A Reminder for Contractors of Perils of Not Registering

Originally published by the Daily Journal of Commerce on March 16, 2023.

Chapter 18.27 of the Revised Code of Washington (“chapter”) contains the requirements for contractors performing services in Washington state. This chapter governs who is considered a contractor, the registration requirements of those contractors, and what could happen if those contractors do not register. Recently, the Washington Supreme Court found need to give contractors some guidance on this chapter.

Definition of contractor

The chapter defines contractors as:

• “Contractor” includes any entity that undertakes to, or offers to undertake to, construct, alter, repair, add to, subtract from, improve, develop, move, wreck, or demolish any building, structure, project, development, or improvement attached to real estate, including the installation of carpeting or other floor covering, the erection of scaffolding or other structures or works in connection therewith, the installation or repair of roofing or siding, performing tree removal services, or cabinet or similar installation.
• “General contractor” means a contractor whose business operations require the use of more than one building trade or craft upon a single job or project or under a single building permit.
• “Specialty contractor” means a contractor who does not fall within the definition of a general contractor.

Registration requirements

The chapter contains the requirement that every contractor register, though 17 exemptions are noted. Persons or entities within one of these exemptions are still contractors (if within the above definitions) – but are exempt from having to register as one.

For example, a “contractor” who only once performed work on a project (or series of projects) totaling under $500 does not need to register. Additionally, a person working on his or her own property or residence does not need to register. However, this exemption does not apply if the owner is performing the work for the purpose of selling, demolishing, or leasing the property.

Failure to register

It is a gross misdemeanor for an unregistered contractor to advertise, offer to do work, submit a bid, or perform any work as a contractor. In addition, a contractor cannot sue for breach of contract if it cannot prove that it held a valid certificate of registration at the time the contract was executed.

Dobson v. Archibald

The above issues are addressed in the 2023 Washington Supreme Court decision Dobson v. Archibald, which was filed Feb. 9, 2023. This case involves Gina Dobson, who was not registered as a contractor, and Trefan Archibald, a homeowner who hired Dobson to refinish his hardwood floors. Dobson worked principally as a longshoreman, but she occasionally performed construction work on the side. Archibald was unhappy with Dobson’s work and refused to pay. Dobson sued for breach of contract.

Archibald filed a motion for summary judgment, arguing that because Dobson is an unregistered contractor, she is precluded under the chapter from filing suit. Dobson filed a cross-motion for summary judgment, arguing that the chapter is in fact an affirmative defense, and Archibald waived that affirmative defense by not pleading it in his answer. The Superior Court granted Archibald’s motion, denied Dobson’s motion, and dismissed the case with prejudice.

The Court of Appeals affirmed, holding that Dobson was a contractor and was therefore required to register, and that registration is a requirement to bring suit. Failure to do so is not an affirmative defense that a defendant must plead.

The Washington Supreme Court agreed that Dobson was a contractor as defined by the chapter. In reaching this conclusion, the court adopted a five-part test used by the Washington Court of Appeals in Rose v. Tarman (1977), whereby the Court of Appeals considered: 1, the nature of the relationship with the client, 2, the time of performance, 3, the agreed-upon price for performance and whether it is substantially below the going rate for similar work, 4, the public perception of the individual’s role in performing such work, and 5, which party solicits the contract. The court found that “on balance,” the factors weighed in favor of Dobson being a contractor (although two of the five factors weighed against it).

In holding that registration as a contractor is a prerequisite to sue (as opposed to an affirmative defense that the defense must plead), the court concluded that “the plain language of the statute identifies registration as a prerequisite to sue. … There is no indication anywhere in chapter 18.27 RCW that nonregistration is an affirmative defense that could be waived.”

Conclusion

Dobson v. Archibald reminds us that anyone performing work within the definition of a contractor as defined in RCW 18.27 should think carefully before doing so without being registered. Performing work as an unregistered contractor could result in a contractor’s inability to recover payment owed by its customers.