§ 6.05 ENFORCEMENT OF JUDGMENTS

• Jurisdiction: Washington

§ 6.05 ENFORCEMENT OF JUDGMENTS

This section addresses the wide range of judgments as to which creditors and courts may look to community property interests for satisfaction. Topics covered include liens, notice of lis pendens, prejudgment attachment and garnishment, various judgments and postjudgment proceedings, exemptions and allowances, bankruptcy, and fraudulent transfers.

[1] Mechanics' and Materialmen's Liens

Chapter 60.04 RCW governs the right to, and enforcement of, mechanics' and materialmen's liens, and in the normal nonbusiness situation, no substantial problems will be found. In the usual case, property will be community property, community funds or credit will be used to finance improvements, both spouses will participate in planning and building, both will execute applicable contracts, and both will be joined in lien claims and foreclosure actions.

If the property upon which improvements are placed is community property, a valid lien may exist even though only one spouse was a party to the improvement contract. This rule was laid down long ago, when the husband generally had the exclusive right to manage most community property, but a wife was even then required to join in transactions to sell, convey, or encumber real property. Littell & Smythe Mfg. Co. v. Miller, 3 Wash. 480, 28 P. 1035 (1892). The Littell & Smythe rationale was that the statute giving the husband management of the community property necessarily implied his authority to contract for improvements. The statutory section in force at the time, Section 2410 of the 1881 Code, included provisions now contained in two sections—RCW 26.16.030(3) (sales, conveyances, and encumbrances of community realty) and RCW 26.16.040 (mechanics' liens on community realty). But there is no reason to suppose that in dividing up the former section, the legislature intended to overrule Littell & Smythe, because the statutory language remains virtually unchanged in the relevant particulars. Compare Code of 1881 § 2410 (quoted in Littell & Smythe, 3 Wash. at 481-82), with RCW 26.16.030(3), .040. Cf. Shulgan v. Evangelical Lutheran Good Samaritan Soc'y, No. 23392-8-III, 2006 Wash. App. LEXIS 18 at *15, 131 Wn. App. 1008 (Wash. Ct. App. Jan. 10, 2006) (unpublished) (citing Littell & Smythe as good authority for one spouse's authority to bind the community in contracting with contractors); Meltzer v. Wendell-West, 7 Wn. App. 90, 93-94, 497 P.2d 1348 (1972) (same).

The modern lien statute, RCW 60.04.211, reinforces the point by making clear that the filing of a claim of lien in the name of one spouse constitutes notice to the other spouse or owner of record and subjects the community interest of both to the lien. See also Douthitt v. MacCulsky, 11 Wash. 601, 40 P. 186 (1895) (mechanics' lien on community property may be obtained even though the wife is not named in the lien notice). These things said, with the amendment of RCW 26.16.030 in 1972 to provide equal management powers to both husbands and wives, the wife alone, as well as the husband, must have equal power to enter into a contract that could subject the community property to a mechanics' lien.

If the property upon which a lien is sought is the separate property of one spouse, the authority of the other spouse to contract must be established. RCW 60.04.011(1) identifies the persons who, as a matter of law, are deemed to be the owner's agent. The spouse of the owner is not included within that statutory listing; therefore, one must refer to the law of agency to determine the spouse's authority. In Cattell v. Fergusson, 3 Wash. 541, 28 P. 750 (1892), the court reviewed the husband's testimony and concluded (on rather slim evidence) that an agency relationship had been established. The result could be reached on either of two theories:

(1) the husband was in fact the wife's agent, or
(2) the wife was aware of the construction and participated therein to some degree and was therefore estopped. Compare Spears v. Lawrence, 10 Wash. 368, 38 P. 1049 (1894), with Spokane Valley Lumber & Box Co. v. Dawson, 94 Wash. 246, 161 P. 1191 (1917).

[2] Notice of Liens

RCW 60.04.031 specifies the necessary contents and form of a lien claim and the time and place for its filing. The potential lienor is required to name the owner or purported owner of the real property in the notice. Generally, the potential lienor will know whether the owner is married, and, if so, will name both spouses. Such a practice is advisable even though there may be some indication that the real property (or the improvement) is the separate property of one of the spouses. See also RCW 60.04.211 (filing of a claim of lien in the name of one spouse constitutes notice to the other spouse or owner of record and subjects the community interest of both to the lien).

