If you have not been paid for labor, services or materials furnished on a construction project in Washington, you may be able to collect the money you are owed by filing a mechanic’s lien (also referred to as a claim of lien). You can file a mechanic’s lien claim on your own, or call upon an attorney or mechanic’s lien service to help you navigate the paperwork and process.

Step 1: Determine If You Are Qualified To File A Mechanic’s Lien

Not everyone is entitled to file a mechanic’s lien. The services, materials or labor you furnish to a construction project must qualify for protection under Washington’s lien laws. Liens are authorized by RCW 60.04.021 for any person furnishing labor, professional services, materials, or equipment for the improvement of real property.  The trick is determining whether your construction project is a qualifying improvement, which is defined by RCW 60.04.11(5):

“Improvement” means: (a) Constructing, altering, repairing, remodeling, demolishing, clearing, grading, or filling in, of, to, or upon any real property or street or road in front of or adjoining the same; (b) planting of trees, vines, shrubs, plants, hedges, or lawns, or providing other landscaping materials on any real property; and (c) providing professional services upon real property or in preparation for or in conjunction with the intended activities in (a) or (b) of this subsection.

Suppliers to suppliers are not protected.

Step 2: Confirm You Preserved Your Mechanic’s Lien Rights

In Washington, most construction participants must deliver some type of notice to preserve their rights to file a mechanic’s lien.

Those who did not contract with the property owner must deliver a “Notice to Owner” within 60 days of first furnishing labor or materials to the project. If you did not send a preliminary notice on time, but have furnished labor or materials within 60 days, there are some protections for those who sent late notices as to labor and materials furnished within a 60 day period from when the notice is sent.

While most notice requirements are for those who did not contact with the property owner, in some circumstance, those who did contract with the owner must provide a “Model Disclosure Statement” before commencing work to preserve their lien rights. This is required on select residential and commercial projects. You can learn more about this requirement at this post: Deliver the Model Disclosure Statement in Washington…Or Else

If you furnished these notices, you’re in luck, and you’ve preserved your right to file a mechanic’s lien. If you haven’t furnished the requisite notice, you may not have lien rights.

Step 3: Produce The Mechanics Lien Document With Required Content

Now it’s time to produce the mechanic’s lien form. Washington has strict requirements about what your mechanic’s lien must contain (see RCW 60.04.091) Here are a few:

• Identification of the party who hired you
• Description of the labor, materials or services furnished to the project
• Legal Property Description
• Identification of the Property Owner
• Date services first and last furnished
• Amount due and unpaid to you

The statute itself proscribes a form to use to file a Washington mechanic’s lien. Download the form for free here: Free Washington Mechanic’s Lien Form.

The most challenging part of completing this form is to insure you have the proper legal property description for the property being liened, as this is an absolute requirement for your lien to be valid in Washington.

Step 4: Timely Record The Washington Mechanic’s Lien with the Proper Auditor’s Office

The next step is to timely record your Washington mechanic’s lien. Washington requires all parties to record their mechanic’s lien within 90 days after last furnishing services, labor or materials to the project. The courts will not accept any excuses for a late filing. If you record a tardy mechanic’s lien , it will be void.

The Washington mechanic’s lien – statutorily referred to as a “Claim of Lien” – must be recorded in the county auditor’s office where the construction project itself is located. If a project is situated in two counties, it must be recorded with both auditor offices.

Step 5: Send Notice Your Mechanic’s Lien Was Recorded

Washington requires all mechanic’s lien claimants to serve a copy of the mechanic’s lien on the property owner within 14 days of recording.  While the failure to serve the lien will not invalidate it, it will disqualify you from recovering your attorney fees in any action to enforce the lien (Washington law typically allows lien claimants to recover their attorney fees).  So, not having the lien served can be an expensive oversight.

The mechanic’s lien must be served on the property owner by certified or registered mail, or by personal service.

Step 6: Foreclose On Your Washington Mechanic’s Lien

Mechanic liens in Washington (or elsewhere) do not remain effective and encumbering against a property forever (See: Does A Mechanic’s Lien Cloud Title Forever?).

