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Elcon Constr., Inc. v. E. Wash. Univ.
State: Washington
Court: Supreme Court
Docket No: 83690-6
Case Date: 03/29/2012
 
Supreme Court of the State of Washington

Opinion Information Sheet

Docket Number: 83690-6
Title of Case: Elcon Constr., Inc. v. E. Wash. Univ.
File Date: 03/29/2012
Oral Argument Date: 10/27/2011

SOURCE OF APPEAL
----------------
Appeal from Spokane County Superior Court
 04-2-05145-7
 Honorable Gregory D. Sypolt

JUSTICES
--------
Barbara A. MadsenConcurrence Author
Charles W. JohnsonMajority Author
Tom ChambersSigned Majority
Susan OwensSigned Majority
Mary E. FairhurstSigned Majority
James M. JohnsonSigned Majority
Debra L. StephensSigned Majority
Charles K. WigginsSigned Concurrence
Steven C. GonzálezDid Not Participate
Gerry L. Alexander,
Justice Pro Tem.
Signed Majority

COUNSEL OF RECORD
-----------------

Counsel for Petitioner(s)
 Kevin W Roberts  
 Dunn & Black PS
 111 N Post St Ste 300
 Spokane, WA, 99201-0907

 Robert Allan Dunn  
 Dunn & Black PS
 111 N Post St Ste 300
 Spokane, WA, 99201-0907

 Michael R Tucker  
 Dunn & Black PS
 111 N Post St Ste 300
 Spokane, WA, 99201-0907

Counsel for Respondent(s)
 Jarold Phillip Cartwright  
 Aty General's Ofc Tort Division
 1116 W Riverside Ave
 Spokane, WA, 99201-1106

 Carl Perry Warring  
 Washington State Aty General
 1116 W Riverside Ave
 Spokane, WA, 99201-1194

 Catherine Hendricks  
 WA Attorney General
 800 5th Ave Ste 2000
 Seattle, WA, 98104-3188

Amicus Curiae on behalf of Washington Defense Trial Lawyers
 Stewart Andrew Estes  
 Keating, Bucklin & McCormack, Inc., P.S.
 800 Fifth Ave Ste 4141
 Seattle, WA, 98104-3175

 Daniel Joseph Gunter  
 Riddell Williams PS
 1001 4th Ave Ste 4500
 Seattle, WA, 98154-1065

 Shata Ling Stucky  
 Riddell Williams
 1001 4th Ave Ste 4500
 Seattle, WA, 98154-1065

Amicus Curiae on behalf of Inland Northwest Agc
 Robert H Crick Jr.  
 Robert Crick Law Firm PLLC
 421 W Riverside Ave Ste 1555
 Spokane, WA, 99201-0402

Amicus Curiae on behalf of Associated General Contractors O
 Robert H Crick Jr.  
 Robert Crick Law Firm PLLC
 421 W Riverside Ave Ste 1555
 Spokane, WA, 99201-0402

Amicus Curiae on behalf of Associated General Contractors O
 Robert H Crick Jr.  
 Robert Crick Law Firm PLLC
 421 W Riverside Ave Ste 1555
 Spokane, WA, 99201-0402
			

      IN THE SUPREME COURT OF THE STATE OF WASHINGTON

ELCON CONSTRUCTION, INC., a                                )
Washington Corporation,                                    )      No. 83690-6
                                                           )
                             Petitioner,                   )
                                                           )
       v.                                                  )      En Banc
                                                           )
EASTERN WASHINGTON UNIVERSITY,)
                                                           )
                             Respondent.                   )      Filed March 29, 2012
________________________________________                   )

       C. JOHNSON, J. -- This case involves a claim for damages relating to a 

drilling contract between Petitioner Elcon Construction and Respondent Eastern 

Washington University.  In the suit, tort and contract claims were alleged by Elcon.  

