Cosmopolitan Eng. Group v. Ondeo Degremont

• Decision Date: 28 December 2006
• Docket Number: No. 77661-0.,77661-0.
• Parties: COSMOPOLITAN ENGINEERING GROUP, INC. Respondent, v. ONDEO DEGREMONT, INC., a Virginia corporation, Petitioner, National Fire Insurance Company/Hartford, a foreign corporation, Defendant.
• Court: Washington Supreme Court

149 P.3d 666

159 Wn.2d 292

COSMOPOLITAN ENGINEERING GROUP, INC. Respondent, v. ONDEO DEGREMONT, INC., a Virginia corporation, Petitioner National Fire Insurance Company/Hartford, a foreign corporation, Defendant.

No. 77661-0.

Supreme Court of Washington, En Banc.

Argued May 25, 2006.

Decided December 28, 2006.

Alan R. Merkle, Margarita V. Latsinova, Christina L. Haring, Stoel Rives LLP, Seattle, WA, for Petitioner.

Sandra Jean Rovai, Bradley Alan Maxa, Gordon Thomas Honeywell, Tacoma, WA, for Respondent.

Timothy M. Harris, Building Industry Association of Wash. State, Olympia, WA, Amicus Curiae on behalf of Building Industry Association of Washington.

BRIDGE, J.

¶ 1 The registration of contractors act, chapter 18.27 RCW, requires contractors in Washington to register and to file a surety bond with the Department of Labor and Industries (Department). RCW 18.27.040 provides a mechanism for consumers, subcontractors, and other injured parties to recover against the bond. In 2001, the legislature amended the statute in part by adding a provision to RCW 18.27.040 allowing a prevailing party to recover attorney fees in an action for breach of contract filed under that section. Laws of 2001, ch. 159, § 3(6). We conclude the amended statute authorizes a prevailing plaintiff to recover attorney fees for an action against the bond, but it does not provide a mechanism to recover attorney fees for an action against the contractor. Accordingly, we reverse the Court of Appeals.

I Statement of Facts and Procedural History

¶ 2 Miller Brewing Company hired Ondeo Degremont, Inc., to design an onsite wastewater treatment facility and to explore the development of a water reuse option for its brewery in Tumwater, Washington. Ondeo subcontracted with Cosmopolitan Engineering Group, Inc. for engineering services. Cosmopolitan did some additional work directly for Miller with regard to the reuse option. Miller eventually cancelled its wastewater and water reuse plans and announced its intention to sell its Tumwater brewery.

¶ 3 Cosmopolitan was not paid for all of its services. It filed a complaint against Miller and Ondeo, seeking to recover the unpaid fees by asserting breach of contract, promissory estoppel, and unjust enrichment claims against both Miller and Ondeo. Cosmopolitan also sought recovery from National Fire Insurance Company to the extent of Ondeo's surety bond. In addition, Cosmopolitan filed a lien against Miller's property pursuant to chapter 60.04 RCW and sought foreclosure on the lien. Miller and Ondeo successfully moved to dismiss the lien claim on summary judgment. The court also dismissed the breach of contract and equitable claims against Miller.

¶ 4 The court allowed the breach of contract and equitable claims against Ondeo and its bond to proceed, and those issues were tried in front of a jury. Neither party requested special verdict forms. The jury returned a verdict in favor of Cosmopolitan in the amount of $100,420.19, but the general verdict form did not indicate which theory (breach of contract, promissory estoppel, or unjust enrichment) prevailed. Ondeo has since satisfied the judgment on the jury verdict.

¶ 5 Ondeo and Miller moved for attorney fees for the dismissal of the lien claim pursuant to the attorney fee provision in the mechanic's lien statute, RCW 60.04.081(2). Cosmopolitan moved for attorney fees as the prevailing party against Ondeo and its surety bond pursuant to the attorney fee provision in RCW 18.27.040(6), which reads:

The prevailing party in an action filed under this section against the contractor and contractor's bond or deposit, for breach of contract by a party to a construction contract, is entitled to costs, interest, and reasonable attorneys' fees. The surety upon the bond is not liable in an aggregate amount in excess of the amount named in the bond nor for any monetary penalty assessed pursuant to this chapter for an infraction.

(Emphasis added.) The trial court awarded fees to Ondeo in the amount of $2,570 and Miller in the amount of $10,000. The court denied Cosmopolitan's motion for attorney fees against Ondeo but entered a judgment in the amount of $3,000 against the bond.¹

¶ 6 Cosmopolitan appealed raising several issues, including a challenge to the trial court's conclusion that attorney fees authorized under RCW 18.27.040(6) are limited to recovery against the contractor's surety bond. The Court of Appeals decided the case in a partially published opinion. Cosmopolitan Eng'g Group, Inc. v. Ondeo Degremont, Inc., 128 Wash.App. 885, 117 P.3d 1147 (2005). In the published portion, the Court of Appeals held, "as a matter of law a prevailing party under this provision is entitled to attorney fees against both the opposing contractor and its bond." Id. at 892, 117 P.3d 1147 (emphasis added). The court explained that given the plain language of RCW 18.27.040(6), the express purpose of the registration statute, and case law describing the statute as comprehensive, "`[t]he Legislature would not have been providing meaningful relief if it limited such an award to only the amount of the contractor's bond.'" Id. (quoting Br. of Appellant at 15).

