Week 10

Class 10 outlines

Design professional as judge

Initial Decision Maker (IDM): AIA A201-2007 ¶¶ 1.1.8, 4.2.2, 15.2
Condition of construction contract: can be waived or excused
Historical accident or most efficient alternative?
Jurisdiction to make decisions: ¶¶ 4.2.11-.14
Who can make decisions for design professional?
Contract controls powers
Procedure
- Fairness required: ¶ 4.2.12
- Interpretation: objectivity impossible?
  - Long v. Pierce County (1900)
- Decision form: ¶ 15.2.5
- Appeal: ¶ 15.2.6
- Costs: uncovering work ¶ 12.1
Decision finality
- Mallory v. Olympia (1913)
- Aesthetic effects: ¶ 4.2.13
- Plus immunity = power?

Construction dispute resolution

Voluntary third-party dispute resolution: beware of adhesion
Validity: manifestation of mutual assent to arbitrate
- AIA A101 A201 AAA’s construction industry rules (Appendix F)
  - Unless parties agree otherwise (new in 2007): ¶ 15.4
  - Follows IDM (¶ 15.2 new in 2007), mediation (¶ 15.3 new in 1997)
- Attacks for fraud, unconscionability, mutuality
Specific clauses
- Arbitrator jurisdiction
- Demand timeliness: ¶¶ 15.3.1, 15.4.1.1
- Who decides: court or arbitrator? * see § 6
  - Botting v. Pamco (1987)
  - ACF v. Chaussee (1993)
  - Stein v. Geonerco, 105 Wn. App. 41 (2001)
  - Mendez v. Palm Harbor, 111 Wn. App. 446 (2002)
  - Tacoma Narrows v. NSKB, 138 Wn. App. 203 (2007)
    - Federal Arbitration Act (FAA): 9 USC § 2
  - Westcott Homes v. Chamness, 146 Wn. App. 728 (2008)
  - Owners Ass’n v. Burton Landscape, 148 Wn. App. 400 (2009)
Waiver may be inferred from party’s actions
Prehearing activities: fee, briefs, discovery
Arbitrator(s) selection: impartiality * see § 12
Joinder and consolidation: ¶ 15.4.4 new in 2007
- Barnes v. Valiquette (1979) * see § 10
Hearing: reasonable place, time; site visit?
- Subpoena powers
- Legal rules of evidence
- Ex parte communications
Substantive standards: case precedent?
Remedies: money damages, performance
Award
- Advantages and disadvantages of explanation
- Enforcement: grounds for vacating award
  - RCW 7.04.160 (L 43) superseded 1 Jan 06 * see § 23
  - Pegasus v. Turner (1997)
  - Davidson v. Hensen (1998)
  - Brooks Trust v. Pacific Media, 111 Wn. App. 393 (2002)
  - Fluor v. Walter Constr., 141 Wn. App. 761 (2007)
- Modification for attorneys’ fees?
  - Expert v. Ellis-Don, 86 Wn. App. 884 (1997)
  - Bongirno v. Moss, 93 Wn. App. 654 (1999)
  - Mike’s Painting v. Garco, 95 Wn. App. 64 (1999)
  - Belfor USA v. Thiel, 160 Wn. 2d 669 (2007)
- Award = liquidated sum?
  - DOC v. Fluor Daniel, 130 Wn. App. 629 (2005)
Insurers and sureties: some deny responsibility
Arbitrator immunity: quasi-judicial * see § 14
Compared to litigation: private, filing fee, judge, speed
* SHB 1054 (L 05): Revised Uniform Arbitration Act [ report]: RCW 7.04A
Other ADR techniques
- Mediation, “med-arb”; partnering, DRB, project neutral
- ESSB 5173 (L 05): modified Uniform Mediation Act [ report]: RCW 7.07
Public contracts: federal, state, local procedures
International arbitration: FIDIC construction contract (1999)

Surety bonds

Terminology: principal/surety/obligee
Compared to insurance
Surety not relieved for minor contract changes
Owner: protection at what cost?
Bid bond
Performance bond: A312-1984 (Appendix D)
Payment bond: A312
Subcontractor bond
Legal problems
- Who can sue?
  - Performance bond: ¶ 7
    - Rust v. USF&G (1915)
  - Payment bond: ¶¶ 9, 15.1
  - WA public works bond: RCW 39.08.030
    - Lobak v. Atlas (1988)
  - WA contractor’s registration bond: RCW 18.27.040
    - Stewart v. CBIC (1986)
    - AAA Cabinets v. Accredited Surety, 132 Wn. App. 202 (2006)
- Validity: owner misrepresentation
- Surety’s defenses same as principal’s
- Surety’s responsibilities
  - Colorado Structures v. ICW, 161 Wn. 2d 577 (2007)
- Bond limit
- Bankruptcy under 11 USC: surety not released
- Time requirements: ¶ 9 (performance), ¶ 11 (payment)
- Reimbursement: collectible?
- Bad-faith claims?

Construction contract termination

Termination: drastic, risky
By agreement: “call the deal off” in writing
Contractual power
- Default: A201 ¶¶ 14.1.1, 14.2.1
- Owner’s convenience
  - Suspension ¶ 14.3; termination ¶ 14.4
- IDM’s role: ¶ 14.2.2
- Waiver: lose power to terminate?
- Notice
  - J&J Electric v. Moen, 9 Wn. App. 954 (1973)
  - ¶¶ 14.1.3, 14.1.4, 14.2.2, 14.4.2
- Take material and equipment? ¶ 14.2.2.1
- Effect on delay claims
- Disputed terminations: ¶¶ 15.1.3?
By law
- Material breach of contract
- Prospective inability to perform
- Anticipatory repudiation: indication of non-performance
- Bankruptcy: 11 USC liquidation ch 7, reorganization ch 11
Restitution: ¶¶ 14.1.3, 14.2.3, 14.3.2, 14.4.3
Owner assigned subcontracts: ¶ 5.4