Arctic Stone, Ltd. v. Dadvar

• Decision Date: 31 May 2005
• Docket Number: No. 54455-1-I.,54455-1-I.
• Citation: 127 Wash. App. 789,112 P.3d 582
• Parties: ARCTIC STONE, LTD., Appellant, v. Anthony DADVAR and Jane Doe Dadvar, husband and wife, and the marital community thereof, Respondents.
• Court: Washington Court of Appeals

112 P.3d 582

127 Wash. App. 789

ARCTIC STONE, LTD., Appellant, v. Anthony DADVAR and Jane Doe Dadvar, husband and wife, and the marital community thereof, Respondents.

No. 54455-1-I.

Court of Appeals of Washington, Division 1.

May 31, 2005.

John R. Guardi, Attorney at Law, Blaine, WA, for Appellant.

James Robert Hawes, Attorney at Law, Everett, WA, for Respondent.

AGID, J.

¶ 1 Anthony Dadvar hired Arctic Stone, Ltd., to provide cut granite and limestone for a home construction project. Arctic Stone sued Dadvar for breach of contract and unjust enrichment after Dadvar refused to pay the remaining balance owed. Dadvar moved for summary judgment, arguing that Arctic Stone could not sue him because it was not registered as required by Washington's Contractor Registration Act (CRA), RCW 18.27. The trial court granted Dadvar's motion, and Arctic Stone appealed.

¶ 2 Arctic Stone argues that genuine issues of material fact remain about whether it qualified for two of the CRA's exemptions, and that even if it was not exempt, it substantially complied with the CRA. Because it did not rebut Dadvar's showing that the stone was fabricated into and became a permanent part of the structure, Arctic Stone is not exempt under RCW 18.27.090(5). But it did show that a registered contractor installed at least some of the stone. RCW 18.27.090(8) exempts contractors who only furnish materials, so we conclude Arctic Stone is exempt from the registration requirement for all the stone it furnished and the registered contractor installed. Finally, Arctic Stone did not substantially comply with the CRA because, as the contractor seeking recovery, it must have been covered by both a surety bond and liability insurance. We affirm in part and reverse in part, and remand for a determination of how much of the stone Arctic Stone furnished and the registered contractor installed.

FACTS

¶ 3 In October 2002, Anthony Dadvar hired Arctic Stone, Ltd., to provide cut granite and limestone for various components of a Kirkland home Dadvar was building. Arctic Stone is located in Richmond, British Columbia, and is not registered as a contractor in Washington. The contract provided in part

This contract is to confirm Anthony Dadvar has contracted Arctic Stone Ltd to fabricate granite countertops, vanity tops and fireplaces for 10433 N.E. 43rd Avenue, Kirkland, WA.

The contract total amount is $53[,]466.33 in CAD (GST Exempt). This price includes all materials, labour, transport, taxes and installation. Arctic Stone will add and/or deduct the final measurements and will be reflected upon the final invoice.

¶ 4 Arctic Stone hired a registered contractor to install the stone, but the parties dispute how much installation that contractor actually did. There were problems with the stone work throughout late 2002 and early 2003. Dadvar made one payment and then refused to pay the balance of over $40,000, alleging that the work was defective. In August 2003, Arctic Stone filed a complaint against Dadvar for breach of contract and unjust enrichment. Dadvar moved for summary judgment, arguing that Washington's CRA, RCW 18.27.005-.900, prohibited Arctic Stone from suing him because Arctic Stone was not a registered contractor. Arctic Stone made the same arguments it raises on appeal, but the Superior Court rejected them and granted Dadvar's motion for summary judgment.

DISCUSSION

¶ 5 We review summary judgments de novo, making the same inquiry as the trial court.¹ Summary judgment is proper only when there is no genuine issue about any material fact, and the moving party is entitled to a judgment as a matter of law.² We consider all facts and reasonable inferences in the light most favorable to the nonmoving party.³ But the nonmoving party

may not rely on speculation, argumentative assertions that unresolved factual issues remain, or in having its affidavits considered at face value; for after the moving party submits adequate affidavits, the nonmoving party must set forth specific facts that sufficiently rebut the moving party's contentions and disclose that a genuine issue as to a material fact exists.[⁴]

Questions of fact may be determined as a matter of law when reasonable minds can reach only one conclusion.⁵

¶ 6 The CRA requires contractors to register with the Department of Labor and Industries.⁶ As an incentive to register, the CRA mandates that

[n]o person engaged in the business or acting in the capacity of a contractor may bring or maintain any action in any court of this state for the collection of compensation for the performance of any work or for breach of any contract for which registration is required under this chapter without alleging and proving that he was a duly registered contractor and held a current and valid certificate of registration at the time he contracted for the performance of such work or entered into such contract....[⁷]

The parties agree that Arctic Stone was not registered under the CRA. However, the CRA provides exemptions which excuse registration under certain circumstances, and Arctic Stone argues that it falls under two of these exemptions.