In Washington, mechanic liens must be enforced within 8 months from the date the lien was recorded.  To learn more about lien foreclosure, read this tag: Foreclosures.

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.

When the Washington Supreme Court delivered its big mechanic’s lien opinion last week in Williams v. Athletics’ Field, I only had a few moments to report it here on the blog (Williams v. Athletics’ Field). However, this decision has significant consequences to mechanic lien jurisprudence in Washington state, and it deserves a blog post or two to explain what the Supreme Court had to say and how it should affect mechanic lien filings.

Summary of Case

If you’re a reader of the Construction Lien Blog, you know we’ve been following this case for more than a year now (read our posts: Williams v. Athletics’ Field tag).

In this case, the lien claimant filed a lien using a form that was provided by the Washington mechanic lien statute.  The lien statute says within it that a filing “using substantially the same form shall be valid.”  (§60.04.091) However, because of some other wording in the statute, lawyers challenging the lien argued that a separate “acknowledgment” of the lien claimant’s signature was required as an attachment to the statutory provided lien form.

While I think the argument is terrible, and a clear misreading of the statute’s plain language making the provided form acceptable per se, the trial court and the appeals court agreed with the party challenging the lien.  This was measurable seismic activity on mechanic lien jurisprudence in Washington state, jeopardizing the validity of thousands and thousands of liens in the state.

The Washington Supreme Court accepted review, and all was made right with the world again. But, the Washington Supreme Court did a lot more with its recent decision than just dismiss this acknowledgement argument. They set law on a growing division between the state’s appeal circuits over whether mechanic lien statutes should be liberally or strictly construed, and this could have far-reaching consequences.

The Liberal v. Strict Construction Divide in Washington

I don’t want to brag, but I saw this decision coming a mile away. While there was a lot of argument in the trial and circuit courts about the friction between §60.04.091′s acknowledgment requirements and the statutory provided form lacking an acknowledgment, what really mattered in deciding whether the lien was valid or invalid was whether courts were to require strict compliance with §60.04.091 or liberal compliance.

Earlier this year, I wrote about this saying:

Interestingly, the decision does a lot more than just address how a Washington mechanic’s lien must be signed and notarized. Instead, it addresses a big-picture difference between Division I and Division II of the Washington Courts of Appeals.

The bigger issue is whether lien laws must strictly or liberally construed by courts. Critizing the Williams v. Athletic Field decision and the underlying reasoning of the Division II court, Division I engaged in the debate about whether strict or liberal interpretation must be applied in lien disputes with the following:

“In the lien context…there is a strong statutory directive that “[the lien statutes]…be liberally construed to provide security for all parties intended to be protected by their provisions.” RCW 60.04.900. This directive clearly applies to RCW 60.04.091. See, e.g. Northlake Concrete Prods., Inc. v. Wylie, 34 Wn.App. 810, 818, 663 P.2d 1380 (1983) (explaining the Legislature’s intent that “the lien laws shall be liberally construed with the view to effecting their object” meant that “when it has been determined that persons come within the operation of the act it will be liberally applied to them” (quoting De Gooyer). N. Coast. Elect. Co. v. Ariz. Elec. Serv., 2010 Wash. App. LEXIS 914, fn4 (Wash. Ct. App. Aug 23 2010).”

The strict v. liberal rub is weird in Washington.  It seems obvious to me, in reading the case law, when liberal construction applies versus when strict construction applies. However, attorneys making confusing or disingenuous arguments combined with misapplication of jurisprudence by district and appeal court judges, created a long-lasting incorrect application of law that caused big problems to Washington lien claimants.

The problem arises because both strict and liberal construction of mechanic liens may be required depending on circumstances. If the court is determining whether a particular claimant falls into the class of parties who are protected by lien laws, strict construction should apply.  If the party is protected by lien laws, and the question is simply whether the lien is valid or meets statutory requirements, then liberal construction should apply.  The strict construction rule comes from jurisprudence (case law), and the liberal construction rule comes straight from statute (§60.040.900).

