In King County v. Walsh Construction Company II, LLC, No. 86503-0-I (Wash. Ct. App. Aug. 4, 2025), an unpublished decision from Division I of the Washington Court of Appeals, the Court affirmed the denial of a subcontractor’s request for prevailing-party attorney fees under an indemnity clause after the general contractor voluntarily dismissed its indemnity claims. Because the indemnity claim was no longer live and no determination of fault had occurred, the Court held that the trial court did not err in denying the request. ACS represented Walsh, the general contractor, in securing the denial of the fee request at the trial court that the Court of Appeals affirmed.
A Pass-Through Indemnity Claim That Ended Before Fault Was Decided
The dispute arose out of a public works contract under which King County hired Walsh Construction Company II, LLC (“Walsh”) to construct and install a conveyance pipeline. After the pipeline broke, King County sued Walsh for breach of contract and warranty, expressly identifying both Walsh and its subcontractor, Mears Group Inc., (“Mears”) as responsible. Walsh tendered defense and indemnity to Mears under the subcontract.
The subcontract’s indemnification provision required Mears to defend “regardless of the merits of the matter” and to continue that defense ‘until a final determination of fault is made.” That provision also contained the subcontract’s only attorney fee recovery provision: a prevailing-party clause allowing recovery of fees and costs “in an action brought to enforce all or any part of this Indemnification Article.”
Walsh’s third-party complaint against Mears asserted claims based on the allegations that were, in turn, asserted by King County. After an earlier appeal, King County voluntarily dismissed its claims against Walsh under CR 41, and, as a result, Walsh voluntarily dismissed its pass-through claims against Mears (because King County’s dismissal of its own claims left no claims for Mears to indemnify). Mears did not oppose dismissal but asked the trial court to retain jurisdiction to pursue prevailing-party fees, and later sought fees and costs in excess of half a million dollars.
The Court’s Reasoning: No Determination of Fault, No Fees
Under Washington law, each party bears its own attorney fees unless a contract, statute, or recognized ground in equity authorizes an award. Because Mears sought fees only on a contractual basis, the analysis turned on the indemnity clause. The Court said that a prevailing party, for purposes of a contractual fee provision, is ordinarily one who secures a judgment in its favor, and a voluntary dismissal without prejudice is not a final judgment, because it leaves the parties as if the action had never been brought. Here, the trial court dismissed Walsh’s claims against Mears without prejudice. Drawing on Washington Supreme Court authority, the Court reasoned that there is no default rule requiring a fee award following the voluntary dismissal of a claim, and that where neither party prevails with a final judgment, neither party is entitled to fees.
Applying those principles, the Court concluded that because the underlying claim disappeared and no “fault” was ever determined, there was no live controversy on which Mears could have prevailed, and thus no “action brought to enforce” the indemnification provision within the meaning of the fee clause. The Court added that even under the more lenient, “commonsense’ definition of “prevailing party” that Mears argued should apply, Mears did not prevail in any practical sense, because dismissal of the underlying claim eliminated any need for indemnification. On that basis, the Court affirmed.
Commentary
A general contractor facing an owner’s claim will often tender that claim to the subcontractor whose work is at issue. Mears’s argument was that when those indemnity claims were dismissed voluntarily Mears became the prevailing party and could recover its defense fees from Walsh. Had that argument been accepted, a general contractor that had done no more than tender an owner’s claims could have faced liability to its subcontractor for the subcontractor’s defense fees. Such a decision could have had significant implications on indemnity agreements in construction contracts in general. The Court, however, applied narrower reasoning and did not reach that result. Instead, its decision focused on the specific fee language in that subcontract, which allowed recovery only to a prevailing party in an action to enforce the indemnity provision tied to a final determination of fault that never occurred.
Because the fee entitlement in any given matter often turns on the contract language and the procedural posture in which the claim is resolved, contractors and subcontractors should review their indemnity and fee provisions carefully and consult counsel about how those provisions may function in the context of a specific project or dispute.
This article is provided for general informational purposes only and does not constitute legal advice, nor does it create an attorney-client relationship. It discusses a single, unpublished court decision and its particular facts; it is not a prediction of how any court would resolve a different dispute, and outcomes depend on the specific contract language and circumstances involved. Readers should consult qualified legal counsel regarding their own situations before taking or refraining from any action.