### FILED SEPT 1, 2016 In the Office ofthe Clerk ofCourt WA State Court ofAppeals, Division Ill

INTHE COURT OF APPEALS OF THE STATE OF WASHINGTON DIVISION THREE GENERAL CONSTRUCTION COMPANY, ) a Delaware corporation, ) Respondent,



### v. PUBLIC UTILITYDISTRICTNO. 2 OF GRANT COUNTY, a Washington municipal corporation, Petitioner. PUBLIC UTILITYDISTRICTNO. 2 OF GRANT COUNTY, a Washington municipal corporation, Third-Party Plaintiff,



### v. GENERAL CONSTRUCTION COMPANY, a Delaware corporation, TRAVELERS CASUALTY & SURETY COMPANY; and TRAVELERS CASUALTY & SURETY COMPANYBONDNUMBER 41S103871237BCM, Third-Party Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) No. 32305-6-111

OPINION PUBLISHED INPARTNo. 32305-6-111 Gen. Constr. Co. v. PUDNo. 2

GENERAL CONSTRUCTION COMPANY, ) a Delaware corporation, ) ) Fourth-Party Plaintiff, ) ) V. ) ) GLOBAL DIVING & SALVAGE, INC., a ) Washington corporation. ) ) Fourth-Party Defendant. )

KORSMO, J.

- We granted discretionary review ofthis unduly convoluted and overly-lawyered1 action at the request ofthe Grant County Superior Court in orderto determine ifthe doctrine ofquantum meruit recognized inBignoldv. King County, 65 Wn.2d 817, 399 P.2d 611 (1965), still has application afterthe decision in Mike M Johnson Construction v. County of Spokane, 150 Wn.2d 375, 78 P.3d 161 (2003) upheld contractual notice and waiverprovisions in government construction contracts. In the published portion ofthis case, we conclude thatBignoldremains viable afterJohnson for matters not included within the contract and affirm the trial court's rulings onthatpoint.

1Despite the fact that this case comes to us from rulings on motions seeking partial summaryjudgment, the Clerk's Papers tally 20,605 pages. Much ofthe record is duplicative and unnecessary. Our commissioner's office also has been subjected to repeated motions before discretionary review was sought as well as after review was granted. While it is debatable whether Public Utility District (PUD) is a substantially prevailingparty, it is undebatable that both sides have contributed to the excessive litigation. Accordingly, we exercise our discretion under RAP 14.2 and deny costs and fees on appeal. 2No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

In the unpublished portion we affirm the majority ofthe trial court's remaining summary judgmentrulings, reverse some, and remand this interlocutory appeal for trial. FACTS2 This case arises from a contractto build a fish ladder into the Wanapum Dam on the ColumbiaRiver immediately south ofVantage, Washington. The dam was built between 1959 and 1963, and required the abandonment ofthe former Vantage town site and its relocation above the new high water levels. The dam was constructed for Public Utility Districtno. 2 ofGrant County (PUD). The dam was built with 16 intake units designed to house large, power-generating turbines. Six ofthose units were left open for future expansion ofthe dam's powergenerating capacity. The dam was designed as a "gravity dam" that is built to withstand upstream waterpressure by its own weight. Thirteen anchor tendons help support each of the expansion units ofthe dam since those units do not have sufficientweight to withstand the waterpressure. The anchor tendons consist ofsteel cables anchored into the upstream bedrock. In the early 2000s, PUD decided to construct a fish bypass in Unit 11, an expansion unit containingthree separate slots. Itthen contractedwith an independent

2 Most ofthe facts necessary to the resolution ofthe remaining issues will be detailed in the unpublished portion ofthis opinion in conjunction with the discussion of those issues. 3No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2 firm, Jacobs Engineering, to do some preliminary analysis in anticipation ofsoliciting bids for the project. Jacobs Engineering produced a series ofreports analyzing general, presumptive methods ofconstruction. Based on those reports, PUD produced and disseminated bid specifications. General Construction Company (GCC) and other potential bidders met with Jacobs Engineering to go overthat material in preparation for bidding. Ultimately, PUD awarded the contractto GCC to perform "all work necessary for the Construction ofWanapum Future Unit Fish Bypass." Clerk's Papers (CP) at 19583. The nearly-430 page contract contains many provisions relevant to this litigation. Among the most pertinentto this opinion are provisions that (1) made the overall project engineerthe primary contactperson between GCC and PUD, (2) allowedthe engineerto approve or direct minor changes to the construction process, (3) required PUD management approval for changes costing more than $10,000, (4) required all change requests from GCC be in writing ifpaymentwas expected for the change, (5) and stated that GCC's failure to submit a written request for damages within ten days waived the right to payment for those damages. Regulations promulgatedby the Federal Energy Regulatory Commission (FERC) require periodic inspection ofdams by independent consultants to analyze potential and actual deficiencies. 18 CFR § 12.32. Pursuant to this requirement, PUD periodically contracted with independent engineering firms to conductpotential failure modes 4No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2 analysis ofthe dam (PFMA). As a result ofthe periodic analyses, PUD and FERC constantly monitored the dam for any signs offailure. The most recent analysis priorto the fish bypass project was conducted in late 2004 by Acres International. Since at least the mid-1980s, PUD and FERC have been aware that the anchor tendon construction method may result in the anchors becoming weakened by the corrosive effects ofwater. Consequently, the PFMAs have all assessed this possibility and its repercussions. Because ofthe severity ofthe consequences, FERC classified this potential failure mode as a "Category I: Highlighted Potential Failure Modes." However, they have been unable to ascertain the likelihood that any corrosion has in fact occurred.3 Following completion ofthe project, GCC obtained these reports from FERC through a Freedom ofInformationAct request. 5 U.S.C. § 552 Just as no plan ofbattle survives first contact with the enemy4, it appears no plan ofconstruction survives first contact with the elements. Accordingly, original plans must be revised to address the changed conditions. That was certainly the situation with the Wanapum Dam fish ladderproject. Change was constant; the building process saw

3 Wanapum Dam has been in the news in the last few years because ofcracks that occurred after completion ofthe fish bypass construction project. There is no indication in ourrecord that the crackingproblem is related to eitherthe constructionproject or to the anchoring method. 4Attributed to Field Marshall Helmuth von Moltke in his 1871 essay, "On Strategy," reprinted in DANIEL A. HUGHES, MOLTKE ON THE ART OF WAR: SELECTED WRITINGS 45-47 (1993). 

