In a recent opinion, Division III of the Washington Court of Appeals clarified arbitrator limits in Reecer Creek Excavating v. SRI-Rochlin Construction JV,[1] holding that consequential damage waivers are enforceable, fee-shifting depends on who “substantially prevails,” and arbitration awards can be vacated only in narrow circumstances.

Reecer Creek Excavating (“Reecer”) was subcontracted by SRI-Rochlin Construction JV (“SRI”) to perform excavation and paving work on a housing development in Ellensburg, Washington. When payment disputes arose, both parties filed breach-of-contract claims and later agreed to private arbitration. Their arbitration agreement included terms mandating that “the prevailing party shall be entitled to reasonable attorney fees and costs” and providing for an exception to the finality of the award where the arbitrator exceeded its authority.

After a multi-day arbitration, the arbitrator found both parties partly at fault - Reecer for incomplete and defective work, and SRI for withholding certain payments. The net award favored Reecer by about $55,000, with each side ordered to bear its own attorney’s fees.