### FILED JANUARY 

### 10, 2017 In the Office ofthe ClerkofCourt WA State Court ofAppeals, Division Ill

INTHE COURT OF APPEALS OF THE STATE OF WASHING TON DIVISION THREE INLANDEMPIRE DRYWALL SUPPLY ) CO., a Washington corporation, Appellant, V. WESTERN SURETY COMPANY (Bond No. 

### 58717161), Respondent. ) ) ) ) ) ) ) ) ) ) No. 

### 34022-8-111

PUBLISHED OPINION

PENNELL, J.

- Washington law allows for the recording ofa bondto free up property encumberedby a construction lien. Whenthis happens, thebondis substituted for theproperty and a lien claimant cantake legal action againstthe bond. The question

we confronthere is who mustbe sued when a claim is filed against a lienrelease bond. Theprocedural statute governing lienrelease bonds unambiguously identifies only theNo. 34022-8-III InlandEmpire Dry Wall Supply Co. v. W. Sur. Co.

bond surety as an interestedparty. This is consistent with general suretyship principles, which allow a claimantto seek reliefdirectly against a surety. Because the trial court erroneously ruled that a claim against a lien release bond could notbe made solely against

a surety, thejudgment in this matter is reversed. FACTS1 Inland Empire Dry Wall Supply Company (Inland) entered into a credit and sales agreement with Eastern Washington Drywall & Paint (EWD&P) for a construction project. EWD&P had been subcontracted by Fowler General Construction (Fowler), the project's general contractor, to provide labor and materials for the project. Overthe

course ofthe constructionproject, Inland purportedly supplied $124,653.05 in drywall materials to EWD&P. Fowlerprovided EWD&P with funds to pay Inland, butEWD&P neverpaid Inland and eventually ceased working on the project. Inland ultimately initiated a lien against the project for money owed. 

### It filed a preclaim lien notice againstthe owner of the project, Western States Development Corporation, as required by RCW 60.04.031. Inland then timely recorded the lien as required by RCW 60.04.091.

1While the facts material to this decision are largely not in dispute, they are construed in the light most favorable to the appellant. 

### 2No. 34022-8-III InlandEmpire Dry Wall Supply Co. v. W. Sur. Co.

In order to release the project from Inland's lien, Fowler obtained a release oflien bond in the amount of$186,979.57 from Western Surety Company (Western). The bond identifies Fowler as the "Princip~l," Western as the "Surety," and Inland as the "Obligee." Clerk's Papers at 84-85. After the lien release bond was recorded, Inland filed an action against Western in Spokane County Superior Courtto recover on its lien. Fowler was not named aparty to the suit. Western answered Inland's complaint and raised several affirmative defenses, including that by failing to name and include Fowler as a necessary and indispensable party, Inland had not satisfied the statute oflimitations requirements in chapter 60.04 RCW. Bothparties filed motions for summaryjudgment. Relying on our decision in Ca/Portland Co. v. Leve/One Concrete, LLC, 180 Wn. App. 379, 321 P.3d 1261 (2014), the trial court granted summaryjudgment in favor of Western. The trial court reasoned that under Ca/Portland, when legal action is taken to foreclose on a lien release bond, the statute oflimitations under RCW 60.04.141 for service ofthe lawsuit on a property owner is replaced by an analogous statute of limitations requiring service on a bond'sprincipal and surety. The courtruled that because Inland only named Western as a party and served it as the bond's surety, the statute oflimitations was not met and Western was discharged from liability and entitled

3No. 34022-8-111 InlandEmpire Dry Wall Supply Co. v. W. Sur. Co.

tojudgmentin its favor. Inland filed a motion for reconsideration, butthe motion was denied. Inland appeals. 

### BACKGROUND This case concerns chapter 60.04 RCW, also known as the "mechanics' lien" or "construction lien" statute. See Ca/Portland, 180 Wn. App. at 385-86. This statute sets forth a lien procedure toprotectthe financial interests ofpersons contributing labor, materials or equipmentto a constructionproject. Ifconstruction costs are notpaid, the statute allows a lien to beplaced against the constructionprojectproperty as a method for financial recovery. Given the burdens onproperty imposed by construction liens, the statute sets forth stricttime limits. One asserting a claim oflien mustbring an action to foreclose the lien within eightmonths ofrecording the claim. RCW 60.04.141. The property ownermustbe servedwith notice ofthe suit within 90 days. Id. A lien claimant who fails to comply with these time constraints loses all rights to recover onthe lien. See Bob Pearson Constr. Inc. v. First Cmty. BankofWash., 111 Wn. App. 174, 178, 43 P.3d 1261 (2002). Apart from protecting the rights ofproperty ownersbyrequiring stricttime compliance, the statute also sets forth a bondprocedure that canbe usedto free up constructionprojectproperty from a lien priorto resolution ofclaims. RCW 60.04.161.

4No. 34022-8-III InlandEmpire Dry Wall Supply Co. v. W. Sur. Co.

Under the lien release bond statute, avariety ofpersons disputing the validity ofa lien can obtain and record a bond, including a property owner, a contractor or a lender. Id. While the statute allows for flexibility with respect to who can initiate a bond, it has strict requirements for bond sureties. A surety must be authorized to issue bonds in the state and must comply with federal bonding requirements. The statute also states a bond "surety shall be discharged from liability under the bond" if"no action is commencedto

recover on a lien within the time specified in RCW 60.04.141." Id. In other words, strict time frames for filing suit apply in the lien release bond context, notjustthe regular lien context. The procedure for obtaining reliefagainst a lien release bond under RCW 60.04.161 has been the source ofconsiderable confusion. Relevant here, questions have arisen with respect to who the necessary parties are when a bond has been obtainedto release property from a lien. Without a bond, the statute is fairly straightforward. The

owner ofthe real property must be made aparty to the suit, along with any person who, prior to commencement ofthe action, has a recorded interest in the property which the lien claimant seeks to have affected. RCW 60.04.141, .171. Butwho must be served when a bondreleases a piece ofproperty? This is the source ofthe parties' dispute.

5No. 34022-8-III InlandEmpire Dry Wall Supply Co. v. W Sur. Co.