### 5No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

numerous changes to the projected course ofthe construction. For instance, although the PUD had anticipatedthe three slots in Unit 11 wouldbe worked on sequentially, GCC bidthe contractto work on the first two slots simultaneously and commenced work according to that approach. 5 However, when Unit 11 moved during construction, tilting very slightly before stabilizing, the engineer ordered GCC to cease simultaneous work and proceed sequentially, delaying the project and driving up GCC's expenses. Many additional changes, some formally requested by GCC and some not, as well as changes directed by the engineer, occurred. GCC also did not submit timely damage claims on

some ofthe changes. Under a partial settlementreached in 2007 during the construction, PUDpaid GCC extra for some changes and denied payment for others. Afterthe project was completed, GCC initiated this litigation addressing the damage claims that were not resolved by the settlement. Ultimately, the matterwas assigned to the Honorable John Knodell. Overthe course ofseveral years, the parties argued the motions at issue in this appeal. By well-analyzed andthoughtful rulings, the trial court eventually granted partial summaryjudgmentto PUD on several ofGCC's damages claims and denied summaryjudgment on other claims. Similarly, GCC sought to challenge some ofthe factual bases for the contract and establishthat PUD had waived compliance with the contract's notice provisions; those efforts failed.

5 PUD does not agree that the contract authorizedthe two slot approach, butwe viewthe facts onthis issue in the light most favorable to GCC, the nonmovingparty. 6No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2 Nonetheless, the trial courtwas concerned with the question ofhow strictly to apply the notice and claim provisions ofthe contract, with particular concern over whether PUD had to establish prejudice in orderto rely on the notice and claim provisions. To that end, the trial court urgedthis court to grantreview in order to resolve that specific legal contention and certified its partial summaryjudgmentrulings for appeal. This court granted both PUD's motion for discretionary review and GCC's cross motion. The matter eventually proceeded to oral argument. ANALYSIS Theparties understandably frame their arguments under expansive readings ofthe

case most favorable to theirposition, with PUD emphasizingJohnson and GCC relying

onBignold. We think it is quite possible to give effectto both cases. This courtreviews orders on summaryjudgment de novo, and will performthe

same inquiry as the trial court. Lybbertv. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000). All facts and inferences shall be considered inthe light most favorable to the nonmoving party. Jones v. AllstateIns. Co., 146 Wn.2d 291, 300, 45 P.3d 1068 (2002). Summaryjudgmentis appropriate where there are no material facts at issue and a party is entitledtojudgment as a matter oflaw. Lybbert, 141 Wn.2d at 34. Bignoldinvolved a constructionproject to build a road in King County. The contractor, Bignold, was required to build the road in segments, using materials cut from

one portion ofthe roadway as embankment for subsequentportions. 65 Wn.2d at 819. 7No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

As with this case, a government-employed engineer had responsibility for directing the project. Id. Theprimary6problem that developed was the discovery that large sections ofthe excavated material were too wet and contained too many boulders to be used for embankment. As a result, the contractor was ordered by the engineerto remove and dispose ofthe unsuitable material and find replacement material. Id. These changed requirements slowed the project down and imposed increased expenses for both the unexpected disposal and for having to obtain materials from a greater distance at a greater expense. The county paid for only a portion ofthe additional work it directed Bignoldto undertake. Id. Bignold sued under a theory ofquantum meruit andprevailed on the claims related to the subsurface conditions. Id. at 819-22. The Washington Supreme Court affirmed. In the course ofits opinion, the court discussed two issues ofparticular import to this case. First, after noting that the contract required the contractorto give written notice ofchanged subsurface conditions to the county, the court upheld a trial court finding that the contractorhad given "timely notice ofthe subsurface conditions on thejob site." Id. at 821,822. The county had been alerted to the changed conditions as
soon as they were discovered and ordered the contractorto perform changes. Id. at 822.

6 Other successful claims in the case involved costs imposed by a stop work order and costs incurred when the engineer required the contractorto work underbad weather conditions. Bignold, 65 Wn.2d at 823-26. 8No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

"Under such conditions, the county cannot defeat recovery by a contractor even ifno written notice was given." Id. Second, the court expressly rejected King County's argumentthatthe doctrine ofquantum meruit had no place in an action on a contract. Id. at 826. Instead, the court expressly found it available to the subsurface condition problems, and that it was "an appropriate basis for recovery when substantial changes

occur which are not coveredby the contract and were notwithin the contemplation ofthe parties, ifthe effect is to require extrawork and materials orto cause substantial loss to the contractor." Id. Johnson involved a contract between Spokane County and the Mike M. Johnson Construction Company to construct sewers ontwo separate projects in the Spokane Valley. 150 Wn.2d at 378. Although the parties expected that Johnson would work on the projects sequentially, the county had the ability to direct which streets to work. Id. Both contracts required Johnson "to use mandatory notice, protest, and formal claim procedures for claims ofadditional compensation, time extensions, and changed conditions." Id. at 379. Problems developed when one ofthe streets needed to be redesigned and buried telephone lines unexpectedly were discovered. Id. at 378-79. As a result, the county changed the order ofstreets that Johnson was to work and directed project changes to the streetbeingredesigned; it paid Johnson for the extra expenses of that component ofthe project, but not for increased expenses to the entire project. Id.

9No. 32305-6-III 

### Gen. Constr. Co. v. PUD

### No. 2

More changes followed and Johnson noted its unhappiness with the delay and constant change orders, and also indicatedthat it was incurring additional costs. 

### Id. at 380-81. However, it did not follow the contractprovisions for protest and for claiming additional compensation, despite the county's written indication that Johnson needed to comply with the contract's provisions. 

### Id. at 381-82. After extensive negotiations failed, Johnson eventually filed suit seeking damages; the county defended on the basis that Johnson had failed to comply with the contract. 