If you look at the law and jurisprudence, this diachodimy of construction is actually clear.  §60.040.900 requires the mechanic lien statutes to be “liberally construed to provide security for all parties intended to be protected by their provisions.”  Case law picks up on this, stating that to decide who is “intended to be protected” requires strict construction.  Seems simple, yes?

Somehow, however, case law confused the issue. The Supreme Court in Williams pointed to a 1997 Division II case as when mechanic lien jurisprudence went off track:

…more recent cases have expanded the rule of strict construction beyond identifying what services or property the mechanics’ lien statutes protect. In Lumberman’s of Washington, Inc. v. Barnhardt, 89 Wn. App. 283, 286 (1997), the Court of Appeals applied the rule of strict construction in determining whether a lien was valid where the claimant failed to sign a statement swearing it believed the claim of lien to be just.

Williams Decision Restores Liberal Construction

The Supreme Court in Williams recognizes that §60.040.900′s liberal construction has taken a back seat to strict construction since the 1997 Lumberman’s decision.  They drew a comparison between the pre-1997 jurisprudence and the post-1997 jurisprudence and held that the old ways of considering mechanic lien questions should prevail:

We agree with Hos [defendant in Williams] that the appropriate way to view the competing canons of strict and liberal construction is found in our early cases. The strict construction rule, at its origin, was invoked to determine whether persons or services came within the statute’s protection. Expanding the rule of strict construction beyond this inquiry effectively nullifies RCW 60.04.900. As Hos explains, “applying a ‘liberal construction’ to RCW 60.04.091 only after a valid lien is deemed to attach would make no sense. At that point — when by definition the claimant has a valid lien — nothing in RCW 60.04.091 would matter to the claimant.” Appellant’s Reply Br. at 3. To the extent Lumberman’s or other cases suggest that the statute’s mandate of liberal construction has been supplanted by a common law rule of strict construction, we disapprove them.

Conclusion – What Does This Mean?

As I see it, having the Supreme Court weigh in on this question was a long time coming. Practicing law in Washington, I can’t count the number of times opposing attorneys have relied on Lumberman’s to argue a lien was invalid. Defense attorneys loved the Lumberman’s precedent, but to me it always just seemed to be a wrong decision.  Now, the Supreme Court has addressed the discrepancy, and Lumberman’s is tossed.

This is a big deal for Washington lien claimants.  If you’re a party who is intended to be protected by the mechanic lien laws (contractors, subcontractors, suppliers, etc.)….then you’ll have just a bit more leeway in filing your mechanic lien claims.  If there is a small mistake in your lien claim, Washington courts should now look at that mistake liberally, allowing you to amend and fix it in most situations.

As lots of little mistakes can be made in filing a mechanic’s lien, this little bit of breathing room can be a huge difference maker.

Today, the Washington Supreme Court released its opinion on Williams v. Athletic’s Field, and reversed, making all lien claimants breathe a huge sigh of relief.    We’ve written a great number of posts on this interesting case in Washington state, and how much it means to mechanic lien claimants in that state.  You can read our posts here.  

More analysis on this decision is coming soon – but wanted to post and announce the decision.  You can read the decision’s full text on the Washington court’s website.

This situation happens all across the country, but happened recently in massive style with “Prium,” a construction outfit in Tacoma, Washington.

The News Tribune just published an article about the situation written by Kathleen Cooper, titled: Prium’s Pierce County Founders Borrowed Big, Lived Well and Left Tenants, Contractors In Lurch. I was contacted by the Tribune as a legal expert to help explain what happens in these messy payment situations.  Unfortunately for contractors, suppliers and builders, the answer is usually nothing.  When a project is completely belly up and there’s no money to be found, those at the top file bankruptcy and those below get stuck.

The News Tribune article does mention the mechanic’s lien remedy, and I also discussed this with the journalist.

Usually, when money gets misappropriated and low tier subs or suppliers get stiffed, the mechanic’s lien works terrifically by letting these unpaid parties jump over who hired them and request payment directly from the prime or property owner.  When things get too bad, however, and the property owner is bankrupt and the property is over-mortgaged, there’s just nothing left to collect.

