Opinion Information Sheet

			

          IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON

PACIFIC CONTINENTAL BANK,                   )       NO. 65929-4-I
an Oregon State chartered bank,             )
                                            )       DIVISION ONE
                      Respondent,           )
                                            )
                      v.                    )
                                            )
SOUNDVIEW 90, LLC, a Washington,            )
State limited liability company, and        )
JOHN P. RADER, in his capacity as           )
general receiver for SOUNDVIEW              )
90, LLC,                                    )
                      Respondents,          )       PUBLISHED OPINION
                                            )
VILLAGE FRAMERS CORP., a                    )       FILED: March 26, 2012
Washington corporation,                     )
                                            )
                      Appellant.            )
                                            )

       Lau, J.  --  RCW 60.04.221's stop notice procedure protects potential lien 

claimants when a lender provides interim or construction financing.  Under this 

provision, a potential claimant may give notice to the lender, who then "shall withhold 

from the next and subsequent draws the amount claimed to be due as stated in the  

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notice." RCW 60.04.221(5).  If the lender fails to comply, the encumbrance securing 

the lender is "subordinated to the lien of the potential lien claimant to the extent of the 

interim or construction financing wrongfully disbursed . . . ." RCW 60.04.221(7).  

Pacific Continental Bank (the Bank) provided construction financing to Soundview 90, 

LLC (Soundview) to purchase and construct an apartment complex.  Village Framers, 

Corp. (VFC) recorded a $385,465.48 mechanic's lien on the property for the unpaid 

contract balance.  Because the Bank's creation of a $386,000.00 reserve violates the 

stop notice provision's express requirement to withhold that amount from the next and 

subsequent draws, the Bank's entire deed of trust is subordinated to VFC's lien claim 

under RCW 60.04.221(7).  We reverse summary judgment granted in the receiver's 

favor and remand for proceedings consistent with this opinion.

                                            FACTS
       The material facts are undisputed.1 In October 2007, the Bank committed to 

loan Soundview up to $10,300,000.00 to finance the purchase and construction of the 

Soundview Apartments.  The Bank secured its loan with a construction deed of trust on 

the land and its improvements, recorded on October 29, 2007.  

       VFC subsequently entered into a subcontract with Soundview to perform wood 

framing for the project in exchange for $430,372.00.  VFC subcontracted the framing 

       1 Both parties' clerk's papers (CP) citations are erroneous.  Rather than citing to 
the CP numbering system, the parties erroneously cite to King County Superior Court's 
sub numbers.  See RAP 10.4(f) ("A reference to the record should designate the page 
and part of the record.  Exhibits should be referred to by number.  The clerk's papers 
should be abbreviated as 'CP'; exhibits should be abbreviated as 'Ex'; and the report of 
proceedings should be abbreviated as 'RP.'").

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work to Gordon Harding Construction.  VFC began work on the Soundview Apartments 

on June 23, 2008, and completed its work on June 26, 2009.  On February 12, 2009, 

Soundview paid VFC $73,000.00. VFC recorded a $385,465.48 mechanic's lien 

on Soundview's property on August 5, 2009 for the unpaid contract balance.  On 

August 13, VFC served the Bank with a stop notice for that amount according to 
RCW 60.04.221.2  

       The stop notice substantially complied with the sample form provided for in 

RCW 60.04.221(4).  This notice informed the Bank about its statutory obligation to 

withhold from the next and future project construction draws the amount of $385,465.48 

or have its security interest in the property subordinated to VFC's mechanic's lien:

                             NOTICE TO REAL PROPERTY LENDER
                                  (Authorized by RCW 60.04.221)
                                                 . . . . 
              The amount owing to the undersigned according to contract or purchase 
       order for labor, supplies, or equipment (as above mentioned) is the sum of three 
       hundred eighty-five thousand four hundred sixty-five and 48/100 dollars 
       ($385,465.48). Said sums became due and owing as of June 26, 2009.
              You are hereby required to withhold from any future draws on existing 
       construction financing which has been made on the subject property (to the 
       extent there remain undisbursed funds) the sum of three hundred eighty-five 
       thousand four hundred sixty-five and 48/100 dollars ($385,465.48).
                                         IMPORTANT
       FAILURE TO COMPLY WITH THE REQUIREMENTS OF THIS NOTICE MAY 
       SUBJECT THE LENDER TO A WHOLE OR PARTIAL COMPROMISE OF ANY 
       PRIORITY LIEN INTEREST IT MAY HAVE PURSUANT TO RCW 60.04.226.

