Williams v. Athletic Field, Inc., No. 33607-3-II (Wash. Ct. App. Apr. 7, 2010)
By: Jesse O. Franklin IV and Bradley D. Bowen, K&L Gates, Seattle
This case demonstrates the importance for claimants to substantially comply with Washington’s lien statutes. The issue in Williams was whether a lien is invalid if a lien filing service employee signs the lien’s attestation clause, rather than a claimant or the claimant’s attorney. The Court in Williams held that an agent of a claimant can sign a lien’s attestation clause under RCW 60.04.091, addressing the recording of liens, including an employee of a lien filing service. However, the Court went on to hold that when the claimant’s agent is also a corporation, like a lien filing service, the agent must comply with the corporate acknowledgement requirements under Washington law. Moreover, the Williams case stands for the more general proposition that a lien claimant in Washington must clearly demonstrate that all statutory lien claim requirements have been met because courts strictly construe the lien statutes.
Terry and Janis Williams (“Williamses”) were owners and developers of land who entered into an oral contract with Athletic Field, Inc. (“Athletic Field”) to complete site preparation work. The Williamses made some payments to Athletic Fields but became dissatisfied with the pace of Athletic Field’s performance. The Williamses then ordered Athletic Fields to discontinue work and vacate the site.
As a result, Athletic Fields filed a lien against the Williamses’ property for roughly the difference in amount between the payment it had received and the estimated value of the entire site preparation. Athletic Fields’ notice of claim of lien included an attestation clause signed by Rebecca Southern, an employee of LienData USA, Inc. (“LienData”), a lien filing service. The clause identified Athletic Fields as the claimant, and LienData as its agent. The attestation clause in the claim of lien stated:
I am the claimant (or attorney of the claimant, or administrator, representative, or agent of the trustees of an employee benefit plan) above named; I have read or heard the foregoing claim, read and know the contents thereof, and believe the same to be true and correct and that the claim of lien is not frivolous and is made with reasonable cause, and is not clearly excessive under penalty of perjury.
/S/ Rebecca Southern
SUBSCRIBED AND SWORN to before me this 1st day of December, 2004.
/S/ Judi M. Elsbree
NOTARY PUBLIC in and for the
State of Washington, residing at Bothell.
My Commission expires: 08/18/07
Before a pro tempore superior court commissioner, the Williamses argued that the lien was invalid because neither Athletic Fields nor its attorney signed the attestation clause. The superior court commissioner agreed, ordered the lien to be released, and awarded attorney fees and costs to the Williamses for an amount to be determined at a motion for revision hearing held by a superior court judge. The commissioner’s order stated that the lien did not comply with RCW 60.04.091 because it was not signed by the claimant or the claimant’s attorney. Further, the order indicated that the Williamses had met their burden in showing the lien was frivolous and without reasonable cause and Athletic Fields failed to present a case to the contrary. Subsequently, the trial court considered the issues in a motion for revision, declined to revise the commissioner’s ruling, and awarded the Williamses attorney fees and costs.
Athletic Fields appealed the trial court order releasing its mechanics’ lien as frivolous and awarding attorney fees to the Williamses. The Division II Court held that the lien was invalid for failure to comply with the statutory attestation requirement, but on different grounds than those set forth in the commissioner’s order.
The Court found that a “lien claim is invalid if it does not substantially comply with RCW 60.04.091.” RCW 60.04.091 provides that a lien claim must be notarized and “[s]hall be signed by the claimant or some person authorized to act on his or her behalf who shall affirmatively state they [sic] have read the notice of claim of lien and believe the notice of claim of lien to be true and correct under penalty of perjury . . . .” (emphasis in original). Under this statute, the court indicated that it was permissible for LienData to act as Athletic Fields’ agent for purposes of filing the lien.
However, the Court also noted that RCW 60.04.091(2) requires that the notice of claim of lien “shall be acknowledged pursuant to chapter 64.08 RCW.” Under RCW 64.08 there are two proper forms of acknowledgement, one for individuals and one for corporations. See RCW 64.08.060 (form of certificate for an individual); RCW 64.08.070 (form of certificate for corporation). The Court applied the requirements for acknowledgment by a corporation under RCW 64.08.070, and found that the attestation clause signed by Rebecca Southern did not meet those requirements because it did not indicate that she had signed in a representative capacity on behalf of LienData.
The court referenced the four elements for valid corporate acknowledgement set forth in Ben Holt Industries, Inc. v. Milne, 36 Wn. App. 468, 471-472 (1984): (1) the person signing the instrument was known to the notary to be an officer of the corporation which executed the instrument; (2) he acknowledged the same to be the free and voluntary act of the corporation; (3) he was authorized to execute it on behalf of the corporation; and (4) the seal affixed was the corporate seal. The Court found that the attestation clause signed by Rebecca Southern was invalid because the elements of corporate acknowledgement were not satisfied in this case. The form failed to identify Rebecca Southern as an employee of LienData, failed to characterize the subscription as the free and voluntary act of LienData, and failed to set forth Rebecca Southern’s authority to act on behalf of LienData.
The Court therefore held that the lien was invalid because LienData and Rebecca Southern failed to properly comply with the statutory attestation requirements for corporate acknowledgement.
Additionally, the Court found that while lack of compliance with RCW 60.04.091 renders a lien claim invalid, it does not necessarily mean that the lien is frivolous. Release of a lien as frivolous is appropriate only when it is apparent beyond legitimate dispute that the lien was invalid when filed. In this case, because the question of the form of acknowledgement for a corporate agent attesting to the lien was subject to legitimate debate, the Court also found the trial court acted improperly when releasing the lien as frivolous.