Washington Supreme Court Adds Equity Exception to Attorney Fees Rule on Mechanic Lien Challenges
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In my post from earlier this week, I suggested that the Washington Supreme Court’s Williams v. Athletics’ Field decision was a big deal with a number of consequences to mechanic lien laws in that state. We talked about the liberal v. strict construction of mechanic lien statutes in that article, but now I want to talk about a subtle part of the anticipated ruling: it’s effect on the award of attorney fees in lien challenges.
Every state provides property owners and others a mechanism to dispute mechanic liens improperly filed. In Washington, when a party challenges a lien, the statute authorizing the challenges requires attorney fees to get awarded. If the lien is frivolous, the fees to go the challenging party. If the lien is not frivolous, the fees go to the lien claimant. I commented about this in a post “The Risks of Litigating a Washington Construction Lien:”
In Washington, anyone who disputes a lien faces potential risk…or reward. If they win and the lien is overturned, they may be entitled to attorneys fees. If they lose and the lien is upheld, the lien claimant will be entitled to attorneys fees. Since lien dispute proceedings can cost thousands in attorneys fees, the Washington laws require parties disputing a lien to think long and hard about whether to bring this type of action.
While I didn’t like the overall appeals court ruling in Williams, one thing I thought they got right was awarding attorney fees to the lien claimant even though the lien was declared invalid. In essence, the lien claimant lost the challenge because the lien was invalid, but was awarded attorney fees because although the lien was invalid, it was not “frivolous.”
The reason attorney fees should always be awarded in these Washington lien challenge cases is because the statute requires an award of attorney fees by using the term “shall.” Take a look at RCW § 60.04.081(4):
If, following a hearing on the matter, the court determines that the lien is frivolous and made without reasonable cause, or clearly excessive, the court shall issue an order . . . awarding costs and reasonable attorneys’ fees to the applicant to be paid by the lien claimant. If the court determines that the lien is not frivolous and was made with reasonable cause, and is not clearly excessive, the court shall issue an order so stating and awarding costs and reasonable attorneys’ fees to the lien claimant to be paid by the applicant.
So…who got attorney fees after the Supreme Court’s Williams case? No one!
The Washington Supreme Court carved out an equity exception to the legislature’s mandate that someone be awarded attorney fees, saying that it wouldn’t be fair for one party to bear the substantial costs of all of these proceedings. This is what the court said:
However, in reviewing a decision, an appellate court may take action as required by the merits of the case and the interests of justice. RAP 12.2. In this unique instance, given that both parties reasonably interpreted the ambiguous acknowledgment requirement in RCW 60.04.091(2), we think it would be inequitable for one party alone to bear the costly burden of this litigation. In the interest of justice, we do not award attorney fees to either party for the trial or appellate proceedings.
I don’t agree with this component of the decision, because it’s a direct contradiction to the statute, and I don’t think the issue was as ambiguous as the high court let on. Attorneys made this issue ambiguous, but any plain Joe reading the statute would understand what it said: the statutory form is sufficient.
It will be interesting to see if any appeal courts use this RAP 12.2 to wipe out an award of fees in future mechanic lien challenges. As RAP 12.2 only applies to the appeal courts, that rule won’t apply at the trial level.
