No. 28141-1-I | Wash. Ct. App. | Oct 7, 1991
MB Construction Company (MB) filed a motion for discretionary review of an order of partial summary judgment dismissing with prejudice its hen foreclosure action against respondents. We grant discretionary review, accelerate review, and reverse and remand.
In January 1989, MB entered into a construction contract with respondent O'Brien Commerce Center Associates, a joint venture. MB furnished labor and materials for the construction of a project known as the O'Brien Commerce Center. In November 1989, and again in February 1990, MB recorded hens against the subject property pursuant to RCW 60.04.
On April 26, 1990, MB commenced a hen foreclosure action against respondents seeking to foreclose on the
The sole issue raised in the motion for discretionary review is whether the trial court erred in dismissing the hen action as against all of the respondents. MB concedes, for purposes of this motion, that the dismissal of US Ban-corp for lack of proper service under RCW 60.04.100 was appropriate, but contends that the trial court erred in concluding that US Bancorp was a necessary party to the foreclosure action and that its dismissal rendered the foreclosure action void as to the remaining defendants.
Under RCW 60.04.100,
It is obvious that the only purpose of the section is to authorize the foreclosure of all hens on the same property in one action and to avoid a multiplicity of suits; not to designate generally who are proper or necessary parties to such suits. These, aside from the hen claimants designated, are to be determined as in other actions.
(Italics ours.) Davis v. Bartz, supra at 401. Thus, since the term "necessary parties" in RCW 60.04.100 is not statutorily defined, the determination of who is a "necessary" party should be made by reference to the common law. Northern Pac. R.R. v. Henneford, 9 Wash. 2d 18" court="Wash." date_filed="1941-05-22" href="https://app.midpage.ai/document/northern-pacific-railway-co-v-henneford-3996161?utm_source=webapp" opinion_id="3996161">9 Wn.2d 18, 113 P.2d 545 (1941) (where Legislature uses term without defining it and such term has a well-known meaning at common law, it will be presumed that Legislature used the word in the sense in which it was understood at common law); Ludwig v. Mutual Real Estate Investors, 18 Wash. App. 33" court="Wash. Ct. App." date_filed="1977-07-08" href="https://app.midpage.ai/document/ludwig-v-mutual-real-estate-investors-1195463?utm_source=webapp" opinion_id="1195463">18 Wn. App. 33, 40, 567 P.2d 658 (1977).
One Washington court has held that a mortgagee such as US Bancorp is a necessary party in a hen foreclosure action. Curtis Lumber Co. v. Sortor, 9 Wash. App. 762" court="Wash. Ct. App." date_filed="1973-10-04" href="https://app.midpage.ai/document/curtis-lumber-co-v-sortor-1452193?utm_source=webapp" opinion_id="1452193">9 Wn. App. 762, 515 P.2d 554, (1973) , rev'd on other grounds, 83 Wash. 2d 764" court="Wash." date_filed="1974-05-29" href="https://app.midpage.ai/document/curtis-lumber-co-v-sortor-1246166?utm_source=webapp" opinion_id="1246166">83 Wn.2d 764, 522 P.2d 822 (1974) . In that case, the court cited Davis v. Bartz, supra, for the proposition that "a mortgagee is a necessary party to a hen foreclosure action" under the hen foreclosure statute. Curtis Lumber, at 765. That proposition is, however, contrary to a plain reading of Davis.
In Davis, a hen claimant seeking foreclosure of his hen failed to timely serve a mortgagee. After the statutory service period had expired, the mortgagee commenced its own foreclosure proceedings. The hen claimant filed a cross complaint, contending that his hen was prior to the
This interpretation of Davis is supported by the Supreme Court's decision in Washington Asphalt Co. v. Boyd, 63 Wash. 2d 690" court="Wash." date_filed="1964-01-30" href="https://app.midpage.ai/document/washington-asphalt-co-v-boyd-1167332?utm_source=webapp" opinion_id="1167332">63 Wn.2d 690, 388 P.2d 965 (1964). There, the court rejected the argument that mortgagees are indispensable or necessary parties, as opposed to proper parties, in a hen foreclosure action. The court cited Davis, among other authorities, and stated that "[m]ortgagees, prior or subsequent, being considered only as proper parties, it was not incumbent upon plaintiff to join them, and plaintiffs failure to join them was not fatal to its foreclosure action." Washington Asphalt, at 696; see also Cathcart-Maltby-Clearview Comm'ty Coun. v. Snohomish Cy., 96 Wn.2d 201, 206, 634 P.2d 853 (1981) (citing Washington Asphalt for the proposition that mortgagees are not necessary parties); Queen Anne Painting, supra at 395-96 (noting that, under Washington Asphalt, a mortgagee is not a necessary party). Thus, it appears to us that Curtis Lumber incorrectly states
Respondents apparently concede that mortgagees are normally only proper, not necessary, parties. They argue, however, that Curtis Lumber can be read for a different proposition, i.e., that once a hen claimant names , a mortgagee as a defendant and seeks to foreclose against that mortgagee's interest, the mortgagee is a necessary party without whom the foreclosure action is absolutely void as to all parties. This argument is not persuasive and is not supported by Curtis Lumber or respondents' other authorities.
