Judge: Armen Tamzarian, Case: 22STCV31578, Date: 2023-05-05 Tentative Ruling

Case Number: 22STCV31578    Hearing Date: May 5, 2023    Dept: 52

Defendant J.D. Parker’s Demurrer to Complaint

Defendant J.D. Parker demurs to plaintiff The J. Alexander Company, Inc.’s sixth cause of action for foreclosure of mechanic’s lien. 

Statute of Limitations

Defendant argues plaintiff’s sixth cause of action is untimely.  A demurrer should be sustained where “the complaint shows on its face that the statute [of limitations] bars the action.”  (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315 (E-Fab).)  “[T]he defect must clearly and affirmatively appear on the face of the complaint; it is not enough that the complaint shows merely that the action may be barred.”  (Id. at p. 1316.)  The court must determine which statute of limitations applies and when the claim accrued.  (Ibid.)

Generally, an action to enforce a mechanic’s lien must be filed “within 90 days after recordation of the claim of lien.”  (Civ. Code, § 8460(a).)  But “if the claimant and owner agree to extend credit, and notice of the fact and terms of the extension of credit is recorded (1) within 90 days after recordation of the claim of lien or (2) more than 90 days after recordation of the claim of lien but before a purchaser or encumbrancer for value and in good faith acquires rights in the property,” then the action must be filed “within 90 days after the expiration of the credit, but in no case later than one year after completion of the work of improvement.”  (Civ. Code, § 8460(b).)

Summary of Complaint

Plaintiff initially recorded its mechanic’s lien on January 6, 2022.  (Comp., ¶ 29, Ex. C.)  “[T]wice Defendants extended credit to Plaintiff pursuant to Civil Code 8460 to permit the timely filing of this action, as reflected in Exhibits D and E.”  (¶ 30.) 

Both extensions begin, “Pursuant to California Civil Code section 8460(b),” followed by the specific terms of extension.  (Comp., Exs. D, E.)  On April 5, 2022, they entered the first “notice of extension of credit to foreclose lien” which provides that the parties “hereby agree to extend by a period of 60 (sixty) days, the time in which Claimant must commence an action to foreclose said Claim of Lien.  Said extension shall extend to and including July 6, 2022.”  (Ex. D.)  On July 6, 2022, the parties entered the “notice of second extension of credit to foreclose lien,” which has the same language except that it states the parties “hereby agree to further extend…” and specifies the date as “to and including September 6, 2022.”  (Ex. E.) 

Plaintiff filed this action on September 27, 2022. 

Analysis

Whether plaintiff’s cause of action is timely depends on which of two interpretations applies to the “notice of second extension of credit to foreclose lien.”  Plaintiff argues the instrument is an agreement to “extend credit” that expired on September 6, 2022, and therefore plaintiff had another 90 days to foreclose on the lien under Civil Code section 8460(b).  Defendant argues the instrument is an agreement to extend plaintiff’s time to foreclose on the lien to September 6, 2022, which would make plaintiff’s action untimely. 

At this stage, the court cannot rule that defendant’s interpretation of the instrument is correct as a matter of law.  “ ‘Where a complaint is based on a written contract which it sets out in full, a general demurrer to the complaint admits not only the contents of the instrument but also any pleaded meaning to which the instrument is reasonably susceptible.’ ”  (Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221, 229.) 

The ”notice of second extension of credit to foreclose lien” is reasonably susceptible to plaintiff’s interpretation.  Civil Code section 8460(b) uses the word “credit” in an uncommon way.  The “credit” is the extension of the deadline itself, akin to a forbearance.  (See Southwest Concrete Products v. Gosh Construction Corp. (1990) 51 Cal.3d 701, 705 [“A forbearance of money is the giving of further time for the payment of a debt or an agreement not to enforce a claim at its due date”].)  Section 8460(b) refers to an agreement “to extend credit,” “the extension of credit,” and “the expiration of the credit.” 

Civil Code section 8484(e) uses “extension of credit” in the same sense.  It requires that any petition to release a lien state “[w]hether an extension of credit has been granted under Section 8460, if so to what date, and that the time for commencement of an action to enforce the lien has expired.”  (Ibid.) 

Extending credit under section 8460(b) therefore results in two crucial dates: first, the “expiration of the credit” as agreed, followed by “90 days after” that.  The end date of the “extension of credit” thus does not mean when the statute of limitations expires.  It is more like specifying when the right to foreclose accrues—followed by the 90-day statute of limitations.  California courts have consistently interpreted the former statutes on foreclosure of liens (which are equivalent to section 8460) this way.  “[A]s to the right of action upon the lien itself, a cause of action upon the entire claim of lien did not accrue until the expiration of the credit, from which time the 90 days began to run.”  (Hughes Bros. v. Hoover (1906) 3 Cal.App. 145, 150.) 

Ziganto v. Taylor (1961) 198 Cal.App.2d 603 (Ziganto) expressly discusses the two separate periods: the credit period, then the statutory 90 days.  “Two subsidiary questions are presented: (a) When did the 30-day credit period expire?  (b) When did the subsequent 90-day lien period expire?”  (Id. at p. 606.)  The “credit period commenced on April 22, 1959, and expired on May 21, 1959.  We now take up the second subsidiary question concerning the 90-day lien period.”  (Id. at p. 609.)  “[T]he counting of the 90-day lien period is to start on May 22, 1959, and that such 90-day period expired on August 19, 1959.”  (Id. at p. 610.)

Plaintiff therefore pleads a reasonably susceptible interpretation of the second extension: that it expired on September 6, 2022, so plaintiff’s complaint on September 27 was within the 90-day period after expiration.  The court cannot conclude that, as a matter of law, the complaint and its exhibits “clearly and affirmatively” show the sixth cause of action is untimely.  (E-Fab, supra, 153 Cal.App.4th at p. 1315.)  At most, “the complaint shows merely that the action may be barred.”  (Id. at p. 1316.) 

Disposition

Defendant J.D. Parker’s demurrer to the sixth cause of action for foreclosure of mechanic’s lien is overruled.  Defendant is ordered to answer within 20 days.