Mountain States Const. Co. v. Tyee Elec., Inc.

• Court: Washington Court of Appeals
• Writing for the Court: THOMPSON; McINTURFF, Acting C.J., and MUNSON
• Citation: Mountain States Const. Co. v. Tyee Elec., Inc., 718 P.2d 823, 43 Wn.App. 542 (Wash. App. 1986)
• Decision Date: 01 May 1986
• Docket Number: No. 6996-6-III
• Parties: MOUNTAIN STATES CONSTRUCTION CO., a corporation, and United Pacific Insurance Company, Appellants, v. TYEE ELECTRIC, INC., a corporation, and St. Paul Insurance Company, Respondents.

Page 542

43 Wn.App. 542

718 P.2d 823

MOUNTAIN STATES CONSTRUCTION CO., a corporation, and United Pacific Insurance Company, Appellants, v. TYEE ELECTRIC, INC., a corporation, and St. Paul Insurance Company, Respondents.

No. 6996-6-III.

Court of Appeals of Washington Division 3, Panel Three.

May 1, 1986.

Joel E. Smith, Gavin, Robinson, Kendrick, Redman & Pratt, Yakima, for appellants.

Walter G. Meyer and Bryan G. Evenson, Halverson & Applegate, Yakima, for respondents.

THOMPSON, Judge.

General contractor Mountain States Construction Company (Mountain States) and its insurer, United Pacific Insurance (United Pacific), appeal the summary judgment dismissal of breach of contract claims against subcontractor Tyee Electric, Inc. (Tyee), and its insurer, St. Paul Insurance Co. (St. Paul), for failure to obtain adequate insurance. We affirm.

In March 1978, Mountain States was awarded a contract by the City of Wapato to construct waste water treatment facilities. Included in the main contract between Mountain States and the City was "Stipulation 26" which provided in pertinent part:

26. CONTRACTOR'S PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE : The Contractor [Mountain States] shall not commence work under this contract until he has furnished evidence (in duplicate copy) of insurance required hereunder ... nor shall the Contractor allow any subcontractor to commence work on his subcontract until the same insurance requirements have been complied with by such subcontractor.... Evidence of liability insurance shall be furnished on the "Certificate of Insurance" form included at the end of this article.

* * *

The Contractor shall maintain, during the life of this contract, Comprehensive General and Automobile Liability Insurance and Builders' Risk "All-Risk" Insurance as detailed herein. The insurance shall include, as Additional Named Insureds, the Owner [City of Wapato] and the Engineer.

Mountain States entered into a subcontract with Tyee to provide supervision, materials, labor, supplies and equipment for electrical work. Paragraph A of the subcontract provided in part:

(A) OBLIGATIONS AND RESPONSIBILITIES

It is agreed that the SUBCONTRACTOR will assume toward the CONTRACTOR all obligations and responsibilities which the CONTRACTOR has assumed toward the OWNER under the MAIN CONTRACT, and shall be entitled to all privileges and protection granted the CONTRACTOR by the OWNER, under the MAIN CONTRACT. In case of conflict between the terms of the obligation and the responsibilities of the parties of this SUBCONTRACT and the MAIN CONTRACT, this SUBCONTRACT shall control.

Paragraph S of the same subcontract provided:

(S) INSURANCE

SUBCONTRACTOR shall obtain and keep in force during the term of the contract public liability and property damage insurance with coverage equal to, or greater than, the minimum specified in the MAIN CONTRACT. The SUBCONTRACTOR shall furnish to the CONTRACTOR evidence of this insurance as in the same form as described in Paragraph (R). Such insurance shall indicate that it includes contractual liability coverage applicable to the indemnity provisions of this SUBCONTRACT. The SUBCONTRACTOR shall give CONTRACTOR ten days notice of any cancellation.

On May 4, 1979, a Tyee employee was fatally injured while in the course of his employment at the jobsite. The personal representative brought a wrongful death action against Mountain States and was awarded a $320,000 jury verdict after a 60 percent reduction for the decedent's comparative fault. Thereafter, Mountain States and its insurer, United Pacific, sought to enforce subcontract indemnity provisions against Tyee. Their complaint was amended and the relief sought was changed to a request for damages based on breach of the contractual obligation to insure. The trial court granted Tyee's motion for summary judgment, ruling the provision in the subcontract requiring the subcontractor to assume toward the general contractor all obligations the general contractor owes the owner did not require the subcontractor to obtain comprehensive general liability insurance naming the general contractor as an additional insured.

The dispositive issue is whether Tyee breached its contract as a matter of law. Our review is governed by the principle that absent disputed facts, contract construction is a matter of law, and the appellate court is in as good a position as the trial court to interpret a contract's meaning. Yeats v. Estate of Yeats, 90 Wash.2d 201, 204, 580 P.2d 617 (1978); Jones Assocs. v. Eastside Properties, Inc., 41 Wash.App. 462, 465-66, 704 P.2d 681 (1985).

The court concluded stipulation 26 of the main contract read solely with paragraph A of the subcontract would require Tyee to name Mountain States as an additional insured in its liability policy. The court further concluded, however, that the language of paragraph S of the subcontract created a conflict between that provision and stipulation 26. Based on (1) the fact Mountain States drafted the subcontract; (2) language in paragraph A, which asserted the controlling effect of the subcontract; and (3) absence of a certificate of insurance form in the main contract, the court found the...