[No. 78928-2. En Banc.]
Argued May 22, 2007. Decided September 20, 2007.
[1] Brokers — Agent for Sale of Realty — Who Qualifies — Determination — From Conduct — Mixed Question of Law and Fact. Determining whether a person acted as a real estate broker through a particular course of conduct is a mixed question of law and fact. A mixed question of law and fact requires establishing the relevant facts, determining the applicable law, and then applying the law to the facts. In the context of determining whether a person acted as a real estate broker, the process is to apply the legal precepts (the definition of "real estate broker") to the factual circumstances (the details of the person's conduct). [2] Appeal — Findings of Fact — Review — Substantial Evidence — Effect. A trial court's factual findings that are challenged on appeal are treated as verities by the appellate court if they are supported by substantial evidence in the record. [3] Appeal — Review — Application of Law — Standard of Review. The process of determining the applicable law and applying the law to the facts of a case is a question of law that is reviewed de novo. [4] Brokers — Agent for Sale of Realty — Brokerage Agreement — What Constitutes — Question of Law or Fact. Whether an agreement constitutes a broker's contract for a real estate commission is a question of law. [5] Brokers — Agent for Sale of Realty — Who Qualifies — Statutory Provisions — Qualifying Conduct. A person who negotiates the sale or lease of real property for compensation is a "real estate broker" within the meaning of RCW 18.85.010(1) of the real estate brokers and salepersons statute. [6] Brokers — Agent for Sale of Realty — Brokerage Agreement — Determination — Factors. An agreement creates a contract for real estate brokerage services where the agreement defines itself as "an exclusive engagement to represent and right to sell or lease [designated] facility(ies)"; obligates the putative broker "not to advertise the facility(ies) for sale" or "to 'list' said facility(ies) in any multiple listing service" "without the prior written consent" of the property owner; provides for the payment of a "fee" calculated as a percentage of the given transaction; and requires the property owner to acknowledge a responsibility to pay the putative broker the fee in "any purchase and sale contract, lease, or sublease agreement, and any escrow established." [7] Brokers — Agent for Sale of Realty — Who Qualifies — Determination — From Conduct — Factors. A person acts as a real estate broker where the person, at the request of a property owner, engages in considerable communications with an agent of the property owner and with a potential lessee that lead to meetings between the property owner, the agent, and the potential lessee, resulting in a negotiated lease of the owner's property. [8] Brokers — Agent for Sale of Realty — Who Qualifies — Determination — Consulting Services — Employment Agreement — Effect. A person is a real estate broker where the person engages in brokerage services in the course of providing consulting services in a specialized field involving a particular kind of business or enterprise or where brokerage services are provided pursuant to the terms of a "consulting contract" that employs the person because the person has specialized knowledge about a particular kind of business or enterprise. The label applied to an instrument does not determine, as a matter of law, whether the services provided pursuant to it are those of a real estate broker. The fact that the purpose of the agreement is completely different from regular real estate activity in terms of the properties involved and the geographic range of possible transactions does not change the person into something other than a real estate broker where the essential nature of the person's performance pursuant to the agreement is that of a real estate broker. [9] Conflict of Laws — Contracts — Choice of Law — Effectiveness — Question of Law or Fact — Review — Standard of Review. The effectiveness of a contractual choice of law provision is a question of law that is reviewed de novo. [10] Conflict of Laws — Contracts — Choice of Law — Distinguished From Forum Selection. A contractual choice of law provision specifies the law under which a dispute will be adjudicated, whereas a forum selection clause specifies the jurisdiction where a dispute will be decided. The two are not the same. [11] Conflict of Laws — Contracts — Choice of Law — Dispute — Analysis. When presented with an argument that a contract dispute should be decided under the law of a jurisdiction other than the one selected in an otherwise valid contractual choice of law provision, a court must determine (1) whether there is an actual conflict of laws and, if so, (2) whether the choice-of-law provision is effective. [12] Conflict of Laws — Contracts — Choice of Law — Actual Conflict — Effect. In a dispute over a contractual choice of law, the court must engage in a conflict of laws analysis only