Courts Enforce Clear Contract Language: The Importance of Unambiguous Lien Waivers, Releases, and Reservation of Claims on Construction Projects

By:  Benjamin J. McDonnell

       The importance of unambiguous lien waivers and releases on construction projects cannot be overstated. Reserving claims is likewise important when executing waivers and releases for work performed.  A recent unpublished decision from Division III of the Washington State Court of Appeals reminds us that courts will enforce the plain language of these contract documents. 

       In Exterra, LLC v. Cle Elum Gateway Property, LLC, Division III of the Washington State Court of Appeals upheld the trial court’s dismissal of a subcontractor’s lawsuit to foreclose a materialmen’s lien arising from an alleged failure to pay for construction services.  In doing so, the appeals court agreed with the trial court’s enforcement of waivers and releases that the subcontractor signed in connection with receiving progress payments.   

       The subcontractor argued on appeal that the trial court should not have dismissed its lien foreclosure claim because, the subcontractor asserted, an ambiguity existed in the waiver language. Applying common law contract principles, the appeals court rejected this argument and enforced the plain language of the contract documents.  In affirming the trial court, the appeals court noted that the waivers contained a space for the subcontractor to identify any claims it retained but that the subcontractor failed to identify in that space any claims.  Accordingly, the lien foreclosure action was dismissed.

       If you need legal assistance with respect to drafting, enforcing, or defending against lien waivers and releases, contact the attorneys at Piskel Yahne Kovarik, PLLC.