This is why Lien Priority is so important.  I’ve written about it often on this blog.  In some states, a lien will take priority over a construction loan or mortgage (in which case, the laborers and materialmen are nearly always protected).  In other states like Washington, however, there is no such priority.  The bank gets paid first, and that leaves everyone else with just a sour story.

Great article in the News Tribune that really illustrates a worst case scenario.  Your best protection against these situations is to protect your lien rights, enforce your lien rights, and get on these rights and your collection efforts as soon as you can.

Over the past year, I’ve had some dealings with construction companies and suppliers being hired to furnish labor and/or materials to Indian Tribes or on Tribal Land, and am finding that there is a bit of a boom in construction of casinos and other establishments for Indian Tribes.  With the boom, non-Indian contractors and suppliers are faced with some pretty complex legal questions about what rights they have in the event they are unpaid or something goes wrong. Since tribal land is much, much different from ordinary land, and Indian tribes have what is called “sovereign immunity” from United States’ laws, these legal questions can get very hairy.

Edward Rubacha, an Arizona attorney with Jennings, Haug & Cunningham, LLP, wrote a very good article on these issues in “Construction Contracts with Indian Tribes or on Tribal Land.”  I highly recommend it to anyone who is thinking about contracting to perform work with an Indian business or on Indian Land.  I used it very heavily in researching this short blog post, which focuses on the narrow question of whether a contractor or supplier can file a mechanic’s lien against Indian Tribal Land.

I was inspired to write this post after receiving an email this afternoon from a Washington construction company who asked whether Washington’s Revised Code “regarding materialmen’s liens and other requirements apply on tribal land for residential construction.”

The short answer to this question is easy:   No.

The long answer to this question is very complex, as there are a hundred different issues that can come up in determining what extend of “lien rights” a contractor or supplier could have on a construction project performed either on tribal land or off tribal land (i.e. on regular private land) for a tribe!

Here is a breakdown of the two biggest issues:

1)  Sovereign Immunity.  First and foremost, Indian tribes have “sovereign immunity” from the laws of the United State and the laws of each state.  You cannot sue an Indian tribe in state or federal court because the courts simply cannot exercise jurisdiction over it. The only way to get around this is if the Indian Tribe voluntarily waives its immunity.

2) The land is not state land, and therefore, not subject to the state’s mechanic’s lien laws.  Here is how Mr. Rubacha summed up this point:

Given this protection, and perhaps, more importantly, ownership of the land by the federal government, state mechanic’s lien laws have no application to reservation land or to trust lands held by Native American allottees. These antialienation principles apply likewise to land held in fee by Native American tribes or tribal entities. It could be argued that state mechanic’s lien laws do not even apply to lands off the reservation owned in fee simple by Native American tribes, given the sovereign immunity principles…If the tribal owner of the property has sovereign immunity, then how can the prospective plaintiff name that entity to enforce a mechanic’s lien properly recorded against the property?

Long Answer: The first thing to say about this subject is that if you’re doing work that requires a license without having that license, you’re treading in dangerous water regardless of your state’s laws.  While some state are more liberal and allow unlicensed parties to collect amounts owed to them, it is very rare when the unlicensed contractor isn’t penalized in some way. Therefore, if you’re unlicensed and doing construction work that requires a license….get licensed!  You can read more about Contractor Licensing laws on my other blog, Construction Law Monitor.

The question here is whether you can file a mechanics lien if you’re unlicensed.  Unfortunately for unlicensed contractors, this question may be just the tip of the iceberg.  In reality, unlicensed construction participants must ask a more significant question: can they recover for their work at all?

I’ll discuss the laws in California and Washington, and then in Louisiana, to compare how the answer to this question may vary by state.

In California and Washington, the laws against unlicensed contractors are very strict — unlicensed contractors have no recovery whatsoever.  This means they cannot file a lien, or a lawsuit, or anything at all.  If they did $1,000,000 of work, and a party refuses to pay them, they are completely without a remedy and basically donated their time and money to the construction project.  (See previously written post: Can Unlicensed Contractors Lien in California?)

