Bizarre Lien Foreclosure Case May Have Far-Reaching Effects in WashingtonOn May 31, 2011 By Scott Wolfe Jr
A bizarre case from the Washington Division I Court of Appeals in Diversified Wood Recycling, Inc. v. Harold Johnson, et al. may have far-reaching consequences for claimants, property owners and construction attorneys foreclosing mechanic liens.
Until the opinion was published last week, Washington lien law seemed pretty clear on two points:
- When you file a lien, you can name the owner or reputed owner; but when you foreclose the lien, the foreclosure must be against the actual owner; and
- The owner must be named a party in the foreclosure action.
Division I in Diversified Recycling finds to the contrary on both points, creating a previously non-existing tension between §60.04.141 and §60.04.171.
The decision is discussed in substantial detail on my other blog that focuses on mechanic lien laws, the Construction Lien Blog (published by Zlien). Read the post here: Foreclosing A Mechanic’s Lien in Washington Just Got More Confusing.
A lot of the Diversified Case has very limited applicability, as it arises out of a bizarre fact pattern. The trial judge even commented on how the situation would create a “hard to believe” bar exam question. And because of the unique facts, it feels the trial and appeal court went out of their way to serve the ends of justice rather than allow injustice based on technicalities.
However, it will be very interesting to see what happens with this decision, and whether its appealed to the Washington Supreme Court. While Division I does not comment in their opinion about the liberal construction it affords the lien statutes, they certainly construed §60.04.141 and §60.04.171 liberally, in line with the approach in N. Coast Elect. Co. v. Ariz. Elec. Serv. (Wash. Division I. 8/23/2010) where they stated:
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….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.”
As any student of Washington construction law (and construction lien law) knows, there is a lien law battle being waged in the Washington Supreme Court over whether strict or liberal construction of these statutes should prevail in the controversial Williams v. Athletics’s Field matter.
I’m sure there is more to come on all of this soon.