(Formatting and boldface omitted.)  

       2 Below, the receiver "reserved argument on the factual question of whether . . . 
a timely stop notice from VFC would have been required long before the date it was 
actually issued." But on review of the summary judgment, the receiver acknowledges 
that "all factual claims by VFC are presumed accurate."  Resp't's Br. at 5 nn.18, 19.  
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       On receipt of the stop notice, "the Bank withheld $386,000.00 from loan funds 

available for disbursement to or for the benefit of the Borrower[,] although the Bank did 

continue to advance other unrestricted loan proceeds for payment of non-contested 

invoices."  According to the Bank, it issued an alert message through its loan 

accounting system directing its officers to hold back $386,000.00 for VFC's lien.  The 

Bank continued to fund Soundview's other unrestricted draw requests until the total of 
all loan advances reached $9,208,226.13 of the total loan amount of $10,300,000.00.3  

       On November 1, 2009, the Bank declared Soundview in default on the past due 

loan.  In December 2009, the Bank filed a complaint for monies due, judicial foreclosure 

of its deed of trust, and appointment of a receiver.  The receiver moved to approve the 

sale of the Soundview property for $6.5 million, create a $400,000.00 escrow fund from 

the proceeds, and distribute the remainder to the Bank.  The Bank had a deficiency of 

unpaid principal and interest totaling $3,074,328.91 after applying the distributed 

portion of the sale proceeds.  

       On July 29, 2010, the receiver moved for summary judgment on behalf of the 

Bank, seeking an order declaring the validity and priority of the Bank's security interest 

in the $400,000.00 escrow fund and authorizing the distribution of those funds to the 

Bank. On August 17, 2010, VFC filed its combined opposition brief and cross motion 

       3 In essence, the Bank created a reserve equal to the amount of VFC's claim 
rather than withhold the amount claimed from Soundview's monthly draw.  According to 
VFC, the Bank's reserve would "theoretically prevent Soundview from tak[ing] a draw 
for the last $385,465.48 of the total $10,300,000 loan commitment, but would not -- and 
did not -- result in any reduction in the amount of its monthly draws." Appellant's Br. at 
8.
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for summary judgment seeking a declaration that its mechanic's lien had priority over 

the Bank's deed of trust.  VFC later withdrew its cross motion, claiming that "it was 

more beneficial to allow the court to focus on the single issue of properly interpreting 

RCW 60.04.221, regarding 'Stop Payment Notices' to real property lenders."  The trial 

court granted the receiver's summary judgment motion, found that the Bank's security 

interest took priority over VFC's mechanic's lien, extinguished VFC's interest in the 

escrowed funds, and ordered distribution of the $400,000.00 to the Bank.  

                                          ANALYSIS

       Standard of Review

       When reviewing a summary judgment order, we engage in the same inquiry as 

the trial court, viewing the facts and all reasonable inferences in the light most 

favorable to the nonmoving party. Jones v. Allstate Ins. Co., 146 Wn.2d 291, 300, 45 

P.3d 1068 (2002). Summary judgment is appropriate only where there is no genuine 

issue of material fact and the moving party is entitled to judgment as a matter of law.  

CR 56(c); Jones, 146 Wn.2d at 300 -- 01.  Statutory interpretation is a question of law, 

which we review de novo.  Lake v. Woodcreek Homeowners Ass'n, 169 Wn.2d 516,

243 P.3d 1283 (2010).

       History of RCW 60.04.221's Stop Notice Provision 

       Future advances clauses in mortgages or deeds of trust allow for collateral to 

serve as security for obligations the mortgagor may incur in the future.  Future 

advances mortgages are common in real estate development.  In a construction loan 

mortgage, the developer (mortgagor) typically "agrees that the mortgage will secure a 

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loan to be paid out in installments, called 'progress payments' or 'draws' as 

construction progresses." 18 William B. Stoebuck & J. Weaver, Washington Practice:  

Real Estate:  Transactions § 17.16, at 299 (2d ed. 2004).

