Wash. State Dep't of Transp. v. Seattle Tunnel Partners

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WASHINGTON STATE DEPARTMENT OF TRANSPORTATION, Respondent, v. SEATTLE TUNNEL PARTNERS, a joint venture, TUTOR PERINI CORPORATION; DRAGADOS USA, INC., Appellants.

No. 54425-3-II

Court of Appeals of Washington, Division 2

June 14, 2022

UNPUBLISHED OPINION

CRUSER, A.C.J.

The Washington State Department of Transportation (WSDOT) and Seattle Tunnel Partners (STP) entered into a contract that required STP to construct a tunnel. STP's boring machine was damaged while it was boring the tunnel, and STP missed the contractually required completion date. WSDOT filed suit alleging STP breached the contract by failing to meet the contract's deadline. STP acknowledged it did not meet the deadline but asserted the delay was excusable under the contract. STP argued that its equipment was damaged because it encountered a steel pipe that WSDOT failed to disclose. STP also counterclaimed, alleging WSDOT breached the contract when it did not grant STP additional time and compensation after the equipment was damaged.

Prior to trial, the court granted WSDOT's motions for partial summary judgment, dismissing the portions of STP's claim that involved damage to the boring machine and subcontractor pass-through claims. The court also sanctioned STP for losing evidence relevant to the lawsuit.

During trial, STP objected to the admittance of certain evidence offered by WSDOT and proposed evidence that the trial court excluded. STP also objected to the court's inclusion of specific jury instructions and proposed instructions the trial court declined to include. The jury ultimately found in WSDOT's favor on all claims.

On appeal, STP argues the trial court committed multiple errors in its evidentiary rulings and erred in instructing the jury. Additionally, STP contends that the court erred in sanctioning STP for losing evidence.

We affirm.^[1]

FACTS

I. The Project

A. Background

The Alaskan Way Viaduct was a critical piece of transportation infrastructure for Seattle. Following an earthquake in 2001 it was determined that the viaduct needed to be replaced with a tunnel due to damage to the viaduct.

To find an appropriate contractor to construct the tunnel, WSDOT issued a request for proposals. Along with the request, WSDOT included multiple documents, such as the contract terms and technical requirements for the project, a "Geotechnical Baseline Report" (GBR) and a "Geotechnical and Engineering Data Report" (GEDR). The GBR provided an overview of the subsurface conditions, and the GEDR provided the data underlying the GBR. The GBR instructed that it (the GBR) "must be read in conjunction with" the GEDR. Ex. 5, at 10.

WSDOT also included "Reference Documents" to provide potential contractors additional background information. However, the Reference Documents, were not considered a part of the contract.^[2]

B. STP Becomes the Design-Builder for the Project

WSDOT selected STP's proposal. STP acknowledged that "in developing its Proposal, [STP] gave full consideration to the contents of the Geotechnical Baseline Report, Environmental Baseline Report [(EBR)] and the Geotechnical & Environmental Data Report." Ex. 2, at 24. The parties then signed a contract in which WSDOT agreed to pay STP $1.35 billion to construct the tunnel.

STP was "in complete control of defining how [STP] would proceed with both design and construction on this project." 7 Verbatim Report of Proceedings (VRP) (Oct. 14, 2019) at 728. STP was required to design and provide all the materials and labor necessary to construct the tunnel. STP hired a third company to design and manufacture a tunnel boring machine (TBM). The TBM was 425 feet long and 57 feet in diameter. The TBM had a cuttinghead design that was essentially a round disc that had spokes that were attached at the rim and met in the center. The spokes had cutting tools on the front and sides. The soil fell into a chamber behind the cuttinghead and a conveyor belt took the soil through the TBM to fall into a muck bin at the back.

II. The TBM Cuts Into TW-2

On December 4, 2013, the TBM ran into Test Well (TW) 2, a pipe that had a "3/8 inch thick, eight-inch diameter, steel well casing." Clerk's Papers (CP) at 2164. "When the TBM struck TW-2, a portion of the pipe was pushed up from the ground," the pipe was cut, and this piece became known as Piece #1. Id. On December 5, 2013, STP also removed two boulders and two pieces of steel (Pieces #2 and #3) from TBM's conveyor belt. Greg Hauser, STP's Deputy Project Manager at that time, instructed employees to retain the pieces of steel pipe coming from the TBM because he knew the pipe might be the basis of a claim against WSDOT. On December 11, 2013, STP pulled a 55-foot long piece of TW-2 out of the ground, Piece #4.

