American Safety Casualty v. City of Olympia

On December 27, 2007, the Washington State Supreme Court issued its decision in a closely watched case dealing with notice requirements on public works construction projects, and whether the owner (City of Olympia) had waived its rights to insist on the bonding company (American Safety Casualty) meet the contractual deadlines for filing a claim for additional compensation. American Casualty was the bonding company for Katspan, Inc., the contractor hired by the City of Olympia for a pipeline project.

In its analysis, the Supreme Court discusses the impact of the Mike M. Johnson case and how it relates to the facts of this case.

The unanimous decision by the Supreme Court states in part:

"This case arises from a contract dispute between American Safety Casualty Insurance Company (American Safety) and the city of Olympia (City) and the trial court's award of summary judgment in favor of the City. There is no dispute that American Safety did not follow the contract's provisions when it sought additional compensation for work it had performed and that it filed suit after the 180-day time limit established in the contract. However, American Safety argues that the City implicitly waived its right to demand compliance with the contract's provisions when it agreed to negotiate and try to reach a settlement. American Safety argues that the trial court erred in granting summary judgment to the City, and that the Court of Appeals was correct to reverse because an issue of material fact existed as to whether the City waived its contractual defenses. The City maintains that it expressly reserved its rights; that any waiver of rights must be unequivocal; and that, at most, its acts were equivocal and thus did not constitute a waiver. We agree with the City and reverse the Court of Appeals."

Conclusion: "Implied waiver of contractual rights requires unequivocal acts, and here the City's acts were, at most, equivocal. Agreeing to enter into negotiations, without more, does not constitute an implied waiver of contractual rights. Therefore, since American Safety admittedly did not comply with the contractual provisions and thus waived its claim to additional compensation, the trial court was correct in granting summary judgment to the City. The decision of the Court of Appeals is reversed."

If you would like a copy of the full decision, please contact me and I'll e-mail it to you.