The contract claims were resolved by arbitration.  In dismissing the tort claims, the 

trial court applied the independent duty rule formerly known as the economic loss 
rule, which the Court of Appeals similarly applied in affirming.1 We hold the 

economic loss rule has no application under the facts of this case but affirm the 

Court of Appeals on different grounds.

1 This case was deferred pending Eastwood v. Horse Harbor Foundation, Inc., 170 Wn.2d 380, 
241 P.3d 1256 (2010), and review was granted after Eastwood was filed.  Elcon Constr., Inc. v. 
E. Wash. Univ., 170 Wn.2d 1028, 249 P.3d 182 (2011). 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

                                             Facts

       Eastern relies on two on-campus wells for its water supply (wells 1 and 2), 

both of which draw from what is called the Wanapum Aquifer.  Beginning in 1987, 

Eastern requested approval from the Department of Ecology (DOE) to consolidate 

its water rights.  In 2003, the DOE approved Eastern's request, thereby allowing 

Eastern to "refurbish" its two existing on-campus wells to increase their individual 
yields.2 Under DOE rules, refurbishment could include drilling replacement wells in 

close proximity to the existing wells.  Eastern decided to drill replacement wells 

near wells 1 and 2 and began accepting bids for the job.  Eastern's "Instructions to 

Bidders" contained an "Examination of Site and Conditions" section, which stated 

in relevant part that by submission of a proposal, the bidder acknowledges:

                  1. That it has taken steps reasonably necessary to 
                      ascertain the nature and location of the Work, and that 
                      it has investigated and satisfied itself as to the general 
                      and local conditions which can affect the Work or its 
                      cost, including . . . (d) the conformation and conditions 
                      of the ground; and (e) the character of equipment and 
                      facilities needed preliminary to and during the 

2 Without consolidation, Eastern was permitted to pump 750 gallons per minute (GPM) from well 
2 and 150 GPM from well 1, for total production of 900 GPM.  With consolidation, Eastern is 
permitted to produce the total 900 GPM from either well, giving Eastern the flexibility to attain 
total production from one well should problems arise with the other. The drilling contract with 
Elcon concerned "refurbishing" the wells to make each capable of producing 900 GPM.

                                               2 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

                      performance of the Work.

                  2. That it has satisfied itself as to the character, quality 
                      and quantity of surface and subsurface materials or 
                      obstacles to be encountered insofar as this information 
                      is reasonably ascertainable from an inspection of the 
                      site, including all exploratory work done by 
                      Owner . . . .

                       . . . .

              D. No statement made by any officer, agent, or employee of 
                  the Owner or [Architect/Engineer] in relation to the 
                  physical conditions pertaining to the site of the work will 
                  be binding on the Owner or [Architect/Engineer]. 

Clerk's Papers (CP) at 1113-14.  Prior to bidding, Elcon contacted Eastern and 

requested all the information it had about the project, about other wells in the area, 

or about the geology relating to wells in the area of the drill site.  Three years 

earlier, in 2000, Eastern had hired Varela & Associates to conduct a water capacity 

study, seeking to identify future options for expanding its water supply.  Varela, in 

turn, hired Golder Associates to perform a hydrogeological investigation.  The 

"Golder Report," based primarily on published reports and selected drillers' logs 

                                               3 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

obtained from the DOE, contained information about the regional hydrology and 

recommended future wells be drilled into the Grande Ronde Aquifer below the 

Wanapum Aquifer at a depth of between 700 to 1,500 feet.  CP at 338, 340.  Per 

Elcon's request, Eastern provided Elcon a well log for well 2 and a video of well 1

but did not provide the Golder Report.  CP at 864.  Elcon submitted the low bid 

($1,516,635) and was awarded the contract.  CP at 1106-07.

