In Diamaco, 2006 Wash. App. LEXIS 2350 (October 23, 2006), the subcontractor, ARM Construction, made a claim against the payment bond and retainage for unpaid extra work it performed on the King County Duvall Bridge Project. The general contractor, Diamaco, refused to pay ARM and purchased a retainage bond from Travelers, who also issued Diamaco’s payment bond. ARM filed a lawsuit against the payment and retainage bonds. ARM prevailed at the trial court level and was awarded some but not all of its attorneys’ fees.
The first issue before the Division I Court of Appeals was whether the trial court erred in not awarding ARM all of its attorneys’ fees and costs. The court held that while the award of attorney fees is not discretionary under the bond and retainage statutes, the amount of any such award is discretionary. The Court of Appeals affirmed the trial courts award of $135,000 in fees to ARM (the total amount at issue in the trial was $140,955).
The second issue was whether the award of attorney fees against Travelers was appropriate. Travelers argued that it did not have a sufficiently adverse interest in the matter to justify an award of fees under the bond and retainage statutes. The Court of Appeals held that there was a sufficient adverse relationship where Traveler’s answered the complaint by denying the allegations in the complaint and sought dismissal of the complaint. The Court also contrasted Lakeside Pump & Equipment, Inc. v. Austin Constr. Co., 89 Wn.2d 839, 576 P.2d 392 (1978), where the Supreme Court had previously held that a surety was not liable for attorney fees where it merely filed a notice of appearance but did not answer and deny the allegations in the complaint.