Opinion Information Sheet

			

    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                       DIVISION  II

WAQAS SALEEMI, a single man, and                                 No.  40351-0-II
FAROOQ SHARYAR, a single man,

                             Respondents,

       v.

DOCTOR'S ASSOCIATES, INC., a Florida                        PUBLISHED OPINION
corporation,

                             Appellants.

       Johanson, J.  --  Doctor's Associates, Inc. (DAI) entered into three franchise agreements 

with Waqas Saleemi and Farooq Sharyar (Saleemi).  Each  agreement required  the parties  to 

arbitrate their disputes  in Connecticut, under Connecticut substantive law, and included      a 

damages-limitation provision.  After a dispute arose, DAI filed for arbitration in Connecticut and 

Saleemi filed a civil lawsuit against DAI in Washington.  When DAI moved to compel arbitration 

under the terms of the agreements, the trial court struck the arbitration site (venue), choice of law, 

and damages-limitation provisions and ordered the parties to arbitrate the dispute in Washington, 

under Washington law, without any damages limitation.  DAI did not move for discretionary 

review of the trial court's order.  After the arbitrator found in Saleemi's favor, Saleemi moved in 

the superior court to confirm the arbitration award, and DAI moved to vacate the award.     The 

superior court denied DAI's motion to vacate the arbitration award in full and confirmed the  

No. 40351-0-II

arbitration award.1 DAI appeals, arguing that, although the trial court did not err in compelling

arbitration generally, it (1) exceeded its authority when it determined that the venue, choice of 

law, and damages-limitation provisions were unenforceable; (2) erred in finding that the venue, 

choice of law, and damages-limitation  provisions  were unconscionable; (3) erred in failing to 

award DAI attorney fees and costs; (4) erred in confirming the arbitrator's award; and (5) erred in 

awarding Saleemi "post arbitration award" attorney fees.  Br. of Appellant at 2.  Although we 

remand to the superior court to award attorney fees and costs to DAI on the motion to compel,

because DAI does not establish prejudice, we affirm the order on the motion to compel and the 

order confirming the arbitrator's award.

                                            FACTS

                     I.  Franchise Agreements, Alleged Breach, and Lawsuit

       DAI franchises Subway sandwich shops.  On March 2, 2004, June 14, 2006, and June 21, 

2006,  DAI and Saleemi entered into franchise agreements for three Subway  stores in Pierce 

County.   Each of these agreements required binding arbitration in Connecticut and contained 

choice of law, attorney fee, and damages-limitation provisions.

       In  June  2008, DAI attempted to terminate the franchise agreements after it obtained 

information  leading  it to believe  that Saleemi had  violated  the noncompetition clause in the 

franchise agreements.  On August 20, DAI demanded arbitration in Bridgeport, Connecticut.

       On August 28, Saleemi  filed a civil  complaint against DAI in Pierce County Superior 

Court, alleging that Saleemi had cured the default and that DAI's  attempt to terminate the 

1 The superior court did, however, strike the prejudgment interest that had been included in the 
award.  That portion of the superior court's decision is not at issue in this appeal.
                                               2 

No. 40351-0-II

agreements without an opportunity to cure violated RCW 19.100.180(2)(j).2  Saleemi asked the 

superior court to "restrain[]" DAI from "arbitrating this matter and from arbitrating the matter in 

the [s]tate of Connecticut." Clerk's Papers (CP) at 2.

 II.  Trial Court Order Compelling Arbitration in Washington, Under Washington Law, Without 
                                      Damages Limitation

       In its answer, DAI asserted that the superior court "lack[ed] appropriate jurisdiction over 

the parties" because the Agreements required arbitration, challenged the superior court's venue, 

and asked the superior court to dismiss Saleemi's complaint and award attorney fees and costs.  

CP at 6.  But DAI also asserted a "counterclaim," asking the superior court to enter an order 

compelling arbitration and arguing that the agreements' arbitration clauses required binding 

arbitration in Bridgeport, Connecticut and that "[v]enue" was not in Washington State.  CP at 6.  

DAI also requested attorney fees under the agreements because Saleemi had "failed and refused to 

engage in arbitration." CP at 7. In its motion to compel arbitration, DAI asserted:

              It is undisputed that the Agreements provide that the laws of the [S]tate of 
       Connecticut shall govern the interpretation and enforcement of the Agreements.  