### Id. at 384. The trial court ultimately granted summaryjudgment in favor ofthe county and Johnson appealed. 

### Id. at 384-85. This courtreversed, deciding that material questions offact existed concerning whether the county's "actual notice" excused Johnson from complying withthe contract. 

### Id. at 385. The Washington Supreme Court granted review and reversed in a 5to 4 decision. The majority concludedthat there was no "actual notice" exception and that, instead, contract requirements would "be enforced absent either a waiver by the benefiting party or an agreement between the parties to modify the contract." 

### Id. at 386-87 (citing

cases rejecting claims where contractor had not complied with contractual notice provisions). The court expressly rejected Johnson's argument that

### Bignoldhad created an actual notice exception. 

### Id. at 387 (citing 

### Bignold, 65 Wn.2d at 822). It read

### Bignoldas reaffirming "the long-established rule requiring contractors to follow contractual notice provisions unless those procedures are waived by the owner." 

### Id. at 388. It then discussed the cases relied on by Johnson as examples ofwaiver. 

### Id. The majority found 10No. 32305-6-111 Gen. Constr. Co. v. PUDNo. 2

that Johnson did not comply with the notice and claimprovisions ofthe contract and that the county did not waive its reliance onthose provisions. Id. at 390-92. By contrast, the dissent authored by Justice Chambers argued that it was unfair to require Johnson to comply with the claims procedure when the county had been fully informed about the problems and observed the workperformed. Id. at 393. The dissent agreed that more than actual notice was required to waive compliance with a contract provision. Id. at 400. The dissent readBignoldas creating a rule thatthe failure to comply with the "claimsprocedures will not defeat the contractor's right to compensation unless that procedural error causes prejudice to the owner." Id. In support ofthat statement, the dissent cites Bignold, 65 Wn.2d 817. Id. Thatpage, however, is the title page for the opinion and contains three ofthe nine headnotes for the case. See 65 Wn.2d at 817. Thus, the dissent appears to simply be citingBignoldin passing. However, headnote three from thatpage might also bear on the issue: It states: [3] Same-Construction-FormalNotice Requirement-Actual Notice. The fact that a contractor did not give written notice ofchanged conditions, as required by the contract, did not prevent his recovery for the cost ofextra workrequired by conditions which had not been anticipated by the contracting parties, where the person for whomthe work was being done had become immediately aware ofthe changed conditions as soon as they developed and had ordered the contractorto perform the extra work involved. Id. at 817-18.

11No. 32305-6-111 Gen. Constr. Co. v. PUDNo. 2

Our issue arises against this backdrop due to the trial court's concern whetherthe position ofJustice Chambers might have any traction. For several reasons, we think it has none in this case. First, this case is factually closertoJohnson than toBignoldbecause the contract at issue inJohnson expressly imposed duties onthe contractorto give written notice and follow a specific written claimprocedure, as does the contract here. The notice requirements, ifany, in theBignoldcontract are discussed very little, and whether the contractor complied with them is discussed even less. The only notice provision mentioned in the opinion involved the requirement that the contractor notify the county about changed subsurface conditions. 65 Wn.2d at 821. The trial court's finding thatthe contractorhad given that notice was upheld. Id. at 822. Ifthere were any other notice provisions at issue, they simply were not discussed.7 Bignolddoes notprovide implicit factual authority for the proposition that contractual notice provisions were at issue there, let alone any authority thatthey can be ignored. Second, the Bignoldpassage on page 822 cited for the proposition that lack of compliance with notice requirements is not a barto recovery8 is not a statement ofthe

7 In the event the headnote states a fact that is not included in the opinion, we simply note that headnotes are not prepared by the court and do not constitute authority. UnitedStates v. Detroit Timber & Lumber Co., 200 U.S. 321, 337, 26 S. Ct. 282, 50 L. Ed. 499 (1906). 8 And which subsequently becameheadnote 3. 12No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

facts ofthat case. Rather, the passage expressly cites to two 1941 federal cases that did state thatrule oflaw. This passage simply shouldbe read as a general statement oflaw rather than as the governing rule ofthe case. Itwouldbe no more than dicta ifviewed as

a ruling on the issue ofcompliance with contractual notice provisions inBignoldand likely would be in conflict withJohnson iftreated as such. Finally, it should go without saying that a dissenting opinion is not law. 9 While GCC canproperly urge that Justice Chambers' opinionbe adopted, this court is not the place to make that argument. We are boundby the majority opinion inJohnson. E.g., State v. Gore, 101 Wn.2d 481,487,681 P.2d 227 (1984). TheJohnson majority speaks squarely to the validity ofcontractual notice and claim provisions-they are valid unless the party in whose favor the provisions act waives the protection. Johnson, 150 Wn.2d at 391-92. There must be unequivocal evidence ofan intentto waive. Id. at 391. Bignold's oblique reference to the topic has no bearing onthe issue in light ofJohnson. Bignold, however, is still good law for its actual holding that quantum meruit has a place in litigation arising from a construction contract. 65 Wn.2d at 826. It applies to "substantial changes" beyondthe contemplation ofthe parties and not coveredby the contractthat result in extra work or substantial costs to the contractor. Id. Thus, in

9But, for those who do need a citation for that proposition, please see Cole v. Harvey/and, LLC, 163 Wn. App. 199,207,258 P.3d 70 (2011) ("[T]he meaning ofa majority opinion is not found in a dissenting opinion."). 13No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2 Bignold, the doctrine applied to the costs incurred when the subsurface conditions, duly reported by the contractor upon discovery, varied significantly from that expected bythe parties and led to increased costs for finding new fill and the removal and transportation ofthe saturated materials. Id. Giving effectto bothBignoldandJohnson, we discern the following rules. First, for work within the scope ofthe contract, which here was "all work necessary for the Construction ofWanapum Future Unit Fish Bypass," the terms ofthe contract must be complied with unless there is evidence that PUD waived compliance with the notice and claim requirements. Forwork outside 10 ofthe contract, and changed work within the scope ofthe contract where GCC satisfiedthe contractual notice and claimprovisions, quantum meruit applies and entitles GCC to compensation. In essence, Bignoldprovides

a supplemental means ofrecovery when the contract is not applicable. 11 The trialjudgetypically tookthis approach to the various claims presented. An example involved a contractual requirement that an inspector certified by the National Association ofCorrosion Engineers (NACE) oversee the painting ofthe flow fairing

