Frank v. Fischer

730 P.2d 70, 46 Wash. App. 133

• Court: Court of Appeals of Washington
• Decided: December 8, 1986
• Docket: No. 8131-8-II
• Status: Published

Opinions

Reed, A.C.J.

James V. Frank appeals a summary judgment dismissing his lien foreclosure suit against Edward A. and Mildred M. Fischer, husband and wife.

The issue on appeal may be stated as: Can a homeowner with extensive past experience as a contractor, who employs members of more than one trade in the construction of his personal residence, and generally supervises the project, assert the bar to suit provision of RCW 18.27.080 against a claim of one of the contractors who did not register? We answer in the affirmative, and affirm.

Summary judgment is appropriate only when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. Ohler v. Tacoma Gen. Hosp., 92 Wn.2d 507, 598 P.2d 1358 (1979). The uncontroverted facts before the trial court, in the form of affidavits and deposition excerpts, when viewed in the light most favorable to Frank, the nonmoving party, Ohler, 92 Wn.2d at 511, are as follows: Frank is a contractor specializing in residential woodwork and carpentry. He is a registered contractor in his home state of Oregon, but not in Washington. Fischer is a resident of Washington, and a former licensed general contractor in the state of California, who retired from that business some 10 years ago and now invests in multi-family residential units.

In February of 1983 Fisher hired Frank, along with other specialists in the residential construction trade, to build a personal residence in Vancouver, Washington. Some of these contractors were registered but some, including Frank, were not. Fischer purchased the materials and generally supervised the project on a daily basis.

Fischer having refused to pay, Frank brought this suit on his contract seeking $32,500 and to foreclose his lien on Fischer's property. Fischer interposed the statutory bar of RCW 18.27.080 and moved for summary judgment, which was granted. Frank appealed.

It is clear that, under a literal reading of RCW 18.27.080,¹ Frank's nonregistration prohibits him from bringing this suit against Fischer. Ordinarily, when a statute is unambiguous, there is no room for interpretation. However, our Supreme Court has escaped the literal confines of RCW 18.27.080 by looking to the statute's broad general objective or policy of protecting the public.

In Murphy v. Campbell Inv. Co., 79 Wn.2d 417, 486 P.2d 1080 (1971), our Supreme Court held that a contractor who had substantially complied with the statute by securing bonding and insurance was not precluded from suit, despite a lack of registration at the time of contracting. The Murphy court found that the owner was fully protected by the bond and insurance and suffered no loss of protection because of the technical failure to register.

In Jeanneret v. Rees, 82 Wn.2d 404, 511 P.2d 60 (1973), the court refused to recognize an exception for a "contractor performing work for a member of the same profession". Jeanneret, at 408. The argument in Jeanneret was that such contractors were not of the class (public) that the Legislature intended to protect. In rejecting this proposition, the court said:

If it was the intention of the legislature that the statute should not be applicable where work is performed for a member of the same profession, it could have so provided. Where there are express exceptions in a statute, as in the instant case, the statute applies to all cases not excepted, and no other exceptions can be read into the statute.

Jeanneret v. Rees, 82 Wn.2d at 408. Justice Finley, concurring in the result, opined that "the statute was not intended or designed to protect prime contractors" from suits by their subcontractors. 82 Wn.2d at 409.

More recently, in Bremmeyer v. Peter Kiewit Sons Co., 90 Wn.2d 787, 585 P.2d 1174 (1978), Justice Finley's view prevailed and the court, laying emphasis on RCW 18.27-.140,² held that "prime contractors" cannot claim protection of the statute against claims of their unregistered subcontractors. In so doing, the court stated:

After careful reexamination of the issue, [does RCW 18.27 apply to actions between subcontractors and prime contractors?] we are convinced that we can no longer be guided in our interpretation of the reach of RCW 18.27 by relying exclusively upon the specific exemptions contained in RCW 18.27.090 or upon the sweeping language used in RCW 18.27.080. As we said in Murphy v. Campbell Inv. Co., 79 Wn.2d 417, 420, 486 P.2d 1080 (1971):

It should be quite obvious that:

There are times when even the literal expression of legislation may be inconsistent with the general objectives or policy behind it, . . .

(Italics ours.) J. Sutherland, Statutes and Statutory Construction § 6006 (Horack 3d ed. 1943).

. . . This [statutory] purpose is not to protect contractors. Quite the contrary. The statute is intended to protect the public from contractors. . . .

Bremmeyer v. Peter Kiewit Sons Co., 90 Wn.2d at 790-91.

These protections are not necessary for members of the contracting trade when dealing with each other.