We attempted to resolve this confusion in Ca/Portland. In that case, like this one,

a general contractorrecorded a lien release bondpriorto the filing ofsuit. Unlike this case, the lien claimant served both the general contractor as lien principal and the surety company. However, the owner ofthe underlying real property was not sued. Initially, the trial court dismissed the lien claim, holding the real property ownerwas a necessaryparty. We reversed. As we explained, because a bond operates to release real property from being encumbered by a lien, once the bond is recorded, the real property owner is no longer an interested party. Instead, the bond replaces the property and suit is sufficient so long as it is against the bond. Ca/Portland, 180 Wn. App. at 387-88. Given this context, the property owner need not be included as a party for a claimant's case to go forward. In Ca/Portland, we stated a real property owner is not a necessary party to a suit against a lien release bond; instead, inclusion ofthe bond principal and surety is "sufficient." Id. at 388. This statement forms the basis ofWestern's currentposition. According to Western, the foregoing statement means Inland was required to sue both Western (as the surety) and Fowler (as the bond principal) in orderto proceed on its lien. We disagree. All we said in Ca/Portlandwas that a suit againstboth a bondprincipal and bond surety is sufficient for compliance with the lien release bond statute. The ruling did not address whether suit against both is necessary.

6No. 34022-8-111 InlandEmpire Dry Wall Supply Co. v. W. Sur. Co.

ANALYSIS Resolution ofthis case turns on statutory construction, which wereview de novo. Dep'tof Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 9, 43 P.3d 4 (2002). Our "fundamental objective" in this analysis "isto ascertain and carry out the Legislature's intent." Id. Where a statute's meaning is plain on its face, construction aids such as legislative history are unnecessary to determine the legislature's intent. While the current statute is not a model ofclarity, its terms are sufficientlyplainto resolve the parties' dispute without resorting to aids ofconstruction. Ca/Portland, 180 Wn. App. at 388. As previously noted, we are asked to resolve the statutory question ofwho is a necessary party when a bond has been recorded to replace a construction lien. Forinitial guidance, we look to RCW 60.04.141, which sets procedures to be followed when a bond has not been filed. In this context, service ofa lawsuit to enforce a lien must be made on "the owner ofthe subjectproperty" within a tight statutory timeframe. RCW 60.04.141 (suit must be filed within eight months and served within ninety days). By designating the "owner ofthe subjectproperty" as the entity that must be served, the construction lien statute clearly contemplates that the "owner ofthe subjectproperty" is a necessary party to a lien foreclosure claim. See Bob Pearson, 111 Wn. App. at 178.

7No. 34022-8-III InlandEmpire Dry Wall Supply Co. v. W. Sur. Co.

Once a lien release bond is recorded, the procedural statute shifts from RCW 60.04.141 to RCW 60.04.161. This change alters the governing legal landscape. With a bond, real property is no longer encumbered. Ca/Portland, 180 Wn. App. at 386-87; DBMConsultingEng'rs, Inc. v. US. Fid. & Guar. Co., 142 Wn. App. 35, 40, 170 P.3d 592 (2007). The lien release bond operates as a substitute for the property. Id. at 41. As

a result, the parties interested in a foreclosure action are different. Unlike RCW 60.04.141, RCW 60.04.161 makes no mention ofthe "owner ofthe subjectproperty" as

an entity necessarily impacted by a suit.2 Instead, the statute states it is the "surety" who must be included in a suit in a timely manner. RCW 60.04.161 ("ifno action is commenced [within the time frame setby RCW 60.04.141], the surety shall be discharged from liability") (Emphasis added.) This substitution ofthe "surety" in RCW 60.04.161 for the "owner ofthe subjectproperty," as used in RCW 60.04.141, indicates the legislature's plain intent that when a lien release bond is filed, the surety shall be substituted for the property owner as the entity that must be sued to recover on a lien. The omission ofany reference to the bondprincipal is significant and indicates the legislature's intent that a bondprincipal need not be included.

2 The only reference in RCW 60.04.161 to the owner ofthe property subjectto a lien is in the context ofidentifying the owner as one ofseveral entities that may dispute a lien and record a bond. 8No. 34022-8-111 InlandEmpire Dry Wall Supply Co. v. W. Sur. Co.

Confusion overwho must be sued in this case appears to lie in the beliefthat, regardless ofthe existence ofa lien release bond, suit must be filed against a property

owner. Because a bondprincipal mightbe considered the lien release bond's owner, Western claims Inland was required to include Fowlerin its suit. We disagree. When it

comes to a bond, the term "owner" is no longertechnically applicable. Underthe law of suretyship, once a bond has been obtained, the applicable terms are the obligee (or claimant or creditor), the principal obligor, and the secondary obligor (or surety). See RESTATEMENT OF SECURITY§ 82 (AM. LAW INST. 1941); RESTATEMENT (THIRD) OF SURETYSHIP AND GUARANTY, at 

### IX-XI (AM. LAW INST. 1996). The parties' relationship to the bond is created by contract. There is no "owner" in this context. The legislature appears to have understood this terminology. Nowhere in the bond in lieu ofclaim statute (RCW 60.04.161) is there any indication a bond lien claimantmust

sue an "owner." Nor does this statute incorporate the requirement ofRCW 60.04.141 that service ofsuit be effected on an "owner." The lien release statute only incorporates the provisions ofRCW 60.04.141 as to the timing ofan action. 

