BIAW and MBAKS support builder’s motion for reconsideration in liability expansion case

November 27, 2022

Roughly a month ago, the Washington State Supreme Court invalidated a local builder’s contractual liability limit, claiming the builder’s one-year limitation for defect claims was “substantially unconscionable and, therefore, void and unenforceable.” BIAW and the Master Builders Association of King and Snohomish Counties (MBAKS) last week filed an amicus — or friend of the court — brief to support the builder’s motion for reconsideration.

Expanding builder liability

Noble Ridge’s 14-page contract included a one-year limit for liability for defects. In its 5-4 decision (Tadych v. Noble Ridge Construction, Inc.) on Oct. 27, the court said contractual liability limits such as Noble Ridge’s one-year limit “shock the conscience” because they are less than the state’s six-year statute of limitation for such claims.

If the decision stands, it could have significant repercussions, not just for the home construction industry, but for any contracts containing clauses that limit liability to less than allowable under statutes of limitations.

A departure from lower court decisions

The case involved a suit by a couple who contracted with Noble Ridge to build a custom home. As noted in the dissent by Chief Justice Steven Gonzalez, the couple had a month to review the 14-page contract before they signed it. Further, they first identified the defects before the one-year period expired, but they did not sue until after that period.

Both the trial court and court of appeals dismissed the couples’ claims and upheld the contract. As BIAW and MBAKS point out in their amicus brief, the Washington State Supreme Court “and the courts of appeals have repeatedly upheld reasonable limitation periods.”

Despite this, the state Supreme Court reversed.

Supporting builder’s motion for reconsideration

In their amicus brief, BIAW and MBAKS argue that despite well-established precedents, the Supreme Court “failed to conduct the required analysis showing these prior decisions over the last 70 years were incorrect and harmful or that the legal underpinnings of these precedents have changed or disappeared altogether.”

The associations also warn the decision will “open the floodgates of litigation on claims that would otherwise be contractually barred.” The additional anticipated litigation could overwhelm the state’s judicial system.

Finally, they warn the decision will further exacerbate the state’s housing crisis.

“Increasing artificial costs, such as the significant shift in risk allocation presented in the instant case, will increase the economic pain felt by thousands of households across the state,” the brief says.

Protect yourself

While BIAW and MBAKS join in urging the court to reconsider this far-reaching and dangerous decision, it’s unclear at this time whether or not the court will decide to do so.

Any member with a contract that limits liability to less than six years should consider the case and whether their liability limitation clause should be eliminated or modified.

Don’t have a standard contract?

BIAW’s contract subscription service, exclusively for builder members, provides unlimited online access to a suite of more than two dozen contracts and addenda. Covering most common construction needs, this subscription could save you thousands of dollars in legal fees. BIAW’s legal team regularly reviews and updates these contracts based on court rulings like these, so your contracts will always be up to date.

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