Is this fair?

There are two schools of thought on this.  In Washington and California, the legislature considers it more important to regulate the unlicensed constructor market than it is to ensure unlicensed contractors get paid.   States like Louisiana take a different approach.  In Louisiana, the unlicensed contractor is still penalized (i.e. he can get penalized by the licensing board, and his contract is declared null and void and the unlicensed contractor can only recover the “minimum value” of his work), but he is still allowed to recover some sort of compensation for the work he performed…and that means, he can file a mechanic’s lien.

If you’re doing work in California or Washington and are unlicensed, you’re really out of luck.  If you’re in Louisiana, you have some legal ground.  Elsewhere, it’s really important to examine that state’s liens laws to determine if you can file or recovery for your work.

Last year, the Washington Supreme Court accepted the decision for review, and the matter was orally argued on June 14, 2011.  You can watch the oral argument at this link, or in the video embedded below:

This case is interesting because a mechanics lien was invalidated even though it used the same wording and form provided by the statute. There is a conflict between the provided form and some other terminology within the law stating the verification must be in conformance with the state’s notary statutes.

When counsel for Athletics Field was making his presentation,the justices continually interrupted him questioning why the lien should stand when the acknowledgement is not in conformance with the notary statutes.  Justin Wiggins, for example, asks pointedly “If the statutory form was not an issue, do you think the acknowledgement was acceptable?” Another justice appeared concerned that the person who ultimately signed the lien (an employee of a lien preparation company) did not fully identify herself or explain her relationship to the claimant.

An underlying issue with this case that I think is very important but which has not been put front and center by the court and parties thus far is whether the lien statutes are subject to strict or liberal interpretation.  There is a conflict in the lien laws with respect to this issue as well, and the 1st District Court of Appeals have subscribed to liberal interpretation of liens, while the 2nd District, from where this Williams v. Athlethic Field decision arises, have subscribed to the opposite.  I discuss this in the blog post:  Bill Dies That Would Offset Controversial Williams v. Athletic Field Decision.

Warning: Reading this opinion will (i) Confuse the hell out of you; and (ii) Make you laugh our loud.  You’ll be confused because very detailed components of the state’s construction lien laws are scrutinized by the court. You’ll laugh out loud because this controversy arises out of a foreclosure action against Harold Johnson, who insists he is not the same “Harold Johnson” who owns the property. The court’s discussion of the ambiguous Harold Johnson reminded me of a “Who’s on First” sketch.

From reading this case, you get the feeling that Harold Johnson was using the ambiguity between himself and his father (also Harold Johnson, both of whom refuse to use “junior” or “senior” to distinguish themselves) to his benefit, and because of this, it feels like the trial and appellate court really went out of their way to find the defendants liable in this case.  As a result, a lot of the opinion appears to me to have extremely limited application, as there just aren’t that many circumstances when this dual identity problem would present itself.

That’s not to say it doesn’t have large implications.  To the contrary. Some are discussed below.

Rough Facts

Here’s what happened:  Like the court, I will use “junior” when talking about the son, “senior” when talking about the father, and “Harold Johnson” when everyone’s unsure.

Junior hired Diversified Wood to perform construction services on property owned (at the time) by Harold Johnson, racks up a bill of $10k, and leaves Diversified Wood on the hook without payment.  Diversified Wood filed a mechanics lien, and when payment still wasn’t made, filed a foreclosure action against Harold Johnson.  Junior was served with process.

At trial, junior argued that senior always owned the property, and he only arranged for the construction work through his own construction company. Plus, before the foreclosure action was filed, junior testified that the property was sold to to “Kuleana, LLC,” a company owned by senior.  As a result, junior argued the foreclosure action did not name, join or get served upon the owner, and therefore, the lien was expired.

Harold Johnson was Kuleana’s registered agent, which junior alleged referred to senior, although the registered address was at junior’s  property.