On January 2, 2014, STP found another pipe piece, Piece #5, in the TBM's muck bin, as well as "a collection of small metal fragments" that became known as Piece #6. Id. at 2165. On January 17th, two steel pieces were extracted from the TBM's spokes, Pieces #7 and #8. Finally, on "January 25, 2014, Piece #9 came off the conveyor belt." Id.

At some point, Pieces #1, #2, #3, #5, #7, #8, and #9, along with the two boulders, went missing and could not be located. Hauser's work journal that covered December 2013 through February 2014 also went missing.

In February 2014, the manufacturer of the TBM directed STP to stop mining because the TBM had been damaged and needed to be repaired.

III. Differing Site Condition Claim

On December 12, 2013, STP submitted to WSDOT an initial notice of a proposed change order, asserting TW-2 was a differing site condition (DSC). The contract defined DSCs as "actual subsurface or latent physical conditions at the Site that are substantially or materially different from the conditions identified" in the GBR or GEDR. Ex. 3, at 12. STP claimed because the TW-2 pipe was not properly identified in the GBR or GEDR, the pipe is a DSC and STP was entitled to a time extension. WSDOT rejected STP's assertion that the pipe was a DSC, noting that TW-2 was identified in the GEDR.

Despite WSDOT's response, STP still submitted a proposed change order, again asserting that TW-2 was not fully disclosed in the GEDR. WSDOT maintained that TW-2 was not a DSC.

IV. Judicial Proceedings

On March 9, 2016, WSDOT sued STP because it failed to meet the "substantial completion deadline." Id. at 7. STP conceded the project was not substantially completed, but claimed that the delay was excusable because it was caused by a DSC, TW-2. STP also counterclaimed, arguing that WSDOT breached the contract when it failed to remove or advise STP of TW-2 and thus STP should have been awarded the additional time and compensation needed to address the problems caused by TW-2.

A. Spoliation Rulings

Following a discovery request to STP for "[a]ll parts of the TW-2" and "[a]ll boulders removed from the [TBM]", WSDOT moved for spoliation sanctions, arguing that STP lost or destroyed pieces of the TW-2, the two boulders, and Hauser's journal. Id. at 1312.

1. Findings of Fact

The court found, "On an unknown date, all pieces of the steel pipe except Piece #4 and Piece #6 and the boulders were lost or destroyed. The loss or destruction was not immediately discovered." Id. at 3245. The court also found that Piece #5 "probably" came from TW-2, but that it could not determine that with certainty. Id. at 3227. One of Hauser's journals also went missing and could not be recovered.

The trial court found that STP was well aware that the pipe pieces and boulders "were critical and important" and that STP knew it needed to preserve the pipe pieces and boulders because the pipe could serve as a basis of a DSC claim. Id. at 3229. The court also found that WSDOT's expert testified credibly that the loss of the pipe pieces and boulders "impeded his ability to perform his analysis." Id. at 3254. Additionally, STP and WSDOT's experts' testimony made it clear "the missing pieces of steel pipe and boulders are important evidence." Id. at 3260.

Furthermore, STP recognized it had a duty to preserve the pipe pieces and boulders and knew WSDOT would want to access the materials.

The court found that STP did not intend to destroy the evidence. However, the court also found testimony by STP employees that they instructed" 'all' STP employees" orally through the chain of command to preserve the evidence was not credible. Id. at 3239. Rather, "there [was] a lack of documentation or instructions that was certain to communicate such instruction to all STP employees, contractors, subcontractors, and everyone who had access" to the missing evidence. Id.

Regarding Hauser's missing journal, the court found Hauser used journals for his work related to the tunnel project, documenting his daily work activities and relying on the journals to refresh his memory. Furthermore, the missing journal covered from December 2013 through February 2014. The court found this journal to be important "because of the inability of witnesses to identify specific communication and dates of activities associated with the missing pipe pieces and boulders." Id. at 3250. Despite its importance, the court found that Hauser did not know nor could provide an explanation of what happened to the missing journal. But "Hauser did not intentionally destroy or hide the missing journal." Id.

The court found that on "December 12, 2013, STP submitted Proposed Change Order #250, asserting that TW-2 was a Differing Site Condition under the Design-Build Contract" and that the contract provided"' [STP] agrees that it shall give WSDOT access to all of [STP]'s books, records and other materials relating to the Work in question, and shall cause its Subcontractors to do the same, so that WSDOT can...