NOVA Contracting, Inc. v. City of Olympia

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IN THE SUPREME COURT OF THE STATE OF WASHINGTON

NOVA CONTRACTING,INC., a No. 94711-2
Washington Corporation,
Respondent,
EN BANC
V.

CITY OF OLYMPIA,a Washington
Municipal Corporation,
Filed SEP 2 7 2011
Petitioner.

GORDON McCLOUD, J.—^The city of Olympia (City) contracted with

NOVA Contracting Inc. to replace a deteriorating culvert. Their contract contained

a "notice of protest" provision, standard specification section 1-04.5 (Section 1-

04.5), taken from the Washington State Department of Transportation's Standard

Specifications for Road, Bridge, and Municipal Construction (2012),

www.wsdot.wa.gov/publications/manuals/fulltext/M41-10/ss2012.pdf

[https://perma.cc./77X9-Z593]. See Clerk's Papers (CP) at 90-91. Section 1-04.5

required NOVA to "give a signed written notice of protest" "[ijmmediately" if
No. 94711-2

NOVA "disagree[d] with anything required in a change order, another written order,

or an oral order from the [City] Engineer, including any direction, instruction,

interpretation, or determination by the Engineer." Id. at 90, NOVA later sued the

City for breach of the implied covenant of good faith and fair dealing. The City

moved to dismiss NOVA's claim, arguing (in part) that NOVA's failure to file a

written notice protesting the "written order[s]" on which the claim of breach was

based violated Section 1-04.5 and hence barred NOVA's claim.

The trial court dismissed NOVA's claim, but the Court of Appeals reversed

in part. NOVA Contracting, Inc. v. City of Olympia, No. 48644-0-II, slip op. at 1-2

(Wash. Ct. App. Apr. 18, 2017) (unpublished),

https;//www.courts.wa.gov/opinions/pdf/D2%2048644-0-II%20Unpublished%20

Opinion.pdf, review granted, 189 Wn.2d 1038,413 P.3d 565 (2017). This court has

twice held that such written notice is mandatory and that actual notice does not

suffice. Mike M. Johnson, Inc. v. Spokane County, 150 Wn.2d 375, 377, 391, 78

P.3d 161 (2003); Am. Safety Cas. Ins. Co. v. City ofOlympia, 162 Wn.2d 762, 773,

174 P.3d 54 (2007). The Court of Appeals interpreted those holdings, however, as

applying only to claims for cost of work performed, not to claims for expectancy and

consequential damages. NOVA Contracting, slip op. at 6 n.3. We hold that Mike M.
No. 94711-2

Johnson applies even to claims for expectancy and consequential damages. We

therefore reverse the Court of Appeals' decision as it relates to Section 1-04.5.

Factual History

In early 2013, the City began soliciting bids to fix a deteriorating cement

culvert along Woodland Creek in Olympia, Washington. Because the culvert was

located next to a wetland,the City wanted to minimize land disturbance. Thus,rather

than seeking bids to excavate the land to remove the cement pipe, the City sought

bids to use the "pipe bursting" method. That method "consist[s] of bursting the

existing pipe while simultaneously installing [the] new steel pipe, driven forward

from the back using a percussive hammer and guided forward from the front using

a winch cable." CP at 72. After two failed bidding periods, id. at 274, the City

eventually awarded the contract to NOVA in May 2014, id. at 70.

The City provided designs for the project but left decisions regarding project

implementation—such as the fill material for sand bags and the designation ofaccess

routes—^to NOVA. The contract expressly stated that some ofthose implementation

plans "must be submitted . .. prior to construction." Id. at 81-82. The contract also

required compliance with a Department of Ecology (DOE) hydraulic project

approval permit conditioned on "[ejrosion control measures ... be[ing] in place

prior to any clearing, grading, or construction." Id. at 466. The City interpreted
No. 94711-2

these contractual and permit conditions as requiring city approval of all

implementation plans—which the parties refer to as "submittals"—before on-site
construction began. NOVA disputes whether preapproval of all submittals was

actually required under the contract.

Nevertheless, by early August 2014, NOVA had submitted implementation

plans for at least 12 different aspects ofthe project. Id. at 499-502. The City rejected
many ofthem and asked NOVA to revise and resubmit. NOVA did, but never to the

City's satisfaction.

On August 7, before the City finished reviewing NOVA's first batch' of
revised submittals, the City informed NOVA that seven "key" plans still needed city

approval "before work related to these submittals can begin on site." CP at 77.