### It does not incorporate the requirements ofRCW 60.04.141 regarding who mustbe sued. 3

3 Ifthe legislature had intended RCW 60.04.141 to apply to the lien release bond context it would not have specifically limited the applicability ofRCW 60.04.141 to issues oftiming. 9No. 34022-8-III InlandEmpire Dry Wall Supply Co. v. W Sur. Co. Contraryto the position taken by our dissenting colleague, neitherRCW 60.04.141

nor RCW 60.04.171 is directly applicable in the bond context. BothRCW 60.04.141 and .171 discuss the procedures for foreclosing on a "lien" and the disposition ofrelated "property." Butonce a bond is filed, property is no longer encumbered. DBM Consulting, 142 Wn. App. at 42 ("A lien bondreleases theproperty from the lien, butthe lien is then secured by the bond"). Onlythe bond is at risk. Althoughthe subject matter ofthe proceeding is still the validity ofthe originally recorded claim oflien, Id. at40, this continuity ofsubjectmatter does not control who must be made partyto the suit. See Ca/Portland, 180 Wn. App. at 391.4 Just as it makes little sense, in the context ofa bond, to require suit against an "owner," it also makes little sense to incorporate the "property" concepts discussed in RCW 60.04.141 and .171. The whole point ofa bond is to release property from being tied up in litigation. Once a bond is filed, the statute operates to substitute the bond for the property. In like manner, application ofthe bond statute operates to substitutethe bond surety for the property owner as the individual that must be sued in a timely manner. Contraryto Western's protests, there is no practical or logical impedimentto

4 Given this subject matter, it is not surprising that RCW 60.04.161 refers to an action against a bond as one involving an effortto recover on a lien. We therefore disagree withthe reliance placed on this portion ofthe statute by our dissenting colleague. 10No. 34022-8-III InlandEmpire Dry Wall Supply Co. v. W. Sur. Co. pursuing a bond claim against only the surety. General suretyship principles apply. Under those principles, a bond lien claimant such as Inland "hastwo sets ofrights, one set against the principal obligor and the other against the secondary obligor," also known as the surety. RESTATEMENT (THIRD) OF SURETYSHIP AND GUARANTY§ 50 cmt. a. The failure ofthe claimant to take action against the principal "does not discharge the [surety]" unless provided by statute or other authority. Id. at§ 50(1). This rule works no injustice to the surety because, to the extent the surety requires the principal's assistance, the surety "may seek enforcement ofthe principal obligor's duty ofperformance." Id. at cmt. a. Accordingly, "even ifthe [claimant] has not sought enforcement ofthe underlying obligation, the [claimant's] inaction generally affords no equitable basis for a claim of discharge by the [surety]." Id. See also Hutnick v. US. Fid. andGuar. C~., 47 Cal. 3d 456, 468-69, 763 P.2d 1326, 253 Cal. Rptr. 236 (1988) (service on surety sufficientto allow claim against mechanic's lien bond). See also Warren v. Washington TrustBank, 92 Wn.2d 381,390n.l, 598 P.2d 701 (1979) ("it is the general rule that, even though the creditor has a security interest in property ofthe principal, he may proceed first against the surety before resorting to the security interest"). The general suretyship principle that a claimant may seekreliefonly against a surety is fully consistent with Washington law. This is true under the lien release bond

11No. 34022-8-111 InlandEmpire Dry Wall Supply Co. v. W. Sur. Co.

statute, which only contemplates suit against the surety. RCW 60.04.161. It is also true under generally applicable surety law, chapter 19.72 RCW. In fact, RCW 19.72.090 recognizes suits will sometimes be laid directly against sureties. The only caveat is that in such circumstances, the principal must sometimes be allowed to intervene as a defendant. By the plain terms ofRCW 60.04.161, Inland was only required to name Western,

as the bond surety, as a defendant to its bond foreclosure action. While Inland could have also named Fowler, as the bondprincipal, it was notrequired to do so. Inclusion of Fowler may have streamlined the case and would have obviatedthe need for this appeal, but it was not a statutoryprerequisite. Because Inland satisfiedthe statute oflimitations for inclusion ofa necessary party under RCW 60.04.161, the trial court'sjudgmentin favor ofWestern is reversed. 

### ATIORNEY FEES Bothparties request an award ofattorney fees and costs pursuantto RCW 60.04.181(3). Because this matter is remanded for further proceedings, an award at this juncture is premature. Onremand, the trial courtmay awardto Inland reasonable attorney fees and expenses incurred in the trial and appellate courts ifthe trial court determines Inland to be theprevailingparty. RAP 18.l(i). We decline to make an award ofcosts pursuantto RAP Title 14.

12No. 34022-8-III InlandEmpire Dry Wall Supply Co. v. W Sur. Co.

CONCLUSION Based on the foregoing, wereverse and remand for proceedings not inconsistent with this opinion.

I CONCUR:

13No. 34022-8-111 FEARING, C.J. (dissenting)-This appeal asks two questions. First, must the principal orpurchaser ofa construction lienrelease bond, under RCW 60.04.161, be joined and served as a party when a claimant againstthe bond sues to recover on the bond? Second, is the principal orpurchaser ofthe construction lienrelease bond, under RCW 60.04.161, an indispensable or necessary party in a lawsuit broughtby a bond claimant? Despite answering the first question in the negative, the majority addresses only the first question. I answerthe first question in the positive and thus dissent. Language in chapter 60.04 RCW and the nature and purpose ofthe lienrelease bond demandjoinder ofthe bond'sprincipal in that the bond claimant must still adjudicate his construction lien in the action against the bond. Joinder ofthe bondprincipal also avoids duplicitous litigation. I need not answerthe second question, but my answerto the first question subsumes an answerthatthe bondprincipal is a necessary party to an action on the lien release bond. FACTS On October 15, 2012, Inland Empire Dry Wall Supply, Co. (InlandEmpire) andNo. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

