Lennar Multifamily Builders, Llc, V. Saxum Stone, Llc
492 P.3d 175
| Wash. Ct. App. | 2021Background:
- Lennar was general contractor for Totem Lake Apartments and subcontracted Wall to Wall Tile & Stone to supply and install quartz countertops for ~$480,494.
- Wall to Wall filed chapter 11 (later converted to chapter 7) but continued work as debtor in possession through March 24, 2020; an unpaid receivable of ~$73,103 from Lennar remained.
- The chapter 7 trustee sold substantially all assets to Saxum via an asset purchase agreement approved by the bankruptcy court; the sale included accounts receivable and "all claims" but did not assign the subcontract.
- Saxum recorded a $73,149.90 construction lien on the project, identifying itself as assignee of Wall to Wall’s claim; Lennar moved under RCW 60.04.081 to release the lien as frivolous and obtain fees.
- The superior court granted Lennar’s motion, released the lien, and awarded fees without written findings; on appeal the Court of Appeals reversed, holding the lien was assigned and not frivolous and directing award of fees to Saxum on remand.
Issues:
| Issue | Plaintiff's Argument (Lennar) | Defendant's Argument (Saxum) | Held |
|---|---|---|---|
| 1. Whether RCW 60.04.081 proceedings require written findings that a lien is frivolous | Superior court must enter findings when record is undisputed | Special proceeding by affidavit does not require CR 52 findings; court’s reasoning may be apparent from record | No error: findings not required here because material facts undisputed and court’s reasoning was apparent |
| 2. Whether Saxum was assigned Wall to Wall’s construction lien via the bankruptcy sale | No assignment: cause of action didn’t exist during bankruptcy sale or assignee must hold subcontract; lien therefore frivolous | Asset purchase agreement and bankruptcy order assigned estate assets (including claims/accounts receivable and liens) to Saxum; assignee may record/enforce lien | Reversed: lien was assigned to Saxum by asset sale approved by bankruptcy court and therefore was not frivolous |
| 3. Whether only original performer (or recorded claimant) may record/enforce a lien; subcontract assignment required | Only the entity who performed the work (or who recorded the lien) may validly claim a lien; assignee cannot assert if subcontract not assigned | RCW 60.04.121 expressly permits assignment of lien and right of action; assignee may file notice and enforce lien even if assignor did not record | Court: statute authorizes assignment and assignee may file claim of lien; subcontract need not be assigned for lien assignment to be effective |
| 4. Entitlement to attorney fees under RCW 60.04.081(4) | If lien frivolous, applicant (Lennar) receives fees | If lien not frivolous, lien claimant (Saxum) is entitled to fees and costs | Because lien not frivolous, award to Lennar reversed; Saxum entitled to fees for trial and appeal on remand |
Key Cases Cited
- W.R.P. Lake Union Ltd. P’ship v. Exterior Servs., Inc., 85 Wn. App. 744 (Wash. Ct. App. 1997) (describing RCW 60.04.081 summary proceeding and affidavit nature)
- S.D. Deacon Corp. v. Gaston Bros. Excavating, Inc., 150 Wn. App. 87 (Wash. Ct. App. 2009) (material factual disputes require specific findings before denying live testimony)
- Estate of Haselwood v. Bremerton Ice Arena, Inc., 166 Wn.2d 489 (Wash. 2009) (construction liens are statutory and must be strictly construed; statutes liberally construed to protect intended parties)
- Intermountain Elec., Inc. v. G-A-T Bros. Constr., Inc., 115 Wn. App. 384 (Wash. Ct. App. 2003) (statutory interpretation of chapter 60.04 reviewed de novo)
- A.A.R. Testing Lab., Inc. v. New Hope Baptist Church, 112 Wn. App. 442 (Wash. Ct. App. 2002) (lien arises and attaches upon performance or furnishing of materials)
- Pac. Indus., Inc. v. Singh, 120 Wn. App. 1 (Wash. Ct. App. 2003) (frivolous lien defined as one presenting no debatable issues)
- Mueller v. Rupp, 52 Wn. App. 445 (Wash. Ct. App. 1988) (lien as a chose in action; personal property concept)
- Folger Adam Sec., Inc. v. DeMatteis/MacGregor JV, 209 F.3d 252 (3d Cir. 2000) (analysis whether bankruptcy §363(f) ‘‘free-and-clear’’ sales extinguish defenses like setoff and recoupment)