Estate of Haselwood v. Bremerton Ice Arena, Inc.
| Decision Date | 25 June 2009 |
| Docket Number | No. 80411-7.,80411-7. |
| Citation | 166 Wn.2d 489,210 P.3d 308 |
| Court | Washington Supreme Court |
| Parties | ESTATE OF Charles C. HASELWOOD and Joanne L. Haselwood, husband and wife, Petitioners, v. BREMERTON ICE ARENA, INC., a Washington corporation; Gregory S. Meakin and Deborah A. Meakin, husband and wife, Defendants, RV Associates, Inc., a Washington corporation, Respondent, City of Bremerton, Respondent Intervenor, Mallory Enterprises, Inc., d/b/a Abbey Carpets, a Washington corporation; Robison Mechanical, Inc., a Washington corporation; JPL Habitability, Inc., a Washington corporation; Consolidated Electrical Distributors, Inc., d/b/a Stusser Electric Co/Eagle Electric, a Washington corporation; Alaska Cascade Financial Services, Inc., assignee for Sound Glass Sales, Inc., a Washington corporation; Sullivan Heating & Cooling, Inc., a Washington corporation; Stirnco Steel Structures, Inc., a Washington corporation; Eagle Electric, Inc., a Washington corporation; Hanson Sign Company, Inc., a Washington corporation; and Stripe Rite, Inc., a Washington corporation, Defendants. |
David R. Riley, Weinstein & Riley, P.S., Seattle, WA, for Defendants — Bremerton Ice Arena, Inc. & Frontier Bank.
Charles M. Granoski Jr., Attorney at Law Betzendorfer & Granoski Tacoma, WA, for Defendants — Deborah Meakin, Gregory Meakin & Stirnco Steel Structures, Inc.
Kenneth L. Kambich, Gary Theodore Chrey, Shiers Law Firm, Port Orchard, WA, Kenneth Wendell Masters, Shelby R. Frost Lemmel, Wiggins & Masters PLLC, Bainbridge Island, WA, for Petitioners — Estate of Charles C. Haselwood & Joanne L. Haselwood.
David P. Horton, Law Office of David P. Horton Inc., PS, Silverdale, WA, for Respondent Intervenor — City of Bremerton.
William Henry Broughton, Broughton & Singleton Inc., PS, Silverdale, WA, for Respondent — RV Associates, Inc.
¶ 1 The question in this case centers on the mechanic's lien statute, chapter 60.04 RCW.1 We must determine whether a mechanic's lien can attach to improvements on property but not the real property itself, and if so, whether that lien has priority over a previously recorded deed of trust.
¶ 2 Joanne and Charles Haselwood (the Haselwoods)2 loaned Bremerton Ice Arena, Inc. (BIA) money to construct an ice arena on property owned by the City of Bremerton (City). A promissory note was executed between the Haselwoods and BIA, which was secured by a deed of trust. BIA defaulted on the promissory note, and the Haselwoods brought an action to foreclosure the deed of trust against BIA, RV Associates, Inc. (RV) and 11 other creditors. They also sought a declaration that their deed of trust was prior to all other liens on the property. RV asserted by counterclaim that its mechanic's lien against BIA for failure to pay was superior to all other liens on the property because RV delivered equipment to the property before the Haselwoods recorded their deed of trust. The trial court held the Haselwoods' deed of trust was superior to RV's lien under chapter 60.04 RCW. The Court of Appeals reversed in part, holding RV's lien attached only to the improvements and was superior to Haselwoods' deed of trust, affirmed in part, and remanded for further proceedings. We affirm the Court of Appeals.
¶ 3 The United States Secretary of the Interior deeded 17.6 acres of land to the City in 1971 for use as a public park and recreation center. The conveyance prohibited the City from leasing the land except to another government agency, but allowed the City to provide recreational facilities and services by entering into private concession agreements, subject to approval by the Secretary of the Interior.
¶ 4 On August 9, 2002 the City and BIA entered into a concession agreement, which granted BIA a ground and use concession to develop, construct, and operate an ice arena on city property. The concession agreement provided in pertinent part: (1) the City retains ownership of the land; (2) BIA cannot encumber the land; (3) BIA will build and operate an ice arena on the land (Arena); (4) BIA will own the Arena for 10 years, with four successive 10-year renewal options; (5) BIA will own improvements developed and constructed on the land subject to any security interest of a lender during the agreement; and (6) ownership of the Arena and all improvements will revert to the City when the agreement terminates.
