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Gonzales Boring & Tunneling v. Mike M. Johnson Construction8/30/1999
UNPUBLISHED
At issue is the correctness of various rulings by the trial court in this construction dispute arising from a public works project. The general contractor, Mike M. Johnson Construction, Inc., wrongfully terminated its contract with the subcontractor, Gonzales Boring & Tunneling, Inc., because it did not give notice and Gonzales did not unequivocally repudiate the contract. Moreover, substantial evidence supports the damages award. We affirm those rulings. But Johnson's counterclaim for defective work should have been allowed to proceed to trial. Moreover, interest under RCW 39.76.011(2)(c)(ii) should have been awarded to Gonzales. We reverse the court's rulings on these points. Johnson executed the prime contract with the City of Everett. The construction project required a tunnel to be built underneath Mukilteo Boulevard in Everett. Gonzales was the subcontractor for the tunneling work. Specifically, it was to bore the tunnel, install liner plates, and apply grout. Johnson was primarily responsible for dewatering the site.
Gonzales was responsible for incidental water drainage.
During construction, significant water problems slowed the work. Because Gonzales deficiently installed liner plates and grout, the City informed Johnson that the work did not comply with the prime contract's specifications.
Johnson and Gonzales communicated their mutual dissatisfactions. They met on September 29, 1995. Gonzales abruptly left that meeting before it was over, and Johnson terminated the subcontract, without notice, shortly thereafter.
Gonzales brought this breach of contract action, and Johnson counterclaimed for breach based on Gonzales' deficient performance. The trial court granted summary Judgement to Gonzales, determining that Johnson had wrongfully terminated the subcontract and that Johnson was not entitled to its counterclaim. The remaining issues went to trial.
The court found that both parties were in breach. It awarded Gonzales its restitution damages and its expenses incurred in trying to dewater the site. The court denied Gonzales statutory interest under RCW 39.76.
Johnson appeals, and Gonzales cross-appeals.
I. Wrongful Termination
Johnson claims that the trial court erred in ruling that Johnson had wrongfully terminated its subcontract with Gonzales by failing to give notice as required by the subcontract. The trial court was correct. We may affirm an order granting summary Judgement if there are no genuine issues of material fact and the moving party is entitled to Judgement as a matter of law. We consider all facts and reasonable inferences in the light most favorable to the nonmoving party. We review questions of law de novo.
The subcontract between Johnson and Gonzales required "reasonable notice" before Johnson could terminate it. It states:
"It is specifically understood and agreed that in the event the CONTRACTOR shall at any time be of the opinion that the SUB-CONTRACTOR is not proceeding with diligence and in such a manner as to satisfactorily complete said work within the required time, then and in that event the CONTRACTOR shall have the right, after reasonable notice, to take over said work and to complete the same at the cost and expense of the SUB- CONTRACTOR, without prejudice to the CONTRACTOR'S other rights or remedies for any loss or damage sustained."
Whether notice is reasonable depends on the facts and circumstances of the individual case. Here, Johnson gave no notice before terminating the contract. Although Johnson had expressed its dissatisfaction with Gonzales' work on several occasions, it never
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