Douglas Northwest, Inc. v. Bill O'Brien & Sons Const., Inc.
| Decision Date | 13 January 1992 |
| Docket Number | No. 25208-9-I,No. 1,1,25208-9-I |
| Citation | 828 P.2d 565,64 Wn.App. 661 |
| Court | Washington Court of Appeals |
| Parties | DOUGLAS NORTHWEST, INC., a Washington corporation; Douglas Whitley, a single man, Appellants, v. BILL O'BRIEN & SONS CONSTRUCTION, INC., a Washington corporation, Respondent, HERITAGE INSURANCE COMPANY OF AMERICA, a foreign corporation; and Transamerica Premier Insurance Company, a California corporation, Defendants, v. DOUGLAS N.W., INC., a Washington corporation; Douglas Whitley and Jane Doe Whitley, his wife, and the marital community composed thereof; Merton Gribble and Jane Doe Gribble, his wife, and the marital community composed thereof, Appellants, v. N.A.N. PARTNERS, a Washington general partnership; James E. Tompkins and Jane Doe Tompkins, his wife, and the marital community composed thereof; Chicago Title Insurance Company, a corporation; N.A.N. Partners N.A.N. Inc.; First American Title Insurance Co., a corporation; American Overhead Door Corporation; Federal Savings & Loan Insurance Corporation; Federal Savings & Loan Insurance Corporation as Receiver for State Federal Savings and Loan Association of Corvallis, Oregon; Ticor Title Insurance Co., a California corporation; State Federal Savings and Loan Association; Mid Kansas Federal Savings & Loan Association of Wichita; First Federal of Lewiston, Idaho, Defendants, King William Associates, a Washington partnership, Donald Winton and Jane Doe Winton, and the marital community composed thereof, as managing partner and as agents and nominees of all the partners thereof; Appellants, Evan O. Thomas, his wife, and the marital community composed thereof; Alderwood Water District, a municipal corporation; Public Utility Districtof Snohomish County; State of Washington; Vincent Shoenberger and Dorothy Shoenberger, his wife, and the marital community composed thereof; Snohomish County; and Pacific Management Company, Inc., Defendants. |
Alan B. Bornstein, Bruce P. Babbitt, and Ferguson & Burdell, Seattle, for respondent.
Douglas Whitley and his company, Douglas Northwest, Inc., appeal an adverse decision following a bench trial in their action to set aside a lien placed on their construction project by Bill O'Brien & Sons Construction, Inc. We affirm in part and reverse in part.
This case arose from a series of disputes between the parties involved in the construction of Admiralty Terrace, a residential apartment complex located in south Snohomish County. The parties bringing this appeal are (1) Douglas Northwest, Inc., a Washington corporation that was the original general contractor for the project; (2) Douglas Northwest's principal, Douglas Whitley, who owned the Admiralty Terrace site during the period of construction; (3) Merton Gribble, chief executive officer of Douglas Northwest and construction manager for the Admiralty Terrace project; (4) Gribble's putative wife, Nancy Gribble; (5) King William Associates, a Washington general partnership that currently owns the Admiralty Terrace project, and (6) Donald and Jane Doe Winton, and their marital community, as managing partner of King William Associates.
The respondent in this action is Bill O'Brien & Sons Construction, Inc. (hereinafter O'Brien), defendant below, a Washington corporation, whose president and principal is William O'Brien. 1 O'Brien was a subcontractor on the Admiralty Terrace construction project.
An examination of the ownership history of the Admiralty Terrace site, as well as past efforts to develop it, is important in resolving the issues raised in this appeal. Prior to October 29, 1984, the Admiralty Terrace site was owned by a group known as the N.A.N. partners, a general partnership in which Merton Gribble was a principal. In 1979, the N.A.N. partners had attempted to develop the property for condominiums. To this end, the partners applied for building permits with Snohomish County in 1979 and commissioned a soils report for the property in 1980. After an environmental review of the project, Snohomish County required that several conditions be met before building Many of the conditions remained unsatisfied as of September 1984, when Gribble requested Western Surveyors, Inc., to prepare engineering and design work plans for the Admiralty Terrace site. These plans were submitted to Snohomish County by Western Surveyors on October 5, 1984. Although a soils report had been completed for the property in 1980, it was not mentioned in any of the plans submitted by Western Surveyors.
