Court: Court of Appeals of Washington; July 29, 1991; Washington; State Appellate Court
John Morgan Construction Co. Inc. and Helen E. Plastino (collectively referred to as Morgan Construction) appeal a summary judgment that denied their request for a permanent injunction against Brock A. McDowell, who holds a mechanics' lien on a property. Morgan Construction argues that the trial court erred by ruling that McDowell was not required to file a lis pendens to enforce his mechanics' lien against subsequent purchasers who acquired the property more than eight months after the lien notice was filed but before the foreclosure. The court affirms the trial court's decision.
The case involves undisputed facts dating back to 1986 when McDowell contracted with Windsor Development, Inc. to perform excavation work on a four-lot short plat. A lien was filed by another contractor, Shaffer Crane, against one of the lots, and McDowell subsequently filed a lien against the entire plat. Shaffer Crane initiated a foreclosure action and filed a lis pendens. In 1989, after Windsor sold two lots to Morgan Construction, McDowell learned of the sales during the foreclosure trial, which resulted in a judgment in his favor for $6,693.57, confirming the validity of his lien.
Morgan Construction, claiming to be innocent purchasers who lacked actual knowledge of McDowell's lien or the foreclosure action, sought to enjoin McDowell from enforcing the judgment against the lots, arguing for protection under the lis pendens statute. The trial court denied their motion and instead granted McDowell's, leading to this appeal. Morgan Construction contends that they should be considered bona fide purchasers protected from the lien, but the court refuses to impose an additional requirement for lien claimants to file a lis pendens in order to enforce their lien against subsequent purchasers who may lack actual knowledge of a foreclosure action. The court reiterates that a bona fide purchaser must pay valuable consideration without notice of any claims against the property prior to acquiring title.
Notice does not equate to actual notice; rather, knowledge or information that would prompt an ordinarily prudent person to inquire further constitutes constructive notice. In this case, Morgan Construction acknowledges having constructive notice of McDowell's lien claim. Constructive notice of a recorded lien claim obligates a party to investigate the status of such liens, which Morgan failed to do. Had it conducted a reasonable inquiry, it would have discovered that McDowell's liens had priority over its own judgment lien and that a foreclosure was pending.
A mechanics' lien arises when labor is performed or materials are provided and must be perfected by following statutory requirements, including recording the lien within 90 days after labor ceases. The lien binds the property for eight months after filing unless an enforcement action is initiated within that timeframe. If the claimant adheres to these requirements, the lien has priority over later claims.
Morgan Construction contends that a lien claimant should also file a lis pendens to enforce the lien against property transactions during a foreclosure. However, no Washington authority mandates this, and the filing of a lis pendens is not necessary unless specifically required by statute. RCW 60.04 does not impose such a requirement, and the act of filing a lis pendens does not affect the substantive rights of the parties involved. Morgan's claim that a prospective purchaser need not look beyond the recorded title disregards the significance of McDowell's recorded lien, which is sufficient to nullify Morgan's assertion as a bona fide purchaser.
The validity of mechanics' liens is emphasized, clarifying that a properly perfected lien relates back to when labor commenced, and a lien claim can be filed up to 90 days after labor ceases. This means a purchaser might acquire property with an enforceable lien even if a title search shows no recorded lien. The effectiveness of a lis pendens filed during lien foreclosure is marginally equivalent to that of a recorded lien. Morgan Construction's proposed rule suggests limited buyer protections based on the timing of labor, lien claims, and purchases, indicating that even if a lis pendens had been timely filed, a thorough title search would still be necessary. Morgan Construction's arguments are deemed legislative rather than judicial. The reliance on Packard Bell and Scottsdale cases is critiqued; Packard Bell supports that a lis pendens is not necessary absent statutory requirement, while Scottsdale differentiates between a lien claim and a pending foreclosure without supporting Morgan Construction’s position. The court confirms that purchasers are still bound by recorded lien claims despite actions taken against original owners. Ultimately, the trial court’s decision is upheld, affirming that a proper title search would have revealed the lien. The reference to RCW 4.28.320 outlines the process for filing a notice of action affecting property title, which serves as constructive notice to subsequent purchasers.