1

# ° For instance, ifPUD hadrequired GCC to repair orreplace an anchortendon, the work would have been outside ofthe scope ofthe contractto buildthe fish passages. 11 GCC sees Bignoldas providing an alternative theory ofrecovery rather than merely a supplemental one. We reject that approach. 14No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

modules that were to be inserted in the fish bypass. 12 GCC asked that it be allowed to use

an internal quality assurance manager employedby one ofits subcontractors. That individual, however, was notNACE certified and PUD declined to waive the certification requirement. GCC then hired an outside inspector who had NACE certification at a cost of$67,000. 

### It later soughtreimbursement from PUD for this expense in this litigation. The trial court dismissed the claim on the grounds that GCC had failed to notify PUD ofthe claim when it arose. Although GCC contends that PUD modified the contract by requiring a third-party inspector, the record does not support the claim. 13 The contract always required a certified inspector without mandating that the personbe an independent employee. The trial court correctly concluded that the Selway claim was barred by the failure to provide timely notice to the PUD. We affirm the dismissal ofthat claim. A majority ofthe panel having determined that only the foregoing portion ofthis opinion will be printed in the Washington Appellate Reports and that the remainder

12 The production ofthe modules was subcontractedto Selway Corporation. The parties identify this issue as "Claim 12" or as "the Selway claim." 13 GCC also argues here, as it does in all instances where the court determined that a claim was not timely raised under the contract, that PUD had waived the notice and claim requirements. We address, and reject, that argument in the unpublished portion of this opinion. 

### 15No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2 having no precedential value shall be filed for public record pursuantto RCW 2.06.040, it is so ordered. The remaining claims are reorganized and addressed differently than the parties have asserted them. We first address the cross appeal claims thatthe contract shouldbe invalidated or modified due to mistake or superior knowledge, before turning to the "Slot Claim" and GCC's contention that PUD waived compliance with the notice and claim provisions. We next address, sometimes summarily, the "CofferCell" claim, the "DistrictInstruction" claims, andthe remaining "FlowFairings" claims. CrossAppeal GCC contends thatthe FERC documents demonstrate that it is entitledto damages due to either mistake or an alleged intentional withholding ofinformation concerning the stability ofthe dam. Thetrial court properly rejected this argument. GCC primarily relies on "the doctrine ofsuperiorknowledge" in support ofits argument, although it also argues that either mutual orunilateral mistake entitles it to relief. Thetrial court found that the facts presented did not support eithertheory because the information contained in the FERC documents was not material. We agree. In essence, the doctrine ofsuperiorknowledge is a variety offraud where, priorto entering a contract, one party fails to disclose information peculiarly in its possession or unavailable to the other that materially impacts the other's costs or ability to perform on

16No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

the contract. 14 See Jordan v. Corbin Coals, 162 Wash. 503,298 P. 712 (1931); Lincoln v. Keene, 51 Wn.2d 171, 316 P.2d 899 (1957); Nelson Const. Co. of Ferndale, Inc. v. Port of Bremerton, 20 Wn. App. 321, 582 P.2d 511 (1978); see also Walla Walla PortDist. v. Palmberg, 280 F.2d 237 (9th Cir. 1960). The law ofmistake allows one party to reform the contract where there has either been a mutual mistake by the parties as to the content ofthe contract, or one party is mistaken about material facts that the other concealed. Wash. Mut. Savs. Bankv. Hedreen, 125 Wn.2d 521, 525-26, 886 P.2d 1121 (1994). Both ofthese theories hinge on establishing that GCC was unaware ofinformation existing priorto enteringthe contractthat would have indicated Unit 11 could not withstand the two slot construction method. 15 The sole evidence that GCC relies on to establish this particular fact is the FERC classification ofapotential failure ofthe anchor tendons as a "Category I Potential Failure Mode." However, nothing about that information adversely implicates the stability ofthe dam. Rather, the FERC reports

14 Some ofthe authority GCC cites involves claims ofbreach ofimplied warranty such as an ownerrepresenting to the bidding contractorthat certain methods of construction would work despite knowing that they would not. See, e.g., Md. Cas. Co. v. City of Seattle, 9 Wn.2d 666, 116 P.2d 280 (1941). 15 GCC's mutual mistake contentions before the trial court were premised on two alternative theories: (1) that the parties mistakenly believed they were agreeing to the two slot method and (2) that the parties were mistaken about the stability ofthe dam. The bulk ofits argument here addresses facts concerning that first theory, one that the trial court agreed had sufficient factual support to deny summaryjudgment on that claim. CP at 7802, 17050-52. Only the second theory was dismissed, and, consequently, is the only theory ofmistake addressed in this section. Id. 17No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

address the possible consequences ofdam failure; it does notprovide any evidence that anyone knewwhetherthe dam could withstand the two slot construction method. Rather, the evidence in the record seems to indicate that it is impossible to actually assess the probability that the anchortendons might fail. The trial court correctly concluded that the FERC documents were not material evidence. 16 Summaryjudgmentwas properly granted onthe superior knowledge and mistake claims related to the FERC documents. Slot Claim The remaining slot claim argument is that the parties agreed to buildunder the two slot method andhadto alterthat agreement due to the instability ofUnit 11. PUD argues that this claim is barred by failure to follow the notice and claims procedure. GCC argues that the contractual notice provisions are irrelevant to its quantum meruit claim, that PUD waived the provisions through the conduct ofits engineer, DanaJeske, and that it gave notice, including notice written on a chalkboard. Thetrial court concluded that whetherthe parties understoodthat there would be two slot construction, regardless of

