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WASHINGTON MOLD LITIGATION (cont'd)

2. Construction negligence claims in Washington

In Davis v Baugh Industrial Contractors, Inc., case no 76696-7, decided January 18, 2007, the Washington Supreme Court abandoned the “completion and acceptance” doctrine and adopted the Restatement (Second) of Torts rule which holds building contractors liable in negligence for defective workmanship.
Prior to Davis v Baugh, it was unclear whether a cause of action for construction defect existed beyond a claim for breach of contract or breach of warranty. There was some confusion in Washington’s case law on the subject, with some cases requiring privity between plaintiff and defendant. But Davis v Baugh not only abandoned the completion and acceptance doctrine, but adopted the Restatement (Second) of Torts rule establishing that a Washington contractor can be held liable for negligent construction work, especially if it causes personal injury.

Some defense attorneys had traditionally cited Washington’s “economic loss” rule in asserting that there was no cause of action for construction negligence in Washington. An "economic loss” is described in Washington as “those damages falling on the contract side of the line between tort and contract. " Id. (quoting Washington Water Power Co. v. Graybar Elec. Co., 112 Wn.2d 847, 861 n.10, 774 P.2d 1199, 779 P.2d 697 (1989)). Under Washington law, economic loss is distinguished from physical harm or property damage. Stuart v. Coldwell Banker Commercial Group, Inc., 109 Wn.2d 406, 420, 745 P.2d 1284 (1987).

The economic loss rule was designed as a boundary between the law of contracts, which is designed to enforce expectations created by agreement, and the law of torts, which is designed to protect citizens and their property by imposing a duty of reasonable care on others. Berschauer/Phillips Constr. Co. v. Seattle Sch. Dist. No. 1, 124 Wn.2d 816, 821, 881 P.2d 986 (1994). This rule was developed allow parties to allocate risk of pure economic loss by contract. Id. at 822. If, for example, a contractor walks off the job, leaving the owner to hire another to complete the project at greater expense or if he overcharges the owner, the law of contracts establishes the aggrieved party’s remedy to recover the economic loss of the additional expense of completion. He can sue for breach of contract and receive the benefit of his bargain – a structure completed for the price he agreed to pay. This is often referred to as “expectation damages.” He is entitled to the result which he had a right to expect when he made the contract with the breaching party.

But it is not generally expected that a builder will perform negligently. In fact, the expectation is just the opposite. Therefore, the law needed to provide a remedy for such unexpected malfeasance. If, for example, a contractor, through his negligence, damages the building or makes the owner sick because the building gives off toxic gases or is contaminated by mold due to bad workmanship, the cost to repair and other consequential damages are not perceived as economic losses but damages flowing from the negligent acts or omissions of the builder.

Contrary to the arguments routinely made by defense attorneys, an argument can be made that, even before Davis v Baugh, Washington law has acknowledged a negligence cause of action in construction defect cases. For example, Washington’s statutes, RCW 4.16.300 et seq., requires that a consumer give written notice of construction defects to a builder 45 days before filing a construction defect suit. In addition, RCW 4.16.326 sets up a defense of comparative fault to a consumer claim based on construction defect.

Obviously, there would be no need to have a comparative negligence statute if Washington did not at least implicitly recognize construction negligence claims. This statute, moreover, clearly states that this comparative fault defense was not applicable in a case where a person suffered personal injury from a construction defect. The statute states in pertinent part that it:

“[D]oes not apply to any civil action in tort alleging personal
injury or wrongful death to a person or persons resulting from
a construction defect.” (Emphasis added)

Plaintiffs in Washington also have the ability to rely on the Washington Consumer Protection Act if builders misrepresent the quality and nature of their services. See Washington’s Consumer Protection Act, RCW 19.86 et seq.

Practice tip: An attorney should analyze his case and the type of damages his client suffered before pleading a complaint. If there is a construction contract, look to see if the contractor breached it or breached the warranty. If he breached a contract provision (remember, most contracts incorporate the plans and specifications into the contract) the claim can be made for breach of contract regarding the damage resulting from that breach. Where there are defects that would not be, strictly speaking, a breach of the contract, then allege a negligence cause of action if a person suffered property damage or personal injury.

Another practice tip. Don’t forget to analyze whether there is an attorney fee clause in the contract. I have seen attorneys fail to include a claim for attorney fees in their complaint and end up losing their client’s right to reimbursement for their attorney fees after the case is won. Remember, however, that these clauses are usually interpreted to be reciprocal, so if a party loses the case he or she can be required to pay the prevailing party’s attorney fees.

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