if there is an actual conflict between the laws or interests of the chosen state and the laws or interests of the other state that are claimed to apply. [13] Conflict of Laws — Actual Conflict — What Constitutes. An actual conflict exists between the laws of two states if application of each state's laws to the same legal issue would produce different results. [14] Conflict of Laws — Contracts — Choice of Law — Enforceability — Test. When parties have made an express choice of law for the resolution of disputes arising under a contract, the law of the chosen state will be applied to a particular issue if (1) the issue is one the parties could have resolved by an explicit provision in their agreement directed to that issue or (2) the issue is one the parties could not have resolved by an explicit provision in their agreement directed to that issue unless (a) the chosen state has no substantial relationship to the parties or to the transaction and there is no other reasonable basis for the parties' choice or (b) application of the law of the chosen state (i) would be contrary to a fundamental policy of a state (ii) which has a materially greater interest than the chosen state in the determination of the particular issue and (iii) which, by application of the "most significant relationship" rule, would be the state of the applicable law in the absence of an effective choice of law by the parties. The first part of the test applies only if the particular issue is one that the parties could have resolved by contract; the first part does not necessarily apply simply because parties have included language in their contract purporting to resolve the particular issue by an explicit provision. The second part of the test applies to issues that the parties could not have determined by explicit agreement, such as those involving capacity, formalities, and substantial validity. [15] Brokers — Agent for Sale of Realty — Commissions — Transaction in State Where Agent Not Licensed — Application of Washington Law — Policy of Foreign State. Application of Washington's real estate broker licensing law to a dispute over compensation for services performed in Washington by a broker licensed in Washington in regard to a real estate transaction involving a property in California is not contrary to any fundamental policy of California if there is no proof that the broker was incompetent or untrustworthy or that the property owner's interests were harmed by dealing with the broker, and none of the services performed by the broker in Washington are unlawful in California. California's broker licensing statutes do not regulate out-of-state acts performed by a broker in another state, even if those acts relate to California real property. [16] Conflict of Laws — Contracts — Choice of Law — Competing Policies and Interests. In a dispute over whether the law of one state or another should be applied to resolve a contract dispute, a weighing of the states' relative interests does not involve merely counting the contacts. The interest of a state in having its contract rule applied in the determination of a particular issue depends on the purpose sought to be achieved by the rule and on the relation of the state to the transaction and the parties. A primary consideration is protecting the justifiable expectations of the contracting parties, as expressed by their agreed choice of law. In general, it would be unfair and improper to hold a party liable under the law of one state when the party justifiably molded his or her conduct to conform to the requirements of the selected state. Likewise, predictability and uniformity of result are of particular importance in areas where the parties are likely to give advance thought to the legal consequences of their transactions. [17] Brokers — Agent for Sale of Realty — Commissions — Public Policy. Washington has a strong interest in providing Washington residents with a means for recovering compensation for real estate brokerage services rendered pursuant to contract. [18] Conflict of Laws — Contracts — Choice of Law — Public Policy — Certainty and Predictability. The primary objectives of contract law of protecting the justified expectations of the parties and of making it possible for the parties to foretell with accuracy their rights and liabilities under the contract may best be attained in multistate transactions by letting the parties choose the law that will govern the validity of the contract and the rights created thereby. In this way, certainty and predictability of result are most likely to be secured. [19] Licenses — Brokers — Agent for Sale of Realty — License — Statutory Provisions — "Duly Licensed Real Estate Broker" — Licensing State. A "duly licensed real estate broker" within the meaning of RCW 18.85.100 is a real estate broker who is licensed in Washington. RCW 18.85.100 provides that "[n]o suit or action shall be brought for the collection of compensation as a real estate broker . . . without alleging and proving that the