## Facts

- Touchet Valley Grain Growers, Inc., a farmers’ cooperative, contracted with Opp & Seibold General Construction, Inc. to build a large grain “flathouse” designed to store about 1.9 million bushels of grain.
- Opp & Seibold subcontracted with Truss‑T Structures, Inc. to design and fabricate the building’s metal structural system.
- The flathouse was completed and used for grain storage.
- In October 1985, after the building was filled to capacity in its intended use, part of an exterior wall failed and collapsed outward.
- The collapse exposed stored grain to moisture and pests, destroying or degrading the grain and causing substantial loss.
- Touchet Valley’s property insurer paid much of the loss and, through subrogation, sought recovery.
- Touchet Valley and its insurer sued Opp & Seibold, its performance-bond surety (National Surety Corporation), and Truss‑T, alleging negligence, breach of express and implied warranties, and product liability under the Washington Product Liability Act (WPLA).
- The owner–contractor contract included a waiver of subrogation stating the owner waived rights against the contractor and its surety for damages covered by property insurance.

## Issues

1. Whether the owner–contractor waiver of subrogation barred claims only against the contractor and its surety, or also barred claims against the subcontractor that designed and supplied the structural system.
2. Whether the owner was an intended third-party beneficiary entitled to enforce the subcontractor’s express and implied warranties made to the contractor.
3. Whether the collapse-related losses were purely economic loss (limiting the owner to contract remedies) or constituted “harm to property” actionable under the WPLA.

## Decision

- The court enforced the waiver of subrogation to bar the owner/insurer’s claims against Opp & Seibold and National Surety to the extent the losses were covered by property insurance.
- The waiver did not extend to Truss‑T because it was not a party to the owner–contractor contract and was not expressly included within the waiver’s protection.
- Touchet Valley was an intended third-party beneficiary of Truss‑T’s warranties to the contractor and could sue to enforce those warranties.
- The wall collapse and resulting destruction/contamination of stored grain constituted property damage (including damage to “other property”), not merely disappointed commercial expectations; WPLA claims against Truss‑T could proceed.

## Legal Principles

- A construction-contract waiver of subrogation is enforceable to allocate insured property-loss risk to insurance and bar subrogation claims against the parties identified in the waiver, to the extent of insurance coverage.
- A subcontractor is not protected by an owner–contractor waiver of subrogation unless the contract language or demonstrated intent clearly extends the waiver’s benefit to the subcontractor.
- An owner may enforce a subcontractor’s express or implied warranties as a third-party beneficiary when the contracting parties intended the subcontractor to assume a direct obligation benefitting the owner.
- Under Washington’s economic-loss doctrine as applied in product-liability analysis, tort/WPLA remedies are available for physical harm to persons or property; damages confined to repair/replacement or loss of bargain are generally contract-based.
- Damage to property other than the allegedly defective product or component (e.g., stored grain) supports WPLA “harm to property” claims rather than a pure economic-loss limitation.

## Conclusion

The court held that the owner’s waiver of subrogation barred insured-loss recovery against the general contractor and its surety but did not shield a nonparty subcontractor; it also ruled the owner could sue the subcontractor as an intended warranty beneficiary and could pursue WPLA remedies because the collapse caused physical damage to other property, not only economic loss.


Touchet Valley Grain Growers, Inc. v. Opp & Seibold Gen. Constr., Inc., 119 Wash. 2d 334, 831 P.2d 724 (1992)