Whether US Bancorp was a named defendant or not is irrelevant to the question of whether it is a "necessary" party to the foreclosure action under RCW 60.04.100. Under the aforementioned cases, a "necessary" party is a party without whom the foreclosure action cannot proceed. A hen foreclosure action can proceed without a mortgagee, Davis; Washington Asphalt, and therefore, naming a mortgagee as a defendant in the foreclosure complaint does not suddenly make them "necessary" to the prosecution of the foreclosure action under RCW 60.04.100.
Furthermore, respondents' authorities do not support their argument. Nothing in Curtis Lumber supports respondents' argument except perhaps the statement that "a mortgagee is a necessary party to a hen foreclosure action . . .". As noted above, that statement of the law is based on a misreading of Davis and is not correct. More importantly, the Curtis Lumber court did not predicate its holding on, and said nothing about, the fact that the party foreclosing
Respondents' reliance on 57 C.J.S. Mechanics' Liens § 284(e) (1948) is also misplaced. That reference states in part:
In the absence of a statute to the contrary, a mortgagee is a proper, but not a necessary, party to a proceeding to enforce a mechanic's Hen unless it is sought to subject his interest to the lien.
(Italics ours.) However, the reference goes on to explain the emphasized portion of the above-quoted language, stating that
a mortgagee is not a necessary party to a proceeding to enforce a mechanic's lien, but one seeking to establish a mechanic's lien must make a mortgagee of the premises a party if he desires to bind the interest of the mortgagee.
(Footnote omitted. Italics ours.) Thus, the reference only stands for the proposition, recognized by Washington decisions such as Davis, that the mortgagee's interest cannot be affected by a hen foreclosure unless the foreclosing party joins the mortgagee as a party to the foreclosure action.
Respondents also cite Queen Anne Painting for the proposition that the words "all necessary parties" in RCW 60.04.100 include all parties with recorded interests, including lenders who hold deeds of trust recorded prior to the hen claimant commencing work on the project. That proposition is not supported by Queen Anne Painting. In that case, the party foreclosing a mechanics' hen had not timely served or joined another party who had a separate mechanics' lien on the property, and had also failed to serve a bank holding a deed of trust on the home. After noting that the hen claimant must, under RCW 60.04.120, join ah parties who have hens against the same property, the court held that the failure to join the party holding the other
In short, respondents' argument and the trial court's decision are directly contrary to the decisions of our State Supreme Court in Davis and Washington Asphalt, and the trial court should have only dismissed the foreclosure action as to US Bancorp.
The order of partial summary judgment and the award of $2,212.50 in costs and attorney's fees to respondents under RCW 60.04.130 are reversed. MB's request for attorney's fees on appeal is denied without prejudice to request such fees below should it emerge as the "prevailing party" on remand.
RCW 60.04.100 currently provides:
No lien created by this chapter binds the property subject to the hen for a longer period than eight calendar months after the claim has been filed unless an action be commenced in the proper court within that time to enforce such hen; or, if credit be given and the terms thereof be stated in the claim of hen, then eight calendar months after the expiration of such credit; and in case such action be not prosecuted to judgment within two years after the commencement thereof, the court, in its discretion, may dismiss the same for want of prosecution, and the dismissal of such action or a judgment rendered therein, that no hen exists, shah constitute a cancellation of the hen: Provided, That, for the purposes of this chapter, an action to enforce such hen shall not be timely commenced unless the filing of summons and complaint in a court of competent jurisdiction shah be made prior to the expiration of the eight month period, and service of the summons and complaint shall he made upon all necessary parties personally, or by commence
(Italics ours.)
Effective April 1, 1992, this section will be repealed and replaced with a substantially different section. Laws of 1991, ch. 281, § 14, p. 1440. The new section deletes the term "necessary parties" and requires service only upon "the owner of the subject property . . .."
RCW 60.04.120 currently provides:
"The liens provided by this chapter, for which claims have been filed, may be foreclosed and enforced by a civil action in the court having jurisdiction; in any action brought to foreclose a hen, all persons who, prior to the commencement of such action, have legally filed claims of liens against the same property, or any part thereof shall be joined as parties, either plaintiff or defendant; and no person shall begin an action to foreclose a hen upon any property while a prior action begun to foreclose another hen on the same property is pending, but if not made a party plaintiff or defendant to such prior action, he may apply to the court to be joined as a party thereto, and his hen may be foreclosed in such action; and no action to foreclose a hen shah be dismissed at the instance of a plaintiff therein to the prejudice of another party to the suit who claims a hen."
Effective April 1, 1992, this section will be repealed and replaced with a substantially different section.
We note that Curtis Lumber has been cited by one commentator for the proposition that a mortgagee is a necessary party in an action to enforce a mechanics' lien. 3A L. Orland, Wash. Prac. § 5223, at 366 (3d ed. 1980). Two other commentators have cited Davis (which is cited in Curtis Lumber) for the same proposition. 3 Wash. State Bar Ass'n, Real Property Deskbook § 65.8, at 65-12 (1986); 1A B. Barker & I. Scharf, Wash. Prac., Methods of Practice § 35.9 (3d ed. 1989). The conflict between Curtis Lumber and Washington Asphalt is noted in Trautman, Joinder of Claims and Parties in Washington, 14 Gonz. L. Rev. 103, 116 n.56 (1978-1979).