Fccc v. King County

• Decision Date: 22 January 2007
• Docket Number: No. 56594-0-I.,56594-0-I.
• Citation: 136 Wn. App. 751,150 P.3d 1147
• Parties: FRANK COLUCCIO CONSTRUCTION COMPANY, INC., Respondent, v. KING COUNTY, Appellant.
• Court: Washington Court of Appeals

150 P.3d 1147

136 Wn. App. 751

FRANK COLUCCIO CONSTRUCTION COMPANY, INC., Respondent, v. KING COUNTY, Appellant.

No. 56594-0-I.

Court of Appeals of Washington, Division 1.

January 22, 2007.

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Stevan David Phillips, Christina L. Haring, Margarita V. Latsinova, Stoel Rives LLP, Oma Lynn La Mothe, King Co. Courthouse, Seattle, for Appellant.

Bryan Patrick Coluccio, Cable Langenbach Kinerk & Bauer LLP, Seattle, WA, for Respondent.

DWYER, J.

¶ 1 King County hired Frank Coluccio Construction Co., Inc. (FCCC) as general contractor for a public works project involving construction of a small utility tunnel under the Duwamish Waterway. FCCC hired Donald B. Murphy Contractors, Inc. (DBM) as a subcontractor. DBM was responsible for constructing an access shaft at the eastern end of the tunnel. Problems arose during construction, including a "blow in" of the access shaft. FCCC and DBM incurred substantial monetary losses resulting from repairs and delays.

¶ 2 Under the project contract, King County was obligated to purchase an insurance policy to "insure against physical loss or damage by perils included under an `All Risk' Builder's Risk policy form." However, King County failed to obtain such insurance. When FCCC and DBM submitted builder's risk claims to King County in accordance with contractual requirements, King County denied the claims. Ultimately, FCCC sued King County, alleging, among other claims, that King County was liable for breaching the project contract by failing to obtain the builder's risk insurance. After a bench trial, FCCC prevailed on its claims and on DBM's pass-through claims. King County appeals from the judgment entered in FCCC's favor. We affirm.

I.

¶ 3 King County undertook a public works project known as the Alki Transfer/CSO Project West Duwamish Waterway Crossing, Contract W/F 6-95 (the Project). King County hired FCCC as general contractor for the Project. FCCC hired DBM as a subcontractor. The Project involved the construction of a small tunnel under the Duwamish Waterway for utility services. FCCC was responsible for constructing the tunnel. DBM was responsible for constructing an access shaft at the eastern end of the tunnel (East Access Shaft).

¶ 4 King County drafted the General Conditions portion of the Project contract. The General Conditions of the Project contract provide:

The County will purchase and maintain property damage insurance upon the entire work, including materials and supplies, at the site, storage offsite or while in transit, to the insurable value thereof. The insurance shall include the interests of the County, the Contractor, subcontractors and sub-subcontractors of all tiers in the work and shall insure against physical loss or damage by perils included under an "All Risk" Builder's Risk policy form.¹

Under the General Conditions, King County assumed the right and responsibility of adjusting any claim under the builder's risk policy, and to act as trustee for the insureds with regard to any payments made on such claims.

¶ 5 King County did not purchase a builder's risk insurance policy for the Project as mandated by the General Conditions of the Project contract. During the Project, King County had a general property damage insurance policy through Arkwright Mutual Insurance Company² (the Arkwright Policy).

¶ 6 DBM designed and constructed the East Access Shaft. The East Access Shaft wall was designed as a circular series of 34 interlocking columns, known as "piles," consisting of concrete poured into holes drilled in the ground. Following construction of the shaft wall, the shaft would be excavated and dewatered, and a thick concrete slab placed at the bottom of the structure, approximately 60 feet below the ground surface. The first 33 piles were constructed without incident.

¶ 7 Although DBM employees followed the same construction methods and procedures used on the previously constructed piles, problems arose during the installation of the final pile, Pile 8S. While the concrete was being pumped into the hole drilled for Pile 8S, the pipe used to convey concrete into the hole (the "tremie pipe") became stuck while the concrete level was 70 feet below surface level. DBM employees responded by taking remedial measures, continuing to pump concrete into the hole and attempting to remove the tremie pipe with a large crane. After the concrete pour was completed, the stuck tremie pipe was cut off at surface level and left embedded in the pile. Only 39.5 cubic yards of concrete was used to construct Pile 8S, approximately 12 cubic yards less than was used on comparable piles.

