ServPro filed a single lien on a condo for water damage remediation work in the amount of $183,945.09 but did not allocate proportionally the amount of its billing among the 20 units impacted. This mistake illustrates the difficulties in getting a lien filed correctly on a condo and the consequences of doing it wrong.
Pursuant to RCW 60.04.081, the condo owner filed a motion to seek to have the lien invalidated. Finding it both frivolous and clearly excessive, the court released the lien, leaving ServPro with no recovery. Not wanting to get skunked, ServPro appealed. The Court of Appeals determined the lien must be reduced but not completely released (down but not out) based on lien method utilized when filed.
The Court first described the frivolous/excessive lien challenge process. After a claimant files a lien, ROW 60.04.081 authorizes a “narrow and limited” summary proceeding to determine whether the lien “is frivolous and made without reasonable cause or clearly excessive.” A court must release the lien “if frivolous and made without reasonable cause” or reduce the lien if “clearly excessive.” This “trial by affidavit” should not be a substitute for trial on the merits where the facts “do not clearly indicate” the lien is frivolous or clearly excessive.
Standard for Frivolous Lien
A lien is frivolous if “improperly filed beyond legitimate dispute” and “so devoid of merit that it has no possibility of succeeding.” Even if a lien is invalid, it may not be frivolous. This high standard exists to ensure contractors and laborers are not deprived of their right to trial on a legitimate lien claim. Thus, a lien is not frivolous if it presents debatable issues of law and fact.
The court found the lien was not frivolous because the work was ordered by the condo association manager, a recognized agent for the owners, and ServPro at least claimed it continued to supply services within the 90 days prior to the lien filing, replying on Intermountain Electric, Inc. v. G-A-T Brothers Construction, Inc., 115 Wn. App. at 393 (“Even small quantities of additional supplies, if furnished at the request of the owner to complete the contract will serve to keep the 90-day lien limitation period from starting.”). The lien might still be invalid but it was not frivolous for purposes of the summary lien proceeding.
Excessive Lien
Under the statute, a lien is clearly excessive under RCW 60.04.08 when the amount claimed on the face of the lien is unquestionably far greater than the usual or agreed amount. Here, the maximum value of services to the individual condo was only $6,001. Therefore, on its face, the lien was excessive and had to be reduced, but not released altogether. The case was remanded to the trial court to make this determination.
Significantly, the Court of Appeals clarified that RCW 60.04.081(4) eliminated the possibility of release of a lien where it is “clearly excessive” but not frivolous. The only remedy is reduction of lien amount.
In reviewing the lien claim process, the court noted that the contractor can file a lien against the entire condo and name the condo association. Each unit is then encumbered pro rata. A contractor can also file a lien against an individual unit improved by the contractor’s services where the unit owner or the owner’s agent “expressly consented” to the services. ServPro blended these two options and therefore did not properly lien the individual owner’s units. As a consequence, the Court allowed the award of attorney fees to the condo owner for successfully filing the motion and reducing the lien amount. ServPro lived to fight another day on the balance of the lien but clearly lost significant leverage to collect for unpaid work that the lien statute is designed to protect.
See Woodley v. Style Corp. d/b/a Servpro of Shoreline/Woodinville, No. 77352-6-I (Wash. Ct. App. Feb. 11, 2019). https://www.courts.wa.gov/opinions/pdf/773526opin.pdf
