Ever been to one of those helpful construction law seminars? You know, the ones where a friendly lawyer (like me) keeps saying, “don’t forget: read your contract?” Yep, you know the ones.
I was a contractor for almost 20 years. Did I always read my contract? Actually, yeah, most of ‘em, I did. But, the ones I didn’t read were ones I naively assumed were merely perfunctory, the kinds you saw all the time: concrete sawcutters, crane and other operated equipment rentals, and quite often, credit agreements with suppliers. “I understand,” I would think as I (literally) scawled my John Henry on those agreements. And all that was fine until I discovered one not-so-fine day that a chunk had been taken out of my ample backside by something I missed by not closely reading one of those “routine” agreements.
So was the case for poor old (and now defunct) Arm Construction of Seattle. Division III of the Washington Court of Appeals told this cautionary tale in an unpublished decision released on September 11. When I read the decision, all I kept hearing in the back of my head were all those lawyers I have heard plead to their contractor clients, “Please, please, you gotta read the contract!”
Perhaps like I did (or perhaps more correctly, didn’t) in my contractor days, when Arm Construction’s owner signed its credit application with Gray Lumber in 2003, either it didn’t read the contract closely, or maybe at all. And therefore, the red light disclaimers included in that agreement—the ones that said that Gray wouldn’t be responsible for warranting the materials it sold Arm, and wouldn’t guarantee the fitness of those materials for a particular purpose—got missed. Big mistake.
Therefore, when Arm ordered No.2 Doug Fir 4x4s from Gray in 2006, and got shipped Standard 4x4s, and then failed to notice the error, that’s when the problems arose. Workers using the scaffolding Arm built with the 4x4s were hurt when it collapsed. They sued. Arm’s L&I rating went up, it had to pay its insurance deductible, and it alleged that it incurred other damages.
Four years after its lumber purchase, Arm sued Gray, asserting what were essentially Uniform Commercial Code claims (breaches of warranty, fitness for a particular purpose and contract, and a failure to furnish conforming goods). After discovery, Gray moved for summary judgment, relying on the 2003 credit agreement and the waivers of liability included in it. To attempt to stave off summary judgment Arm asserted, in addition to other factors, the existence of a supplemental oral contract, in which Gray was alleged to have waived the immunities to which it was entitled by written credit agreement.
You won’t be surprised to know that the judge didn’t buy it, and granted Gray’s motion for summary judgment, a ruling the Court of Appeals upheld. Bottom line: almost no agreement by which you obligate yourself is perfunctory. As trite and obvious as it might sound, take your nagging lawyer’s (and Arm Construction’s) advice: signing something you haven’t read or don’t understand is like spitting into the wind. You might get lucky. Then again, if you’re not so lucky, it can be a nasty mess.
Handling water and wastewater is becoming more and more important in our everyday lives. Just take a look at the DJC’s Environmental Outlook special section and you will see several articles on the subject.
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