2 RCW 19.100.180(2)(j) states, in part:
       (2)  For the purposes of this chapter and without limiting its general application, it 
       shall be an unfair or deceptive act or practice or an unfair method of competition 
       and therefore unlawful and a violation of this chapter for any person to:
              . . . .
              (j)  Terminate a franchise prior to the expiration of its term except for good 
              cause.  Good cause shall include, without limitation, the failure of the 
              franchisee to comply with lawful material provisions of the franchise or 
              other agreement between the franchisor and the franchisee and to cure 
              such default after being given written notice thereof and a reasonable 
              opportunity, which in no event need be more than thirty days, to cure such 
              default, or if such default cannot reasonably be cured within thirty days, the 
              failure of the franchisee to initiate within thirty days substantial and 
              continuing action to cure such default.
(Emphasis added).
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No. 40351-0-II

       The Agreements do provide for the application of the  Franchise Investment 
       Protection Act [(FIPA)] of this state.  However, there is nothing in that statute 
       which restricts the use of a choice of forum or an arbitration clause.  Therefore, the 
       Washington FIPA still provides no basis for this lawsuit.

CP at 11.  Saleemi opposed the motion to compel.3

       At the motion hearing, the superior court stated that its "biggest concern" was the venue

provision, noting that it was particularly concerned because the "alleged non-compete issue"

occurred in Washington, and it might be a hardship for Saleemi to face arbitration in Connecticut 

when all the witnesses were in Washington. Verbatim Transcript of Proceedings (VTP) (Sept. 19, 

2008) at 5, 7.  Although DAI acknowledged that the venue provision was severable and stated 

that it would proceed with arbitration in Washington if the superior court ordered          such 

arbitration, DAI continued to argue that the superior court should find that Saleemi was required 

to arbitrate the matter in Connecticut.4 DAI also stated that Washington's FIPA would apply 

even if the arbitration took place under the terms of the agreements.  

3 Saleemi also moved to amend his complaint "to include the claim that the arbitration paragraphs 
in the Franchise Agreements are unconscionable under the laws of the State of Washington." CP 
at 81.  But Saleemi withdrew his motion to amend the complaint after the trial court ordered 
arbitration in Washington.

4 For example, DAI's counsel argued:
       If the Court rules that the matter go to arbitration but orders that it take place in 
       Washington, my client will, of course, abide by that particular determination, but 
       there's no question that this matter has to be decided by arbitration, under the 
       agreement, is scheduled to take place and should take place a[t] a forum in the 
       state of Connecticut.
       . . . .
              Certainly, under a situation such as this, the Court should . . . order that the 
       arbitration take place and should order that the arbitration take place in the venue 
       where the parties, by agreement, not once, not twice, but on three separate 
       occasions agreed to the venue that would be set.
VTP (Sept. 19, 2008) at 8-9.
                                               4 

No. 40351-0-II

       On September 19, 2008, without hearing any argument related to the choice of law 

provision or the damages limitation, the superior court found the venue clause unconscionable and 

ordered "that the disputes between the parties shall be arbitrated in Washington under Washington 

law, with no limitation on remedies."5  CP at 218.   The superior court did not enter any order 

(oral or written) regarding DAI's request for attorney fees in its motion to compel arbitration.  

DAI did not move for discretionary review of the September 19, 2008 order.

                III.  Arbitration Award and Motion to Vacate Arbitration Award

       The parties proceeded to arbitration in Washington before an American Arbitration 

Association arbitrator. CP at 222.  In his "interim award," the arbitrator (1) found in Saleemi's 

favor; and (2) stated, "Claimant DAI shall pay to respondents 'compensatory damages' as that 

term is defined in section 17 of exhibit 52.[6]  They may choose either option."     CP at 290

(capitalization omitted).  The arbitrator awarded Saleemi a total of $230,000 in "compensatory 

damages," $161,536 in attorney fees, and $32,837.96 in costs.7 CP at 222.  Saleemi moved in the 

5 The superior court also orally ruled:
              Well, I am going to find that the forum selection is unconscionable under 
       this circumstance and -- but on the other hand, I am going to order that there be 
       arbitration in the state of Washington.  I'm also going to order that there be no 
       limit to the remedies in the arbitration.  
              So you're going to get your arbitration, but we're going to have 
       Washington law, Washington forum, and no limit to the remedies.
VTP (Sept. 19, 2008) at 17.

