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# rruE IN CLERKt OFFICE 8UPRBE COURT,STKIEOFVIMSHNQTOli This opinion was filed for record 

# at. (Xk on i/.UV /y 7£}1^
J

GHIEFJUSTKE DATE JAN 1 8 SUSAN L. CARLSON SUPREME COURT CLERK

IN THE SUPREME COURT OF THE STATE OF WASHINGTON

INLAND EMPIRE DRY WALL SUPPLY CO.,a Washington corporation,

Respondent,

V. WESTERN SURETY COMPANY (Bond No. 58717161), Petitioner. No. 94118-1

En Banc

Filed JAN 1 8 ?niS JOHNSON,J.—This case involves the issue ofwhether the purchaser ofa lien release bond is an indispensable party in an action under chapter 60.04 ROW by a lien claimant against the surety ofthe release bond.The Court ofAppeals,in a divided opinion,reversed the trial court's grant ofsummary judgment in favor of the surety and held that a claim against a lien release bond could be pursued solely against the surety. We affirm.Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No. 94118-1

Facts and Procedural History 

### Inland Empire Dry Wall Supply Company is a supplier ofdrywall materials. Inland Empire entered into an agreement to supply drywall materials to Eastern 

### Washington Drywall & Paint (EWD&P).EWD&P contracted with Fowler General Construction to work on an apartment complex project in Richland, Washington. Inland Empire claims to have supplied $124,653.05 worth ofdrywall for the apartment complex project work that EWD&P was performing. Inland Empire claims EWD&P never paid it for the materials supplied. To pursue payment,Inland Empire filed a preclaim notice and timely recorded a mechanics' lien against the construction project under RCW 60.04.091. To release the project property from the lien. Fowler obtained a lien release bond in the 

### amount of$186,979.57 from Western Surety Company.The lien release bond identifies Fowler as the "Principal," Western as the "Surety," and Inland Empire as the "Obligee." Clerk's Papers (CP)at 23. After Fowler recorded the lien release bond.Inland Empire filed an action asking for "judgment in the principle sum of 

### $124,653.05"plus interest, costs, and attorney fees,and for "an order foreclosing [its] claim against Defendant Western Surety's Bond . . . and an Order directing the penal sum be paid to [it]." CP at 5,6. The complaint named Western Surety—but not Fowler,the principal on the bond—as a party to the action. In its answer. Western raised several affirmative defenses, including the affirmative defense thatInland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### Inland Empire failed to name and include Fowler as a necessary and indispensable party,and that Inland Empire had not satisfied the statute oflimitations under chapter 60.04 RCW.Inland Empire and Western then filed cross motions for summary judgment. 

### The trial court granted summary judgment in favor ofWestern. It ruled that under RCW 60.04.141,Inland Empire was required to sue and serve both Western 

### as surety and Fowler as principal in the action to foreclose on a lien release bond.It reasoned that because the bond,rather than the apartment complex property, was now the property subject to the claim oflien. Fowler,as purchaser ofthe bond, together with Western became owners ofthe subject "property." The trial court therefore dismissed the lawsuit because Inland Empire failed to name and to serve Fowler as a party within the 90 days required under RCW 60.04.141. Division Three ofthe Court ofAppeals in a divided opinion reversed,the majority holding that RCW 60.04.161 controlled under these circumstances and that Inland Empire was only required to name Western,the bond surety, as the defendant to its bond foreclosure action.Inland Empire Dry WallSupply Co. v. W. Sur. Co., 197 Wn.App. 510,519, 389 P.3d 717,review granted, 188 Wn.2d 1002, 393 P.3d 785 (2017). ChiefJudge Fearing dissented.Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No. 94118-1
Analysis This case raises the issue ofwhether under chapter 60.04 RCW the 

### purchaser ofa lien release bond is an indispensable party who must be named and joined in an action on the lien release bond;this is an issue ofstatutory 

### interpretation. Construction ofa statute is a question oflaw that this court reviews de novo.State v. Wentz, 149 Wn.2d 342, 346,68 P.3d 282 (2003). Where a 

