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Court of Appeals Division II
State of Washington

Opinion Information Sheet

			

    IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

                                        DIVISION II

SWINERTON BUILDERS NORTHWEST, 
INC., a Delaware corporation,
                             Appellant,                           No. 40924-1-II
                                                         Consolidated with No. 41780-4-II
       v.
                                                            UNPUBLISHED OPINION
KITSAP COUNTY, a Washington municipal 
corporation,
                             Respondent.

       Van Deren, J.  --  Kitsap County contracted with Swinerton Builders Northwest, Inc. to 

construct a county administration building.  At issue in these consolidated appeals is whether the 

trial court erred in granting summary judgment to Kitsap County in Swinerton's breach of 

contract claim against the County and whether the trial court earlier erred in denying Swinerton's 

motion to compel arbitration in that lawsuit.  We hold that summary judgment was properly 

granted to the County because the parties' stipulation and dismissal order bars Swinerton's breach 

of contract claims.  We also resolve the arbitration matter on alternative threshold issues:  No 

arbitration agreement existed between the parties and the claims that Swinerton seeks to arbitrate 

are barred by the parties' prior stipulation.  We affirm the trial court decisions in each of the 

consolidated cases.   

No. 40924-1-II, consolidated with No. 41780-4-II

                                            FACTS

       This is the second lawsuit involving Swinerton and Kitsap County arising out of a single 

construction project.  See M.B. Diddy Const., Inc. v. Swinerton Builders, Northwest, et al., 152 

Wn. App. 1044, 2009 WL 3337249, at *1 (2009), review denied, 168 Wn.2d 1033 (2010).  In the 

first suit,1 subcontractor Diddy Construction sued general contractor Swinerton and Kitsap 

County for breach of contract regarding earthwork services that Diddy performed on a building 

project.  Diddy, 2009 WL 3337249, at *1.  The parties settled their dispute and the case was 

dismissed with prejudice after the parties (including Kitsap County) signed a broad written 

stipulation and order of dismissal prepared by Swinerton's and Diddy's attorneys.  Diddy, 2009 

WL 3337249, at *1.  The stipulation stated in relevant part:

              COMES NOW, Plaintiff M.B. Diddy Construction, Inc. and Defendants 
       Swinerton Builders Northwest . . . and Kitsap County Administration, by and 
       through their undersigned attorneys of record, and stipulate that all claims asserted 
       herein, or which could have been asserted herein, by and between them, shall be 
       dismissed with prejudice, without admission of liability, and without costs to any 
       party.  
              The parties to this action hereby release and discharge each other, their 
       employees, officers, agents, successors, assigns, and sureties from any [and] all 
       claims, demands, causes of action and liabilities . . . , known or unknown, asserted 
       or unasserted . . . arising from the Project in any manner.  

Diddy, 2009 WL 3337249, at *1.  The dismissal order was similarly broad and stated, "[A]ll 

claims asserted herein, or which could have been asserted herein, by and between Plaintiff M.B. 

Diddy Construction, Inc. and Defendants Swinerton Builders Northwest . . . and Kitsap County 

Administration, are hereby dismissed with prejudice, and without costs to any party."  Diddy, 

2009 WL 3337249, at *1.  

1 Background facts are from the prior appeal involving these parties and resolved in a Division I 
unpublished opinion at Diddy, 2009 WL 3337249.  
                                               2 

No. 40924-1-II, consolidated with No. 41780-4-II

       A superior court judge entered the stipulation and signed an order of dismissal on January 

15, 2008.  Diddy, 2009 WL 3337249, at *1.  The following day, Swinerton served Kitsap County 

with a new complaint for breach of contract regarding the ongoing construction of the county 

administration building.  Diddy, 2009 WL 3337249, at *1.  In response to this second lawsuit, the 

County notified Swinerton of its intent to move for summary judgment based on the January 15, 

2008 stipulation and order of dismissal.  Diddy, 2009 WL 3337249, at *1.  Swinerton and Diddy 

filed a joint motion asking the trial court to vacate the stipulation and order of dismissal, arguing 

that the language releasing claims against Kitsap County constituted a mistake under CR 60(b)(1).  

Diddy, 2009 WL 3337249, at *1.  The trial judge granted their motion and vacated the stipulation 

and order of dismissal.  Diddy, 2009 WL 3337249, at *1.  

       The County then appealed, arguing that under Washington law "'poorly drafted 

language'" or other errors by an attorney do not constitute sufficient grounds to vacate a 

judgment under CR 60(b)(1). 2  Diddy, 2009 WL 3337249, at *2.  Division One of this court 

ultimately agreed with the County and reversed, holding that the trial court abused its discretion in 

vacating the stipulation and order of dismissal.  Diddy, 2009 WL 3337249, at *4.  Our Supreme 

Court denied Diddy and Swinerton's petition for review.  Diddy, 168 Wn.2d 1033 (2010).  

Thereafter, on June 17, 2010, the trial court entered an order reinstating the stipulation and order 

of dismissal.  

       Meanwhile, on June 16, 2010, Swinerton filed a motion to lift the stay in its breach of 

contract case and a motion to compel arbitration with the County on that claim.  The County filed 

2 Swinerton's breach of contract suit (i.e., the second lawsuit), Kitsap County Cause No. 08-2-
00045-3, was stayed during the County's appeal of the trial court's order vacating the stipulation 
in Kitsap County Cause No. 06-2-01941-7.

                                               3 

No. 40924-1-II, consolidated with No. 41780-4-II

a motion for summary judgment in the breach of contract suit on June 18, 2010.  It argued both in 

its summary judgment motion and in its response to Swinerton's motion to compel arbitration that 

Swinerton had waived all claims against the County through the stipulation and dismissal in the 

prior Diddy-Swinerton-County suit and, thus, there was no basis on which Swinerton could 

pursue its breach of contract claims (either through arbitration or through the trial court).  

       Swinerton's motion to compel arbitration was decided six months before the County's 

summary judgment motion.  At the July 2, 2010, hearing on Swinerton's motion to compel 

arbitration, the County responded, "[W]e do deny that there is an arbitration [agreement]."  

Report of Proceedings (RP) (No. 40924-1-II) at 5.  The County primarily argued that 

Swinerton's motion to compel arbitration was without merit because Swinerton had entered into a 

written stipulation and order of dismissal that was dispositive of Swinerton's motion and 

precluded the filing of the second suit claiming breach of contract.  The County's attorney also 

said, "I can and am ready to address the arbitration provisions if the Court believes that is

necessary, but I don't believe it appropriate to waste County expenses to respond to something 

that was a frivolous motion, and I can address the arbitration clause if the Court would like me to 

do that." RP (No. 40924-1-II) at 8.  

       The trial court heard from Swinerton's attorney regarding the County's argument that 

neither the motion to compel arbitration nor the breach of contract claim was meritorious because 

of the stipulation and order of dismissal in the earlier lawsuit.  Swinerton's attorney responded 

that the stipulation and order of dismissal on which the County relied was ambiguous and because 

"there is an arbitration agreement between the parties," questions arising out of such ambiguity 

"should be addressed by an arbitrator and not by the Court." RP (No. 40924-1-II) at 13, 12.  

                                               4 

No. 40924-1-II, consolidated with No. 41780-4-II

       In ruling, the trial court did not address the existence of an arbitration agreement.  Instead, 

it denied Swinerton's motion to compel arbitration based on the stipulation and order of dismissal 

of the prior lawsuit, stating, "In reading the language of the stipulation, the order quite clearly 

states that any and all claims between M.B. Diddy, Swinerton Builders, and Kitsap County [are] 

released and dismissed with prejudice.  I think that language is very clear, and on that basis I am 

denying [Swinerton's] motion." RP (No. 40924-1-II) at 14.  

       Swinerton immediately appealed the trial court's denial of its motion to compel arbitration 

(No. 40924-1-II) and this notice of appeal stayed matters in the trial court, including the County's 

summary judgment motion.  We ultimately granted the County's motion to allow trial court action 

on its motion for summary judgment.  See Order Granting Motion to Modify (granting the 

County's motion to allow the trial court to hear and decide the County's summary judgment 

motion while Swinerton's appeal of the order denying its motion to arbitrate was pending), 

Swinerton Builders NW, Inc. v. Kitsap County, No. 40924-1-II (Wash. Ct. App., Oct. 14, 2010).  

       The trial court heard the County's summary judgment motion on January 14, 2011.  

Noting that the stipulation "addresse[d] potential future actions," and finding no issue of material 

fact, the trial court granted the County's motion.  RP (No. 41780-4-II) at 12.  Swinerton 

appealed that order and that appeal was pending under our cause number 41780-4-II when we 

held oral argument on Swinerton's appeal of the trial court's denial of its motion to arbitrate the 

new dispute on June 30, 2011.  Following oral argument, we stayed consideration in Swinerton's 

appeal on the arbitration motion and consolidated it with Swinerton's appeal of the trial court's 

later summary judgment order.  We now consider the consolidated cases.  

                                          ANALYSIS

                                               5 

No. 40924-1-II, consolidated with No. 41780-4-II

       We first address the trial court's order granting summary judgment to the County based 

on the stipulation and order of dismissal entered in the earlier dispute among Diddy, Swinerton, 

and the County.  This is dispositive in this instance, but we attempt to briefly address Swinerton's

appeal of the trial court's denial of its motion to compel arbitration of its contract dispute to 

clarify that the contract between Swinerton and the County did not contain an arbitration 

provision.

I.     Summary Judgment

       A.  Standard of Review

       We review an order granting summary judgment de novo, engaging in the same inquiry as 

the trial court.  In re Estate of Black, 153 Wn.2d 152, 160, 102 P.3d 796 (2004); Hisle v. Todd 

Pac. Shipyards Corp., 151 Wn.2d 853, 860, 93 P.3d 108 (2004).  Summary judgment is 

appropriate when there is no genuine issue of material fact and the moving party is entitled to 

judgment as a matter of law.  CR 56(c).  The moving party has the burden of proving that there is 

no genuine issue of material fact.  Black, 153 Wn.2d at 160 -- 61.  If the moving party meets its 

burden, the burden shifts to the nonmoving party to "'set forth specific facts showing that there is 

a genuine issue for trial.'"  Black, 153 Wn.2d at 161 (quoting LaPlante v. State, 85 Wn.2d 154, 

158, 531 P.2d 299 (1975)).  The nonmoving party must set forth evidentiary facts and cannot 

meet its burden by relying on "speculation, argumentative assertions that unresolved factual issues 

remain, or in having its affidavits considered at face value."  Seven Gables Corp. v. MGM/UA

Entm't Co., 106 Wn.2d 1, 13, 721 P.2d 1 (1986).  In determining whether a genuine issue exists, 

we construe the facts and reasonable inferences from them in the light most favorable to the 

nonmoving party.  Black, 153 Wn.2d at 160 -- 61.  

                                               6 

No. 40924-1-II, consolidated with No. 41780-4-II

       B.  Same Parties

       Swinerton first argues that summary judgment, based on the prior stipulation and order of 

dismissal, was improperly granted because a material issue of fact exists about whether the parties 

to the stipulation and the parties in the present lawsuit are the same.  We disagree.  

       Swinerton argues that "Kitsap County was not a party to the M.B. Diddy Stipulation and 

Order of Dismissal." Second Br. of Appellant (No. 40924-1-II) at 9.  Swinerton relies on the fact 

that the stipulation names Kitsap County Administration as a defendant and stipulating party, 

while the breach of contract case names Kitsap County as defendant.  But Swinerton offers no 

explanation about how the inclusion of the word "administration" denotes separate and distinct 

legal entities between Kitsap County and Kitsap County Administration.  Both designations 

clearly refer to the Kitsap County government.3  

       Also, throughout the various proceedings, Swinerton has repeatedly referred to the 

government entity defendant in the Diddy-Swinerton-County lawsuit as "Kitsap County."  

Swinerton acknowledged in its oral arguments before the superior court4 and briefing in the 

3 Swinerton notably does not contend that different parties were served in the two lawsuits.  Also, 
the County is represented by the same counsel in both lawsuits.  

4 At the July 2, 2010, hearing on Swinerton's Motion to Compel Arbitration, Swinerton's counsel 
stated that "Kitsap County was listed . . . as a defendant" in the original lawsuit.  RP (No. 40924-
1-II) at 9.  Similarly, at the September 26, 2008, hearing on the Swinerton/Diddy joint motion to 
vacate the stipulation and order of dismissal, Swinerton's counsel identified the County as a 
named party in the first lawsuit.  

                                               7 

No. 40924-1-II, consolidated with No. 41780-4-II

Court of Appeals5 and in our Supreme Court6 that "Kitsap County" was in fact a party to that first 

lawsuit.  

       Moreover, the Division One unpublished decision in the Diddy appeal acknowledged that 

the case caption and the stipulation and dismissal order then at issue identified the involved 

governmental party as "Kitsap County Administration."  2009 WL 333724, at *1.  But in 

discussing the "undisputed" facts, Division One noted that Diddy "sued Kitsap County."  Diddy,

2009 WL 3337249, at *1 (emphasis added).  Division One held that "Diddy and Swinerton's 

attorneys, with their clients' authority, drafted and entered into the stipulation and order of 

dismissal with Kitsap County."  Diddy, 2009 WL 3337249, at *4 (emphasis added).  

       Swinerton must do more than baldly allege that Kitsap County was not a party to the 

stipulation and order of dismissal in the first lawsuit.  See Seven Gables, 106 Wn.2d at 13 

(nonmoving party must set forth evidentiary facts and cannot meet its burden by relying on 

5 In Diddy/Swinerton's joint respondents' brief in Division Two Court of Appeals Cause No. 
38457-4-II (Appeal of Order Granting Motion to Vacate Stipulation and Order of Dismissal), 
Swinerton acknowledged, "M.B. Diddy and Swinerton filed a stipulation and order of dismissal 
that the County signed."  Clerk's Papers (CP) (No. 41780-4-II) at 258 (emphasis added).  The 
same brief also acknowledged "M.B. Diddy also named the County as a nominal defendant. . . . 
The County also appeared." CP at 259 (No. 41780-4-II) (emphasis added) (footnote omitted).  
       In the arbitration appeal (No. 40924-1-II), Swinerton filed a document entitled 
"Appellant's Opposition to Respondent's Motion to Permit Trial Court Action," in which 
Swinerton stated, "[T]he County focuses on the resolution of a prior lawsuit in which Swinerton 
was sued by M.B. Diddy, a subcontractor that had performed work on the Project.  The 
subcontractor alleged breach of contract claims against Swinerton and named the County as a 
defendant . . ." CP (No. 41780-4-II) at 268, 272 (emphasis added) (capitalization altered).  

6 In Swinerton's petition for review regarding Diddy, 2009 WL 3337249 (Division One's reversal 
of the trial court's order vacating the trial court's prior order, which granted Swinerton's motion 
to vacate the stipulation and order of dismissal in the first lawsuit), Swinerton stated, "Diddy also 
alleged a claim against Swinerton's retainage fund, naming the County as merely a nominal party."  
CP (No. 41780-4-II) at 265 (emphasis added).  Swinerton's petition also stated, "because the 
County was also a party of record they had the County's attorney sign [the Stipulation and Order 
of Dismissal]." CP (No. 41780-4-II) at 266 (emphasis added).  
                                               8 

No. 40924-1-II, consolidated with No. 41780-4-II

speculation, argumentative assertions that unresolved factual issues remain, or in having its 

affidavits considered at face value).  In light of this record, we hold that there is no material 

factual question about whether Kitsap County was a party to the first lawsuit.  

       C.  Unripe Claims

       Swinerton next argues that the trial court erred in granting Kitsap County summary 

judgment because the Diddy stipulation and dismissal order did not cover Swinerton's present 

breach of contract claims against the County.  Swinerton argues that when the parties entered into 

the Diddy stipulation and dismissal, the administrative procedures for claims and disputes in its 

contract with the County had not been exhausted as to Swinerton's breach of contract claims.  

Thus, Swinerton contends, such claims were not ripe under the terms of the stipulation and were 

not waived by that stipulation.  We disagree.  

       Swinerton's argument relies on language appearing in the first paragraph of the 

stipulation, noting that the signing parties "stipulate that all claims asserted herein, or which could 

have been asserted herein, by and between them, shall be dismissed with prejudice."  Clerk's 

Papers (CP) (No. 41780-4-II) at39.  Swinerton's view is that its breach of contract claims do not 

qualify as claims that "could have been asserted" in the Diddy lawsuit because the claims were not 

yet ripe.  But that view ignores the second paragraph of the stipulation, which additionally 

provides that "[t]he parties to this action hereby release and discharge each other, their 

employees, officers, agents, successors, assigns, and sureties from any [and] all claims, demands, 

causes of action and liabilities . . . known or unknown, asserted or unasserted . . . arising from the 

Project in any manner."  CP (No. 41780-4-II) at 39.  This language is not limited to ripe claims 

(i.e., claims that could have been asserted in the Diddy lawsuit), and by its express terms waives 

                                               9 

No. 40924-1-II, consolidated with No. 41780-4-II

all claims arising from "the Project" in any manner, even if unknown or unasserted.7 CP (No. 

41780-4-II) at 39.  

       A valid stipulation is binding unless fraud, mistake, misunderstanding, or lack of 

jurisdiction is established.  De Lisle v. FMC Corp., 41 Wn. App. 596, 597, 705 P.2d 283 (1985);

cf. Estate of Harford, 86 Wn. App. 259, 266, 936 P.2d 48 (1997) (trial court's decision to vacate 

a stipulated order under CR 60(b) reversed where court found only that a unilateral mistake was 

made). Division One of our court previously determined that the stipulation binds Swinerton, 

stating, "Diddy and Swinerton's attorneys, with their clients' authority, drafted and entered into 

the stipulation and order of dismissal with Kitsap County. Accordingly, Diddy and Swinerton are 

bound by the acts of their attorneys including their attorneys' mistakes in drafting the stipulation 

and order."  Diddy, 2009 WL 3337249, at *4 (footnote omitted).  Because Swinerton's breach of 

contract claims arise from the project, we hold the stipulation bars these claims.  

       D.  Arbitration

       Swinerton next contends that the trial court improperly granted summary judgment 

because the parties had agreed to arbitrate disputes and, thus, the trial court lacked jurisdiction to 

decide the County's summary judgment motion.  This contention is resolved on alternative 

threshold matters.  First, Swinerton's argument is built on the underlying contention that the 

parties incorporated American Institute of Architects (AIA) A201 arbitration provisions into their 

7 We do not suggest that any agency named even as a nominal party to a lawsuit must respond 
with all potential or actual claims to avoid a later bar to assertion of those claims.  The broad 
language of the stipulation here encompasses the entire project involved in constructing the new 
county administration building.  And although the stipulation provides exceptions to this release 
(i.e., for contractual warranty claims, claims for defective work or products, or indemnity 
obligations owed for work performed on the project and for Diddy's negligence), Swinerton does 
not contend that any of the exceptions apply to its breach of contract claims against the County.  
                                               10 

No. 40924-1-II, consolidated with No. 41780-4-II

contract by way of the change orders executed on the project.  We address that contention in Part 

II of this opinion, which addresses Swinerton's challenges to the trial court's denial of 

Swinerton's motion to compel arbitration.  For the reasons discussed therein, the parties did not 

incorporate AIA A201 arbitration provisions into their contract.  Accordingly, Swinerton's 

assertion that the trial court lacked jurisdiction to address the summary judgment motion because 

of the incorporated arbitration provisions fails.  

       Alternatively, as we discussed above, Swinerton is bound by the stipulation in any event.  

As noted, the stipulation bars Swinerton's claims against the County "arising from the Project in 

any manner." CP (No. 41780-4-II) at 39.   

       E.  Res Judicata

       Swinerton next argues that res judicata does not bar its breach of contract suit against the 

County. Given the facts of this case, we disagree.8  

       The purpose of the doctrine of res judicata is to ensure the finality of judgments.  Hayes v. 

City of Seattle, 131 Wn.2d 706, 712, 934 P.2d 1179, 943 P.2d 265 (1997).  "Under this doctrine, 

a subsequent action is barred when it is identical with a previous action in four respects: (1) same 

subject matter; (2) same cause of action; (3) same persons and parties; and (4) same quality of the 

persons for or against whom the claim is made."  Hayes, 131 Wn.2d at 712.  

