Trane Co. v. Brown-Johnston, Inc.

• Decision Date: 16 July 1987
• Docket Number: No. 7789-6-III,BROWN-JOHNSTO,INC,7789-6-III
• Citation: 739 P.2d 737,48 Wn.App. 511
• Court: Washington Court of Appeals
• Parties: The TRANE COMPANY, a Delaware corporation, Respondent, v., a Washington corporation; The County of Spokane; Liberty Lake Sewer District, a municipal corporation; Jeslyn Morris Schultz and John Doe Schultz, husband and wife; The W. Main Corporation, a Washington corporation; Transamerica Title Insurance Company; B.S. & T. Investments, Ltd., a Washington corporation; Bullock Trane Service Agency, Inc.; E.J. Bartells Company; Concrete Cutting Company, Inc.; Air Products, Inc.; and United Pacific Insurance Company, Defendants, ISC Systems Corporation; Appellant, Grinnell Fire Protection Services, Respondent. BAUGH INDUSTRIAL CONTRACTORS, INC., a Washington corporation, Appellant, v. Joseph H. MUNGER and Diane Munger, husband and wife, and the Munger marital community, Third-Party Defendants.

Page 511

48 Wn.App. 511

739 P.2d 737

The TRANE COMPANY, a Delaware corporation, Respondent, v. BROWN-JOHNSTON, INC., a Washington corporation; The County

of Spokane; Liberty Lake Sewer District, a municipal

corporation; Jeslyn Morris Schultz and John Doe Schultz,

husband and wife; The W. Main Corporation, a Washington

corporation; Transamerica Title Insurance Company; B.S. &

T. Investments, Ltd., a Washington corporation; Bullock

Trane Service Agency, Inc.; E.J. Bartells Company;

Concrete Cutting Company, Inc.; Air Products, Inc.; and

United Pacific Insurance Company, Defendants,

ISC Systems Corporation; Appellant,

Grinnell Fire Protection Services, Respondent.

BAUGH INDUSTRIAL CONTRACTORS, INC., a Washington

corporation, Appellant, v. Joseph H. MUNGER and Diane Munger, husband and wife, and the

Munger marital community, Third-Party Defendants.

No. 7789-6-III.

Court of Appeals of Washington,

Division 3.

July 16, 1987.

Respondents' Motion for Reconsideration Granted and Opinion

Amended August 28, 1987.

Appellants' Motion for Reconsideration Denied August 28, 1987.

Sheri L. Flies, F. Douglas Ruud, Diamond & Sylvester, Seattle, for appellant.

John Rizzardi, Hatch & Leslie, Thomas Theisen, Williams, Lanza Kastner & Gibbs, Seattle, for respondents.

GREEN, Judge.

Summary judgment was entered in favor of The Trane Company and Grinnell Fire Protection Services foreclosing their construction liens against ISC Systems Corporation and Baugh Industrial Contractors, Inc. ISC and Baugh appeal.

The dispositive issue is whether an issue of material fact exists as to Trane and Grinnell's knowledge there was more than one contract between ISC, the property owner, and Baugh, the general contractor, so as to require them to file two claims of lien.

During 1981-82 ISC began to develop a plan for a manufacturing and warehousing complex at its Liberty Lake property. The complex was to be built in phases. On September 7, 1982, ISC entered into a written contract with Baugh, a general contractor, for the phase one construction of the manufacturing building. Baugh subcontracted the mechanical work to Brown-Johnston. Brown-Johnston in turn subcontracted the heating and air conditioning system (HVAC) to Trane and the fire protection work to Grinnell. Phase one construction began in May 1983 and was substantially completed in February 1984.

On June 30, 1983, Baugh and ISC entered into a written contract for construction of the phase two warehouse building. Baugh advised ISC it would be more economical if the major subcontractors for phase one were used to perform the phase two work, which they did. Baugh paid Brown-Johnston for work completed, but Brown-Johnston went bankrupt and failed to pay Grinnell and Trane.

On August 16, 1983, Trane sent ISC a notice of intent to lien for materials supplied to that date. On March 27, 1984, Trane sent a notice of intent to lien for materials not included in the prior notices. Subsequently, Trane filed a lien. Grinnell also sent a notice of intent to lien and later filed it. Both parties, Grinnell and Trane, brought this action to foreclose their liens and both moved for summary judgment. The motions were granted and they were awarded their attorney fees and costs. ISC and Baugh appeal.

