Justia Contracts Opinion Summaries

Gregory and Sue Tadych filed suit after the one-year limitation period to bring a construction defect suit expired. The trial court entered summary judgment, dismissing the suit and upholding the contractual limitation. The Court of Appeals affirmed. The Washington Supreme Court found the contractual limitation here was substantively unconscionable and, therefore, void and unenforceable. "The one-year limitation provision provides a substantially shorter limitations period than plaintiffs are otherwise entitled to under RCW 4.16.310 and benefits the contractor at the expense of the rights of the homeowner." Judgment was reversed and the matter remanded for trial. View "Tadych v. Noble Ridge Constr., Inc." on Justia Law

Vought sued for the balance due on his contract for the renovation of Stock’s house, additional compensation under a disputed change order, and penalties for the violation of a prompt-payment statute, Civil Code section 8800. Stock did not dispute the unpaid amount Vought had earned for finished work, including approved change orders, but disputed the claim for additional compensation and sought liquidated damages for delay. The court held that Vought was entitled to the undisputed balance due plus approximately half the disputed amount of additional compensation; that Stock was entitled to approximately half the amount he claimed as liquidated damages; and that Stock had not violated section 8800 by withholding final payment. The court held that neither side was entitled to attorney fees under section 8800 or to costs under Code of Civil Procedure section 1032.The court of appeal affirmed in part. Stock was not prohibited from withholding the $79,000 otherwise due based on his good faith claim for liquidated damages. Vought was not relieved of the obligation to pay liquidated damages for the delay that it caused although it was not responsible for the entire delay. Neither party was the prevailing party under section 8800 but Vought was the prevailing party for purposes of recovering costs under section 1032; it secured a “net monetary recovery.” View "Vought Construction Inc. v. Stock" on Justia Law

The Supreme Court affirmed the judgment, decree of foreclosure, and order of sale by the district court, and the orders and actions contained within these documents, holding that there was no error or abuse of discretion.Thermal Design, Inc. filed a complaint to foreclose its construction lien against Mark and Pam Duffy and Central Copters, Inc. The complaint also asserted claims against TNT Building Systems. A jury found that TNT, acting as an agent of Central Copters, entered into a contract with Thermal Design for the insulation system, and both TNT and Central Copters were jointly and severally liable for breaching the contract with Thermal Design. As to a crossclaim between TNT and Central Copters, the jury found that both parties breached their agreement but that only TNT incurred damages. The district court entered a final order restating that, as a matter of law, Thermal Design had a valid construction lien attaching to both the Duffys’ real property and Central Copters’ building that should be foreclosed. The Supreme Court affirmed, holding that the district court did not err or abuse its discretion in the proceedings below. View "Thermal Design, Inc. v. Thorson" on Justia Law

The Supreme Court held that public policy prohibits an agreement between a builder-vendor and a homebuyer to disclaim and waive the warranty of workmanship and habitability implied in every contract entered into between the buyer-vendor and homebuyer and to replace it with an express warranty.Plaintiff entered into a preprinted purchase agreement with M & RC II, LLC to buy a home that M & RC II's affiliate, Scott Homes Development Company, would build. Plaintiff later sued M & RC II and Scott Homes (together, Defendants) for breach of the implied warranty of workmanship and habitability. Defendant moved for summary judgment on the ground that Plaintiff had waived the implied warranty per the purchase agreement. The trial court granted summary judgment for Defendant. The court of appeals reversed. The Supreme Court affirmed, holding that the public policy underlying the implied warranty of workmanship and habitability clearly outweighed enforcement of the waiver of that warranty in the purchase agreement. View "Zambrano v. M & RC II LLC" on Justia Law

The United States Federal District Court for the Western District of Washington certified a question of law to the Washington Supreme Court. Cox Construction was the general contractor of a remodeling project. Cox hired Baker & Son Construction, Inc. as a subcontractor. A Baker employee allegedly caused a two-by-four to fall from a railing and strike Ronnie Cox, owner of Cox Construction, who later died from his injury. Baker allegedly called an insurance agent to alert them of the incident. The agent told Baker that no action needed to be taken because at that time, no claim existed. A few months later, Baker received a wrongful death claim from an attorney representing Cox’s widow. Baker notified its insurer, Preferred Contractors Insurance Company (PCIC) of the claim. PCIC denied coverage, but agreed to defend Baker under a reservation of rights. The certified question to the Washington Supreme Court related to the “claims-made” nature of the policy and the timing of Baker’s tender of Ms. Cox’s claim. The Supreme Court replied to the certified question that in light of RCW 18.27, a contractor’s commercial general liability insurance policy that requires the loss to occur and be reported within the same policy year, and provides neither neither prospective nor retroactive coverage violates Washington’s public policy. View "Preferred Contractors Ins. Co. v. Baker & Son Constr., Inc." on Justia Law