### "statute's meaning is plain on its face,then the court must give effect to that plain meaning as an expression oflegislative intent."Dep't ofEcology v. Campbell & Gwinn, LLC, 146 Wn.2d 1, 9-10,43 P.3d 4 (2002). Such meaning "is discerned from all that the Legislature has said in the statute and related statutes which disclose legislative intent about the provision in question," and ifthe statute 

### remains susceptible to more than one reasonable meaning,this court resorts to aids ofconstruction, including legislative history. Campbell & Gwinn, 146 Wn.2d at 11, 12. Chapter 60.04 RCW creates a cause ofaction for suppliers oflabor, materials, or equipment to a construction project. The statute is often referred to as the "construction lien" statute. Before chapter 60.04 RCW was enacted, material and equipment providers and laborers were limited in pursuing unpaid claims under contract principles and generally could bring suit against only the purchaser ofthe materials or person (or entity)contracting for labor. In the absence ofsomeInland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### equitable or contractual theory,no claim existed against the property,property owner,or others. Construction lien statutes such as chapter 60.04 RCW were 

### enacted to create a cause ofaction and remedy under certain circumstances in the 

### construction industry. The enactment ofchapter 60.04 RCW created a limited
cause ofaction, allowing a claim to be filed against the property and property 

### owner,so long as strict statutory time requirements were followed. As we have 

### previously noted,the statute is construed liberally to protect persons who fall within its provisions.See Williams v. Athletic Field, Inc., Ill Wn.2d 683,696-97, 261 P.3d 109 (2011). 

### RCW 60.04.021 allows "any person furnishing labor,professional services, 

### materials, or equipment for the improvement ofreal property" to place a lien on the construction project property as a method ofsecuring payment for services rendered. A lien claimant, here Inland Empire,is required to give the property 

### owner and the prime contractor written notice ofthe lien claim and to record the notice in the county where the subject property is located. RCW 60.04.031, .091. The statutory scheme includes strict time limits in which to act. 

### RCW 60.04.141 describes procedures a lien claimant must follow once the lien has been recorded. It provides, in relevant part: No lien created by this chapter binds the property subject to the lien for a longer period than eight calendar months after the claim cif lien has been recorded unless an action is filed by the lien claimant withinInland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### that time in the superior court in the county where the subject property is located to enforce the lien, and service is made upon the owner of 

### the subject property within ninety days ofthe date offiling the action .

. . and in case the action is not prosecuted to judgment within two 

### years after the commencement thereof,the court, in its discretion, may dismiss the action for want ofprosecution,and the dismissal ofthe 

### action or a judgment rendered thereon that no lien exists shall constitute a cancellation ofthe lien. RCW 60.40.141. The statutory language makes it clear that RCW 60.04.141 

### requires "the owner ofthe subject property" to be named in actions where no release bond has been filed. This makes legal and practical sense: while the foreclosure suit seeks to enforce payment,ifpayment is not made,the property 

### owner's interest in the property may be foreclosed, i.e., forfeited. Based on this potential remedy,the statute—^RCW 60.04.141—requires joinder ofthe property owner.Failure to comply with these statutory provisions results in the loss by the lien claimant ofthe right to the lien. See Bob Pearson Constr., Inc. v. First Cmty. Bank, 111 Wn.App. 174, 179,43 P.3d 1261 (2002). The type ofaction created under RCW 60.04.141 is a quasi in rem type ofaction where the object, or res, is the real property. RCW 60.04.161 authorizes a property owner or contractor, subcontractor, lender, or lien claimant who disputes the correctness or validity ofthe claim oflien to post a lien release bond. The real property then is released from the claim and becomes unreachable,and the bond purchaser instead posts the bond as security.Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### The purpose ofthe lien release bond is twofold.First,the bond protects the property owner by removing the lien from the real property,thus providing the
owner with clear marketable title. Second,the bond "protects the lien claimant by 

### taking the place ofthe property and serving as a form ofsubstitute security should the lien claimant ultimately prevail." TheLaw OF Miscellaneous and 

### Commercial Surety Bonds 155 (Todd C.Kazlow & Bruce C.King eds., 2001);
see also CalPortland Co. v. LevelOne Concrete, LLC, 180 Wn.App. 379, 387, 321 

### P.3d 1261 (2014). Fowler,the general contractor on the project here,obtained a lien release bond to free up the construction project property. As the Court of Appeals correctly recognized,"Once a lien release bond is recorded,the procedural statute shifts from RCW 60.04.141 to RCW 60.04.161."Inland Empire, 197 Wn. 

