Washington Construction Law Blog : Washington Construction Lawyer & Attorney : Davis Wright Tremaine Law Firm : Serving Seattle, Spokane, Tacoma, Bellevue, Everett & Yakima

If you need to figure out whether that disappointing arbitration award you received can be vacated for conflict of interest on the part of the arbitrator, here's the recent Division 1 case to read.

Copy of opinion also available here Download file

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Division 1 in this new case raises the bar a bit higher on RCW 60.04.081's summary procedure for vacating frivolous liens on private jobs -- the lien must be "so devoid of merit that the claim has no possibility of succeeding."

The Court offered three examples for when the summary process (decided on motion with no live testimony) is best suited -- whether the lien is signed by the proper party, whether the lien was properly served, and whether the lien's content complied with statutory requirements.  The case in question, by contrast, involved issues of scope of work and intent of the underlying subcontract.

Copy of opinion also available here Download file

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There's a relatively new blog prowling the real estate and construction landscape, maintained by the Tacoma law firm of Dickson Steinacker.  Let's see if they can keep up with the DWT real estate blog!  Hey, a little friendly competition is a good thing, right? 

Good luck to the Dickson firm with their nice looking, informative blog.

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The Supreme Court on Tuesday ruled an arbitration clause can be applied against (or for the benefit of) persons who do not sign the clause, as long as governing state law makes that extension to nonsignatories possible. 

At issue in Arthur Anderson LLP v Carlisle was a tax shelter scheme gone bust, which in turn generated suits by individual investors who had put money into the tax shelters against the advisors and lawyers who recommended the illegal schemes.  Certain LLCs created for the purpose of facilitating the tax scheme (but not the individual investors themselves) signed contracts containing arbitration clauses with one or more of the defendant advisors.

When the investors filed suit in federal district court, the defendants moved for a stay under Section 3 of the Federal Arbitration Act (FAA) on the ground that the issues in the suit were "referable to arbitration under an agreement in writing" under Section 3.  The plaintiff/investors fought this, contending that they are not individually bound by whatever clauses the LLCs had signed.

The Supreme Court held that state law governs the issue of whether such clauses can be extended to nonsignatories, and there's nothing in the FAA itself that preempts or overrides whatever the outcome is under that state law.

Note:  Washington state law is well-settled on the fact that nonsignatories can in certain circumstances be bound by -- or take advantage of -- arbitration clauses.  See McClure v. Davis Wright Tremaine, 77 Wn. App. 312 (1995).

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Division 2 today joins Division 1's recent decision in Carlile v. Harbour Homes holding that claims for fraudulent misrepresentation are barred by the Economic Loss Rule.

Copy of opinion also available here Download file

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Mike Purdy's timely and useful summary of the ins and outs of the Washington State public works retainage law, recently revised by SHB 1555, is available here in this post to his public contracting blog.

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This case, the latest from Division 1 in its treasure chest of condo defect / insurance coverage cases, contains two notable nuggets:

1. A 14 month delay in responding to a tender of defense and indemnity was bad faith as a matter of law, estopping the carrier from denying coverage under the additional insured endorsement it issued to a GC under a subcontractor's policy.  As a result, the carrier had to pay both the defense costs incurred by the GC as they pertained to the subcontractor's scope of work as well as the portion of a related settlement that the GC paid to the HOA.
2. That estoppel remedy, however, did not run so far as to sweep into the policy liability for claims made against the GC that arose from work not performed by the particular subcontractor that the carrier insured.  The Court rejected the GC's argument that bad faith in handling a claim related to a particular sub's work made the carrier liable for all of the GC's liabilities on the entire project, regardless of cause. 

Copy of opinion also available here Download file

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Walla Walla College hired a tank company in 1991 to install two underground gas storage tanks.  In 2001, approximately 10,000 gallons of gas leaked from one tank into the ground.  The tank installation contractor had two CGL policies in effect from 1990 to 1992. 

Seeking coverage under those policies to pay for the cleanup costs, the College claimed that the triggering "property damage" occurred at the time of installation in 1991 due to the installer's failure to use proper backfill which in turn set in motion stress to the tank which ultimately lead to the failure and leakage.  The carrier, on the other hand, claimed that there was no covered "property damage" until the leakage in 2001.

Division Three held that mere stress to the tank was not enough to constitute "property damage" and therefore denied coverage for the loss under the 1990-1992 policies.  First, the Court noted that the "your product" exclusion" negated any coverage for loss in value to the tank itself.  Next, the Court distinguished continuous trigger cases such as Groul Construction Co., Inc. v. Ins. Co. of North America, 11 Wn.App 632 (1974) by noting that while "a process began" in 1991, the "property damage did not occur until the tank failed in September 2001, long after the policies had expired."

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OK, after a week in Mexico on vacation, yours truly in back in the saddle and ready to continue bringing you the latest and greatest in all matters construction...but in the meantime, I offer a few harmless graphics as a reminder of a great week away and a harbinger of things to come now that the weather is turning to margarita season:

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