Opinion
No. 27925-8-II, 2799995;
Filed: May 20, 2003 DO NOT CITE. SEE RAP 10.4(h). UNPUBLISHED OPINION
Appeal from Superior Court of Pierce County Docket No: 01-2-04901-7 Judgment or order under review Date filed: 08/24/2001
Counsel for Appellant(s), Ronald D. Heslop, Attorney at Law, 1401 S Union Ave, Tacoma, WA 98405-1901.
Counsel for Defendant(s), Desmond Leoron Brown, Sound Transit Union Station, 401 S Jackson St, Seattle, WA 98104-2826.
Counsel for Respondent(s), Lawrence Ballis Linville, Linville Clausen Linton PLLC, 800 5th Ave Ste 3850, Seattle, WA 98104-3101.
Lumpkin, Inc. was the prime contractor on Sound Transit's Sumner Commuter Rail Contract. Michele's Trucking and Excavation, Inc. (MTE) was a subcontractor on the project and arranged for Washington Rock Quarries, Inc. (WRQ) to supply the rock needed for the job. When MTE failed to pay WRQ, WRQ sued MTE and obtained a judgment. MTE appeals, claiming that WRQ (1) failed to properly serve MTE; (2) did not comply with procedural requirements of the Retainage Act necessary to obtain funds held by Sound Transit (chapter 60.28 RCW); and (3) did not comply with procedural requirements of the Contractor's Bond Statute (chapter 39.08 RCW) necessary to obtain funds from Lumpkin. MTE also asserts that the trial court erred when it set the interest rate on the judgment at 18 percent instead of 12 percent and awarded WRQ attorney fees. MTE asks this court to impose sanctions under CR 11 and award it attorney fees for this appeal. We affirm.
FACTS
In October 1999, general contractor Lumpkin contracted with Sound Transit to build the Sumner Commuter Rail Station. To guarantee payment to subcontractors and suppliers, Lumpkin obtained a payment bond from Reliance Insurance Company in accord with the Contractor's Bond Statute, chapter 39.08 RCW. Sound Transit held a retainage bond as required by the Retainage Act, chapter 60.28 RCW.
Chapter 39.08 RCW requires contractors to execute a bond whenever contracting with a public body for the protection of materialmen, among others. RCW 39.08.010.
Chapter 60.28 RCW requires that public bodies who contract for public works projects must hold back a percentage of the amount owed the general contractor of the project for the protection of any parties who provide labor or supplies to subcontractors; the amount held back is called retainage.
Lumpkin subcontracted with MTE to deliver rocks and other materials. MTE then subcontracted with WRQ to provide the rocks and other related raw materials needed for the project. WRQ prepared and submitted a quote that stated 'charges not paid by the 10th of the month subject to 1.5% interest on the unpaid balance.' Exhibit 1. Between May 23, 2000, and December 11, 2000, MTE purchased $75,646.41 in materials from WRQ. MTE made payments between July 2000, and May 2001, totaling $57,422.72.
On December 5, 2000, WRQ mailed a 'Notice to Prime Contractor' to Lumpkin (as general contractor), informing Lumpkin (1) that WRQ had begun furnishing materials to the Sumner Commuter Rail Station project, (2) that MTE was the subcontractor who ordered the materials, and (3) 'THAT YOUR BOND AND RETAINAGE WILL BE HELD FOR PAYMENT OF THESE MATERIALS IN THE EVENT THAT THE CLAIMANT IS NOT FULLY AND TIMELY PAID BY [MTE].' Exhibit 11. On January 15, 2001, WRQ mailed a notice to Sound Transit entitled Notice of Claim Against Contractor[']s Bond Retainage Fund, informing Sound Transit that WRQ had a claim in the amount of $10,975.58, and the claim was against both Lumpkin's contractor's bond and the retainage Sound Transit was withholding from Lumpkin.