Bremmeyer v. Peter Kiewit Sons Co., 90 Wn.2d at 793.

Frank seizes on this language to urge that Fischer cannot raise the statutory bar because: (1) he is a "contractor" as defined by RCW 18.27.010,³ or (2) he is a contractor in fact and in legal contemplation, because he had extensive experience as such, he bypassed hiring a general or prime contractor, he secured separate bids from the building trades, and he generally supervised the project. We disagree with both propositions.

First, Fischer is not subject to the provisions of RCW 18.27 by virtue of an express exemption. RCW 18.27.090 provides:

Exemptions. This chapter shall not apply to:

(12) Any person working on his own property, whether occupied by him or not, and any person working on his residence, whether owned by him or not but this exemption shall not apply to any person otherwise covered by this chapter who constructs an improvement on his own property with the intention and for the purpose of selling the improved property;

At first blush, it may appear difficult to reconcile the language of the exemption with the statutory definition of contractor. However, it is not impossible. In order to do so, we reject Frank's argument that the exemption's terminology, "working on his own property" and "working on his residence," is meant to describe only that owner who "rolls up his sleeves” and physically performs all the work himself. This would be an unreasonable construction of the exemption, because such an owner is not within the statute's definition of contractor in the first instance. Therefore, something else must have been intended by the exemption. "Statutes must be construed as a whole, and, if possible, effect must be given to each word, phrase, clause and sentence of the act." McKenzie v. Mukilteo Water Dist., 4 Wn.2d 103, 112, 102 P.2d 251 (1940).

A reasonable interpretation is that the exemption creates two categories of landowners—each of whom employs one or more members of the building trades—so as superficially to bring him within the statutory definition of contractor. Those in the first category have no intent or purpose of selling. They are exempt. Those in the second category do intend or propose to sell. They are not exempt.

Fischer falls within the first category. The only evidence before the trial court was that Fischer had moved to Vancouver to be near his grandchildren and intended the dwelling for his own use. Thus, even though he employed several building tradesmen in the actual construction of his home, he is not a "contractor" under RCW 18.27.

Frank's second argument, that Bremmeyer excludes Fischer from the protected class because he is a contractor in law and fact, also is off the mark. Frank overlooks language in Bremmeyer that we believe limits the breadth of its holding: "Moreover the public to be protected from contractors are those customers who themselves are not routinely in the business of acting as 'contractors' as defined by RCW 18.27.010", and ”[t]hese protections are not necessary for members of the contracting trade when dealing with each other."4 Bremmeyer, 90 Wn.2d at 791-92, 793. (Italics ours.) It must be conceded that Fischer is not a "prime" or "upper tier general" contractor as those terms are used in Bremmeyer and Stewart Carpet Serv., Inc. v. Contractors Bonding & Ins. Co., 105 Wn.2d 353, 715 P.2d 115 (1986). Although he may have had extensive experience in the building trades and was himself, at one time, a general contractor, he was not "routinely" engaged in that business, "as defined by RCW 18.27.010", when he contracted with Frank. Rather, Fischer was dealing with Frank in an isolated transaction as an owner of a homesite, not as a fellow member of the contracting trade.

Nor do we believe that availability of the statute's shield should depend upon a homeowner's personal experience in the construction field, despite Bremmeyer's emphasis on "inter-trade expertise," and the availability within the building fraternity of information concerning competency and financial responsibility. In this respect, professional contractors routinely engaged as such cannot be equated with a homeowner not so engaged, but who may have some experience and expertise. If we accept such a thesis, the courts would be called upon to make an ad hoc determination in each case where an individual seeks to avoid the cost of securing a general contractor for home construction or improvement and himself employs more than one member of the building trade. The result would be very unequal application of the statute.

As so often has been stated, judicial review of legislation does not carry with it a license to modify or amend legislative enactments. Murphy v. Campbell Inv. Co., 79 Wn.2d at 425 (Stafford, J., dissenting). Any attempt on our part to carry the Bremmeyer rationale one step farther, so as to deny the protection of the statute to homeowners such as Fischer, could only rest on speculation and conjecture. Nothing in the statutory scheme suggests that the Legislature intended to exclude such individuals from the class— the public—sought to be protected.

Frank argued in the trial court that estoppel and unjust enrichment should prohibit Fischer from raising the statutory bar. Affidavits were submitted asserting inter alia that Fischer knew that Frank was not registered, told him he need not bother to do so, and that Fischer would secure all necessary permits and licenses. Assuming that these defenses are available in law to defeat the statutory ban,⁵ these allegations were contradicted by Fischer in his deposition and affidavits, thus creating genuine issues of material fact not resolvable by summary judgment.

