The key takeaway from Graham Contracting, Ltd v. City of Federal Way in Washington appeals court

A recent unpublished decision issued by the Court of Appeals of Washington, Graham Contracting, Ltd v. City of Federal Way, reinforces the importance of following the disputes and claims procedures included in a Public Works Contract when submitting a claim against a state agency.

Graham Contracting Ltd. ("Graham") entered into a Public Works Contract with the City of Federal Way (the "City") as part of the Pacific Highway South improvement project. Included in the scope of work, Graham was required to remove overhead utility lines and relocate them underground. The Contract incorporated the 2016 Washington State Department of Transportation's Standard Specifications for Road, Bridge, and Municipal Construction ("Standard Specifications"). The Standard Specifications set forth the procedure for asserting a claim against the City in the event of a dispute. In pertinent part, the dispute and claims procedure required the contractor to submit any request for additional compensation and/or time through the City's project engineer. If the project engineer issued a determination with which the contractor disagreed, the specifications required that the contractor submit a written protest of the engineer's decision within seven days of its receipt. The specifications further indicated that failure to follow dispute provisions would result in a total waiver of the underlying claim.

During performance, Graham uncovered an unexpected joint utility trench ("JUT") that required completion prior to the relocation of utility lines underground. Graham issued a Notice of Delay to the City, indicating that completion of the trench would "significantly impact the project schedule." Graham subsequently submitted a request for additional time and money due to the impact of the JUT.

The City issued a formal determination rejecting Graham's submission. Despite the rejection, the parties held weekly meetings in an attempt to resolve the JUT issue. However, Graham did not submit a formal protest of the City's determination for several weeks after receipt of the decision. Upon receipt of Graham's protest, the City denied the submission as untimely.

Graham filed a subsequent claim against the City seeking $11,974,791 in additional impacts to the project due to the JUT work among other things. The City denied the costs associated with the JUT work. Graham ultimately sued the City. The City filed a partial motion for summary judgment alleging that Graham failed to follow the dispute and claim provisions of the contract related to the JUT work. The trial court ruled in favor of the City. Graham appealed the decision.

Court of Appeals Decision

On appeal, the court noted that the plain language of the contract required Graham to comply with the disputes and claims procedures in the specifications. In particular, the specifications required Graham to submit any protest of a determination issued by the City within seven days of Graham's receipt of the determination. By waiting several weeks to issue its formal protest regarding JUT work, the court determined that Graham failed to follow the contractual dispute provisions.

Regarding the weekly meetings between the parties, the court addressed whether the meetings constituted a waiver of the dispute provisions by the City. The court found that the purpose of the weekly meetings was to resolve issues prior to reaching the contractual dispute procedures. However, the meetings did not reach the level of formal dispute resolution under the contract. Because of this, the court determined that the meetings failed to establish a waiver of the provisions by the City.

In finding for the City, the court determined that because "Graham did not follow the contractual disputes and claims requirements…it waived any claim for additional payment."

Takeaway

When submitting a claim against a state agency pursuant to a Public Works Contract, a prudent contractor must follow the notice of claim procedures included in the agreement without deviation. As Washington courts have indicated on multiple occasions, failure to do so may well result in the dismissal of what could be an otherwise valid claim against the government.

[View source.]