Facts:  Petitioner Elcon Construction, Inc. entered into a contract with respondent Eastern Washington University to refurbish Eastern Washington University’s on campus wells in order to increase the wells’ yields.  After work began and Elcon Construction discovered that it would have to drill significantly deeper than it had anticipated in order to complete the project, it demanded payment for increased costs.  Eastern Washington University refused and instead terminated the contract for cause on grounds that Elcon Construction had damaged one of the wells.  Eastern Washington University also sent a copy of its letter informing Elcon Construction that it was terminating the contract for cause to Elcon Construction’s bond surety.  Asserting breach of contract, fraud, and tortious interference with a businesss relationship, Elcon Construction subsequently filed suit against Eastern Washington University in the Superior Court for Spokane County.  After an arbitrator ruled in favor of Elcon Construction with regard to its breach of contract claim and awarded it $1,837,000 in damages, Elcon Construction pursued its tort claims in the superior court.  The superior court granted summary judgment for Eastern Washington University, ruling that Elcon Construction’s tort claims are barred by the independent duty doctrine.  Upon appeal, the Washington Court of Appeals affirmed.  Elcon Construction appealed this decision to the Supreme Court of Washington.

Question(s):  Does the independent duty doctrine bar Elcon Construction’s tort claims?

If not, did the superior court err in granting summary judgment for Eastern Washington University?

Conclusion:  Justice Charles W. Johnson’s opinion for the Court affirmed the Washington Court of Appeals on alternate grounds.  The Court concluded that although the independent duty doctrine does limit the availability of tort remedies in cases in which there is a contractual relationship between the parties, it does not bar Elcon Construction’s fraud and tortious interference claims under the facts of the case.  However, the Court also held that the superior court did not err in granting summary judgment for Eastern Washington University insofar as Eastern Washington University’s statements regarding its knowledge of subsurface conditions at the site were not false statements and insofar as Elcon Construction failed to present evidence that Eastern Washington University was motivated by greed, retaliation, or hostility when it sent a copy of its letter informing Elcon Construction that it was terminating the contract for cause to Elcon Construction’s bond surety.

Docket No. 83690-6 (from Court of Appeals Division III Case No. 27201-0)

Petitioner: Elcon Construction, Inc.

(Counsel: Kevin W. Roberts, Robert Allan Dunn, and Michael R. Tucker)

Respondent: Eastern Washington University

(Counsel: Jarold Phillip Cartwright, Carl Perry Warring, and Catherine Hendricks)

Briefs:

Argument: Thursday, October 27, 2011 9:00am

[Source: TVW, http://tvw.org]

Decided: Thursday, March 29th, 2012

Prevailing Party: Eastern Washington University (Respondent)

Vote: 9-0

Citation: Pending

Court: Madsen2 Court (2011)

Madsen
(Concurs)

Johnson
(Majority)

Alexander

Chambers

Owens

Fairhurst

Johnson

Stephens

Wiggins

Opinion

Concurrence