### App. at 516.Unlike RCW 60.04.141,the language ofRCW 60.04.161 refers to the liability ofthe surety and does not mention either the bond purchaser or property owner in that context.RCW 60.04.161, ofcourse,necessarily refers to the owner 

### ofthe property as one ofseveral entities that may dispute a lien and record a bond. But aside from that reference, it simply states that "[t]he condition ofthe bond shall be to guarantee payment ofany judgment upon the lien in favor ofthe lien claimant entered in any action to recover the amount claimed in a claim oflien, or on the claim asserted in the claim oflien." RCW 60.04.161 (emphasis added). It further provides:Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### The effect of

recording a bond shall be to release the realproperty described in the notice ofclaim oflien from the lien and any action 

### brought to recover the amount claimed. Unless otherwise prohibited by law,ifno action is commenced to recover on a lien within the time specified in RCW 60.04.141,the surety shall be discharged from liability under the bond.Ifan action is timely commenced,then on 

### payment ofany judgment entered in the action or on payment ofthe full amount ofthe bond to the holder ofthe judgment,whichever is 

### less, the surety shall be discharged from liability under the bond. RCW 60.04.161 (emphasis added). The real property owner and the real property 

### subject to the claim oflien are no longer subject to the claim. The bond becomes the only available source for the lien claimant to turn to in seeking to collect the amount owed,and the bond purchaser under RCW 60.04.161 therefore need not be treated the same way as the property owner under RCW 60.04.141.Nothing in the statute suggests that the bond purchaser gets the bond back ifthe claim fails for any reason. The Court ofAppeals majority correctly recognized that [tjhis substitution ofthe "surety" in RCW 60.04.161 for the "owner of the subject property," 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. Inland Empire, 197 Wn.App.at 516-17. Western argues that suing only the surety on a release bond does not satisfy RCW 60.04.161 and RCW 60.04.Mi's procedural requirements "because a 

### surety's liability is fully conditional and not triggered and absolute until the lien claimant successfully litigates with the principal to establish the disputed lien'sInland Empire Dry WallSupply Co. v. Western Surety Co.,No.94118-1



### correctness and validity." Pet. for Review at 10. The statutory language Western 

### relies on does not expressly state against whom the action to foreclose on the lien must be brought. 

### The main premise ofWestern's argument is that until the validity ofthe lien claim has been adjudicated as between the principal and the lien claimant,no 

### obligation exists on its part to pay. It is true that the lien claimant must prove the validity and the right to recover the claimed amount,whether its claim is against 

### the property and its owner or the bond.But that does not answer the question of who must be named as a party. That issue is resolved by looking at the statutory 

### provisions. To that end,nothing in the language ofRCW 60.04.161 stating that "any judgment upon the lien in favor ofthe lien claimant entered in any action to

recover the amount claimed . . . or on the claim asserted in the claim of lien" 

### requires that the lien claimant must first proceed against the principal. (Emphasis added.) 

### Western argues that the provisions ofthe lien release authorization ofRCW 60.04.161 must be read in conjunction with the general provisions ofRCW 60.04.141,which set forth the procedures for bringing an action to foreclose the 

### original lien as against the real property. It maintains that the procedural requirements ofRCW 60.04.141,and specifically the language that service is to be made on the "owner ofthe subject property," should be and have been interpretedInland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### to require that both the principal and the surety be joined in the action to foreclose on the bond.But reading these provisions together does not support the result that Western wants. Western reads more into the statutory language than what is actually there. 