plaintiff was duly licensed real estate broker . . . prior to" contracting to provide such services. [20] Brokers — Agent for Sale of Realty — Commissions — Transaction in State Where Agent Not Licensed — Statutory Provisions — Scope. Under the real estate brokers and salepersons statute (chapter 18.85 RCW), a real estate broker licensed in Washington may be entitled to fees for services relating to the sale or lease of property located in another state where the broker is not licensed. Nature of Action: A real estate agent licensed only in Washington sought to collect commissions for arranging the lease of several nursing homes for the defendants in California and Texas pursuant to the terms of an agreement containing clauses specifying that any disputes would be resolved under Washington law in the Washington courts. Superior Court: The Superior Court for Yakima County, No. 02-2-02282-0, Michael E. Schwab, J., on December 3, 2004, entered a judgment in favor of the plaintiff, awarding commissions and attorney fees. Court of Appeals: The court affirmed the judgment at 133 Wn. App. 143 (2006), holding that the contract's provision for application of Washington law to the dispute was valid and enforceable. Supreme Court: Holding that the plaintiff provided real estate broker services for the defendants, that the contractual choice of Washington law was effective, that Washington law governs the agreement, and that the plaintiff could maintain the claim for fees arising from the leasing of the California properties, the court affirms the decision of the Court of Appeals. Charles K. Wiggins- (of Wiggins & Masters, PLLC), for petitioners. James S. Berg- (of Larson Berg & Perkins), for respondents. EN BANC ¶1 FAIRHURST, J. — Petitioners James F. Cotter and Cotter Health Centers challenge a Court of Appeals decision affirming the award to respondents Carey D. Erwin and Healthcare Properties, Inc., of fees arising from the leasing of several of Cotter's senior health care (SHC) facilities. Cotter argues that Erwin provided real estate broker services to Cotter; that the parties' contractual choice of Washington law is ineffective and California, not Washington law, should govern their dispute; and that under California law, Erwin is prohibited from claiming the leasing fees because Erwin was not licensed in California as a real estate broker. I. FACTUAL AND PROCEDURAL HISTORY A. Background ¶2 Erwin, a Washington resident at all times material hereto, is the sole owner and operator of Healthcare Properties, Inc., a Washington corporation since at least 1996. Erwin has been a licensed Washington real estate broker since 1992. ¶3 Cotter, a Texas resident at all times material hereto, is the sole owner and operator of Cotter Health Centers, a California corporation. Cotter for many years has owned SHC facilities and other commercial properties in several states. All of Cotter's Texas and California SHC facilities discussed herein were, regardless of their corporate forms, in fact owned by Cotter and under his complete control. ¶4 Cotter leased three of his Texas SHC facilities to Camlu Care Centers, a Texas corporation, for its operation. In 1997, Camlu contracted with Erwin "to help it divest its leasehold interest" in those SHC facilities. Clerk's Papers (CP) at 30, Findings of Fact (FOF) 10. In early 1998, Erwin found a potential buyer, the Ensign Group, for Camlu's leases. ¶5 The Ensign Group, a California entity, was very interested in taking over Camlu's leases, but only if lease terms longer than the three years remaining on those leases could be negotiated. Extension and transfer of Camlu's leases required Cotter's involvement, which led to Erwin meeting Cotter later in 1998. Erwin also met Cotter's employee, William Sleeth, who performed property management activities for all of Cotter's SHC facilities. B. Cotter and Erwin entered into a consulting agreement ¶6 During 1997 and 1998, many of Cotter's SHC facilities in Texas and California "were experiencing operational problems" due to "inefficient and irresponsible operators." CP at 31, FOF 18. Cotter "turned to" Erwin, "among others, for assistance" with these problems. Id. On February 9, 1999, Erwin and Cotter "signed a document entitled Consultant Agreement" (hereinafter referred to as Agreement) at Cotter's home in California. ¶7 In the Agreement, Cotter granted Erwin a nine month "exclusive engagement to represent and right to sell or lease" designated Cotter SHC facilities. Ex. 8, ¶ 4. Cotter agreed to pay Erwin a "fee" of 14 percent of the first year's annual lease payment for any new operational lease on a designated SHC facility. Ex. 8, ¶¶ 3, 4; see also CP at 33, FOF 32. The Agreement "automatically extended to cover a deferred closing of any business opportunity or Buyer presented" to Cotter during its original nine month term. Ex. 8, ¶ 3. In the event that Cotter canceled the Agreement, Erwin was entitled to an entire fee for any lease of a designated facility made to a "registered buyer" within 