       Washington has long recognized future advances mortgages and historically 

took the position that between the holder of a future advances mortgage and third 

parties with competing lien or mortgage claims on the same land, any progress 

payments made before the competing lien is filed take priority.  18 Stoebuck & Weaver, 
supra, at 300.4 But Washington law varied on whether draws made after an intervening 

lien took the same priority as earlier advances.  Early Washington cases held that the 

mortgage lender took priority in progress payments made after a competing lien was 

filed.  See Eltopia Fin. Co. v. Colley, 126 Wn. 554, 219 P. 24 (1923); Heal v. Evans 

Creek Coal & Coke Co., 71 Wn. 225, 128 P. 211 (1912).  But in Elmendorf-Anthony Co. 

v. Dunn, 10 Wn.2d 29, 116 P.2d 253 (1941), "Washington adopted the rule that future 

advances take priority over intervening liens only if the advances are 'obligatory,' not if 

they are 'optional' with the lender."  18 Stoebuck & Weaver, supra, at 300; Elmendorf-

Anthony, 10 Wn.2d at 39-40.

       In National Bank of Washington v. Equity Investors, 81 Wn.2d 886, 506 P.2d 20 

(1973), the court held that the bank's construction mortgage, which contained several 

       4 In Washington, a mechanic's or materialmen's lien will take priority over "any 
lien, mortgage, deed of trust, or other encumbrance which attached to the land after or 
was unrecorded at the time of commencement of labor or professional services or first 
delivery of materials or equipment by the lien claimant." RCW 60.04.061 (emphasis 
added).  Thus, encumbrances that attached and were recorded before commencement 
of labor or professional services or first delivery of materials or equipment by a 
mechanic's lien claimant take priority over the mechanic's lien. 
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protective clauses allowing the bank to withhold progress payments for various 

reasons, made every progress payment "optional" and thus lower in priority than 

intervening liens. The decision created unintended difficulty for drafters of construction 

loan mortgages, prompting the legislature to intervene.  18 Stoebuck & Weaver, supra, 

at 301.  Responding to Equity Investors, the legislature adopted RCW 60.04.220 in 

1973 (reenacted with minor changes in 1991 as RCW 60.04.226).  18 Stoebuck & 

Weaver, supra, at 301.  It abrogates the obligatory/optional distinction and provides 

that a recorded mortgage or deed of trust takes priority over subsequently recorded 

liens "to the extent of all sums secured by the mortgage or deed of trust regardless of 

when the same are disbursed or whether the disbursements are obligatory." RCW 
60.04.226.5  

       The statutory trade-off to RCW 60.04.226 is the so called "stop notice" created 

by RCW 60.04.221. See 18 Stoebuck & Weaver, supra, at 299-301.  "Subject to some 

exceptions, an unpaid potential lien claimant is empowered to give a lender who 

provides 'construction financing' a notice of his claim, whereupon the lender is required 

to hold back from progress payments enough to cover the claim." 18 Stoebuck & 

Weaver, supra, at 299-301; see also RCW 60.04.221.  

       Under RCW 60.04.221's linked subsections, withholding the construction draw 

       5 The full text of RCW 60.04.226 provides, "Except as otherwise provided in 
RCW 60.04.061 or 60.04.221, any mortgage or deed of trust shall be prior to all liens, 
mortgages, deeds of trust, and other encumbrances which have not been recorded 
prior to the recording of the mortgage or deed of trust to the extent of all sums secured 
by the mortgage or deed of trust regardless of when the same are disbursed or whether 
the disbursements are obligatory."

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forces the borrower to seek resolution of the payment dispute.  Failing that, if the lender 

can obtain from the borrower or general contractor a lien release bond for the benefit of 

the claimant in the amount of a stop notice claim received, the lender need not withhold 

any funds for that particular claim.

              (5) After the receipt of the notice, the lender shall withhold from the next 
       and subsequent draws the amount claimed to be due as stated in the notice.  
       Alternatively, the lender may obtain from the prime contractor or borrower a 
       payment bond for the benefit of the potential lien claimant in an amount sufficient 
       to cover the amount stated in the potential lien claimant's notice.  The lender 
       shall be obligated to withhold amounts only to the extent that sufficient interim or 
       construction financing funds remain undisbursed as of the date the lender 
       receives the notice.
              (6) Sums so withheld shall not be disbursed by the lender, except by the 
       written agreement of the potential lien claimant, owner, and prime contractor in 
       such form as may be prescribed by the lender, or the order of a court of 
       competent jurisdiction.
              (7) In the event a lender fails to abide by the provisions of subsections [5] 
       and [6] of this section, then the mortgage, deed of trust, or other encumbrance 
       securing the lender shall be subordinated to the lien of the potential lien claimant 
       to the extent of the interim or construction financing wrongfully disbursed, but in 
       no event more than the amount stated in the notice plus costs as fixed by the 
       court, including reasonable attorneys' fees.

