For Washington construction projects, two different statutes interact to determine whether a lawsuit is timely. RCW 4.16.310 states that any cause of action that has not accrued within 6 years of substantial completion of the project is barred. Based on relatively recent decisions of the Washington Supreme Court, accrual for purposes of RCW 4.16.310 has come to be contemporaneous with the claimant’s becoming aware that there is a problem with the work. This statute is known as the statute of repose. Then, once the cause of action has accrued, RCW 4.16.040 gives the claimant another 6 years to bring suit. This is called the statute of limitations. Taken together, for a problem a claimant discovers almost 6 years after substantial completion, a contractor is exposed to suit for a total of 12 years after substantial completion of the project.
In order to avoid this extended liability, contractors routinely insert a provision into their contracts stating that any cause of action relating to the work shall be deemed to have accrued upon substantial completion, thus doing away with the 6-year discovery period allowed by the statute of repose, and starting the clock on the 6 year statute of limitations. The result is to reduce their exposure to a total of 6 years from the time they finish their work.
That is a good strategy for private projects, and it is one that the joint venture that built Safeco Field employed when it believed it was contracting with a non-state entity. Unfortunately for the joint venture, three years ago, in a dispute over allegedly defective primer on structural steel used in the construction of that project, to the surprise of most observers, the court held that Safeco Field was a project “for the benefit of the state” under RCW 4.16.160, so that the 6-year statute of limitations for actions based on written contracts for non-state projects did not apply.
The joint venture went back to court and argued that even if the statute of limitations did not apply, because the Mariners did not discover the problem with the primer for more than 6 years after the stadium was substantially complete, the statute of repose barred the claim. Late last month, the court disagreed, and held that the contractual provision stating that causes of action accrued upon substantial completion was enforceable, such that the statute of repose was satisfied.[i]
The result is that the contractor’s attempt to contractually reduce its exposure from 12 years to 6 years ended up exposing it to claims relating to the project indefinitely.
The lesson is that it may be a good idea to make the accrual-upon-substantial completion language conditional on a finding that a project is not “for the benefit of the state” under RCW 4.16.160, and to include a provision that states that if it is found to be such a project, the statute of repose will apply as provided by RCW 4.16.310. That seems to be the only way to guarantee a time limit on claims against a contractor on a project that a court may characterize in a surprising way after the fact.
[i] Washington State Major League Baseball Stadium Public Facilities District v. Huber, Hunt & Nichols-Kiewit Construction Company, 2013 WL 363453, __ P.3d __ (2013).