Statutes Construed and Decision

So, how do you foreclose on a mechanic’s lien in Washington?  Here are the two statutes:

RCW 60.04.141:
No lien created by this chapter binds the property subject to the lien for a longer period than eight calendar months after the claim of lien has been recorded unless an action is filed by the lien claimant within that time in the superior court in the county where the subject property is located to enforce the lien, and service is made upon the owner of the subject property within ninety days of the date of filing the action…

RCW 60.04.171
The lien provided by this chapter, for which claims of lien have been recorded, may be foreclosed and enforced by a civil action in the court having jurisdiction in the manner prescribed for the judicial foreclosure of a mortgage. The court shall have the power to order the sale of the property. In any action brought to foreclose a lien, the owner shall be joined as a party. The interest in the real property of any person who, prior to the commencement of the action, has a recorded interest in the property, or any part thereof, shall not be foreclosed or affected unless they are joined as a party…

The Court was called upon to resolve some tension between these two statutes. In this case, a claimant sought to foreclose a mechanics lien, but did not name the owner (Kuleana) as a party.  §60.04.171 required that “the owner shall be joined as a party,” and §60.04.141 required that “service [of the foreclosure action be] made upon the owner” of the property.

The court held that a foreclosure could proceed even if an owner was not made a party, so long as the owner was served. However, the court noted that “if the owner or anyone else with a recorded interests in the property is not made a party, the consequence is that his or her interest will not be foreclosed or affected.”

Huh?   What does this mean?

If the owner need not be a party, but if not named, a foreclosure will not affect that owner’s interest, what is the point of this opinion? Here are some things I got out of this opinion.

Division I Says Foreclosure Can Take Place…But Against Who?

At the end of the day, Division I held that foreclosure could move forward even through the owner was not joined as a party.  The owner of the property in this case was Kuleana, who the trial court found (and appeals court affirmed), was the actual owner of the property at the time the foreclosure action was filed. But, as mentioned above, also affirmed that foreclosure would have no effect against non-parties.

I had to read this portion of the decision two or three times, trying to figure out its consequence, and am still a bit confused. I really can’t make heads or tails as to whether plaintiff Diversified is actually able to foreclose against the Kuleana property or not.

This opinion seems to suggest that the mechanic lien has been properly foreclosed upon because the owner (Kuleana) was served (through Hal Johnson), as service is the only thing required to foreclose on the lien. The owner (Kuleana) need not be joined in as a party. However, if the unjoined party’s interest in the property is not affected, what difference does it make? The court goes through all this trouble to distinguish 60.04.141 from 60.04.171, but it makes no difference as the factual finding is that Kuleana is the owner of the property and Kuleana wasn’t joined as a party.

Thus, my take is that Diversified cannot foreclose against Kuleana’s interest (although they may be able to foreclose against any portion intentionally or accidentally remaining with Hal Johnson because there is some legal property description discrepancies and Harold Johnson may still own a portion of the property). This is a hard interpretation to make in the face of the long court discussion that appears to suggest the opposite conclusion.

Can Diversified Amend and Add Kuleana to Foreclose Against Its Interest?

As a result of the separation Division 1 placed between 60.04.141 and 171, it seems possible to me that Diversified might be able to amend their complaint to seek foreclosure against Kuleana now.

Kuleana would argue that the lien expired, but this would be rejected based on this decision because expiration was prevented by meeting the criteria of 60.04.141. While this Hal Johnson v. Hal Johnson identity issue rarely comes up, this could have further reaching effects in those situations when a property has multiple owners and the lien claimant leaves an owner or two out of the foreclosure action.

Service on Person = Service on Registered Agent?

Another interesting component of this decision is how Division I concluded that Kuleana was served with the complaint. It was really just matter of fact, essentially finding that regardless of whether the property was owned by Hal Johnson or Kuleana (whose reg. agent was Hal Johnson) the required party had been served: Hal Johnson.

Recently, I had something like this come up in a case. We were suing a company and the member of the company, and the member was the company’s registered agent. Instead of serving both the member individually and the member as registered agent of the company, we accidentally only served the member individually without the registered agent designation. Our adversaries claimed there was no service on the company, even though service was actually made on the company’s registered agent. We didn’t litigate the point, we simply re-served the complaint.

