So, where has all of the mechanic lien posts gone?!

If you’re a reader of this blog but not my other blog – The Construction Lien Blog – you may be wondering.  But as you can gather from the blog’s title, a few years ago I created a separate blog focused on lien issues across the country, and post very regularly there on the topic.

As I exhaust the subject on that blog, and don’t to duplicate postings from there over here, most of my mechanic lien and bond claim talk is done on the Construction Lien Blog.  So, if you’re interest in lien laws (and if you are a construction participant or construction law person, lien laws are super important), I recommend you take a look at this other blog.

To give you a more direct path to relevant information, here are the articles posted on the construction lien laws in the states where Wolfe Law Group practices.

• Washington
• Oregon
• California (Yes, we now practice here. Announcement coming soon!)
• Louisiana
• Miller Act Claims
• State Bond / Little Miller Act Claims

Also, be sure to check out these other resources providing through the lien and notice preparation and management company I founded in 2007, Zlien:

• 50-State Lien Law Summaries
• 50-State Little Miller Acts Full-Text Compilations

Until the opinion was published last week, Washington lien law seemed pretty clear on two points:

1. 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
2. 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.

Basically, if you significantly violate certain laws as a contractor on a state or federal construction project (i.e. prevailing wage laws and workers’ compensation laws), you may be debarred and no longer allowed to work on a state or federal construction project. Pretty serious stuff.

Debarment may last until all penalties are paid in full or, if those laws are violated on numerous occasions, a contractor might be debarred for a period of years on top of monetary fines.

The report by the Washington State Department of Labor cited above provides folks with some concrete data on this issue so we can all better understand what most frequently causes debarment. The report includes the names of all Washington State contractors who are debarred, why they were debarred, how long they are debarred for, and whether or not their penalties have been paid.

Though this report only regards debarment by Washington State authorities for Washington State projects, each state has its own annually updated list you can refer to online, as does the federal government. All in all, they look a lot like the Washington list.

So, most importantly, how can public contractors avoid debarment? The answer here I can give you: focus on prevention.

First, be certain that you are not violating any prevailing wage laws, workers’ compensation laws, contractor registration laws, apprenticeship requirements, and/or industrial insurance laws. Read up on the laws yourself if possible (we have some information about state and federal contracting laws on this blog), or hire a lawyer to help you.  In the long run, the money you spend with an attorney to understand and accommodate these legalities will be worth it.

Second, check the relevant state or federal list of debarred contractors to make sure you’re not signing a contract with a debarred contractor or subcontractor.

Finally, keep meticulous records and be extra careful to make sure you are complying with these laws.

Doing whatever it takes to keep your contracting business alive and thriving is key here, so make sure to remain proactive.

House Bill 1531 (Adjusting the minimum wage rate based on changes in consumer pricing)
Introduced by Rep. Cary Condotta, (R-Wenatchee) (R) on January 25, 2011, requires the calculations for the adjusted minimum wage rate to include the actual change in consumer prices since September 1, 2000, based on the consumer price index for urban wage earners and clerical workers, or a successor index. This act requires the new calculations to begin September 30, 2011.
http://www.washingtonvotes.org/Legislation.aspx?ID=127384

House Bill 1532 (Creating a good faith defense for certain minimum wage and overtime compensation complaints)
Introduced by Rep. Cary Condotta, (R-Wenatchee) (R) on January 25, 2011, relieves liability for employers who violate minimum wage or overtime pay requirements when the act or omission occurs in good faith and in reliance on rules, rule interpretations by the Director of the Department of Labor and Industries, or administrative or interpretive opinions issues by the Department.
http://www.washingtonvotes.org/Legislation.aspx?ID=127385

House Bill 1535 (Providing requirements for business payment contracts)
Introduced by Rep. Cary Condotta, (R-Wenatchee) (R) on January 25, 2011, provides for specific requirements for business payment contracts. This act requires a separate signature line for a business representative to accept the terms of the contract on behalf of another and makes the business representative personally liable for the contract. This act applies to business payment contracts executed on or after July 1, 2012.
http://www.washingtonvotes.org/Legislation.aspx?ID=127388

House Bill 1559 (Limiting indemnification agreements involving design professionals)
Introduced by Rep. Kathy Haigh, (D-Shelton) (D) on January 25, 2011, modifies current law to limit indemnification agreements involving design professionals. This act allows for the indemnification of a public agency in a claim filed by a design professional only to the extent of any negligence, recklessness, or willful misconduct of the design professional. This act may not be waived or modified by contractual agreement, act, or omission of the parties.
http://www.washingtonvotes.org/Legislation.aspx?ID=127422

