Washington Construction Law

Change of Address - Visit our New Site

2006-01-04T10:18:00.000-08:00

WCL has moved. This site will not be updated any longer. Instead, please visit us at http://www.waconstructionlaw.com/. Thanks!

Disclaimer This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Finally, statements made in this Blog/Web Site are the viewpoints of the individual authors, and do not necessarily reflect the views of Davis Wright Tremaine LLP or any of its clients

SnoCo Council Taps Brakes on Rural Development

2005-12-22T11:04:00.000-08:00

Fireworks of a sort at yesterday's Snohomish County Council meeting, where by a 3-2 vote the Council adopted a somewhat more restrictive GMA development blueprint than was anticipated. http://www.heraldnet.com/stories/05/12/22/100loc_a1growth001.cfm

What 1-901 Means for Job Sites

2005-12-21T08:15:00.000-08:00

The AGC is up with a summary of what Initiative 901 (requiring work places and enclosed public spaces to be 100% smoke free) means for contractors and job sites. http://agcwa.com/Public/newsletter/2005/1205/smokingban.asp

GC/CM Report Card

2005-12-20T09:09:00.000-08:00

In 1991, Washington first authorized the GC/CM delivery system for certain public works. Since that time, about 53 major projects have been built under this model. The Legislature wanted to know how things are going. The attached study gives the report card. http://www1.leg.wa.gov/reports/05-9.pdf

Court Affirms Judgment Prohibiting Use of City Light Money to Fund Public Art

2005-12-20T08:27:00.000-08:00

Division I wasn't impressed by City Light's claim that spending $3 million on public art had the required "close nexus" to the agency's primary task of supplying electrical power: "The City's evidence consists only of broad, general statements about the applicability of the disputed projects to the goals of conservation and education without any explanation as to how the projects furthered these goals." http://www.courts.wa.gov/opinions/?fa=opinions.opindisp&docid=551043MAJ.

The case arises from a challenge to the validity of Seattle Municpal Code Section 20.32, which requires City Light and other city departments to allocate 1% of budget for their capital construction projects within Seattle for the support of public art. The Court ruled that while certain art purchases are OK, "the trial court correctly prohibited the City from relying on conservation education as a pretext for art projects whose purpose was to benefit the general public."

Division I Rules Arbitration Award Does Not Accrue Interest Akin to Judgment

2005-12-15T18:00:00.000-08:00

Division I holds that arbitration award is akin to jury verdict rather than final judgment, and thus does not accrue prejudgment interest. http://www.courts.wa.gov/opinions/?fa=opinions.opindisp&docid=558676MAJ

Court to Contractor: Administration Costs Not Compensable under Oral Cost-Plus Contract

2005-12-13T11:41:00.000-08:00

Those who dare to contract on an oral, cost-plus basis are subject to the rules made by the court to determine exactly what costs are included -- and excluded -- from the definition of reimbursable cost. And in Washington, despite the unfortunate frequency with which owners and contractors resort to this informal process, there is precious little law on the issue.

In Keever & Associates v. Randall, 129 Wn. App. 733 (2005). Division III recently held that a GC's administrative time is not separately chargeable to the owner as a matter of law under a cost-plus arrangement. Instead, such administration time is subsumed by the "plus" portion of the cost-plus formula.

Taken to the extreme, this holding could mean bad things for GCs under the oral cost-plus regime. For example, it could mean the GC may not separately charge for its superintendent or project manager time. A literal reading of "cost" for this purpose might, the Court seems to suggest, be limited to the expenses paid to third parties such as subcontractors or vendor.

Busy Cranes Are Happy Cranes

2005-12-12T08:22:00.000-08:00

The most intriguing part of this article is not that the region's tower cranes are booked up, but that they are booked up largely on residential and mixed use projects - not office towers. http://seattletimes.nwsource.com/html/businesstechnology/2002678649_cranes12.html

Federal Suit Challenges Idaho's Highway Management Program

2005-12-08T09:52:00.000-08:00

Idaho's selection of the Washington Group/CH2M Hill team for program administration in connection with the state's ambitious highway redevelopment plan has triggerred a federal lawsuit by Parsons Brinckerhoff, according to ENR. http://enr.ecnext.com/free-scripts/comsite2.pl?page=enr_document&article=nefiar051212a. PB (teamed with HDR Engineering) alleges in the suit that Idaho violated federal law by weighting the selection process with in-state preferences.

