Nova, a public works contractor, filed a claim for breach of the covenant of good faith and fair dealing, based entirely on the City's untimely and repeated rejection of submittals to perform culvert work in Olympia. The Supreme Court held that the contractor was barred from seeking damages because it failed to give written notice of protest “immediately” when the rejections occurred rather than waiting until the City terminated the contract. Under Section 1-04.5 of the contract (adopted from the WSDOT standard specifications), the contractor is required to "immediately" file a written notice of protest to preserve any claims related to rejection of such submittals, including claims for expectancy or consequential damages.
Failure of the contractor to “immediately" file such a written notice of protest following rejection of its submittals, regardless of actual notice by the City, bars the claim under the rule set forth in Mike M Johnson in the 2003 case. Interesting side note, the Washington Court of Appeals had carved out an exception to the harsh result of the Mike M Johnson rule and allowed the contractor to proceed with its breach claims since they were based on expectancy and consequential damages, not for the cost of work performed. The Supreme Court reversed and once again affirmed that no notice means no claim, leaving the contractor without a leg to stand on.
Nova Contracting Inc. v. City of Olympia, Case No. 94711-2 (Sept. 27, 2018).