I. RCW 18.27.090(5)

¶ 7 Under RCW 18.27.090(5), registration is not required for the "sale or installation of any finished products, materials or articles of merchandise that are not actually fabricated into and do not become a permanent fixed part of a structure[.]" Whether or not a contractor is exempt under RCW 18.27.090(5) is a question of fact.⁸ Arctic Stone argues that the trial court erred in granting summary judgment because there is a genuine issue of material fact about whether the cut stone was "fabricated into" and became a "permanent fixed part" of Dadvar's home.

¶ 8 There is no easy formula for determining whether something has or has not become "fabricated into" and a "permanent fixed part of a structure."⁹ Factors include whether removal of the material would prevent its reuse or cause substantial damage to the structure,¹⁰ whether the material is more of a decoration than an improvement,¹¹ and the parties intent.¹² Materials and products that courts have found were not "fabricated into" and made permanent parts of structures include cold storage machinery that only needed to be bolted to the structure and plugged in,¹³ synthetic turf gym flooring that could be removed without damaging the underlying concrete,¹⁴ readily removable carpet,¹⁵ and window and door shutter frames.¹⁶ ¶ 9 Here, Dadvar's affidavit included descriptions of the stone material, the labor-intensive manner in which it was installed (and in some cases, removed), and its purpose and use in the home. Cut pieces of granite and limestone were used for numerous purposes, including kitchen, bathroom, and bar countertops, four fireplaces, bathtub and Jacuzzi surroundings, stairs, and tubs and showers in four bathrooms. He stated that the stone became a permanent fixed part of the structure "to the same extent that wood, drywall, tile, brick or mortar is fully incorporated into the construction of a residence by any contractor, . . . [and] its removal would necessarily entail destruction or substantial damage to the material and the underlying structure." He testified that once installed, the stone could only be removed by breaking it apart with a crowbar, chisel, and hammer, and that sometimes the underlying wooden framework also broke during the removal process.¹⁷ He demonstrated that the stone was not easily removed, that removal caused damage to both the stone and the underlying framework, and that the parties intended that the stonework be permanent and not merely decorative.

¶ 10 Arctic Stone did not rebut Dadvar's factual assertions with factual assertions of its own. It simply stated that whether the stone was "fabricated into" and became a "permanent part of the structure" is a factual determination. That is not sufficient to create a genuine issue of material fact. While we view the facts in the light most favorable to Arctic Stone, it did not come forward with any facts to view in its favor. There is no genuine issue of material fact about whether the stone was "fabricated into" and became a "permanent fixed part" of Dadvar's home. The trial court properly granted Dadvar's motion for summary judgment under RCW 18.27.090(5).

II. RCW 18.27.090(8)

¶ 11 RCW 18.27.090(8) exempts from registration "[a]ny person who only furnished materials, supplies, or equipment without fabricating them into, or consuming them in the performance of, the work of the contractor[.]" Arctic Stone argues that the trial court improperly granted Dadvar's motion for summary judgment because there is a factual issue about who actually installed the stone. It contends that because it hired a registered contractor to install the stone, it only furnished the materials and therefore qualifies under the statutory exception. Dadvar argues that Arctic Stone does not qualify for the exemption because it contracted to install the stone. He also contends it is undisputed that Arctic employees did at least some of the installation work.

¶ 12 In Harbor Millwork, Inc. v. Achttien, the unregistered millwork company contracted to furnish millwork and cabinets for a new home.¹⁸ The homeowner and a carpenter installed most of the items, but Harbor Millwork installed some of the cabinets. We held that RCW 18.27.090(8) exempted the company from the registration requirement for all items installed by the homeowner and carpenter, and remanded for a determination of whether the items installed by the millwork company were fabricated into and became a permanent part of the house.¹⁹ We held that RCW 18.27.090 allowed the contractor to recover for exempt items even if other items under the contract were not exempt.²⁰

¶ 13 In Pope Talbot, Inc. v. Productization Inc., the parties entered into a contract under which Productization was to "construct" a wood waste fuel refinery.²¹ A dispute arose after Productization had...