From my take of Division I’s opinion, they equated service on Hal Johnson, individually, to service on Hal Johnson as an individual and/or as registered agent of Kuleana.

Did Division I Change The Meaning Of The Term “Owner?”

It seemed pretty clear before this decision that when you file a lien, you can file against the owner or reputed owner. But, when you file a lawsuit, the claimant better file against the actual property owner. The court’s wiggling around this rule is a significant consequence of this decision.

Even though the owner at the time Diversified Wood performed the title search was Kuleana (deed recorded 2/2 and search on 2/7), that mistake was somehow forgiven, as the court found there was enough in the record to support their mistake. I don’t know of any other circumstance like this. It seems Division I watered down the requirement that the suit be filed against the “owner,” creating some gray matter between “reputed owner” and “owner,” that forgives claimants for title search mistakes.

Tip Of The Hat To Jordan Foster

Thank you to Jordan K. Foster of the Grit City Law Blog for giving me a heads up about this new Washington appeals decision. He sent me an email last week with his own thoughts on the case, and we had a great exchange trying to figure out the effect of this decision. Check our Jordan’s blog discussing Washington State Real Estate, Business and Construction Law, with a focus on Tacoma, the Grit City.

To catch you up on the decision, its effects and the bill, here are some cliff notes:

The Issue

In Washington state, mechanic liens must be notarized and verified by the lien claimant. The lien statutes require that the claim be notarized pursuant to the state’s notarization statutes, which has different methods for notarizing an individual signature and a corporate signature. However, the lien statutes themselves provide a lien form that can be used by claimants, and that form has the notarization language required for individuals. The issue in Williams v. Athletic Field is whether the statutory lien form could be used for corporate claimants…or if the corporate notary language was required.

Timeline

– August 2006 – Washington Court of Appeals Division II Finds the Lien, relying on the statutory form, is valid.

– March 2010 – Sua Sponte, Washington Court of Appeals reconsiders its decision, withdraws it and reverses, invaliding the lien.  See blog post:  Washington Appeals Case Confirms Lien Requirements Are Technical.

– November 2010:  Washington Supreme Court Accepts Case for Review (blog post)

– January 2011: House Bill 1475 introduced in Washington Legislature to offset the impact of the controversial decision. Bill passes the house unanimously.  (blog post)

– April 2011:  House Bill 1475 dies, as it does not reach a vote in the Washington Senate before the session April 12, 2011 deadline.

Now What?

Unfortunately, now that the mechanic lien legislation has died in the 2011 legislature, the Washington lien laws remain up in the air. I have been involved in a few cases in Washington where the effect of the Williams v. Athletic Field decision is squarely at issue.  Interestingly, the decision does a lot more than just address how a Washington mechanic’s lien must be signed and notarized. Instead, it addresses a big-picture difference between Division I and Division II of the Washington Courts of Appeals.

The bigger issue is whether lien laws must strictly or liberally construed by courts. Critizing the Williams v. Athletic Field decision and the underlying reasoning of the Division II court, Division I engaged in the debate about whether strict or liberal interpretation must be applied in lien disputes with the following:

In the lien context…there is a strong statutory directive that “[the lien statutes]…be liberally construed to provide security for all parties intended to be protected by their provisions.” RCW 60.04.900. This directive clearly applies to RCW 60.04.091. See, e.g. Northlake Concrete Prods., Inc. v. Wylie, 34 Wn.App. 810, 818, 663 P.2d 1380 (1983) (explaining the Legislature’s intent that “the lien laws shall be liberally construed with the view to effecting their object” meant that “when it has been determined that persons come within the operation of the act it will be liberally applied to them” (quoting De Gooyer).  N. Coast. Elect. Co. v. Ariz. Elec. Serv., 2010 Wash. App. LEXIS 914, fn4 (Wash. Ct. App. Aug 23 2010). 

Now that House Bill 1475 is history, the importance of the Washington Supreme Court decision is more pronounced. However, it was always going to be important.

Now, the construction industry must collectively hold their breath, as we all wait and see how this ends, and whether Division I’s liberal construction, or Division II’s strict construction will prevail.