Those plans related to(1)access and haul routes,(2)temporary bypass pumping,(3)

temporary work area excavation,(4) work description,(5) steel pipe specifications,

(6)pipe sealing, and (7) habitat boundary fencing. Id. Additionally, the City asked
NOVA for a revised project schedule detailing how NOVA intended to make up for

the delays due to outstanding submittals. Id. The City also asked NOVA to submit

a "Request to Sublet Work" form confirming that NOVA's subcontractor, rather

'NOVA did not actually send its submittals in batches, but we group them that way
for ease of referenee. The exaet dates of eaeh submittal is not eritieal to our analysis.
No. 94711-2

than NOVA, would perform the pipe bursting portion of the construction project.

Id.

The City issued a "notice to proceed" letter a few days later, on August 11,

despite the missing plans, schedule, and sublet form. Id. at 79. The City likely
issued the notice to proceed letter before the submittals were approved because of

the tight timeline: the hydraulic project approval permit would expire on October

15, id. at 156; the contract gave NOVA 45 working days from issuance ofthe notice

to proceed letter for project completion, id. at 79; so an August 11 notice to proceed

letter gave NOVA until October 14 (the day before the DOE permit expired) to

complete the project. Id. at 219. Both NOVA and the City agree that this left ample

time to complete the project if NOVA could get past the submittal stage.

That did not happen. The City rejected NOVA's first batch of revised

submittals the following week. The City again asked NOVA for a revised project

schedule. Id. at 103.

NOVA did not submit a revised schedule or a sublet work form. Instead,

NOVA defended the adequacy of its submittals and blamed the City's "rebarbative

requirements" throughout the submittal process for the project's inertia. Id. at 103.

NOVA acknowledged that its prior submittals did not include every detail that the

City demanded but explained that such detail was unnecessary because "much ofthe
No. 94711-2

required information necessary in the submittals or plans [was]redundant or already

specified by the contract specifications." Id. at 116. NOVA also argued that any

perceived inadequacy in its submittals resulted from the City's design flaws. Id.

NOVA suggested that the City was abusing the submittal process to clarify and

correct the City's own design flaws and that those flaws should have been addressed

through the change order process instead. Finally, NOVA complained that it was

receiving mixed messages from city employees about what information the City

needed in the submittals and asked the City to clarify the proper lines of

communication for the contract. Id. at 116-17. But NOVA did not file a formal

notice of protest regarding any of these matters. NOVA continued to believe, as of

August 25, that there was still adequate time to complete the project by the October

deadline. M at 117.

The City did not respond to NOVA's complaints about the submittal process.

After some back and forth with the City about the inadequacy of NOVA's

submittals, NOVA submitted a second batch ofrevised submittals. The City rejected

it. NOVA did not file a notice of protest at that time either.

Then, on September 4, the City issued a notice of default letter, demanding

that NOVA cure its delinquent performance or risk termination of the contract. Id.

at 156-58. The City identified four delinquencies: (1) failure to submit sufficient
No. 94711-2

information or acceptable submittals,(2) failure to mobilize to the work site, (3)

failure to submit a revised project schedule, and (4) failure to present written

documentation confirming TT Technologies Inc. (NOVA's subcontractor) would

perform the pipe bursting. The City gave NOVA 15 days to cure these delinquencies

but emphasized that "[wjithout submittals that include specific and sufficient design

and work details, the City cannot allow work to proceed." Id. at 157.

Upon receipt ofthe notice of default letter, NOVA submitted a third batch of

revised submittals. It also provided the City with a revised project schedule. Id. at

286. But NOVA refused to provide the City with the requested written confirmation

from its subcontractor about pipe bursting because the subcontractor had provided

verbal confirmation several times. Id. at 297-99. Because the default notice listed

failure to mobilize as a delinquency, NOVA also began moving equipment to the

work site, even though it did not have keys to the jobsite. Although there were some

earlier communications about giving NOVA access to the jobsite, the City never did

so. Id. at 472-73. To gain that access, NOVA cut the padlock on the City's fence.

NOVA then installed its own padlock and began implementing parts of the

previously approved traffic control plan. Id. at 160.

The City ordered NOVA to stop work immediately and vacate the jobsite. Id.

at 160, 166. The City did so because NOVA failed to obtain all the necessary
No. 94711-2

preconstruction submittal approvals. Id. at 164. Around that same time, the City

also rejected NOVA's third batch of revised submittals. Again, NOVA did not

formally protest those rejections.