16 Materiality aside, it appears that the claims also lack a factual basis since the record is replete with evidence that GCC had access to information indicating that possibility. For instance, Jacobs Engineering had conducted a stability analysis specifically in anticipation ofthe fish bypass project andthe bid documents reference specifications resulting from dam stability studies. There is no dispute that GCC's engineer met with and went over substantial material preparedby Jacobs Engineering. He merely claims notto have seen orrequested the stability analysis report; no evidence suggests that the informationwas withheld from GCC. 18No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

whetherthe contract called for it to be two slots, was a factual issue to be decided at trial and might, therefore, be outside the contract's notice provisions. Clerk's Papers (CP) at 7802. With respectto the notice argument, we decline to address PUD's claim because the trial court did not analyze the notice aspect ofthis issue and we are loathe to scrutinize a record ofthis size in an interlocutory appeal in orderto resolve a claim the trial court did not resolve. The trial court is free to reconsiderthis issue in light ofour analysis ofthe relationship betweenBignoldandJohnson. We do have to address two 17 ofGCC's cross appeal arguments related to this claim. The factual basis for these contentions is a claim that the PUD's engineer directed that GCC not file claim letters. 18 When engineerJeske directed GCC to abandonthe two slot construction due to stability issues, GCC engineerEd Kittle allegedly provided notice to PUD by writing it on the projectblackboard. We first consider GCC's claimthatthe writing on the blackboard constituted written notice ofits challenge to the change to a single slot method. The trial court concludedthat an unpreserved writing on a chalkboard did notprovide written notice to

17 GCC's contention that the contract is irrelevantto its quantum meruit argument is rejected for the reasons stated in the first portion ofthis opinion. 18 Ourreview ofthe record suggests thatthe engineer asked GCC to attemptto settle matters informally before submitting claims, butwe again view this issue in favor ofGCC. 19No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

PUD. We agree. Even ifit were semantically correctto call this "written," it defies the clear contractual intent that notice be made in a substantial and permanentmanner, which could, ifnecessary, be forwarded to PUD management for approval. Writing on a blackboard which is subsequently erased evinces no intent by GCC to provide that notice. The trial courtunderstandably, and quite properly, dismissed this argument. While the waiver argument has a better grounding in law and in fact than the chalkboard claim, it fares no better because it runs directly contrary to the contract. This claim is based on contentions that the engineer, Jeske, could waive the notice provisions for PUD. He could not. The contract restricts which individuals have the authority to modify the contract and what situations can constitute waiver ofcontractual provisions, as well as explicitly defining the authority ofthe engineer. As the engineer, Mr. Jeske did not have authority under the contract19 to modify its provisions. His authority extended to direct changes that would not result in additional costs as well as limited authority to direct changes that

19 GCC contends that Mr. Jeske's actions manifested apparent authority as an agent ofPUD. However apparent authority can only be derived by the objective manifestations ofthe principal. King v. Rive/and, 125 Wn.2d 500, 507, 886 P.2d 160 (1994). Here, the objective manifestations ofthe principal are set forth in the contract documents that vest certain, specific authority in Mr. Jeske as an agent; contract modification is notpart ofthe authority granted. GCC also contends that since Mr. Jeske was an employee ofPUD rather than a third-party contractor, he had actual authority. This argument ignores the fact that an agent only has authority to the extent objectively manifested by the principal. 20No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2
would cost less than $10,000. He could also require GCC to continue withthat changed work pending a decision by PUD on GCC's objection. However, the contract explicitly precluded him from directing work changes that would result in substantially increased costs or from otherwise modifying the contract. Accordingly, the trial court properly rejected GCC's claim that PUD had waived the protection ofthe notice requirements. The engineer simply had no authority to modify the contract and GCC knew that fact. We remand the slot claim argument to the trial court. Coffer Cell Claim PUD next challenges the denial ofits motion for summaryjudgment on its "Coffer Cell" claim (also referred to by the parties as the "Tailrace Claim"). GCC sought damages for the costs ofpumping water from its coffer cell on four occasions where it faced higher water levels than expected because PUD actions delayed work into the high water season. We reverse the trial court and grant summaryjudgmentto PUD. The coffer cell dams were built to create dry work areas on the downstream side of the dam (the tailrace). The appropriate height ofthe coffer cells was the subject of significant discussion before and after the parties entered into the contract, with historic monthly water levels provided for at least the previous decade. Those documents showed that the water level varied between 480 and 500 feet above sea level, with an average between 490 and 494 feet. GCC decided to build the coffer cell at 497 feet despite the 21No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

concerns ofPUD engineer Jeske that the height mightbe insufficient. The historic data suggested that the 497 foot level was seldom exceeded until late March. That, in fact,

was the time period when the water level first exceeded the coffer dam. The contract expressly provided that GCC might encounter "hightailrace levels (tailrace elevation 500.0) during the course ofthe work." CP at 35-36. 

### It also provided that "notime extensions or extra compensation will be given by the Districtbased on weather conditions. The Contractor shall be responsible for the cost of protecting/sheltering ofall work vulnerable to such extreme weather conditions." Id. Despite the contract provision, the trial court denied summaryjudgment on the ground that this claim arguably sounded in quantum meruit. GCC believedthat its damages were caused by the PUD delay, not by extreme water conditions, and thatthe extra costs ofredewatering should be borne by PUD. The problem with this contention is that claims in quantum meruit are, by definition, claims for activities or costs notcontemplated in the contract. The contract clearly assigned GCC the obligation ofsheltering the work from tailrace levels up to 500 feet and stated that there would be no extra compensation based on river conditions. GCC determined, against the recommendation ofPUD's engineer, that a 497 foot coffer cell dam would be sufficient. The gamble backfired when GCC was confronted with water levels between 497 and 498 feet on four days in the spring and summer of2007. But for the delay, those damages may not have occurred, but nothing about that fact 22No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2 changed GCC's contractual obligation to shelterthe work from high water. Consequently, this was not a quantum meruit claim. We reverse the trial court's ruling and direct that summaryjudgmentbe entered in favor ofPUD on this claim. DistrictInstruction Claims PUD next argues thatthe trial court erred in not granting summaryjudgment on 28 district instruction claims that it alleges GCC did not timely contest under the notice and claimprovisions ofthe contract.20 As the trial court did not analyze this argument, we decline to address it, leaving the matter in the capable hands ofthe trial court on remand. The essence ofthis argument involves a series ofchanges ordered by engineer Jeske under contractual provisions that allowed himto order GCC, in writing, to proceed differently in its construction methods. The contract assumed the changes were not expected to alter GCC's costs, so compliance with the changes was treated as agreement that no additional costs would be incurred. In those instances where the changes would increase costs, GCC was required to file written objections and await a determination by PUD.

