Week 8

Class 8 outlines

Defects

Design and construction roles blurred
- Design delegation: AIA A201-2007 ¶ 3.12.10
Responsibility follows control
- McConnell v. Gordon (1919)
Risk shifting: unconscionability
- Report design errors? ¶ 3.2.2
Good faith and fair dealing
Project acceptance
- Waiver of claim for defects? ¶¶ 9.6.6, 9.10.4
Divided responsibility? ¶¶ 3.2.4, 3.7.3
Third-party claims
Contractor’s CGL insurance: ¶ 11.1
- PEMCO v. Sellen (1987)
  - Owner’s “builder’s risk” property insurance: ¶ 11.3.1
    - Coluccio v. King County, 136 Wn. App. 751 (2007)
    - Oak Harbor v. St. Paul, 139 Wn. App. 68 (2007)
- Coverage, defense denials
  - Yakima v. Great American, 93 Wn. 2d 210 (1980)
  - Aetna v. M&S Industries, 64 Wn. App. 916 (1992)
  - Coventry v. Am. States, 132 Wn. 2d 269 (1998)
  - APA v. Glens Falls, 94 Wn. App. 556 (1999)
  - Diamaco v. Aetna, 97 Wn. App. 335 (1999)
  - TIE v. VanPort Homes, 147 Wn. 2d 751 (2002)
  - Torina v. Mut. of Enumclaw, 118 Wn. App. 12 (2003)
  - Quadrant v. Am. States, 118 Wn. App. 525 (2003)
  - TIE v. BRE Props., 119 Wn. App. 582 (2003)
  - Mut. of Enumclaw v. Archer, 123 Wn. App. 728 (2004)
  - MacLean Townhomes v. Am. States, 138 Wn. App. 186 (2007)
  - Mut. of Enumclaw v. Paulson, 161 Wn. 2d 903 (2007)
  - Bordeaux v. Am. Safety, 145 Wn. App. 687 (2008)
  - Mut. of Enumclaw v. T&G, 165 Wn. 2d 255 (2008)
  - Ledcor v. Mut. of Enumclaw 150 Wn. App. 1 (2009)
- Spoliation of evidence
  - Homeworks v. Wells, 133 Wn. App. 892 (2006)
Warranty clauses: ¶¶ 3.5, 12.2
- Seattle v. Kuney (1957)
- St. Andrew’s v. Walsh (537)
  234 So.2d 922 (1970)
- Griffith v. Centex, 93 Wn. App. 202 (1998)
Implied warranty of habitability in home sales
- Atherton v. Blume (1990)
- Brickler v. Myers, 92 Wn. App. 269 (1998)
- Lian v. Stalick, 115 Wn. App. 590 (2003)
- Will v. Frontier, 121 Wn. App. 119 (2004)
- Burbo v. Douglass, 125 Wn. App. 684 (2005)
- Warner v. Design & Build Homes, 128 Wn. App. 21 (2005)
- Condo Ass’n v. 6th Ave View, 146 Wn. App. 760 (2008)
- Carlile v. Harbour Homes, 147 Wn. App. 193 (2008)

Condos since 1 July 90: RCW 64.34 (L 89 ... 04), 64.35 (L 04), 64.55 (L 05)

Seattle DPD: moisture damage brochure (3 Jan 00)

“Officials, scientists team to prevent leaks in homes”
The Seattle Times (16 Dec 99)
Marina Cove v. Isabella Estates, 109 Wn. App. 230 (2001)
SSB 6409 (L 02): construction defect claims [ report]

“Some see defects in new condo defect law”
Seattle Daily Journal of Commerce (11 Apr 02)
- RCW 64.50 applies to all residences
- SB 6627 (2006): 60-day tolling if no notice [ report]
- Homeowners v. Lakemont, 156 Wn. 2d 696 (2006)
Park Ave. Condo Ass’n v. Buchan (2003)

