The Washington Court of Appeals Upholds Washington’s Statute of Repose in Puget Sound Energy, Inc. v. Pilchuck Contractors, Inc. 

Congratulations Brandon Smith who recently scored a big win in Division I of the Washington Court of Appeals! This decision is not only a win for our client, but a success for construction companies and insurance carriers statewide. In this matter, the Court of Appeals properly refused to disrupt the decades of stability that the construction statute of repose has supplied to Washington’s construction industry in favor of contractors—providing simplicity, predictability, and certainty for contractors and insurers calculating the windows of exposure associated with construction projects.

The matter of Puget Sound Energy, Inc. v. Pilchuck Contractors, Inc. concerned PSE’s $17 million contractual indemnity claim arising out of the 2016 Greenwood gas explosion. In 2004, PSE hired Pilchuk to redesign the gas distribution system on the 8400 block of Greenwood Ave in Seattle, WA. One of the gas lines to be decommissioned as a part of the project remained active, leading to the explosion twelve years later that destroyed a few commercial properties and significantly damaged many others. PSE claimed that Pilchuk had a contractual duty to indemnify PSE for its losses arising from the explosion, including immediate remediation costs, penalties incurred in the UTC’s regulatory action, costs to perform the UTC’s mandated remediation program, settlement payments for dozens of third-party property damage claims and attorneys’ fees. 

Brandon successfully moved for summary judgment on all claims under Washington’s construction statute of repose (RCW 4.26.300 et seq.), which bars all claims arising from construction of an improvement upon real property which do not accrue within six years of substantial completion of the construction. On appeal, PSE argued that the statute of repose did not apply because:

(1) deactivation of the gas line in question was a separate “improvement” from the overall project for purposes of the statute;

(2) a contractor who fails to perform work cannot be said to have substantially completed the improvement;

(3) submission of records documenting construction fall outside of the construction activities within the scope of the statute; and

(4) Washington courts should recognize an exception to the statute for claims of fraudulent conduct. 

The Court of Appeals affirmed the dismissal of PSE’s claims and confirmed our arguments in opposition to the appeal, holding that:

(1) deactivation of the gas line in question was substantially complete regardless of whether it was separate improvement, because it was put to its intended “disuse;”

(2) submission of records documenting construction is indeed a construction activity within the scope of the statute; and

(3) the plain language of the statute barring “all claims…of any kind” includes claims of fraud. The decision preserves the statute’s longstanding role protecting contractors from indefinitely long windows of liability.

The unpublished decision can be found here. The Washington State Supreme Court has denied review.