Washington Construction Law Blog

So you wrap up a lawsuit and enter into a settlement agreement in which one side agrees to pay money to the other side in exchange for mutual releases and other typical settlement clauses.

But then the party required to make the payment, well, doesn't pay.  What happens to the claims that were released?  Do they come back to life?  Or does the failure to pay merely give the wronged party to right to sue to enforce the payment obligation in the settlement agreement?

Division 1 holds in this case that, unless clearly stated otherwise, a settlement agreement is merely an "executory" contract rather than a "substituted" contract -- and therefore the wronged party can revive its released claim and go back to court. 

Copy of decision also available here Download file

Another chapter in the story of what happens when good folks use bad contracts.

Owner contracted with electrical contractor to upgrade service in a 5 unit apartment.  The Contract stated: "Payment in full at time of completion."

The electrical contractor sued when Owner refused to make payment in full.  And in fact the electrician did not obtain a final inspection from the City of Walla Walla until the time of trial.  Based on that fact, the Owner claimed the work was not complete until the time of trial and thus full payment was not previously due.

Not so fast, said the Court.  The Contract only said the work had to be complete and therefore substantial completion will suffice to trigger full payment, relying on an 1895 case. 

Copy of opinion also available here Download file

Throwing its weight behind ConsensusDocs (see our post from October 25), the AGC announces it will not support the AIA's revised General Conditions.

... are available online.

ConsensusDocs seeks to dislodge the standard AIA contract forms & become the new industry standard.

Is anyone using these forms yet?  If so, how is it going?

Here's an insightful summary of potential risks to design professionals in undertaking green projects, mainly from an insurance coverage angle.

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.

In contract law, a warranty is a different breed of cat. To prevail, one generally need only prove the the work was defective. The focus is upon the end result itself, not whether the installer or subcontractor breached the details of a contract provison or specification. Breach of contract claims, by contrast, depend upon proof the subcontractor actually failed to comply with an applicable standard in the documents. In the other words, the problem or defect in itself is not enough; one must prove a breach leading to the defect to prevail.

Depending on state law and the wording of the contract, the warranty remedy may be deemed an exclusive remedy - and thereby trump the contract claim - or not. Division 1 recently said no, holding that a subcontractor's one-year warranty to correct defective work was not the "exclusive remedy" for a GC. Download file

Those who dare to contract on an oral, cost-plus basis are subject to the rules made by the court to determine exactly what costs are included -- and excluded -- from the definition of reimbursable cost. And in Washington, despite the unfortunate frequency with which owners and contractors resort to this informal process, this is precious little law on the issue.