INLAND EMPIRE DRY WALL SUPPLY CO., a Washington corporation, Respondent,
WESTERN SURETY COMPANY (Bond No. 58717161), Petitioner.
case involves the issue of whether the purchaser of a lien
release bond is an indispensable party in an action under
chapter 60.04 RCW by a lien claimant against the surety of
the release bond. The Court of Appeals, in a divided opinion,
reversed the trial court's grant of summary judgment in
favor of the surety and held that a claim against a lien
release bond could be pursued solely against the surety. We
and Procedural History
Empire Dry Wall Supply Company is a supplier of drywall
materials. Inland Empire entered into an agreement to supply
drywall materials to Eastern Washington Drywall & Paint
(EWD&P). EWD&P contracted with Fowler General
Construction to work on an apartment complex project in
Richland, Washington. Inland Empire claims to have supplied
$124, 653.05 worth of drywall for the apartment complex
project work that EWD&P was performing.
Empire claims EWD&P never paid it for the materials
supplied. To pursue payment, Inland Empire filed a preclaim
notice and timely recorded a mechanics' lien against the
construction project under RCW 60.04.091. To release the
project property from the lien, Fowler obtained a lien
release bond in the amount of $186, 979.57 from Western
Surety Company. The lien release bond identifies Fowler as
the "Principal, " Western as the "Surety,
" and Inland Empire as the "Obligee."
Clerk's Papers (CP) at 23. After Fowler recorded the lien
release bond, Inland Empire filed an action asking for
"judgment in the principle sum of $124, 653.05"
plus interest, costs, and attorney fees, and for "an
order foreclosing [its] claim against Defendant Western
Surety's Bond . . . and an Order directing the penal sum
be paid to [it]." CP at 5, 6. The complaint named
Western Surety-but not Fowler, the principal on the bond-as a
party to the action. In its answer, Western raised several
affirmative defenses, including the affirmative defense that
Inland Empire failed to name and include Fowler as a
necessary and indispensable party, and that Inland Empire had
not satisfied the statute of limitations under chapter 60.04
RCW. Inland Empire and Western then filed cross motions for
trial court granted summary judgment in favor of Western. It
ruled that under RCW 60.04.141, Inland Empire was required to
sue and serve both Western as surety and Fowler as principal
in the action to foreclose on a lien release bond. It
reasoned that because the bond, rather than the apartment
complex property, was now the property subject to the claim
of lien, Fowler, as purchaser of the bond, together with
Western became owners of the subject "property."
The trial court therefore dismissed the lawsuit because
Inland Empire failed to name and to serve Fowler as a party
within the 90 days required under RCW 60.04.141.
Three of the Court of Appeals in a divided opinion reversed,
the majority holding that RCW 60.04.161 controlled under
these circumstances and that Inland Empire was only required
to name Western, the bond surety, as the defendant to its
bond foreclosure action. Inland Empire Dry Wall Supply
Co. v. W. Sur. Co., 197 Wn.App. 510, 519, 389 P.3d 717,
review granted, 188 Wn.2d 1002, 393 P.3d 785 (2017).
Chief Judge Fearing dissented.
case raises the issue of whether under chapter 60.04 RCW the
purchaser of a lien release bond is an indispensable party
who must be named and joined in an action on the lien release
bond; this is an issue of statutory interpretation.
Construction of a statute is a question of law that this
court reviews de novo. State v. Wentz, 149 Wn.2d
342, 346, 68 P.3d 282 (2003). Where a "statute's
meaning is plain on its face, then the court must give effect
to that plain meaning as an expression of legislative
intent." Dep't of Ecology v. Campbell &
Gwinn, LLC, 146 Wn.2d 1, 9-10, 43 P.3d 4 (2002). Such
meaning "is discerned from all that the Legislature has
said in the statute and related statutes which disclose
legislative intent about the provision in question, "
and if the statute remains susceptible to more than one
reasonable meaning, this court resorts to aids of
construction, including legislative history. Campbell
& Gwinn, 146 Wn.2d at 11, 12.
