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Court of Appeals Division I
State of Washington

Opinion Information Sheet

			

     IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
                                      DIVISION ONE

PACIFIC NORTHWEST EARTHWORKS LLC, )                        No. 66267-8-I
a Washington limited liability company,             )      consolidated with
                                                    )      No. 66362-3-I
                             Appellant,             )
                                                    )
              v.                                    )
                                                    ) 
THE CITY OF BELLEVUE, WASHINGTON,                   )      UNPUBLISHED OPINION
a municipal corporation,                            )
                                                    )      FILED: February 21, 2012
                             Respondent.            )
                                                    )

       Ellington, J.  --  Pacific Northwest Earthworks LLC (Earthworks) was the low 

bidder on a public works contract to install sewer lines for the city of Bellevue (City).  

Earthworks claims it is entitled to compensation beyond the contract price because the 

City misrepresented the undertaking.  We disagree, and affirm the trial court's 

dismissal and its award of attorney fees and costs to the City.

                                       BACKGROUND

       The City sought bids on a project to excavate for and install sanitary sewer lines 

and manholes along some 500 linear feet in the Cougar Mountain area.  Prospective 

bidders received a construction contract packet that included bid instructions, special 

contract information, the general conditions and technical specifications applicable to  

No. 66267-8-I/2

the project, detailed drawings, and a geotechnical report from GeoEngineers.  One 

stated purpose of the GeoEngineers report was to "provide conclusions and 

recommendations for . . . [e]arthwork and site preparation including . . . trench 
excavation considerations."1

       To prepare its report, GeoEngineers explored the subsurface conditions of the 

project site by drilling two borings along the route.  It reported the bedrock material was 

sandstone and siltstone consistent with "Blakeley Formation bedrock," which is 

"generally friable (crumbles easily by rubbing with fingers) . . . and is very soft with 
respect to rock hardness."2 It also noted the bedrock did not meet the criteria for "rock 

excavation" under the Washington State Department of Transportation (WSDOT) 

standard specifications: 

           Rock excavation shall cover the removal and disposal of rock that 
       requires systematic drilling and blasting for its removal, and also boulders 
       exceeding ½-cubic yard. Ledge rock, boulders, or stones shall be 
       removed to provide a minimum clearance of 4-inches under the pipe.

           Hardpan, hard clay, glacial till, sandstone, siltstone, shale, or other 
       sedimentary rocks, which are soft, weathered, or extensively fissured will 
       not be classified as rock excavation. Rock is defined as one that has . . . 
       unconfined compressive strength at field moisture content of more than 
       2,000-PSI.[3]

GeoEngineers opined that the trench excavation could be accomplished "with 
conventional excavation equipment, such as trackhoes or dozers."4

       1 Clerk's Papers at 284.

       2 Clerk's Papers at 286.

       3 Wash. St. Dep't of Transp. Standard Specifications for Road, Bridge, and 
Municipal Construction, section 7-09.3(7)B (2008) (emphasis added).

       4 Clerk's Papers at 287.

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No. 66267-8-I/3

       GeoEngineers also explained, however, that "geoscience practices . . . are far 

less exact than other engineering and natural science disciplines . . . [which] could lead 
to disappointments, claims, and disputes."5 Its report therefore included a section 

entitled "Report Limitations and Guidelines for Use," which made several disclaimers:

       ?   The geotechnical report was prepared for exclusive use of the City 
           and not intended for use by others unless agreed to in writing;

       ?   The report was compiled for a civil engineer or architect and may not 
           fulfill the needs of a construction contractor;

       ?   Interpretation of subsurface conditions was based on field 
           observations only from the widely spaced sampling locations at the 
           site;

       ?   Actual subsurface conditions may differ, sometimes significantly, from 
           those indicated in the report;

       ?   The report, conclusions and interpretations should not be construed 
           as a warranty of subsurface conditions;

       ?   Contractors could misinterpret the report and could avoid risk by 
           participating in pre-bid and pre-construction conferences;

       ?   When providing the report to contractors, the City should provide the 
           complete report and include with it a letter advising them that it was 
           not prepared for bid development; and

       ?   The City should be sure contractors have sufficient time to perform 
           additional study.6

       The City also disclaimed liability for reliance upon its representations:

       [T]he bidder shall examine the site of the work and ascertain for himself 
       all the physical conditions in relation thereto. . . . He will not be entitled to 
       additional compensation if he subsequently finds the conditions to require 
       other methods or equipment that he did not anticipate. . . . 

