Who Should A Contractor Sue When A Bond In Lieu of Claim Is Recorded Before The Contractor Files Its Lawsuit?

In CalPortland Co. v. LevelOne Concrete LLC, 321 P.3d 1261 (Wn. App. Div. 2, March 2014), a concrete supplier to a commercial building project was not paid for concrete it delivered to a subcontractor on the job.  When this happens, Washington law gives the unpaid contractor (1) 90 days from the date it last provided services or materials for the project to record its “claim of lien,” (2) 8 months from the date the claim of lien is recorded to file a lawsuit to foreclose that lien, and (3) 90 days from the date that lawsuit is filed to serve the summons and complaint on the “owner of the subject property.”  RCW 60.04.091, .141.  In CalPortland, after the concrete supplier recorded its claim of lien but before it filed its lawsuit the general contractor recorded a “bond in lieu of claim.”  By recording the bond, the general contractor effectively replaced the land identified in the claim of lien with the bond as the property subject to the concrete supplier’s lien.  The concrete supplier filed its lawsuit within the eight month window, then served the general contractor–not the landowner–with the summons and complaint.  Ninety days passed from the date the lawsuit was filed and the concrete supplier still had not served the landowner.  The general contractor argued the concrete supplier’s claims should be dismissed because the concrete supplier did not serve the landowner within the 90 day service window.  The trial court agreed and dismissed the concrete supplier’s claims.  But the court of appeals reversed the trial court.  By posting the bond and naming itself as principal under the bond, the general contractor became the “owner of the subject property” that was subject to the lien and it was appropriate for the concrete supplier to serve the general contractor.  The takeaway: If you’re an unpaid contractor and a bond in lieu of claim is recorded before you file your lawsuit, to be safe you should name both the landowner and the principal/surety under the bond as defendants and serve both.  At the very least, sue and serve the principal and surety under the bond.


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