Washington Construction Law Blog

The venerable Spearin doctrine receives a thorough vetting in this new Court of Federal Claims case.  In decidedly pro-owner fashion, the Court denied a structural steel fabricator's Spearin claim against the VA.

Copy of opinion also available here Download file

Here, a jury rejected a condo developer's case against its property insurer (Safeco) for decay to the structure due to rainwater infiltration caused by poor construction & Division One affirmed because:

• The ultimate loss -- decay to the building -- was an excluded loss, and therefore the ensuing loss doctrine did not apply.
• The "collapse" provision of the policy -- which the Court held to mean there's coverage for any "substantial impairment of structural integrity" -- did not apply because the jury elected to believe Safeco's experts rather than the Owner's experts on the nature & severity of the decay, and
• There was no reversible error in Safeco's untimely disclosure of a draft expert report because there was insufficient prejudice to the Owner given that the report was made available toward the end of trial and counsel had the opportunity to cross-examine Safeco's expert on the draft report.

Copy of opinion also available here Download file

While it took four separate opinions involving the nine Justices, yesterday the Supreme Court decided in the Colorado Structures v. Ins. Company of the West case that:

1. By a 6-3 vote, the Obligee on a surety bond (i.e., the GC where a subcontractor bond is at issue, and the Owner where a GC bond is at issue) need not declare the Principal (the subcontractor or GC) to be in default before triggering the Surety's liability on the bond, and
2. By a 5-4 vote, the Olympic Steamship doctrine applies to surety bonds, which now means that the party seeking relief on the bond (normally the Obligee) is entitled to recover its attorneys fees as the prevailing party and that such recovery is not limited by the penal sum of the bond.

Of the two holdings, the Olympic Steamship may be the more durable because the surety industry presumably can (as signaled by the lead opinion) tinker with the language of the standard bond form to make a declaration of default -- which the Court defined as an intent to terminate the contract, as distinguished from a breach of the contract -- to be a true condition precedent to the surety's duty to pay.  The Olympic Steamship holding, by contrast, was the Court's policy determination that fees ought to be paid in this context just as they are paid in the liability insurance context

Copy of lead opinion also available here Download file

The next time you have a construction law issue in any of these splendid states -- Alabama, Arizona, California, Florida, Georgia, Illinois, Kansas, Louisiana, Michigan, Minnesota, Missouri, New York, North Carolina, Pennsylvania or Virginia -- this useful compendium would be a good first place to look for the answer.

Yet another example of the discovery quagmire created by widespread email use on construction projects.  Here, in producing more than 3,000 emails, the attachments to the emails were separated from the emails due to some type of software incompatibility.  This snafu gave rise to a heated discovery battle over whether the owner had to re-produced the emails with restored attachments (very expensive) and if so who pays.  Bottom line: the owner was ordered to re-produce the emails, with attachments, at its expense.

Copy of opinion also available here Download file

This case arose from a home remodel contract and went to private arbitration before Seattle arbitrator Don Logerwell who ruled in favor of the contractor.  In seeking to vacate the award, the owner claimed that Logerwell was biased toward the contractor because of a close relationship with the contractor's counsel.

The Court rejected this challenge on procedural grounds, holding that the owner had failed to raise the challenge in a "timely" manner -- which the Court defined to be "upon learning of any basis of partiality and before the arbitrator makes a decision."  The Court held that Logerwell had disclosed his "specific relationships with both attorneys" prior to the commencement of the arbitration and therefore the owner could not, as a matter of law, mount a post-award challenge to the validity of the award.

Copy of opinion also available here Download file