IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
KING COUNTY, No. 86503-0-I Plaintiff, DIVISION ONE v. UNPUBLISHED OPINION WALSH CONSTRUCTION COMPANY II, LLC, an Illinois limited liability company,
Respondent,
MEARS GROUP INC., a Delaware corporation,
Appellant,
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, a foreign insurance corporation,
Defendant,
FEDERAL INSURANCE COMPANY and LIBERTY MUTUAL INSURANCE COMPANY, Bond No. 82381732- 906003393; and UNDERGROUND SOLUTIONS, INC., a Delaware corporation,
Third-Party Defendants.
HAZELRIGG, C.J. — Walsh Construction Company II LLC filed a pass-
through claim against Mears Group Inc. and later voluntarily dismissed it after the
original claimant dismissed its claims against Walsh. Mears then sought attorney No. 86503-0-I/2
fees, costs, and expenses as the prevailing party under the subcontract’s
indemnification provision, which requires a final determination of fault. The trial
court denied Mears’ motion. Because Walsh’s indemnity claim was no longer live
and no determination of fault occurred, the trial court did not err and we affirm.
FACTS
The underlying facts giving rise to this appeal are set out in detail in this
court’s published opinion in the case between King County and Walsh
Construction Company II as the general contractor, and are only briefly
summarized here. See King County v. Walsh Constr. Co. II, LLC, 27 Wn. App. 2d
156, 158-61, 532 P.3d 182, review denied, 2 Wn.3d 1006 (2023). That case arose
out of a public works contract requiring Walsh to construct and install a conveyance
pipeline for the county. Id. at 158.
Walsh was hired by King County to serve as general contractor for the
project. Walsh then entered into a subcontract with Mears Group Inc. to provide
all equipment and labor for the pipeline’s construction and installation. When the
pipeline broke, King County paid Walsh for repairs, but later filed suit against
Walsh for breach of contract and breach of warranty. Id. In its complaint, King
County identified Walsh and Mears as the parties responsible for the pipeline
damage. Walsh, in turn, tendered defense and indemnity to Mears pursuant to the
subcontract, which contained the following indemnification provision:
9.1. Indemnification. To the fullest extent permitted by law, Subcontractor shall indemnify, defend (with counsel reasonably satisfactory to Contractor), and save harmless Owner, Owner’s Representative, Architect/Engineer, Contractor, and Contractor’s
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surety, as well as any individual and/or entity that Contractor is required by contract to indemnify, defend and/or hold harmless with respect to the Subcontract Work, and their partners, , [sic] parents, members, subsidiaries, related corporations, officers, directors, agents and employees, and each of them, (hereafter collectively “Indemnified Parties” and individually “Indemnified Party”) from and against any and all suits, actions, legal or administrative proceedings, claims, debts, demands, damages, , [sic] liabilities, judgments, fines, penalties, interest, reasonable attorney’s fees, costs and expenses of whatever kind or nature (hereafter “Indemnified Claims”) to the extent caused by any fault or negligence whether active or passive of Subcontractor, or anyone acting under its direction, control, or on its behalf or for which it is legally responsible, in connection with or incident to the Subcontractor’s Work or, to the extent due to Subcontractor’s fault, arising out of any failure of Subcontractor to perform any of the terms and conditions of this Subcontract; without limiting the generality of the foregoing, the same shall include injury or death to any person or persons (including Subcontractor’s employees) and damage to any property, regardless of where located, including the property of Owner and Contractor. Subcontractor’s obligation to provide a defense for an Indemnified Party shall arise regardless of the merits of the matter and shall continue until a final determination of fault is made. Notwithstanding any provision in the Contract Documents to the contrary, Subcontractor’s obligation to indemnify, defend and hold harmless an Indemnified Party shall apply only to Indemnified Claims arising during performance of the Subcontractor’s Work and only to the extent caused by the negligence or other fault of Subcontractor or those for whom Subcontractor is legally liable. The prevailing party shall be entitled to recover from the non-prevailing party the actual attorney fees and court costs and all other costs, expenses and liabilities incurred by the prevailing party in an action brought to enforce all or any part of this Indemnification Article. The obligations described in this paragraph shall not be construed to negate, abridge, or reduce other rights or obligations of indemnity which would otherwise exist as to a party or person described in this paragraph.