6 The reference to "section 17 of exhibit 52" appears to be to section 17 of the Agreements.  
Section 17 set out the damages-limitation clause, which contained two alternative methods for 
calculating compensatory damages.  CP at 38, 54, 68-69.

7 The arbitrator also indicated that this award would bear interest from the date of the award until 
paid in full.  The superior court later determined that the start date of the prejudgment interest 
award was incorrect.  That portion of the superior court's decision is not at issue in this appeal.
                                               5 

No. 40351-0-II

superior court to confirm the arbitration award; DAI opposed Saleemi's motion to confirm the 

arbitration award and moved to vacate the award, arguing that the superior court's September 

2008 order was improper.

       On January 22, 2010, the superior court heard argument on both of these motions.  DAI

argued that the superior court had exceeded its authority when it decided that the venue, choice 

of law, and damages-limitation provisions were unconscionable.  DAI asserted that the validity of 

these three provisions was a question for the arbitrator in Connecticut and that the superior court 

lacked the authority to address them.

       In response, the superior court asked DAI why it had proceeded to arbitration rather than 

moving for discretionary review of the 2008 order.8  DAI explained:

              We looked at that particular issue at the time, to be frank.  We looked at 
       the statute . . ., and we came to the conclusion that the likelihood of the Court 
       taking it back at that particular point was not very great and the costs and 
       expenses at that particular point in time, who knew, the cost and expenses of 
       taking the appeal would not be a wise allocation.  We thought we would get a 
       decision, a different decision, but it would have been a discretionary review.  So 
       that alone is not grounds.  I've cited to the case law in that particular area and 
       that's not a final order.
              . . . .
              . . . So that's the particular reason for it.  We made a decision for economic 
       reasons at that time that we thought we could take this particular shot.  It's not
       like we didn't raise all of these issues in the first go-round.  We did.  Every issue 
       that I am raising now is in the briefs that we submitted, originally.
              So what we have now is mainly the benefit of new case law that has come 

8 Specifically, the superior court stated:
       [M]y question [is], if now a year and a half later with a result which clearly the 
       defendant is not very happy with, now say, oh, what you did a year and a half ago 
       was wrong, when you had an opportunity to at least ask for a discretionary review 
       on a critical issue, obviously.  If this should have gone to Connecticut, that should 
       have been decided then.
Verbatim Report of Proceedings (VRP) (Jan. 22, 2010) at 7.

                                               6 

No. 40351-0-II

       down since the Court's original determination in September of 2008 that clearly 
       directs that the trial court enter an order that does not weigh upon this particular
       process and leaves these matters for the arbitrator.

VRP (Jan. 22, 2010) at 7-8.

       The  superior  court denied DAI's motion to vacate and granted Saleemi's motion to 

confirm the arbitration award.  The superior court stated:

              Well, I think you knew you had a tough row to hoe when you got here this 
       morning, and I'm going to deny your motion to vacate.  You know, I don't even 
       need to hear from the plaintiffs in terms of this portion of it.  I think there were 
       other remedies in 2008.  It is clear that the defense is unhappy with the result, so 
       you're trying to get a second bite at the apple and it's not going to happen on my 
       watch.  Let the Court of Appeals sort that part of it out.

VRP (Jan. 22, 2010) at 9.   Saleemi  later  moved  for attorney fees related to confirming the 

arbitration award.  The superior court awarded Saleemi $6,453.33 in attorney fees.

       DAI appeals (1) the superior court's September 2008 order requiring arbitration in 

Washington, under Washington law, and without any damages limitations;9 (2) the January 22, 

2010 order denying DAI's motion to vacate the arbitrator's award in full; (3) the February 12, 

2010 order confirming the arbitrator's award and final judgment; and (4) the March 19, 2010 

order on motion for attorney fees. DAI's arguments, however, focus on whether the superior 

court's 2008 order was proper.

9 We note that DAI does not assert that the superior court erred in compelling arbitration or that 
the matter was not subject to arbitration under the arbitration clause.