20 PUD concedes, somewhat grudgingly, that District Instruction 188 "arguably" and "partially" complied with the notice requirements. Br. ofAppellant at 22. GCC appears to have conceded that some ofits claims were not timely raised. Id. at 21. 23No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2


### It appears thatthe trial court had concerns about which claims GCC thought were outside the scope ofthe contract and denied the motion, in part, pending GCC's clarification. CP at 10001. The denial also appears to have been tied into the concern

overthe application oftheBignoldquantum meruit doctrine to these claims. While we do not believe vagueness should be a defense to summaryjudgment, it does appearthat the trialjudge did not address the merits ofthe summaryjudgmentmotion. Accordingly, neither should we do so. We decline to address the order in light ofthe fact thatthe trialjudge may still address the motion. Upstream Stoplog Guiderail Claim The trial court denied summaryjudgment on this claim because questions offact remain for resolution at trial. Again, we agree. This claim concerns prefabricated components designed to be attached to the dam. Additional costs were incurred whenthe dam's surface was determinedto not be smooth,

as it was depicted on PUD's drawings, but instead bulged-apparently a common condition among middle-aged men and middle-aged dams. Unlike the previous district instruction claims, GCC clearly and properly objected in writing. GCC argues, with appropriate supportive authority, that it was entitled to rely on the drawings. PUD responds, with equally supportive authority, that GCC was requiredto determine dam surface conditions for itself. 24No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

We agree with the trial court that the reasonableness ofGCC's reliance on PUD's plans is a question offact for trial. Summaryjudgmentwas properly denied. RemainingFlow Fairings Claims These final claims are related to the initial claim addressed in the published portion ofthis opinion. They involve the assembly ofthe flow fairing modules priorto installation and a related claim involving the cost of"shrinkwrap" that was obtained for

use while installing the modules, but was subsequently destroyed by windprior to the installation. The flow fairings consisted ofthree large steel structures fixed to the upstream side ofthe dam to guide and smooth water flow to the fish bypass. The modules were manufactured in segments, assembled at thejobsite, and then lowered into place and bolted on to the face ofthe dam. The trial court denied summaryjudgment. We, once again, agree with the trial court. The parties seem to be talking about different issues. PUD contends that its approval ofGCC's request to assemble the flow fairings by use oftwo four-segment components put the onus on GCC to ensure the components fit properly. However, this "fit-up" requirement is distinct from the "pre-fit" requirement argued by GCC. The district instruction merely directed GCC to insure that the components would fit together. GCC's claim is that a different instruction, allegedly given at the last minute during a meeting, required it to pre-fitthe two modules togetherpriorto installation and increased 25No. 32305-6-III Gen. Constr. Co. v. PUDNo. 2

its costs. GCC objected and promptly filed the general notice required to maintain claims underthe contract. CP at 6352. Similarly, the shrink wrap issue did not arise from a district instruction. Instead, this was an additional requirement, tentatively inserted into the plans, and then ultimately omittedper the verbal instructions ofPUD representatives. As notice was timely given, the claim was preserved. Trial will determine the party responsible for this claim. The trial court correctly denied summaryjudgment on these issues. In summary, we affirm the trial court in part, reverse in part, and remandthis interlocutory appeal for further proceedings.

I CONCUR:

26No. 32305-6-111 FEARING, C.J. (concurring)- I concur in all ofthe majority's rulings. Nevertheless, I disagree with or wish to expand some ofthe analysis ofthe majority on two subject matters. 

### Bignoldand

### Mike M Johnson I disagree with the tenor ofthe majority opinionthat

### Bignoldv. King County, 65 Wn.2d 817, 399 P.2d 611 (1965) and

### Mike M Johnson, Inc. v. Spokane County, 150 Wn.2d 375, 78 P.3d 161 (2003) may be reconciled. 

### Mike M Johnson v. Spokane County silently overrules

### Bignoldv. King County's ruling that a contractor may recover for additional workresulting from changed conditions, ifthe public owner ofthe project knows ofthe changed conditions, despite the contractor's failure to obey contract requirements demanding compliance with formal written claimprocedures. The majority correctly notes thatthe opinion in

### Bignoldv. King County fails to outline many ofthe relevant contractprovisions in the subjectpublic works contract. The 

### Bignoldopinion notes thatthe contract contained a "changed condition" section similarto that found in other standard construction contracts. 65 Wn.2d at 821. Nevertheless, the decision does not cite any ofthe language ofthe section or detail whatthe court 

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considered to be a standard contract. What was standard in 1965 might notbe standard in 2005. At any rate, the public works contract in Bignoldhad a provision admonishing the contractorto fully examine the contract site before bidding. Anotherprovision demanded the contractor give notice in writing to the county ofany subsurface or latentphysical conditions materially different from conditions described in the contract. Finally, a provision required the contractorto invoke some section ofthe contract ifit wished payment for extra material. A provision may have exculpatedthe owner ofthe project, King County, from any extra costs incurred by the contractbyreason ofunforeseen conditions at the site. The Washington Supreme Court, in Bignoldv. King County, refused to enforce many ofthe relevant contractual terms. Although the contractor gave oral notice, the contractor failed to provide any written notice ofunanticipated subsurface conditions and withheld any written notice ofan expectation ofadditional payments. The trial court granted additional recovery caused by unanticipated conditions, nonetheless, and the Supreme Court affirmed. The high court held that the contractor may recover for additional costs. Based onBignoldv. King County, this court, in Mike M Johnson, Inc. v. Spokane County, reasonably held thatMike M. Johnson need not have necessarily followed the notice provisions in Spokane County sewer installation contracts. Instead, a question of 2No. 32305-6-111 (concurring) Gen. Constr. Co. v. PUD #2