RCW 60.04.221 (emphasis added) (revisor's note omitted).  A related statute provides, 

"RCW . . . 60.04.011 through 60.04.226 . . . are to be liberally construed to provide 

security for all parties intended to be protected by their provisions." RCW 60.04.900.

       Creation of a "Reserve"       

       The main issue here is whether, under RCW 60.04.221's stop notice provision, 

the Bank's creation of a "reserve" for VFC satisfies the requirement to "withhold from 

the next and subsequent draws the amount claimed to be due as stated in the notice."  

RCW 60.04.221(5).  VFC argues that the Bank's $385,465.48 reservation from the full 

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loan amount of $10,300,000, while fully funding all subsequent draw requests 

submitted by Soundview until declaring Soundview to be in default, violated the stop 

notice provision.  The Bank argues that its reservation of the disputed sum against the 

remaining undisbursed portion of the $10,300,000 construction loan fulfilled its 

obligation under the stop notice provision.

       When interpreting a statute, the court first looks to its plain language. State v. 

Armendariz, 160 Wn.2d 106, 110, 156 P.3d 201 (2007). "If a statute is clear on its 

face, its meaning is to be derived from the language of the statute alone." Kilian v. 

Atkinson, 147 Wn.2d 16, 20, 50 P.3d 638 (2002). This rule applies to mechanic's lien 

statutes.  Estate of Haselwood v. Bremerton Ice Arena, Inc., 166 Wn.2d 489, 498, 210 

P.3d 308 (2009).  Only where a statute is subject to more than one reasonable 

interpretation will a court resort to statutory construction, legislative history, and 

relevant case law for assistance in determining the legislature's intent.  Haselwood, 

166 Wn.2d at 498.  "'[A] statute is not ambiguous merely because different 

interpretations are conceivable.'"  Agrilink Foods, Inc. v. State Dep't of Revenue, 153 

Wn.2d 392, 396, 103 P.3d 1226 (2005) (quoting State v. Hahn, 83 Wn. App. 825, 831,

924 P.2d 392 (1996)).  If "a party's lien is covered by chapter 60.04 RCW, the statute is 

to be liberally construed to provide security for all parties intended to be protected by 

its provisions."  Haselwood, 166 Wn.2d at 498; RCW 60.04.900.

       VFC claims specifically that the Bank, in creating a "reserve" out of the 

undisbursed funds that were never paid out to Soundview, failed to withhold the amount 

claimed to be due from "the next and subsequent draws," and instead merely made a 

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bookkeeping entry establishing a reminder not to release the final $386,000.6  

Appellant's Br. at 2.  VFC argues that this action violates the stop notice provision.  

This provision requires that upon receipt of a stop notice, the lender must withhold from

the next and subsequent draws the amount claimed in the notice.  RCW 60.04.221.  

RCW 60.04.011(3) defines "draws" as "periodic disbursements of interim or 

construction financing by a lender." "It is an axiom of statutory interpretation that where 

a term is defined we will use that definition."  United States v. Hoffman, 154 Wn.2d 730, 

741, 116 P.3d 999 (2005).  The ordinary meaning of "withhold" is "to desist or refrain 

from granting, giving, or allowing; keep in one's possession or control; keep back."  

Webster's Third New International Dictionary 2627 (2002). The common meaning of 

"next" is "immediately preceding or following in order (as of place, rank, relation, or 

time)" and the ordinary meaning of "subsequent" is "following in time" or "succeeding."  

Webster's, supra, at 1524, 2278.  "'[W]e may discern the plain meaning of nontechnical 

statutory terms from their dictionary definitions.'"  State v. Kintz, 169 Wn.2d 537, 547, 

238 P.3d 470 (2010) (alteration in original) (quoting State v. McDougal, 120 Wn.2d 

334, 350, 841 P.2d 1232 (1992)).  When determining the meaning of undefined terms, 

       6 Our review of the record confirms alert message notations in the Bank's file to 
"hold back $386,000 for lien for Village Framers." Pacific Continental Bank Executive 
Vice President and Chief Credit Officer Casey Hogan testified by declaration, "Upon 
the Bank's receipt of the Stop Notice the Bank notified the Borrower of the Bank's 
receipt of the Stop Notice.  In accordance with the requirements of RCW 60.04.221 and 
because the Borrower disputed the validity of VFC's lien and Stop Notice, the Bank 
withheld $386,000 from loan funds available for disbursement to or for the benefit of the 
Borrower.  At all material times since that date, the Bank has withheld disbursement of 
such Stop Notice funds, although the Bank did continue to advance other unrestricted 
loan proceeds for payment of non-contested invoices."  
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courts "will consider the statute as a whole and provide such meaning to the term as is 

in harmony with other statutory provisions."  Heinsma v. City of Vancouver, 144 Wn.2d 

556, 564, 29 P.3d 709 (2001).

