Bonding around mechanics liens can be an efficient way to close out a project when disputes arise, but case law and statutes created some ticklish questions about who needed to be included in any subsequent lawsuit. Now, the Washington Supreme Court has given us some clarity. In Inland Empire Dry Wall Supply Co. v. Western Surety Company, the Supreme Court held that the subcontractor could sue the surety of the release bond alone for recovery of unpaid amounts.
In this case, the subcontractor (Inland Empire) supplied drywall materials to Eastern Washington Drywall and Paint that were used at an apartment complex in Richland. EWD&P was a subcontractor of Fowler General Construction, who was the general contractor on the project. EWD&P failed to pay for the materials, Inland Empire filed a preclaim notice and then timely filed its mechanics lien under RCW 60.04.091. Before any lawsuit to foreclose the lien was filed, the general contractor Fowler obtained and recorded a lien release bond from defendant Western Surety Company for the full amount owed. Inland Empire ultimately sued Western Surety alone for the amount remaining unpaid (not Fowler, and surprisingly, not EWD&P who contractually owed the money).
Western Surety defended by claiming that the general contractor Fowler (who was identified as the “principal” on the bond) was a necessary party as it was the “owner” under RCW 60.04.141. Further, as that statute requires service of the summons and complaint upon the “owner” within 90 days, and Fowler hadn’t been served at all, Western Surety argued that the lien claim was barred by the statute of limitations. The trial court agreed with that argument and dismissed the case. A divided Court of Appeals reversed, and the Supreme Court took review. The Supreme Court once again reiterated that the mechanics lien statute is to be construed liberally to protect persons who fall within its provisions, and indeed took it a step further by stating the mechanics lien statute’s language must always be construed in favor of the claimant in if there is any question about the statute’s meaning. Applying those principles of construction (and a large dollop of common sense), a unanimous Supreme Court held that once a lien release bond is filed, the unpaid lien claimant has the right to proceed against the surety directly without joining the party who provided the bond.