       Here because Swinerton and the County were parties in the first suit, the third factor is 

met.  As for the remaining factors, the breadth of the agreed stipulation and order that resolved 

8 The County argued to the trial court that the stipulation's release of all claims alone required 
summary judgment dismissal of Swinerton's claims.  The County, noting that the trial court need 
not reach any other issue, alternatively argued that res judicata also required dismissal of 
Swinerton's suit.  In granting summary judgment, the trial court appears to have relied on only the 
stipulation.  
                                               11 

No. 40924-1-II, consolidated with No. 41780-4-II

the Diddy-Swinerton-County lawsuit appears to encompass these considerations.  The stipulation 

and release covered "all claims, demands, causes of action and liabilities . . . known or unknown, 

asserted or unasserted . . . arising from the Project in any manner." CP (No. 40924-1-II) at 195.  

That language is broad enough to include the breach of contract suit, which involved another 

claim arising from the same project.  Because the stipulation resolved all claims arising from the 

project in any manner, including unknown and unasserted claims, it encompassed the subject 

matter, cause of action, and quality of persons involved in Swinerton's subsequent claim against 

the County.  Accordingly, we hold that the broad language of the agreed stipulation and order 

resolving all claims arising from the project effectively precluded Swinerton's subsequent breach 

of contract claim against the County.  

       F.  Failure To Plead Defenses in Answer 

       Swinerton also contends that the County waived any reliance on the agreed stipulation and 

order because it did not affirmatively assert the defenses of release, waiver, or res judicata in its 

answer.  We disagree.  

       CR 8(c) provides that a party "shall set forth" in a "pleading to a preceding pleading"

(answer) "any . . . matter constituting an avoidance or affirmative defense" including release, res 

judicata, and waiver.  "'Generally, affirmative defenses are waived unless they are (1) affirmatively 

pleaded, (2) asserted in a motion under CR 12(b), or (3) tried by the express or implied consent of 

the parties.'"  Henderson v. Tyrrell, 80 Wn. App. 592, 624, 910 P.2d 522 (1996) (quoting 

Bernsen v. Big Bend Elec. Coop., 68 Wn. App. 427, 433-34, 842 P.2d 1047 (1993)).  But 

affirmative pleading is not always required "'[w]here a failure to plead a defense affirmatively 

does not affect the substantial rights of the parties, the noncompliance will be considered 

                                               12 

No. 40924-1-II, consolidated with No. 41780-4-II

harmless.'"  Henderson, 80 Wn. App. at 624 (quoting Mahoney v. Tingley, 85 Wn.2d 95, 100, 

529 P.2d 1068 (1975)); see also Dixon v. Crawford, McGilliard, Peterson & Yelish et al., 163 

Wn. App. 912, 919 n.7, 262 P.3d 108 (2011), review denied, 173 Wn.2d 1015 (2012).  

       Here, while the County did not affirmatively set forth its reliance on the agreed stipulation 

and waiver in its answer, that noncompliance is harmless.  Swinerton does not allege any surprise 

or prejudice by the County's noncompliance, and the record shows none.  

       The agreed stipulation and order in the first lawsuit was presented to and signed by the 

superior court on January 15, 2008.  Diddy, 2009 WL 3337249, at *1.  Swinerton then served the 

County with the complaint in the present action for breach of contract.  Diddy, 2009 WL 

3337249, at *1.  In response to this second lawsuit, the County notified Swinerton of its intention 

to move for summary judgment based on the prior agreed stipulation and order.  Diddy, 2009 WL 

3337249, at *1.  Swinerton (and Diddy) then moved to vacate the stipulation and order of 

dismissal and fully litigated the vacation matter over the next year.  Diddy, 2009 WL 3337249, at 

*1.  We lifted the stay imposed in Swinerton's breach of contract suit pending appeal of the 

vacation litigation in June 2010, and the County immediately filed a motion for summary 

judgment, arguing that Swinerton had waived all claims against the County in the prior agreed 

stipulation and order.  

       In light of the parties' extended litigation about the stipulation's vitality, which preceded 

the County's summary judgment motion by some two years, the County's failure to specifically 

assert reliance on the agreed stipulation and order in its answer did not result in any surprise or 

prejudice to Swinerton,  Under these facts, we hold that the County's noncompliance with CR 

8(c) was harmless and Swinerton's challenge to the trial court's summary judgment order 

                                               13 

No. 40924-1-II, consolidated with No. 41780-4-II

dismissing its breach of contract claims against the County fails.  See Dixon, 163 Wn. App. at 919 

n.7.  

II.    Denial of Motion To Compel Arbitration

       In asserting that the trial court erred in denying its motion to compel arbitration, 

Swinerton relies heavily on the presumption in favor of arbitration Washington courts impose.  

See Adler v. Fred Lind Manor, 153 Wn.2d 331, 342, 103 P.3d 773 (2004); Kamaya Co., Ltd. v. 

Am. Prop. Consultants, Ltd., 91 Wn. App. 703, 714, 959 P.2d 1140 (1998); ML Park Place 

Corp. v. Hedreen, 71 Wn. App. 727, 739, 862 P.2d 602 (1993). Swinerton asks us to apply this 

presumption and reverse, remand, and direct the trial court to issue an order compelling 

arbitration.  

       We review de novo a trial court's decision granting or denying a motion to compel 

arbitration.  Satomi Owners Ass'n v. Satomi, LLC, 167 Wn.2d 781, 797, 225 P.3d 213 (2009).  

