§15.8 Defending Against Damages Claims

• Jurisdiction: Washington

§ 15.8 DEFENDING AGAINST DAMAGES CLAIMS

The parties on both sides of a damages claim would be well served to assess the potential defenses early in construction litigation. Any defense will depend largely on the circumstances of each claim. Therefore, this section is not exhaustive, but rather is a resource for defenses common in construction litigation.

(1) Contractual defenses to damages

In construction litigation, Washington courts determine a party's liability based upon application of agreed risk allocation provisions. See, e.g., Berschauer/Phillips Construction Co. v. Seattle Sch. Dist., 124 Wn.2d 816, 826-27, 881 P.2d 986 (1994) ("We hold parties to their contract.... The fees charged by architects, engineers ... and so on are founded on their expected liability exposure as bargained and provided for in the contract."); see also Am. Nursery Prods., Inc. v. Indian Wells Orchards, 115 Wn.2d 217, 222, 797 P.2d 477 (1990) (holding exclusionary clauses presumptively valid in commercial transactions). The Berschauer/Phillips court explained the policy reasons underlying its commitment to enforce allocation of risk provisions as follows:

There is a beneficial effect to society when contractual agreements are enforced and expectancy interests are not frustrated. In cases involving construction disputes, the contracts entered into among the various parties shall govern their economic expectations. The preservation of the contract represents the most efficient and fair manner in which to limit liability and govern expectations in the construction business.

124 Wn.2d at 828.

Thus, any party opposing a damages claim should start with the allocation of risk provisions contained in the parties' agreement. Some typical allocation of risk provisions include (1) releases of responsibility for the contractors' failures; (2) waivers of consequential damages; and (3) limitations of liability. The Berschauer/Phillips case has been under review for the last several years and, although not overturned, it is well worth noting.

(a) Release of responsibility for another's acts or omissions

In Washington, it is a well-established rule that when an owner furnishes plans and specifications to a contractor and requires the contractor to build in accordance with those plans and specifications, the owner impliedly guarantees that the plans are workable and

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sufficient. Armstrong Constr. Co. v. Thomson, 64 Wn.2d 191, 390 P.2d 976 (1964) (affirming the rule ofEricksen v. Edmonds Sch. Dist. No. 15, 13 Wn.2d 398, 125 P.2d 275 (1942)); see Teufel v. Wienir, 68 Wn.2d 31, 411 P.2d 151 (1966) (contractor not liable for leak of curtain wall when wall was constructed in accordance with specifications that called for design improper for intended use); Clark v. Fowler, 58 Wn.2d 435, 363 P.2d 812 (1961) (contractor not a guarantor of proper functioning of furnace installed in accordance with contractee's plans and contract); Huetter v. Warehouse & Realty Co., 81 Wash. 331, 142 P. 675 (1914) (contractor excused from completing contract for large fill and viaduct, whose walls collapsed during construction stage, when plans and specifications prepared by contractee city's engineer were defective); Ward v. Pantages, 73 Wash. 208, 131 P. 642 (1913) (holding failure of a plumbing and heating system installed by subcontractor in conformity with plans and specifications as required by the architect would not defeat right of subcontractor to mechanics' lien); Novelty Mill Co. v. Heinzerling, 39 Wash. 244, 81 P. 742 (1905) (contractor not liable for collapse or weakening of piers, when concrete was properly tamped underwater as contract required and damage was fault of contract term requiring that to be done); Tyee Constr. Co. v. Pac. Nw. Bell Tel. Co., 3 Wn. App. 37, 472 P.2d 411 (1970) (contractor not responsible for damage to conduits for power lines resulting from operation necessary to fulfill requirements of contractee's plans).

In Tyee Construction Co., the owner required the contractor to place particular conduits in an existing tunnel and in-fill the tunnel with sand. 3 Wn. App. at 40. The contractor presented substantial evidence establishing that the "only way to inject the sand was by blowing, and that it was not possible to do this without damaging [the owner's] conduit." Id. The court held the contractor was not responsible for the owner's damaged conduits because the contractor performed the services in the way made necessary by the owner's plans. Id. Therefore, when the means and methods are left to the contractor's discretion, the contractor may defend a damages claim by showing the chosen means and methods constituted the only way to perform the contracted services.

In Weston v. New Bethel Missionary Baptist Church, 23 Wn. App. 747, 754, 598 P.2d 411 (1978), a contractor began but did not finish constructing a rockery to full height. The plans provided for the rockery to reach a maximum height of 16 feet. Id. A subsequent contractor constructed the rockery to 22 feet at the church's direction and the rockery collapsed. The court barred the church's claim against the original contractor because, at the time he left the project, the

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rockery was only 12 feet tall and there was no evidence the original contractor failed to comply with the rockery plans.

A contractor's claim for damages for defective design or defective product will be barred if the defending party can present evidence that clearly demonstrates the contractor failed to follow the plans and specifications. See id. at 752-53 ("Since [engineer's] plans were not followed or relied upon, [he] could not be guilty of negligence that caused damages to plaintiff's property") (citing McGuire v. United Bhd. of Carpenters, 50 Wn.2d 699, 314 P.2d 439 (1957), and Day v. Nat'l U.S. Radiator Corp., 241 La. 288, 128 So. 2d 660 (1961) (holding architect's approval of plans for hot water boiler system that exploded and killed plaintiff's husband was not proximate cause of the explosion, when subcontractor did not rely on the plans)). Therefore, whether the claimant is an owner or contractor, care should be taken to determine whether the construction conformed to approved plans and specifications.

(b) Waiver of consequential damages

Consequential damages are "[l]osses that do not flow directly and immediately from an injurious act but that result indirectly from the act." Black's Law Dictionary (10th ed. 2014); accord RCW 62A.2-715(2) ("Consequential damages resulting from the seller's breach include ... (b) injury to person or property proximately resulting from any breach of warranty").

Any defense against a damages claim should examine the source and whether they occurred as an indirect result of the alleged breaches of contract.

(c) Limitation of liability provisions

A contract may set...