That notice reads as follows:
That notice read:
Notice is hereby given that the undersigned subcontractor [WRQ], materialman or supplier has a claim in the sum of $10,975.58 against the payment and performance bond furnished by the following prime contractor as well as a claim against the retainage in the sum of $10,975.58 which you are withholding from the following prime contractor [Lumpkin.] Exhibit 10. The following entities received carbon copies of this notice: Reliance Insurance Company, MTE, and WRQ.
About a week later WRQ filed a complaint against MTE and United Pacific Insurance Company (which held a $6,000 contractor's registration bond for MTE), alleging a principal amount owing of $31,779.94.
About two weeks later, WRQ amended its complaint, naming Sound Transit and Reliance as additional defendants. The amended complaint requested relief from MTE, United Pacific, Reliance's payment bond, and Sound Transit's retainage.
WRQ did not seek a judgment against Reliance or the contractor's bond. WRQ explains that it realized that it has failed to comply with chapter 39.08 RCW and, thus, could not maintain a claim against the contractor's bond.
Sound Transit filed an answer. MTE's answer, if any, is not included in the record before us. The parties entered a stipulated order dismissing United Pacific on May 15, 2001.
After a two-day bench trial in July 2001, the trial court found for WRQ. The trial court ordered the total amount owed by both parties to bear interest at 18 percent per annum under the terms of WRQ's quote to MTE. Finally, the trial court ordered that 'payment by one defendant shall become a credit to the remaining judgment owed by the remaining defendant in this matter.' Clerk's Papers (CP) at 93.
Sound Transit explained in a letter to this court dated April 3, 2002, that it 'is a nominal party to this action, being named as a defendant solely because it is a required statutory party pursuant to RCW 60.28.030.
Because Sound Transit has no interest in the outcome of the case, it has no basis upon which to participate in the appeal.'
ANALYSIS
Standard of Review
MTE challenges WRQ's compliance with chapter 39.08 RCW (contractor's bond) and chapter 60.28 RCW (retainage). The process of applying law to the facts is a question of law that this court reviews de novo. Tapper v. State Employment Sec. Dep't, 122 Wn.2d 397, 403, 858 P.2d 494 (1993).
Service of Process
MTE alleges that WRQ failed to serve MTE with either a summons or complaint, and therefore the judgment is void.
MTE asserts this argument in the section entitled, 'PLAINTIFF FAILED TO FORECLOSE ITS LIEN IN ACCORDANCE WITH RCW 60.28.030.' Br. of Appellant at 9-11. Insufficient service of process relates to foreclosure of the retainage lien under RCW 60.28.030 only in that a failure in service of process if properly raised would of course be fatal to the entire action.
Under CR 12, the defense of insufficient service of process is waived if not asserted either by motion or included in a responsive pleading. CR 12(h)(1)(B). The trial court did not address the issue in its findings of fact and conclusions of law. And the record before us does not contain an answer, a CR 12(b)(5) motion by MTE, or trial transcripts. The party seeking review has the burden of perfecting the record so that the reviewing court has relevant evidence before it. RAP 9.2(b); State ex rel. Dean, 56 Wn. App. 377, 382, 783 P.2d 1099 (1989). Thus, we cannot reach the issue.
Compliance with the Notice Requirements of Chapters 39.08 and 60.28 RCW
MTE next claims that the trial court erred when it ruled that WRQ complied with the notice requirements of chapters 39.08 and 60.28 RCW. MTE argues that failure to comply with the notice requirements of chapter 39.08 RCW precludes any claim against the retainage fund. MTE's arguments are without merit.
Under chapter 60.28 RCW, a public body (here, Sound Transit) must reserve a sum not to exceed five percent of the total funds to be paid to the contractor in trust for the protection and payment of the claims of persons protected under the statute. RCW 60.28.010(1). The protected class includes 'mechanic[s], subcontractor[s] or materialm[e]n who shall perform any labor upon such contract . . . and all persons who shall supply such person or persons or subcontractors with provisions and supplies for the carrying on of such work[.]' RCW 60.28.010(1). When claimants properly file notice, they create a lien on the retainage. RCW 60.28.010. Claimants must then file suit to foreclose the lien within four months of filing the notice. Thompson v. Peninsula Sch. Dist. No. 401, 77 Wn. App. 500, 505, 892 P.2d 760 (1995).