Here's the most recent news, courtesy of the Statesman in Boise. http://www.idahostatesman.com/apps/pbcs.dll/article?AID=/20051208/NEWS01/512080347

Update: The Idaho transportation board voted December 14 - reluctantly, and under pressure from the feds - to reconsider the award to Washington Group. http://www.idahostatesman.com/apps/pbcs.dll/article?AID=/20051215/NEWS06/512150363 . While WCL is far removed from the action, the fix still seems to be in on this contract award. Look for Washington Group to be re-awarded the contract shortly after the New Year.

Burien Hit with Large Verdict in Permit Denial Case

2005-12-08T07:22:00.000-08:00

There is a lot of litigation by developers against cities for arbitrary conduct in permit application -- but much of it is invisible, gets settled and rarely reaches a jury for decision. Here's what happened to the City of Burien in a long-running dispute in connection with a proposed 200 unit complex: $10.5 in damages awarded to the developer. The City intends to appeal. http://seattlepi.nwsource.com/local/251278_lawsuit08.html

GC or CM: How to Tell the Difference

2005-11-30T07:12:00.000-08:00

Want to know more about the distinction between the duties of a general contractor vs. a construction manager? Check out a new Mississippi case posted at www.constructionownerslawblog.com. Given the current lack of guidance from Washington courts on this evolving issue, it's good to keep up with what's happening elsewhere.

Church Cleared to Demolish Historic Structure for Office Tower

2005-11-23T08:26:00.000-08:00

In an interesting conflict that pitted free religious exercise against historic preservation, First United Methodist Church (FUMC) has won the right to proceed with demolition of its existing church sanctuary located in downtown Seattle on a block also occupied by the Rainier Club. http://www.courts.wa.gov/opinions/?fa=opinions.opindisp&docid=557319MAJ FUMC plans to replace the existing church with a 33-story office tower, the lower levels of which would house FUMC's office and human services facilities.

Owner Allowed to Bring Tort Claim Despite Having Signed RESPA

2005-11-23T07:55:00.000-08:00

WCL brings you the latest dispatch from the "economic loss doctrine" front: a Division II decision that allows a home buyer to proceed, in tort, against the developer of a lot to recover for property damage caused by water intrusion. As the Court dryly summarized the evidence: "They [owners] eventually discovered that water up to five inches deep had accumulated in the home's crawl space and would not drain. They also discovered mold in the home and the crawl space below." http://www.courts.wa.gov/opinions/?fa=opinions.opindisp&docid=313286MAJ
"We decline to hold that the mere existence of a REPSA, by itself and without more, is sufficient to trigger the economic loss rule that would bar virtually every real estate purchaser from seeking relief in tort for property damage..."

Stormwater Permit Regulations Modified to Include Small Sites

2005-11-21T13:54:00.000-08:00

Builders, especially in single-family subdivisions, will now need stormwater general permits for construction sites as small as 1 acre as part of the new construction stormwater general permit requirements the state Department of Ecology released recently, according to today's Daily Journal of Commerce. The law becomes effective Dec. 16, 2005. The DJC quotes Jeff Killelea, Ecology's lead permit writer, as summarizing the three big changes in the new permit: the drop from 5 acres to 1 acre in site size; water quality monitoring requirements; and special provisions for some sites that discharge into polluted waters. For further info: http://www.ecy.wa.gov/programs/wq/stormwater/construction/small_const.html

School District Not Bound by Six-Year Statute of Limitation in Defect Case

2005-11-18T11:00:00.000-08:00

Contractors doing work for public entities would be wise to check out the recent King County Superior Court ruling in a $4 million defect dispute arising from the construction of a school on Vashon Island. The effect of the ruling: the contractor can be sued at any time beyond the normal six-year statute of limitation. Vashon Island School District v. Bassetti Architects et. al., No 05-2-09083-9SEA (Order Denying Summary Judgment dated October 10, 2005).