Senate Bill 5444 (Concerning the construction of a state boundary bridge)
Introduced by Sen. Steve Conway, (D-Tacoma) (D) on January 25, 2011, to make specific provisions for the construction of a state boundary bridge. This act requires specific conditions in any requests for proposals issued by the Department of Transportation for the bridge, including a requirement that the contractor use products, materials, and components manufactured in Washington or the adjoining state with which the project is designed. This act also provides other considerations for the contract, unless any would jeopardize federal funding. (Companion: HB 1383).
http://www.washingtonvotes.org/Legislation.aspx?ID=127329

Senate Bill 5485 (Maximizing the use of our state’s natural resources)
Introduced by Sen. Jim Hargrove, (D-Hoquiam) (D) on January 26, 2011, to adopt, by reference, the international green construction code to reduce greenhouse gas emissions and other environmental impacts at earlier stages in the building and construction design process. The state building code council is required to review the state building code and adopt changes as necessary to promote the greater use of wood and wood products.
http://www.washingtonvotes.org/Legislation.aspx?ID=127647

Senate Bill 5562 (Creating a task force on construction crane safety review)
Introduced by Sen. Jerome Delvin, (R-Richland) (R) on January 31, 2011, to create a task force on construction crane safety review to review the implementation of statutes concerning crane safety. Membership will consist of legislators, stakeholders from the construction crane industry, and a representative of the department of labor and industries. The task force expires December 31, 2011.
http://www.washingtonvotes.org/Legislation.aspx?ID=129265

House Bill 1761 (Limiting private activity bond issues by out-of-state issuers)
Senate Bill 5618 (Limiting private activity bond issues by out-of-state issuers)
Introduced by Rep. Hans Dunshee, (D-Snohomish) (D) on February 1, 2011, to allow lines of group disability insurance, except short-term or student-only plans, to be issued to more groups when certain conditions are met. (Companion: SB 5617).
http://www.washingtonvotes.org/Legislation.aspx?ID=129616

House Bill 1788 (Concerning the practice of registered interior design)
Introduced by Rep. Tami Green, (D-Lakewood) (D) on February 2, 2011, creates registration requirements and fees for those who practice interior design. This act includes design services rendered for new construction, alterations, or interior repairs on any nonstructural interior area of any occupancy not exceeding four thousand square feet. This act creates the state Board for Registered Interior Designers consisting of five members appointed by the Governor. This act requires the Board to adopt a national exam to test competencies in codes and practices in interior, nonstructural design work.
http://www.washingtonvotes.org/Legislation.aspx?ID=129800

House Bill 1806 (Concerning construction and industrial storm water general permits)
Introduced in the House on February 2, 2011, requires construction and industrial storm water general permits issued by the department to include an enforceable adaptive storm water mechanism using benchmarks and action levels as goals. This act sets out specific criteria for monitoring compliance under industrial storm water general permits. This act allows the department to modify or terminate the permit if the permit holder is not satisfying the controls in place with the original permit. This act also creates reporting and assessment requirements of the department regarding these permits. This act expires January 1, 2015.
http://www.washingtonvotes.org/Legislation.aspx?ID=129819

House Bill 1809 (Establishing a preference for resident contractors on public works)
Senate Bill 5662 (Establishing a preference for resident contractors on public works)
Introduced by Rep. Kevin Van De Wege, (D-Sequim) (D) on February 3, 2011, to require the state or a municipality to award a contract to the responsible bidder with the lowest responsive bid after a resident contractor preference of seven percent has been applied. (Companion: SB 5662).
http://www.washingtonvotes.org/Legislation.aspx?ID=130057

Senate Bill 5131 (Expanding the definition of public facilities eligible for impact fee credits)
Substitute offered in the Senate on February 3, 2011, to provide that a local government’s capital facilities plan, included in its comprehensive plan adopted under the growth management act, must include public streets, roads, and transit, bicycle, and pedestrian facilities.
http://www.washingtonvotes.org/Legislation.aspx?ID=123071

Senate Bill 5250 (Modifying the design-build procedure for transportation projects)
Substitute offered in the Senate on February 3, 2011, to provide that at the request of the transportation committees of the Legislature or the Office of Financial Management, the department of transportation must provide a written explanation as to why the design-build process was not used. The department must periodically evaluate the design-build process
http://www.washingtonvotes.org/Legislation.aspx?ID=124072

