Puyallup doesn’t have to pay $1.1 million in attorneys’ fees in construction lawsuit, court says
This story has been updated.
Puyallup does not need to pay $1.1 million in attorneys’ fees accrued by lawyers of a construction company that successfully sued the city in a contract dispute, the state court of appeals has ruled.
The city’s attorney, Joe Beck, said the fees were the main reason the city appealed after the Pierce County Superior Court’s decision in 2018 requiring Puyallup to pay for the construction work and the attorney’s fees with interest.
“The attorneys’ fees were unconscionable,” Beck told The Puyallup Herald.
Conway Construction Company’s head attorney, Joseph Straus, said they were pleased that after four years of litigation the court affirmed that the city illegally terminated the contract, but did not agree with the decision on attorneys’ fees.
Straus said that Conway will appeal the decision to the state Supreme Court.
“It is unfortunate and sad for the taxpayers of Puyallup that City officials still attempt to cast the result as a win,” Straus said in an email to The Herald.
The Court of Appeals for Division 1 issued an opinion May 4 upholding a previous ruling by the trial court that found Puyallup must pay the rest of a construction contract to Conway. But the appeals panel rejected the lower court’s decision on the company’s request for attorney’s fees.
The three judges agreed that the city was only justified in ending its contract with Conway if the company refused or neglected to correct it’s six-block work near Puyallup’s Costco.
Because Puyallup terminated the contract before Conway could fix the alleged “defects” of the roadwork, the city must pay Conway the contracted amount of $986,810, plus $177,000 in pre-judgment interest.
The decision agreed with the city that $1.1 million of attorneys’ fees should not be paid because Conway did not make a settlement offer. State law requires the plaintiff to make a good-faith effort to settle before it can ask for attorneys’ fees.
In 2015, Conway was hired by the city to widen the 39th Avenue Southwest road from 11th Street Southwest to 17th Street Southwest, near the South Hill Mall. Construction was expected to take eight months.
The city fired Conway for alleged unsafe measures and “defective” work. Beck said the city had to tear up the vast majority of the roadwork Conway had done and start over. Conway offered to redo the work for free before the contract was canceled, Straus said.
Courts have continued to rule that the city wrongfully terminated Conway by not providing the company the opportunity to correct mistakes. Between litigation and the original contract, termination has been expensive for taxpayers. Beck said he and the Finance Department still are adding up costs.
Straus spoke before the City Council in 2016, asking to let Conway finish the contract.
“The city could have avoided this situation and saved millions in the process,” Straus said in an email.
Deputy Mayor John Palmer said he considers this decision a win.
“This is the best-case scenario,” Palmer said. “This appeal has saved taxpayers over a million dollars in attorney’s fees.”
A slip opinion is issued by the Court of Appeals and sent to the Superior Court to revise the final decision. The opinion will be in effect once acted upon by the Pierce County Superior Court.
This story was originally published May 11, 2020 at 5:00 AM.