MTE argues that both WRQ's claim against the retainage fund and its claim for attorney fees depend on compliance with RCW 60.28.010's requirement that notice of the lien against the retainage fund 'shall be given in the manner and within the time provided in RCW 39.08.030[.]' See RCW 60.28.010(1). Resolving these issues depends on the relationship between RCW 39.08.030 and chapter 60.28 RCW.
RCW 39.08.030 provides when the claimant must file notice and gives a form for such notice:
[Claimants] shall not have any right of action on [the contractor's] bond for any sum whatever, unless within thirty days from and after the completion of the contract with an acceptance of the work by the [contracting governmental body, i.e. Sound Transit], the [claimant] shall present to and file with such [body acting for the governmental entity] a notice in writing in substance as follows:
To (here insert the name of the [contracting governmental body]):
Notice is hereby given that the undersigned (here insert the name of the [claimant]) has a claim in the sum of . . . . . . dollars (here insert the amount) against the bond taken from . . . . . . (here insert the name of the principal and surety or sureties upon such bond) for the work of . . . . . . (here insert a brief mention or description of the work concerning which said bond was taken). (here to be signed) . . . . . . . . . . . . . .
(Emphasis added.)
In addition, both the retainage and the contractor's bond statutes require materialmen to provide preclaim notice to the contractor that it furnished materials to be used for the public project. See RCW 39.08.065 (requiring notice not later than 10 days after the date of the first delivery of materials); RCW 60.28.015 (explaining that the notice shall cover the material, supplies, or equipment furnished or leased during the 60 days preceding the notice). WRQ admits that it missed the 10-day notice required under RCW 39.08.065, and that for this reason it dismissed its claim against the contractor's bond. Thus, only the retainage action is before us for review.
This statute reads in its entirety as follows:
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.
RCW 39.08.065 (emphasis added).
This statute reads in its entirety as follows:
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.
RCW 60.28.015 (emphasis added).
Failure to Comply With RCW 39.08.065
MTE argues that the retainage award was improper because WRQ failed to file the preclaim notice with the general contractor, Lumpkin, within the 10-day period required under RCW 39.08.065. MTE's argument presumes that RCW 60.28.010's reference to the notice requirements of RCW 39.08.030 also incorporates RCW 39.08.065's 10-day requirement. But RCW 60.28.010 does not reference RCW 39.08.065. It only requires notice of retainage liens to 'be given in the manner and within the time provided in RCW 39.08.030[.]' See RCW 60.28.010(1).
Moreover, the Retainage Act expressly requires that notice be given to contractors for any work provided in the preceding 60 days, thus precluding application of a 10-day requirement.
Timing of Notice
MTE also argues that WRQ's notice was untimely because the Sumner Commuter Rail Project was not yet completed and Sound Transit had not formally accepted the project when WRQ gave notice (under RCW 39.08.030). But in Airefco, Inc. v. Yelm Community School No. 2, 52 Wn. App. 230, 232-33, 758 P.2d 996, review denied, 111 Wn.2d 1029 (1988), we ruled that claimants need not wait to file their notice until completion and acceptance of the contract and may file anytime up until 30 days after the project is completed and accepted:
RCW 39.08.030 provides that a claim of lien must be filed within 30 days 'from and after the completion of the contract with an acceptance of the work'. A claimant need not wait until completion and acceptance to file a claim, however, and may file it as soon the material is furnished to the project.
Airefco, 52 Wn. App. at 232-33 (citing Denny-Renton Clay Coal Co. v. Nat'l Sur. Co., 93 Wn. 103, 110, 160 P. 1 (1916)). Thus, WRQ's notice was timely.
