Joseph D. Harwood v. First American Title Ins. Co.
33024-9
| Wash. Ct. App. | May 2, 2017Background
- In April 2007 Bell Franklin recorded condominium "Declaration and Covenants" for The Bel covering the entire building; the covenants bind successors and subsequent owners.
- Article 12 (Management) includes Section 12.14 requiring mediation then binding arbitration, with an express clause that "The arbitrator(s) shall determine whether the dispute is subject to binding arbitration under this section."
- Bell Franklin later sold the upper residential units (2008) to Bel Franklin Apartments LLC; plaintiff Joseph Harwood (and related entities) alleges Bel Franklin Apartments (and First American Title Ins. Co.) committed fraud and recorded counterfeit covenant amendments.
- Harwood sued Bel Franklin Apartments (and First American) in superior court asserting covenant breaches, breach of implied good faith, estoppel violations, and consumer-protection claims arising from condominium affairs.
- Bel Franklin moved to compel arbitration under Section 12.14; the trial court denied the motion. Bel Franklin appealed. Harwood did not file a responsive brief on appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability | Harwood: court should decide arbitrability; Section 12.14 invalid or limited to management disputes; RCW 64.34 (Condominium Act) allows court action | Bel Franklin: Section 12.14 clearly requires mediation/arbitration and expressly assigns arbitrability to the arbitrator | Court: Clause unmistakably delegates arbitrability to the arbitrator; arbitrator decides scope |
| Scope of arbitration clause (coverage of claims) | Harwood: clause applies only to association/management disputes, not these claims | Bel Franklin: clause is broad and binds successors; covers disputes arising from the Declaration | Court: arbitrator should determine whether the particular disputes fall within the clause |
| Effect of covenant enforcement provisions (Article 18) | Harwood: 18.1 preserves right to sue and permits court suit | Bel Franklin: enforcement provisions do not negate arbitration clause in 12.14 | Court: Article 18 does not override the express arbitration agreement/delegation provision; arbitration control stands |
| Arbitration as to non-signatory defendant (First American) | Harwood: claims against non-party (First American) need not be arbitrated | Bel Franklin: (did not claim First American was party to covenants) | Court: First American was not a party to the covenants; Harwood need not arbitrate claims against First American; stay applies only as to Bel Franklin Apartments |
Key Cases Cited
- Brown v. MHN Government Services, Inc., 178 Wn.2d 258 (WA 2013) (contracts that unmistakably assign arbitrability to arbitrators are enforced)
- Satomi Owners Ass'n v. Satomi, LLC, 167 Wn.2d 781 (WA 2009) (Washington enforces arbitration provisions that delegate arbitrability to arbitrators, even when statutory claims are asserted)
- Waqas Saleemi v. Doctor's Assocs., Inc., 176 Wn.2d 368 (WA 2013) (courts generally determine existence/scope of arbitration clause absent clear delegation)
- Otis Housing Ass'n, Inc. v. Ha, 165 Wn.2d 582 (WA 2009) (standard of review for denial of motion to compel arbitration is de novo)
- Gorden v. Lloyd Ward & Assocs., P.C., 180 Wn. App. 552 (Ct. App. 2014) (applying delegation principle where contract clear on arbitrability)
- Mendez v. Palm Harbor Homes, Inc., 111 Wn. App. 446 (Ct. App. 2002) (arbitrability delegated to arbitrator when clause plainly so provides)