¶ 8 On January 9, 1998, as the shaft was being dewatered, a "blow-in" occurred. The shaft filled with water, soil, and debris. After the blow-in, a diver observed that Pile 8S and two adjoining piles were damaged, and that the blow-in occurred in the area of this damage. Again, DBM employees were forced to take remedial action. After three failed attempts, DBM employees were eventually able to able to repair the shaft by freezing the ground around the shaft with liquid nitrogen. Thereafter, the shaft was successfully excavated and dewatered. The repairs delayed construction of the tunnel by two months. FCCC incurred expenses during the delay related to costs of equipment, site maintenance, and labor.

¶ 9 Following the blow-in, FCCC, King County, and Arkwright corresponded with each other about the builder's risk claims related to the East Access Shaft. King County denied the builder's risk claims on June 30, 1999. FCCC and King County also corresponded about the fact that the Project would "close out" while the builder's risk claims were still pending. The General Conditions of the Project contract provide:

By accepting final payment, the Contractor shall be deemed thereby to have released the County from all claims of and all liability to the Contractor ... other than timely written claims identified in detail and stated amounts that were submitted prior to the final payment and in strict compliance with the requirements of this Contract.

King County issued a warrant to FCCC, dated August 23, 1999, for final payment on the contract.

¶ 10 In August 1999, DBM filed an action against King County for breach of contract, breach of the implied covenant of good faith and fair dealing, negligent misrepresentation, promissory estoppel and implied contractual indemnity. King County moved for summary dismissal of DBM's claims. The trial court granted the motion. This court affirmed the dismissal, holding that DBM was not a third-party beneficiary to the contract and, thus, its claim for breach of the duties of good faith and fair dealing was properly dismissed because King County owed no contractual duty to DBM. Donald B. Murphy Contractors, Inc. v. King County, 112 Wash. App. 192, 194-98, 49 P.3d 912 (2002).

¶ 11 DBM then brought an action against FCCC for wrongful withholding of sums due under the subcontract. DBM and FCCC settled their dispute in December 2001, and entered into a Settlement and Joint Prosecution Agreement. This agreement provided that FCCC would sponsor and pass through DBM's builder's risk claim against King County.

¶ 12 FCCC subsequently initiated the present action, asserting claims against King County for breach of contract, promissory estoppel, implied indemnification, breach of the covenant of good faith and fair dealing, breach of fiduciary duties, tortious interference with FCCC's economic interests, and violation of the Washington Insurance Code. The trial court granted King County's motion for summary judgment on the tort claims, the Washington Insurance Code claim, and the implied indemnity and promissory estoppel claims. The claims for breach of contract and breach of the implied duty of good faith and fair dealing went to trial.

¶ 13 Before trial, pursuant to CR 56(d), the trial court ruled that no issues of material fact existed as to several issues, and that the following matters had been established: (1) King County had a contractual duty to purchase and maintain property damage insurance for the Project; (2) the insurance King County was obligated to obtain was "required to be for physical loss or damage by perils included under an `All Risk' Builder's Risk policy form;" and (3) such insurance was to include the interests of FCCC and DBM.

¶ 14 Following an eight-day trial, the trial court ruled in FCCC's favor, entering extensive and detailed findings of fact and conclusions of law. The trial court's conclusions included the following:

2. King County breached its contractual obligation to provide All Risk Builder's Risk insurance coverage for the Project, including the interests of FCCC and DBM.

3. Losses described in the builder's risk insurance claim submitted by FCCC to the County (including the pass-through claims of DBM) would have been covered under the All Risk Builder's insurance coverage the County was obligated to purchase and maintain for the Project. To the extent the Arkwright Policy might have applied to the Project, the losses would have been covered under that Policy.

4. [King County's] affirmative defenses have not been established by the evidence, and are dismissed with prejudice.

5. FCC is entitled to an award of damages in an amount to be set, based upon property damage caused by the blow-in at the shaft and reasonable efforts to repair.

¶ 15 The trial court heard additional testimony and argument on the issue of damages, and on January 21, 2005, entered supplemental findings of fact and conclusions of law pertaining to its award of damages. The trial court awarded FCCC total damages of $1,501,426.21, inclusive of pre-judgment interest. The trial court held hearings on FCCC's motion for an award of attorney fees and costs and, on June 24, 2005, entered supplemental findings of fact and conclusions of law and awarded fees and costs to FCCC in the amount of...