(Emphasis added) (boldface omitted). Mears rejected Walsh’s tender of indemnity
but accepted the tender of defense under a reservation of rights, adding terms and
qualifications. Specifically, Mears stated the following:
Section 9.1 provides for the prevailing party to recover attorneys’ fees and costs “to enforce all or any part of this indemnification
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Article.” Should it be determined that Mears has no defense and indemnity obligation, Mears reserves the right to seek recovery of its attorneys’ fees, costs, and expenses from Walsh.
(Emphasis added.) Walsh then filed a third-party complaint against Mears for
breach of contract, breach of contractual obligation to save harmless, duty to
defend, indemnity, performance bond, and attorney fees. 1 Walsh’s indemnity
claims were derivative pass-through claims from King County. Walsh repeatedly
noted that its claims against Mears were “as alleged by King County,” and it was
“re-tender[ing] King County’s claims to Mears.” For the breach of indemnity claim,
Walsh argued that Mears owed an obligation to indemnify “[i]n the event that Walsh
pays or is legally adjudged to pay damages to King County as a result of alleged
work negligently performed or performed with fault by Mears.”
After extensive litigation, King County moved for partial summary judgment,
which the trial court granted. Mears then filed its own motion for summary
judgment to dismiss Walsh’s claims, limit Mears’ liability, and award Mears its
prevailing party attorney fees and costs pursuant to the terms of the subcontract.
However, the motion was continued pending Walsh’s appeal of the trial court’s
order granting King County’s motion. The court never considered or decided the
arguments Mears raised in its motion.
Meanwhile, this court reversed and remanded the trial court’s order that
granted King County’s motion. Walsh Constr. Co. II, 27 Wn. App. 2d at 165. On
remand, King County voluntarily dismissed its claims against Walsh under CR 41.
Walsh then moved to voluntarily dismiss its derivative third-party claims against
1 Walsh filed similar claims against another subcontractor, Underground Solutions Inc. (UGSI).
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Mears. Mears did not oppose dismissal, but asked the trial court to retain
jurisdiction to consider its request for prevailing party fees. Walsh responded,
arguing that its third-party complaint was based solely on “claims as alleged by
King County” and the only fee provision in the subcontract was in the indemnity
clause. The trial court granted dismissal without prejudice, but it retained
jurisdiction for Mears to file its fee request within 10 days.
10 days later, Mears filed a notice of hearing for its fee request and a fee
declaration with timesheets that appeared to support a request for $505,733 in
fees and costs, but did not file an accompanying motion. Walsh then moved to
shorten time, arguing that any fee motion from Mears would not be timely and the
trial court should not consider it. Walsh further asserted that Mears would need to
show excusable neglect before the court could hear the motion.
15 days after the trial court’s deadline, Mears filed its motion for fees, costs,
and expenses. The following day, Mears sought to enlarge time, claiming that it
had needed more time to gather the necessary information. The trial court found
excusable neglect and allowed the late-filed fee motion, noting that Walsh was not
prejudiced by the delay, but ultimately denied it.
Mears timely appealed.
ANALYSIS
Mears’ appeal seeks solely a determination of whether a fee award applies
in a pass-through indemnification action when resolved by voluntarily dismissal of
the claims. It is undisputed that the subcontract at issue here lacks a stand-alone
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attorney fee provision. The only relevant fee provision appears in the indemnity
clause that allows for fee recovery in actions to enforce indemnification rights.