We may sustain the trial court on any correct ground, even though the trial court did not consider 

that ground in making its ruling.  Nast v. Michels, 107 Wn.2d 300, 308, 730 P.2d 54 (1986); see 

also Rainier View Court Homeowners Ass'n, Inc. v. Zenker, 157 Wn. App. 710, 723, 238 P.3d 

1217 (2010), review denied, 170 Wn.2d 1030 (2011); State v. Williams, 93 Wn. App. 340, 347-

48, 968 P.2d 26 (1998) ("Although our reasoning differs from that of the trial court, we can 

affirm the decision of the trial court upon other valid grounds.").  

       But we must first resolve the threshold matter of whether there is an agreement to 

arbitrate disputes between the parties.  "As arbitration is a matter of contract, parties cannot be 

compelled to arbitrate unless they agreed to do so."  Weiss v. Lonnquist, 153 Wn. App. 502, 510, 

224 P.3d 787 (2009).  RCW 7.04A.070(1) provides that "the court shall order the parties to 

                                               14 

No. 40924-1-II, consolidated with No. 41780-4-II

arbitrate," but that directive is premised on a "showing [of] an agreement to arbitrate."9 The 

party asserting a valid arbitration agreement has the burden of proving the existence of such 

agreement.  Weiss, 153 Wn. App. at 514-15.  

       Under Washington law, a valid contract requires the parties' mutual assent to essential 

terms, and such mutual assent must be gleaned from the parties' outward manifestations and 

conduct.  Weiss, 153 Wn. App. at 511.  A fact finder "may deduce mutual assent to an agreement 

from the circumstances surrounding a transaction, inferring the existence of a contract based on a 

course of dealings between the parties or a common understanding within a particular commercial 

setting."  Weiss, 153 Wn. App. at 511.  

       Swinerton contends that the agreement between the parties consists of three separate 

documents:  (1) the Capital Project Contract; (2) the General Conditions For Kitsap County 

Facility Construction; and (3) the AIA Document A201, General Conditions of the Contract for 

Construction.10 Swinerton acknowledges that the parties' agreement originally consisted of only 

9 RCW 7.04A.070 states in part: 
       (1) On motion of a person showing an agreement to arbitrate and alleging another 
       person's refusal to arbitrate pursuant to the agreement, the court shall order the parties to 
       arbitrate if the refusing party does not appear or does not oppose the motion. If the 
       refusing party opposes the motion, the court shall proceed summarily to decide the issue. 
       Unless the court finds that there is no enforceable agreement to arbitrate, it shall order the 
       parties to arbitrate. If the court finds that there is no enforceable agreement, it may not 
       order the parties to arbitrate.
              (2) On motion of a person alleging that an arbitration proceeding has been initiated 
       or threatened but that there is no agreement to arbitrate, the court shall proceed summarily 
       to decide the issue. If the court finds that there is an enforceable agreement to arbitrate, it 
       shall order the parties to arbitrate. If the court finds that there is no enforceable 
       agreement, it may not order the parties to arbitrate.  

10 AIA Document A201 is produced by the American Institute of Architects and contains 
standardized contract terms and provisions for use in the construction industry.  W. Wash. Corp. 
of Seventh-Day Adventists v. Ferrellgas, Inc., 102 Wn. App. 488, 491, 496-98, 7 P.3d 861 
(2000).  
                                               15 

No. 40924-1-II, consolidated with No. 41780-4-II

the Capital Project Contract and the General Conditions for Kitsap County Facility Construction 

(General Conditions), but Swinerton contends that the parties' subsequent execution of several 

change orders "unequivocally incorporate[d] the AIA A201." Corrected Br. of Appellant (No. 

40924-1-II) at 10.  Swinerton thus relies on the AIA's arbitration provision contained in AIA 

Document A201, section 4.6.  After close review of the parties' agreement, we reject Swinerton's 

contention that the AIA arbitration provision has been incorporated by reference into the parties'

contract through the change orders.  

       "Incorporation by reference allows the parties to 'incorporate contractual terms by 

reference to a separate agreement to which they are not parties.'" W. Wash. Corp. of Seventh-Day 

Adventists v. Ferrellgas, Inc., 102 Wn. App. 488, 494, 7 P.3d 861 (2000) (alteration in original) 

(footnotes omitted in original) (quoting 11 Samuel Williston, The Law of Contracts § 30:25, at 

234 (Richard A. Lord, 4th ed.1999)).  "Incorporation by reference must be clear and 

unequivocal." Ferrellgas, 102 Wn. App. at 494; Navlet v. Port of Seattle, 164 Wn.2d 818, 845 

n.15, 194 P.3d 221 (2008); Santos v. Sinclair, 76 Wn. App. 320, 325, 884 P.2d 941 (1994).  It 

must also be clear that "'the parties to the agreement had knowledge of and assented to the 

incorporated terms.'"  Ferrellgas, 102 Wn. App. at 494 (quoting 11 Contracts at 234).  

