Washington Construction Law Blog

This lien case arose out of a bridge project in Duvall where the subcontractor claimed a lien under RCW 60.28 (retainage) and RCW 39.08 (bond) for sums due from the general contractor.  The case went to trial for 15 days and the jury awarded the sub an amount not specified in the opinion.

As the prevailing party, the sub moved for its fees in the claimed amount of $213,770.  The Court awarded only $135,000.  Part of the rationale was the lawyer's "ponderous questioning" which needlessly extended the trial.  Another major factor was that 7 professionals (four lawyers, three paralegals) billed time to the case for the claimaint.

Well, that settles that...or does it?  Today the Supreme Court issued its decision in the long-running dispute dispute between Scoccolo Construction and the City of Renton - a complete victory for the contractor.  Justice Madsen's concurring opinion, however, raises legitimate questions on just how precedential today's decision is.

This site previewed the Scoccolo case back in May.  The basic issue in the case is the meaning of the acting for" clause in the RCW 4.24.360, which makes it void against public policy for a construction contract to purport to waive the right of the contractor to sue for damages for delay caused by the contractee/owner or persons "acting for" the contractor/owner.

Scoccolo claimed its road widening project was impacted by the failure of certain utilities (Puget Power, US West, TCI Cable) to relocate their utilities to facilitate the progress of the work within Scoccolo's contract.  The trial court ruled as a matter of law the utilities did "act for" the City and, on the basis of that ruling, the jury awarded roughly $400,000 in damages.

The Supreme Court upheld the damage award, finding that the City's power to compel the utilities to relocate their utilities under franchise agreement meant the utilities "act for" the City for purposes of the delay statute.  Unfortunately, the Court does not appear to have separately decided the statutory meaning of the "acting for" clause apart of the way it was interpreted in the jury instruction in this case (which was not challenged on appeal), and for that reason the book may not be fully written on this issue as noted in Justice Madsen's concurrence.

A former client sued Preston Gates for $1.7 million related to the "nightmare" associated with the client's retirement home in Kitsap County.  The client alleged the problems which lead him to sell the home -- primarily cost overruns & insufficient insurance recovery available to the builder which was doing business as an LLC -- were due to the law firm's failure to warn about the danger's associated with a "cost plus" contract with no guaranteed maximum, among other things.

The Court of Appeals upheld summary judgment in favor of the law firm on the ground the client did not prove a "but for" causal connection between the alleged malpractice and his losses.  The case is a must read for anyone who is contemplating building a large custom home or who is asked to represent that person in drafting the contract.

On a school renovation project, the general contractor hired a subcontractor to apply stain to a newly installed concrete floor which had been sealed with a silicone product specified by the architect.  The stain failed to adhere -- washing off after an accidental water spill. 

After settling with the owner and subcontractor, the general contractor brought product liability claims against t he manufacturer and seller of the stain. 

Division 1 first held that the claim under the WPLA (Washington Product Liability Act) was no good because the general contractor suffered only economic loss (failure of the stain itself) which is not covered by the WPLA rather than loss to something else such as the underlying concrete floor or the health & safety of students.

The Court of Appeals gave the green light, however, to the general contractor's UCC warranty claims.  While the defendants claimed the failure was due to improper application or the wrong sealant, the Court held that a trier of fact might well find the stain itself failed to comply with the implied or express warranties under the UCC.

We previewed the ergonomics case in this prior post.  Today the Supreme Court voted 8-1 in favor of allowing L&I to proceed with ergonomics-related investigations under the general duty clause of WISHA.  The employer, supported by the industry, had contended that Initiative 841 passed in 2001 essentially preempted this general authority.  The case is now remanded to the trial court to enforce the investigative subpoena which triggered this dispute in the first place.

There's a lot to chew on in this recent Oregon Supreme Court case arising from a $2.6 million delay and disruption claim, and the basic proposition relied on by the Court is nothing new:  arbitration clauses will be broadly applied and, in case of doubt, all disputes potentially within the scope of the arbitration clause will in fact be shipped off to arbitration for resolution.

The interesting twist in this case is in how the Court applied this general rule to the specific issue of who decides -- as between the court and the arbitrator -- whether a particular issue is in fact subject to arbitration.  Here, one side argued the claimant had no right to initiate an arbitration because it lacked a valid contractor's license.  Traditionally, it was the rule that the Court decides whether an issue is subject to arbitration and the arbitrator decides the merits of the dispute if it is subject to arbitration. 

That rule is good as far as it goes, but leaves open an important battleground:  if one side argues that (for example) the other side has waived its right to arbitrate (or, as in this case, lacks standing because it has no license), who decides this threshold issue?  Under this Oregon case, the threshold issue goes to the arbitrator because it is characterized as a "procedural" defense to arbitration rather than a "substantive" one.

This holding is part of a broader trend - spearheaded by the American Arbitration Association (AAA) - to expand the power of the arbitrator to decide an important array of threshold and jurisdictional defenses to arbitration. 

The lesson here is relatively simple:  if you enter into an arbitration clause but want the court to maintain some control over which issues actually get referred to arbitration for decision, you need to be very explicit in how you (a) write the clause and (b) define the scope of the arbitrator's authority.  Because once the issue is decided by the arbitrator, the courts will not entertain any kind of appeal absent some sort of egregious circumstance.