Summary judgment is appropriate if the pleadings, depositions and admissions on file, together with the affidavits, show there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Del Guzzi Constr. Co. v. Global N.W., Ltd., 105 Wash.2d 878, 882, 719 P.2d 120 (1986). On review of a summary judgment, the appellate court places itself in the position of the trial court and assumes facts most favorable to the nonmoving party. Del Guzzi, at 882, 719 P.2d 120. The burden is on the moving party to prove no genuine issue of fact exists which could influence the outcome at trial. Hartley v. State, 103 Wash.2d 768, 774, 698 P.2d 77 (1985). While generally a question of fact is properly left to the trier of fact, when reasonable minds could reach but one conclusion, questions of fact may be determined as a matter of law. Hartley, at 775, 698 P.2d 77. The nonmoving party is given the benefit of any factual doubt when a summary judgment is made. Hartley, at 777, 698 P.2d 77. Of course, after the moving party has established a prima facie case, the nonmoving party must set forth specific facts which sufficiently rebut the moving party's contention and disclose a genuine issue as to a material fact; the nonmoving party cannot merely claim contrary facts nor rely on speculation, argumentative assertions that unreasonable factual issues remain "or on affidavits considered at face value." Meyer v. University of Wash., 105 Wash.2d 847, 852, 719 P.2d 98 (1986). With these principles in mind, we turn to the statutes governing the liens at issue in this case.

RCW 60.04.020 provides in pertinent part:

Every person, firm or corporation furnishing materials or supplies ... to be used in the construction ... of any ... building ... shall give to the owner or reputed owner of the property ... a notice in writing, which notice shall cover the material, supplies or equipment furnished ... during the sixty days preceding the giving of such notice as well as all subsequent materials, supplies or equipment furnished ... No materialmen's lien shall be enforced unless the provisions of this section have been complied with ...

RCW 60.04.060 provides:

No lien created by this chapter shall exist, and no action to enforce the same shall be maintained, unless within ninety days from the date ... of the cessation of the performance of such labor, the furnishing of such materials, or the supplying of such equipment, a claim for such lien shall be filed for record as hereinafter provided, ...

Since labor and materialmen's liens are creatures of statute and are in derogation of common law, they must be strictly construed. Dean v. McFarland, 81 Wash.2d 215, 219-20, 500 P.2d 1244, 74 A.L.R.3d 378 (1972); Wells v. Scott, 75 Wash.2d 922, 925, 454 P.2d 378 (1969). Generally, after a contract is completed, the time for filing a claim of lien cannot be extended or the right revived by furnishing material or performing labor upon a new contract and tacking the same to the original contract. Boise Cascade Corp. v. Pence, 64 Wash.2d 798, 801, 394 P.2d 359 (1964); Anderson v. Taylor, 55 Wash.2d 215, 217, 347 P.2d 536, 78 A.L.R.2d 1161 (1959) (quoting Swensson v. Carlton, 17 Wash.2d 396, 405, 135 P.2d 450 (1943)). However, where the lien claimant is not a party to either contract because either he furnished material or labor to a contractor who has two or more contracts with an owner, or to a subcontractor who has two or more subcontracts in connection with the same project, the general rule is not applicable, unless the lien claimant was aware of the fact there were two or more contracts. Anderson, 55 Wash.2d at 217, 347 P.2d 536; Standard Lumber Co. v. Fields, 29 Wash.2d 327, 338, 187 P.2d 283, 175 A.L.R. 309 (1947). The burden is then on the owner who is claiming there were two or more contracts to prove the lien claimant had actual or constructive notice of the two or more contracts. Anderson, 55 Wash.2d at 217, 347 P.2d 536; Standard Lumber, 29 Wash.2d at 338-39, 187 P.2d 283.

Standard Lumber is on point with the instant case. There, the lien claimant, Standard, was a subcontractor which supplied building materials to the general contractor, Berry, for the construction of a grain elevator, bunkhouse, and shop building, all located on the owner's property. Berry had two different construction contracts with the owner for these three structures. When Standard was not paid for the materials supplied to the project, it filed a materialmen's lien and brought a foreclosure action. The owner defended on the ground there were two contracts between the owner and the general contractor, that the subcontractor lien claimant did not file its lien in time for the materials on the first contract, and no notice of delivery had been given to the owner for materials used under the second contract. The court held that neither the sequence in ordering materials nor the fact that three buildings were constructed put the subcontractor on inquiry to determine whether there was more than one contract between the owner and general contractor. Standard Lumber, at 339, 187 P.2d 283. The court also pointed out the buildings were constructed on a single tract of land for a common purpose, deliveries of materials were at frequent intervals, and the owner made nine payments through the general contractor. Standard Lumber, at 340, 187 P.2d 283. The court held that under such circumstances the burden shifted to the owner to show the lien claimant had either actual or constructive notice there were two separate contracts between the owner and the general contractor. ¹ Standard Lumber, at 339, 187 P.2d 283. The court pointed out that constructive notice could be established by showing (1) a lapse of time between the construction of each structure; (2) cessation of work on each structure; (3) occupation of the building and premises by the owner; and (4) settlement of accounts.

Thus, the only issue to be resolved is whether Trane and Grinnell knew there were two contracts between ISC, the owner, and Baugh, the general contractor. ISC and Baugh contend there are several material questions of fact on this issue.

Actual Knowledge:

(1) ISC points to the deposition of the president of Brown-Johnston, Mr. Munger, in which he stated he informed representatives of Trane and Grinnell there were separate contracts for each phase. However, in a later deposition, Mr. Munger clarified this statement, stating he was referring to the two contracts between...