60.04 RCW creates a cause of action for suppliers of labor,
materials, or equipment to a construction project. The
statute is often referred to as the "construction
lien" statute. Before chapter 60.04 RCW was enacted,
material and equipment providers and laborers were limited in
pursuing unpaid claims under contract principles and
generally could bring suit against only the purchaser of the
materials or person (or entity) contracting for labor. In the
absence of some equitable or contractual theory, no claim
existed against the property, property owner, or others.
Construction lien statutes such as chapter 60.04 RCW were
enacted to create a cause of action and remedy under certain
circumstances in the construction industry. The enactment of
chapter 60.04 RCW created a limited cause of action, allowing
a claim to be filed against the property and property owner,
so long as strict statutory time requirements were followed.
As we have previously noted, the statute is construed
liberally to protect persons who fall within its provisions.
See Williams v. Athletic Field, Inc., 172 Wn.2d 683,
696-97, 261 P.3d 109 (2011).
60.04.021 allows "any person furnishing labor,
professional services, materials, or equipment for the
improvement of real property" to place a lien on the
construction project property as a method of securing payment
for services rendered. A lien claimant, here Inland Empire,
is required to give the property owner and the prime
contractor written notice of the lien claim and to record the
notice in the county where the subject property is located.
RCW 60.04.031, .091. The statutory scheme includes strict
time limits in which to act.
60.04.141 describes procedures a lien claimant must follow
once the lien has been recorded. It provides, in relevant
No lien created by this chapter binds the property subject to
the lien for a longer period than eight calendar months after
the claim df 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 . . . and in case the action is not prosecuted to
judgment within two years after the commencement thereof, the
court, in its discretion, may dismiss the action for want of
prosecution, and the dismissal of the action or a judgment
rendered thereon that no lien exists shall constitute a
cancellation of the lien.
RCW 60.40.141. The statutory language makes it clear that RCW
60.04.141 requires "the owner of the subject
property" to be named in actions where no release bond
has been filed. This makes legal and practical sense: while
the foreclosure suit seeks to enforce payment, if payment is
not made, the property owner's interest in the property
may be foreclosed, i.e., forfeited. Based on this potential
remedy, the statute-RCW 60.04.141-requires joinder of the
property owner. Failure to comply with these statutory
provisions results in the loss by the lien claimant of the
right to the lien. See Bob Pearson Constr., Inc. v. First
Cmty. Bank, 111 Wn.App. 174, 179, 43 P.3d 1261
(2002). The type of action created under RCW 60.04.141 is a
quasi in rem type of action where the object, or res, is the
60.04.161 authorizes a property owner or contractor,
subcontractor, lender, or lien claimant who disputes the
correctness or validity of the claim of lien to post a lien
release bond. The real property then is released from the
claim and becomes unreachable, and the bond purchaser instead
posts the bond as security.
purpose of the lien release bond is twofold. First, the bond
protects the property owner by removing the lien from the
real property, thus providing the owner with clear marketable
title. Second, the bond "protects the lien claimant by
taking the place of the property and serving as a form of
substitute security should the lien claimant ultimately
prevail." The Law OF MISCELLANEOUS AND Commercial Surety
Bonds 155 (Todd C. Kazlow & Bruce C. King eds., 2001);
see also CalPortland Co. v. LevelOne Concrete, LLC,180 Wn.App. 379, 387, 321 P.3d 1261 (2014). Fowler, the
general contractor on the project here, obtained a lien
release bond to free up the construction project property. As
the Court of Appeals correctly recognized, "Once a lien
release bond is recorded, the procedural statute shifts from
RCW 60.04.141 to RCW 60.04.161." Inland Empire,
197 Wn.App. at 516. Unlike RCW 60.04.141, the language of RCW
60.04.161 refers to the liability of the surety and does not
mention either the bond purchaser or property owner in that
context. RCW 60.04.161, of course, necessarily refers to the
owner of the property as one of several entities that may
dispute a lien and record a bond. But aside from that
reference, it simply states that "[t]he ...