Senate Bill 5643 (Revising the definition of “well” in water well construction)
Introduced by Sen. Val Stevens, (R-Arlington) (R) on February 3, 2011, to revise the definition of “well” for purposes of water well construction to provide that “well” does not mean an excavation of less than six feet in depth, regardless of purpose or method of construction.
http://www.washingtonvotes.org/Legislation.aspx?ID=130028

House Bill 1853 (Regarding structural engineers)
Introduced by Rep. Mike Sells, (D-Everett) (D) on February 7, 2011, modifies current law to allow to allow an engineer to provide structural engineering services on certain structures without being registered as a structural engineer. This act excludes from the definition of significant structure non-occupied towers containing telecommunication and broadcast antennas, allowing non-registered structural engineers to provide services on such towers.
http://www.washingtonvotes.org/Legislation.aspx?ID=130677

In any event, I was interested in a post last week that reviewed the Supreme Court’s 2010 docket, breaking down the voting tendencies of the justices and more. If you’re interested in Washington jurisprudence and the tendency of the state’s high court, check out the post and the great information therein.

Today, Representative Moeller introduced a bill “addressing the notice requirements for claiming a mechanics’ or materialmen’s lien,” leapfrogging the Washington Supreme Court to legislatively address the impact of Athletic’s Field. House Bill 1475 can be viewed here. It’s schedule for public hearing in the House Committee on Labor & Workforce Development on January 28th.

Read the original text of the bill here.

The proposed changes are quite simple. When setting forth the statutory form for acknowledgment, the proposed bill would separately provide acknowledgment language for individuals and corporations.

The acknowledgment language that currently exists in the law should be used for “An acknowledgment for an individual claimant, an attorney of an individual claimant, or the administrator, representative, or agent of the trustees of an employee benefit plan…”

For a corporate claimant, the following acknowledgment language is provided in the bill:

_________, being sworn, says: I am the present (or vice president, secretary, treasurer, or other authorized officer or agent, as the case may be) of _________ that executed the claim of a lien, and I acknowledge this claim to be the free and voluntary act and deed of the corporation, for the uses and purposes therein mentioned; I am authorized to execute this claim and the seal affixed is the corporate seal of the corporation; I have read or heard the forgoing 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.

The law also provides that a party or entity that is not specifically identified in the statute with associated acknowledgment language “shall modify the pattern form to comply with the acknowledgment requirements pursuant to chapter 64.08 RCW”

If passed, the act would take effect on January 1, 2012. We’ll monitor and update you on the status of this act.

I completely overlooked a recent change in the Oregon law related to licensing joint ventures.   A change in ORS §701.021 puts Oregon in Washington’s camp insofar as joint ventures are concerned.  Like in Washington, so long as a single member of the joint venture is licensed, the JV entity will be considered licensed.

The change took effect on July 1, 2010.  Read the full text of ORS §701.021 here. Read a great article discussing details of the changed statute from Steward Sokol & Gray LLC here.

A case decided Division III of the Court of Appeals last year addresses a challenge to this act made by a contractor, and highlights just how difficult it is for folks to argue that the Model Disclosure Statement is not required on a qualifying project.

In this case, AWR Construction v. Labor & Industries, a contractor contracted to replace the roof of an apartment building. The owner of the apartment building – while not acting as a contractor on the project – was actually a registered contractor.

The Model Disclosure Statement must be provided whenever a contractor contracts with an owner. It is not required when a contractor is contracting with other contractors, suppliers, or the like.

AWR Construction’s argument here was that the property owner was a registered contractor, and thus, the disclosure requirement did not apply.

While this at first may sound like a clear position, there’s actually a decent justification behind the argument. The Model Disclosure Statement is required for the public’s interest, to disclose certain things to the public that is not known by them…but is known by contractors (i.e. that a lien can be filed against a project by subs, even after payment to the prime).

So, if the purpose of the statute is to disclose this type of information to the public, then why require this disclosure to a registered contractor?

Ordinarily, the disclosure need not be delivered to other contractors. The Court of Appeals found this was not the case, however, when the registered contractor was acting in the role of an owner, and not a contractor – as was the case here.

The disclosure requirement has nothing to do with the parties’ actual registration (or lack thereof), but everything to do with the role of the contractor’s customer. If the client is the owner of the property, the disclosure must be sent.

