Lobak Partitions, Inc. v. Atlas Const. Co., Inc.
Citation | 50 Wn.App. 493,749 P.2d 716 |
Decision Date | 01 February 1988 |
Docket Number | No. 18035-5-I,18035-5-I |
Court | Court of Appeals of Washington |
Parties | LOBAK PARTITIONS, INC., Appellant, v. ATLAS CONSTRUCTION COMPANY, INC., a Washington corporation; The City of Seattle; Tuffey & O'Malley, Inc., a Washington corporation; and Industrial Indemnity Company, Respondents. |
Gerald B. Netzky, Redmond, for Lobak Partitions, Inc.
Brian Coluccio, Seattle, for Atlas Constr. Co.
Richard L. Lambe, Ulin, Dann, Elston & Lambe, Seattle, for Tuffey & O'Malley, Inc.
Phillip King, Seattle City Atty., Seattle, for the City of Seattle.
William L. Hintze, Taylor & Hintze, Seattle, for Indus. Indem. Co.
Lobak Partitions (Lobak) appeals the trial court's dismissal of all of its claims against Atlas Construction (Atlas), Industrial Indemnity, and the City of Seattle (the City). We reverse in part and affirm in part.
The dispute in this case arose from the construction of the Seattle Center Resident Theater, better known as the Bagley Wright theater. The City, owner of the project, hired Atlas as the general contractor. The contractor's bond posted for the project was provided by Industrial Indemnity.
Atlas subcontracted a portion of the project to Tuffey & O'Malley (T & O). In August 1982, T & O in turn entered into a subcontract with Lobak for drywall work. Lobak was not registered as a contractor pursuant to RCW 18.27 1 at the time it entered into the contract with T & O.
In May 1984, Lobak filed suit against Atlas, the City, Industrial Indemnity, and T & O, alleging breach of contract and also seeking recovery against the contractor's bond. Lobak alleged in its complaint that it was due a balance of approximately $58,000 on the original subcontract, and claimed damages against the bond in the approximate amount of $371,000, due to the defendants' delay, hindrance, delayed payments, costs, fees, loss of efficiency, impact, acceleration, penalties and other damages, and a claim against the retainage in the amount of $93,000.
In the body of the complaint, Lobak alleged two specific causes of action: a claim against the project contractor's bond, for which a proper "notice of claim" was filed, and a claim for breach of contract against T & O with varying (unknown) degrees of liability attributed to the other defendants. In its answer, Atlas alleged as counterclaims that Lobak failed to pay its creditors and failed to complete the work called for, causing Atlas to sustain damages. Counsel for Lobak withdrew in November 1984. Apparently, no counsel was retained by Lobak until December 1985.
On October 25, 1985, a trial date of January 9, 1986 was set for the case. On November 20, 1985, T & O moved for partial summary judgment, seeking an order limiting its liability to Lobak to an amount that would be attributed On December 13, 1985, Atlas and Industrial Indemnity filed a motion for judgment on the pleadings, or in the alternative, for summary judgment against Lobak, to dismiss all claims. On December 20, 1985, the City filed a similar motion.
and passed on to Atlas. Following a hearing on the issue, the trial court entered an order on December 10, 1985 that T & O's liability to Lobak, if any, was limited to that portion of the claim that would pass through to Atlas, giving T & O judgment over Atlas. Apparently, Lobak did not respond to T & O's motion, nor did it appear at the hearing
In support of its motion, Atlas argued that it was not liable to Lobak for any contractual obligations arising under the subcontract because there was no contractual privity between itself and Lobak. In addition, Atlas stated in its supporting affidavit that it did not impact Lobak's performance on the project. As noted above, Atlas argued that it was damaged through Lobak's failure to pay creditors and complete work. Atlas also argued that because Lobak was an unregistered contractor, it should not be permitted to bring suit.
The City argued in support of its motion that no privity existed between itself and Lobak and also argued that Lobak's claim against the retainage should be dismissed for lack of prosecution. A hearing on both motions was set for January 3, 1986. On January 2, 1986, Lobak submitted its memorandum in opposition to Atlas' and the City's motions, together with the affidavit of Jeff Baker, vice president of Lobak. The affidavit stated that Lobak had obtained a renewal bond (certificate of insurance) on February 23, 1982, expiring on December 20, 1982, and thus was in complete compliance with RCW 18.27.040, even though Lobak was not included in the 1982 contractor list.
