A recent unpublished opinion from the Washington Court of Appeals serves as a good reminder that contractors should carefully review their contract terms, especially when it becomes clear that there will be additional expenses or delays in performing their work caused by others. In Cascade Civil Construction, LLC v. Jackson Dean Construction (September 25, 2023), Division I of the Washington Court of Appeals issued an unpublished opinion concerning an excavation subcontractor’s (Cascade Civil Construction) claim for approximately $3.5 Million above the original subcontract price.
The additional costs appear to be largely due to a change to the construction schedule. Under the new schedule, dewatering the soil occurred at the same time as the excavation work, instead of prior to the excavation work as originally planned at the time of contracting. Cascade asserted this caused the excavation to be more time consuming and more expensive to haul (because of the extra water weight of the soil). Cascade also argued that having both scopes of work done simultaneously caused delays because the dewatering work was being performed in the same physical space as the excavation work.
Cascade sent multiple communications to the general contractor referencing the issue and expected cost increases. In the communications, Cascade notified the prime contractor that it would need additional compensation and time and requested commensurate change orders. It appears that no change order, however, was ever issued to approve the extra cost or time.
The Washington Court of Appeals found that although Cascade communicated the issues to the prime contractor, Cascade’s communications did not follow the notice of claim procedures under the parties’ subcontract. The court also found that Cascade’s communications did not provide details of the portions of its work impacted, or potential solutions to the problem, as would have been required under the subcontract notice provisions.
The subcontract, as many do, required Cascade to obtain a change order before commencing changed work, or else it would not be entitled to compensation related to such changes. Ultimately, the court held that once Cascade was aware that it was required to perform changed work for which it had not received a change order, it had a “claim” for which it should have immediately followed the claim notice procedures under the contract. The court held that by failing to do so, Cascade was not entitled to the claim for the additional cost or time.
In reaching its decision, the court rejected Cascade’s arguments that the general contractor waived the notice or claim provisions in the subcontract, or that Cascade was entitled to relief under the change directive provisions of the prime contract (which apparently was incorporated into the subcontract).
Although not published, this case certainly should serve as a cautionary tale for contractors who are often caught in the crosshairs of being asked to perform additional or changed work without delay, even when the contract requires that signed change orders must precede such changed or extra work. To the extent a contractor is being pressured to imminently perform changed work without a signed change order, that contractor should immediately review its contract and should strongly consider consulting with counsel to determine whether the situation triggers the obligation to follow the contract’s claim provisions as a condition precedent to being entitled to additional compensation.
