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W.R.P. Lake Union Limited Partnership v. Exterior Services Inc.

April 14, 1997

W.R.P. LAKE UNION LIMITED PARTNERSHIP, RESPONDENT,
v.
EXTERIOR SERVICES, INC., A WASHINGTON CORPORATION, APPELLANT.



Appeal from Superior Court of King County. Docket No: 95-2-19903-8. Date filed: 09/07/95. Judge signing: Hon. Nancy A. Holman.

Order Modifying Opinion April 30, 1997.

Authored by William W. Baker. Concurring: Mary K. Becker, Ann L. Ellington.

The opinion of the court was delivered by: Baker

BAKER, C.J. - Exterior Services, Inc. (Exterior) asks us to determine whether a mechanics' and materialmen's lien should be released as frivolous and without reasonable cause in the summary proceeding created by RCW 60.04.081 *fn1 based upon disputed assertions that Exterior did not comply with two statutory prerequisites to lien filing. Because a summary proceeding is not intended to substitute for a trial and because an ultimate ruling against a lienor does not make a lien per se frivolous, we hold that the trial court erred in releasing this lien. Moreover, the record does not adequately set forth the trial court's rationale for releasing the lien to allow appellate review. We therefore reverse the release of the lien and remand for its reinstatement.

Exterior also challenges the attorney fees award to W.R.P. Lake Union Limited Partnership (WRP). In light of our holding that the lien release was improper, we reverse the trial court's fee award to WRP and remand for calculation of attorney fees for Exterior both below and on appeal.

FACTS

WRP is the owner and developer of a multi-use building, which includes parking, commercial space, and 20 residential units. WRP contracted with Western Exterior Siding Specialist (WESS) to provide and install siding, flashing, and downspouts at this building. The contract contained a clause prohibiting assignment of the contract without WRP's express written approval.

When the contract was made, WESS was a sole proprietorship owned by Mark and Desiree Hodgson. Shortly thereafter, Hodgson incorporated, re-registered, and obtained a new bond under the name Exterior. Hodgson maintains that Exterior was the incorporated version of WESS, as evidenced by the fact that Exterior employed all of WESS's employees. WESS notified WRP of the change by letter. WRP did not object to the change in ownership; however, WRP did not give WESS written approval of the assignment of the contract to Exterior.

WRP knew that Exterior was performing the work under the WESS contract, as evidenced by part of WRP's correspondence that was addressed to Exterior. WRP made four payments under the contract; however, those payments were made payable to WESS. The contract was then terminated based upon allegations of non-performance.

Within 30 days, Exterior filed a lien for $26,608.38 plus costs and notified WRP of the lien. The lienor was identified as "Exterior Services, Inc. dba Western Exterior." *fn2 Exterior did not give WRP a notice of a right to claim a lien or a notice to customer before filing the lien. *fn3

WRP claimed that the lien was frivolous because it contracted with WESS, not Exterior, and thus Exterior had to serve a notice of its right to claim a lien before filing the lien. WRP demanded that the lien be released, but Exterior refused.

WRP then obtained an order to show cause why the lien should not be released as frivolous and without reasonable cause. WRP argued that (1) WESS and Exterior were different entities, *fn4 (2) Exterior failed to provide the written notice of its right to claim a lien, which was required because WRP did not contract with Exterior or approve the contract assignment, (3) Exterior failed to provide a notice to customer, (4) Exterior would not be harmed by the release because it had other contractual rights, and (5) the lien was excessive.

Exterior responded that neither notice was required because (1) the change in ownership structure was not equivalent to an assignment, (2) the lien was primarily for labor costs, and (3) the project had more than four residential units. Exterior also argued that WRP waived its objection to any assignment that may have occurred by not responding to Exterior's letter regarding the change. Exterior also requested attorney fees.

At the hearing, WRP raised additional arguments that (1) notice to customer was required because Lake Union Terrace was a commercial building, (2) WRP's correspondence and dealings were ...


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