Mears avers that it is entitled to fees because it qualifies as the prevailing
party because Walsh dismissed its claims, and the indemnity provision entitles the
prevailing party to fees and costs. Walsh, in contrast, contends that the indemnity
provision does not apply because Mears’ duty to indemnify, defend, and hold
Walsh harmless continues until a final determination of fault, which never
happened here due to the voluntary dismissal based on the resolution in the
original litigation.
Under Washington law, each side must bear their own attorney fees unless
a contract, statute, or a recognized ground in equity authorizes a fee award. 2 See
Schmidt v. Coogan, 181 Wn.2d 661, 679, 335 P.3d 424 (2014) (plurality opinion).
This court applies a two-part standard of review to a trial court’s denial of attorney
fees: first, de novo review of the legal basis for awarding attorney fees, and then,
an abuse of discretion review of the trial court’s decision to award or deny attorney
fees. Park Place Motors, Ltd. v. Elite Cornerstone Constr., LLC, 18 Wn. App. 2d
748, 753, 493 P.3d 136 (2021).
The interpretation of a contractual attorney fee provision is a legal question
reviewed de novo. See Newport Yacht Basin Ass’n of Condo. Owners v. Supreme
Nw., Inc., 168 Wn. App. 86, 97, 285 P.3d 70 (2012). Indemnity contracts
“must receive a reasonable construction so as to carry out, rather than defeat, the purpose for which they were executed. To this end they should neither, on the one hand, be so narrowly or technically
2 Mears concedes that a statutory basis for attorney fees is not applicable and argues
exclusively for attorney fees on a contractual ground, the bilateral fee provision. We accept Mears’ concession.
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interpreted as to frustrate their obvious design, nor, on the other hand, so loosely or inartificially as to relieve the obligor from a liability within the scope or spirit of their terms.”
Snohomish County Pub. Transp. Benefit Area Corp. v. FirstGroup Am., Inc., 173
Wn.2d 829, 835, 271 P.3d 850 (2012) (internal quotation marks omitted) (quoting
McDowell v. Austin Co., 105 Wn.2d 48, 53-54, 710 P.2d 192 (1985).
We interpret indemnity provisions using fundamental rules of contract
construction, giving words their ordinary meaning. Cambridge Townhomes, LLC
v. Pac. Star Roofing, Inc., 166 Wn.2d 475, 487, 209 P.3d 863 (2009). “‘Where the
terms of a contract are plain and unambiguous, the intention of the parties shall be
ascertained from the language employed.’” Cornish Coll. of Arts v. 1000 Va. Ltd.
P’ship, 158 Wn. App. 203, 231, 242 P.3d 1 (2010) (internal quotation marks
omitted) (quoting Marine Enters., Inc. v. Sec. Pac. Trading Corp., 50 Wn. App. 768,
773, 750 P.2d 1290 (1988)). To determine the parties’ intent, we view “the contract
as a whole, the subject matter and objective of the contract, all the circumstances
surrounding the making of the contract, the subsequent acts and conduct of the
parties to the contract, and the reasonableness of respective interpretations
advocated by the parties.” Stender v. Twin City Foods, Inc., 82 Wn.2d 250, 254,
510 P.2d 221 (1973); see also Berg v. Hudesman, 115 Wn.2d 657, 666, 801 P.2d
222 (1990).
During oral argument before this court, Mears asserted that the subcontract
distinguishes between defense and indemnity obligations and the duty to defend
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continues until a final determination of fault, while indemnity does not. 3 Mears
claims that Walsh conflates these obligations and misinterprets the prevailing party
provision. 4 This piecemeal approach risks distorting the parties’ agreed
obligations. We are required to read the contract as a whole and give effect to all
provisions to ensure they function cohesively rather than allowing one clause to be
construed in a way that nullifies or diminishes another. See Nishikawa v. U.S.
Eagle High, LLC, 138 Wn. App. 841, 849, 158 P.3d 1265 (2007) (holding contracts
must be interpreted to harmonize all clauses that seem to conflict and give effect
to all provisions).