       The contract required Elcon to drill two replacement wells to an "estimated"
depth of 750 feet.3 CP at 357.  The contract specified that "[s]hould water of 

sufficient quantity and quality be encountered at lesser depths, drilling may be 

stopped by the Owner.  Likewise, the Owner may direct the depth to be increased in 

order to obtain sufficient water." CP at 357.  In addition, the "General Provisions"

of the contract placed a duty on Elcon to investigate the site and subsurface 

conditions.  CP at 1123-24.  Elcon delegated this duty to its subcontractor, 

Intermountain Drilling.  Outside of requesting information from Eastern and looking 

at several DOE well logs on-line, Intermountain Drilling did not conduct an 

independent investigation.  CP at 1211-12.  

       In July 2003, work started on replacement well 1.  Drilling stopped soon after 

3 The depths of preexisting wells 1 and 2 are 512 feet and 561 feet, respectively.  CP at 327.

                                               4 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

it started, however, when an unforeseen layer of sand disrupted the work.  Then, 

upon learning that it may have to drill significantly deeper than 750 feet, Elcon 

insisted upon payment for increased costs.  Eastern terminated the contract for 

convenience instead and solicited a final pay request, which Elcon submitted to 

Eastern on June 4, 2004.  

       Upon learning of previously unknown damage to replacement well 1, Eastern 

issued a termination for cause letter on October 22, 2004, a copy of which was sent 

to Elcon's bond surety.  Elcon filed this lawsuit claiming breach of contract, in 
addition to various tort claims.4 The trial court, interpreting the contract's 

arbitration provisions, submitted all contract claims to arbitration and stayed Elcon's 
tort claims pending completion of arbitration.5 CP at 211-13.

4 Elcon's original compliant listed only contract claims.  Its amended complaint, however, listed 
negligent misrepresentation, fraud, defamation, tortious interference with a contractual 
relationship, publication in a false light, and violation of civil rights.  CP at 3-33.
5 The arbitration clause in Eastern and Elcon's contract provided: "All claims arising out of the 
Work shall be resolved by arbitration.  The judgment upon the arbitration award may be entered, 
or review of the award may occur, in the superior court having jurisdiction thereof.  No 
independent legal action relating to or arising from the Work shall be maintained." CP at 93.  The 
trial judge stated:
       I am of the opinion that a fair and reasonable interpretation of this contract 
       provides that all contract claims are subject to the arbitration provision . . . .  
       However, [Elcon's] claims list a number of actions in tort . . . .  I am satisfied that 
       the economic loss rule does not bar claims based in tort that are independent from 
       the breach of contract claims.
CP at 211-12.

                                               5 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

       In December 2005, the arbitrator awarded Elcon $1,837,000 ($891,000 in 

addition to $946,000 Eastern had previously paid for work performed) and denied 

Elcon's postaward motion for statutory interest.  CP at 1132-33.  Following

                                               6 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

arbitration, Elcon pursued its tort claims against Eastern, which included fraud in the 

inducement for not providing the Golder Report and interference with a business 

relationship for sending a copy of the termination for cause letter to Elcon's surety.  

The trial court granted summary judgment dismissing Elcon's fraud and intentional 

interference claims, finding the intentional interference claim factually insufficient 

and the fraud claims barred by the economic loss rule.6 Relying on Alejandre v. 

Bull, 159 Wn.2d 674, 153 P.3d 864 (2007), the Court of Appeals affirmed, holding 

all Elcon's tort claims barred by the economic loss rule.

                                            Issues

   1. Whether summary judgment was appropriate with respect to Elcon's fraud in 
       the inducement claim?

   2. Whether summary judgment was appropriate with respect to Elcon's 
       intentional interference with a contractual relationship claim?

6 Eastern first moved for summary judgment when the case was assigned to Judge Rielly.  Judge 
Rielly dismissed Elcon's tortious interference, defamation, and 42 U.S.C. § 1983 claims as 
factually insufficient but denied summary judgment regarding Elcon's fraud and false light claims, 
finding Elcon raised genuine issues of material fact and determining the claims were not barred by 
the economic loss rule under the Court of Appeals' Alejandre v. Bull decision, 123 Wn. App. 
611, 98 P.3d 844 (2004).  CP at 1017-20.  The case was then transferred to Judge Sypolt, who 
granted summary judgment on Elcon's remaining tort claims, determining they were barred under 
our Alejandre decision, 159 Wn.2d 674, which overruled the Court of Appeals.  CP at 1379-81.