Eastern Washington Drywall & Paint, LLC (Drywall & Paint) entered a contract, under which Inland Empire agreed to sell building supplies on open accountto Drywall & Paint, a construction subcontractor. Pursuantto the contract and beginning in April 2014, Inland Empire began supplyingto Drywall & Paint construction supplies for the building project, BellaVista Apartments in Richland. Western States Development Corporation (Western States) ownedthe apartmentproject, and the ownerhired Fowler General Construction (Fowler) as general contractor. Fowler, in tum, hired Drywall & Paintto install the drywall on the project. During the course ofthe project, Drywall & Paintpurchased $124,653.05 worth of drywall materials from Inland Empire. Accordingto Inland Empire, Drywall & Paint paidnothing for the purchases. According to Fowler, InlandEmpire collected some payment since Fowlerrefused to release some payments to Drywall & Paintwithout Inland Empire receiving the payments. Fowlerinsists that Inland Empire has failed to properly account for payments from Drywall & Paint. On April 16, 2014, Inland Empire served a preclaim notice to Western States and Fowler. On September 26, 2014, Inland Empire recorded a claim oflien withthe Benton County auditor's office on the apartmentprojectrealty. OnNovember 17, 2014, Fowler purchased and recorded a release oflien bond from Western Surety Company (Western Surety) with the Benton County auditor's office in the amount of$186,979.57 to release the construction lien on the apartmentreal property. Thebond names Fowler as the 2No. 34022-8-111 InlandEmpire Dry Wall Supply, Co. v. Western Surety Co. principal. The bondreads as always in awkward language: RELEASE OF LIEN BOND KNOWALL MENBYTHESE PRESENTS, ThatFowler General Construction, Inc., as Principal and Western Surety Company, as Surety, are heldand firmly unto InlandEmpire Drywall Co., as Obligee, in the amount ofOne HundredEighty Six Thousand Nine Hundred Seventy Nine & 57/100 (186,979.57) DOLLARS, AND, WHEREAS, Inland Empire Drywall Co. on September 26, 2014, filed a LienNumber 2014-024259 against the property known as Bella Vista Apartments Phase II and owned by Western States Development Corporation, AND, WHEREAS, Fowler General Construction, Inc. does not wish to pay said lien until the validity ofthe lien can beproperly determined or adjudicated. NOW, THEREFORE, ifthe saidPrincipal andSurety shall hold harmless the said Obligee from and against any loss, costs or expenses which may accrue due to the filing ofsaid lien, then this obligationto be null and void, otherwise to remain in full force and effect. Clerk's Papers (CP) at 23 (emphasis added). BothFowler and Western Surety signed the bond. Before Inland Empire filed suit, it demanded direct payment ofthe lien from Western Surety. An agent ofWestern Surety replied: The referenced bond states that Fowler does notwish to pay the lien until the validity ofthe lien canbe properly determined or adjudicated. RCW 60.04.161 states that the condition ofthebond shall be to guarantee payment ofanyjudgmentupon the lien. Thus, if judgmentis entered against Fowler, and Fowler does not satisfy thejudgment, then demand can be made against the Release ofLien Bond. It does not appear that a lawsuit has been filed nor ajudgmententered against Fowler. Atthis time, Western surety is not obligated to satisfy your demand for paymentto InlandEmpire Drywall & Supply. CP at 82.

3No. 34022-8-111 InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

Western Surety's counsel represents Fowlerin a separate actionbroughtby Fowler against Drywall & Paint. PROCEDURE InlandEmpire filed this lawsuit to recover against or foreclose on the lien release bond. Inland Empire only named Western Surety as a defendant. The trial court dismissed this suit because ofInland Empire's failure tojoin and serve Fowler as a defendant. Contrary to the majority, I would affirm. LAWAND ANALYSIS This appeal requires comparing and contrastingthree related construction lien statutes found in chapter 60.04 RCW. Chapter 60.04 RCW creates a construction lien, formerly known as a mechanic's ormaterialman's lien, whichbinds real estate improved by construction in favor ofone who furnishes labor, professional services, equipment, or material for the improvement. RCW 60.04.021. Our first crucial statute is RCW 60.04.141, which establishes a statute oflimitations for foreclosing onthe lien and demands service ofprocess onthe property owner. The statute reads inrelevantpart: 

### Lien-Duration-Procedural limitations. No lien created bythis chapter binds the property subjectto the lien for a longer period than eight calendar months after the claim oflien has been recorded unless an action is filed by the lien claimant within that time in the superior court in the county where the subjectproperty is located to enforce the lien, andservice is made upon the owner of the subjectproperty within ninety days ofthe date offiling the action.

4No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co. (Emphasis added.) We must decide ifthe service proviso ofRCW 60.04.141 still controls after a lien release bond replaces the real property as security, and, ifso, who becomes the owner ofthe property. Our next critical statute is RCW 60.04.161, whichpermits the owner ofthe real estate encumberedby the lien or a contractor onthe construction projectto post a bond in order to release the lien on the real property. The statute reads in pertinentpart: Bond in lieu ofclaim. Any owner ofreal property subjectto a recorded claim oflien under this chapter, or contractor, subcontractor, lender, or lien claimantwho disputes the correctness orvalidity ofthe claim oflien may record, either before or afterthe commencement ofan action to enforce the lien, in the office ofthe county recorder or auditor in the county where the claim of lien was recorded, a bond issued by a surety company ... equal to or greaterthan the amount ofthe bond to be recorded. The bond shall contain a description ofthe claim oflien and real property involved, and be in an amount equal to the greater offive thousand dollars ortwo times the amount ofthe lien claimed ifit is ten thousand dollars or less, and in an amount equal to or greater than one and one-halftimes the amount ofthe lien ifit is in excess often thousand dollars.

. . . The condition of the bond shall be to guaranteepaymentof any judgment upon the lien infavor of the lien claimant entered in any action to recover the amountclaimed in a claim of lien, or on the claim asserted in the claim of lien. The effect of recording a bondshall be to release the realpropertydescribed in the notice of claim of lienfrom the lien andanyaction brought to recover the amount claimed. Unless otherwiseprohibitedby law, if no action is commencedto recover on a lien within the time specified in RCW 60.04.141, the suretyshall be dischargedfrom liability under the bond. If an action is timely commenced, then onpayment ofanyjudgmententered in the action or on payment ofthe full amount ofthe bondto the holder of thejudgment, whichever is less, the surety shall be discharged from liability under the bond. (Emphasis added.) 

### 5No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

Our final decisive statute is RCW 60.04.171, which discusses the lien foreclosure suit. The first paragraph ofthe statute declares: 