Substance of Notice
Claimants' written notice to the contractor must list the materials furnished during the 60 days preceding the notice. RCW 60.28.015. This notice must also state the name of the subcontractor ordering the materials, any subsequent materials, and that a lien may be claimed against the retainage fund. RCW 60.28.015.
Substantial compliance is sufficient to meet the notice requirements of RCW 60.28.015. Keller Supply Co., Inc. v. Lydig Constr. Co., Inc., 57 Wn. App. 594, 600, 789 P.2d 788, review denied, 115 Wn.2d 1012 (1990). The Keller court held that claimants must complete the following to substantially comply with RCW 60.28.015: (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, [the claimant] must notify the contractor 'in substance and effect' that a lien against either the bond or the retained percentage may be claimed.
Keller, 57 Wn. App. at 598 (stating also that the preclaim notice requirements of RCW 60.28.015 and RCW 39.08.065 are nearly identical).
Here, WRQ substantially complied with the notice requirements of RCW 60.28.015. It sent Lumpkin the Notice to Prime Contractor by certified mail on December 5, 2000. This notice provided (1) the name of the general contractor; (2) the name of the claimant; (3) the name of the project; (4) the address of the project; (5) the name of the ordering subcontractor; (6) notice that the claimant commenced delivering materials; and (7) notice that the contractor's bond and retainage would be held for payment of materials in case of MTE's non-payment.
WRQ also sent Sound Transit a Notice of Claim Against Contractor[']s Bond Retainage Fund by certified mail. This notice contains more information, including the amount of the claim.
Thus, WRQ (1) notified Lumpkin 'in substance and effect' that it (2) commenced delivering materials to the project (3) upon the request of MTE. Further, WRQ notified Lumpkin 'in substance and effect' that a lien against the contractor's bond and retainage may be claimed. WRQ's notice substantially complies with RCW 60.28.015.
Attorney Fees
MTE next argues that WRQ did not comply with the 30-day waiting period required by RCW 39.08.030, and because of this failure the trial court erred in awarding attorney fees. WRQ counters that the trial court awarded attorney fees under RCW 60.28.030, not RCW 39.08.030. Resolving this issue depends on whether the language of RCW 60.28.010 that cross-references the notice requirements of RCW 39.08.030 includes the attorney fee provisions of that statute as well.
RCW 39.08.030 provides that 'no attorney's fees shall be allowed in any suit or action brought or instituted before the expiration of thirty days following the date of filing of the notice hereinbefore mentioned.' But the Retainage Act does not incorporate this portion of RCW 39.08.030. As we noted above, without reference to the attorney fees provision, RCW 60.28.010(1) simply states that 'notice of the lien . . . shall be given in the manner and within the time provided in RCW 39.08.030[.]' (Emphasis added). Furthermore, the Retainage Act specifically provides for attorney fees under RCW 60.28.030 and does not mention RCW 39.08.030: 'In any action brought to enforce the lien, the claimant, if he prevails, is entitled to recover, in addition to all other costs, attorney fees in such sum as the court finds reasonable.' RCW 60.28.030.
Thus, WRQ did not need to comply with the 30-day requirement of chapter 39.08 RCW because it did not recover under that chapter. Moreover, the Retainage Act, under which WRQ did recover, does not expressly incorporate RCW 39.08.030's 30-day requirement. Here, WRQ substantially complied with the terms of chapter 60.28 RCW, and thus we will not disturb the trial court's award of attorney fees.
Interest
MTE also challenges the trial court's award of interest, contending that WRQ failed to produce a contract and that without a contract with an explicit interest rate the proper rate is the statutory 12 percent per annum.