                                               7 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

   3. Whether Elcon is entitled to statutory interest on its arbitration award?

                                               8 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

                                     Standard of Review

       We review summary judgment orders de novo and perform the same inquiry 

as the trial court, viewing all facts and reasonable inferences in the light most

favorable to the nonmoving party.  Hisle v. Todd Pac. Shipyards Corp., 151 Wn.2d 

853, 860, 93 P.3d 108 (2004) (citing Kruse v. Hemp, 121 Wn.2d 722, 853 P.2d 

1373 (1993)).  The grant of summary judgment is appropriate where there is "no 

genuine issue as to any material fact and . . . the moving party is entitled to a 

judgment as a matter of law." CR 56(c).  "A material fact is one that affects the 

outcome of the litigation."  Owen v. Burlington N. Santa Fe R.R., 153 Wn.2d 780, 

789, 108 P.3d 1220 (2005) (citing Hisle, 151 Wn.2d at 861).  Where no dispute as 

to the material facts exists, summary judgment is proper.  

                                           Analysis

       The trial court and the Court of Appeals applied the independent duty 

doctrine, formerly referred to as the economic loss rule, to dismiss Elcon's tort 

claims.  This was a misapplication of the doctrine, though an inconsequential one.  

Because Elcon's tort claims factually fail, we affirm the Court of Appeals 

                                               9 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

regardless.

       The independent duty doctrine is "an analytical tool used by the court to 

maintain the boundary between torts and contract." Eastwood v. Horse Harbor 

Found., Inc., 170 Wn.2d 380, 416, 241 P.3d 1256 (2010) (Chambers, J., 

concurring).  In Eastwood, we adopted the term "independent duty doctrine"

because it more accurately captured the principle behind the rule: "An injury," we 

held, "is remediable in tort if it traces back to the breach of a tort duty arising 

independently of the terms of the contract."  Eastwood, 170 Wn.2d at 389.  To date, 

we have applied the doctrine to a narrow class of cases, primarily limiting its 

application to claims arising out of construction on real property and real property 

sales.  "We have done so in each case based upon policy considerations unique to 

those industries.  We have never applied the doctrine as a rule of general application 

outside of these limited circumstances."  Eastwood, 170 Wn.2d at 416 (Chambers, 

J., concurring).  Indeed, in Eastwood we directed lower courts not to apply the 

doctrine to tort remedies "unless and until this court has, based upon considerations 

of common sense, justice, policy and precedent, decided otherwise."  Eastwood, 

170 Wn.2d at 417 (Chambers, J., concurring).  

                                              10 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

       We have not applied the independent duty doctrine to bar a claim for fraud, 

and we see no basis to utilize it in this case.  Even in the real property context, 

where we have been the least hesitant to apply the doctrine, we have repeatedly 

recognized a fraud claim to be outside the doctrine's scope, allowing such claims to 

be decided based on established tort precedent.  See Alejandre, 159 Wn.2d at 689-

90; Atherton Condo. Apartment-Owners Ass'n Bd. of Dir. v. Blume Dev. Co., 115 

Wn.2d 506, 523-27, 799 P.2d 250 (1990).  We find no compelling reason, whether 

based on common sense, justice, policy, or precedent, to bar Elcon's fraud or 

tortious interference claim under the independent duty doctrine.  The doctrine 

simply does not apply under these circumstances.

   1. Fraudulent Inducement

       The trial court and the Court of Appeals also determined that Elcon's fraud in 

the inducement claim was factually insufficient.  We agree.  There are nine essential 

elements of fraud, all of which must be established by clear, cogent, and convincing 

evidence: (1) a representation of existing fact, (2) its materiality, (3) its falsity, (4) 

the speaker's knowledge of its falsity, (5) the speaker's intent that it be acted upon 

by the person to whom it is made, (6) ignorance of its falsity on the part of the 

                                              11 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

person to whom the representation is addressed, (7) the latter's reliance on the truth 

of the representation, (8) the right to rely upon it, and (9) consequent damage.  

