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The Themis Update

Policy, Regulations, and Rulings:
The Inside Scoop

Purchaser of lien release bond is NOT an 'indispensable' party in lawsuit against surety for release of the bond.

The Washington State Supreme Court held today that a construction company (Fowler General Construction) was not an indispensable party in a lawsuit between a drywall supplier and surety who issued the lien release bond under RCW 60.04.

Inland Empire Dry Wall Supply Company supplied drywall to Eastern Washington Drywall & Paint for a project Eastern was working on for Fowler General Construction.  When Inland did not get paid for the drywall it supplied, they recorded a mechanics' lien against the construction project.  Fowler obtained a lien release bond in order to release the property from the lien.  Inland then filed a lawsuit seeking a judgment and order foreclosing its claim against the surety, Western Surety Company, and obtain the funds from the bond.

Normally, everyone gets sued as an 'indispensable' party in a lawsuit, however, since Inland only sued the surety company, Western sought to get the case dismissed on summary judgment alleging that Inland failed to join a necessary or indispensable party, Fowler.  The Supreme Court affirmed the Appellate Court's decision that under RCW 60.04.161, Inland need only sue the surety to recover against the bond (while the surety may interplead the general contractor or owner, if it so chooses) because the only necessary party is the surety which issued the bond. (Inland Empire Dry Wall Supply Co. v. Western Surety Co., No. 94118-1)(filed January 18, 2018)

"RCW 60.04.161 Bond in lieu of claim.... The condition of the bond shall be to guarantee payment of any judgment upon the lien in favor of the lien claimant entered in any action to recover the amount claimed in a claim of lien, or on the claim asserted in the claim of lien. The effect of recording a bond shall be to release the real property described in the notice of claim of lien from the lien and any action brought to recover the amount claimed. Unless otherwise prohibited by law, if no 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. If an action is timely commenced, then on payment of any judgment entered in the action or on payment of the full amount of the bond to the holder of the judgment, whichever is less, the surety shall be discharged from liability under the bond."