Walsh contended at oral argument that the trial court properly denied Mears’
motion because the indemnity provision was never triggered and the subcontract
does not contain a bilateral indemnity provision. 5 In its briefing, Walsh argues that
the plain language of the indemnity provision requires Mears to defend and
indemnify “until a final determination of fault is made.” The provision also obligates
Mears to defend “any and all” claims, regardless of merit. Because no final
determination of fault was reached, Walsh avers that Mears has no contractual
basis to claim fees. Furthermore, Walsh asserts that Mears’ expenses stemmed
from defending its own work in the underlying action rather than enforcing the
indemnity provision. And, since the subcontract has no stand-alone prevailing-
3 Wash. Ct. of Appeals oral arg., Mears Grp., Inc. v. Walsh Constr. II, LLP, No. 86503-0-I
(Mar. 12, 2025), at 1 min., 37 sec., video recording by TVW, Washington State’s Public Affairs Network, https://tvw.org/video/division-1-court-of-appeals-2025031278/. 4 Id. at 1 min., 47 sec. 5 Id. at 15 min., 16 sec.
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party fee provision, 6 the prevailing-party fee provision is only available for
enforcing the indemnity clause.
Mears insists that it seeks only fees, costs, and expenses incurred in
defending against Walsh’s third-party lawsuit. Yet, Mears concedes in briefing that
its fault had to be addressed in order to trigger an entitlement to fees under the
indemnity provision and its indemnity obligation was limited to losses solely
resulting from its own fault, even if the subcontract required a defense irrespective
of fault. Still, it objects to limiting the prevailing party provision.
Mears does not qualify as a prevailing party in the indemnity action brought
by Walsh here. Walsh’s third-party complaint arose from the subcontract’s
indemnity clause, which required Mears to indemnify and defend Walsh in the
underlying litigation “until a final determination of fault is made.” The relevant
portion of the subcontract states the following:
9.1. Indemnification. To the fullest extent permitted by law, Subcontractor shall indemnify, defend (with counsel reasonably satisfactory to Contractor), and save harmless . . . from and against any and all suits, actions, legal or administrative proceedings, claims, debts, demands, damages, , [sic] liabilities, judgments, fines, penalties, interest, reasonable attorney’s fees, costs and expenses of whatever kind or nature (hereafter “Indemnified Claims”) to the extent caused by any fault or negligence whether active or passive of Subcontractor . . . Subcontractor’s obligation to provide a defense for an Indemnified Party shall arise regardless of the merits of the matter and shall continue until a final determination of fault is made. . . . The prevailing party shall be entitled to recover from the non- prevailing party the actual attorney fees and court costs and all other costs, expenses and liabilities incurred by the prevailing party in an action brought to enforce all or any part of this Indemnification Article.
6 UGSI’s subcontract, though not at issue here, included a stand-alone attorney fee
provision. UGSI recovered its attorney fees after prevailing on summary judgment against Walsh, which had challenged the validity and enforceability of a contractual limitation of liability provision, and because Walsh had not produced any evidence to support any of its claims against UGSI, all of which were contract-based.
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(Emphasis added) (boldface omitted). For the purposes of a contractual provision
for an award of attorney fees, a prevailing party is usually one who secures
judgment in its favor. Crest Inc. v. Costco Wholesale Corp., 128 Wn. App. 760,
772, 115 P.3d 349, 355 (2005); see also Eagle Point Condo. Owners Ass’n v. Coy,
102 Wn. App. 697, 706, 9 P.3d 898 (2000); RCW 4.84.330 (“prevailing party” is
defined as “the party in whose favor final judgment is rendered”).
A “final judgment” is “a court's last action that settles the rights of the parties and disposes of all issues in controversy, except for the award of costs (and, sometimes, attorney’s fees) and enforcement of the judgment.” BLACK'S LAW DICTIONARY 971 (10th ed. 2014). A voluntary dismissal is not a final judgment by this definition when it “leaves the parties as if the action had never been brought.” Wachovia [SBA Lending, Inc. v. Kraft, 165 Wn.2d 481, 492, 200 P.3d 683 (2009)]. On the other hand, a voluntary dismissal is a final judgment when the court elects to dismiss with prejudice because then it does not leave the parties as if the action had never been brought.
