Oola Industries, Llc v. Staples Restaurant, Llc
75809-8
| Wash. Ct. App. | Aug 21, 2017Background
- Oola Industries (landlord) held a master lease and subleased a Capitol Hill Seattle unit to Staples Restaurants (tenant) for 2011–2020, limited to use as a "Full Service Restaurant and full bar."
- Staples converted Restaurant Zoe into "Zoe Events" (an event space) in early 2016; Oola initially did not object but later asserted the change violated the use provision.
- Oola served a 30-day Notice of Default (May 2016) demanding return to restaurant use; Staples did not comply and continued event operations.
- Oola filed an unlawful detainer action seeking possession and damages; the lease contained an arbitration clause excluding "unlawful detainer or ejectment" actions from arbitration.
- The trial court issued a writ of restitution (conditioned on a bond) and denied Staples’s motion to stay proceedings and compel arbitration; Staples appealed the denial.
Issues
| Issue | Plaintiff's Argument (Oola) | Defendant's Argument (Staples) | Held |
|---|---|---|---|
| Whether the dispute must be arbitrated | Arbitration clause excludes unlawful detainer; Oola argues court action is permitted | Arbitration clause broadly covers disputes "arising out of or relating to" the lease; Staples argues this dispute is really a breach-of-lease claim and must be arbitrated | Held: Not arbitrable — the lease expressly excludes unlawful detainer, and this action is properly characterized as unlawful detainer seeking possession |
| Whether unlawful detainer is limited to nonpayment of rent | Oola: unlawful detainer includes breaches of any lease covenant affecting possession | Staples: unlawful detainer normally involves unpaid rent; here rent was paid so it’s a breach claim | Held: Unlawful detainer includes failures to perform lease conditions other than rent; Oola’s repossession claim fits unlawful detainer |
| Whether arbitrability clause delegation requires arbitration of arbitrability | Oola: court has authority to decide arbitrability in unlawful detainer context | Staples: the lease states arbitrability "shall be determined by arbitration," so arbitrability is for arbitrator | Held: Court decides arbitrability here; Staples waived this argument by not raising it below and it’s not jurisdictional |
| Whether trial court should sever possession claim and compel arbitration of remainder | Oola: possession controls; arbitration exclusion applies while possession is at issue | Staples: trial court should separate claims and arbitrate breach/damages portions | Held: Court declined to address this unpreserved argument on appeal |
Key Cases Cited
- Herzog v. Foster & Marshall, Inc., 56 Wn. App. 437 (appealability of order denying stay to compel arbitration)
- Satomi Owners Ass'n v. Satomi, LLC, 167 Wn.2d 781 (standard of review for arbitration orders)
- Meat Cutters Local No. 494 v. Rosauer's Super Mkts., Inc., 29 Wn. App. 150 (court decides threshold arbitrability)
- Kamava Co. v. Am. Prop. Consultants, Ltd., 91 Wn. App. 703 (principles for determining arbitrability and scope of arbitration clauses)
- Munden v. Hazelrigg, 105 Wn.2d 39 (definition and scope of unlawful detainer actions)
- Cole v. Harveyland, LLC, 163 Wn. App. 199 (jurisdictional limitations and preservation of issues on appeal)