In a unanimous decision, the Washington Supreme Court held last week that an owner’s lawsuit against its general contractor (GC) was timely filed because the parties had agreed in their contract when such claims would be deemed to accrue. The court further held that because the subcontractors agreed to assume the same duties toward the GC that the GC had to the owner, the GC’s lawsuit against the subcontractors was also timely.
The case arose from construction of Safeco Field (home of the Mariners baseball club), which was completed in 1999. In 2005, the Mariners discovered alleged construction defects relating to the fireproof paint used on the steel beams, and the Public Facilities District (PFD) brought suit against the GC in 2006. The supreme court had already determined in 2009 that the PFD’s claims against the GC were not barred by the general six-year statute of limitations on contract claims (Washington State Major League Baseball PFD v. Huber, Hunt, 165 Wn.2d 679 (2009) (PFD I). The court was now asked to decide whether the claims were time-barred because of the six-year statute of repose on construction claims (RCW 4.16.310) and, if not, whether the GC’s claims against the subcontractors were nonetheless time-barred. In PFD II, the court focused its analysis on the general contract’s provisions stating that, as to any act occurring before substantial completion, “any alleged cause of action shall be deemed to have accrued in any and all events not later than such date of Substantial Completion.” The construction statute of repose (RCW 4.16.310) bars claims that do not “accrue” within six years of substantial completion or termination of services, whichever is earlier. Once the claim “accrues,” however, the owner still has six more years in which to bring its contract claims. Since the claim here accrued by no later than substantial completion (pursuant to the parties’ contractual agreement), the claim accrued within the six-year statute of repose. Because the court had already determined in PFD I that the claims were not barred by the statute of limitations, the owner’s claims were timely.
Similarly, since the owner’s claims were timely, the GC’s claims against the subcontractors were also timely because of the “flow-down” provisions of the subcontracts. Each of the subcontracts incorporated by reference the general contract with the owner, and had language providing that if the GC was liable to the owner for the subcontractor’s defective workmanship or materials, the subcontractor would be liable to the same extent. Hence, so long as the GC remained potentially liable to the owner, the subcontractors remained potentially liable to the GC.
This case again points out the importance of careful contract drafting in construction projects. In the confusion of finishing a project, parties might ignore their contracts—but they do so at their peril, since Washington courts especially have shown a marked proclivity toward holding parties to the letter of their written contracts in the construction arena.