36 months following the cancellation. ¶8 The Agreement expressly stated that it applied to properties identified in "Addendum 'A,' " Exhibit 8, ¶ 3, and additionally "contemplated that properties could be added." CP at 33, FOF 30; see also Ex. 8, ¶ 18. When Cotter and Erwin signed the Agreement, Addendum A was "not filled in as to any specific properties." CP at 31, FOF 21. However, they and Sleeth, "prior to, during, and immediately after the meeting of February 9, 1999," discussed "the properties which Cotter was interested in working on, which included facilities in Texas, California, Oklahoma, and possibly others." CP at 31, FOF 21. Shortly thereafter, Addendum A was completed, listing several Texas SHC facilities. C. The fee dispute ¶9 After the Agreement was signed, Cotter told Erwin to "deal primarily with" Sleeth "regarding the status of efforts to achieve transfers" of Cotter's interests. CP at 33, FOF 28. Between February 1999 and February 2000, there was "considerable communication" between Erwin and Sleeth and Erwin and the Ensign Group regarding both the Texas and the California SHC facilities. ¶10 Prior to the November 1999 expiration of the Agreement's original nine month term, Cotter and the Ensign Group entered business relationships with respect to two of Cotter's Texas SHC facilities and the four California SHC facilities. On August 18, 1999, Cotter and the Ensign Group executed leases on two Texas SHC facilities. Two days later, Cotter's attorney sent the Ensign Group proposed leases for the four California SHC facilities. The California leases "would have been executed on the terms set forth" but for Cotter's inability to deliver the SHC facilities to the Ensign Group "due to certain contingencies, all of which were eventually resolved by Cotter." ¶11 On March 6, 2000, Cotter's attorney sent Erwin a letter terminating "any agreements or other arrangements" between Cotter and Erwin "as to marketing of properties owned by" Cotter. CP at 35, FOF 42. The attorney also sent a letter to the Ensign Group withdrawing the proposed California leases. Over the course of the next year, Cotter worked to make the four California SHC facilities available for transfer and simultaneously negotiated with the Ensign Group and other parties regarding leasing those facilities. In February 2001, less than 36 months after the cancellation of the Agreement, Cotter and the Ensign Group executed lease agreements for the four California SHC facilities. ¶12 Erwin demanded fees under the Agreement for his services in connection with the Cotter-Ensign Group transactions on the two Texas SHC facilities and the four California SHC facilities. Cotter denied that any fees were owed. D. Procedural history ¶13 In July 2002, Erwin filed suit in Yakima County Superior Court seeking to collect fees from Cotter for the two Texas leases and the four California leases. Subsequently, Cotter filed actions against Erwin in Texas and California seeking to block Erwin's litigation in Washington. The Texas court, without explanation, denied Erwin's motion to stay its proceedings. The California court recognized jurisdiction in Washington pursuant to the Agreement and granted Erwin's motion to stay its proceedings until the Washington litigation was completed. ¶14 Following a four day bench trial, the trial court found in favor of Erwin. The court concluded that the Agreement's forum selection clause, choosing the jurisdiction of Washington, and choice-of-law provision, choosing Washington law, were effective. CP at 37-38, Conclusions of Law (COL) 2-4, 9, 10, 13, 14. Applying Washington law, the court concluded that, under the terms of the Agreement, Erwin was entitled to "an entire fee" for the Cotter-Ensign Group leases on the two Texas ¶15 On appeal, the Court of Appeals affirmed the trial court and awarded Erwin costs and fees on appeal. Erwin v. Cotter Health Ctrs., Inc., 133 Wn. App. 143, 155, ¶ 35, 135 P.3d 547 (2006). We granted review. Erwin v. Cotter Health Ctrs., Inc., 159 Wn.2d 1011, 154 P.3d 919 (2007). II. ISSUES A. Did Erwin act as a real estate broker in providing services to Cotter under the Agreement? B. Is the parties' contractual choice of Washington law effective? C. Under the applicable law, can Erwin, a Washington-licensed real estate broker, maintain a claim for fees arising from the leasing of Cotter's California SHC facilities? III. ANALYSIS ¶16 Cotter argues that Erwin cannot recover a fee for his services in connection with the Cotter-Ensign Group leases because, in providing those services, Erwin acted as a real estate broker in California without the requisite California broker's license in contravention of California law. Erwin argues first that he provided services as a consultant, not as a real estate broker. In the alternative, Erwin argues that Washington law governs this dispute by virtue of the parties' contractual choice of law to that effect and, as a Washington-licensed real estate broker, he is entitled to maintain a claim for his