Nevertheless, because neither estoppel nor unjust enrichment is raised or argued in Frank's appellate brief, we will not consider these issues. RAP 10.3(g); Lassila v. Wenatchee, 89 Wn.2d 804, 576 P.2d 54 (1978). Fraud in the inducement is raised for the first time in Frank's Statement of Additional Authorities, contrary to RAP 10.3(g) and 10.8. We will consider neither this issue nor Frank's argument that Oregon law should apply to this controversy; that too is raised for the first time on appeal. Oregon law was neither pleaded nor proved in the trial court; it was mentioned only in the context of whether it would apply to a separate action by Frank in Oregon based upon fraud. Under all the circumstances, we must hold that Fischer is entitled to raise the bar of RCW 18.27.080.

We are constrained to observe that, if Frank's allegations be true, the bar of the statute may work a decidedly unjust result in this case. If Fischer did induce Frank's noncompliance with the statute in the manner described, all would agree that a grave injustice results from strict application of the statute. Fischer will have succeeded in transforming the act into "an unwarranted shield for the avoidance of a just obligation." Andrews Fixture Co. v. Olin, 2 Wn. App. 744, 750, 472 P.2d 420 (1970). However, this is a matter that must be addressed to the Legislature, not the courts. Stewart v. Hammond, 78 Wn.2d 216, 220, 471 P.2d 90 (1970); In re Estate of Sherwood, 122 Wash. 648, 655-56, 211 P. 734 (1922); State v. Olson, 31 Wn. App. 403, 406, 642 P.2d 410 (1982).

In this vein, we note that the Oregon Legislature, recognizing the inequities of strict enforcement of that state's similar statute, has responded by adding to Or. Rev. Stat. § 701.065 the following: "(2) [a] court may choose not to apply this [bar to suit] if the court finds that to do so would result in a substantial injustice to the unregistered builder." Despite the fact that our case law is rife with observations about the inequities of strict interpretation, and that the remedies if any lie with the Legislature, our own state Legislature has not responded with a similar escape clause. We can only surmise that the Legislature is content with the act as it stands.

In sum, we hold that because Fischer is not required to register as a contractor under RCW 18.27.010, and because he is not a "prime contractor" as that term is used in Bremmeyer v. Peter Kiewit Sons Co., he is entitled to raise the bar of RCW 18.27.080 against a suit by Frank, a contractor who failed to register under the act. Summary judgment was appropriate.

In the exercise of our discretion, we have determined that each party shall bear his own costs and attorney's fees. It is so ordered.

Judgment affirmed.

Alexander, J., concurs.

1 RCW 18.27.080 reads as follows:

"Registration prerequisite to suit. No person engaged in the business or acting in the capacity of a contractor may bring or maintain any action in any court of this state for the collection of compensation for the performance of any work or for breach of any contract for which registration is required under this chapter without alleging and proving that he was a duly registered contractor and held a current and valid certificate of registration at the time he contracted for the performance of such work or entered into such contract."

2 RCW 18.27.140, a new section adopted in 1973 provides:

"Purpose of Chapter. It is the purpose of this chapter to afford protection to the public including all persons, firms, and corporations furnishing labor, materials, or equipment to a contractor from unreliable, fraudulent, financially irresponsible, or incompetent contractors.”

3 RCW 18.27.010, insofar as pertinent here, reads as follows:

"Definitions. A 'contractor' as used in this chapter is any person, firm or corporation who or which, in the pursuit of an independent business undertakes to, or offers to undertake, or submits a bid to, construct, alter, repair, add to, subtract from, improve, move, wreck or demolish, for another, any building, ... or other structure, project, development, or improvement attached to real estate or to do any part thereof including the installation of carpeting or other floor covering, the erection of scaffolding or other structures or works in connection therewith or who installs or repairs roofing or siding; or, who, to do similar work upon his own property, employs members of more than one trade upon a single job or project or under a single building permit except as otherwise provided herein.

4 Bremmeyer overrules Jeanneret to the extent the latter is inconsistent with the Bremmeyer holding.

5 Our courts consistently have held that the defenses of estoppel and unjust enrichment may not be interposed by a contractor to overcome the statute's bar to suit. See, e.g., Stewart v. Hammond, 78 Wn.2d 216, 471 P.2d 90 (1970); Cameron v. State, 15 Wn. App. 250, 548 P.2d 555 (1976); Suburban Fuel Co. v. Lamoreaux, 4 Wn. App. 179, 480 P.2d 216 (1971).