Page 46 - FDCC_InsightsSpecialIssue23

Construction Law
expert to inspect the residence and who identified defects with the residence. Over the next year and a half, plaintiffs submitted concerns with the residence to the contractor, who promised to make repairs, but none were made. By April 2017, the plaintiffs had not heard from the contractor for several months, and they hired another construction expert, who opined that there were significant defects with the residence.
The plaintiffs filed suit against the contractor in August 2017—over three years after taking occupancy in the residence and over two years after initially discovering defects. The contractor successfully dismissed the plaintiffs’ claims on summary judgment, which was affirmed at the appellate level.
In reversing the lower two courts, Washington’s Supreme Court acknowledged that Washington generally follows the “black letter law of contracts that parties to a contract shall be bound to a contract by its terms” but noted that contractual provisions “that are unconscionable are not enforceable.” Id. at 641. The factors analyzed for unconscionability included: “(1) the manner in which the contract was entered, (2) whether [the parties] had a reasonable opportunity to understand the terms of the contract, and (3) whether the important terms were hidden in a maze of fine print, to determine whether a party lacked a meaningful choice.” Id. at 635 (citing Burnett v. Pagliacci Pizza, Inc., 196 Wn.2d 38, 470 P.3d 486 (2020)).
The Tadych court held that the one-year limitation in the warranty provision was substantively unconscionable because it deprived the plaintiffs of the six-year statute of repose under RCW 4.16.310.1
In addition, the court considered the “expertise or sophistication of the parties, which party drafted the contract, and whether the term at issue was separately negotiated or bargained for.” Id. at 645. The court held that the limitation period appeared to benefit the contractor more than the plaintiffs, highlighting that the plaintiffs were laypersons.
That said, there is no indication from this opinion that all contractual limitation periods will be deemed unconscionable. Moving forward, it would be prudent for contractors to ensure that limitation-periods are set out in bold with large writing and easily distinguishable from the other provisions of the contract. Consider requiring a separate set of initials for the limitation provision. Correlate the cost of the contract with the limitation provision to show that the provision was “bargained for.” Most importantly, consider with whom you are entering the contract: is it an average individual? If so, that alone may be enough to void the limitation provision, because lest we forget, the plaintiffs in Tadych had a month to review the contract, did not object to provisions, and hired experts early on to inspect their residence. They were far more careful than the average “layperson,” and they were still able to convince the Washington Supremes that this limitation provision was unconscionable.
Natasha A. Khachatourians is a Director with Betts Patterson Mines, P.S. in Seattle, WA. Contact her at: nkhachatourians@bpmlaw.com.
1 The court also indicated that a homeowner has a six-year period to discovery a defect and bring a claim under RCW 4.16.326(1)(g), but this is an affirmative defense for claims that did not accrue within the statute of repose or were not filed within the statute of limitations.
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FDCC ANNUAL FIVES 2023