NOVA did file a formal written protest on September 9 against the City's

notice of default and stop work order. Id. at 171, 173. NOVA protested the City's

stop work order, arguing that the order was inconsistent with the City's notice of

default letter, which gave NOVA 15 days to cure its failure to mobilize to the work

site. Id. at 160, 173. NOVA repeated its belief that the City was abusing the

submittal process to alter and correct defects in the City's construction designs. Id.

at 173.

On September 18, NOVA informed the City that it could no longer complete

theprojectby the October deadline. Id. at 302-03. NOVA expressed its willingness

to continue construction beyond that October deadline, but only if the City covered

costs related to the delay. See id. at 306-14. The City declined that offer.

Instead, the City terminated the contract on September 24. It cited NOVA's

failure to timely cure the deficiencies listed on the notice of default as the basis for

termination. Id. at 215.

NOVA filed a formal written protest against the City's termination for default.

Id. at 295-96. NOVA argued that its failure to perform was justified because the
No. 94711-2

City breached the contract by failing to give NOVA access to the jobsite after the
notice to proceed letter issued back on August 11 and then ordering NOVA to stop
work on September 9 without an opportunity to cure the failure to mobilize. Id.
According to NOVA, those actions constitute a material breach of the City's
contractual obligation to give NOVA access to the work site, act in good faith, and
properly administer the contract. Id. at 295.

NOVA filed a claim for damages with the City on September 30. Id. at 295-

96. The City denied NOVA's claim '"in its entirety.'" Id. at 5. This lawsuit
followed.

Procedural History

After the City denied NOVA's claim, NOVA sued the City for breach of

contract in Thurston County Superior Court. Id. at 3-8. NOVA's complaint

identified five material breaches by the City:(1)the City's refusal "to allow NOVA

to proceed," despite the fact that it had issued a notice to proceed letter, id. at 5,(2)
the City's failure "to evaluate and approve submittals properly, rejecting proper
submittals," id. at 6, (3) the City's "refusal to participate in ordinary project

activities" when it "canceled numerous project meetings and refused to participate

in on-site meetings," id,(4)the City's "demands of NOVA to perform extra work
and/or supply extra material but without the benefit to NOVA of proceeding as a
No. 94711-2

Change Order," id., and (5) the City's "wrongful termination," id. at 7. The

complaint also alleged that the City's failure to participate in project activities

constituted a breach of the covenant of good faith and fair dealing. Id. at 6.

The City counterclaimed, alleging breach of contract and requesting

liquidated damages. CP at 42-43.

After completing discovery, the City moved for summary judgment on

NOVA'S complaint and its own counterclaims. Id. at 49-66. The City argued that

it properly terminated the contract for default because NOVA failed to complete the

submittal process on time. The City also denied owing NOVA any money for part

performance. The City argued that the little traffic control work that NOVA did

when it trespassed onto the jobsite did not merit compensation because that work

was defective and unauthorized. Id. at 65-66.

The City did not initially raise NOVA's failure to timely comply with notice

of protest requirements in its motion for summary judgment. But the City did raise

this issue in its reply. Id. at 439-40. That reply argued that because NOVA "did not

provide a written protest of the City's rejection of its submittals as required by

Section 1-04.5 of the Contract . . . [NOVA] 'completely waives any claims for

protested Work.'" Id. at 440 (quoting Section 1-04.5). The City also argued this

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No. 94711-2

ground for dismissal at the hearing on that motion. Verbatim Report ofProceedings

(Feb. 19, 2016)(VRP)at 7, 23, 25.

NOVA opposed summary judgment. Id. at 228-44. It argued that disputed

issues of material fact existed regarding which party breached first and whether that

breach excused subsequent performance by the other party. Id. at 234. It never

responded to the City's belated waiver argument, never opposed the City's ability to

raise that argument, and never sought additional time to address that argument.

The trial court granted summary judgment in favor of the City on its cross

claim for breach and awarded the City liquidated damages. The trial court also

dismissed NOVA's claims for breach of contract. The trial court found that NOVA

had failed to present evidence to "sufficiently raise[] an issue that there was a breach

by the city in not accepting certain submissions" or "that there was some

inappropriate or bad faith utilized by the city engineer [in rejecting NOVA's

submittals]." VRP at 28-29. Thus,the trial court did not reach the City's alternative

ground for dismissal, i.e., NOVA's failure to comply with Section 1-04.5's written

notice of claim requirement.