The trial court dismissed all of Lobak's claims against the City with prejudice and without costs, but refused to consider Lobak's untimely memorandum and affidavit. The trial court also granted Atlas and Industrial Indemnity Lobak's subsequent motions for reconsideration were denied by the trial court, after the trial court reviewed all materials submitted to it, including the untimely memorandum and affidavit. Lobak filed its notice of appeal with this court on March 5, 1986. Although the original notice appeared to contain an appeal on the issue of the retainage fund, it was later conceded by Lobak and determined by the court commissioner that the appeal was not from the portion of the trial court's order dealing with the retainage.
summary judgment, dismissing with prejudice all of Lobak's claims against them. The trial court's order further dismissed Lobak's claim against the project retainage
Under ordinary circumstances, a stranger to a contract may not sue. A third party may enforce a contract to which he is not in privity only if the contracting parties intended to secure to him personally the benefits of the provisions of the contract. A contract which only creates a general obligation to pay the costs of performing a particular undertaking does not show an intention to make such contract for the benefit of a third person who may have furnished necessary materials to some project. See Layrite Concrete Prods. of Kennewick, Inc. v. H. Halvorson, Inc., 68 Wash.2d 70, 74, 411 P.2d 405 (1966).
Alternatively, a contracting party may assign its right to payment, giving the assignee a direct right of action against the obligor. No party here argues that Lobak received any such assignment. Lobak also cannot be considered an intended beneficiary of the contract between either the City and Atlas or the contract between Atlas and T & O, because no evidence exists that those contracts were made specifically for Lobak's benefit. The City and Atlas are correct that a lack of privity precludes Lobak's direct breach of contract action against them.
Lobak argues, however, that its complaint also alleged a tort action. In order to state a claim upon which relief may be granted, it is necessary for the complaint to contain direct allegations sufficient to give notice to the court and the opponent of the nature of the plaintiff's claim. Berge v. Gorton, 88 Wash.2d 756, 567 P.2d 187 (1977). A careful review of Lobak's claim fails to suggest that a negligence action or any other tort action was intended by Lobak. The complaint describes a claim against the bond and a claim for breach of contract. Although it is certainly possible that certain of Lobak's claims for delay, hindrance, etc. could be considered to sound in tort, the wording of the complaint does not suggest a tort action.
However, lack of privity does not preclude Lobak's right to bring an action on Atlas' contractor's bond. As stated in Am.Jur.:
Although there is some authority to the contrary, it is generally held that a subcontractor, as well as a laborer or materialman, may recover on a bond executed pursuant to a statute which requires of a public contractor a bond conditioned for the payment of laborers and materialmen, and provides that the bond shall inure to the benefit of such persons, or authorizes them to sue thereon. Moreover, it has been held that a sub-subcontractor ... may recover on such a bond.
Under the Miller Act, a subcontractor may recover on the prime contractor's payment bond if he has dealt directly with the prime contractor or if he has dealt directly with another subcontractor and has given the statutory notice of his claim to the prime contractor.
(Footnotes omitted.) 17 Am.Jur.2d Contractors' Bonds § 78 (1964). RCW 39.08.010 requires a general contractor to make, execute and deliver to the appropriate governmental body a sufficient bond to ensure that all laborers, mechanics, subcontractors and materialmen are properly paid. RCW 39.08.030 gives a right of action to such persons to sue on the bond as follows:
[A]ll such persons mentioned in RCW 39.08.010 shall have a right of action in his, her, or their own name or names on such bond for work done by such laborers or mechanics, and for materials furnished or provisions and goods supplied and furnished in the prosecution of such work, or the making of such improvements ...
Because Lobak was a subcontractor on the Bagley Wright theater project, we hold that RCW 39.08.010 gives it a right to sue on the contractor's bond.
Former RCW 18.27.020 reads in pertinent part:
(1) It shall be unlawful for any person to submit any bid or do any work as a contractor until such person shall have been issued a certificate of registration by the state department of labor and industries. A partnership or joint venture shall be deemed registered if any one of the general partners or venturers whose name appears in the name under which the partnership or venture does business shall be registered. A violation of this section shall be a misdemeanor.
RCW 18.27.080 concerns registration as a prerequisite to suit:
No person engaged in the business or acting in the capacity of a contractor may bring or maintain any action...
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