### While RCW 60.04.161 expressly states that the action to recover the amount claimed has to be commenced within the time specified in RCW 60.04.141, it does 

### not transpose any other requirements contained in RCW 60.04.141 on the lien claimant seeking to commence an action on the bond. Instead, it states that unless
an action to recover on a lien is timely commenced,the surety must be discharged 

### from liability under the bond.It further states that ifthe action is timely commenced,then on payment ofany judgment entered in that action or on payment ofthe full amount ofthe bond to the judgment holder,the surety's liability will be discharged. RCW 60.04.161. As the Court ofAppeals here noted, "Unlike RCW 60.04.141,RCW 60.04.161 makes no mention ofthe 'owner ofthe subject property' as an entity necessarily impacted by a suit." Inland Empire, 197 Wn.App.at 516.The only reference in RCW 60.04.161 to the owner ofthe property subject to a lien is in the context ofidentifying the owner as one ofseveral entities permitted to dispute a lien and record a bond.RCW 60.04.161 does,however,explicitly refer to the surety and the conditions that would discharge its obligations, which evinces a

10Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### legislative choice to treat the surety's rights and obligations distinct from those of the other parties. 

### To complete the statutory picture,RCW 60.04.171 provides that "[i]n any action brought to foreclose a lien, the owner shall be joined as a party." Western, 

### as well as Judge Fearing in his dissent,relied on this language to construe the statutory framework and the legislative intent to require that the lien claimant in an action to recover on the bond is required to join the principal as the "owner" ofthe bond.Tellingly,RCW 60.04.171 also states that "[t]he court shall have the power to order the sale ofthe property," which renders any reliance on this provision to equate Fowler to the owner ofthe subject property unconvincing. The concept ofan "owner" in a two party, owner-versus-lien-claimant relationship is not easily transposed to a situation where general suretyship law principles provide that a bond lien claimant,here Inland Empire,"has two sets of rights, one set against the principal," here Western,"and the other against the secondary obligor," here Fowler.RESTATEMENT(THIRD)OF SURETYSHIP AND Guaranty § 50 cmt.(Am.Law Inst. 1996). Further, "[a] suretyship relationship is a three-party relationship between surety,principal, and obligee [, and]the surety undertakes to answer for the debt or default ofthe principal," RICHARD E. Tasker etal..Practical Guide to Construction Contract Surety Claims 9 (1997). The legislature does not impose the constraints ofa rather straightforward,

11Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### two party relationship between a real estate owner and lien claimant on parties

•» 

### whose relationship originates from and is generally undertaken under the law of suretyship. 

### A similar situation was analyzed in CalPortland, 180 Wn.App.379. In that case,the Court ofAppeals determined that a real property owner is not a necessary party to a suit against a lien release bond. In CalPortland,a general contractor recorded a lien release bond after a building materials provider recorded a claim of 

### lien against the construction property but before the provider filed suit. When the provider, as a lien claimant,thereafter sued on the lien, it named the general contractor and the surety among various defendants but did not name the real property owner as parties. The Court ofAppeals held that the trial court erred in granting summary judgment in favor ofthe general contractor and stated that including the bond principal and surety is "sufficient" in an action on a release bond.But the Court ofAppeals in CalPortland did not hold that the bond purchaser was a necessary party that had to be joined. Western contends its position is supported by Division One's decision in DBM Consulting Engineers, Inc. v. United States Fidelity & Guaranty Co., 142 Wn.App. 35, 170 P.3d 592 (2007). There,the lien claimant,DBM, recorded a mechanics' lien against a client's property to secure a debt owed. Subsequently, the client recorded a lien release bond. In the action alleging breach ofcontract,

12

### InlandEmpire Dry WallSupply Co. v. Western Surety Co.,'S\o. 94118-1



### unjust enrichment,and foreclosure ofthe mechanics' lien,DBM failed to ask for judgment on the lien foreclosure claim and no judgment was entered as to that claim. When DBM demanded that the surety pay the entire bond amount as partial 

### satisfaction ofthe judgment,the surety refused, citing DBM's failure to foreclose
on the lien. Division One noted that ROW 60.04.161 was not a model ofclarity. It 

### interpreted ROW 60.04.161 to require judgment against the bond.The DBMcourt concluded that because DBM did not obtain a judgment foreclosing its lien,the surety was not obligated to pay on the lien bond. DBMdoes not establish a requirement that a lien claimant seeking to 

### foreclose on the lien cannot proceed against the surety,here Western,to do so. The facts and procedure differ. In DBM,the lien claimant initially filed suit against the property owner before the property owner filed a lien release bond.DBM could have,and likely should have,amended its pleadings and sought to foreclose on the lien secured by the bond. It did not do so.Unlike in CalPortland and here,no claim was asserted against the bond or the surety at the time the lawsuit was commenced.DBMdots,not impact the statutory analysis here. 

