Northwest Cascade Construction, Inc. v. Custom Component Structures, Inc.
Docket: No. 1366-1
Court: Court of Appeals of Washington; April 2, 1973; Washington; State Appellate Court
The key issue is whether two plaintiffs, Kuipers and Mowry, can recover damages despite not being registered under the contractor’s registration statute (RCW 18.27.020). The trial court ruled that they did not operate 'in the pursuit of an independent business' as defined by RCW 18.27.010, thus granting judgment for all three plaintiffs. Custom Component Structures, Inc. is appealing this decision.
The facts reveal that in October 1968, Custom contracted with Northwest Cascade Construction, Inc., a registered contractor, for wall erection in 12 apartment houses in Seattle. Kuipers worked as a superintendent and Mowry as an accountant for Northwest. Custom paid Northwest for the work, which included both base compensation and extra charges.
In November 1968, Northwest transitioned to a new job in Olympia and orally agreed with Kuipers and Mowry that they would complete the subcontract work with Northwest’s assistance. They utilized Northwest’s contractor registration and bond, with Custom aware of and unopposed to this arrangement. Kuipers and Mowry completed the work under the name M-K Construction Co., while Paul Box, Northwest’s vice-president, remained involved in the project.
A dispute arose around March or April 1969, leading Kuipers and Mowry to file a lien, which they later released at Custom’s insistence. Northwest then formally notified Custom of their involvement, but Custom refused to pay for the work completed, arguing that Kuipers and Mowry, lacking contractor registration, were not entitled to payment.
The trial court determined that RCW 18.27 did not apply as a defense since plaintiffs Mowry and Kuipers were not operating "in the pursuit of an independent business" as defined in RCW 18.27.010. Consequently, the court ruled in favor of the plaintiffs on both the oral contract and additional claims. The purpose of RCW 18.27 is to protect the public from unreliable contractors who may operate transiently from other states. According to RCW 18.27.020, it is illegal for any contractor to bid or perform work without a state-issued registration certificate, and RCW 18.27.080 stipulates that registration is a prerequisite for seeking compensation or addressing breaches of construction contracts. Registration requires compliance with specific bonding and insurance provisions. Even if a nonregistered contractor's work benefits the property owner, the contractor cannot recover compensation (Vedder v. Spellman; Stewart v. Hammond; Suburban Fuel Co. v. Lamoreaux). However, substantial compliance with the statute may suffice to prevent unjust outcomes (H.O. Meyer Drilling Co. v. Alton V. Phillips Co.). RCW 18.27.010 defines a contractor as someone undertaking construction as part of an independent business, indicating that an individual could work on a single job without being considered as pursuing an independent business. The statute's application is limited to those regularly engaged in construction, and merely performing similar work does not necessitate contractor registration. This principle is supported by case law, which clarifies that statutory requirements should not be extended beyond their intended scope without explicit legislative language.
The court affirmed findings from Jones v. State regarding the term "engage in business," clarifying it refers to regular employment rather than occasional activities. In the case at hand, the court found that Northwest Cascade retained its contractual obligation to Custom Components for completing remaining buildings, despite Custom's claims of lack of substantial evidence. Custom never released Northwest from its subcontract and allowed Mowry and Kuipers to file reports under Northwest's name, indicating acknowledgment of Northwest’s ongoing responsibilities. The court also determined that Northwest's involvement met the registration statute's purposes, even though it did not explicitly find that Custom had the required bond and insurance from Northwest's registration. Mowry and Kuipers, employed by Northwest as an accountant and superintendent, did not intend to operate as independent contractors, nor did they ever conduct a contracting business. Their work was seen as a singular task for Northwest rather than a step into the contracting occupation. The court ruled that this isolated job fell under the single transaction doctrine, and Mowry and Kuipers were not required to be registered contractors to sue for compensation for extras related to the project. The judgment was upheld, with concurrence from Justices Williams and Callow, and a petition for rehearing was denied.