fact existed as to whetherthe county waivedthe claims procedures. The Supreme Court reversed us. I find language inBignoldv. King County irreconcilable with language inMike M Johnson, Inc. v. Spokane County. In the former decision, the Supreme Court announced the controlling principles: Courts generally allow recovery for additional costs whenthe condition complained ofcould not reasonably have been anticipated by eitherparty to the contract. Bignoldv. King County, 65 Wn.2d at 821-22. This rule remains true despite admonitory or exculpatory phrases such as those requiring the contractorto carefully examine the site. Bignoldv. King County, 65 Wn.2d 822. Ifthe contractor gives timely oral notice ofan unanticipated condition and/orthe ownerbecomes immediately aware of the changed conditions as soon as they develop and orders the contractorto perform the changes and extrawork, the owner cannot defeat recovery by the contractor for additional costs even ifthe contractorprovided no written notice ofunforeseen conditions and extra work. Bignoldv. King County, 65 Wn.2d at 822. The owner cannotprecluderecovery for extra costs incurred by the contractor and causedby a shutdown ofwork, ifthe owner's engineer gives instructions to shut down despite the engineer giving no written instruction as required by the construction contract. Bignoldv. King County, 65 Wn.2d at 822-23. Underthe previous circumstances, equitable estoppel bars the owner from relying on a contractprovision thatrequires any instructions to be in writing. Bignoldv. 3No. 32305-6-111 (concurring) 

### Gen. Constr. Co. v. PUD#2 King County, 65 Wn.2d at 823. Quantum meruitprovides an appropriate basis for recovery when substantial changes occurwhich are not coveredbythe contract and were not within the contemplation ofthe parties, ifthe effect is to require extrawork and materials orto cause substantial loss to the contractor. 

### Bignoldv. King County, 65 Wn.2d at 826. The owner cannotrely on contractnotice provisions for claims sounding in quantum meruit. 

### Bignoldv. King County, 65 Wn.2d at 826. A claim in quantum meruit is outside the coverage ofthe contract. 

### Bignoldv. King County, 65 Wn.2d at 826. These controllingprinciples in 

### Bignoldv. King County conflictwith the following rules applied in

### Mike M Johnson, Inc. v. Spokane County: Washington law generally requires contractors to follow contractual notice provisions unless those procedures are waived. 

### Mike M Johnson, 150 Wn.2d at 386. A contractor's claim for extraworkwill be dismissed whenthere was no written order for the extra work as required bythe contract and no waiver ofthe requirement. 

### Mike M Johnson, 150 Wn.2d at 387. When the engineer issued no required written order for extrawork, the contractor may recover for the extra work only ifit shows a waiverbythe owner. 

### Mike M Johnson, 150 Wn.2d at 387. A building contractprovision requiring a written order for alterations orextras will be enforced. 

### Mike M Johnson, 150 Wn.2d at 387. Despite an ownerhaving actual notice ofa contractor's protest or claim, the notice, in and ofitself, does not excuse the contractor from complyingwith mandatory contractual protest and claimprocedures. 4No. 32305-6-111 (concurring) 

### Gen. Constr. Co. 

### v. PUD #2
Mike M Johnson, 150 Wn.2d at 377, 387. Even ifthe contractor gives notice ofa claim

or even ifthe owner knows ofconcerns ofdelay, ifthe contractor does not give notice of the amount ofthe claim or length ofdelay, as requiredby the contract, the contractor cannot recover for costs causedby delay. 

### Mike M Johnson, 150 Wn.2d at 389. Even if the contractor submits a letterto the owner indicating a concern over a change order and that it expected additional compensation for its workunder the order, ifthe letter does not supply the information required by the contractto support a protest or a formal claim, the contractor will be denied recovery for extra work requiredbythe change order. 

### Mike M Johnson, 150 Wn.2d at 390. A general notice to the ownerthatthe contractor expects additional compensation does not excuse the contractor from complyingwiththe contractual claimprocedures. 

### Mike M Johnson, 150 Wn.2d at 390. A contractor's notice ofprotestto the owner does not excuse the contractor from complyingwith mandatory claim procedures. 

### Mike M Johnson, 150 Wn.2d at 391. In

### Mike M Johnson, Inc. v. 

### Spokane County, 150 Wn.2d 375 (2003), the contractor ofa sewer installationpublic works contract encountered buriedtelephone lines, which halted work until the county and the utility company resolved the conflict. The construction contractplaced all risks from utilities mislocated on the plans ornot shown on the plans on the contractor. The contract also required the contractorto use mandatory notice, protest, and formal claim procedures for claims ofadditional 5No. 32305-6-III (concurring) 

### Gen. Constr. Co. v. PUD #2 compensation, time extensions, and changed conditions. The contractread that the contractors' failure to follow the procedures resulted in waiver ofany claims for protested work. In a 5to 4 decision, the Supreme Court dismissedMike M. Johnson's claim for additional workbecause ofits failure to follow contractprocedures, despite other written notice to the county ofthe additional work caused by the unforeseen utilities. Two facts found in

### Mike M Johnson, Inc. v. Spokane County may distinguish it from 

### Bignoldv. King County. First, Mike M. Johnson's owner admitted knowing ofthe formal protestprocedures, but decided to ignore the procedures because ofthe time needed to comply. Second, the City ofSpokane repeatedly warned Mike M. Johnson of the need to follow the contractprovisions with regard to notice ofadditional claims. The 

### Mike M Johnson court formulated no rules for use in the future based on these peculiar facts. The majority downplays notice requirements found in the public works contract in 

### Bignoldv. King County. The majority may emphasize thatthe contractor, in

### Bignoldv. King County, sued in quantum meruit. The

### Mike M Johnson, Inc. v. Spokane County opinion does not show that the contractor, Mike M. Johnson, sued in quantum meruit. The majority in this appeal may also highlight that the contractor, in 