### Western also cites to Olson Engineering, Inc. v. KeyBankNationalAss 'n, 

### 171 Wn.App. 57,286 P.3d 390 (2012),for the proposition that "Washington's construction lien foreclosure statutes control suits on lien release bonds because the 

### bond claimant must still prove the validity and correctness ofits lien." Suppl. Br.

13Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No. 94118-1



### ofPet'r at 12. The primary issue before the court in was whether RCW 

### 60.04.161 prevents a trial court from adjudicating the parties' lien priorities when one party files a release-of-lien bond. Olson, 171 Wn.App.at 63. In reaching the conclusion that RCW 60.04.161 does allow a trial court to adjudicate the parties' 

### lien priorities after the filing ofsuch a bond,the Court ofAppeals concluded that "[t]he plain language ofthe statute . . .implies that to be entitled to the proceeds of the lien release bond,the lien claimant must obtain a favorable judgment on the 

### lien." Olson, 171 Wn.App. at 66. Relying on this interpretation, the court also went on to review the trial court's grant ofsummary judgment as to the validity of the lien at issue. This reading ofthe statutory language by the court in Olson is consistent with our conclusion here that the statutory language allows this determination ofvalidity to be made in an action brought against the surety without naming and joining the principal in the action. Here,Inland Empire filed its lawsuit in the trial court after Fowler,the general contractor,had already posted the release bond,and in its complaint sought "judgment in the principle sum of$124,653.05" as well as "an order foreclosing Plaintiffs claim against Defendant Western Surety's Bond No. 58717161 and an Order directing the penal sum be paid to Plaintiffto satisfy the principal, interest and costs incurred in prosecuting this claim." CP at 5, 6. Inland Empire and Western appear to agree that Inland Empire cannot obtain a judgment on the lien

14Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### and foreclose against the bond without first litigating the validity ofthe lien and correctness ofthe amount due and owed.The disagreement lies, rather, in that Western believes that determination requires Inland Empire to name and join 

### Fowler,the general contractor who purchased the lien release bond from Western, as a necessary party. Inland Empire,on the other hand,argues that litigating the validity and correctness ofthe lien, although prerequisite to obtaining a judgment and foreclosing against the bond,can occur in the same action brought by the lien claimant obligee against the surety. 

### Western appears to conflate two unrelated statutory requirements by arguing that because the validity ofthe lien must be determined first, the lien claimant obligee has to do so in an action against the principal before it can bind the surety and trigger its obligations, yet the remedy that it seeks before this court is compulsory joinder ofthe principal in what is essentially the same action. The analysis ofthe statutory language and the case law discussed supra does not support Western's proposition. First, as previously stated, nothing in the statute or the case law discussed above suggests that the surety is precluded from challenging and litigating the validity or amount ofthe lien. RCW 60.04.161 functions to allow a substitution of the bond for the real estate,replacing the res to which the lien attaches. But aside from the requirements ofthe timing ofthe action ofRCW 60.04.141,it does not

15Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No. 94118-1



### impose any requirements on the lien claimant such that it would have to litigate against both the principal and the surety.Nothing in the statute or our case law prevents the surety from asserting the same claims or defenses as the principal on the bond,and nothing prevents the surety from impleading the principal or from 

### seeking its assistance.^ Counsel for the petitioner appears to have recognized as much at oral argument,agreeing that substantively,nobody's rights or obligations differ depending on who is named. Wash. Supreme Court oral argument.Inland Empire Dry WallSupply Co. v. W.Sur. Co.,No.94118-1 (Sept. 28,2017),at 8 

### min., 11 sec., audio recording by TVW,Washington State's Public Affairs Network,http://www.tvw.org. 

### Importantly,RCW 60.04.161 authorizes not only property owners but also contractors, subcontractors, lenders, or other lien claimants to obtain and record a 

### lien release bond. Inland Empire points out that lien claimants, such as itself,may have no contractual or other basis for obtaining a judgment against these potential principals. In this instance. Inland Empire recorded a lien against the real property project in question on the basis ofEWD&P's alleged nonpayment,not Fowler's. 

