Severin!
A rare sighting of the Severin doctrine is on display in this Division 2 case released yesterday in the Natkin-Scott v. M+W Zander litigation.
As Severin encourages, a GC and sub entered into a pass-through agreement whereby the GC assigned its rights against the owner to the sub & the sub agreed to look solely to the owner for recovery in alleged impact claims.
There was one major but unknown problem -- the GC was unregistered & thus lacked the authority to bring claims against the owner. The assignment of claims was, therefore, hollow. After the owner defeated the pass-through claim on this ground, the sub turned back against the GC claiming the GC had breached an implied warranty that the assigned cause of action actually existed (relying on Section 333 of the Restatement (Second) of Contracts).
Division 2 held in favor of the GC and dismissed all of the sub's claims. The basis of the holding was language in the Severin Agreement that both parties assume the risk of any mistake of fact or law. The Court held that the GC's lack of registration -- and consequent lack of authority to bring claim -- was a mistake shared by both GC and that the risk of that mistake was transferred to the sub under the terms of the Severin Agreement.
Copy of opinion also available here Download file
What would be the ruling under the following scenario? General Contractor has a subcontractor and both parties are impacted by design delays on a public works project with the State of Washington. General Contractor proceeds during the course of construction, to terminate said subcontractor for lack of performance separate from the design delay. Can General Contractor submit a claim on behalf of self and terminated subcontractor? Award would be used to offset additional costs to replace said subcontractor.