fees. ¶17 To resolve this dispute, we address three issues: (1) whether Erwin acted as a real estate broker in providing services to Cotter under the Agreement; (2) whether the parties' contractual choice of Washington law is effective; and (3) whether, under the applicable law, Erwin, a Washington-licensed real estate broker, can maintain a claim for fees arising from the leasing of Cotter's California SHC facilities. The first issue is a threshold issue. If Erwin did not act as a real estate broker, then an essential component of Cotter's argument—Erwin's lack of a California broker's license—is immaterial. A. Erwin acted as a real estate broker in providing services to Cotter under the Agreement ¶23 Nor can we agree with the Court of Appeals that Erwin did not act as a real estate broker because the Agreement was not "a typical 'listing agreement' " but rather "a hybrid 'consulting agreement' calculated to capitalize on Erwin's unique expertise in this highly regulated industry and his contacts in the industry throughout the country." Erwin, 133 Wn. App. at 153, ¶ 26. It is well settled in Washington that the label applied to an instrument does not determine, as a matter of law, whether the services provided pursuant to it are those of a real estate broker. Main, 8 Wn. App. at 10 (citing Shorewood, Inc. v. Standring, 19 Wn.2d 627, 638, 144 P.2d 243 (1943)). ¶24 Moreover, the fact that the Agreement's purpose was "completely different from regular real estate activity in terms of the properties involved and the interstate range of possible transactions" does not change Erwin into something other than a real estate broker. CP at 31, FOF 20 (emphasis added). Finding that Erwin handled only a discrete category of properties that he marketed to an interstate base of prospective buyers merely describes the narrow subset of the real estate market within which Erwin operated. The essential nature of Erwin's conduct remains that of a real estate broker. ¶25 Pursuant to the Agreement and in expectation of compensation, Erwin provided services to Cotter for the purpose of achieving the transfer of Cotter's interests in several SHC facilities. We hold that, in so doing, under either Washington or California law, Erwin acted as a real estate broker. B. The parties' contractual choice of Washington law is effective ¶27 This case does not present a classic conflict of laws problem in which the forum state undertakes a conflict of laws analysis to determine whether the contractually chosen law or forum law will govern. Here, although the parties chose Washington law and the forum is Washington, Cotter argues that the law of California—neither the parties' chosen law nor the law of the forum—should apply. ¶28 Nor does either party argue that the contractual choice of law is a product of the parties' unequal bargaining power or some other unconscionable condition. This case involves a freely negotiated contract between Cotter and Erwin, two highly experienced and successful business people who explicitly selected Washington law to govern their contract. Other terms included in the Agreement reflect that Cotter understood the potential ramifications of this choice. For example, anticipating that the Agreement might extend to SHC facilities "located in a state other than the state of Washington," Cotter "expressly acknowledge[d]" that he was "not knowingly entering into an agreement which [was] illegal by contracting with [a] real estate broker . . . not licensed in [the] state where facilities [were] located." Ex. 8, ¶ 9. Cotter also agreed "to waive any such provision that would allow for a contest of fees based on the fact that [Erwin was] not licensed as a real estate broker in the state where facilities [were] located." 1. An actual conflict of laws exists between the laws of Washington and California with respect to Erwin's claim for fees ¶31 There is an actual conflict between the laws of Washington and the laws of California with respect to Erwin claiming fees under the Agreement for his services as a real estate broker. Both Washington and California law make it unlawful to operate as a real estate broker within each state, respectively, without possessing an in-state license. ¶32 These results are different—thus an actual conflict exists. 