### The statutory lien claim against the property (and now the bond)is the only claim that can be successfully pursued,and in cases ofunavailability or insolvency ofthe

^ Sureties, as well as bond purchasers,can likewise seek indemnification.

16Inland Empire Dry WallSupply Co. v. Western Surety Co.,No.94118-1



### original debtor,chapter 60.04 RCW operates to establish the only feasible legal basis for recovery for lien claimants like Inland Empire. While including Fowler as the principal on the bond it obtained to free up the apartment complex project would have been feasible,joinder is not a statutory prerequisite. Western cites to case law from Virginia in support ofthe proposition that a 

### surety should be considered a necessary and indispensable party in Washington, focusing on Synchronized Construction Services, Inc. v. Prav Lodging, LLC,288 Va. 356,764 S.E.2d 61 (2014),and Johnson Controls, Inc. v. Nor air Engineering 

### Corp., 86 Va. Cir. 138 (2013). While those cases do suggest that in Virginia,both the principal and the surety are necessary parties in a lien foreclosure action,they rely on and stem from the statutory language ofthe Virginia mechanics' lien statute. Va. Code Ann. § 43-71 explicitly states that "[t]he sureties on any [lien release] bond,which may be involved in any suit or action brought under the provisions ofthis section, shall be made parties to such suit or action." The 

### Virginia statutory provision differs from RCW 60.04.161 and is not helpful here.^

^ It is noteworthy that in Oregon,where the lien release statute directs lien claimants to proceed against the principal on the bond,sureties have also argued a surety is an indispensable party in an action to foreclose the underlying lien. See, e.g., Valencich v. TMTHomes ofOr., Inc., 193 Or. App.47,88 P.3d 300 (2004)(rejecting a surety's argument that had it been made a party,it would have been able to contest the validity ofthe underlying liens).

17Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### Western also cites to statutory provisions out ofArizona (Ariz.Rev.Stat. § 

### 33-1004(C),(D)),New York (N.Y.Lien Law § 37(7)),Oklahoma (Okla.Stat. tit. 42, § 147.1)and Nevada (Nev.Rev.Stat. § 108.242l(2)(b))for the 

### proposition that "general suretyship law principles can be superseded and rendered inapplicable by contrary statutory requirements or other authority." Suppl.Br.of Pet'r at 14. Western is correct that lien statutes are viewed by most courts to be in derogation ofcommon law.See, e.g., THE Law OF MISCELLANEOUS AND 

### Commercial Surety Bonds,supra,at 158. In applying this principle, we analyze
our statute in accordance with the general guiding principles ofstatutory 

### construction. We cannot ignore or add to the language ofRCW 60.04.161. The 

### statute defines a "payment bond"^ to mean "a surety bond issued by a surety licensed to issue surety bonds in the state ofWashington that confers upon 

### potential claimants the rights ofthird party beneficiaries," RCW 60.04.011(10), 

### and further provides that the terms be liberally construed.RCW 60.04.900."^ Although the type ofbond at issue is a lien release bond,the rule ofliberal

^ A "payment bond" is an agreement in which the surety assures the obligee that the suppliers oflabor, material, and rental equipment to the project will be paid by the principal. Tasker,supra,at 44. 4 RCW 60.04.900 provides that "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 be protected by their provisions."

18Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### construction applies^ and is a directive to construe the language ofRCW 60.04.011(10)and RCW 60.04.161 in favor ofthe claimant in the event any question ofstatutory meaning existed. In following this directive,the Court ofAppeals has relied on a California Supreme Court decision in Hutnick v. United States Fidelity & Guaranty Co.,47 Cal. 3d 456, 763 P.2d 1326 (1988). In Hutnick,the California State Supreme Court 

### concluded that "[i]fonly the surety is joined,the resulting judgment will be binding on the principal,provided only that the surety has given notice to the principal 'and an opportunity at the surety's request to join in the defense.'" 47 Cal. 3d at 469 (quoting Cal.Civ.Proc. § 1912). The court noted that "[a] principal notified ofthe action by the surety will have the same motivation to defend the action as ifformally named as a party,because the judgment will be equally conclusive as a determination ofthe principal's liability" and that "the surety has the means to call upon the principal to defend the lien foreclosure action." Hutnick, 47 Cal. 3d at 469. This reasoning is persuasive both from a practical standpoint and from the standpoint ofgeneral suretyship principles that confer third party beneficiary rights
on lien claimants in Washington. As previously noted,nothing in the language of

See Williams, 172 Wn.2d at 696-97.

19Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No. 94118-1



### RCW 60.04.161 or our case law interpreting it prevents the surety from impleading 

### the principal or from seeking its assistance or bringing a third party claim. Western next argues that the general principles ofsuretyship law should be 

### inapplicable here because attempting to foreclose on a lien release bond against only the surety is illogical or impractical. Western insists that we should look only to the statute in resolving the dispute. While Western's observation that statutory language should control is correct,nothing in our interpretation ofthe statute runs afoul ofthe statute's language or renders the foreclosure process illogical or impractical. RCW 60.04.161 operates similarly to a situation where,for example,
someone guarantees a debt. In such a situation a lawsuit can properly be pursued against the guarantor; the debtor need not be made a party. Surety bonds are underwritten based on the principal's creditworthiness and ability to perform, and the principal may be obligated to repay the surety for any losses incurred. Tasker, supra,at 9. The "contract ofsuretyship is one to answer for the debt,default, or miscarriage ofanother." Meyer v. Bldg. & Realty Serv. Co., 209 Ind. 125, 196 N.E. 250, 254 (1935). "[D]espite a surety's contract being collateral to a valid principal obligation contracted by another,a contract ofa surety involves a direct promise to perform the obligations ofanother person. In other words,the surety is primarily

20Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No. 94118-1



### and jointly bound with the principal." 74 Am.Jur. 2d Suretyship § 1 (2017 Supp.) (footnote omitted). 

### While not interpreting chapter 60.04 RCW,we have held that an obligee named in a surety bond containing joint and several promises has a right to sue the surety alone withoutjoining the principals in the action, where a breach has occurred.Kampendonkv.Am.Bonding Co. ofBaltimore,6 Wn.2d 312,318, 107 P.2d 588 (1940);see also Kanters v. Kotick, 102 Wash. 523,526, 173 P. 329 (1918). This is consistent with the general suretyship law principle that the obligee has two sets ofrights: one against the principal obligor and the other against the secondary obligor.RESTATEMENT (Therd)OF SURETYSHIP AND Guaranty § 50 cmt.(1996);see also LAURENCEP.SIMPSON,SIMPSON ON SURETYSHIP 9(1950)(a surety's obligation to pay for another's debt not conditioned on another's default). The record does not reveal whether the bond in question contemplated that the parties would be jointly and severally liable, and neither does the bond's boilerplate language,but that does not change the statutory language. In similar cases,a payment bond claimant may bring suit solely against the surety and not against the principal on the bond, often "because the principal is bankrupt, insolvent, defunct,beyond the reach ofjudicial process, or not otherwise capable ofsatisfying the debt owed to the claimant." The Law OF PaymentBonds 894 (Kevin L.Lybeck et al. eds., 2d ed. 2011). "[Sjureties have sometimes argued

21Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No.94118-1



### that the claimant is obligated to bring suit against both the surety and the principal in the same action," and the majority ofthe courts relying on general suretyship law principles have rejected this argument.TheLaw of PaymentBonds,supra, 

### at 895. In the present case,although the bond in question is not a payment bond but
a lien release bond,similar considerations inform lien claimants' decisions to bring 

### suit solely against the surety. We interpret the statutory language while mindful of the practical considerations ofthe parties whose interests the statute protects. Attorney Fees 

### Both parties request an award ofattorney fees and costs pursuant to RCW 60.04.181(3)and RAP 18.1. Pursuant to RAP 18.1(1)and RCW 60.04.181(3),ifon remand the trial court determines Inland Empire to be the prevailing party in the lien foreclosure action and upon submission ofsatisfactory proofofthe claimed amount due,judgment against the bond should be entered. Reasonable attorney fees and expenses, including statutory fees and costs on appeal,are also recoverable.

22Inland Empire Dry Wall Supply Co. v. Western Surety Co.,No. 94118-1

Conclusion 

### We affirm the Court ofAppeals and remand the case to the trial court for further proceedings.

WE CONCUR:


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