“Buchan loses condo defect appeal”
Seattle Daily Journal of Commerce (2 Sept 03)
SHB 2039 (L 03): affirmative defenses [ report]
- RCW 4.16.326 applies to all homeowners
HB 3131 (2004): insured warranty standards [ report]

2ESSB 5536 (L 04): warranty changes [ .pdf

report]: RCW 64.35

“‘Rotting’ condos pit owners vs. builders”
Seattle Post-Intelligencer (26 Mar 03)

“$4.7M settlement in condo defects case”
Seattle Daily Journal of Commerce (24 July 03)

“Courtroom battles over building
defects leave condo market reeling”
The Seattle Times (2 Nov 03)

“Master Builders see hope in condo law”
Seattle Daily Journal of Commerce (31 Mar 04)

“Changes to state’s Condo Act—a zero-sum game”
Puget Sound Business Journal (18 June 04)

Homeowners v. Kelsey Lane, 125 Wn. App. 227 (2005)
Condo Owners v. Sundquist, 128 Wn. App. 317 (2005)
EHB 1848 (L 05): multi-unit enclosures; condo ADR [ report]: RCW 64.55
Owners Ass’n v. Satomi, 139 Wn. App. 175 (2007)
Post-dissolution claims against developers
- Condo Owners v. Dynasty, 158 Wn. 2d 603 (2006)
- Condo Ass’n v. Roosevelt, 139 Wn. App. 257 (2007)
- Homeowners v. First Pacific, 143 Wn. App. 521 (2008)
- Hartford v. Ohio Casualty, 145 Wn. App. 765 (2008)
- Owners Ass’n v. FHC, 166 Wn. 2d 178 (2009)

Statutory new home warranty?

SSB 5923 (2000) [ report]
HB 2806 (2004)

ESSB 5550 (2007): passed Senate [ .pdf

report]

“Builders try to demolish homeowner ‘rights’ bill”
Seattle Post-Intelligencer (5 Feb 07)

Editorial: “Home warranty: Trust, but verify”
Seattle Post-Intelligencer (6 Feb 07)

“Legislator confronts builders on homeowner rights”
Puget Sound Business Journal (9 Feb 07)

Editorial: “The house that Carmela built”
The Seattle Times (13 Feb 07)

“Measure requiring new-home warranties looks dead”
The Seattle Times (30 Mar 07)

Editorial: “Consumer protection: Building to last”
Seattle Post-Intelligencer (2 Apr 07)

“Freshman senator lashes out at speaker”
The Seattle Times (3 Apr 07)

E2SHB 1393 (2009) passed House [ report]
E2SSB 5895 (2009) passed Senate [ report]

“State Senate passes homeowner’s bill of rights”
Seattle Post-Intelligencer (11 Mar 09)

“Homeowners rights bill at death’s door”
Seattle Post-Intelligencer (9 Apr 09)

Statutory negligent residential construction?

SB 5046 (2007)

SSB 6385 (2008): passed Senate [ .pdf

report]

Editorial: “Legislature: A consumer fix”
Seattle Post-Intelligencer (27 Feb 08)

Editorial: “Homeowners protection that’s fair, reasonable”
The Seattle Times (6 Mar 08)

House committee: statutory implied warranties [ .pdf

report]

“Rights bill for owners of homes fails to get House vote”
The Seattle Times (8 Mar 08)

Editorial: “Home warranty: A simple matter”
Seattle Post-Intelligencer (11 Mar 08)

“State Democrats feud over rival
‘protection’ plans for home buyers”
Seattle Post-Intelligencer (11 Mar 08)

Opinion: “Chopp’s House holds up homeowners’ rights”
Seattle Post-Intelligencer (8 July 08)

Opinion: “Law skewed in favor of builders”
Seattle Post-Intelligencer (15 July 08)

Volunteer emergency repair services: HB 1052 (L 03) [ report]
- RCW 4.16.327 for unpaid repair work only
Defect response agreements