       In Ferrellgas, we addressed whether a provision in AIA Document A201 that waived 

subrogation had been incorporated by reference into two construction contracts.  Ferrellgas, 102 

Wn. App. at 494-501.  We held that the "Trade Contract," between the general contractor and a 

furnace subcontractor contained the AIA Document A201 subrogation waiver because, under the 

contract, the subcontractor agreed to perform in accordance with the "Project Contract 

Documents," which included the "mechanical specifications." Ferrellgas, 102 Wn. App. at 492, 

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No. 40924-1-II, consolidated with No. 41780-4-II

494.  Those mechanical specifications repeatedly stated (in nine separate subsections) that 

"Division I of Specification Sections apply to this Section," and it was undisputed that the 

"Division I" document expressly incorporated AIA Document A201, which included the waiver 

provision.  Ferrellgas, 102 Wn. App. at 492-93, 498-99.  The parties' knowledge and assent 

regarding the incorporation was shown in that AIA Document A201 was referred to in the 

instructions to the contract bidders and the mechanical specifications were delivered to the 

furnace subcontractor the same day it signed the Trade Contract.  Ferrellgas, 102 Wn. App. at 

498.  

       But also in Ferrellgas, we rejected a different subcontractor's assertion that the AIA

subrogation waiver had been incorporated by reference into the "Owner/Architect Agreement."  

102 Wn. App. at 499.  Unlike the Trade Contract, the Owner/Architect Agreement did not 

incorporate the AIA document "in its entirety."  Ferrellgas, 102 Wn. App. at 499.  Instead, the 

Owner/Architect Agreement incorporated by reference only specific provisions of the AIA, such 

as the AIA's term definitions and an insurance provision related to the subrogation waiver, but the 

Owner/Architect Agreement never referenced the specific subrogation waiver.11  Ferrellgas, 102 

Wn. App. at 500-01.  We applied the rule: "'[W]here incorporated matter is referred to for a 

specific purpose only, it becomes a part of the contract for such purpose only, and should be 

treated as irrelevant for all other purposes.'" Ferrellgas, 102 Wn. App. at 499 (alteration in the 

original) (quoting 11 Contracts at 238). We also noted that treating the AIA subrogation waiver 

11 The Trade Contract incorporated the entire AIA Document A201 that contained the 
subrogation waiver.  Ferrellgas, 102 Wn. App. at 494-99.  The Owner/Architect Agreement did 
not incorporate in its entirety the AIA Document A201; instead the Owner/Architect Agreement 
incorporated only specific provisions of the AIA Document A201 regarding administration, term 
definitions, and insurance.  Ferrellgas, 102 Wn. App. at 499-501.  

                                               17 

No. 40924-1-II, consolidated with No. 41780-4-II

as incorporated by reference into the Owner/Architect Agreement would be "inconsistent with the 

other provisions of the Owner/Architect Agreement."  Ferrellgas, 102 Wn. App. at 501.  

       Swinerton's contract is like the Owner/Architect Agreement in Ferrellgas. Here, each 

change order contains a notation stating that the change order does not contain a change in the 

money or time that is "in dispute as described in Subparagraph 7.3.8 of AIA Document A201."12  

CP (No. 40924-1-II) at 114-19, 121.  Thus, the change order notation refers to a single AIA 

provision, for the limited purpose of describing a "dispute[d]" cost.  

       Like the Owner/Architect Agreement in Ferrellgas, the change order notation does not 

reference AIA Document A201 in general or incorporate that document in its entirety, instead the 

change order notation references only a single provision, subparagraph 7.3.8, and that reference is 

for the limited purpose of describing a disputed cost, which the notation verifies is not included in 

the change order.  Thus, subparagraph 7.3.8's further reference to Article 4's contract 

administration and claim provisions for disputed amounts is not relevant to the purpose for which 

12 The notation reads in full:  "NOTE: This Change Order does not include changes in the 
Contract Sum or Contract Time which have been authorized by Construction Change Directive 
for which the cost or time are in dispute as described in Subparagraph 7.3.8 of AIA Document 
A201." CP (No. 40924-1-II) at 114-19, 121.  Subparagraph 7.3.8 of AIA Document A201 states 
in relevant part, "[p]ending final determination of the total cost of a Construction Change 
Directive to the Owner, amounts not in dispute for such changes in the Work shall be included in 
Applications for Payment accompanied by a Change Order indicating the parties' agreement with 
part or all of such costs." CP (No. 40924-1-II) at 148 (emphasis added).  The subparagraph then 
provides:  
       For any portion of such cost that remains in dispute, the Architect will make an 
       interim determination for purposes of monthly certification for payment for those 
       costs.  That determination of cost shall adjust the Contract Sum on the same basis 
       as a Change Order, subject to the right of either party to disagree and assert a 
       claim in accordance with Article 4.  
CP (No. 40924-1-II) at 148.  Article 4 addresses administration of the contract and contains 
provisions addressing claims and disputes (section 4.3), resolution of claims and disputes (section
4.4), mediation (section 4.5), and arbitration (section 4.6).  

                                               18 

No. 40924-1-II, consolidated with No. 41780-4-II

subparagraph 7.3.8 is referenced.  

       Moreover, incorporating AIA Document A201's section 4.6 arbitration provision would 

be inconsistent with the other provisions of the parties' contract.13 And finally, there is no 

contention that AIA Document A201 was ever referred to by the parties before or during the 

signing of the Project Contract, unlike the contemporaneous notice to the bidders in Ferrellgas. 