Elliott Bay Adjustment Co., Inc. v. Dacumos, 200 Wn. App. 208, 214, 401 P.3d 473
(2017). The term “substantially prevails” is included in many attorney fee
provisions and applies when neither party wholly prevails and the determination
turns on the extent of the relief awarded to the parties. See Mike’s Painting, Inc.
v. Carter Welsh, Inc., 95 Wn. App. 64, 68, 975 P.2d 532 (1999); Crest Inc., 128
Wn. App. at 772; Transpac Dev., Inc. v. Young Suk Oh, 132 Wn. App. 212, 217,
130 P.3d 892 (2006).
Mears avers that Walsh’s dismissal of all claims renders Mears the
prevailing party. It relies on this court’s opinion in Walji v. Candyco Inc., 57 Wn.
App. 284, 288, 787 P.2d 946 (1990) to argue that “[u]nder the general rule, the
defendant is regarded as having prevailed when the plaintiff obtains a voluntary
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nonsuit.” It asserts that Walji explained that when determining the meaning of
prevailing party in cases with a bilateral attorney fee provision, statutory fee
provisions such as those in RCW 4.84.330 would not apply. While Mears is correct
as to its characterization of that holding, Walji is factually distinct from the case
before us and, thus, is not controlling here.
In Walji, Queen Anne Group filed a lawsuit to enforce a commercial lease
against Candyco. 57 Wn. App. at 286. The lawsuit was subject to mandatory
arbitration, where Queen Anne Group did not prevail. Id. Queen Anne Group then
sought a trial de novo, and, just before trial, moved to amend its complaint after
discovering that it had been administratively dissolved prior to the lawsuit. Id. It
asked that its former shareholders be substituted as plaintiffs. Id. The trial court
denied the motion but eventually allowed Queen Anne Group to take a nonsuit
under CR 41(a)(2). Id. The court granted attorney fees to Candyco under a
prevailing party attorney fee provision in the lease. Id. That provision stated that
“‘the prevailing party shall be entitled to a reasonable attorneys’ fee and all costs
and expenses expended or incurred in connection with such default or action.’” Id.
at 287 (emphasis omitted).
On appeal, Queen Anne Group argued that the trial court erred in granting
attorney fees to Candyco. Id. It contended that the definition of “prevailing party”
in RCW 4.84.330 must be used in interpreting the lease provision. Id. RCW
4.84.330 defines “prevailing party” as “the party in whose favor final judgment is
rendered.” However, the court noted that Queen Anne Group cited no authority,
or offered any compelling legal reason, for adopting the statutory definition of
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“prevailing party” in interpreting the provision. Id. at 288. The court then stated,
“At the time of a voluntary dismissal, the defendant has ‘prevailed’ in the
commonsense meaning of the word.” Id. (emphasis added). It further indicated,
consistent with controlling case law, “In interpreting the lease, the intentions of the
parties are to be given effect.” Id. It then concluded that there was “no reason to
believe that the parties intended to incorporate [the] statutory definition, which is
not even the usual legal definition.” Id.
Our Supreme Court in Wachovia also clarified that Walji did not create a
general rule equating voluntary dismissal with a final judgment for the purposes of
determining a prevailing party. 165 Wn.2d at 490. It explained, “Walji merely held
that the statutory definition of ‘prevailing party’ under RCW 4.84.330 could not be
imposed where there was already a bilateral contract.” Id. Our Supreme Court in
AllianceOne Receivables Management Inc. v. Lewis further reaffirmed Wachovia
to mean that “there is no default rule that permits the award of attorney fees
following voluntary dismissal of a claim under CR 41(a)(1)(B).” 180 Wn.2d 389,
398, 325 P.3d 904 (2014). “‘[W]here neither party prevails with a final judgment,
neither party is entitled to attorney fees.’” Id. (alteration in original) (quoting
Wachovia, 165 Wn.2d at 492).