                                               7 

No. 40351-0-II

                                          ANALYSIS

                           I. Threshold Issue: Review of 2008 Ruling

       As a preliminary matter, Saleemi asserts that we cannot consider DAI's challenges to the 

superior court's September 2008 order because DAI did not appeal that ruling before proceeding 

to arbitration.  Instead, Saleemi asserts that we can examine only whether the superior court later 

had any ground for rejecting the arbitrator's decision under RCW 7.04A.230.10  We disagree.

10 RCW 7.04A.230 provides:
              (1)  Upon motion of a party to the arbitration proceeding, the court shall 
       vacate an award if:
              (a)  The award was procured by corruption, fraud, or other undue means;
              (b)  There was:
                      (i)  Evident partiality by an arbitrator appointed as a neutral;
                      (ii) Corruption by an arbitrator; or
                      (iii) Misconduct by an arbitrator prejudicing the rights of a party to 
       the arbitration proceeding;
              (c)  An arbitrator refused to postpone the hearing upon showing of 
       sufficient cause for postponement, refused to consider evidence material to the 
       controversy, or otherwise conducted the hearing contrary to RCW 7.04A.150, so 
       as to prejudice substantially the rights of a party to the arbitration proceeding;
              (d)  An arbitrator exceeded the arbitrator's powers;
              (e)  There was no agreement to arbitrate, unless the person participated in 
       the arbitration proceeding without raising the objection under RCW 7.04A.150(3) 
       not later than the commencement of the arbitration hearing; or
              (f)  The arbitration was conducted without proper notice of the initiation of 
       an arbitration as required in RCW 7.04A.090 so as to prejudice substantially the 
       rights of a party to the arbitration proceeding.
              (2)  A motion under this section must be filed within ninety days after the 
       movant receives notice of the award in a record under RCW 7.04A.190 or within 
       ninety days after the movant receives notice of an arbitrator's award in a record on 
       a motion to modify or correct an award under RCW 7.04A.200, unless the motion 
       is predicated upon the ground that the award was procured by corruption, fraud, 
       or other undue means, in which case it must be filed within ninety days after such a 
       ground is known or by the exercise of reasonable care should have been known by 
       the movant.
              (3)   In vacating an award on a ground other than that set forth in 
       subsection (1)(e) of this section, the court may order a rehearing before a new 
                                               8 

No. 40351-0-II

       On July 16, 2010, our commissioner denied Saleemi's motion to dismiss this appeal in 

which Saleemi asserted that DAI's challenge to the September 2008 order was untimely.  See 

spindle.  We then denied Saleemi's motion to modify the July 16, 2010 commissioner's ruling

because the September 2008 order was not a final order that was appealable as of right.  

Saleemi's arguments do not convince us that the commissioner's ruling or our denial of Saleemi's 

motion to modify that ruling was incorrect.

       Although DAI could have moved for discretionary review of the September 2008 order,

that order was not appealable of right, and DAI was not required to appeal the ruling until after a 

final order was issued in this matter.  All-Rite Contracting Co. v. Omey, 27 Wn.2d 898, 900-01, 

181 P.2d 636 (1947); ACF Prop. Mgmt., Inc. v. Chaussee, 69 Wn. App. 913, 921 n.7, 850 P.2d 

1387, review denied, 122 Wn.2d 1019 (1993); Teufel Constr. Co. v. Am. Arbitration Ass'n, 3 

Wn. App. 24, 25, 472 P.2d 572 (1970).  That DAI failed to move for discretionary review does 

not prevent us from considering the propriety of the September 2008 order.  See RAP 2.2; RAP 

2.3(a); ACF Prop. Mgmt., Inc., 69 Wn. App. at 921-22 (a party does not waive the issue of 

arbitrability by failing to seek discretionary review of decision on arbitrability in motion to compel 

arbitration); see also RAP 2.4(b).

       Saleemi also appears to assert that we may review the September 2008 order only under 

       arbitrator.  If the award is vacated on a ground stated in subsection (1)(c), (d), or 
       (f) of this section, the court may order a rehearing before the arbitrator who made 
       the award or the arbitrator's successor.  The arbitrator must render the decision in 
       the rehearing within the same time as that provided in RCW 7.04A.190(2) for an 
       award.
              (4)  If a motion to vacate an award is denied and a motion to modify or 
       correct the award is not pending, the court shall confirm the award.

