Keller Supply Co., Inc. v. Lydig Const. Co., Inc.

• Decision Date: 23 April 1990
• Docket Number: No. 23107-3-I
• Citation: Keller Supply Co., Inc. v. Lydig Const. Co., Inc., 789 P.2d 788, 57 Wn.App. 594 (Wash. App. 1990)
• Parties: , 59 Ed. Law Rep. 905 KELLER SUPPLY COMPANY, INC., a Washington corporation, Respondent, v. LYDIG CONSTRUCTION COMPANY, INC., a Washington corporation; Appellant, Warrior Mechanical, Inc., a Washington corporation; the State of Washington; Board of Regents of the University of Washington; Defendants, Federal Insurance Company, a foreign corporation, Appellant.
• Court: Washington Court of Appeals

Page 594

57 Wn.App. 594

789 P.2d 788, 59 Ed. Law Rep. 905

KELLER SUPPLY COMPANY, INC., a Washington corporation, Respondent, v. LYDIG CONSTRUCTION COMPANY, INC., a Washington corporation; Appellant Warrior Mechanical, Inc., a Washington corporation; the State of Washington; Board of Regents of the University of Washington; Defendants Federal Insurance Company, a foreign corporation, Appellant.

No. 23107-3-I.

Court of Appeals of Washington Division 1.

April 23, 1990.

Lynden O. Rasmussen, Carl E. Hueber, Winston & Cashatt, Spokane, for Lydig Const. and Federal Ins. Co.

David R. Riley, Weinstein, Hacker & Mathews, Inc., Seattle, for Keller Supply Co., Inc.

GROSSE, Acting Chief Judge.

Lydig Construction, Inc. (Lydig) and Federal Insurance Company (Federal) appeal a summary judgment granted in favor of Keller Supply Company, Inc. (Keller). The question presented is whether Keller substantially complied with the preclaim notice requirements of RCW 39.08 (the Bond Act) and RCW 60.28 (the Retainage Act). We affirm.

In May of 1986, Lydig, as the project general contractor, and Warrior Mechanical, Inc. (Warrior), as the mechanical subcontractor, commenced work on the University of Washington Husky Stadium Expansion Project. As required by law, Lydig posted a performance bond, provided by Federal, and the University retained a percentage of the total contract to satisfy unpaid claims of materialmen. Keller provided plumbing materials to Warrior for the project. During the project, Warrior became insolvent and was unable to pay Keller. Subcontractors, including Keller, filed claims against Lydig's bond and against the retainage. Lydig refused to pay Keller's claim stating Keller failed to comply with the preclaim notice requirements of either the Bond Act or the Retainage Act.

On February 20, 1987, Keller notified the University of Washington it was supplying plumbing materials to Warrior. Keller sent by certified mail a copy of this written notice to Lydig and Warrior. The last paragraph of the notice stated:

We are required by law to furnish this notice to the owners of all property to which we deliver materials and supplies, so they may have notice that in the event of non-payment of our account, a materialman's lien may be claimed by us. This notice is not in itself a claim of lien, nor does it imply in any way that a lien may be necessary. It is sent only because we are required by statute to do so.

The notice did not specifically state that Keller would look to Lydig's bond or the retainage for any claim in case of nonpayment, and the notice was addressed only to the University of Washington, not Lydig.

The two statutes at issue here are RCW 39.08 and RCW 60.28. These statutes provide as follows:

Notice to contractor condition to suit on bond when supplies are furnished to subcontractor. Every person, firm or corporation furnishing materials, supplies or provisions to be used in the construction, performance, carrying on, prosecution or doing of any work for the state, or any county, city, town, district, municipality or other public body, shall, not later than ten days after the date of the first delivery of such materials, supplies or provisions to any subcontractor or agent of any person, firm or corporation having a subcontract for the construction, performance, carrying on, prosecution or doing of such work, deliver or mail to the contractor a notice in writing stating in substance and effect that such person, firm or corporation has commenced to deliver materials, supplies or provisions for use thereon, with the name of the subcontractor or agent ordering or to whom the same is furnished and that such contractor and his bond will be held for the payment of the same, and no suit or action shall be maintained in any court against the contractor or his bond to recover for such material, supplies or provisions or any part thereof unless the provisions of this section have been complied with.

(Emphasis added.) RCW 39.08.065.