Subsurface problems

Discovery of unforeseen conditions by contractor
- Effect on performance
- Causes
- Design/build risk
- Enforceability of promise to pay compensation
- Supervening conditions
General rule (with exceptions): contractor bears risk
- Valley v. Lake Hills (1966)
Owner-furnished information relied on by contractor
- Fraud: Douglas NW v. O’Brien (1992)
Risk allocation plans
- Owner disclaimers
  - Dravo v. Metro (1971)
  - Clevco v. Metro (1990)
  - Basin v. Johnson (2001)
- Contractor protection
  - “Differing site conditions” clause
    - US: 48 CFR § 52.236-2 (as of 1 Oct 08)
  - “Concealed conditions” clause: ¶ 3.7.4

Time

Time is money!
Commencement: ¶ 8.2.2
Acceleration: specific, constructive, voluntary
Completion: substantial ¶ 9.8, final ¶ 9.10
Schedules: ¶ 3.10
- Critical path method (CPM)
Causation: frequently difficult to trace; concurrent?
Allocation of delay risks: time, added costs
- Force majeure clauses: ¶ 8.3.1
- Weather: ¶ 15.1.5.2
Time extensions
Unexcused contractor delay: “liquidated damages” clause
- Bethlehem v. Chicago (578)
  350 F.2d 649 (1965)
- Rohlin v. Hinton (580)
  476 N.W.2d 78 (1991)
- UW Husky Stadium north stands addition
- UW Tacoma branch campus
- LDs ≠ fines
  
  “State may fine builder for error”
  The Seattle Times (6 Aug 97)
  
  “Fines, missed deadlines add up”
  Las Vegas Review-Journal (10 May 04)
Owner-caused delay: “no-damage-for-delay” clause
- Goss v. Northern Pacific (1908)
- Seattle v. Dyad, 17 Wn. App. 501 (1977)
- Mortensen v. Group Health (1978)
- Christiansen v. State (1978)
- Precluded: RCW 4.24.360-.380 (L 79); ¶ 8.3.3
- Scoccolo v. Renton, 102 Wn. App. 611 (2000)
- Scoccolo v. Renton, 125 Wn. App. 150 (2005)
- Triple R v. Broward (587)
  774 So.2d 50 (2001)

Claims

Definition: ¶ 15.1
Contractor v. owner
- Partially-completed project
  - Damages
  - Restitution: quantum meruit
    - Heaton v. Imus (1980)
    - Auburn v. Lydig, 89 Wn. App. 893 (1998)
- Completed project
  - Loss of productivity: “measured mile”, studies
  - Home office overhead: “Eichleay” formula
    - Complete v. Ohio DOT (600)
      760 N.E.2d 364 (2002)
    - Golf v. Century (1984)
    - Waived: ¶ 15.1.6.2
  - Damages: “jury verdict” method
    - New Pueblo v. Arizona (605)
      696 P.2d 185 (1985)
  - Damages: “total cost” method not favored
    - Rowland v. Beall (1975)
Owner v. contractor
- Partially-completed project
  - Restitution rare
  - Damages
    - Excess reprocurement costs: ¶ 14.2.4
    - Omitted or defective work
- Defective performance
  - Correction cost
  - Diminished value
- Delay
  - Damages waived: ¶ 15.1.6.1
Certainty
Records
Consequential damages: ¶ 15.1.6 mutual waiver
Mitigation
- Maryhill v. Emil’s Concrete (1988)
- TransAlta v. Sicklesteel, 134 Wn. App. 819 (2006)
Collateral source rule
Noneconomic losses
- Erlich v. Menezes (620)
  981 P.2d 978 (1999)
Punitive damages rare: deter outrageous conduct
Disputes and settlements
- Rich & Whillock v. Ashton (626)
  157 Cal. App. 3d 262 (1984)
- Evans & Son v. City of Yakima, 136 Wn. App. 471 (2006)
Claims against multiple parties: apportionment
Security
False Claims Act
- US: 31 USC § 3729 (PL 82)
- WA: ESSB 5439 (1999) passed Senate [ report]
  - SB 5435 (2001)
  - SB 5144 (2009) [ report]