AN ACT
Relating to the surety bond required from fire protection sprinkler system
contractors; adding a new section to chapter 18.160 RCW; repealing RCW
18.160.060; and declaring an emergency.
BE IT
ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW
SECTION. Sec. 1. A new
section is added to chapter 18.160 RCW to read as follows:
(1)
Before granting a license under this chapter, the director of fire protection
shall require that the applicant file with the state director of fire
protection a surety bond issued by a surety insurer who meets the requirements
of chapter 48.28 RCW in a form acceptable to the director of fire protection
running to the state of Washington in the penal sum of ten thousand dollars.
However, the surety bond for a fire protection sprinkler system contractor
whose business is restricted solely to NFPA 13-D or NFPA 13-R systems shall be
in the penal sum of six thousand dollars. The bond shall be conditioned that
the applicant will pay all purchasers of fire protection sprinkler systems with
whom the applicant has a contract for the applicant to install, inspect,
maintain, or service a fire protection sprinkler system, and who have obtained
a judgment against the applicant for the breach of such a contract. The term
"purchaser" means an owner of property who has entered into a
contract for the installation of a fire protection sprinkler system on that
property, or a contractor who contracts to install, inspect, maintain, or
service such a system with an owner of property and subcontracts the work to
the applicant. No other person, including, but not limited to, persons who
supply labor, materials, or rental equipment to the applicant, shall have any
rights against the bond.
(2) In
lieu of the surety bond required by this section the applicant may file with
the director of fire protection a deposit consisting of cash or other security
acceptable to the director of fire protection in an amount equal to the penal
sum of the required bond. The director of fire protection may adopt rules
necessary for the proper administration of the security.
(3)
Before granting renewal of a fire protection sprinkler system contractor's
license to any applicant, the director of fire protection shall require that
the applicant file with the director satisfactory evidence that the surety bond
or cash deposit is in full force.
(4)
Any purchaser of a fire protection sprinkler system having a claim against the
licensee for the breach of a contract for the licensee to install, inspect,
maintain, or service a fire protection sprinkler system may bring suit upon
such bond in superior court of the county in which the work was done or of any
county in which jurisdiction of the licensee may be had. Any such action must
be brought not later than one year after the expiration of the licensee's
license or renewal license then in effect at the time of the alleged breach of
contract.
(5)
The bond shall be considered one continuous obligation, and the surety upon the
bond shall not be liable in aggregate or cumulative amount exceeding ten
thousand dollars, or six thousand dollars if the bond was issued to a licensee
whose business is restricted solely to NFPA 13-D or NFPA 13-R systems,
regardless of the number of years the bond is in effect, or whether it is
reinstated, renewed, reissued, or otherwise continued, and regardless of the
year in which any claim accrued. The bond shall not be liable for any
liability of the licensee for tortious acts, whether or not such liability is
imposed by statute or common law, or is imposed by contract. The bond shall
not be a substitute or supplemental to any liability or other insurance
required by law or by the contract.
(6) If
the surety desires to make payment without awaiting court action against it,
the amount of the bond shall be reduced to the extent of any payment made by
the surety in good faith under the bond. Any payment shall be based on final
judgments received by the surety.
(7)
Claims against the bond shall be satisfied from the bond in the following
order:
(a)
Claims by a purchaser of a fire protection sprinkler system for the breach of a
contract for the licensee to install, inspect, maintain, or service a fire
protection sprinkler system;
(b)
Any court costs, interest, and attorneys' fees the plaintiff may be entitled to
recover by contract, statute, or court rule.
A condition
precedent to the surety being liable to any claimant is a final judgment
against the licensee, unless the surety desires to make payment without
awaiting court action. In the event of a dispute regarding the apportionment
of the bond proceeds among claimants, the surety may bring an action for
interpleader against all claimants upon the bond.
(8)
Any purchaser of a fire protection sprinkler system having an unsatisfied final
judgment against the licensee for the breach of a contract for the licensee to
install, inspect, maintain, or service a fire protection sprinkler system may
execute upon the security held by the director of fire protection by serving a
certified copy of the unsatisfied final judgment by registered or certified
mail upon the director within one year of the date of entry of such judgment.
Upon the receipt of service of such certified copy the director shall pay or
order paid from the deposit, through the registry of the court which rendered
judgment, towards the amount of the unsatisfied judgment. The priority of
payment by the director shall be the order of receipt by the director, but the
director shall have no liability for payment in excess of the amount of the
deposit.
NEW
SECTION. Sec. 2. RCW
18.160.060 and 1990 c 177 s 7 are each repealed.
NEW
SECTION. Sec. 3. This
act is necessary for the immediate preservation of the public peace, health, or
safety, or support of the state government and its existing public
institutions, and shall take effect immediately.