Williams v. Joslin, 65 Wn.2d 696, 697, 399 P.2d 308 (1965) (citing Michielli v. 

U.S. Mortg. Co., 58 Wn.2d 221, 361 P.2d 758 (1961)).  Elcon claims that 

Eastern misrepresented the necessary depth of the replacement wells and its 

knowledge of subsurface conditions by failing to produce the Golder Report.  This 

misrepresentation, it claims, induced it to bid the job and contract with Eastern, 

thereby causing it injury.  This argument ignores the contract's bidding instructions 

and the character of the Golder Report.

       The trial court and the Court of Appeals determined the Golder Report was 

not relevant to the refurbishment project.  We agree.  Importantly, the report was 

not prepared for the project, having been commissioned three years before the DOE 

authorized Eastern's consolidation.  Moreover, it recommended drilling future wells 

in an area geographically separate from wells 1 and 2.  CP at 338-40.  When asked 

whether there was a hydrology report for this project, Eastern replied there was not.  

CP at 673.  Based on the character of the Golder Report, this was not a false 

statement. 

                                              12 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

       The trial court also found that the bidding instructions required Elcon to take 

steps reasonably necessary to ascertain the nature and location of the drilling, 

including the conformation and conditions of the ground, and the character of 

equipment needed for the performance of the work.  CP at 1380.  Yet, despite this 

requirement, Elcon did little more than request all of Eastern's available 

information.  CP at 1211-12.  The instructions further notified bidders that "[n]o 

statement made by any officer, agent, or employee of the Owner or 

[Architect/Engineer] in relation to the physical conditions pertaining to the site of 

the work will be binding on the Owner or [Architect/Engineer].  CP at 1114.  Thus, 

even with the Golder Report in hand, Elcon still would have been required to 

conduct its own reasonable investigation.  The trial court determined that Elcon 

failed to do so.  CP at 1380.  We agree.

       The Golder Report was not relevant to Elcon's contractual duty to investigate 

under the bidding instructions.  Evidence of Elcon's justifiable and reasonable 

reliance on the information provided by Eastern is therefore lacking.  And since the 

report did not contain information or data of specific relevance to the drill site, not 

providing the report had no impact on the bidding process.7 Based on the character 

7 While the Golder Report discussed preexisting wells 1 and 2 -- the wells closest to the drill 

                                              13 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

of the Golder Report, nondisclosure of the report did not, in this case, constitute a 

material misrepresentation.  As such, there are no genuine issues of

site -- the information regarding the wells was based entirely on the well log for well 2, which 
Elcon possessed.  Otherwise, the report discussed other area wells that, according to 
Intermountain Drilling's Glen Frachiseur, were not near enough to the campus to be of interest to 
Elcon.  CP at 316-46, 1212.

                                              14 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

material fact and summary judgment was appropriate.

       Despite the trial court and the Court of Appeals' reliance on the independent 

duty doctrine, we conclude the doctrine is irrelevant to the above analysis.  In so 

concluding, we note this is a tort case unrelated to real property.  Under these

circumstances, the independent duty doctrine does not apply.

   2. Intentional Interference

       Elcon argues Eastern intentionally interfered with its contractual relationship 

by sending a copy of the termination for cause letter to Elcon's surety.  According to 

Elcon, the letter impaired its bonding capacity causing it injury.  The trial court 

determined Elcon's intentional interference claim was factually insufficient.  We 

agree.  A claim of intentional interference requires (1) the existence of a valid 

contractual relationship of which the defendant has knowledge, (2) intentional 

interference with an improper motive or by improper means that causes breach or 

termination of the contractual relationship, and (3) resultant damage.  Cornish Coll.

of the Arts v. 1000 Virginia Ltd. P'ship, 158 Wn. App. 203, 225, 242 P.3d 1 (2010)

(citing Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133, 157, 930 

P.2d 288 (1997)), review denied, 171 Wn.2d 1014, 249 P.3d 1029 (2011)

                                              15 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

Exercising one's legal interest in good faith is not improper interference. 