NOVA successfully appealed. NOVA Contracting, slip op. at 20. The Court

of Appeals held that there were material questions of fact about whether the City

breached the implied covenant ofgood faith and fair dealing when it denied NOVA's

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No. 94711-2

submittals. Id. at 1. That court rejected the City's argument that NOVA had waived

all claims relating to the City's rejection of those submittals by failing to comply

with Section 1-04.5's written notice of claim requirement. Id. at 6 n.3. The court

explained that "[ajlthough NOVA may have waived claims for the cost of work

performed under the contract, [Sjection 1-04.5 does not apply to expectancy and

consequential damages." Id. It cited no authority for this holding. It then remanded

to the trial court for further proceedings solely on NOVA's claim for breach of the

covenant of good faith and fair dealing. Id. at 2. But in the event the jury agreed

with the City, the Court of Appeals ruled, an award of liquidated damages was

proper. The court affirmed dismissal of NOVA's other breach of contract claims.

The City petitioned this court for review ofthe Section 1 -04.5 notice ofprotest

issue. NOVA did not seek review of any ruling, including the dismissal of its other

breach of contract claims or the enforceability of the contract's liquidated damages

clause. Thus, the only issue before us is whether Section 1-04.5 bars NOVA's claim

for breach of the covenant of good faith and fair dealing. We hold that it does. We

therefore reverse the Court of Appeals in part.

Standard of Review

We review a trial court's grant ofsummary judgment de novo, taking all facts

and inferences in the light most favorable to the nonmoving party. Keck v. Collins,

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No. 94711-2

184 Wn.2d 358, 370, 357 P.3d 1080 (2015)(citing Folsom v. Burger King, 135

Wn.2d 658, 663, 958 P.2d 301 (1998)).

Analysis

Section 1-04.5 ("Procedure and Protest by the Contractor") provides that if

the contractor

disagree[s] with anything required in a change order, another written
order, or an oral order from the [City] Engineer, including any
direction, instruction, interpretation, or determination by the Engineer,
the Contractor shall.
. . . Immediately give a signed written notice of protest to the
Project Engineer or the Project Engineer's field Inspectors before doing
the Work;
...[and] Supplement the written protest within 14 calendar days
with a written statement and supporting documents.

(Emphasis added.) "By not protesting .. .,the Contractor . . . waives any additional

entitlement and accepts from the Engineer any written or oral order (including

directions, instructions, interpretations, and determinations)." Section 1-04.5

(emphasis added). Additionally, the contractor's failure to comply with the protest

procedures of Section 1-04.5 ''completely waives any claimsfor protested Work.'''

Id. (emphasis added).

We have repeatedly upheld such notice of protest provisions. Mike M.

Johnson, 150 Wn.2d at 391; Am. Safety, 162 Wn.2d at 773. Relying on those cited

13
No. 94711-2

cases, the City argued that NOVA's claim should be dismissed because NOVA

failed to protest each rejected submittal "[ijmmediately," as Section 1-04.5 requires.

The Court of Appeals disagreed, reasoning that "[ajlthough NOVA may have

waived claims for the cost of work performed under the contract, [Sjection 1-04.5

does not apply to expectancy and consequential damages." NOVA Contracting, slip

op. at 6 n.3. We disagree.

I. There Is No Exception to Section 1-04.5's Written Requirement for
Consequential or Expectancy Damages

Section 1-04.5 states,"By failing to follow the procedures of Sections 1-04.5

and 1-09.11, the Contractor completely waives any claimsfor protested Work." CP

at 90(emphasis added). "The word 'any' is a broad and inclusive term with respect

to subject matter." S.L. Rowland Constr. Co. v. Beall Pipe & Tank Corp., 14 Wn.

App. 297, 306, 540 P.2d 912(1975)(citing Rosenoff v. Cross, 95 Wash. 525, 528,

164 P. 236 (1917); State ex rel. Evans v. Bhd. ofFriends, 41 Wn.2d 133, 145, 247

P.2d 787 (1952)). Thus,"'Washington courts have repeatedly construed the word

"any" to mean "every" and "all."'" LK Operating, LLC v. Collection Grp., LLC,

181 Wn.2d 48, 82 n.l8, 331 P.3d 1147 (2014)(quoting State v. Smith, 117 Wn.2d

263, 271, 814 P.2d 652 (1991)). The term "any claims" therefore plainly means

"all" claims related to the "protested Work," including claims for expectancy and

consequential damages that are based on protested work. Thus,there is no exception

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No. 94711-2

to Section 1-04.5's written notice of claim requirements for expectancy and

consequential damages.

