Washington Construction Law Blog

Lots to chew on in this new case from Division 1 arising from a King County project where a subcontractor to Coluccio experienced a tunnel shaft "blow-in" which in turn lead to project delays and costs of repair.  Main holdings appear to be:

1. An owner who promises to buy property insurance (i.e., All Risk coverage under a builders risk policy) but then fails to do so "assumes all risks of loss" and is thereby responsible for "the full amount that would have been covered by insurance" had the policy been purchased.  In other words, the owner steps into the shoes of the insurer.
2. The initial burden is on the claimant (here, Coluccio) to establish the loss would have fallen within the coverage of the policy -- in this case, that the "blow-in" was a fortuitous event.
3. If established, the burden shifts to the owner to prove that coverage would be negated by any exclusion.  In fact, the owner can "only escape liability for the losses suffered by proving at trial that every all risk builder's risk insurance policy available for purchase, without exception, would have excluded the losses" claimed by Coluccio.
4. King County in this case failed to prove that the "faulty workmanship" exclusion would have applied, according to the Court, because some builder's risk policies only negate coverage under this exclusion if the contractor was negligent (and here, there was no finding of negligence).

The case is Coluccio Construction Company vs. King County.  In addition to the $1.5 million verdict, Coluccio was awarded over $300,000 in legal fees and costs under RCW 39.04.240 (the offer of settlement fee statute applicable to public works projects).

The venerable completion & acceptance doctrine -- which holds that a builder is immune from personal injury suit filed by injured third parties once the owner has accepted the completed work -- is now officially dead in Washington, according to this new 6-3 ruling frorm the Supreme Court. 

The facts of the case were that Baugh completed its work on a processing facility in 1997.  In 2000, the owner suspected a leak in one of the pipes installed by Baugh and sent in a crew to excavate the area to find the leak.  A crew member died when the excavation hole collapsed.  The suit by the deceased worker's estate against Baugh was thrown out by the lower court based on the completion & acceptance doctrine.

Reinstating the suit, the Supreme Court adopted the rule that a negligent builder can be sued by an injured third party, subject to the 6 year statute of repose.

 

 

At the crossroads between agriculture and insurance, Division 3 recently held as follows in a case of rotten onions damaged when someone who was instructed to turn off the irrigation instead turned it on, causing said onions to, well, rot:

• Turning on the water -- while an intentional act in itself -- was nonetheless a covered accidental "occurrence" within the meaning the policy because the wrongdoer did not intend the adverse consequence of his act .  Nationwide Mutual Ins. Co. v. Hayles (1/04/07).

This holding has application to construction defect claims.  For example, if a drywall sub intentionally deviates from the installation details in the design, the resulting damage is still covered unless the sub also intended for that resulting damage to occur.

And lest there be any doubt, Division 3 also settled this significant issue: "An onion is not the same thing as the soil it is grown in."   Enough said.

While this is not a construction case strictly speaking, it does present a scenario which comes up once in a while in construction disputes and therefore merits a brief mention.  A corporation can only participate in a lawsuit through counsel, and here a case filed by a nonlawyer for a corporate plaintiff was dismissed as frivolous under CR 11 even though the result was such that it could not be re-filed because the statute of limitation for a properly filed complaint had since expired.

General contractors and sureties received a nice little Christmas gift late last week when the Washington Supreme Court issued its decision in Cosmopolitan Eng'g Group v. Ondeo Degremont.  The case involved a claim made by an unpaid subcontractor against the Contractors Registration Act (RCW 18.27) bond issued to the general contractor.  The issue in the case was whether the subcontractor, as the prevailing party, could recover its legal fees from the general contractor in addition to the bond itself. 

The Court of Appeals said yes, and thus opened the door to substantial new liability for GCs since legal fee awards can easily exceed the $12,000 statutory bond amount.  For WCL's background on the Court of Appeals decision, see here.

The Supreme Court reversed, holding the subcontractor could recovery its fee award only from the surety whose liability in turn is capped at the penal sum of the bond.