¶ 7 Ondeo filed a petition for review in this court. We granted review (156 Wash.2d 1024 (2006)) to determine if the recovery of attorney fees pursuant to RCW 18.27.040(6) is limited to actions against the contractor's bond or whether the statute also authorizes the recovery of attorney fees in actions against the contractor.

II Analysis

¶ 8 The general rule in Washington, commonly referred to as the American rule, is that each party in a civil action will pay its own attorney fees and costs. See In re Impoundment of Chevrolet Truck, 148 Wash.2d 145, 160, 60 P.3d 53 (2002); Mellor v. Chamberlin, 100 Wash.2d 643, 649, 673 P.2d 610 (1983). This general rule can be modified by contract, statute, or a recognized ground in equity. Chevrolet Truck, 148 Wash.2d at 160, 60 P.3d 53; Mellor, 100 Wash.2d at 649, 673 P.2d 610. Cosmopolitan claims RCW 18.27.040(6) alters the American rule by allowing recovery of attorney fees in actions against contractors as well as in actions against their bonds.

¶ 9 Chapter 18.27 RCW is the contractor's registration statute. Its purpose is:

to afford protection to the public including all persons, firms, and corporations furnishing labor, materials, or equipment to a contractor from unreliable, fraudulent, financially irresponsible, or incompetent contractors.

RCW 18.27.140. Substantively, the registration statute requires every contractor in Washington to register with the Department. RCW 18.27.020(1); RCW 18.27.010(2). The statute makes it a misdemeanor to do work as a contractor without being registered. RCW 18.27.020(2)(a).

¶ 10 RCW 18.27.040, the section of the statute at issue here, is entitled "Bond or other security required—Actions against—Suspension of registration upon impairment." It requires applicant contractors to file with the Department a surety bond issued by an acceptable surety insurer in the amount of $12,000 for general contractors and $6,000 for specialty contractors. RCW 18.27.040(1). The bond must be conditioned that the applicant will pay all persons performing labor, including employee benefits, all taxes and other contributions due to the State, all persons furnishing materials or equipment, and all amounts "adjudged against the contractor by reason of breach of contract including negligent or improper work in the conduct of the contracting business." RCW 18.27.040(1). RCW 18.27.040(3) allows parties having a claim to bring suit against the bond. The statute recites filing requirements, statutes of limitations, and service requirements specifically for suits against the bond. RCW 18.27.040(3).

¶ 11 RCW 18.27.040(4) provides that the surety upon the bond shall not be liable in an aggregate amount in excess of the amount named in the bond and sets forth the priority of payment when the claims against the bond exceed the bond amount. RCW 18.27.040(5) establishes bond amounts that must be reserved for residential homeowners. The remaining sections of RCW 18.27.040 allow the Department to suspend registration of a contractor where the bond no longer meets the required amount and to increase the amount of the bond required for contractors with several previous judgments against them. RCW 18.27.040(7)-(10). It is in the midst of these subsections regarding the bond that the legislature included the attorney fee provision at issue here. RCW 18.27.040(6).

¶ 12 The Court of Appeals held that given the plain language of RCW 18.27.040(6), the express purpose of the contractor's registration statute, and case law describing the statute as comprehensive, a prevailing party under this provision is entitled to attorney fees against both the opposing contractor and its bond. Cosmopolitan, 128 Wash.App. at 892, 117 P.3d 1147. Ondeo argues that the Court of Appeals is incorrect and, instead, we should interpret RCW 18.27.040(6) to allow recovery of attorney fees only against the contractor's bond.

¶ 13 Statutory interpretation is a question of law, subject to de novo review. E.g., City of Olympia v. Drebick, 156 Wash.2d 289, 295, 126 P.3d 802 (2006), cert. denied, ___ U.S. ___, 127 S.Ct. 436, ___ L.Ed.2d ___ (2006). Our purpose when interpreting a statute is to "`discern and implement the intent of the legislature.'" Id. at 295, 126 P.3d 802 (quoting State v. J.P., 149 Wash.2d 444, 450, 69 P.3d 318 (2003)). Where the meaning of statutory language is plain on its face, we must give effect to that plain meaning as an expression of legislative intent. Id. In discerning the plain meaning of a provision, we consider the entire statute in which the provision is found as well as related statutes or other provisions in the same act that disclose legislative intent. Id.; Advanced Silicon Materials, L.L.C. v. Grant County, 156 Wash.2d 84, 89-90, 124 P.3d 294 (2005); Ellerman v....