       Eastern acted on information disclosed prior to the dispute and converted the 

termination for convenience to a termination for cause.  In May 2004, Eastern 

received a high-resolution video of the work performed by Elcon on replacement 

well 1.  According to Eastern, review of the video revealed previously unknown 

damage that, after consultation with Eastern's engineering consultant, was 

determined to be caused by Elcon's nonconforming work.  CP at 1099.  Once such 

a determination was made, Eastern converted the termination to one "for cause."  

CP at 852-53.  Believing Elcon may owe decommissioning costs, Eastern had an 

interest in notifying Elcon's bond surety of Eastern's potential claim.  That the 

arbitrator ultimately ruled Eastern could not convert to a termination for cause does 

not somehow make Eastern's interest illegitimate.

       More importantly, by itself, the letter does not show improper purpose.  And 

Elcon, by merely labeling the letter as "intentional and vindictive," has not met its 

burden of showing such a purpose.  CP at 815-16.  If Eastern was motivated by 

greed, retaliation, or hostility in sending a copy of the termination letter to Elcon's 

surety, Elcon has failed to show such a motive.  Conclusory statements and 

                                              16 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

speculation will not preclude a grant of summary judgment.  Greenhalgh v. Dep't of 

Corr., 160 Wn. App. 706, 714, 248 P.3d 150 (2011) (citing Grimwood v. Univ. of 

Puget Sound, Inc., 110 Wn.2d 355, 360, 753 P.2d 517 (1988)).  Elcon claimed to 

have suffered damage as a result of its surety having knowledge of Eastern's 

attempted conversion,8 but absent a showing that Eastern acted with an improper 

purpose, no genuine issues of material fact exist.  Once the moving party meets 

its burden of showing there is no genuine issue of material fact, the 

nonmoving party must set forth specific facts rebutting the moving party's 

contentions.  Seven Gables Corp. v. MGM/UA Entm't Co., 106 Wn.2d 1, 13, 

721 P.2d 1 (1986) (citing Dwinell's Cent. Neon v. Cosmopolitan Chinook 

Hotel, 21 Wn. App. 929, 587 P.2d 191 (1978)).  Elcon has failed to do so here.  

8 In support of its allegation that it suffered actual, present damage, Elcon submitted evidence of 
an e-mail from Walter Weller, vice-president of Marsh Advantage America, Elcon's bond surety, 
to Brook Ellingwood, Elcon's president.  The e-mail stated:
       Although you submitted your request with adequate time for the bonding company 
       to review, the approval was delayed due to the number of underwriters involved 
       because of the unknown exposure that exists at [Eastern] on the Wells 
       project . . . the bond is approved on the condition that you limit your future bids to 
       quick turn-around jobs such as this (90 days) until the pending issues at [Eastern] 
       become more clear.  
CP at 1253.  Judge Rielly ruled the e-mail was inadmissible hearsay and dismissed the claim on
summary judgment.  CP at 1018.  On appeal, Elcon argued the e-mail was an admissible business 
record.  The Court of Appeals did not address the issue, holding all Elcon's tort claims barred by 
the economic loss rule.  Because Elcon's tortious interference claim fails on the improper purpose 
element, we do not address the admissibility of the above e-mail.

                                              17 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

Summary judgment was therefore appropriate.

                                              18 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

   3. Statutory Interest

       Elcon argues entitlement to statutory interest on the arbitrator's award under 

RCW 39.76.011, which requires public bodies to pay interest whenever they fail to

make "timely payment" on amounts due on written contracts for public works.  