                                               9 

No. 40351-0-II

the statutory grounds set out in RCW 7.04A.230.  Although we review arbitration awards to 

determine  only  whether any statutory grounds for vacation exist under RCW 7.04A.230,11

reviewing the superior court's 2008 decision on DAI's motion to compel arbitration does not 

require us to review the arbitration award itself. Because we are not reviewing the arbitration

award itself,  we are not confined to the enumerated statutory grounds in RCW 7.04A.230.  

Instead, the ruling on the motion to compel is a decision separate from the arbitration award that 

was not a final order and was not appealable as of right until after the superior court issued a final 

order in this matter.  See ACF Prop. Mgmt., Inc., 69 Wn. App. at 922.

       Saleemi also suggests that DAI waived its right to appeal the 2008 order by acquiescing to 

the superior court's 2008 order and proceeding with the arbitration under the terms of that order.  

In effect, Saleemi is asserting that by failing to move for discretionary review, DAI waived its 

right to challenge the September 2008 order.  But DAI clearly objected to the 2008 order before 

going forward with the arbitration, and Saleemi does not direct us to any law that required DAI to 

move for discretionary review before a final order was entered in this matter.  See ACF Prop.

Mgmt., Inc., 69 Wn. App. at 922.

       Saleemi also argues that DAI invited any error here.  He maintains that the following 

statement from DAI during the September 19, 2009 hearing amounted to an invitation to arbitrate 

in Washington:

              Therefore, we would request very simply that you order this matter go 
       before arbitration.  We believe it should take place in Connecticut.  If you should 
       choose and say that Connecticut is an improper forum, then it can take place in the 

11 See Expert Drywall, Inc. v. Ellis-Don Constr., Inc., 86 Wn. App. 884, 888, 939 P.2d 1258 
(1997), review denied, 134 Wn.2d 1011 (1998).

                                               10 

No. 40351-0-II

       state of Washington.  But the long and the short of it, the essence of this dispute 
       must be resolved in arbitration and not in [s]uperior [c]ourts.

VTP (Sept. 19, 2008) at 16-17.  We disagree.

       The doctrine of invited error precludes review when the appellant induces the trial court to 

take the action to which error is assigned on appeal.  In re Dependency of K.R., 128 Wn.2d 129, 

147, 904 P.2d 1132 (1995).  The instances in the record to which Saleemi cites do not amount to 

inducing the trial court to take action.  DAI consistently argued that the agreements required 

arbitration in Connecticut under Connecticut substantive law.  Nothing in the record indicates that 

DAI was changing this position.  Rather, the record merely shows that DAI was cognizant that if 

the trial court ordered arbitration in Washington, it would go forward with the arbitration.

         II.  Failure to Seek Discretionary Review Requires DAI to Establish Prejudice

       DAI  does not challenge the superior court's authority to compel arbitration or to 

determine the enforceability of the arbitration agreement generally.12 Instead, it argues that the 

superior court exceeded its authority in striking the venue, choice of law, and damages-limitation 

provisions and asserts that the arbitrator should have determined the validity of these provisions.

DAI also argues that even if the superior court had the authority to address the enforceability of 

these  provisions, the record does not support the superior court's  decision to strike  these 

provisions.  Even assuming that the superior court exceeded its authority in addressing the venue, 

choice of law, and damages-limitation provisions and in concluding that these provisions were 

12  See Br. of Appellant at 14 ("If the arbitration clause is enforceable, all other disputes subject to 
the parties' agreement to arbitrate must be determined by arbitration."); see Br. of Appellant at 15 
("Thus, where there is a challenge to the enforceability of an arbitration agreement clause, the 
court must determine that issue in isolation.  RCW 7.04A.060(2)." (emphasis added.)).