2. The Agreement's choice-of-law provision, selecting Washington law, is effective ¶34 Restatement section 187 provides as follows: "§ 187. Law of the State Chosen by the Parties "(1) The law of the state chosen by the parties to govern their contractual rights and duties will be applied if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue. "(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either "(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties' choice, or "(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties. "(3) In the absence of a contrary indication of intention, the reference is to the local law of the state of the chosen law." O'Brien, 90 Wn.2d at 685 (quoting RESTATEMENT § 187). ¶35 Erwin argues, incorrectly, that if section 187 applies, then section 187(1) provides the rubric for our analysis. Section 187(1) governs "if the particular issue is one which the parties could have resolved by an explicit provision in their agreement directed to that issue." (Emphasis added.) Erwin asserts that the parties included "an explicit provision" in their Agreement directed at resolving the "particular issue . . . generated by Cotter's agreement to pay Erwin to arrange a series of . . . transactions." Erwin, 133 Wn. App. at 152, ¶ 22. But section 187(1) does not apply simply because the parties included language in their contract purporting to resolve a "particular issue" by "an explicit provision." ¶36 Section 187(1) applies only when the "particular issue" is one that the parties "could have resolved" by contract. (Emphasis added.) It provides "for incorporation by reference," allowing parties to adopt in a comprehensive fashion the gap-filling contractual rules of the chosen state's law. RESTATEMENT § 187 cmt. c. By contrast, section 187(2) applies to particular issues that "the parties could not have determined by explicit agreement," such as those "involving capacity, formalities[,] and substantial validity." Id. cmt. d (emphasis added). The particular issue here involves the substantial validity of the parties' agreement for Cotter to pay Erwin fees arising from Erwin's services as a real estate broker—it therefore falls under section 187(2), not section 187(1). ¶37 Section 187(2) directs that the parties' choice of law will still be applied "even if the particular issue is one which the parties could not have resolved by an explicit provision[,] . . . unless" either of two exceptions is satisfied. Cotter contends that the section 187(2)(b) exception is satisfied ¶38 Under the section 187(2)(b) exception, "three questions are posed," all of which must be answered in the affirmative for the exception to apply. O'Brien, 90 Wn.2d at 685. To wit, application of the parties' chosen law must be "[(1)] contrary to a fundamental policy of a state [(2)] which has a materially greater interest than the chosen state in the determination of the particular issue and [(3)] which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties." RESTATEMENT § 187(2)(b). Inserting the facts presented here, we must inquire (1) whether applying Washington's real estate broker licensing law is contrary to a fundamental policy of California; (2) whether California has a materially greater interest than Washington in the determination of the contract validity issue; and (3) whether, under the rule of Restatement section 188, California would be the state of applicable law in the absence of an effective choice of law by the parties. As explained below, questions one and two must be answered in the negative. Because all three questions are not answered in the affirmative, the section 187(2)(b) exception is not satisfied, and the parties' choice of Washington law remains in effect. ¶40 Cotter also argues that "[a]pplying Washington law offends California policy because the [A]greement and Erwin's services are illegal in California." Reply Br. at 13. This argument is unsound because it is circular—Cotter assumes his conclusion, that California law applies, as a premise in his argument that applying Washington law is contrary to California policy and therefore California law applies. Services that Erwin performed in Washington are not illegal in California. California's broker licensing statutes do not regulate out-of-state acts performed by a broker licensed in another state, even when those acts relate to California realty. Consul Ltd. v. Solide Enters., Inc., 802 F.2d 1143, 1149-51 (9th Cir. 1986) (reaching conclusion based on California statutes' use of "within this state" language and comprehensive review of foreign authority). The trial court determined that "Erwin performed a good deal of work in Washington." CP at 38, COL 10. California has no interest in this matter to the extent that Erwin seeks to collect fees for that work. ¶41 Second, California does not have a materially greater interest than Washington in the determination of the contract validity issue. Cotter claims that "California's interest in the resolution of this contract dispute is 'obvious'—the Agreement provides for a 'business practice' that is unlawful in California," contrary to California's "detailed statutory scheme . . . to 'regulate' brokerage activities in the state and 'deter' unlicensed brokerage activities." Br. of Appellants at 32. This argument, too, is circular—Cotter's conclusion, that California law applies, is a necessary prerequisite to Erwin's business practice being illegal in California, the premise supporting Cotter's conclusion that California law applies. Moreover, applying Washington law to resolve the fee dispute between Erwin and Cotter does not interfere with California's interest in regulating brokerage activities in California. The California Real Estate Commissioner remains