Mears concedes that the subcontract it has with Walsh is bilateral and that
it is “not seeking fees under RCW 4.84.330.” Instead, it argues that the
commonsense definition of prevailing party, as discussed in Walji, renders Mears
the prevailing party. As we established, Walji is distinguishable. In addition to the
reasons previously described, this is separately so because it involved an
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arbitration loss that occurred prior to dismissal. 57 Wn. App. at 286. Furthermore,
the panel in Walji emphasized that
[v]oluntary nonsuits may come shortly after service before discovery even starts, or may come after days of trial before a jury. The decision as to whether a particular voluntary nonsuit should trigger attorney fees should be left to the discretion of the trial judge in light of the circumstances of the particular case, whether interpreting a contract clause or a statute.
Id. at 290 (emphasis added). The fee provision at issue here is embedded in the
indemnity clause, which states that the indemnification obligations are resolved
only upon a final determination of fault. No such final determination occurred here.
During oral argument before this court, Mears also relied on Andersen v.
Gold Seal Vineyards Inc. 7 and incorrectly claimed that it involved a bilateral fee
provision. 8 In Andersen, the defendant voluntarily dismissed a third-party
indemnity action several days into trial and sought attorney fees under RCW
4.28.185(5), Washington’s long-arm statute, not a bilateral agreement. 81 Wn.2d
at 868. Mears’ concession that its basis for attorney fees here is contractual
renders Andersen inapplicable. 9
Walsh’s voluntary nonsuit of the claims against Mears followed King
County’s dismissal under CR 41 of its suit against Walsh. King County’s voluntary
dismissal eliminated Walsh’s pass-through claim, effectively terminating Walsh’s
7 81 Wn.2d 863, 868, 505 P.2d 790 (1973). 8 Wash. Ct. of Appeals oral arg., supra, at 4 min., 42 sec. 9 Other cases Mears offers do not advance its position either. None involve the application of an indemnity provision as a basis for attorney fees or similar factual scenarios. See W. Stud Welding, Inc. v. Omark Indus., Inc., 43 Wn. App. 293, 295, 716 P.2d 959 (1986) (involving plaintiff who obtained voluntary dismissal with prejudice on its claims for fraud, breach of fiduciary duty, and interference with contractual relationship); Cork Insulation Sales Co. v. Torgeson, 54 Wn. App. 702, 705, 775 P.2d 970 (1989) (concerning defendant who requested attorney fees under RCW 4.84.250, which only applies in circumstances involving entry of judgment after trial).
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contractual right to indemnification and defense until a final determination of fault.
Even under the usual definition of “prevailing party” as defined in Walji, Mears did
not prevail in any practical sense. And, because the dismissal of the underlying
claim eliminated any need for indemnification, Mears did not prevail in any “action
brought to enforce all or any part of” the indemnification provision. The
indemnification claim never proceeded to trial or arbitration. Although Mears
moved for summary judgment, that motion was continued and never ruled on.
Because Walsh’s indemnity claim was no longer live, there was no controversy on
which Mears could have prevailed. Accordingly, no legal basis in the subcontract
or elsewhere supports an attorney fee award and we need not engage in the
second step of the analysis: whether the trial court abused its discretion in its denial
of Mears’ request for fees. 10
Affirmed.
WE CONCUR:
10 Mears further contends that, had the trial court fully considered the evidence supporting
its requested fees and costs, it would have deemed the amount appropriate. Mears also requests fees on appeal pursuant to RAP 18.1(b). Because Mears is not entitled to attorney fees under the indemnification provision, we need not address its arguments regarding reasonableness or its appellate fee request. Similarly, because Mears is not entitled to attorney fees under the indemnification provision, we need not address Walsh’s alternative argument that the trial court’s denial should be affirmed because Mears’ fee request was untimely and it failed to establish excusable neglect for the late-filed motion.
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