Recovery from retained percentage--Written notice to contractor of materials furnished. Every person, firm, or corporation furnishing materials, supplies, or equipment to be used in the construction, performance, carrying on, prosecution, or doing of any work for the state, or any county, city, town, district, municipality, or other public body, shall give to the contractor of the work a notice in writing, which notice shall cover the material, supplies, or equipment furnished or leased during the sixty days preceding the giving of such notice as well as all subsequent materials, supplies, or equipment furnished or leased, stating in substance and effect that such person, firm, or corporation is and/or has furnished materials and supplies, or equipment for use thereon, with the name of the subcontractor ordering the same, and that a lien against the retained percentage may be claimed for all materials and supplies, or equipment furnished by such person, firm, or corporation for use thereon, which notice shall be given by (1) mailing the same by registered or certified mail in an envelope addressed to the contractor, or (2) by serving the same personally upon the contractor or the contractor's representative and obtaining evidence of such service in the form of a receipt or other acknowledgement signed by the contractor or the contractor's representative, and no suit or action shall be maintained in any court against the retained percentage to recover for such material, supplies, or equipment or any part thereof unless the provisions of this section have been complied with.

(Emphasis added.) RCW 60.28.015.

The preclaim notice requirements of RCW 60.28.015 and RCW 39.08.065 are almost identical. Under both statutes, Keller must (1) notify the contractor "in substance and effect" that he is (2) providing materials to the project, (3) upon the request of a specified subcontractor. Further, pursuant to each statute, Keller must notify the contractor "in substance and effect" that a lien against either the bond or the retained percentage may be claimed. Neither the bond nor the retainage were specifically identified in the notice Keller sent to Lydig. Both statutes preclude action against the bond or retained percentage if the claimant does not comply with their provisions.

Lydig argues that these statutes should be strictly construed because liens are in derogation to common law, citing International Commercial Collectors, Inc. v. Mazel Co., 48 Wash.App. 712, 740 P.2d 363 (1987) and CH2M Hill, Inc. v. Greg Bogart & Co., 47 Wash.App. 414, 735 P.2d 1330, review denied, 108 Wash.2d 1023 (1987). Neither case is controlling. Both resolve issues relating to the priority of liens against contractor's bonds, not the issue of notice. We believe the controlling case is Foremost-McKesson Systems Division of Foremost-McKesson, Inc. v. Nevis, 8 Wash.App. 300, 505 P.2d 1284 (1973).

The facts of Foremost are virtually identical to the facts at issue here, with one principal difference. The Foremost court reviewed the postwork notice requirements, rather than the preclaim notice requirements at issue here. ¹ We do not believe the difference is significant.

With regard to the statutes at issue, the Foremost court stated as follows:

The question here presented--was a single notice effective to preserve a claim against both the bond and the reserved fund--was not considered. We hold that a single notice, if proper, will suffice to give notice of both a claim against the bond and a lien upon the reserved fund.

Foremost, at 305, 505 P.2d 1284. With regard to RCW 39.08, the Foremost court stated:

Earlier cases have held that the primary purpose of the statute is notice of nonpayment.

But the primary purpose of the statute is notice. It is intended to inform the city and the bondsmen of the contractor who, if any, of the laborers, mechanics, and materialmen have not been paid, and any form of notice that does this, and does not mislead either the city or the bondsmen to their injury, is sufficient to comply with the statute.

Strandell v. Moran, 49 Wash. 533, 536, 95 P. 1106 (1908). Fidelity & Deposit [Co. v. Herbert H. Conway, Inc., 14 Wn.2d 551, 128 P.2d 764 (1942),] also recognizes that the primary statutory purpose is "notice" and determines that "substantial compliance" requires

(1) that some notice must be filed with the proper body; (2) that it must be filed within at least thirty days from the completion of the contract and acceptance of the work; (3) that there must be some identification of the bond, surety, and work; and (4) that there must be some notice of an intent to claim against the bond.

Fidelity & Deposit Co. v. Herbert H. Conway, Inc., supra at 558 .

Foremost, 8 Wash.App. at 303-04, 505 P.2d 1284. The Foremost court treated the provisions of the two chapters of the Revised Code of Washington the same for purposes of testing the sufficiency of the notice. ²

The requisites with regard to a preclaim notice should be no different than those with regard to a postwork notice. Here, the notice sent by Keller,...