### Foreclosure-Parties. The lienprovidedby this chapter, for which claims oflien have been recorded, may be foreclosed and enforcedby a civil action in the court havingjurisdiction in the mannerprescribed for thejudicial foreclosure ofa mortgage. The court shall have the powerto orderthe sale ofthe property. In anyaction brought toforeclose a lien, the ownershall bejoinedas a party. The interest in the real property ofany person who, priorto the commencement ofthe action, has a recorded interest in the property, or any partthereof, shall not be foreclosed or affected unless they arejoined as a party. (Emphasis added.) We must decide, in part, whether RCW 60.04.171 covers an action to foreclose or realize on the lien release bond, and, ifso, who is the owner. We are always to construe a statute in order to apply the intent ofthe Washington Legislature. Department of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 9, 43 P.3d 4 (2002). We are also to read a statute togetherwith related statutes in an attempt to discern the wish ofthe legislature. This court construes the meaning ofa statute by reading it in its entirety and considering its relation with other statutes. Department of Ecology v. Campbell & Gwinn, LLC, 146 Wn.2d at 11. Statutes relating to the same subject matter are to be read together as constituting a unified whole, to the end that a harmonious, total statutory scheme evolves which maintains the integrity ofthe respective statutes. State v. Haggin, 195 Wn. App. 315,319,381 P.3d 137 (2016). The majority writes that the only statute controlling a suit to recover on the lien 6No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.
release bond is RCW 60.04.161. I disagree. This statement disregards the connection between the lien release bond andthe original construction lien and violates the principle that we construe as one related statutes. The majority also writes that RCW 60.04.161 reads that the surety mustbe included in the suit in a timely manner and implies that only the surety must be sued. I find no language in the statute about serving orjoiningthe surety in the lawsuit, let alone stating that the surety is the only party to be served or joined.In this instance, we should fastidiously peruse the three statutes to discern the will ofthe legislature with regard to whether the principal ofthe lien release bond must be joined and served as a party when the bond's obligee forecloses. The statutes are not models ofclarity. But after reading the statutes together, recognizing the purpose behind the statutes, and reviewing case law, the answer arises that the bondprincipal must be joined in the lawsuit. The majority emphasizes a phrase near the end ofRCW 60.04.161, the statute that creates the lien release bond. The phrase declares: "

... ifno action is commencedto

recover on a lien within the time specified in RCW 60.04.141, the surety shall be discharged from liability under the bond." According to the majority, the language suggests that only the surety, and not the bond's principal, need bejoinedin the lawsuit to foreclose on the lien release bond. Butthe majority stretches the language beyond its elasticity. The language says nothing about the parties to invite to the suit. The phrase 7No. 34022-8-111 InlandEmpire 

### Dry Wall Supply, Co. v. Western Surety Co.

does not state that only the surety must be sued orthat conversely the principal need not bejoined in the suit. The three statutes refer to only one suit, a suit to foreclose on a lien. RCW 60.04.161 states that, even after the posting ofthe bond, the claimantproceeds with an action to foreclose on a lien. RCW 60.04.171 demands that the claimantjointhe "owner" in an action to foreclose a lien. The three statutes only describe one procedure regardless ofwhether the bond has replaced the land as security for payment. Note that the phrase emphasized by the majority does not mention filing a suit to collect on the bond, but rather a suit to foreclose on the lien. To repeat, the statute reads: "

... ifno action is commencedto recover on a lien within the time specified in RCW 60.04.141, the surety shall be discharged from liability underthe bond." RCW 60.04.161 (emphasis added). This language confirms that the rules relating to foreclosing a lien under RCW 60.04.141 and .171 control a suit against the bond, regardless ofwhether we employ the terminology "actionto foreclose the lien on the bond" or "actionto recover
on the bond." RCW 60.04.161 uses the indefinite article "a"whenreferring to foreclosure ofa lien release bond. To repeat a second time, the statute reads, in an important section: "

...ifno action is commencedto recover on 

### a lien within the time specified in RCW 60.04.141, the surety shall be discharged from liability underthe bond." (Emphasis added.) Use ofthe indefinite article further shows that the same procedure for 8No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co. foreclosing on the construction lien encumbering land operates when foreclosing on the lien release bond. To keep the surety liable on the bond, the claimantmust file an action to recover on a lien or the lien. One sentence in RCW 60.04.161 declares: "The condition ofthe bond shall be to guarantee payment of any judgment upon the lien in favor ofthe lien claimant entered in any action to recover the amount claimed in a claim oflien, or onthe claim asserted in the claim oflien." This sentence assumes that, despite the posting ofthe bond, the claimant continues with a foreclosure oflien action. Thus, recovery against the bond demands foreclosing the lien and utilizing the lien foreclosure process. One ofthe conditions ofthe lien foreclosure is that the owner ofthe property be served andjoined. A sentence in the succeeding statute, RCW 60.04.171 demands: "In any action brought to foreclose a lien, the owner shall bejoined as a party." (Emphasis added.) Note that the legislature employed the indefinite article again. This language suggests thatthe owner, in addition to the surety, must bejoined as a party in a lien release bond foreclosure. Under such a reading, we need to identify the "owner" in the bond foreclosure. I also note that chapter 60.04 RCW does not present an alternate procedure for foreclosing on a lien release bond instead offoreclosing on land encumbered by the construction lien. Since the legislature did not provide for an alternate procedure and since we must construe the statutory scheme as a whole, I conclude that the language of 9No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

RCW 60.04.141 and .171 requiring service on the "owner" extends to a suit on the lien release bond. Inland Empire argues that we must construe the construction lien statutes liberally and thereby rule in its favor. RCW 60.04.900 states: RCW 19.27.095, 60.04.230, and 60.04.011 through 60.04.226 and 60.04.261 are to be liberally construed to provide security for all parties intended to beprotected by theirprovisions. Case law provides flesh for RCW 60.04.900 and ascertains when courts will employ a liberal construction ofthe statutes. Under Washington decisions, statutes creating liens are in derogation ofthe common law and are to receive a strict construction. Tsutakawa v. Kumamoto, 53 Wash. 231,236, 101 P. 869, 102 P. 766 (1909). Their operation will not be extended for the benefit ofthose who do not clearly

come within the terms ofthe act. Williams v. AthleticField, Inc., 172 Wn.2d 683, 695, 261 P.3d 109 (2011). RCW 60.04.900 means that, when the court determines that persons come within the operation ofthe act, the statutes will be liberally applied to them. Williams v. AthleticField, Inc., 172 Wn.2d at 695. The rule ofliberal construction applies in favor ofInland Empire and almost persuades me tojointhe majority. Still we cannot use the liberal construction requirement to support a strained or unrealistic interpretation ofstatutory language. Senate Republican Campaign Committee v. PublicDisclosure Commission, 133 Wn.2d 229,243, 943 P.2d 1358 (1997). I have already read the statutes to the contrary. This 10No. 34022-8-111 InlandEmpire Dry Wall Supply, Co. v. Western Surety Co. reading demands that the bond claimant follow the procedures needed to foreclose on the construction lien. The nature ofthe lien release bond as later discussed in other decisions confirms this reading. The majority asserts thatthe prevailing view in America is that the principal need not bejoined as aparty when the obligee sues the surety. The majority citesRestatement (Third) of Suretyship & Guaranty§ 50 (1996) for the prevailingrule. The majority may be correct as to this prevailing view. Nevertheless, I question the view'srelevance when

we must review a statutory scheme that substitutes a lien release bond for a construction lien on real property. 74 Am. Jur. 2d Suretyship 