              Any statement or representation made by an officer, agent, or 

       5 Clerk's Papers at 307.

       6 See Clerk's Papers at 305-07.

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No. 66267-8-I/4

       employee of the [City] with respect to the physical conditions appertaining 
       to the site of the work shall not be binding upon the [City].[7]

       The construction contract included a bid item list for bidders to enter the price for 

various components of the project.  Bid item 3 was for rock excavation.  The contract 

provided that additional payment for rock excavation would require demonstration that 

the material excavated met the WSDOT definition of "rock." The City further explained:

              Payment for rock excavation when authorized by the [City] 
       Engineer shall be made at the Contract Price bid per cubic yard.  The 
       Contract Price shall include full compensation for furnishing all labor, 
       materials, tools, equipment, and incidentals, and for completing all work 
       involved . . . .

              . . . .

              Excavated material meeting the [WSDOT] Standard Specifications 
       definition of rock is not expected. . . . This contingent bid item is included 
       for use only if such rock excavation is encountered. [8 ]

       Before bidding on the project, Earthworks investigated the site three times to 

ascertain traffic conditions, power line locations, and access difficulties.  It did not make 

an independent subsurface investigation because the site was a traveled, paved road.

       Fifteen contractors bid on the project.  The amounts bid for rock excavation 

varied widely, from $0.50 to $250.00 per cubic yard.  Earthworks submitted the lowest 

total bid of $158,804, with $2.50 per cubic yard for rock excavation.

       Earthworks started the project using a 45,000 pound Komatsu 200 excavator 

with "tiger teeth," which it owned.  When it encountered rock that was too hard for the 

Komatsu, Earthworks rented a 60,000 pound Kobelco 215 excavator for two weeks.  It 

       7 Clerk's Papers at 108-09.

       8 Clerk's Papers at 202.

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No. 66267-8-I/5

is undisputed that the Komatsu and Kobelco are "conventional excavation equipment."  

       Earthworks hired an outside company to perform testing on some of the 

excavated material, which reported the mean compressive strengths of two sets of 

samples as 2,200 and 2,315 psi, respectively.  Earthworks claimed it excavated 284 

cubic yards of rock as defined by WDOT.

       Claiming the presence of rock was unanticipated and constituted a "changed 

condition" on the job site, Earthworks sought compensation outside the terms of the 
contract.  It requested $55,456 to cover the costs of equipment rental and extra labor.9  

The City denied the request.

       Earthworks sued the City for breach of contract, alleging the City "fail[ed] to 

make an equitable adjustment to the contract to compensate the contractor for its 
misrepresentation of [the] site condition."10 The City moved for summary judgment, 

arguing there was no evidence of misrepresentation and that, as a matter of law, there 

were no changed conditions entitling Earthworks to compensation outside the terms of 

the contract.  The trial court agreed and dismissed the case.  It awarded the City

attorney fees and costs as the prevailing party.

       Earthworks appeals.

                                        DISCUSSION
       The usual standard of review for summary judgment applies.11 Determinations of 

       9 The average hourly rate for labor was about $40 per hour.  The total cost of the 
rental equipment was $3,100.

       10 Clerk's Papers at 4.

       11 This court reviews summary judgment orders de novo, engaging in the same 
inquiry as the trial court and viewing all facts and reasonable inferences therefrom in 

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No. 66267-8-I/6

"reasonableness" are generally questions of fact, but may be disposed of on summary 

judgment if, construing the evidence in favor of the nonmoving party, a reasonable 
person could reach only one conclusion.12

                            Compensation for Rock Excavation

       Where plans or specifications for an excavation contract lead a contractor 

reasonably to believe that certain conditions exist and may be relied upon in making a 

bid, the contractor will be entitled to compensation for extra work or expense made 
necessary by the unanticipated condition.13 Reliance is reasonable if the contractor 

has made a reasonable investigation under the circumstances.14 Where no such 

representation exists, or reliance was not reasonable, a contractor who agrees to do a 

job for a fixed sum will not be entitled to additional compensation because of 
unforeseen difficulties.15  

       Earthworks points out that the City's geotechnical report showed borings 

the light most favorable to the nonmoving party.  Halleran v. Nu West, Inc., 123 Wn. 
App. 701, 709-10, 98 P.3d 52 (2004).  The moving party bears the burden of 
demonstrating the absence of any genuine issue of fact and entitlement to judgment as 
a matter of law; thereafter, the nonmoving party must set forth specific facts evidencing 
a genuine issue of material fact.  Magula v. Benton Franklin Title Co., Inc., 131 Wn.2d 
171, 182, 930 P.2d 307 (1997).

       12 See generally Basin Paving Co. v. Mike M. Johnson, Inc., 107 Wn. App. 61, 
65-68, 27 P.3d 609 (2001).

       13 Dravo Corp. v. Mun. of Metro. Seattle, 79 Wn.2d 214, 218, 484 P.2d 399 
(1971) (quoting Maryland Cas. Co. v. Seattle, 9 Wn.2d 666, 670, 116 P.2d 280 (1941)).

       14 Clevco, Inc. v. Mun. of Metro.Seattle, 59 Wn. App. 536, 542-43, 799 P.2d 
1183 (1990); Nelson Constr. Co. of Ferndale, Inc. v. Port of Bremerton, 20 Wn. App. 
321, 328-29, 582 P.2d 511 (1978).

       15 Dravo, 79 Wn.2d at 218 (quoting Maryland Cas. Co., 9 Wn.2d at 670); see 
also Basin Paving, 107 Wn. App. at 65-66; Clevco, 59 Wn. App. at 542-43; Nelson, 20 
Wn. App. at 328-29.

                                               6 

No. 66267-8-I/7

containing only soft rock, and that the City did not expect the contractor to encounter 

subsurface rock meeting the WSDOT standards.

       But this does not amount to a lack of anticipation.  Both the City and 

GeoEngineers warned bidders against reliance on the geotechnical report, and the City 

specifically disclaimed liability for expenses from subsurface conditions unanticipated 

by the contractor. The geotechnical report warned contractors not to draw conclusions 

about subsurface conditions based on GeoEngineers' analysis of the two widely-

spaced borings.  Most notably, the contract included a contingent bid item for rock 

excavation.  The City clearly foresaw the possibility that harder rock might be present at 

the project site, and Earthworks submitted its bid price for exactly that.  

       Earthworks points to the fact that some other bidders' excavation prices were 

even lower that the Earthworks price, and concludes these other contractors similarly 

relied upon the City's bid information and expected to encounter no rock, so 

Earthworks' expectation was reasonable.  But most of the bidders' prices were higher 

than the Earthworks bid, so this inference is not supported, and in any event, there is 

no evidence showing why other contractors bid as they did.  

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No. 66267-8-I/8

       The rule for excavation contracts is that recovery of additional compensation for 

unforeseen conditions is limited to situations where the "condition complained of could 
not reasonably have been anticipated by either party."16 The rule has been applied in a 

long line of cases involving public works contracts for excavation or dredging, including 
Basin Paving Company v. Mike M. Johnson,17 Dravo Corporation v. Municipality of 

Metropolitan Seattle,18 Maryland Casualty v. City of Seattle,19 and Nelson Construction 

Company of Ferndale, Inc. v. Port of Bremerton.20 The government in these cases 

either disclaimed liability for information it provided about subsurface conditions or 
gave no information about subsurface conditions at all.21 The contractors failed to 

include in the contract price the cost of dealing with certain subsurface conditions.22 All 

       16 Basin Paving, 107 Wn. App. at 65 (citing cases).

       17 107 Wn. App. 61 (court refused to grant contractor extra-contractual 
compensation for unanticipated subsurface conditions where city disclaimed liability for 
accuracy of boring tests and for any conclusions drawn therefrom, and where it advised 
the contractor it would not pay additional compensation for rock excavation).

       18 79 Wn.2d. 214 (court refused to grant contractor extra-contractual 
compensation for unanticipated subsurface conditions where city disclaimed accuracy 
of subsurface test results and contractor assumed risk by terms of contract).

       19 9 Wn.2d 666 (court refused to grant contractor extra-contractual compensation 
for unanticipated subsurface conditions where city provided no warranty regarding 
those conditions).

       20 20 Wn. App. 321 (court refused to grant contractor extra-contractual 
compensation for unanticipated subsurface conditions it encountered where those 
conditions were foreseeable based on the specifications and contractor failed to follow 
contractual procedure for additional compensation).

       21 See Dravo, 79 Wn.2d. at 215-16, 218; Maryland Cas., 9 Wn.2d at 668, 675-
76; Basin Paving, 107 Wn. App. at 63-64; Nelson, 20 Wn. App. at 323-25.

       22 See Dravo, 79 Wn.2d. at 216-17; Maryland Cas., 9 Wn.2d at 677; Basin
Paving, 107 Wn. App. at 64-67; Nelson, 20 Wn. App. at 325-26.

                                               8 

No. 66267-8-I/9

risk of unanticipated subsurface conditions was allocated to the contractors.23

       Earthworks contends that in those cases "there could be no dispute but that the 

basic information and test borings provided to the contractors for bidding purposes 
were accurate."24 But nothing in the record indicates the analysis of GeoEngineers' two 

boring samples was not accurate.  Further, the City and GeoEngineers actually 

disclaimed reliance upon the accuracy of the geotechnical report and pointed out that 

the information came from only two samples.

       The possibility that Earthworks would encounter rock was foreseeable, and 

Earthworks is not entitled to additional compensation.  We affirm the court's order on 

summary judgment and its award of attorney fees and costs to the City as the prevailing 

party pursuant to the contract.

WE CONCUR:

       23 See Dravo, 79 Wn.2d. at 218-19, 222; Maryland Cas., 9 Wn.2d at 670, 680; 
Basin Paving, 107 Wn. App. at 67-68; Nelson, 20 Wn. App. at 329.

       24 Appellant's Br. at 16.

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