       The stop notice provision's meaning is plain on its face.  Under the 

circumstances here, it required the Bank to withhold the amount VFC claimed to be due 

from "the next and subsequent draws" to maintain its priority.  RCW 60.04.221(5).  The 

legislature clearly intended lenders to withhold the amount of the claim from the "next 

and subsequent draw" requests until it either received notice from the claimant that the 

dispute was resolved or obtained from the borrower or general contractor a bond in 

favor of the claimant.  See RCW 60.04.221(5).  Or it could declare the borrower in 

default and immediately foreclose.  Town Concrete Pipe of WA, Inc. v. Redford, 43 Wn. 
App. 493, 717 P.2d 1384 (1986).7  

       VFC contends, "The Bank has complete control over whether it will maintain 

priority over lien claimants." Appellant's Br. at 17.  We agree.  In Town Concrete, we 

discussed three options when a lender receives a stop notice:
              The stop notice provision, RCW 60.04.[221],[8] was devised to provide 
       additional security to those who furnish labor or materials in the erection or 
       improvement of buildings.  Under the statute, a potential lien claimant may give 
       notice to a construction lender that payment by the borrower is more than 5 days 

       7 Town Concrete held that although not specifically provided by the stop notice 
statute, a lender may avoid the effect of the stop notice statute by foreclosing its 
mortgage and making no further loan advances.  The court reasoned that nothing in the 
statute prevents such an option, that lien statutes are in derogation of the common law 
and must be strictly construed, and that the legislature's intent to provide additional 
protections for lien claimants is not violated by a strict interpretation of the statute.  
Town Concrete, 43 Wn. App. at 497.

       8 Former RCW 60.04.210 (1975), repealed by Laws of 1991, ch. 281, § 31.

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65929-4-I/12

       overdue.  RCW 60.04.[221](2). The lender then has three options:
              First, if the lender chooses to allow further draws upon the construction 
              loan fund, he "shall withhold" funds to satisfy the stop notice from these 
              "next and subsequent draws." Second, if the lender chooses to continue 
              draws without withholding funds for the stop notice, he suffers the 
              "penalty" of Section 2(6), and his mortgage is subordinated to the 
              subsequent mechanics' lien of the stop notice claimant "to the extent of 
              the interim or construction financing wrongfully disbursed, but in no event 
              in an amount greater than the sums ultimately determined to be due the 
              potential lien claimant by a court of competent jurisdiction, or more than 
              the sum stated in the notice, whichever is less." Third, the lender may 
              avoid the effect of the stop notice altogether by making no further loan 
              advances and foreclosing his mortgage.  In this last situation, the 
              [potential lien claimant]'s only recourse is to his mechanics' lien which will 
              have no enhanced priority by reason of the stop notice.

Town Concrete, 43 Wn. App. at 496-97 (emphasis added) (quoting Note, Mechanics'

Liens: The "Stop Notice" Comes to Washington, 49 Wash. L. Rev. 685, 695-96 (1974)).  

The Bank could have maintained its priority by (1) withholding the amount in 

arrears -- $385,465.48 -- from the next and subsequent draws it issued, (2) requiring 

Soundview to post a bond for the amount of VFC's claim, or (3) suspending all further 

draws to Soundview and immediately foreclosing on its deed of trust.  It is undisputed 

that the Bank did not seek or receive a bond to cover VFC's claim.  Moreover, the Bank 

failed to suspend all further draws.  It subsequently advanced $1,147,868.  Whether 

the Bank's deed of trust became subordinated to VFC's lien claim turns on whether the 

Bank complied with RCW 60.04.221(5)'s requirement that it withhold from the next and 

subsequent draws the funds necessary to satisfy the lien.  The Bank claims it satisfied 

this requirement when it established a reserve in the amount of $386,000.

       Because Soundview and VFC never resolved the lien dispute by agreement or 

by order of a court, the funds could not have been disbursed in accordance with RCW 

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65929-4-I/13

60.04.221(6).  Indeed, the Bank terminated the line of credit and retained the 

"reserved" funds, using them for its own purpose contrary to VFC's RCW 60.04.221(7) 

priority lien.