### § 102 (2016) reads, inpart: A surety may in all cases be suedjointly with the principal. Ifthe obligation isjoint and not several, all the obligors mustbejoined as parties defendant. However, ifthe obligation isjoint and several, the creditor has the right to proceed against the surety alone, or ifthe creditor chooses, it may sue the principal, and at the same time bring an action also against the surety, and prosecute both suits concurrently until the creditor obtains satisfaction from one ofthem. (Footnotes omitted). Both Fowler and Western Surety, respectively as principal and surety, bound themselves to Inland Empire. Bothprincipal and surety agreed to hold InlandEmpire harmless from any release ofthe lien on the real property. BothFowler and Western Surety signed the bond. Nevertheless, the bond does not read that the parties sufferjoint and several liability. 11No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

Even assumingjoint and several liability ofFowler and Western Surety, cases conflict with 74 Am. Jur. 2d Suretyship § 102. The only case cited by Am. Jur. 2d for the propositionthat the creditor mayjoin only the surety is Morgen & Oswood Construction Co. v. UnitedStates Fidelity & Guaranty Co., 167 Mont. 64,535 P.2d 170 (1975), wherein the bond specifically read thatthe principal and surety undergojoint and several liability. A series ofTexas cases hold that, when the surety bondprovides forjoint and several liability ofthe surety and principal, the principal is a necessary party to suit on the bond. GreatAmericanInsurance Company v. Sharpstown State Bank, 422 S.W.2d 787 (Tex. Civ. App. 1967); Iley v. Tapick, 368 S.W.2d 809 (Tex Civ. App. 1963). In Smith v. Rogers, 34 S.W.2d 312 (Tex. Civ. App. 1930), the court considered a principal on a sheriffsbondto be a necessary party. Hutnickv. US. Fidelity & Guaranty Co., 47 Cal. 3d456, 763 P.2d 1326, 253 Cal. Rptr. 236 (1988) supports the majority's decision. A landscaperrecorded a mechanic's lien against property on which it hadperformed services. Afterthe landscaper filed suit to foreclose on the lien, apurchaser ofthe land posted a lien release bond from U.S. Fidelity & Guaranty. Eight months after posting the bond, the landscaper servedthe lawsuitpapers on the bonding surety. Shortly thereafter the landscaper filed an amended complaintto add a cause ofaction for foreclosure onthe bond. A California statute read: "Any action onthe lien release bond shall be commencedbythe claimantwithin six months ofthe recording ofthe lien release bond." CAL. CIV. CODE§ 3144.5. The surety 12No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co. sought to dismiss the claim against it because the landscaper failed to sue on the bond within six months ofthe bond'srecording andbecause the landscaper failed to serve the lawsuit onthe land purchaser, who was also the principal onthe surety bond. The California court rejected the surety's arguments. TheHuntnik court identifiedthe purpose behind the lien release bond and its operation. The bondprovides a means by which, before a final determination ofthe lien claimant'srights and withoutprejudice to those rights, the property may be freed ofthe lien, so that it may be sold, developed, orused as security for a loan. Therecording of the lien release bond does not extinguish the lien. Rather the bondreplaces the land as the object to which the lien attaches. The recordation ofthe bond in effecttransfers the claim oflien from the owner's landto the bond. The court adopted the reasoning ofother courts when writing: [A] cause ofaction to foreclose a mechanic's lien is substantially the same whetherreliefis sought against the liened property or against a bond which has been substituted for the property. Thus it has been saidthatthe bond "does not change the relation orrights ofthe parties otherwise than in substituting its obligations for the [property] subjectto the lien, and itwas notwithin the legislative purpose in permitting the substitution to deteriorate the lienor's rights." 47 Cal. 3d at 463 (quotingHarley v. Plant, 210 N.Y. 405,410, 104 N.E. 946 (1914)). The courtreasoned that the landscaper's amendmentto foreclose on the bond ratherthan the real property did not commence a new cause ofaction. Therefore, the landscaperhad commencedthe claim against the surety timely. The same reasoning supports a 13No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

conclusion that the bond claimant must follow the procedural rules ofthe construction lien foreclosure statutes, including the Washington statutory provisions of joining the

owner ofthe property. The Hutnick court later addressed whatparties the lien claimant shouldjointo a foreclosure ofthe lien release bond. The court citedprevious California case law when writing: "The defendants on the bond cause ofaction are the principal and the sureties." This is so because whenthe release bond is recorded, the bond obligations ofboth principal and surety are substituted for the property as the objectto whichthe mechanic's lien attaches. 4 7 Cal. 3d at 469 (quoting CAL. CONTINUING EDUC. OFBAR, CALIFORNIA MECHANICS' LIENS AND OTHERREMEDIES§ 2.61, at 111 (2d ed. 1988)). Despite identifying the bond principal as a defendant in the bond action, the California high court ruled that the landscaper need not have served theprincipal withthe summons and complaint in order to proceed against the surety. The court declared: Still to be addressed is the more general question raised by the Court ofAppeal regarding the surety's liability when the lien claimant has not served the release bond principal as a defendant in the foreclosure action. The present case directly raises this problem because although plaintiffs have named Anderson, the new owner ofthe property and the principal on the bond, as a defendant in this action, Anderson has notbeen served and has not appeared. We may assume arguendo that ajudgment on a lien release bond would not be directly enforceable against a principal who had not been served and had not appeared in the action. This does not mean, however, thatthe surety will be compelledto defend the action alone and unassisted by the principal. Ifonly the surety isjoined, the resultingjudgmentwill be 14No. 34022-8-111 InlandEmpire Dry Wall Supply, Co. v. Western Surety Co. binding on the principal, provided only that the surety has given notice to the principal "and an opportunity at the surety's request tojoinin the defense." (Code Civ. Proc.,§ 1912.) A principal notified ofthe action by the surety will have the same motivation to defend the action as ifformally named as a party, because thejudgmentwill be equally conclusive as a determination ofthe principal's liability. Consequently, the surety has the means to call upon the principal to defend the lien foreclosure action. 4 7 Cal. 3d at 469 (citations omitted). Hutnick can be distinguished. The California statute, unlike the Washington statute, specifically mentioned "any action on the lien release bond." 47 Cal. 3d at 464. Washington also does not have a statute by which the principal is bound by ajudgment against the surety ifthe surety gives the principal notice ofthe suit. TheHutnick decision mentions no California statutes requiring the owner ofproperty to bejoined in the suit. Three Washington decisions provide help in answering the first question on appeal in favor ofdemanding service on the bondprincipal. All three supportthe proposition that an action on the lien release bond is tantamount to foreclose on the construction lien. InDBMConsultingEngineers, Inc. v. UnitedStates Fidelity & Guaranty Co., 142 Wn. App. 35, 170 P.3d 592 (2007), DBM Consulting Engineers recorded a lien against the owner ofreal estate to secure a debt DBM asserted it was owed under a contract. The

