[WSBARP] Contractor bond question

[scott at scottgthomaslaw.com]

It’s not entirely clear to me that paying money in advance to a contractor who then immediately drives his or her backhoe off into the night would trigger the surety’s obligations under 18.27.040.

 

From: wsbarp-bounces at lists.wsbarppt.com <wsbarp-bounces at lists.wsbarppt.com> On Behalf Of Steve DeShazo
Sent: Friday, December 10, 2021 12:36 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com>
Subject: Re: [WSBARP] Contractor bond question

 


I came to a different conclusion than Ms. Fordham. I think the bond still provides coverage, or is at least meant to, but it’s usually only $12k. You can look up any contractor’s bond status on the Labor  <https://secure.lni.wa.gov/verify/> & Industries website. It’ll show any claims against the contractor’s bond and provide a phone number for an L&I rep you can call. It will also list the bond party and a bond number, so you can call the insurance company and ask about a specific policy.


The “surety insurer” should still hold the policy until cancelled. RCW 18.27.040(3) spells out the process for filing a claim against a contractor’s bond (superior court, surety issuer of the bond shall be named as a party). The excerpts below highlight some of the violations. 18.27.005 says the chapter shall be strictly enforced.


RCW 18.27.020 <http://app.leg.wa.gov/RCW/default.aspx?cite=18.27.020> 


Registration required—Prohibited acts—Criminal penalty—Monitoring program.


(1) Every contractor shall register with the department.

(2) It is a gross misdemeanor for any contractor to:

(a) Advertise, offer to do work, submit a bid, or perform any work as a contractor without being registered as required by this chapter;

(b) Advertise, offer to do work, submit a bid, or perform any work as a contractor when the contractor's registration is suspended or revoked…

 


RCW  <http://app.leg.wa.gov/RCW/default.aspx?cite=18.27.200> 18.27.200


Violation—Infraction.


(1) It is a violation of this chapter and an infraction for any contractor to:

(a) Advertise, offer to do work, submit a bid, or perform any work as a contractor without being registered as required by this chapter;

(b) Advertise, offer to do work, submit a bid, or perform any work as a contractor when the contractor's registration is suspended or revoked;

(c) Transfer a valid registration to an unregistered contractor or allow an unregistered contractor to work under a registration issued to another contractor;

(d) If the contractor is a [plumbing] contractor as defined in RCW  <http://app.leg.wa.gov/RCW/default.aspx?cite=18.106.010> 18.106.010, violate RCW  <http://app.leg.wa.gov/RCW/default.aspx?cite=18.106.320> 18.106.320; or

(e) Subcontract to, or use, an unregistered contractor.

(2) Each day that a contractor works without being registered as required by this chapter, works while the contractor's registration is suspended or revoked, or works under a registration issued to another contractor is a separate infraction. Each worksite at which a contractor works without being registered as required by this chapter, works while the contractor's registration is suspended or revoked, or works under a registration issued to another contractor is a separate infraction.

 

Stephen DeShazo

In-House Counsel

Direct:   206.413.6359

Office:   206.737.9700

Fax:        206.260.1339

Email:    steve.deshazo at isolahomes.com <mailto:steve.deshazo at isolahomes.com>  



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This e-mail and any attachments are for the sole use of the intended recipients and contain information that may be confidential or legally privileged. If you have received this e-mail in error, please notify the sender by reply e-mail and delete the message.

 

From: wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com>  <wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com> > On Behalf Of Inge Fordham
Sent: Friday, December 10, 2021 12:23 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com> >
Subject: Re: [WSBARP] Contractor bond question

 

The bond wouldn’t be triggered absent an occurrence during the bond period.  It sounds like the client may be out of luck with respect to the bond.  Unfortunately, even if the contractor was insured, the CGL policy wouldn’t provide coverage absent property damage caused by an occurrence within the policy period.  It wouldn’t provide coverage for theft (or conversion) of funds.  It may still be worth going after the contractor to obtain a judgment as they are good for 10 years and can be renewed for 10 year periods thereafter.  If the contractor owns real property, you can record a judgment lien.  If the client proceeds with a lawsuit, I would also plead fraud as a fraud judgment cannot be discharged in bankruptcy (but a judgment for a general breach of contract or conversion could).

 

Best of luck!  I always feel horrible for clients in this scenario.  It’s so important to verify licensure, bond, and insurance when hiring a contractor.  But then hindsight is always 20/20.

 




Inge A. Fordham | Attorney

Fordham Law, PLLC

3218 Sixth Avenue | Tacoma, WA 98406

Office: (253) 348-2657 | Mobile: (206) 778-3131

www.fordhamlegal.com <http://www.fordhamlegal.com> 

 

Confidential Communication: This email is sent to a recipient on behalf of an attorney/law firm, and is information intended exclusively for the individual, entity or company to which it is sent.  This communication may contain proprietary, privileged or confidential information or may otherwise be legally exempt from disclosure other than to the intended recipient.  If you are not the named addressee, you are not authorized to read, print, retain, copy or otherwise disseminate this message or any part of it.  If you have received this email in error, please notify the sender immediately by email or other communication and delete all copies of the message.

 

From: <wsbarp-bounces at lists.wsbarppt.com <mailto:wsbarp-bounces at lists.wsbarppt.com> > on behalf of Craig Gourley <craig at glgmail.com <mailto:craig at glgmail.com> >
Reply-To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com> >
Date: Friday, December 10, 2021 at 12:13 PM
To: WSBA Real Property Listserv <wsbarp at lists.wsbarppt.com <mailto:wsbarp at lists.wsbarppt.com> >
Subject: [WSBARP] Contractor bond question

 

Construction bond gurus.  I have a client with a contractor bond question that I hope someone has addressed previously and can share the knowledge.  Hapless homeowner hires sneaky contractor for a remodel.  Hapless pays the contractor in advance. Contractor works a couple of days and disappears.  Hapless would like to go after the bond.  So far a common and predictable outcome.  Now the fun part.  Contractor was suspended by L&I in April.  Contract was signed on June 8 for work to start June 16. Bond expired on June 13th.   Nutshell, unlicensed contractor signs a contract while the bond is in effect but starts work after it expired.  Any bond coverage?   Why does this feel like a bar question? 

 

B. Craig Gourley

GOURLEY LAW GROUP

THE EXCHANGE CONNECTION

SNOHOMISH ESCROW 

P.O. Box 1091

Snohomish, WA 98291

PH:  (360) 568-5065 (800) 291-8401

Fax: (360) 568-8092 

 

CONFIDENTIALITY NOTICE: This electronic mail transmission may contain legally privileged, confidential information belonging to the sender. The information is intended only for the use of the individual or entity named above. If you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or taking any action based on the contents of this electronic mail is strictly prohibited. If you have received this electronic mail in error, please contact sender and delete all copies.

 

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