       Nothing in the record indicates the Bank documented the $386,000 as a draw on 

its books or shows an increase in the principal loaned to Soundview.  Instead, the Bank 

reduced the maximum amount Soundview was eligible to draw on its future line of 

credit.  When it terminated the line of credit, it failed to withhold the $386,000 pending 

agreement between Soundview and VFC or pending court order.  Nor did it tender the 

funds to the court registry.  The Bank treated the reserve of $386,000 as a mere 

obligation under the line of credit that was cancelled along with the line of credit.  As a 

matter of law, the Bank failed to satisfy the requirements of RCW 60.04.221(5) and 
triggered subordination of its deed of trust under RCW 60.04.221(7).9

       Finally, we reject the receiver's partial subordination assertion.  Subsections (5) 

and (6) of RCW 60.04.221 obligate a construction lender that has received a stop 

notice to "withhold from [its borrower's] next and subsequent draws the amount claimed 

to be due." RCW 60.04.221(5), (6).  Subsection (7) requires, "In the event a lender 

fails to abide by the provisions of subsections [5] and [6] of this section, then 

the . . . deed of trust . . . securing the lender shall be subordinated to the lien . . . ."  

RCW 60.04.221(7) (reviser's note omitted).  We find nowhere in the plain meaning of 

the provision any support for the receiver's claim that RCW 60.04.221 requires a court 

       9 Our review of the legislative history similarly shows no support for the Bank's 
contentions.

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to partition a lender's deed of trust securing exclusively construction financing and then 
to subordinate only a portion equal to the amount the lender wrongfully disbursed.10  

And as Representative Richard Kelley, author and cosponsor of this legislation, clearly 

explained when asked how the bill works, "If the lending institution fails to withhold 

money, it is done at the risk of losing [its] priorities."  Floor Notes on Engrossed 

Substitute H.B. 264 (emphasis added). Because the Bank violated RCW 60.04.221's 

stop notice provision, the Bank "los[es] its priority" -- the entire deed of trust is 

subordinated to the lien.

       For the reasons discussed above, we reverse the trial court's order granting 

summary judgment to the receiver and remand for further proceedings consistent with 
this opinion.11

       Attorney Fees

       10 We need not address the exception intended by the legislature that a lender's 
deed of trust be partitioned before subordination but only when the deed of trust 
secured both the acquisition and the improvement of real property.  This exception is 
inapplicable here.

       11 We decline to grant VFC's request for entry of summary judgment in its favor 
because it withdrew its summary judgment motion below and because unresolved 
issues remain for trial court determination.  Similarly, we decline to grant VFC's single 
sentence request, made for the first time on appeal, to impose a constructive trust on 
the $400,000 escrow fund.  Because this issue was not raised below or briefed on 
appeal, we decline to address it. RAP 2.5(a); State v. Scott, 110 Wn.2d 682, 685, 757 
P.2d 492 (1988).  "The purpose of this general rule is to give the trial court an 
opportunity to correct errors and avoid unnecessary retrials."  Postema v. Postema 
Enters., Inc., 118 Wn. App. 185, 193, 72 P.3d 1122 (2003).  See also First Am. Title 
Ins. Co. v. Liberty Capital Starpoint Equity Fund, LLC, 161 Wn. App. 474, 486, 254 
P.3d 835 (2011) (declining to consider an inadequately briefed argument).  And the trial 
court is in the best position to determine the merits of this request on proper briefing.

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       The Bank requests an award of attorney fees pursuant to RCW 60.04.181(3).  

That statute provides that in a lien foreclosure action,

       [t]he court may allow the prevailing party in the action, whether plaintiff or 
       defendant, as part of the costs of the action, the moneys paid for recording the 
       claim of lien, costs of title report, bond costs, and attorneys' fees and necessary 
       expenses incurred by the attorney in the superior court, court of appeals, 
       supreme court, or arbitration, as the court or arbitrator deems reasonable.

Because the Bank is not the prevailing party on appeal, it is not entitled to attorney fees

under RCW 60.04.181(3).  

                                        CONCLUSION

       Because the Bank failed to withhold funds from draws provided to Soundview 

after receipt of VFC's stop notice, it failed to comply with RCW 60.04.221's stop notice 

provision.  We reverse summary judgment in favor of the receiver and remand for 

further proceedings consistent with this opinion.

WE CONCUR:

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