[3] Foreclosure of Liens

A distinction must be made between the establishment of a lien and its foreclosure. As indicated above, joinder of both spouses is not necessary to establish the lien, but in an action to foreclose a mechanics' or materialmen's lien on community property, both spouses are necessary parties to the action. Nw. Bridge Co. v. Tacoma Shipbuilding Co., 36 Wash. 333, 78 P. 996 (1904); Powell v. Nolan, 27 Wash. 318, 68 P. 389 (1902). If a necessary party is not joined in the foreclosure action within the statutory period, the lien is extinguished. Peterson v. Dillon, 27 Wash. 78, 67 P. 397 (1901). Not only must both spouses be joined as parties, but they must be served or the action filed within the statutory period. It is sufficient, however, if service by publication is commenced within the period. Neukirch v. Wong, 195 Wash. 451, 81 P.2d 499 (1938).

In Curtis Lumber Co. v. Sortor, 83 Wn.2d 764, 522 P.2d 822 (1974), the court held that a lien is preserved upon commencement of the action within the meaning of the rules of civil procedure, which require that the claiming party must either serve a summons or file a complaint within the statutory period. Note that the civil rule requiring service within 90 days of filing of the summons and complaint is applicable in a lien situation. See Fox v. Groff, 16 Wn. App. 893, 559 P.2d 1376, review denied, 88 Wn.2d 1018 (1977). Extinction of the lien against the community property by failure to properly join all necessary parties does not terminate the lawsuit. The creditor may still obtain a judgment against the parties served, enforceable in the normal manner. See, e.g., Peterson, 27 Wash. 78.

In McDermott v. Tolt Land Co., 101 Wash. 114, 172 P. 207 (1918), the court held that filing for bankruptcy does not toll the time within which a foreclosure action must be commenced to preserve a mechanics' lien. That decision was based on the reasoning that there was "no statutory prohibition against the maintenance of a foreclosure action after the bankruptcy proceedings have been instituted." Id. at 118. In Culp v. McMehan, 123 Wash. 499, 212 P. 1069 (1923), a receiver had been appointed prior to the expiration of the period for commencement of suit and the court reached the same result.

However, in Dizard & Getty, Inc. v. Wiley, 324 F.2d 77 (9th Cir. 1963), the U.S. Court of Appeals for the Ninth Circuit, applying Washington law, held that commencement of a foreclosure suit was not required to retain the lien when a bankruptcy court order, entered prior to expiration of the statutory period, "froze" the property and ordered it sold by the trustee "free of the liens." Id. at 78. The court noted that the real property (the res) had been converted to cash under the bankruptcy court order and there no longer would be a subject matter for the foreclosure action to reach. The decision did not obviate the need for filing a claim of lien within the time allowed.

In In re Warren, 192 F. Supp. 801 (W.D. Wash. 1961), the federal district court held that if a notice of claim of lien is filed and a foreclosure suit commenced within the statutory time limits, a mechanics' lien may be a secured claim in bankruptcy, even though the claim in bankruptcy is not filed within the period for commencing a suit. See § 6.05[15], below, for further discussion of bankruptcy and community property.

A mechanics' or materialmen's lien accrues at the time materials are furnished and/or labor is performed. The subsequent declaration of a homestead cannot affect the rights so accrued. Brace & Hergert Mill Co. v. Burbank, 87 Wash. 356, 151 P. 803 (1915); Olson v. Goodsell, 56 Wash. 251, 105 P. 463 (1909). An accrued lien may, of course, be lost by failure to file a notice of it within the time allowed.

See § 6.05[12], below, for discussion of the homestead exemption.

[4] Notice of Lis Pendens

In a cause of action that affects title to real property, a notice of lis pendens (i.e., pending litigation) may be filed in the office of the auditor at the time of, or after, the filing of a complaint or answer in the clerk's office. RCW 4.28.320 (state courts); RCW 4.28.325 (federal courts); Burwell v. Smith, 63 Wash. 1, 114 P. 876 (1911). The contents of the notice are governed by the statute. A notice filed in the county where the subject property is located constitutes constructive notice to all persons. A subsequent purchaser or encumbrancer is bound by all proceedings taken after the filing of the notice to the same extent as if they were a party to the action. RCW 4.28.320.

A notice of lis pendens may be filed prior to the commencement of an action, provided that a defendant is served with a summons within 60 days after the filing of the notice. RCW 4.28.320; Kritzer v. Collier, 28 Wn.2d 356, 183 P.2d 195 (1947). Filing only affects such title as the parties have at that time. Tallyn v. Cowden, 158 Wash. 335, 290 P. 1005 (1930). Filing binds only those taking from or through parties to the action. Kritzer, 28 Wn.2d 356. The filing of a notice and writ of attachment has been held to give the same constructive notice as the filing of a notice of...