In its March 11, 2021 opinion, Division Three of the Washington Court of Appeals considered whether the 90-day period to record a claim of lien is extended by a contractor performing work after substantial completion to correct nonconforming work – usually referred to as “warranty work.” In the case of Brashear Electric, Inc. v. Norcal Properties, LLC, the Court strictly construed the statutory term “repairing” to exclude the contractor’s correction of its own work and rejected the notion that warranty work extended the 90-day timeframe to file a lien claim.
Norcal Properties, LLC (“Norcal”) and Blue Bridge Properties, LLC (“Blue”) own adjacent properties. Norcal and Blue separately contracted with Vandervert Construction (“Vandervert”) to construct a building on each property. The prime agreements’ substantive provisions were identical. Vandervert subcontracted with Brashear Electric, Inc. (“Brashear”) to work on both projects.
Under the prime agreements, Vandervert promised to correct nonconforming work up to a year after substantial completion. Vandervert’s subcontracts with Brashear required Brashear to assume the prime agreements’ warranty provisions.
On June 28, 2017, Brashear completed work on Norcal’s project and sent a final invoice to Vandervert on August 17, 2017.
On September 29, 2017, Brashear completed work on Blue’s project and sent a final invoice to Vandervert on October 26, 2017. Norcal and Blue paid Vandervert in full.
On January 8, 2018, the Norcal project’s tenant advised Vandervert that the roof was leaking. In accordance with the prime agreement’s warranty, Vandervert asked Brashear to send an electrician to fix the leak, because preliminary inspections showed the leak was likely caused by Brashear’s work. On January 17, 2018, one of Brashear’s electricians temporarily fixed the leak and determined the leak was not caused by Brashear.
While the electrician was at the Norcal project, Vandervert directed him to repair a fixture at the Blue project. The electrician repaired the fixture as directed.
On January 30, 2018, Brashear recorded a claim of lien against the Norcal property for $12,830.81, the amount Vandervert owed Brashear on that project.
On January 31, 2018, Brashear recorded a claim of lien against the Blue property for $36,278.50, the amount Vandervert owed Brashear on that project.
In June 2018, Brashear filed suit to foreclose its liens against the Norcal and Blue properties. The parties filed cross motions for summary judgment, and the trial court ruled in favor of Norcal and Blue, holding that Brashear’s warranty work did not extend the 90-day deadline for Brashear to record its liens. Brashear appealed.
Brashear argued that the trial court misinterpreted RCW 60.04.091 and related statutes, because its warranty work was “labor” that extended the time for Brashear to record its liens. Norcal and Blue argued that the trial court strictly construed the pertinent statutes and that warranty work should not extend the 90-day deadline to record a lien. RCW 60.04.091 provides in relevant part:
Every person claiming a lien under RCW 60.04.021 shall file for recording … a notice of claim of lien not later than ninety days after the person has ceased to furnish labor, professional services, materials, or equipment[.]
“Furnishing labor, professional services, materials, or equipment” is defined to include “any labor … for the improvement of real property.” RCW 60.04.011(4). “Improvement” includes “[c]onstructing, altering, repairing, remodeling, demolishing, clearing, grading, or filling in, of, to, or upon” real property. RCW 60.04.011(5).
The Court agreed that Brashear’s warranty work involved “labor”; however, the Court analyzed whether Brashear’s warranty work involved “repairing” the projects. This inquiry is significant because the Court had to determine whether “repairing” extended to correcting Brashear’s nonconforming work. Upon reflection, and consistent with the Court’s decision in Wells v. Scott, 75 Wn.2d 922, 454 P.2d 378 (1969), the Court concluded the definition of “repairing” does not include correction of one’s own nonconforming work, meaning warranty work does not extend the statutory time when a lien claim can be properly recorded.
The case presents a cautionary tale for contractors about the negative consequences of waiting to file a lien claim after substantial completion and performance of warranty-related work. Conversely, the case presents owners and developers with a basis to challenge untimely lien claims.