                                               11 

No. 40351-0-II

unconscionable, we hold that DAI is not entitled to relief because it fails to establish any possible 

prejudice.13

       As we discussed above, a party does not waive its right to challenge an interlocutory order 

that is not a final order appealable as of right by failing to move for discretionary review.  But a 

party is not necessarily allowed to acquiesce to the interlocutory order and wait to appeal the 

allegedly adverse interlocutory ruling until it knows the outcome of the proceedings without any 

consequences.  In cases like this, which involve venue decisions, case law supports requiring a 

party that knowingly chooses  to await the outcome of the proceeding before challenging an 

interlocutory order on a venue motion to show that it suffered prejudice before this court will 

grant relief.  See Lincoln v. Transamerica Inv. Corp., 89 Wn.2d 571, 578, 573 P.2d 1316 (1978) 

(if the party objecting to venue fails to move for discretionary review, then the appellate courts 

13 In supplemental briefing this court ordered, DAI asserts that we should presume prejudice 
because there is no record of the arbitration so we cannot determine if anything that occurred in 
arbitration was prejudicial.  But, as we discussed above, we are examining the trial court's 2008 
ruling, not the arbitration itself, and DAI could establish the required prejudice by presenting 
information outside the arbitration record, such as establishing that there are differences between 
Connecticut and Washington law that could have made a difference in this case or that DAI would 
have had access to additional evidence in a different venue.  DAI also asserts that harmless error 
is improper when reviewing an arbitrator's decision.  Again, we are not reviewing the arbitration 
itself but, rather, the trial court's 2008 ruling, so this argument is inapposite.
       DAI also asserts that we should presume prejudice because the errors here are similar to 
instructional errors resulting in errors of law.  But DAI does not show that any error of law 
occurred here, a preliminary step that is required before we presume prejudice.  See Keller v. City 
of Spokane, 146 Wn.2d 237, 249, 44 P.3d 845 (2002) (in general an instructional error will not be 
reversed absent a showing of prejudice, but "[a] clear misstatement of the law, however, is 
presumed to be prejudicial.").
       DAI further argues that we should presume prejudice because these are "structural errors"
that "taint[ed]" the entire proceedings.  Appellants' Suppl. Br. at 3.  But DAI offers no support 
for this assertion, nor does it show that the arbitration here was conducted under different 
procedural or substantive rules or law than would have applied if the arbitration had occurred in 
Connecticut or under Connecticut law.
                                               12 

No. 40351-0-II

require that party to show that the denial of motion to change venue was prejudicial). Because of 

the similar procedural posture here, we apply the rule from Lincoln and hold that in order to 

obtain relief, DAI must affirmatively establish that there is a possibility that the trial court's 2008 

order was prejudicial to DAI.

       The only prejudice DAI alleges is that it was denied the benefit of arbitration in 

Connecticut, under Connecticut law, subject to the damages limitation.  But it is DAI's burden to 

show not only that the proceedings could have been different but that there is some possibility that 

the  outcome of the proceedings could have been different had the arbitration been held in 

Connecticut, under Connecticut law, subject to the damages limitation.  See Coutee v. Barington 

Capital Group, L.P., 336 F.3d 1128, 1134-35 (9th Cir. 2003) (examining whether arbitrator's 

failure to follow valid, enforceable choice of law clause was harmless; refusing to apply bright-line 

rule that would require automatic vacation of arbitration award if choice of law clause was not 

followed and emphasizing that harmless error approach does not contradict the  Federal 

Arbitration Act); Barnes v. Logan, 122 F.3d 820 (1997) (applying harmless error analysis in 

choice of law context), cert. denied, 523 U.S. 1059 (1998); Lincoln, 89 Wn.2d at 578 (possible 

venue error not presumptively prejudicial).  The record does not suggest that the arbitration that 

occurred under the 2008 ruling would have differed if it had been conducted under the terms in 

the agreements: (1) the arbitration was conducted by the arbitration association designated in the 

contracts and the same association would have         been responsible for any arbitration in 

Connecticut; (2) DAI does not describe any advantage it would have received had the arbitration 

physically occurred in Connecticut; (3) DAI repeatedly admits that Washington FIPA would have 

                                               13 

No. 40351-0-II

applied and points to no differences between Washington and Connecticut law that could have 

affected these proceedings; (4) the record shows that the arbitrator in fact directed the parties to 

apply the damages limitation by requiring that the parties apply the definition of "compensatory 

damages" established in paragraph 17 of the agreement; and (5) DAI does not show that the 

damages award exceeded the limitations set in each of the franchise agreements.

       Because DAI fails to allege, let alone establish, any prejudice, we affirm the superior 

court's 2008 order compelling arbitration in Washington, under Washington law, without a 

damages limitation.  Additionally, because DAI's challenges to the order affirming the arbitrator's 

award all relate to its challenge to the 2008 order, we also affirm the order confirming the 

amended arbitration award.