### Bignoldv. King County, soughtrecovery for work outside ofthe contract. I find the distinction between 6 

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quantum meruit and other forms ofrecovery andthe distinction between suit for work covered by the contract and for work not coveredby the contracthollow. Recovery shouldnot be based on magic Latinwords employed inthe complaint. Distinguishing betweenworkwithinthe contractterms and outside the contractprovisions is sometimes difficult and nonsensical. Washington courts have neverprovided working definitions for "work on the contract" and "work outside the contract." DistinguishingBignoldv. King County andMike M Johnson, Inc. v. Spokane County by reason ofBignold suing in quantum meruit and Mike M. Johnson notraising such a claim is unsatisfactory. In each case, the contractorperformed additional work and incurred increased costs as a result ofunforeseen underground conditions. Although the respective owners directed each contractor to performwork in manners unexpected at the time ofcontracting, neither contractorperformedworkbeyondthe scope anticipated in the contract. The finished projectremained the same. Bignoldv. King County, 65 Wn.2d 817 (1965) stands for the following rules. Quantum meruit means "as much as deserved." Bignoldv. King County, 65 Wn.2d at 826 (quotingLosli v. Foster, 37 Wn.2d 220,233, 222 P.2d 824 (1950)). Quantummeruit provides an appropriate basis for recovery when substantial changes occurwhich are not covered by the contract and were notwithinthe contemplation ofthe parties, ifthe effect is to require extra work and materials orto cause substantial loss to the contractor. 7 

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### Gen. Constr. Co. v. PUD#2 Bignoldv. King County, 65 Wn.2d at 826. The owner cannot rely on contractnotice provisions for claims sounding in quantum meruit. 

### Bignoldv. King County, 65 Wn.2d at 826. A claim in quantum meruit is outside the coverage ofthe contract. 

### Bignoldv. King County, 65 Wn.2d at 826. 

### Mike M Johnson, Inc. v. Spokane County, 150 Wn.2d 375 (2003) did not expressly overrule these quantum meruitrules. The remainder ofthis opinion is not to be publishedto coincide withthe lack of publication ofthe corresponding portion ofthe majority opinion. Cross Appeal ofSuperior Knowledge Claim General Construction Company (GCC) seeks recovery for additional costs allegedly resulting from its abandonment ofatwo slot method ofconstruction. GCC argues that the Public Utility District (PUD) demanded it change to a consecutive slot construction method after movement in the dam. GCC further contends that it lacked knowledge offacts existingpriorto enteringthe contractthat would have informed it that Unit 11 could not withstand the two slot construction method. In turn, GCC maintains that the PUD had information ofa possible dam failure because ofcorroding anchor tendons. The PUD knew that Federal Energy Regulatory Commission (FERC) classified

a potential failure ofthe anchor tendons as a category 1potential failure mode. Based on these alleged facts, GCC argues that the PUD is liable to it for the extra costs attended to the abandonment ofthe two slot construction method onthe basis that 8No. 32305-6-111 (concurring) Gen. Constr. Co. v. PUD#2

the PUD had superior knowledge that it should have disclosed to GCC. GCC also claims

a mistake should lead to reformation ofthe contract. I agree with the majority in dismissing GCC's cross appeal. As noted by the majority, the FERC report addresses the possible consequences ofa dam failure. The report does not indicate that a two slot method ofconstruction ofa fish bypass was not safe. The report does not supportthe factual contention thatthe PUD shouldhave known the dam could not withstand the two slot construction method. I write separately to note other defects in the PUD's claim ofmistake and superior knowledge. In opposition to the PUD's motion for summaryjudgmentto dismiss GCC's claim for additional costs resulting from the abandonment ofthe two slot method of construction, GCC relies on the declarations ofDave Anderson and ScottHanson. The two declarations fail to raise an issue offact on the claim. ScottHanson was the project sponsor for GCC with regard to the Wanapum Future Unit Fish Bypass project. Hansontestified to the PUD's approval ofthe two slot construction method. Documents attached to Hanson's declaration confirmthe PUD's knowledge and approval ofthe method. Scott Hansontestified in his declaration that onJanuary 6, 2006, "GCCwas directed to discontinue performance ofthe work in accordance with the July 31, 2005 schedule and was further directed to resequence and reschedule its work in a fashion 9

### No. 32305-6-III (concurring) Gen. Constr. Co. v. PUD #2 

### requiring slot work to beperformed essentially sequentially rather than according to the Two Slot Method GCC hadproposed and the PUD had designed and approved." Clerk's Papers (CP) at 1296. The PUD denies that it gave any direction to GCC to abandon the two slot method. In his declaration, Hanson does not indicate who directed GCC to resequence its work or who at GCC received the directive. The declaration does not even expressly state that the direction came from the PUD. ScottHanson does not declare that he was present whenthe PUD gave any new instructions to GCC. He does not indicate the basis ofhis knowledge ofthe direction. Hanson does not attach any document to his declaration confirming any directive from the PUD. In his declaration, ScottHanson claims the PUD had superiorknowledge with regard to dam stability. Records show that the PUD knew ofpossible failure ofanchor tendons. Nevertheless, Hansonprovides no testimony that, assuming he hadpersonal knowledge ofsuch, any movement in the dam, on January 6, 2006, resulted from failure ofanchor tendons. Dave Anderson is a licensed engineer apparently hired by GCC for purposes of this litigation, to review PUD and FERC records. Anderson notes the wealth ofreports that show concern for failure ofdam anchor tendons resulting from corrosion. Anderson

avers: "Production ofthe known, but undisclosed stability concerns ofFERC, PUD and its consultants to the bidders wouldhave caused GCC and, presumably the otherbidders, 10 

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to consider the accompanyingunknown, increased risk ofre-sequencing work in [Future Unit Intakes] No. 11." CP at 2700-01. I question whetherthe thinkingprocess ofa construction bidder is a permissible subject ofopiniontestimony. Nevertheless, Anderson does not statethat, in fact, GCC would have no longer bid onthe assumption that it would be able to engage in the two slot method ifit had the same informationthat the PUD held. Anderson supplies no testimony that the January 6, 2006, movement resulted from corroding anchortendons.

I CONCUR: Fearing, C.J.

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