Payment is considered untimely if it is not made within 30 days of receipt of a 

"properly completed invoice or receipt of goods or services."  RCW 

39.76.011(2)(a).  Rather than requesting statutory interest at arbitration, Elcon 

requested the interest in a postaward motion.  CP at 404-05.  The arbitrator denied 

the motion, determining he lacked postfinal award jurisdiction to address the issue 

pursuant to the arbitration statutes.  CP at 387.  The trial court determined it did not 

have jurisdiction to award interest on the arbitrator's award.  CP at 1019.  We 

agree.

       In Westmark Properties, the Court of Appeals held that adding prejudgment 

interest to an arbitration award was error on the part of the trial court: "[The trial 

court] has no basis for determining whether the amount awarded met the test for 

[prejudgment] interest; this was part of the merits of the controversy, forbidden 

                                              19 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

territory for a court."  Westmark Props, Inc. v. McGuire, 53 Wn. App. 400, 404, 

766 P.2d 1146 (1989) (quoting Sch. Dist. 5 Snohomish County v. Sage, 13 Wash. 

352, 43 P. 341 (1896)).  Similarly, in Fluor Daniel, Inc., we noted that the majority 

of courts considering this issue have found that adding prejudgment interest is an 

inappropriate modification of the arbitrator's award.  In this case, the trial court 

appropriately limited its review.  Dep't of Corr. v. Fluor Daniel, Inc., 160 Wn.2d 

786, 792, 161 P.3d 372 (2007).  Elcon may not recover statutory interest on the 
arbitrator's award through a postaward motion.9

                                        Attorney Fees

       Both Elcon and Eastern request attorney fees under RAP 18.1.  However, 

neither cites "applicable law" warranting such an award.  We therefore deny both 

parties' RAP 18.1 request.  Elcon also requests fees under RCW 39.76.040, which 

9 In addition, the statute does not apply to claims subject to a good faith dispute, provided notice 
of the dispute is given before timely payment is due.  RCW 39.76.020.  And here, Eastern 
disputed the amount of Elcon's claim.  Pursuant to part 8 of Eastern and Elcon's contract (Claims 
and Dispute Resolution), Eastern notified Elcon of its intent to conduct an audit of Elcon's pay 
request.  A pay request pursuant to the contract would not be deemed a "properly completed 
invoice or receipt" for RCW 39.76.011 purposes until such an audit was complete.  Eastern, 
however, did not receive all of the contractually mandated documents necessary to complete the 
audit until September 23, 2004.  CP at 852-53.  Thus, when Eastern converted its termination to 
one for cause on October 22, 2004, it did so within RCW 39.76.011's 30 day requirement.  After 
conversion, Eastern disputed the pay request and Elcon has not shown Eastern lacked good faith 
in doing so.  Based on these facts, the good faith dispute exception to RCW 39.76.011 applies.

                                              20 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

provides: "In any action brought to collect interest due under this chapter, the 

prevailing party is entitled to an award of reasonable attorney fees." Because Elcon 

does not prevail on its statutory interest claim, we deny its request.  

                                         Conclusion

       The trial court and Court of Appeals misapplied the independent duty 

doctrine to bar Elcon's tort claims in this case.  Regardless, Elcon's claims factually 

fail.  Viewing all facts and reasonable inferences in the light most favorable to 

Elcon, no genuine issues of material fact exist with respect to Elcon's fraud in the 

inducement or tortious interference claims.  And based on Westmark and Fluor 

Daniel, Inc., Elcon is not entitled to statutory interest.  We therefore affirm on 

different grounds.  

                                              21 

Elcon Constr., Inc. v. Eastern Washington University, Cause No. 83690-6

AUTHOR:
       Justice Charles W. Johnson

WE CONCUR:
                                                        Justice James M. Johnson

                                                        Justice Debra L. Stephens

       Justice Tom Chambers                             Gerry L. Alexander, Justice Pro Tem.

       Justice Susan Owens

       Justice Mary E. Fairhurst

                                              22
			

 

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