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.
Reecer moved to vacate the award with the superior court, arguing that the arbitrator exceeded their authority by awarding SRI consequential damages and denying Reecer’s attorney’s fees as the “prevailing party.” Under Washington’s Uniform Arbitration Act, RCW 7.04A.240–.250, arbitration awards can be vacated under narrow circumstances, particularly where an arbitrator exceeds the powers granted by the parties. The trial court denied Reecer’s motion and Reecer appealed.
Regarding consequential damages, the subcontract between Reecer and SRI expressly waived claims for consequential damages. The appellate court agreed that this clause limited the arbitrator’s power—but found most of SRI’s offsets were direct, not consequential, damages. Examples such as bonding costs, extra completion expenses, repair costs, and overbilled survey work flowed directly from Reecer’s breach and were thus recoverable. However, the court ruled that requiring Reecer to indemnify SRI for potential future fire-suppression system claims went beyond direct damages and violated the waiver clause. The Court of Appeals therefore vacated only the indemnity portion of the arbitration award as exceeding the arbitrator’s authority.
Regarding fees, although the stipulation required the arbitrator to award fees to the prevailing party, the Court found that neither side “substantially prevailed.” Reecer recovered roughly 94% of what it sought; SRI recovered 92% of its offset claims. Where multiple and distinct claims are litigated, a “proportionality approach” should be taken. Because both prevailed on major issues, the Court of Appeals concluded that the arbitrator properly required each to bear its own fees and costs and affirmed that portion of the arbitration award and the trial court’s denial of Reecer’s motion to vacate.
Because SRI primarily prevailed on appeal, the Court awarded it reasonable attorney’s fees under RCW 7.04A.250(3) and RAP 18.1—a reminder that unsuccessful challenges to arbitration awards can increase a party’s cost exposure.The opinion confirms that courts will vacate arbitration awards where an arbitrator exceeds their authority. Parties should carefully consider the scope of that authority when drafting and negotiating their contracts, as well as regarding the waiver of consequential damages. Contractors should also carefully consider the risk-award facing them when contemplating whether to move to vacate an arbitration award; an unsuccessful challenge will result in only further fees they will have to pay dow
[1] No. 40486-2-III, 2025 WL 2908342, at *1 (Wash. Ct. App. Oct. 14, 2025)