owner obtained a lien bondto allow it to sell the property. DBM sued the owner for breach ofcontract and to foreclose the lien and prevailed at trial on the contract claim. DBM did not seek ajudgment on its foreclosure claim. DBMthen sued the bond surety to compel it to pay DBMthe amount ofthe bond. This courtheld that, because DBM 15No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

failed to obtain ajudgmentonthe lien in its first suit and only obtained ajudgment on the breach ofcontract claim, the surety was not obligatedto pay on the lien bond. InDBMConsultingEngineers, this court interpretedthe language ofRCW 60.04.161, the lien bond statute. I have already discussed the relevant sentence in the statute, which states: "The condition ofthe bond shall be to guarantee payment ofany judgmentupon the lien in favor ofthe lien claimant entered in any action to recover the amount claimed in a claim oflien, or onthe claim asserted in the claim oflien." 142 Wn. App. at 39 (quoting RCW 60.04.161) (emphasis omitted). This court agreed withthe surety that the sentence declares that the bond only guaranteespayment ofajudgmenton the lien. Whenthe lien claimant forecloses on the lien, thejudgment is paid from the bond. The purpose ofsuch a bond is to transfer the lien from theproperty to the bondto permit alienation ofthe property. The bond is not a concession thatthe lien is valid and correct. Thus, the claimant must still adjudicate the validity ofthe lien. Since DBM failed to adjudicate its lien in the first lawsuit, resjudicatabarred the second lawsuit. Failure to adjudicate the lien was fatal to the claim against the surety. Olson Engineering, Inc. v. Key BankNationalAssociation, 171 Wn. App. 57, 286 P.3d 390 (2012) also supports the conclusion that the construction lien foreclosure statutes control suits on the lien release bond since the bond claimant must still prove the validity ofits lien. Ifthe action on the bond is tantamountto foreclosure ofthe

16No. 34022-8-111 InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

construction lien, the bond claimant must follow the procedural requirements ofthe lien foreclosure statutes, including the requirement thatthe owner bejoined. The third important Washington decision is this court's newly minted decision in Ca/Portland Co. v. Leve/One Concrete, LLC, 180 Wn. App. 379,321 P.3d 1261 (2014). CalPortland answers the question ofwho is the "owner ofthe property" whenthe bond replaces the real property lien. CalPortlandprovided building materials to LevelOne Concrete, a subcontractor working onthe construction ofa new Costco building for which Ferguson Construction served as general contractor. LevelOne Concrete failed to pay for the materials, and CalPortlandrecorded a lien against the real property. Before any lawsuit, Ferguson Constructionposted a lien release bond issued by Travelers Casualty and Surety. The trial court dismissed CalPortland's suit on the bond because CalPortland failed tojoin Costco as a defendant. The surety relied on RCW 60.04.141, which requires the lien claimant to serve the suit on the owner ofthe property. This court reversed since Costco neednot have been served withprocess after Ferguson Construction substituted the lien release bond for the construction lien onthe real property. Costco was no longer the "owner" ofthe relevant property. This court in Ca/Portlandnoted the purpose and operation ofthe lien release bond. RCW 60.04.161 allows a party to file a bondto free the real property for conveyance by transferring the lien to the bond. Filing the bond does not destroy the lien 17No. 34022-8-111 InlandEmpire Dry Wall Supply, Co. v. Western Surety Co. entirely, but instead transfers the lien from the real property to the bond. The lien bond releases the property from the lien, butthe lien is then secured by the bond. The plain language ofthe statute established that Costco's realty was no longer "property subjectto the lien" for purposes ofRCW 60.04.141 'sprocedural requirement. Ca/Portlanddoes not involve our situation on appeal ofthe lien claimant failing to