free to pursue penalties against Erwin for the unlawful provision of real estate broker services in California if doing so were deemed appropriate. ¶43 With respect to purely California interests, California's interest in deterring unlicensed brokerage activities to protect the California public from "incompetent or untrustworthy real estate practitioners," Schantz, 96 Cal. Rptr. at 785, carries relatively little weight because Cotter, the real party in interest receiving the services at issue here, is not a California resident. California's prohibition on unlicensed brokers bringing suit to collect commission in California, see California Business and Professions Code § 10136 (West), evidences an interest in reducing the burden on California's courts. However, this interest is not triggered because the instant litigation is occurring in Washington courts. And, as stated above, California's interest in regulating the provision of brokerage services in California is untouched because California remains free to prosecute Erwin should doing so be deemed appropriate. ¶44 Both California and Washington have interests in protecting the justifiable expectations of the contracting parties. The Restatement, expounding on core choice-of-law principles, explains that in applying section 187, "protecting the justified expectations of the parties . . . come[s] to the fore." RESTATEMENT § 6 cmt. c. "Generally speaking, it would be unfair and improper to hold a person liable under the local law of one state when he had justifiably molded his conduct to conform to the requirements of another state." Id. cmt. g. Likewise, "[p]redictability and uniformity of result are of particular importance in areas where the parties are likely to give advance thought to the legal consequences of their transactions." Id. cmt. i. Here, the justifiable expectations of Cotter and Erwin were memorialized in the Agreement, a freely negotiated contract between two highly experienced and successful business people who defined in advance the terms of their business relationship and explicitly chose Washington law to govern any disputes. ¶46 Third, under the rule of Restatement section 188, California would not necessarily be the state of applicable law in the absence of an effective choice of law by the parties. However, assuming for the sake of argument that, as Cotter asserts, "[a]bsent the choice of law provision, California law would govern this transaction," Br. of Appellant at 30, Cotter would have succeeded in establishing only the third of the three requirements necessary to satisfy the section 187(2)(b) exception. As explained above, applying Washington's real estate broker licensing law is not contrary to a fundamental policy of California. Nor does California have a materially greater interest than Washington in the determination of the contract validity issue. Since, at minimum, requirements one and two of the section 187(2)(b) exception are not satisfied, the parties' choice of Washington law remains effective. C. Under Washington law, Erwin, a Washington-licensed real estate broker, can maintain a claim for fees arising from the leasing of Cotter's California SHC facilities ¶49 RCW 18.85.100 provides that "[n]o suit or action shall be brought for the collection of compensation as a real estate broker . . . without alleging and proving that the plaintiff was a duly licensed real estate broker . . . prior to" contracting to provide such services. As Erwin correctly asserts, RCW 18.85.100 "is a Washington statute and, as such, regulates only 'acts' within Washington." Suppl. Br. of Resp'ts at 5. ¶50 Erwin was a Washington resident at all times material hereto. Erwin was and is a licensed Washington real estate broker who may legally provide real estate broker services in Washington. Erwin performed a good deal of the services pursuant to the Agreement in Washington. Pursuant to RCW 18.85.100, Erwin is entitled to maintain an action to collect his fees in Washington courts. We hold that under Washington law, Erwin, as a Washington-licensed broker, may maintain a claim for fees arising from leases of Cotter's California SHC facilities. D. Attorney fees and costs ¶51 Erwin is the prevailing party. We hold that, as such, he is entitled to fees and costs on appeal pursuant to RAP 14.1, 18.1, and the terms of the Agreement. Ex. 8, ¶ 5. IV. CONCLUSION ¶52 We hold that, in providing services to Cotter pursuant to their Agreement, Erwin did act as a real estate broker. We hold that the parties' contractual choice of Washington law is effective and that therefore Washington law governs the Agreement. Applying Washington law, we hold that Erwin can maintain a claim for fees arising from the leasing of Cotter's California SHC facilities. We reverse in part, affirm in part, and affirm the judgment of the Court of Appeals. We remand to the trial court for actions consistent with this opinion. ALEXANDER, C.J.; and C. JOHNSON, MADSEN, SANDERS, BRIDGE, CHAMBERS, OWENS, and J.M. JOHNSON, JJ., concur.