permits would be issued. The N.A.N. partners appealed the imposition of these conditions, but were not successful
On October 29, 1984, Douglas Whitley, principal of Douglas Northwest, Inc., executed a joint venture agreement with Gribble for the development and sale of the Admiralty Terrace site. Under the agreement, Whitley purchased the site from the N.A.N. partners and agreed to operate as the general contractor for the development of Admiralty Terrace, a $6 million residential apartment project to be located on the site. The agreement provided that Whitley would be the owner of the Admiralty Terrace project, with Gribble being responsible for managing and overseeing its development.
William O'Brien, principal owner of Bill O'Brien & Sons Construction, Inc., learned of the Admiralty Terrace project in November 1984. Prior to submitting a bid for the project, O'Brien met with Gribble, briefly looked over the plans, and accompanied him to the Admiralty Terrace site. While at the site, O'Brien asked Gribble if there was a soils report on the job, and Gribble said Gribble told O'Brien that he had owned the property for a number of years and that the ground on the site was excellent. Gribble stated that he had cleared the site and done some grading work on it, and that all the soil on the site was good material.
Construction work to develop the Admiralty Terrace project involved two areas. The first was the "on site" area comprised of land owned by Douglas Whitley and upon Using the engineering and design plans prepared by Western Surveyors, O'Brien began to prepare a bid for the project. 2 O'Brien originally included in the bid a contingency for costs associated with bringing imported materials onto the site. Gribble, however, wanted reductions in the bid price, so O'Brien removed cost calculations for any use of imported materials. Gribble told O'Brien that all soil on the site was good material, and that only on-site material was to be used in the project.
which the project was to be built. The second area was the adjoining unimproved county right-of-way
In their negotiations, Gribble emphasized that if O'Brien were awarded the contract, he must begin work immediately, preferably prior to the beginning of 1985. O'Brien was given no indication that his access to the site would be restricted or that drawings for the project needed further approval by the regulatory agencies; in fact, O'Brien testified that Gribble indicated the opposite to be true. In preparing his bid, O'Brien assumed the entire Admiralty Terrace site would be made available.
On December 20, 1984, O'Brien entered into a subcontractor's agreement with Douglas Northwest to perform all clearing, grubbing, grading, compaction, retention pond, guard rail and storm drainage work on the project. The written contract was supplied by Gribble on behalf of Douglas Northwest and stated a contract price of $124,000. Because a payment and performance bond was required on the project by Douglas Northwest, O'Brien submitted the contract to its bonding company. The bonding company would not issue a bond based upon the contract, however, and insisted instead that an AIA 3 contract form be used that better protected the rights of O'Brien and the bonding company.
Pursuant to this request, the AIA subcontract for the clearing, grubbing and storm sewer work (grading contract) was substituted for and superseded the previous contract between the parties. Like the original agreement, the AIA contract is dated December 20, 1984, although it was signed later in 1985. The AIA grading contract called for a start work date of January 2, 1985, and a completion date as soon as possible, but not later than 80 workdays. Although the original contract had been silent on which party was obligated to obtain necessary permits, the AIA contract contained a standard preprinted clause providing that "[t]he Subcontractor shall secure and pay for all permits, fees and licenses necessary for the execution of the Work described in the Contract Documents as applicable to this Subcontract." Exhibit 6, art. 11, p 11.17, in part
O'Brien also submitted a bid to Douglas Northwest for the installation of sewer and water utilities on the project. O'Brien's bid was accepted, and by agreement dated February 21, 1985, 4 O'Brien and Douglas Northwest executed a subcontract for the performance of sewer and water work. This contract was on a form supplied by Gribble and required O'Brien to obtain a performance and payment bond. As with the grading contract, however, no bond would issue on Gribble's form. The bonding agents again insisted that an AIA subcontract be used to better protect O'Brien's and the bonding company's rights. The AIA subcontract (utilities contract) for the sewer and water work was substituted for and superseded the previous subcontract agreement between the parties. The contract was dated March 6, 1985 and called for a start work date of March 15, 1985; the work was to be completed as soon as possible, but not later than 60 working days. The contract price for O'Brien's completion of the work was $200,000.
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