II. We Do Not Address the Availability ofEquitable Exceptions to Section
1-04.5's Written Notice of Claim Requirement Because NOVA Raised
a Claim for Breach of the Covenant of Good Faith and Fair Dealing—■
and That Claim Sounds in Contract, Not Equity

NOVA argues that Section 1-04.5 does not apply to a elaim for breach of the

covenant of good faith and fair dealing beeause such a claim sounds in equity. 'Wash.

Supreme Court oral argument, NOVA Contracting, Inc. v. City of Olympia, No.

94711-2 (May 17, 2018), at 22 min., 59 sec. through 32 min., 9 sec. (discussing

Bignold V. King County, 65 Wn.2d 817, 399 P.2d 611 (1965), and Gen. Constr. Co.

V. Pub. Util. Dist. No. 2 of Grant County, 195 Wn. App. 698, 380 P.3d 636 (2016)

(published in part)), video recording by TVW, Washington State's Public Affairs

Network, http://www.tvw.org.

We disagree. A claim of breach of the covenant of good faith and fair dealing

sounds in contract, not equity. Rekhter v. Dep't of Social & Health Servs., 180

Wn.2d 102, 113-16, 323 P.3d 1036 (2014) (plurality opinion) (describing the duty

of good faith and fair dealing as a "contractual duty around a contractual term"); id.

at 127 (C. Johnson, J., concurring in part). Thus, even if there is an equity exeeption

to Mike M. Johnson's, rule of strict compliance with Section 1-04.5 that would not

save nova's claim.

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No. 94711-2

III. NOVA Failed To Comply with Section 1-04.5's Written Notice of
Claim Requirements

NOVA next claims that it was not required to file a written protest after each

rejected submittal because it filed a claim for breach of the covenant of good faith

and fair dealing. NOVA's complaint states that that claim is based on the City's

"refusal to participate in ordinary project activities" when the City "canceled

numerous project meetings and refused to participate in on-site meetings." CP at 6.

NOVA's trial court briefs also speculated that because its last city project resulted

in costly design changes, some city employees wanted a different contractor for the

culvert job. CP at 278. But NOVA later clarified in its supplemental brief and

during oral argument before this court that that claim is based solely on the City's

unreasonable rejection of its submittals and explained that the complaint referred to

meetings and canceled meetings only because "the submittals were discussed and

handled in those meetings." Suppl. Br. of Resp't NOVA at 14; Wash. Supreme

Court oral argument,supra, at 17 min., 21 sec. through 19 min., 16 sec. NOVA also

withdrew any claim that the City sabotaged NOVA's performance in favor of

awarding the contract to a different contractor. Wash. Supreme Court oral argument,

supra, at 19 min., 16 sec. through 20 min., 23 sec.

Because NOVA's claim for breach of the covenant of good faith and fair

dealing is based entirely on the City's improper rejection of its submittals, and

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No. 94711-2

because it is undisputed that NOVA did not file a written notice of protest

immediately, NOVA "waive[d] any claims for protested Work." CP at 91.

NOVA argues that because the City possessed the authority to rescind its

rejections up until the contract ended, NOVA's claim did not fully ripen until the

City issued the stop work order, practically terminating the contract. Suppl. Br. of

Resp'tNOVAat 15.

NOVA's assertion that a protestable dispute does not materialize for purposes

of Section 1-04.5 until after a contract ends, when the City can no longer reverse its

decision, is inconsistent with the contractor's obligation under Section 1-04.5 to

continue contract performance pending resolution of the protest. Section 1-04.5

states that "[i]n spite ofany protest or dispute, the Contractor shall proceed promptly

with the Work as the [City] Engineer orders." (Underlining omitted.)

IV. The Issue of Noncompliance with Section 1-04.5 Was Briefed and
Argued at the Trial Court and Court of Appeals and Is Therefore
Properly before Us

Finally, NOVA argues that we should not consider the Section 1-04.5 issue

because the City failed to properly raise it before the trial court. NOVA correctly

observes that the issue of noncompliance with Section 1-04.5 was not raised in the

City's motion for summary judgment and supporting memorandum. The City did,

however, raise the issue in its reply. CP at 439-40. That reply argued that because

17
No. 94711-2

NOVA "did [not] provide written protest of the City's rejection of its submittals as

required by Section 1-04.5 of the Contract . . .[NOVA]'completely waives any

claims for protested Work.'" Id. (quoting Section 1-04.5). NOVA did not object to

the City's ability to raise that ground in a reply and did not seek additional time to

respond.