The trial court did not expressly find that WRQ's quote providing that 'charges not paid by the 10th of the month subject to 1.5% interest on the unpaid balance' (Exhibit 1) constituted a contract. Nonetheless, it did find that the quote 'provided the terms and conditions of sale, including the payment of interest at 18% per annum [on] unpaid amounts.' CP at 89. Ordinarily, the existence of mutual assent or a meeting of the minds is a question of fact. Sea-Van Inv. Assoc. v. Hamilton, 125 Wn.2d 120, 126, 881 P.2d 1035 (1994). MTE offers no authority, argument, or evidence that the quote in this case was not a contract, and our review of the record clearly indicates that the parties treated it as if it were: After WRQ prepared and submitted the quote to MTE, MTE purchased $75,646.41 in materials from WRQ; MTE made payments between July 2000, and May 2001, totaling $57,422.72; and MTE points to no other contract under which the parties were operating.
Accordingly, the trial court did not err when it relied on the terms stated in the quote to set the interest rate on the judgment.
CR 11 Sanctions
MTE next asks this court to assess CR 11 sanctions against WRQ. The trial court made no findings of fact and conclusions of law on this issue, and it appears that MTE did not present the issue to the court below.
The purpose of CR 11 is to deter baseless claims and other litigation abuses. Biggs v. Vail, 124 Wn.2d 193, 197, 876 P.2d 448 (1994) (quoting Bryant v. Joseph Tree, Inc., 119 Wn.2d 210, 219, 829 P.2d 1099 (1992)). But before a court may impose CR 11 sanctions, a party or attorney must file a pleading, motion, or legal memorandum that lacks a factual or legal basis or is made for an improper purpose without proper investigation of the material facts underlying the claim. See Bryant, 119 Wn.2d at 220 (court cannot impose CR 11 sanctions unless it finds that the attorney who signed complaint failed to conduct a reasonable inquiry into the factual and legal basis of the claim); MacDonald v. Korum Ford, 80 Wn. App. 877, 884, 912 P.2d 1052 (1996). Whether a party or attorney conducted a proper investigation or violated the provisions of CR 11 is a factual matter to be determined by the trial court, and the appropriate sanction is a matter best addressed to the sound exercise of the trial court's discretion. Watson v. Maier, 64 Wn. App. 889, 896, 827 P.2d 311, review denied, 120 Wn.2d 1015 (1992). Appellate courts do not engage in making the factual findings necessary to support imposing sanctions under CR 11. See Biggs, 124 Wn.2d at 201. MTE's request for a CR 11 sanction is an improper subject for an appellate court.
Attorney Fees on Appeal
WRQ has complied with RAP 18.1(b) and RCW 60.28.030. We therefore award WRQ its attorney fees in an amount to be determined by the commissioner of this court upon WRQ's compliance with RAP 18.1. Affirmed.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
ARMSTRONG and HUNT, JJ., concur.
NOTICE TO PRIME CONTRACTOR
TO: LUMPKIN GENERAL CONTRACTOR PRIME CONTRACTORFROM: WASHINGTON ROCK QUARRIES, INC. NAME OF COMPANY P.O.BOX 1806, ORTING, WA 98360 ADDRESS OF COMPANY
ARE NOTIFIED THAT THE ABOVE CLAIMANT HAS COMMENCED TO DELIVER MATERIALS (WITH OR WITHOUT LABOR) TO THE FOLLOWING PROJECT:
SUMNER COMMUTER RAIL STATION OF PROJECT
TRAFFIC AVENUE NARROW STREET, SUMNER, WA
ADDRESS OF PROJECT
THE SUBCONTRACTOR WHO HAS ORDERED THIS WORK FROM THE ABOVE CLAIMANT IS:
MICHELLE'S [sic] TRUCKING EXCAVATION
NAME OF SUBCONTRACTOR
YOU ARE ON NOTICE THAT YOUR BOND AND RETAINAGE WILL BE HELD FOR PAYMENT OF
THESE MATERIALS IN THE EVENT THAT THE CLAIMANT IS NOT FULLY AND TIMELY PAID
BY THE ABOVE NAMED SUBCONTRACTOR. DATED THIS 5TH DAY OF DECEMBER, 2000. SIGNED [signature] WASHINGTON ROCK QUARRIES P.O.BOX 1806 ORTING, WA 98360 Exhibit 11.