|
"[A]n arbitration award does not transform an unliquidated claim into a fully liquidated sum entitling the prevailing party to prejudgment interest," according to the Washington Supreme Court.
In State Dept. of Corrections v. Fluor Daniel, Inc., No. 78290-3, 2007 WL 1953597, (Wash. July 6, 2007), Fluor Daniel appealed the intermediate court's denial of prejudgment interest previously granted by a trial court confirming an arbitration award. The trial court held that the award became "liquidated damages" upon its entry by the arbitrator, and that the prevailing party was therefore entitled to prejudgment interest on the amount of the award from the time of entry to the time of confirmation. The intermediate court had reversed the trial court's addition of interest to the confirmation of the award.
The Court agreed with the intermediate court that Fluor Daniel was not entitled to prejudgment interest, as the award did not become "liquidated damages" upon entry by the arbitrator. The Court clearly stated that the character of the claim established whether the resulting damages are deemed liquidated, and stressed that "[n]othing in our case law or the underlying jurisprudence supports the proposition that the character of damages changes from unliquidated to liquidated by virtue of being decided."
The Court rejected Fluor Daniel's argument that arbitration awards were more analogous to entered judgments than a modifiable jury verdict. The Court observed that the "vast majority of courts considering this issue have rejected pleas to add prejudgment interest to arbitrator's awards" as "impermissible modification[s] of the award[s]."
The Court was not persuaded that the parties intended to disallow modification of the award and allow prejudgment interest upon entry of the award through their agreement, and instead found they "did not contract to remove the trial court's power to make modifications…only to forgo their appeal rights." Since, under this agreement, "the arbitrator's award was not completely fixed until entered into judgment," the court held the damages to be unliquidated and prejudgment interest unavailable.
Subscribe to a free weekly update on ADR case law and
legislation
|