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A classic joke about Washington law was that all court decisions in the state could be explained using three rules: 1, Washington is a lien theory state (for mortgage law); 2, Washington is a community property state (for family law); and 3, Boeing wins. Construction and design firms may be more interested in the following distinctive features of Washington law.

1. RCW 4.24.115 limits the use of indemnity clauses in construction contracts. It basically says that an agreement by which X must indemnify Y against liability arising from X鈥檚 work (a) is unenforceable when the liability is caused by Y鈥檚 sole negligence, and (b) is enforceable only to the extent of X鈥檚 negligence in the case of concurrent negligence of X and Y.聽In response to this statute, many Washington construction practitioners have developed indemnity clause language that tracks the statute, like the following:

To the extent permitted by law, X shall indemnify and hold harmless Y from all claims asserted by third parties arising from X鈥檚 work on the project or from injury or death to any person or damage to any tangible property, and from costs incurred, including reasonable attorney鈥檚 fees and litigation costs in connection with such claims, but only to the extent the underlying injury, death or damage was caused by the negligent act or omission of X in connection with its work under this contract.

2. RCW 4.24.115 contains another clause that may be puzzling: an indemnity agreement 鈥渕ay waive the indemnitor鈥檚 immunity under industrial insurance, Title 51 RCW, only if the agreement specifically and expressly provides therefor and the waiver was mutually negotiated by the parties.鈥� Why would anyone want to waive immunity under the industrial insurance (workers鈥� compensation) laws? The answer can be seen in the following scenario. Suppose that a contractor agrees to indemnify the owner against third-party claims for personal injury, and then the person injured is the contractor鈥檚 own employee. The contractor is immune from direct liability to the employee under the workers鈥� compensation laws. If the injured worker sues the owner and the owner seeks indemnity, the contractor may argue that indemnity should not be available in this case because it would defeat the statutory immunity. RCW 4.24.115 says that this potential defense can be waived. Again, Washington construction practitioners have developed language that tracks the statute, like the following:

X agrees that the provisions of this indemnity clause apply to any claim of injury or damage to tangible property asserted by X鈥檚 employees. As to such claims, X鈥檚 obligation of indemnity under this indemnity clause shall not be limited by any limitation on the amount or type of damages, compensation, or benefits payable to the employee by X under workers鈥� compensation acts or other employee benefit acts.聽Only to the extent necessary to fulfill its obligations pursuant to this indemnity clause, X, by mutual negotiation, hereby waives any immunity that would otherwise be available regarding claims brought by its employees under the industrial insurance provisions of Title 51 RCW.

3. RCW 4.24.360 bars any clause in a construction contract that 鈥減urports to waive, release or extinguish the rights of a contractor, subcontractor or supplier to damages or an equitable adjustment arising out of unreasonable delay in performance which delay is caused by the acts or omissions of the contractee or persons acting for the contractee.鈥� This statute was intended to prohibit 鈥渘o damages for delay鈥� clauses that courts had previously enforced. The statute goes on to say that it does not bar provisions that provide for 鈥渞easonable liquidated damages鈥� for delay. This suggests that, while an owner may not 鈥渆xtinguish鈥� a contractor鈥檚 right to damages for delay, it can define those damages (e.g., by limiting recovery to direct costs and an agreed markup). The meaning of 鈥減ersons acting for the contractee鈥� was explored in Scoccolo Construction, Inc. v. City of Renton.

4. RCW Chapter 60.04 contains Washington鈥檚 lien law for private construction projects. Public projects have analogous protections for persons providing work, including a mandated payment bond (in RCW Chapter 39.08, the 鈥淟ittle Miller Act鈥�), and a requirement that the public agency withhold retainage (in RCW Chapter 60.28). Both the private and public project statutes have detailed notice and timing requirements. Fortunately, Stoel Rives has produced a (including the public remedies) that is available through our website.

There are of course other Washington laws that affect construction projects. To learn more, contact one of the many lawyers in Washington who would love to help.

Karl Oles is an attorney in the Stoel Rives LLP construction and design practice group. Contact him at 206-386-7535 or [email protected].