WEST STAR CORP. v. HAMILTON, 26939-2-II (Wash.App. 2-7-2003)

No. 26939-2-II.The Court of Appeals of Washington, Division Two.
Filed: February 7, 2003. UNPUBLISHED OPINION

Appeal from Superior Court of Lewis County Docket No: 99-2-00570-6 Judgment or order under review Date filed: 01/16/2001

Counsel for Appellant(s), Edward Earl III Younglove, Attorney at Law, P.O. Box 7846, Olympia, WA 98507-7846.

Counsel for Respondent(s), Jon Michael Anthony, Attorney at Law, 2938 Limited Ln N.W. Ste a, Olympia, WA 98502-6501.

MORGAN, J.

West Star Corporation appeals the denial of its motion to compel arbitration. We affirm.

In 1982, Alfred and Ruth Hamilton (Hamilton) leased a gasoline station to West Star. Rent included = of a cent per gallon of `gasoline dispensed.’ In early 1994, West Star began selling gas to members of an operation called Commercial Fuel Network (CFN). West Star did not include this gas in its computation of rent.

In May, 1999, Hamilton sued for a judgment declaring that West Star was obligated to pay = of a cent per gallon on CFN gasoline. That summer, the parties exchanged three letters. The first, dated June 28, 1999, was sent by Hamilton’s attorney to West Star. It stated under a title of `Compromise Payment and Arbitration’:

It is imperative that this situation be rectified immediately. I note that your letter acknowledges a short-fall in rent payments of at least . . . $25,547.55. You have offered to pay this amount, plus the attorneys fees incurred to date by this office. This payment, however, will not pay the rent due in full once you factor in the obligation to pay three quarters of a cent per gallon of every gallon dispensed from the demised premises.
As an accommodation to you, we propose that you pay the amount offered in your letter, plus my attorneys fees to date in the amount of $880.50, for a total of $26,428.05, and we will continue to negotiate or arbitrate the issue with respect to the price per gallon to be paid by the tenant in this case.
If you agree to pay the amount requested and proceed in good faith to complete the litigation or arbitration process, Mr. and Mrs. Hamilton will take no further steps against your company. Specifically, they will not commence an eviction against you, which is their clear right, regardless of the amount in dispute. There is no question that you are in default in your rent obligation which would give my clients the right to commence and complete an eviction at any point. Finally, as a condition of deferring future legal action until the gallon/price issue is resolved, the total amount of $26,428.05 must be paid in cash and in full, not later than ten days from the date of this letter. . . .
. . . In addition, I strongly urge you to seek counsel so that we may more efficiently resolve the litigation. As an alternative to litigation, my clients are also willing to enter into binding arbitration on the CFN gallonage issue and resolve the contract language interpretation once and for all. This would be an alternative to litigation and will certainly be more efficient both in time and costs.[1]

The second letter, dated July 5, 1999, was from West Star’s president to Hamilton’s attorney. It stated in part:

I am in receipt of your correspondence dated June 28, 1999 . . . . In order to settle the matter, please find enclosed my check in the amount of $26,428.05, as you requested. . . . .
In any event, I agree with the direction of your letter and that we need to put this behind us and move on. I have enclosed the amount that you requested in order to reach a compromise even though you misstated that I am in agreement with that amount of back rent. What I did say in my letter was that if we use your rent received number, the $25,547.55 would be the amount due. Our records indicate that we paid $115,755.50 in rent for the period, $1,883.41 more than your number. In good faith, and to the extent that we can conclude this matter, I have enclosed the amount you requested, although I don’t agree with it.[2]
The president went on to say that he was asking a company called Wilcox Flegel to reimburse West Star for the extra rent, and that ‘[b]arring any help from Wilcox Flegel, I think we should then pursue negotiations to resolve the issue. I will contact you as soon as I hear back from them.’[3] The letter did not mention arbitration.

The August 19 letter was also from West Star to Hamilton’s attorney. It contained a description of the CFN arrangement but did not mention an agreement to arbitrate. It stated that West Star `want[s] to settle this matter and move on.’[4] On October 13, 1999, West Star filed a comprehensive and detailed answer to Hamilton’s complaint. It alleged, among other things, `that the parties entered into a compromise . . .; that [it] paid the compromise settlement amount; that there has been an accord and satisfaction of this obligation which has been discharged and satisfied in full by [West Star]; and that the settlement included an agreement to negotiate the alleged-of-a-cent-per-gallon charge on . . . (CFN) gasoline.’[5] It did not mention arbitration.

At a time not clear from the record, Hamilton moved for partial summary judgment. West Star opposed that motion and, on November 15, 2000, filed its own motion `for an order compelling the parties to arbitrate the dispute with regard to what amount, if any, the defendant should be obligated to pay the plaintiffs with regard to the distribution of CFN gasoline from the leased premises.’[6] In January 2001, the trial court granted Hamilton’s motion for summary judgment and denied West Star’s motion to compel arbitration. West Star sought discretionary review, and a commissioner of this court ruled that West Star had a right to appeal the denial of its motion to compel arbitration.

The issue is whether Hamilton should be compelled to arbitrate. It should if it agreed to do so but only if the agreement was in writing. According to RCW 7.04.010, ‘[t]wo or more parties may agree in writing to submit to arbitration . . . any controversy which may be the subject of an action existing between them[.]’[7] West Star asserts that the letter of June 28 was a written offer to arbitrate; that the letter of July 5 was a written acceptance of that offer; and thus that the parties formed a written agreement to arbitrate.

Even assuming that the letter of June 28 was an offer to arbitrate, however, nothing in the letter of July 5 manifested an acceptance of that offer. The July 5 letter merely enclosed a check, stated a disagreement over the claimed rent, and offered further negotiations. No part of it addressed, much less accepted, a particular form of dispute resolution. Based on this record, no rational trier of fact could find a written agreement to arbitrate. West Star asserts alternatively that the June 28 letter empowered it to accept arbitration by its performance, and that it exercised that power by sending its check. In our view, however, nothing in the letter empowered West Star to accept arbitration merely by sending its check and, even if it had, the statute requires a written manifestation of each party’s agreement to arbitrate. Without reaching or addressing whether West Star waived arbitration by waiting more than a year to move for it, we conclude that there was no written agreement to arbitrate; that RCW 7.04.010 was not satisfied; and that the trial court did not err by denying West Star’s motion to compel arbitration. Affirmed.

A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.

HOUGHTON, J., and QUINN-BRINTNALL, A.C.J., concur.