Owners seeking to deny contractor claims on Washington construction projects often rely on the so-called “strict compliance rule,” which they assert is a broad principal of construction law barring recovery of claims unless a party strictly complies with contractual notice procedures for asserting a claim – regardless of whether the party entitled to notice has actual notice of the claim or is prejudiced by late notice. The cases typically cited as support for the rule are Mike M. Johnson v. County of Spokane, 150 Wn.2d 375, 78 P.3d 161 (2003) and Absher Constr. Co. v. Kent School District No. 415, 77 Wn. App. 137, 890 P.2d 1071 (Div. 1 1995). However, a careful analysis of those and subsequent cases reveals that the strict compliance rule is not as broad as owners often assert, and in fact is rather unremarkable.
In Absher, a subcontractor claimed defective plans caused it additional expenses. The contract required the contractor “to give written notice to the Owner and Architect within fourteen days of the event giving rise to the claim,” and further provided that the contractor’s failure to comply with the claim procedure was “an absolute waiver of any claims arising from or caused by delay.” Absher, 77 Wn. App. at 139-140. Absher failed to provide timely notice, and consequently the court, noting that Washington law requires contractors to follow contractual notice procedures unless they are waived, affirmed summary judgment in favor of the District. Similarly, the contract in Mike M. Johnson provided that failure to follow the claim procedures “completely waives any claim for protested work.” Mike Johnson, 150 Wn.2d at 380. Johnson failed to follow the procedures, wherefore the appellate court reversed the trial court and held summary dismissal of Johnson’s claims proper. In other words, in both Absher and Mike M. Johnson the court upheld the sanctity of contract and enforced the express terms thereof; terms which in effect made compliance with the contractual notice procedures a condition precedent to asserting a claim.
In contrast to Absher and Mike M. Johnson is Shepler Construction Inc. v. Leonard, 175 Wn. App. 239, 306 P.3d 988 (Div. 1 2013). In that case a contractor argued that the homeowners’ failure to follow the contractual claim procedures barred their claims. Significantly, the contract did not provide that failure to follow those procedures constituted a waiver of the right to bring a claim. The court analyzed the application of Absher and Mike M. Johnson as follows:
Shepler relies on Absher and Mike M. Johnson, Inc. v. Spokane County, 150 Wn.2d 375, 78 P.3d 161 (2003). This reliance is misplaced. Absher and Mike M. Johnson are distinguishable from the contract at issue here, because the contracts in those cases explicitly provided that failure to follow dispute resolution procedures constituted a waiver of those claims . . . [i]n Mike M. Johnson, the county awarded Mike M. Johnson Inc. (MMJ) bids to construct two sewer projects. The two contracts required that MMJ give signed, written notice of protest of work. The contracts stated that MMJ completely waived any claims for protested work by failing to follow this procedure. If protest procedures failed to provide a satisfactory resolution, another provision required a mandatory formal claim procedure. MMJ’s failure to submit required information supporting its claims constituted a waiver of those claims. The contract required full compliance with the claim procedures as “a contractual condition precedent to the Contractor’s right to seek judicial relief.” . . . In contrast, the contract here does not state that the Leonards’ failure to follow the dispute resolution procedures expressly waives their right to pursue those claims in court.
Shepler Constr., Inc. v. Leonard, 175 Wn. App. at 246-247, 306 P.3d at 992.
To avoid issues, contractors should always strive to follow the claim and notice procedures in the contract. But if that does not occur, the lesson from the foregoing is that compliance with claim procedures is a condition precedent to bringing a claim only if there is express language to that effect in the contract – such as existed in Absher and Mike M. Johnson. Without such language, the failure to follow the claim procedures may be a breach of a promise, just as would be the failure to comply with any other provision in the contract, but it does not necessarily and automatically preclude a contractor’s ability to assert a claim.
In instances where the contract does not expressly provide that failure to follow claims procedures is an absolute waiver of the claim, the failure to follow proper procedures can nonetheless result in a waiver if there is significant prejudice to the owner. However, that discussion is beyond the scope of this article. Navigating the claims procedures can be a complicated process and we assist clients in analyzing and asserting contract claims regularly. Do not hesitate to contact us if you have questions regarding potential claims or contract provisions.
by Mike Bissell & Tyler Waite