http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2008151144&zsection

The Court of Appeals ruled that the Trusts' liens against the bond and retainage were improper. The Court of Appeals was bound by the Washington State Supreme Court's decision in I.B. E.W., Local No. 46 v. Trig Electric Construction Company, 142 Wn.2d 431, 13 P.3d 622 (2000), which held that trust funds, such as those in the Leo Finnegan case, that were created under federal law and governed by the Employee Retirement Income Security Act (ERISA), were governed by federal law that preempted the Trusts' right to recover against the payment bond and retention under Washington state law.

The case demonstrates that until the Trig Electric case is overruled by the Washington Supreme Court, lower Washington courts will hold that trust fund liens against the payment bond and retainage are invalid.

The case arose out of a project for the City of Vancouver.  The general contractor, Berschauer Phillips, subcontracted with Dynamic International, to furnish labor and materials to the project.  Dynamic then subcontracted with Campbell Crane to supply and operate cranes on the project.  Campbell's invoices charged only an hourly rate for crane services and did not differentiate between labor and equipment rental.

Campbell was not paid by Dynamic and it filed a timely notice of lien against Berschauer's bond and the City's retained percentage.  However, Campbell never provided a pre-lien notice to Berschauer.  Berschauer argued that Campbell's lien was invalid because it did not provide the pre-lien notice.  The retainage statute requires a pre-lien notice for providers of materials, supplies or equipment to a subcontractor.  The bond statute requires the pre-lien notice for providers of materials, supplies or provisions to a subcontractor.

The Court of Appeals ruled that Campbell was not required to give the pre-lien notice under both statutes even though it provided equipment as well as labor.  The Court decided that the pre-lien notice was not required for the equipment supplied because Campbell used the cranes as tools incidental to the specialized crane operation labor and its invoices did not segregate labor and equipment provided to the project. 

A complete copy of the Court's opinion can be found here.  Despite this ruling, a prudent sub-tier subcontractor that provides materials or equipment on a public project should nonetheless provide the pre-lien notice in order to ensure that its lien rights are preserved.

While this was certainly the World Series of bid protests, as noted in the previous posting, the process undertaken by Boeing and its team of attorneys is the same required by construction contractors in their protests of most federal procurements.

A walk outside the downtown Seattle offices of Ahlers & Cressman PLLC will tell you that the nonresidential boom does not look to be slowing any time in the immediate future.     

For a link to the Seattle Times article, click here.