AGC Urges Court to Reverse Williams Case and Preserve Liens

By Mike Grace Groff Murphy

(Editor’s note: AGC’s Legal Affairs Committee reviews legal issues and litigation affecting construction and counsels the association regarding potential action. The case described below is one of three for which AGC with the help of the Legal Affairs Committee has submitted an amicus brief.)

On June 14 2011 the Washington Supreme Court will hear argument in Williams v. Athletic Field Inc. a case with significant ramifications for mechanics lien claimants. The Williams case is an appeal from a 2010 decision by Division II of the Court of Appeals in which the court invalidated a lien filed by a lien service on behalf of a contractor Athletic Fields Inc. Although the lien service used the exact lien form set forth in RCW 60.04.091 the Court of Appeals held that the lien was not properly “acknowledged” pursuant to RCW 64.08 and was therefore invalid.

AGC believes that the Williams case was erroneously decided by the Court of Appeals and is requesting the Supreme Court to reverse the decision for multiple reasons.

When the legislature passed a wholesale revision of the mechanics lien statute in 1991 it included a “safe harbor” lien form in RCW 60.04.091 so that lien claimants would have a simple and reliable form to use when filing a lien. In fact the legislature specifically stated in the lien statute that that a lien which substantially follows the safe harbor form “shall be sufficient” to state a valid lien. By invalidating the lien in Williams the Court of Appeals failed to give effect to the legislature’s unequivocal intention to provide a “sufficient” form for lien claimants to use.

In addition it has long been the law in Washington that the mechanics lien statute is to be “liberally construed” by the courts in order to effect the purpose of providing payment security for claimants. In 1991 the legislature wrote this rule of construction into the lien statute and specifically directed that the lien laws “are to be liberally construed to provide security for all parties intended to be protected by their provisions.” RCW 60.04.900. But in Williams the Court of Appeals did exactly the opposite by strictly interpreting the lien statute against the lien claimant.

The vast majority of mechanics’ lien claimants in Washington use the safe harbor form when filing their lien. If taken to the extreme the Court of Appeals decision in Williams presents potentially disastrous consequences for mechanics’ lien claimants who fail to modify the safe harbor form so as to include the acknowledgment language in RCW 64.08. AGC believes that there are presently hundreds of pending recorded liens – representing untold millions of dollars in work – that utilize an unmodified safe harbor form. And unless lien claimants take it upon themselves to modify the lien form so as to include the acknowledgment language in RCW 64.08 the result could be an invalid lien.

AGC and its members have a substantial interest in having Washington courts properly interpret the mechanics lien statutes so as to protect lien claimants and their statutory right to payment security. For that reason AGC through the member law firm of Groff Murphy has submitted an amicus curiae brief to the Supreme Court in support of the contractor who filed the lien in Williams. If you have any questions about the issues raised in the Williams appeal or the amicus brief submitted on behalf of AGC please contact Mike Grace of Groff Murphy at (206) 832-1475.

Mike Grace is a Partner with Groff Murphy and is Chair of AGC’s Legal Affairs Committee.