Cal-Am, a developer and operator of RV and mobile-home parks leased the Yuma Sundance RV Resort from its owner, intending to construct a new banquet and concert hall on the property. The property owner provided the funding for the construction. Cal-Am managed the project. Cal-Am hired a contractor, Nickle, to design and construct the hall, who then hired Edais Engineering to survey the property and place construction stakes to mark the Hall’s permitted location. No contract existed between Edais and Cal-Am. Edais acknowledges that its placement of the stakes was defective. Cal-Am was forced to adjust its site plan, eliminating eight RV parking spaces. Cal-Am sued Edais for claims including negligence. The trial court granted Edais summary judgment on the negligence claim finding that Cal-Am could not recover its purely economic damages. The court of appeals affirmed.The Arizona Supreme Court affirmed, repudiating its 1984 Donnelly Construction holding that a design professional’s duty to use ordinary skill, care, and diligence in rendering professional services extends both to persons in privity with the professional and to persons foreseeably affected by a breach of that duty. Under Arizona’s current framework, which repudiated foreseeability as a basis for duty, design professionals lacking privity of contract with project owners do not owe a duty to those owners to reimburse purely economic damages. View "Cal-Am Properties, Inc. v. Edais Engineering, Inc." on Justia Law

In this case arising out of a construction contract dispute involving competing claims of breach between the owner and the contractor, the Supreme Court reversed in part the court of appeals' judgment affirming the portion of the trial court's judgment awarding damages to the owner but reversing as to the contractor, holding that the judgment awarding certain expenses to the owner could not stand.The jury found that both the owner and the contractor breached the contract and awarded damages as to both parties. At issue was whether the owner's entitlement to recover contract damages associated with a termination of the contractor for default hinged on strict compliance with the written-notice conditions precedent to such recovery, whether sufficient evidence supported the jury's finding of compliance, and whether a contractual provision governing consequential damages was liability waiver or a covenant not to sue. The Supreme Court held (1) when a contract mandates written notice, a writing is a necessary part of complying with contractual notice conditions, substantially or otherwise; (2) because the owner failed to provide the requisite written notices to be entitled to recover expenses associated with a termination for default, the judgment awarding them to the owner could not stand; and (3) the contract did not contain a covenant not to sue for consequential damages. View "James Construction Group, LLC v. Westlake Chemical Corp." on Justia Law

The Supreme Court reversed the judgment of the trial court finding Plaintiffs responsible for failing to complete a project by the parties' agreed-upon deadline and awarding Defendant $335,000 in liquidated damages on its counterclaim, holding that the trial court's pretrial interpretation of various agreements between the parties was erroneous.At issue was which party was responsible for delays in constructing Dunkin Donuts Park in the City of Hartford. Plaintiffs, the project's developer and the design-builder, sued the City claiming breach of contract, and the City counterclaimed for breach of contract. The trial court concluded, as a matter of law, that Plaintiffs controlled the architect and were therefore liable for changes to and mistakes in the ballpark's design. Thereafter, the jury found Plaintiffs responsible for failing to complete the stadium by the agreed-upon deadline. The Supreme Court reversed, holding that the parties' contracts did not unambiguously grant Plaintiffs legal control of the architect and the stadium's design across all relevant time periods. View "Centerplan Construction Co. v. Hartford" on Justia Law

The Supreme Court affirmed the decision of the district court determining that the covenant of good faith and fair dealing applied when it awarded delay damages to a subcontractor, holding that the district court properly determined that the covenant of good faith and fair dealing applied and that the contractor breached the covenant.At issue on appeal was (1) whether the district court properly applied the covenant of good faith and fair dealing when it awarded delay damages to a subcontractor, and (2) whether the subcontractor waived its right to receive delay damages by signing a waiver and release to receive its retention. The Supreme Court held (1) the covenant of good faith and fair dealing allowed for the subcontractor to receive delay damages; and (2) the conditional release and waiver the subcontractor signed did not preclude it from receiving delay damages. View "APCO Construction, Inc. v. Helix Electric of Nev., LLC" on Justia Law

In this construction contract action, the Supreme Court affirmed the judgment of the district court dismissing Helix Electric of Nevada, LLC's claims for retention against APCO Construction, Inc. and the award of attorney fees for APCO pursuant to Nev. R. Civ. P. 68 for less than APCO's requested amount.Gemstone Development West, Inc. sought to construct condominiums and hired APCO as its general contractor. APCO subcontracted with Helix at Gemstone's direction. Helix was paid less than it billed, and the difference, $505,021, was withheld in retention. Under the subcontract, the retention would be released only upon the occurrence of several conditions. Later, the relationship between the parties soured, and the project was terminated. APCO, Helix, and other subcontractors recorded mechanics' liens against the property. After a trial, the district court dismissed Helix's claims for retention against APCO and granted attorney fees. The Supreme Court affirmed, holding (1) the district court correctly concluded that a subcontract provision conditioning the payment of funds on APCO first being paid was unenforceable, but the unenforceablity of the pay-if-paid condition did not also invalidate the remaining conditions precedent for obtaining the retention payment; and (2) none of the remaining arguments on appeal warranted reversal. View "Helix Electric of Nev., LLC v. APCO Construction, Inc." on Justia Law