Washington Construction Law Blog

A classic economic loss scenario: 

The City of Seattle owns the Monorail between downtown and Seattle Center and has a contract with a JV who operates the Monorail.  In 1999, the City hired a design firm (LTK) under a separate contract to identify and repair problems with the Monorail trains.  The JV had no contractual relationship with LTK.  In 2004, one train caught fire.  The JV's insurance company paid the claim then blamed LTK for causing the fire. 

Got it? 

Into the thicket of Washington's economic loss doctrine now comes the 9th Circuit in this recent case certifying a question of state law to the Supreme Court, specifically:

May party A (here, SMS, whose rights are asserted in subrogation by [carrier]), who has a contractual right to operate commercially and extensively on property owned by non-party B (here, the City of Seattle), sue party C (here, LTK) in tort for damage to that property, when A (SMS) and C (LTK) are not in privity of contract?

At first blush, this issue might appeared to have been cleanly resolved by Berschauer/Philips v, Seattle School District (1994), but wait: the 9th Circuit thinks there are unresolved issues lurking in that case that need to be addressed: 

1. First, the 9th Circuit notes that in Berschauer the claimant had been assigned the right to prosecute claims against the remote third party and thus the claimant still had a meaningful remedy.  Would the doctrine still apply in this situation, where the JV appears not to have acquired the right to sue LTK by way of assignment of rights from Seattle?
2. Second, is the JV's right to operate the Monorail a "property right" such that fire damage to the train would come within an exception to the doctrine for harm to personal injury or property damage?

Stay tuned...the Supreme Court is not bound by the 9th Circuit's framing of the issue and could use this case as an opportunity to significantly revise the scope of the economic loss doctrine in Washington.

Puzzled by the Buy American clauses in the new federal stimulus act?  Or just  curious?  Here's an excellent run down written by DWT's Craig Gannett.

In a case of first impression, the Supreme Court yesterday held that because the primary purpose of Safeco Field is public recreation, claims stemming from design and construction of the stadium are exempt from the statute of limitation under RCW 4.16.160 (which provides that claims brought for the benefit of the state are not subject to statutes of limitation).  This is believed to be the first case in the country addressing the time periods for suit applicable to professional sport facilities constructed with public and private funds.

The decision clears the way for the two plaintiffs (the PFD and the Mariners) to collect more than $3 million in damages from the contractor JV based on the failure of the intumescent fire protection coating system on the stadium's structural steel.

Copy of opinion also available here Download file

'Tis the season for legislation and all that good stuff...here's rundown of a few items winding their way through the Capitol which are of interest to the construction industry:

1. False Claims Act.  A proposal to create a false claims act in Washington (Senate Bill 5144)  is being opposed by the AGC.
2. Subcontractor Listing Statute.  Major revisions to this statute (RCW 39.30.060) are proposed in Substitute Senate Bill 5969.
3. Viaduct Tunnel Project.  This bill proposes to put the deep bore tunnel option on the fast track.