The City then raised Section 1-04.5 as a basis for granting summary judgment

during the summaryjudgment hearing in the trial court. VRP at 7(noting that "there

was no previous claim by the contractor or notice given as required by the contract

that the city's previous actions in rejecting those submittals were inappropriate"), 23

(arguing NOVA "waived any ofthe [City's] actions prior to September 4th" because

"[t]he contract specifically states if you disagree with any decision by the engineer,

you have to immediately protest that in writing, and if you don't protest it any related

claims for compensation or extensions oftime are waived"), 25 (asserting again that

"the contract says you have to give notice, they didn't give notice . . . so we're

entitled to judgment as a matter of law").

NOVA never objected to the City's ability to raise this argument on

procedural timeliness or other grounds at the trial court. Instead, it responded on the

merits. NOVA's counsel argued:

The city is now arguing—I saw it basically, it may have been in the
original brief, it was more highlighted in the reply—^that we had a duty

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No. 94711-2

to submit claims when we received the rejections of our submittals and
when—by not doing so we've waived our argument that the submittals
were wrongly rejected. That mistakes how this submittal process
works. None of these rejections were final rejection, that is, none of
[the] rejections said submittal rejected, don't bother resubmitting on
this one, you're done. They all said reject for these reasons, resubmit
to address the following issues. So we were in the middle of the
process. The process wasn't done and the city cut the process short and
we did file our claim timely and in the proper form from the moment
the city stopped the process, but the city is now saying you should have
filed your claim the moment you thought we were doing something
wrong with the process rather than give us the benefit of the doubt and
let the process play out. I guess that's what the city is saying. We're
supposed to give them the benefit of the doubt, we're supposed to let
the submittal process play out.

We were curing what the city said was wrong with the submittal
process even though we thought the city's objections were not well
taken, and the city stopped us from doing so. So we timely appealed
this, there's no question, from the moment the city stopped the
submittal process, we appealed. We filed a claim on the submittal
process and from the moment the city stopped our performance on the
job, we filed a claim for the city not letting us perform. So I think
there's no question we're timely here.

Id. at 17-19. The trial court was therefore fully apprised of the Section 1-04.5 issue

and the parties' arguments, though it rested its decision on other grounds.

The Court of Appeals was also fiilly apprised of the issue and the arguments.

Section 1-04.5 was a central topic in the appellate briefs and the oral argument in

that court. Br. of Resp't at 16, 37-38; Appellant's Reply Br. at 20-21; Wash. Court

of Appeals oral argument, NOVA Contracting, Inc. v. City of Olympia, No. 48644-

O-II (Jan. 26, 2017), at 9 min., 50 sec. through 10 min., 59 sec.; 12 min., 56 sec.

19
No. 94711-2

through 14 min.,0 sec.; 17 min., 42 sec. through 18 min,4 sec.; 22 min. through 25

min., 1 sec.; 28 min., 24 sec. through 28 min., 55 sec.; 29 min., 51 sec. through 31

min., 11 sec., http://www.courts.wa.gov/appellate_triaI_courts/appellateDockets.

And the Section 1-04.5 issue was the only issue on which this court granted

review. An issue that is raised and argued below and accepted for review by this

court is properly before us. See RAP 2.5, 13.6, 13.7.

V. Appellate Attorney Fees

The City requests an award of appellate attorney fees pursuant to RCW

39.04.240. NOVA concedes that if the City prevails on the Section 1-04.5 issue,

then the City is entitled to appellate attorney fees. Appellant's Reply Br. at 22-23.

We therefore grant the City's request for appellate attorney fees.

Conclusion

We reverse in part. NOVA's claim for breach of the covenant of good faith

and fair dealing is based entirely on the City's rejection of submittals. Section 1-

04.5 requires the contractor to "[ijmmediately" file a written notice of protest to

preserve any claims related to rejection of such submittals. NOVA did not

"[ijmmediately" file such a written notice of protest following rejection of its

submittals. Section 1-04.5 therefore bars NOVA's claim.

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No. 94711-2

WE CONCUR:

hl/lAs4 I

7

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