The GC achieved substantial completion in 1994. That same year, the Owner expended more than $4 million to correct alleged defects in the work. In 2005, the Owner sued for breach. The GC moved for summary judgment on the basis of the six-year statute of limitations, which the Legislature recently strengthened to mean that the "discovery rule" will not apply in cases based on construction contracts. RCW 4.16.326(g).

The parties stipulated that the claim "accrued" in 1994 --meaning that the applicable statute of limitation began to run at that time. The trial court reasoned, however, that no applicable statute of limitation constrained the District due to RCW 4.16.160, which provides in part that actions brought "in the name of or for the benefit of the state" shall be exempt from the running of statutes of limitation.

If the court's analysis is correct, contractors doing business with public owners would appear to be exposed to stale claims for an unlimited time period. And given the difficulties in attempting to negotiate contract changes (such as a contract-based limitation period) in public works context, the existing statutory scheme may be ripe for a fix if the court's analysis is correct.

The "Economic Loss Doctrine" Revisited

2005-10-22T16:17:00.000-07:00

The case the Supreme Court heard on September 29, 2005 is not exactly a construction case. But its impact on one of construction law's most formidable doctrines -- the "economic loss doctrine" -- could be significant indeed.

The Supreme Court is reviewing the decision in Alejandre v. Bull, 123 Wn. App. 611, 98 P.3d 844 (2004), which arose from the purchase and sale of a home where the septic tank wasn't to the buyer's satisfaction. The buyer sued for damages. The trial court ruled for the seller, holding that the "economic loss doctrine" barred the claim. The Court of Appeals disagreed.

The issue before the Supreme Court is whether the economic loss rule, which bars tort claims for purely economic damages arising from a contractual agreement, requires that the contract expressly allocate the specific risk giving rise to the tort claims. The contract in the home sale at issue lacked any such allocation of risk, and on that basis the Court of Appeals held that doctrine was inapplicable.

Going out on a limb, WCL looks for the Supreme Court to reverse and reinstate judgment for the seller in this case. The economic loss doctrine probably turns on the existence of the contract itself, not whether the contract specifically allocates any particular risk. But, hey, I don't wear the black robe.

The "Completion and Acceptance" Doctrine in Washington

2005-10-22T15:49:00.000-07:00

It's rare for a construction case to reach the Supreme Court, and rarer still when the issue presented is the infrequently explored "completion and acceptance" doctrine.

On November 9, 2005, the Supreme Court will hear argument on the validity of "completion and acceptance" doctrine, which generally provides that a contractor’s liability to third parties is extinguished when the contractor’s work is complete and accepted by the owner. The case is
Davis v. Baugh Indus. Contractors, Inc.

The trial court awarded summary judgment to the contractor defendants in this case on the basis of this doctrine. The Supreme Court will decide whether that was the right thing to do. Based on a quick check, it appears the last time the Supreme Court addressed this doctrine was . . .1960. While this doctrine is currently recognized in Washington (Tennyson v Plum Creek Timber Co. L.P., 73 Wn.App 550, 558, 872 P.2d 524 (1994), it is subject to certain exceptions. WCL doesn't know if the Baugh case turns on the exceptions to the rule or the validity of the rule itself. Stay tuned.

Judge Orders Roof Replacement in View Case

2005-10-22T08:52:00.000-07:00

In legal terms, it's called abatement: removal of some offending condition or structure. In a recent King County Superior Court trial, the abatement doctrine was applied to require a downslope landowner in West Seattle to remove a pitched roof which disturbed a view easement enjoyed by the up-parcel owner and replace it with a flat roof. Said the Judge: "A defendant who commences and continues to build a project, while a lawsuit is pending which challenges the legality of such a project, continues at the risk of abatement." http://seattlepi.nwsource.com/local/243861_bighome08.html

Initiative 912

2005-10-19T10:44:00.000-07:00

Since this is my soapbox, I will shamelessly plug the anti-912 forces with this link. http://www.voteno912.org/ We either move forward or remain stuck in the quagmire of the status quo. It's that simple.

