The case of Williams v. Tilaye, decided on March 8, 2012 by the Washington Supreme Court, involves two different statutory schemes awarding attorney fees.   One scheme, RCW 7.06.050-.060, discourages frivolous appeals from mandatory arbitration.   It does so by providing a penalty for parties that appeal a mandatory arbitration decision by requesting a trial de novo and do no better at the trial de novo than in arbitration.

The other scheme, RCW 4.84.250-.300, encourages parties to settle before going to court in cases where the amount in controversy is $10,000 or less.   It does so in part by allowing a plaintiff to recover attorney fees if the plaintiff makes an offer of settlement at least 10 days before the initial trial, the offer is rejected, and the plaintiff recovers more than was offered.  The recipient of the settlement offer (whether that is the Plaintiff or the Defendant – either can make an offer) must be confident that they can do better at the arbitration before rejecting the offer.

The question in the Williams case arose because the Plaintiffs invoked the second statutory scheme for the first time, 10 days before a trial de novo, only after they recovered nothing at the mandatory arbitration (from which they had sought a trial de novo).

After succeeding in their trial de novo, the plaintiffs applied for and received prevailing party attorney fees under RCW 4.84.250.   The Plaintiffs, Harris and Williams, argued that although they offered to settle for under $10,000 only after the mandatory arbitration, RCW 4.84.250-.300 allowed them to recover attorney fees as long as they made their offers 10 days before the trial de novo.   The Supreme Court disagreed, and affirmed the appellate court’s holding that RCW 4.84.250–.300, which is designed to encourage prompt settlement of small claims, applies only to a plaintiff that seeks recovery of $10,000 or less and makes an offer of settlement 10 days before the initial hearing — whether that initial hearing is a trial or an arbitration.

The Supreme Court explained that in cases subject to mandatory arbitration, the arbitration hearing is tantamount to “the trial,” and a trial de novo was essentially an appeal.

The basic rule thus established in the unanimous decision in  Williams v. Tilaye is that in order to invoke the attorney fees scheme under RCW 4.84.250-.300, a plaintiff must make an offer of settlement 10 days before the initial hearing whether it is a trial or an arbitration.   Because the Plaintiffs in the Williams case did not make an offer at least10 days before the mandatory arbitration, they were not entitled to attorney fees under RCW 4.84.250-.300.