364 P.3d 784
Wash. Ct. App.2015Background
- King County contracted VPFK (a joint venture) in 2006 to bore BT-2/BT-3 tunnels for the Brightwater wastewater conveyance project; contract fixed-price with STBM (slurry TBM) specified.
- Contract included GBR and GDR geotechnical reports listing Tunnel Soil Groups (TSGs) and percentage baselines for face-pressure categories (30/20/50 baseline), but no location‑specific baselines for soil transitions.
- VPFK encountered frequent soil variability, high face pressures, abrasivity, and STBM damage; submitted RCOs (notably RCOs 65, 66, 85, 86) seeking time and money for differing site conditions and defective specifications.
- County found VPFK in default after delays and hired another contractor (JDC) to finish BT-3; VPFK repaired BT-2 and completed some work. County sued VPFK and sureties; sureties denied coverage under the performance bond.
- Jury found VPFK and the sureties jointly and severally liable for County default damages of $155,831,471 and awarded VPFK $26,252,949 on some claims; trial court awarded County attorney fees; parties appealed.
Issues
| Issue | Plaintiff's Argument (King County / County) | Defendant's Argument (VPFK / Sureties) | Held |
|---|---|---|---|
| Differing site conditions (frequency of plastic/non-plastic transitions) | Contract docs showed baseline expectations; VPFK failed to prove conditions indicated | VPFK: Contract and GBR reasonably interpreted to show expected transitions; reliance in bid | Court: Summary judgment for County — GBR did not specify transition frequency; contract shifted risk of bidder assumptions to contractor, so VPFK failed elements of DSC claim |
| Defective specification (designation of STBM) | VPFK: STBM spec and allotted time were defective and unusable in actual ground | County: STBM was specified because EPBM unacceptable at predicted pressures; VPFK preferred STBM | Court: Affirmed summary dismissal — no material fact that STBM designation was defective; related arguments were DSC theories presented to jury |
| Jury instruction on implied warranty re ground improvements | VPFK: county impliedly warranted plans adequate; instruction required | County: contract did not prohibit contractor from using ground improvements; no implied warranty that ground improvements were unnecessary | Court: No instruction — insufficient evidence that contract warranted absence of ground improvements |
| Liquidated damages exclusivity | VPFK: liquidated damages clause limits County recovery for delay | County: contract’s termination provisions and §8.0 render surety/contractor liable for all damages on default | Court: Denied VPFK motion — contract expressly allowed recovery beyond liquidated damages for default, so County could recover full damages |
| Exclusion of scheduling expert (concurrent delay defense) | VPFK: excluded Habashi testimony showing East Tunnel repairs were concurrent causes of delay | County: testimony untimely, irrelevant to pleaded delay period; procedural/default rules | Held: Trial court within discretion; even if erroneous, exclusion harmless — VPFK presented concurrent delay theory via other witnesses and closing; jury instructed on concurrent delays |
| Attorney fees against sureties under performance bond | County: Olympic Steamship/COLORADO STRUCTURES entitle obligee to fees when surety wrongfully denies bond coverage | Sureties: public‑works statutory scheme (RCW) and no fee provision in bond preclude fees; seek segregation | Court: Fees awarded — Olympic Steamship/COLORADO STRUCTURES apply; statute does not abrogate common‑law rule; segregation not required where claims intertwined and sureties adopted VPFK defenses |
| Joint & several liability of sureties | County: Bond incorporated contract, contract makes contractor and sureties liable for all damages including consequential | Sureties: bond did not create joint & several liability for consequential damages | Court: Affirmed instruction — Bond incorporated contract terms making contractor and sureties liable for all damages on default |
Key Cases Cited
- Maryland Casualty Co. v. City of Seattle, 9 Wn.2d 666 (1941) (establishes basic rule for differing site condition claims where contractor relied on contract representations)
- Basin Paving Co. v. Mike M. Johnson, Inc., 107 Wn. App. 61 (2001) (contractor cannot recover for changed condition that was foreseeable or not indicated)
- Bionold v. King County, 65 Wn.2d 817 (1965) (foreseeability limits recovery for changed conditions)
- Dravo Corp. v. Municipality of Metro. Seattle, 79 Wn.2d 214 (1969) (public owner’s disclaimers and contractor assumptions affect DSC claims)
- Olympic Steamship, Inc. v. Centennial Ins. Co., 117 Wn.2d 37 (1991) (insurer/surety who wrongfully denies coverage may be liable for obligee’s attorney fees)
- Colorado Structures, Inc. v. Ins. Co. of the West, 161 Wn.2d 577 (2007) (extends Olympic Steamship rule to performance bonds)
- Panorama Village Condo. Owners Ass'n v. Allstate Ins. Co., 144 Wn.2d 130 (2001) (attorney fees can include litigation expenses and expert fees under equitable rule)
- Smith v. Safeco Ins. Co., 150 Wn.2d 478 (2003) (standard of review for summary judgment)