Therefore:   Send Model Disclosure Statement…or Else!

Related articles

• Model Disclosure Statement Required in Washington To Protect Lien Rights When Contracting With Owner (constructionlawmonitor.com)

You can take a look at the draft specifications on the city’s website.   The specifications are in a comment period until November 19, 2010, when it will close.  If you have a comment you can use the Comment Form on their website, or send an email to City_Standards_Engineer@Seattle.gov.

How is the proposed 2011 standards different from the current version?

The Ahlers & Cressman Construction Law Blog summarizes the changes as “following the trend of many public works owners…in transferring more risk to the contractor and away from the public works owner.”    Make your comments while there is still time, and we’ll see how it turns out.

The blog is published by Washington’s Department of Labor and Industries, through Carl Hammersburg, the department’s Fraud Prevention and Compliance manager.  The blog focuses on fraud prevention and compliance with L&I regulations.

It’s not shy about it’s goal.   The blog is called “Nailed,” and it’s sending a message to its regulated industries that it will be nailing those not in compliance.

While I generally like the blog and its content (and sometimes share it on my Twitter account), I was a bit upset by an October 25th post:   Tragedy reveals hidden cost of independent contractor label.

The post discusses a very hot topic:  the distinction between independent contractors and employees.   I’ll be the first to tell you that the independent contractor label is often abused, with companies – big and small – holding benefits from its employees by labeling them an “independent contractors.”    Just because you call someone an independent contractor, doesn’t make it so.

The blog post uses a recent tragedy to “reveal the hidden cost” of improperly using the independent contractor label.

According to the post, a Burien two truck driver lost his life in an accident, and his family contacted L&I requesting death benefits.   According to L&I:

That’s when we discovered his employer had not paid for the insurance that would entitle his family to death benefits.

The owner of the tow truck company claims the victim was an independent contractor, not an employee. Even though the man was insured by the company and drove company-owned trucks, the owner insists the man killed met the guidelines to qualify him as an independent contractor.

So, what will come next in the story?   Sounds to me like L&I is going to explain how they investigated the incident and discovered that the tow truck company violated regulations and misclassified the deceased man as an independent contractor.

But no, the post goes on to say this:   “We’re opening a review of this incident…to determine if these claims hold water…”

Wait!   They didn’t already investigate this?   From the setup of this blog post – after all, look at its title – it seems like the department had already made up its mind about this.   They haven’t even investigated the incident yet!?

To highlight that apparent bias that L&I will have entering the investigation, I commented on the blog post with the following:

Hi Carl – Let me start by saying I’m a big fan of the Nailed Blog, and the concept behind it. I am a reader and subscriber, and frequently refer to it on our blog: http://www.constructionlawmonitor.com.

As an attorney who represents clients in the construction industry, we confront this “independent contractor v. employee” issue a lot. There is certainly a problem with the label being used incorrectly. I find that folks don’t use it incorrectly on purpose…they just don’t understand the distinction. After all, the distinction can get quite technical.

All that aside, I’m commenting because I didn’t like this post. Let me explain.

In reading the first three paragraphs, I assumed that L&I had already opened an investigation and closed it: finding the towing company was in violation. But then I encountered the fourth paragraph: “We’re opening a review of this incident…”

Wow! If this were any other blog, I wouldn’t be caught off-guard by the commentary. But since Labor & Industries will be the government agency investigating this incident and the towing company’s conduct, I was surprised that the agency would be starting the investigation with such bias.

This is unfortunate. There are circumstances where the independent contractor label would be appropriate, and maybe this is one of those circumstances and maybe its not. But I think Nailed! went a little too far with this post, as it seems like L&I made up its mind upon hearing the sad story…and not the facts.

It’s unfortunate, but sometimes it seems like government agencies have an agenda of their own, and they plow through honest legal questions and determinations to advance their agenda.

I sympathize a great deal for the Burien man who lost his life, and for his family.    And if the tow truck company was improperly classifying employees to save money, they should be nailed.

But we don’t know that yet.   It’s too bad that the department with the first crack at making that determination seems to already have made up its mind.

Articles About Classifying Employees / Contractors:

• Criminal Penalties For Misclassifying Independent Contractors? (blogs.forbes.com)
• CT State Dept. of Labor Investigating WWE’s Use of Independent Contractors (klqwrestling.com)
• Employee or Independent Contractor: Watch Your Classifications (entrepreneur.com)