                                       III.  Attorney Fees

                                 A.  Fees on Motion to Compel

       In addition to challenging the 2008 superior court order, DAI also argues that the superior 

court erred when it did not award DAI attorney fees and costs incurred in enforcing the 

arbitration clause, as required under paragraph 10(e) of the agreements and RCW 4.84.330.14  

DAI requests that we remand to the trial court to award reasonable attorney fees.  We agree.

14 RCW 4.84.330 provides:
       In any action on a contract . . . entered into after September 21, 1977, where such 
       contract . . . specifically provides that attorney's fees and costs, which are incurred 
       to enforce the provisions of such contract . . . , shall be awarded to one of the 
       parties, the prevailing party, whether he is the party specified in the contract or 
       lease or not, shall be entitled to reasonable attorney's fees in addition to costs and 
       necessary disbursements.
(Emphasis added).

                                               14 

No. 40351-0-II

       After DAI started arbitration proceedings in Connecticut, Saleemi responded by initiating 

a civil action in the superior court rather than  moving for arbitration in Washington or 

Connecticut.  In its answer to Saleemi's civil claim and motion to compel arbitration, DAI 

asserted that it was entitled to attorney fees under the three Franchise Agreements.  When the 

superior court entered the order compelling arbitration, it did not address any attorney fees or 

costs. Because paragraph 10(e)15 of the contracts expressly provide for attorney fees and costs, 

the superior court erred in failing to award attorney fees and costs to DAI.  Accordingly, we 

remand to the superior court to award attorney fees and costs related to DAI's "expenses of 

enforcing the arbitration clause, including court costs, arbitration filing fees and other costs and 

attorney's fees." CP at 35, 51, 65.

           B.  Attorney Fees and Costs Related to Confirmation of Arbitrator's Award

       DAI also argues that if we reverse the superior court's order confirming the arbitrator's 

award, the superior court also erred in awarding Saleemi attorney  fees and costs incurred in 

confirming the arbitrator's award.  Because we do not reverse the superior court, this argument 

15 Paragraph 10(e) provides:
              Any disputes concerning the enforceability or scope of the arbitration 
       clause shall be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. § et seq. 
       ("FAA"), and the parties agree that the FAA preempts any state law restrictions 
       (including the site of the arbitration) on the enforcement of the arbitration clause in 
       this Agreement.  If, prior to an Arbitrator's final decision, either we or you 
       commence an action in any court of a claim that arises out of or relates to this
       Agreement (except for the purpose of enforcing the arbitration clause or as 
       otherwise permitted by this Agreement), that party will be responsible for the 
       other party's expenses of enforcing the arbitration clause, including court costs, 
       arbitration filing fees and other costs and attorney's fees.
CP at 35, 51, 65 (emphasis added).

                                               15 

No. 40351-0-II

fails.

                             C.  Attorney Fees and Costs on Appeal

       Finally, DAI argues that it is also entitled to attorney fees and costs on appeal.  Because 

DAI is not the prevailing party on appeal, we deny DAI's request for attorney fees and costs on 

appeal.

       Saleemi requests fees on appeal under RCW 7.04A.250(3),16 which states:

       On application of a prevailing party to a contested judicial proceeding under . . . 
       7.04A.230 . . . , the court may add to a judgment confirming, vacating without 
       directing a rehearing, modifying, or correcting an award, attorneys' fees and other 
       reasonable expenses of litigation incurred in a judicial proceeding after the award is 
       made.

Saleemi is the substantially prevailing party.  Accordingly, we award Saleemi attorney fees and 

costs under RCW 7.04A.250 to be determined upon his compliance with RAP 18.1.

       We affirm the superior court's 2008 order compelling arbitration and the order confirming 

the arbitrator's award.  But we remand to the superior court to determine attorney fees and costs 

related to DAI's motion to compel arbitration and to award those fees and costs to DAI.

                                                           Johanson, J.
We concur:

       Armstrong, P.J.

       Van Deren, J.

16 Saleemi requests fees under RCW 19.86.090.  We decline to consider this request because 
although he asserts that the arbitrator awarded fees and costs under chapter 19.86 RCW, nothing 
in the record supports that claim.

                                               16