Alan Middleton of the Washington Construction Law Blog published a pithy update to its site last week concerning mechanic liens in Washington State. In “Battle of the Lien Forms: Claims of Lien Must Strictly Comply with the Lien Statute,” Alan reports on a recent Division II appeal decision that “underscores the need…to comply with the lien statute.” The case is Williams v. Athletic Field Inc.
Alan’s right. This decision really accentuates just how technical lien statutes are in Washington. More interesting to me, however, was the decision to award the loser of the suit attorneys fees, which accentuates how risky it is to litigate the validity of a Washington construction lien.
RCW 60.04.091 requires all mechanics liens to be “signed by the claimant or some person authorized to act on his or her behalf…” The statute itself has an example form for the lien (see here), and a specific form for the claimant’s or agent’s signature.
The Division II decision released just last month (March 2010) was actually a re-consideration of the original decision. On the matter’s first hearing, the appeals court ruled that a lien filing corporation could sign on behalf of the claimant, as the statute allows an authorized agent to sign the lien. The court was then urged to reconsider its decision, and specifically consider the manner that the lien filing corporation signed the document.
The lien filing corporation was a corporation, and they signed the lien for the claimant using the general form provided by the legislature. The property owner argued that the lien corporation was required to sign the lien using the corporate form for authenticated signatures in Washington.
The form used by the lien filing company stated as follows:
I am the claimant (or attorney of the claimant, or administrator, representative, or agent of the trustees of an employee benefit plan) above named; I have read or heard the foregoing claim, read and know the contents thereof and believe the same to be true and correct and that the claim of lien is not frivolous and is made with reasonable cause, and is not clearly excessive under penalty of perjury.
However, the Court held that 60.04.091(2) requires the notice of claim be acknowledged pursuant to Chapter RCW 64.08. Therefore, despite the “lien form” in the statute having the above attestation clause, since a corporation was signing the attestation clause should have complied with RCW 64.08.070, and have the following form for corporate acknowledgement:
On this ___ day of _____, 20___, before me personally appeared ________, to me known to be the (president, vice president, secretary, treasurer, or other authorized officer or agent, as the case may be) of the corporation that executed the within and foregoing instrument, and acknowledged said instrument to be the free and voluntary act and deed of said corporation, for the uses and purposes therein mentioned, and on oath stated that he was authorized to execute said instrument and that the seal affixed is the corporate seal of said corporation.
The attestation was not sufficient, and because of this technical defect, the lien was declared null and void.
Earlier this year, I wrote a blog post about the risks of litigating a construction line in Washington. This Athletic Field decision really underlines the risks of litigating a construction lien.
According to RCW § 60.04.081(4), if someone files suit to have a construction lien removed from property records, someone is going home with attorneys fees. If the lien is declared “frivolous and made without reasonable cause, or clearly excessive,” the property owner or interested party gets attorneys fees. If the lien is not declared “frivolous,” the lien claimant gets attorneys fees.
There’s just one wild card: “Although all frivolous liens are invalid, not all invalid liens are frivolous.” Intermountain Elec., Inc. v. G-A-T Bros. Constr., Inc., 115 Wn. App. 384, 394 (2003).
So, what happens when a lien is declared invalid, but not frivolous? That’s exactly what happened in Athletic Field.
The Court in Athletic Field held that while the lien was invalid because of the erroneous attestation clause, it was not frivolous because construction of §60.04.091 presented a debatable issue of law. The result: Athletic Field, the lien claimant, lost its lien right but was awarded all of its attorneys fees in defending the action to declare the lien invalid.
So, the loser was awarded attorneys fees.
This decision largely means three things: