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High court decision deals a blow to contractors’ submittal process

Thu Oct 11, 2018

The Supreme Court of Washington’s recent decision in Nova Contracting versus the city of Olympia dealt another blow to contractors in unanimously holding a contractor’s failure to strictly comply with protest and notice procedures during the preconstruction submittal process was a waiver of future claims.

The court was indiscriminating in its application of the written protest and notice provisions and for that reason overturned the Court of Appeals and did not consider the underlying facts leading to the contractor’s termination for default on the public works construction contract. The city contracted with Nova to replace an underground culvert using the pipe-bursting technique. Prior to beginning construction, the contract required that Nova send numerous submittals to the city’s engineer for approval. As is typical, the contract provided that the city’s engineer would review these submittals, the city’s decision would be final, and Nova would bear all risk and cost of work delays caused by non-approval of any submittals. The contract further required Nova to complete the work within 45 working days after the city issued notice to proceed. In an unpublished decision, the Court of Appeals overturned a summary judgment dismissal of Nova’s claims by the trial court holding that the contract provision giving the city discretion in reviewing submittals was not absolute. Applying the duty of good faith and fair dealing, the Appeals Court determined a question of fact existed as to whether the city acted in a manner that prevented Nova from attaining its “justified expectations under the contract.” The Supreme Court overruled, holding that Nova’s failure to strictly comply with a written protest provision (WSDOT Section 1-04.5) barred Nova’s claim for breach of the covenant of good faith and fair dealing, despite the numerous disputed facts at issue involving the complicated submittal process.

Read the full article published in the Seattle Daily Journal of Commerce.