American Safety Casualty Insurance v. City of Olympia

133 Wash. App. 649
CourtCourt of Appeals of Washington
DecidedJune 27, 2006
DocketNo. 33446-1-II
StatusPublished
Cited by2 cases

This text of 133 Wash. App. 649 (American Safety Casualty Insurance v. City of Olympia) is published on Counsel Stack Legal Research, covering Court of Appeals of Washington primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Safety Casualty Insurance v. City of Olympia, 133 Wash. App. 649 (Wash. Ct. App. 2006).

Opinion

¶1 American Safety Casualty Insurance Company (American Safety) appeals the trial court’s ruling granting summary judgment in favor of the city of Olympia (City). American Safety acted as a surety for Katspan, Inc., on a contract between the City and Katspan. It argues that the trial court erred because material issues of fact exist about (1) whether the City waived the contract’s lawsuit and protest time limits and (2) whether the City prevented American Safety from complying with the contract’s claim information requirements. Further, American Safety argues that the trial court erred when it awarded the City attorney fees. Finding that material [651]*651issues of fact remain to be resolved, we reverse and remand for trial.

Van Deren, A.C.J.

[651]*651FACTS

I. Background

A. The Construction Project

¶2 In July 2000, Katspan, a general contractor, entered into a contract with the City for Katspan to complete a public works construction project called the LOTT Southern Connection Pipeline. LOTT Wastewater Management Partnership, now known as the LOTT Alliance, managed the project.

¶3 American Safety issued a payment and performance bond for Katspan, with the City as the obligee. Katspan entered into a general agreement of indemnity with American Safety in which Katspan assigned all its rights to receive payment from the City on the LOTT project to American Safety.

¶4 The LOTT project is a system of sewer lines that routes wastewater from Tumwater to the LOTT Wastewater Treatment Plant, located in downtown Olympia. The project was built in several segments, and Katspan contracted to construct the downtown Olympia segment. The City agreed to pay Katspan in increments totaling about $1.8 million. The contract contained specific protest provisions and procedures.

¶5 Katspan agreed to have two crews working on the project at all times. The contract segmented Katspan’s work into city blocks and provided that Katspan had 17 calendar days to complete work on any given block and 90 days to complete the entire project. Katspan planned to begin work on September 5, 2000, and the project’s scheduled completion date was December 4, 2000.

¶6 Katspan did not meet all of its contractual obligations, including the contract schedule.

[652]*652B. Contract Provisions

¶7 Section 1-04.5 of the contract between the City and Katspan set out the required protest procedure. If Katspan wished to file a protest against the City, the contract required Katspan to immediately provide written notice of its protest. Thereafter, Katspan had 15 days to supplement the protest with a written statement that included the date of the protested order, the nature and circumstances that caused the protest, the contract provisions that supported the protest, the estimated cost of the protested work, and an analysis of the progress schedule.

¶8 The contract also required Katspan, if the protest was continuing, to provide the project engineer with a written statement of the actual adjustment it requested. And it required Katspan to keep records of extra costs and time incurred and to allow the project engineer access to those records.

¶9 Section 1-09.11(1) stated that if negotiations under section 1-04.5 failed to provide a satisfactory result, Katspan “shall pursue the more formalized method outlined in Section 1-09.11(2) for submitting a claim.” Clerk’s Papers (CP) at 53. Section 1-09.11(2) required Katspan to submit a claim containing detailed and specific information. Section 1-09.11(3) limited the time in which Katspan could bring a claim or cause of action against the City to 180 days after the date of final acceptance of the project. Failure to bring a claim within the required time barred any claims or causes of action.

C. Precompletion Correspondence

¶10 On January 5, 2001, LOTT sent Katspan a letter granting a 20-day extension for the overall contract deadline. Katspan responded that it did not agree with the extension time and it referred to an earlier letter it had sent regarding additional costs it had incurred on the project. Neither letter Katspan sent complied with the contract’s protest requirements.

[653]*653111 On February 26, 2001, Katspan sent another letter to LOTT. This one sought to preserve its right to request additional time and money and stated that Katspan would prepare additional documentation to support its request and that it would contact LOTT to discuss the request. Katspan did not provide the documentation nor arrange a meeting.

¶12 In April 2001, the City sent Katspan a letter informing Katspan that LOTT considered Katspan to have breached the contract because of Katspan’s failure to meet the contractual deadlines. The City acknowledged that LOTT was willing to grant an extension, but it demanded that Katspan complete its work on the project. The letter also notified Katspan that LOTT reserved "its right to withhold liquidated damages from future pay applications and to pursue liquidated damages accrued by Katspan.” CP at 338.

¶13 Katspan disputed that it had breached the contract. It acknowledged that it had not completed the project in the contract’s required time frame, but it stated that the delays were a result of changes to the work in the original bid. It further disputed LOTT’s reservation of a right to pursue liquidated damages.

f 14 When the project was almost completed, LOTT began to prepare to close it out and accept it as complete. As part of the close out procedure, project engineer Parametrix, Inc., sent Katspan two letters asking for the information that Katspan had promised in its February 26 letter. Katspan responded that the information would be coming shortly, but Katspan never sent it. Parametrix then sent Katspan a letter requesting that Katspan execute a change order for all additional work, which Katspan did not do.

f 15 Before Katspan completed the project, the company became insolvent and Katspan assigned all of its rights under the contract to American Safety.

[654]*654¶16 In July 2001, LOTT initiated a unilateral close out of the project. On September 10, 2001,1 LOTT accepted the project as finally complete.

D. Postcompletion Communications

¶17 In November 2001, American Safety sought an equitable adjustment for $767,995.02 from the City for Katspan’s delays, which caused extra costs to Katspan. The request did not follow the specific requirements for a formal administrative claim under the contract.

¶18 By March 2002, American Safety had not received a response from the City, so its attorney contacted the City’s attorney. Thereafter, the City notified American Safety that it needed additional information and documentation in order to make the requested equitable adjustment. American Safety communicated to the City that it was having difficulty obtaining the requested documents from Katspan and asked if the City would be willing to enter into negotiations without the information. The City responded that it would proceed but that it would not negotiate a claim that had inadequate “backup information.” CP at 331.

¶19 In May 2002, American Safety sent the City two three-ring binders containing information pertaining to the adjustment request.

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Related

American Safety Casualty Insurance v. City of Olympia
162 Wash. 2d 762 (Washington Supreme Court, 2007)
AMER. SAF. CAS. INS. CO. v. City of Olympia
174 P.3d 54 (Washington Supreme Court, 2007)

Cite This Page — Counsel Stack

Bluebook (online)
133 Wash. App. 649, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-safety-casualty-insurance-v-city-of-olympia-washctapp-2006.