To initiate this new section of the blog, here is a link to the State Auditor's recent report on whether King County ran afoul public bidding laws in connection with improvements to the Jail in downtown Seattle.

The funding insurers then turned on the holdout -- Great American Insurance Company -- for contribution.   Division 1 held that Great American, an excess carrier, was required to kick into the settlement even though its underlying primary carrier was insolvent and thus didn't actually pay its underlying limits.  That and other complexities related to equitable contribution amongst carriers are addressed in this new case.

The U.S. Supreme Court today issued its decision in Main Street LLC v. Mattel.  The main issue in the case (previewed here) is whether the parties to an arbitration clause are free under the Federal Arbitration Act to provide for a broader scope of judicial review than is otherwise allowed in the FAA itself.  For example, can the parties ask the court to review the award for an error of law by the arbitrator (something which would not ordinarily be allowed under the FAA)?

The Court said no -- once the FAA applies, its limited grounds for vacating an award are exclusive.

With that said, however, the case is instructive by demonstrating the broad authority of the arbitrator to fashion remedies -- here, by conditioning the owner's recovery on its counterclaim upon timely payment to the AAA of the required filing fee.  Because the owner for unexplained reasons never paid the fee, it lost its right to recovery any sums on its counterclaim.

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

The window supplier in this case recorded its lien on October 30, 2003 and obtained an order allowing it to intervene in a prior pending case about 7 months later.  So far so good.  But for reasons unexplained in the opinion, the claimant did not actually file its answer and cross claim until much later (November 2004), after the expiration of the 8 month period.

Invoking all sorts of well-established rules, Division 1 took no mercy and dismissed the lien.  It was true that the claimant had timely obtained permission to intervene.  But no pleading in fact was filed until the 8 month period had lapsed.  The Court stressed that each and every claimant must separately meet the 8 month test, and rejected the window supplier's attempt to rely on the prior suit as evidence of compliance.

Copy of opinion also available here Download file

1. The GC's breach of contract claim vs. the sub accrued (and thus began to run, for purposes of the 6 year statute of limitation) at the earlier point when the sub itself performed the defective work, not at the later time of substantial completion of the overall project.
2. On the GC's indemnity claim, the Court of Appeals refused to give the sub an offset based on the settlements the GC had achieved with the other subcontractors, because the sub failed to prove that the other settlements paid the GC for damages caused by its work.
3. The Court held that the way the trial court apportioned responsibility for the GC's legal fees -- apportioning 1/13 of the total to the sub because there were a total of 13 subs on the project -- was arbitrary and without basis.

Download file

In this case, the contractor was disallowed any extra costs because the Court concluded that the specifications were clear.  Just to give you some indication of how closely the Court parsed the language, a key part of the ruling was based on the absence of a comma in a particular sentence (which the Court took to mean that the final clause "as indicated in the drawings" modified only the noun immediately prior to this subordinate clause not the entire sentence).

This case ended more happily for the contractor when the Court ruled that the distortion of the standing seam metal roof (which the contractor was to provide under a performance specification) was actually caused by flaws in the owner-furnished design specification for the building structure. 

Here, the dispute revolved around TV's "Judge Alex" and an entertainment lawyer.  It seems the good Judge failed to pay his counsel.  To collect the debt, the lawyer filed an arbitration demand under the arbitration clause in the contract.  The good Judge said that the contract as a whole was null and void because the lawyer was not properly licensed under a California statute that regulates talent agents -- and on that ground sought to have the dispute decided by a state administrative tribunal that has original jurisdiction over such issues.

The good Judge lost & will have to arbitrate his claim that the contract was null and void.