Four Significant Supreme Court Cases Scheduled for Argument in May
The Supreme Court will take up four significant issues in cases scheduled for oral argument this month:
1. Surety Law. Whether a surety's obligation to a contractor on a subcontractor's performance bond was conditioned on the contractor declaring a default before the subcontractor substantially completed the work and whether a contractor may recover attorney fees from the surety of a subcontractor in an action to recover on the performance bond, under the rationale of Olympic Steamship Co. v. Continental Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991). For further information, go below the fold.
2. Discovery Rule. Whether the discovery rule applies to actions for breach of contract, and if so, whether RCW 4.16.326(1)(g), which bars the use of the discovery rule in actions based on construction contracts, applies retroactively. No. 77362-9 (cons. w/77846-9), 1000 Virginia Ltd. P'ship (respondent) v. Vertecs Corp. (petitioner); Lombardi (respondent) v. JTE Constr., Inc. (petitioner). (5/16/06)
3. Registation Statute. Whether, in an action against a contractor and its surety bond, the attorney fees available to the prevailing plaintiff under RCW 18.27.040(6) are recoverable against both the contractor and the bond. No. 77661-0, Cosmopolitan Eng'g Group, Inc. (respondent) v. Ondeo Degremont, Inc. (petitioner). (5/25/06)128 Wn. App. 885 (2005). For WCL's prior coverage of this case, click here.
4. Delay Damages. Whether utilities that removed or relocated their facilities pursuant to a city-contracted street improvement project "acted for" the city, thus rendering void, under RCW 4.24.360, a contract clause barring the contractor from recovering damages for delays caused by the utilities. No. 77459-5, Scoccolo Constr., Inc. (petitioner) v. City of Renton (respondent). (6/6/06)
Surety. This case involves some fairly dense issues of surety law - specifically, whether a surety's obligation to a contractor on a subcontractor's performance bond was conditioned on the contractor declaring a default before the subcontractor substantially completed the work. The Court of Appeals said no, holding the surety (ICW) was liable on the subcontractor bond even absent a formal declaration of default. Not exactly your everyday issue since a true default is ordinarily assumed, but interesting nonetheless.
Of equal interest is the second issue in the case -- whether a contractor may recover attorney fees from the surety of a subcontractor in an action to recover on the performance bond, under the rationale of Olympic Steamship Co. v. Continental Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991). Olympic Steamship applies to liability policies without a doubt. The issue here is whether it extends to surety insurance. Lower Washington courts have said yes, but it's an issue of first impression with the Supreme Court.