Contractor Liable for Legal Fees in CRA Suit

2005-10-18T11:16:00.000-07:00

Under the Contractor Registration Act (CRA), contractors are required to obtain a surety bond of ordinarily $12,000 in penal sum. See RCW 18.27.040. Because of the small size of the bond, this statute doesn't get a lot of attention and doesn't raise much liability concern in the typical case.

Under a new decision from Division II, however, the risk of being hit with a large legal fee will often eclipse the liability under the bond itself. In Cosmopolitan Eng'g. Group v. Ondeo Degremont, Inc., an engineering subconsultant sued both its prime engineer and the property owner for unpaid bills after assisting in evaulating the feasibility of modifying a brewery facility in Olympia. The case went to trial and the subconsultant won. The jury awarded $104,420.

The issue on appeal was who has to pay the prevailing party's legal fees and in what amount. Overruling the trial court, Division II held that the contractor itself must pay the other side's fees (rather than limiting that obligation to the bond, as the trial court ruled). As a correlary, the Court of Appeals also seems to have held that the amount of the fee award is not capped by the size of the bond at least as it relates to the contractor's liability.

The impact of this case will depend on your contract. If you already have a clause in your contract that entitles the other side to collect its legal fees in the event of a suit, the case probably adds nothing new to the mix. But if you have an oral contract or a written contract which is silent on the issue of legal fee recovery, this case does inject a solid new shot of liability into what many contractors regard as a low-risk statute.

Overcoming the "Economic Waste" Doctrine

2005-10-17T15:03:00.000-07:00

The "economic waste" doctrine is an equitable doctrine that must give way to whatever remedy is provided for in the contract between the parties. So sayeth Division I in a recent case involving a Costco store in Bellingham. http://www.courts.wa.gov/opinions/?fa=opinions.opindisp&docid=533649MAJ

Owner Beware: No "Third Party Beneficiary" Status

2005-10-17T14:45:00.000-07:00

A recent case out of Division II highlights the rather precarious position occupied by the Owner in a turnkey project delivery -- whether commercial or residential: you can't sue remote contractors or trades because you are generally not considered to be a "third party beneficiary" of your seller's contracts with the firms that actually built your home or facility. That leaves the Owner's remedies limited to whatever the purchase and sale agreement may provide, not what the underlying construction contracts may provide.

In Warner v. Design and Build Homes, Inc., the Owner sued because of structural defects and mold growth in the home. As against the seller, the suit was barred because of an "as is" clause in the contract which Division II held to be enough to disclaim the implied warranty of habitability under Washington law.

Lacking recourse against the seller, the Owner also attempted to bring a direct claim against one of the seller's subcontractors, the stucco applicator. But the Court held the Owner was not an intended beneficiary of this subcontract and thus dismissed the Owner's claim on summary judgment.

An Owner in a turnkey project wishing to avoid a similar fate will negotiate for one of two fixes to this problem -- either an assignment of rights putting the Owner into the shoes of the seller for purposes of bringing such claims, or a new clause in the contract specifically naming Owner as a "third party beneficiary" of the seller's construction agreements with the trades.

Construction Defects & Indemnity

2005-10-17T07:54:00.000-07:00

Indemnity. Given the complexity of major projects -- where the intersection of multiple parties can yield unanticipated and costly problems -- there may be no single clause in a construction contract more essential than the indemnity provision.

A new Washington Court of Appeals case is an instructive lesson in how the language used in the indemnity clause matters. That case is Heritage at Deer Park Owners Association v. Kirtley-Cole Associates, handed down on August 8, 2005.

This was a condo case where the Owner believed the GC was liable, under the indemnity clause in the prime contract, for assorted (and no doubt "alleged") defects existing in the project. The GC said: No, the indemnity clause is limited in scope to "property damage" claims and a mere lapse in quality (again, "alleged") doesn't constitute such damage.

The Court agreed with the GC and denied the Owner's indemnity claim. In doing so, the Court stakes out a two-part test for distinguishing between construction defects and damage to property, in turn which focuses on the nature of the defects and the manner in which the damage occured. Presumably, the Owner would still have regular breach of contract claims separate and apart from the indemnity claim which the Court rejected.