serve the principal under the lien release bond. Some dicta, however, couldbe read to demand thatthe principal ofthe bondbe served. This court wrote: The bond did not name Costco as a principal or surety. Thus, when CalPortland filed suit, Costco did not have an ownership interest in any property "subject" to the lien within the meaning ofRCW 60.04.141. In fact, the plain terms ofthe statute rendered Costco's property immune from "any action broughtto recover the amount claimed" by CalPortland. RCW 60.04.161. CalPortland, therefore, had no duty to serve Costco with the summons and complaint. The only parties with an interest in the bond were Ferguson and Travelers: the principal and surety named in the security. Thus, the trial court erred in relying on CalPortland's failure to serve Costco in granting summaryjudgmentto Ferguson. Ca/Portland Co. v. Leve/One Concrete LLC, 180 Wn. App. at 388. As a party with an interest in the bond, the bond's principal should be identified as its owner. Ca/Portland's dictum thereby supports the conclusion that the principal ofthe surety is the ownerwho must be served in the lien release bond foreclosure action. Foreign decisions also support my conclusion that the principal ofthe lien release bond shouldbejoined and served as a party in the action to recover on the bond. A closely aligned decision is Synchronized Construction Services, Inc. v. PravLodging, 18No. 34022-8-111 InlandEmpire Dry Wall Supply, Co. v. Western Surety Co. LLC, 288 Va. 356, 764 S.E.2d 61 (2014). The Virginia high court addressed the commonwealth's version ofa lien release bond statute. The court noted thatthe bond replaces the real property as the subject ofthe foreclosure, and, in turn, parties with an interest in the bond, including the principal, are necessary parties to the foreclosure. The court wrote: Certain "parties in interest" may, in accordance with the rules set forth by the General Assembly, post a bond after a mechanic's lien enforcement action has been filed. A properly posted bond releases the real estate from the mechanic's lien enforcement action. We have previously recognized that this bonding-offprocess only "substitutes the bond for the real estate" that hadbeen subject to the mechanic's lien. Because the real estate is no longer subjectto the mechanic's lien enforcement action once a bond is properly posted, the "subject matter" orres ofthe suit is no longer the real estate, but is instead the postedbond itself. This has a logical impact on the necessary party analysis. Ifno bond has been postedthe inquiry turns upon whichparties have a realproperty interest in the real estate subject to the mechanic's lien, butwhen a bond is postedthe inquiry focuses upon whichparties have apecuniary interest in the bonditself which is "likely eitherto be defeated or diminished" by the plaintiffs "claim against the bond." To this end, we have previously consideredwhichparties constitute "necessary parties-defendantto [a] bond enforcement suit." The principal on the bond and the surety on the bond are necessary parties. However, the owner ofreal estate, the trustee under the deed oftrust, and the beneficiary ofthe deed oftrust are no longer necessary parties whentheir only relation to the litigation is their respective real property interests in the real estate that had been subjectto the mechanic's lien, butthatwas no longer encumbered once the bond had beenposted in accordance with Code§ 43- 70. 764 S.E.2d at 66 (citations omitted) (alteration in original). In a 4 to 3 decision, the Synchronized Construction Services courtheld that the 19No. 34022-8-III InlandEmpire

### Dry Wall Supply, Co. v. Western Surety Co. general contractor, who had no pecuniary interest in the bondpostedto release the real property lien, was not a necessary party to the foreclosure onthe bond. The general contractor did not pay for the bond. A lender and the property ownerpurchasedthe bond. The three dissenters considered the general contractorto also be a necessary party to the suit since the bond needed to pay only ifthe subcontractor, who filed the lien, was obligated to pay the general contractor. The general contractor should have the opportunity to assert any claims or defenses it might have against paymentto the subcontractor. The general contractor should have the opportunity to protect itself against claims ofthe subcontractor. Another Virginia decision is illustrative. InJohnson Controls, Inc. v. Norair Engineering Corp., 86 Va. Cir. 138 (2013), the court held that, when a lien release bond replaces a mechanic's lien, the owners ofthe real property are no longer necessary parties. Instead, the bond principal and surety are necessary parties. The court dismissed the suit. Although the bondprincipal was named a party in other causes ofaction within the same lawsuit, the bond claimant failed to name the principal as a defendant in the

cause ofaction seeking to foreclose on the bond. George W Kane, Inc. v. NuScope, Inc., 243 Va. 503,416 S.E.2d 701 (1992), teaches ofthe need tojointhe principal in the bond foreclosure action. In orderto

recover against the bond, the claimant must prove a valid lien and the amount ofthe lien. Therefore, the sameparties as required to enforce the lien should be present in the bond 20No. 34022-8-111 InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

recovery action. The principal ofthe bond, who is oftenthe general contractor or the hirer ofthe claimant, has an interest in the outcome ofthe suit. The principal generally has information critical to the resolution ofthe dispute. A series ofNew York cases also supports the conclusion that the principal ofthe lien release bond must bejoinedin a suitto recover on the bond. UnderNew York law, all persons should be made parties defendant, in the bond suit, who wouldbe proper parties to an action for the foreclosure ofthe lien in case a bond had notbe given. Henry QuentzelPlumbingSupply Co. v. 60 Pineapple Residence Corp., 126 Misc. 2d 751,483 N.Y.S.2d 927 (1984); Von DenDriesch v. Rohrig, 45 A.D. 526, 61 N.Y.S. 341 (1899); Genninger v. FrankA. Wahlig Co., 116 N.Y.S. 578 (N.Y.C. City Ct. 1909); Morton v. Tucker, 145 N.Y. 244, 40 N.E. 3 (1895); Sheffieldv. Robinson, 80 N.Y. Sup. Ct. (73 Hun) 173, 25 N.Y.S. 1098 (1893). The New York and Virginia cases may conflictwith the ruling in Ca/Portland Co. v. Leve/One Concrete, LLC, 180 Wn. App. 379 (2014) in that, in Washington, the owner ofthe improved real property need notbejoined in the bond foreclosure suit. Nevertheless, the foreign cases illustrate the need to at least require the bondprincipal to bejoined as a party. Joining the bond principal in the bond recovery suit serves anotherpurpose. The principal must reimburse the surety for any money paid by the surety. FirstInterstate BankofWashington, N.A. v. Ne/co Enterprises, Inc., 64 Wn. App. 158, 162-63, 822 P.2d 1260 (1992); Leuningv. Hill, 79 Wn.2d 396, 400-01, 486 P.2d 87 (1971); Eder v. Nelson, 21No. 34022-8-III InlandEmpire Dry Wall Supply, Co. v. Western Surety Co.

41 Wn.2d 58, 62, 247 P.2d 230 (1952). Typically an indemnity agreementbetweenthe principal and surety confirms this common law rule. Fairness then asks that the principal be able to litigate the validity ofthe lien. I assume that the surety will often notify the principal ofthe suit, but I cannotbe assured that notification will always occur. Demanding that the bond claimantjointhe bondprincipal imposes minimal burden on the claimant compared to the harm that couldresult withoutthe presence ofthe principal in the lawsuit. Inland Empire observes that counsel representing Western Surety in this appeal and at the trial court level in this suit also represents Fowler in a lawsuit brought against Drywall 

### &Paint. I do not find this observation controlling onthe outcome ofthe appeal. No case stands for the propositionthat aparty need notbe served andjoinedin a suit if thatparty's counsel in another lawsuitrepresents another party in the pending suit. In other lien release bond cases, the surety's attorney may notrepresent the bond's principal in another suit.

Fearing, C.J. 

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