On March 3, 2005, in LRS Elec. Controls v. Hamre Constr., 153 Wn.2d 731, 107 P.3d 721 (2005), the Washington State Supreme Court ruled that sub-tier subcontractors providing both labor and materials on public construction projects are required to provide a pre-claim notice for the supplied materials in order to maintain a claim against the general contractor’s payment bond and against the retained percentage.
The holding is significant because if the required pre-claim notices are not provided, a sub-tier subcontractor will be precluded from recovering any money under the bond and retainage statutes for the materials portion of their claim. The Supreme Court’s ruling reversed a previous Court of Appeals decision, which was generally cited for the proposition that sub-tier subcontractors providing a blend of labor and materials on public construction projects were not suppliers, and thus were exempt from the pre-claim notice requirements. Because subcontractors performing improvements on public projects do not have lien rights against public property, RCW 39.08.030 allows subcontractors of any tier to assert a claim against the general contractor’s payment bond to recover any unpaid sums.
Similarly, RCW 60.28.010 provides subcontractors of any tier with a remedy against the statutorily prescribed retainage held by the public owner. Obviously, without lien rights, the bond and retainage statutes provide a secure basis for recovery in the event of non-payment by a general contractor or subcontractor with whom the claimant has contracted. Providing the required pre-claim notice is critical for maintaining a claim for materials supplied under both statutes. RCW 39.08.065 and RCW 60.28.015 require that a sub-tier subcontractor (i.e., subcontractor contracting with a subcontractor) who has provided materials on a public construction project to provide pre-claim notice to the general contractor prior to filing a claim against the bond or retainage. First tier subcontractors are expressly exempt from the notice requirement.
The question before the Supreme Court was whether a sub-tier subcontractor who had provided both materials and labor was a supplier, and thus required to provide the pre-claim notice. The Washington State Court of Appeals had held that a sub-tier subcontractor, who had provided both labor and materials, was not required to give the pre-claim notice to the general contractor. The Supreme Court reversed the Court of Appeals by strictly construing the notice requirements of the bond and retainage statutes, and holding that if both labor and materials are provided, the pre-claim notice must be provided for the materials portion of the claim.