102 Wn. App. at 498.  

       Under these circumstances and in accord with Ferrellgas, we hold that the arbitration 

agreement contained in AIA Document A201 was not incorporated by reference into the parties'

agreement via the change orders as Swinerton contends.  Accordingly, the record does not show 

that the parties entered into an arbitration agreement, and thus, the trial court did not err in 

13 The Capital Project Contract between Swinerton and the County contains its own claim and 
dispute resolution provisions (section 23) that do not include arbitration.  The Capital Project 
Contract also contains an integration clause (section 27).  And it contains a modification clause 
(section 30) that provides "[e]xcept as provided in Section 16, all . . . modifications . . . shall be in 
writing, signed by both parties, and attached to this Contract." CP (No. 40924-1-II) at 68.  No 
attachments reference AIA Document A201 or its arbitration clause.  Section 16 addresses 
"changes in the work," and provides that such changes "shall be incorporated into the Contract 
documents through the execution of change orders." CP (No. 40924-1-II) at 64 (emphasis 
added). Section 16(c) specifically limits the contractor's dispute resolution options, stating that 
"the Contractor shall pursue resolution of [any] disagreement [regarding the change orders] 
pursuant to Section 23." CP (No. 40924-1-II) at 64 (capitalization altered).  
       The General Conditions document also does not contain any arbitration provision.  
Notably, the table of contents lists the title of subsection 8.02 in the Claims and Dispute 
Resolution section as "Arbitration" and lists subsection 8.03 as "Claims Audits," but the 
document itself does not contain an arbitration subsection.  The Claims and Dispute resolution 
section contains only subsection 8.01, "Claims Procedures," and subsection 8.02, which replaces 
the arbitration subsection with the information on "Claims Audits." Neither subsection contains 
any mention of the term arbitration; indicating that all references to arbitration were deleted from 
the General Conditions for purposes of the Swinerton contract.  Instead, the General Conditions 
document provides detailed claims provisions, stating, "If the parties fail to reach agreement on 
the terms of any Change Order . . . Contractor's only remedy shall be to file a Claim with Owner 
as provided in this section." CP (No. 40924-1-II) at 105.  

                                               19 

No. 40924-1-II, consolidated with No. 41780-4-II

denying Swinerton's motion to compel arbitration.14  See Weiss, 153 Wn. App. at 515. 

       Alternatively, the parties' stipulation and order bars the claims that Swinerton seeks to 

have arbitrated.  Accordingly the parties' stipulation and order provides an additional basis for 

affirming the trial court's denial of Swinerton's motion to compel arbitration.    

       We hold that the express terms of the agreed stipulation and order barred Swinerton's 

subsequent breach of contract claims against the County.  Accordingly, the trial court did not err 

in granting the County's summary judgment motion or in denying Swinerton's motion to compel 

arbitration of the breach of contract claims.  In addition, we hold that the parties' contract did not 

compel arbitration of contract disputes.  We affirm the trial court's rulings in both matters.

       A majorityof the panel has determined this opinion will not be printed in the Washington 

Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.

                                                 Van Deren, J.
I concur:

Armstrong, J.

14 Because resolution of this threshold matter is determinative of Swinerton's appeal in No. 40924-
1-II, we do not reach the parties' other issues regarding the motion to compel arbitration.  See 
Weiss, 153 Wn. App. at 515 n.10.  
                                               20 

No. 40924-1-II, consolidated with No. 41780-4-II

       Quinn-Brintnall, J. (concurring)    --     Swinerton Builders Northwest, Inc. argues that 

Kitsap County    was not a party      to  M.B.  Diddy    Construction, Inc.'s lawsuit against 

Swinerton -- M.B. Diddy Construction, Inc. v. Swinerton Builders, Northwest, noted at 152 Wn. 

App. 1044 (2009), review denied, 168 Wn.2d 1033 (2010) -- and that it was precluded from 

bringing its breach of contract claim against the County in Diddy's action.  This argument would 

be persuasive under other circumstances because Kitsap County was only a nominal party in 

Diddy's lawsuit.  Pursuant to RCW 60.28.030, Diddy named Kitsap County as a defendant in 

light of it being the statutorily mandated repository of the retainage fund former RCW 60.28.011 

(2007) required for public projects.  See, e.g., U.S. Filter Distrib. Grp. v. Katspan, Inc., 117 Wn. 

App. 744, 754, 72 P.3d 1103 (2003) ("A surety's liability to subcontractors and suppliers is 

governed by the surety statute and the surety agreement, not by the contract between a supplier 

and a primary contractor.").  But despite Kitsap County's role as a nominal party in the Diddy

case, the stipulation, which Swinerton assisted Diddy in drafting and which Kitsap County 

signed, expressly provides, "The parties to this action hereby release and discharge each other, 

their employees, officers, agents, successors, assigns, and sureties from any all claims, demands, 

causes of action and liabilities . . . known or unknown, asserted or unasserted . . . arising from the 

Project in any manner."     Clerk's Papers (No. 41780-4-II) at 39 (emphasis  added).  Thus, 

Swinterton released Kitsap County of any liability -- whether as a primary party or a retainage 

holder -- and, accordingly, I concur with the result reached by the majority.

                                            _____________________________________
                                            QUINN-BRINTNALL, J.

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