State Supreme Court expands builder liability for defect claims

October 28, 2022

The Washington State Supreme Court today expanded builder liability for defect claims when it invalidated a local builder’s contractual liability limit. In its 5-4 decision, the court found the builder’s one-year limitation for defect claims “substantially unconscionable and, therefore, void and unenforceable.”

In Tadych v. Noble Ridge Construction, Inc., released Thursday, Oct. 27, the court said such clauses “shock the conscience” because they are substantially less than the six-year statute of limitation for such claims.

The case 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.

The trial court and court of appeals dismissed the couples’ claims and upheld the contract. Then the state Supreme Court reversed. Because there is no federal claim, the only way to remedy this situation is to work with the Legislature or persuade the court to reverse the decision.

Protect yourself from liability for defect claims

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

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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, these contracts 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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