Yesterday, the Washington Supreme Court unanimously held that failure to satisfy a “notice of protest” provision bars all claims for protested work — including claims for breach of the covenant and fair dealing and claims for expectancy and consequential damages. In Nova Contracting, Inc. v. City of Olympia, the Court reversed a Court of Appeals decision holding that Nova’s failure to file a written notice of protest did not bar the contractor’s claims for expectancy and consequential damages based upon a breach of the duty of good faith and fair dealing.
In this case, the City of Olympia contracted with Nova to replace a deteriorating culvert. During the submittal and approval process, the City rejected many of Nova’s submittals and ultimately ordered Nova to cease work and vacate the jobsite well before completion of the project. The construction contract between the City of Olympia and Nova required Nova to immediately notify the City in writing if it disagreed with various enumerated aspects of the construction and stated that Nova’s failure to do so would waive “any claims for protested [w]ork.”
The Court made several holdings. First, the Court held that the contract claim notice requirements applies to Nova’s breach of the covenant of good faith and fair dealing claims. Second, reasoning that the contractual term “any claims” meant all claims related to the protested work without exception, the Court held that by failing to file a written notice of protest, Nova waived any and all claims for protested work. Third, the Court also rejected Nova’s argument that its claim did not ripen until the City issued its stop work order because the construction contract contained an express obligation of continuing performance.
We advise that you seek legal counsel for questions relating to this ruling.