Washington Construction Law Blog

The case the Supreme Court heard on September 29, 2005 is not exactly a construction case. But its impact on one of construction law's most formidable doctrines -- the "economic loss doctrine" -- could be significant indeed.

The Supreme Court is reviewing the decision in Alejandre v. Bull, 123 Wn. App. 611, 98 P.3d 844 (2004), which arose from the purchase and sale of a home where the septic tank wasn't to the buyer's satisfaction. The buyer sued for damages. The trial court ruled for the seller, holding that the "economic loss doctrine" barred the claim. The Court of Appeals disagreed.

It's rare for a construction case to reach the Supreme Court, and rarer still when the issue presented is the infrequently explored "completion and acceptance" doctrine.

On November 9, 2005, the Supreme Court will hear argument on the validity of "completion and acceptance" doctrine, which generally provides that a contractor's liability to third parties is extinguished when the contractor's work is complete and accepted by the owner. The case is
Davis v. Baugh Indus. Contractors, Inc.

In legal terms, it's called abatement: removal of some offending condition or structure. In a recent King County Superior Court trial, the abatement doctrine was applied to require a downslope landowner in West Seattle to remove a pitched roof which disturbed a view easement enjoyed by the up-parcel owner and replace it with a flat roof. Said the Judge: "A defendant who commences and continues to build a project, while a lawsuit is pending which challenges the legality of such a project, continues at the risk of abatement."

Since this is my soapbox, I will shamelessly plug the anti-912 forces with this link. We either move forward or remain stuck in the quagmire of the status quo. It's that simple.

Under the Contractor Registration Act (CRA), contractors are required to obtain a surety bond of ordinarily $12,000 in penal sum. See RCW 18.27.040. Because of the small size of the bond, this statute doesn't get a lot of attention and doesn't raise much liability concern in the typical case.

The "economic waste" doctrine is an equitable doctrine that must give way to whatever remedy is provided for in the contract between the parties. So sayeth Division I in a recent case involving a Costco store in Bellingham.

A recent case out of Division II highlights the rather precarious position occupied by the Owner in a turnkey project delivery -- whether commercial or residential: you can't sue remote contractors or trades because you are generally not considered to be a "third party beneficiary" of your seller's contracts with the firms that actually built your home or facility. That leaves the Owner's remedies limited to whatever the purchase and sale agreement may provide, not what the underlying construction contracts may provide.

Indemnity. Given the complexity of major projects -- where the intersection of multiple parties can yield unanticipated and costly problems -- there may be no single clause in a construction contract more essential than the indemnity provision.