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Author: Mario Yepez

Last Updated August 30, 2022

Washington Supreme Court Affirms $9.2M Judgment

 

The Washington Supreme Court considered the issue of whether a jury instruction given in an underlying lawsuit was prejudicial and not harmless to plaintiff.  The Court found plaintiff was not prejudiced by the jury instruction even though the instruction was potentially misleading.  The Appellate decision had found the jury instruction had been prejudicial to plaintiff.  This affirmed a verdict of $9.2 million against Lake Hills Investments, Inc.[i]

 

The Underlying Lawsuit

Lake Hills Investments, Inc. (Lake Hills) contracted with general contractor Rushforth Construction Company dba AP Rushforth (“AP”) for the construction of the Lake Hills Village project.[ii]  Lake Hills Village involved the construction of a King County public library branch, two mixed-used residential/retail buildings, three commercial buildings, an elevator tower, a pedestrian bridge, and townhouses.[iii]

Lake Hills filed a lawsuit against AP alleging breach of contract for delays in construction and for construction defects related to excessive cracking in the concrete garage floor slab.[iv]  AP alleged Lake Hills provided defective plans and specifications.[v]

The parties filed lawsuits against each other based on breach of contract due to the finding of defects, delays in construction, and allegations of underpayment.[vi]  The jury found AP had rendered defective work and awarded damages in six of the eight areas of claimed defects.  The jury also found Lake Hills had breached the contract because it was responsible for the majority of the days the project was delayed.[vii]

At the end of the trial, the jury returned a net judgment to AP in the amount of $9.2 million including $5.8 million in attorneys fees and costs.[viii]  Lake Hills appealed, and AP cross-appealed.[ix]

 

Contractor Must Prove Defect Was Solely Due to Plans

The Washington Supreme Court agreed with the Appellate Court that the jury instruction[1] had the potential to mislead but disagreed as to whether or not it was harmless to AP.[x]

The Court affirmed the standard that a contractor must prove the defects resulted solely from the defective plans or specifications.[xi]  The Court opined that the rationale for the defective design defense is fairness based on control.[xii]  If the owner provides a defective design, then the contractor should not be responsible for the damage caused by following the design because the source of the defects in that case is not based on construction.  Therefore, contractors can continue to rely on the affirmative design defect defense as a complete defense if the damage is due solely to the design.  However, if the defects were caused by a combination of deficient performance and deficient design, then it is not a complete defense.[xiii]

 

Lake Hills Was Not Prejudiced By The Jury Instruction

The appellate court had reversed and remanded the trial court’s decision based on its analysis of jury instruction No. 9.[xiv]  The appellate court stated jury instruction No. 9 incorrectly provided a complete defense to the contractor, suggesting the contractor only needed to prove that the plans were defective to establish a defense even if the contractor shared some proportionate liability for the defects.  Finding the jury instructions were not harmless, the appellate court reversed and remanded the trial court’s decision.[xv]

The jury instruction specifically stated,

“AP has the burden to prove that Lake Hills provided the plans and specifications for an area of work at issue, that AP followed those plans and specifications, and that the [construction] defect resulted from defects in the plans or specifications. If you find from your consideration of all the evidence that this affirmative defense has been proved for a particular area, then your verdict should be for AP as to that area.”[xvi]

The Washington Supreme Court found that while jury instruction No. 9 was potentially misleading, Lake Hills did not meet the burden of showing prejudice.[xvii]  Jury instruction No. 9 described the defense as a complete defense and did not explicitly inform the jury that it could calculate and attribute proportional liability by determining the percentage of the defect that was caused by defective specifications.  Here, the jury awarded damages to Lake Hills on its six other claims despite that jury instruction.  Because of the totality of the jury instructions, the Court decided Lake Hills had not met the burden of showing prejudice.[xviii]

 

Takeaway

It is important to review pattern jury instructions and ensure they apply to the case at hand.  In this case, the instructions were potentially misleading because they did not inform the jury that the complete defense was available only if the design was “solely” responsible for the defects and the contractor did not share any proportionate liability.  When raising this defense, lawyers should confirm proper jury instructions were provided and in a manner which conveys the standard clearly.

 


[1] Of note is that AP argued that jury instruction 9 was based on a correct statement of the law citing to Maryland Casualty Co. v. City of Seattle, 9 Wn2d 666, 116 P.2d280 (1941).  As additional support, it argued that the instruction was based on the Washington Pattern Jury Instructions, drafted by the construction section of the Washington State Bar Association (WSBA) –See WSBA Construction Law Section Pattern Instruction No. 3.4 (Accuracy of Plans and Specifications – Spearin Doctrine)).

[i] Lake Hills Invs. LLC v. Rushforth Constr. Co., No. 99119-7, P.3d, 2021 WL 3923295 (Wash. Sept. 2, 2021).

[ii] Lake Hills Invs. LLC v. Rushforth Constr. Co., Inc., 14 Wash. App. 2d 617, 630, 472 P.3d 337, 346, review granted, 196 Wash. 2d 1042, 481 P.3d 546 (2021), and rev’d, No. 99119-7, 2021 WL 3923295 (Wash. Sept. 2, 2021).

[iii] Id.

[iv] Lake Hills Invs. LLC v. Rushforth Constr. Co., No. 99119-7.

[v] Id.

[vi] Lake Hills Invs. LLC v. Rushforth Constr. Co., No. 99119-7.

[vii] Id.

[viii] Lake Hills Invs. LLC v. Rushforth Constr. Co., Inc., 14 Wash. App. 2d 617, 630, 472 P.3d 337, 346, review granted, 196 Wash. 2d 1042, 481 P.3d 546 (2021), and rev’d, No. 99119-7, 2021 WL 3923295 (Wash. Sept. 2, 2021).

[ix] Lake Hills Invs. LLC v. Rushforth Constr. Co., No. 99119-7.

[x] Lake Hills Invs. LLC v. Rushforth Constr. Co., No. 99119-7.

[xi] Lake Hills Invs. LLC v. Rushforth Constr. Co., No. 99119-7.

[xii] Lake Hills Invs. LLC v. Rushforth Constr. Co., No. 99119-7.

[xiii] Id.

[xiv] Lake Hills Invs. LLC v. Rushforth Constr. Co., Inc., 14 Wash. App. 2d 617, 630, 472 P.3d 337, 346, review granted, 196 Wash. 2d 1042, 481 P.3d 546 (2021), and rev’d, No. 99119-7, 2021 WL 3923295 (Wash. Sept. 2, 2021).

[xv] Id.

[xvi] 1 Clerk’s Papers (CP) at 348-49. Lake Hills Inv. LLC v. Rushforth Constr. Co., 14 Wn. App. 2d 617, 631, 472 P.3d 337 (2020).

[xvii] Lake Hills Invs. LLC v. Rushforth Constr. Co., No. 99119-7.

[xviii] Id.