¶ 5 The Haselwoods agreed to loan BIA funds to construct the Arena. In exchange for an initial loan of $3,775,000 at 10 percent interest, BIA executed and delivered a promissory note to the Haselwoods on September 5, 2002, secured by a commercial security agreement and a deed of trust. The deed of trust purported to secure the loans by (1) the real property at the Arena location; (2) the concession agreement; and (3) all buildings, improvements, and tenements located on the real property. The Haselwoods recorded the deed of trust on September 13, 2002.
¶ 6 BIA hired the Wootan Group as construction manager and general contractor for the Arena construction. RV submitted a $441,716 bid to the Wootan Group to clear, grade, and backfill the site; install drainage, sewer, and water lines; and install a storm water system. The Wootan Group awarded the contract to RV on August 17, 2002, providing RV commenced work by September 9, 2002. RV first delivered equipment to the site on September 6, 2002. RV and BIA executed their contract on September 20, 2002.
¶ 7 RV performed "clearing, grubbing, mass excavation, installation of sewer lines, water lines, storm systems, sidewalks, asphalt paving, striping and curb and gutter." Clerk's Papers (CP) at 199. After RV commenced working, the Wootan Group made several changes to the plans and specifications, which RV claimed increased the cost of its work. RV claimed BIA failed to pay $101,905.30 required by its contract and recorded a statutory mechanic's lien against BIA and the Arena in July 2003.
¶ 8 After BIA defaulted on its promissory note to the Haselwoods in August 2003, the Haselwoods filed a complaint for foreclosure in Kitsap County Superior Court against BIA, RV, and 11 other creditors with interest in the Arena. The Haselwoods sought a declaration their security interest was prior to all other liens on the property, and a decree of foreclosure authorizing sale of the property.
¶ 9 RV filed an answer, counterclaim, and cross claim, asserting it had a mechanic's lien on the real property underlying the Arena, and its lien was superior to all other liens, including the Haselwoods' security interests. RV claimed priority of liens under RCW 60.04.061, asserting it delivered equipment to the site on September 6, 2002, one week before the Haselwoods recorded their deed of trust. RV sought $101,905.30 plus 18 percent interest, costs, and attorney fees from BIA; a declaration its mechanic's lien was superior to all other claims on the property; and foreclosure.
¶ 10 In May 2004 RV moved for summary judgment against BIA, declaring its lien to be superior to all other liens and claims on the property. In response to RV's motion, the Haselwoods argued (1) the real property underlying the Arena is not lienable because it is public property, (2) RV's lien claim is void, and (3) even if RV had a valid lien on improvements, its priority cannot be determined based on RV's claim.
¶ 11 Before the trial court issued its order regarding RV's motion for summary judgment, RV moved for an order allowing it to remove its improvements pursuant to RCW 60.04.051. The Haselwoods opposed the motion, arguing RV had no authority to remove the improvements, RV had not established the amount of money owed to it by BIA, and RV had not established priority of lien over the Haselwoods' deed of trust. The City also opposed RV's motion to remove the improvements and filed a motion to intervene. The trial court granted the City's motion to intervene. The trial court found there were multiple contested factual issues and ordered a fact finding hearing to resolve the removal issue.
¶ 12 Prior to the hearing on whether RV could remove its improvements, the court denied in part and granted in part RV's motion for summary judgment against BIA in September 2004. The trial court ruled that RV's lien did not attach to the real property underlying the Arena, the corporate entity BIA, or the concession agreement. The court also found RV's lien "may attach to certain improvements to the facility commonly known as the Bremerton Ice Arena," but reserved ruling on that issue. CP at 609-10.
¶ 13 In January 2005 the Haselwoods moved for summary judgment against RV on the removal issue, arguing its lien was first and paramount. The trial court granted the Haselwoods' motion. It ruled that the remedy of removal is available only to a lien claimant who has priority, but RV's lien is "junior, inferior and subordinate" to the Haselwoods' deed of trust. CP at 773.
¶ 14 In August 2005 RV sought to file an amended answer, a counterclaim, and cross claims against the Haselwoods and the City. Both the Haselwoods and the City opposed the motion, arguing an amendment would be prejudicial. The trial court denied RV's motion to amend, finding that good cause did not exist.
¶ 15 In September 2005 the trial court entered a final judgment and decree of foreclosure in favor of the Haselwoods. RV filed a motion for discretionary review, which the Court of Appeals, Division Two, granted. Haselwood v. Bremerton Ice Arena, Inc., 137 Wash.App. 872, 155 P.3d 952 (2007).
¶ 16 The Court of Appeals affirmed in part, reversed in part, and remanded for further proceedings. Id. Specifically, the Court of Appeals held (1) under RCW 60.04.051, RV's lien could attach only to the improvements, not to the real property underlying the Arena; (2) RCW 60.04.061 applied to RV's lien on the improvements, making it superior to the Haselwoods' deed of trust because it relates back to the date RV...
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