Washington Construction Law Blog

Our tour of scheduled Supreme Court cases now stops at this case, which involves some fairly dense issues of surety law - specifically, whether a surety’s obligation to a contractor on a subcontractor’s performance bond was conditioned on the contractor declaring a default before the subcontractor substantially completed the work. The Court of Appeals said no, holding the surety (ICW) was liable on the subcontractor bond even absent a formal declaration of default. Not exactly your everyday issue since a true default is ordinarily assumed, but interesting nonetheless.

Of equal interest is the second issue in the case -- whether a contractor may recover attorney fees from the surety of a subcontractor in an action to recover on the performance bond, under the rationale of Olympic Steamship Co. v. Continental Ins. Co., 117 Wn.2d 37, 811 P.2d 673 (1991). Olympic Steamship applies to liability policies without a doubt. The issue here is whether it extends to surety insurance. Lower Washington courts have said yes, but it's an issue of first impression with the Supreme Court.