Judge: Cherol J. Nellon, Case: 23STCV00762, Date: 2024-04-08 Tentative Ruling

Case Number: 23STCV00762    Hearing Date: April 8, 2024    Dept: 14

Case Background

 

            Plaintiff had a contract to build a six-story building. It alleges that it did the work, but Defendant failed to pay the agreed price.

 

            On January 13, 2023, Plaintiff filed its complaint for (1) Breach of Written Contract, (2) Foreclosure of Mechanic’s Lien, (3) Open Book Account, (4) Account Stated, and (5) Statutory Penalties against Defendants 1410 Highland Venture, LLC (“Venture”), 1410 Highland Associates, LP (“Associates”), and DOES 1-25.

 

            No Proof of Service has been filed as to Defendant Associates. No responsive pleading has been filed by Defendant Venture.

 

            No trial date has yet been set.

 

Instant Motion

 

            Defendant Venture now petitions this court for an order either reducing or releasing Plaintiff’s Mechanic’s Lien on the subject property.

 

Decision

 

The motion is TAKEN OFF-CALENDAR. Counsel are ordered to meet and confer, in person or by video conference, regarding the items in dispute. This conference is to take place on or before April 22, 2024. A corporate representative of each party is also to be present at the conference. Any agreement on the proper amount of the lien is to be reduced to a stipulation and order for this court’s signature by April 29, 2024. If there is any dispute left after the conference, Defendant Venture may file a renewed motion, to which Plaintiff may respond via the ordinary briefing schedule.

 

Governing Standard

 

            “In Lambert v. Superior Court (1991) 228 Cal.App.3d 383, 279 Cal.Rptr. 32 (Lambert), the Court of Appeal pointed out that where a claimant has already filed suit to enforce a mechanic's lien or stop notice, the procedures identified in Connolly may no longer be available to the property owner. In such case, the owner may instead file a motion in the enforcement action to have the matter examined by the trial court. On such motion, the claimant bears the burden of establishing the “probable validity” of the claim underlying the lien or stop notice. (Id. at p. 387, 279 Cal.Rptr. 32.) If the claimant fails to meet that burden, the lien and stop notice may be released in whole or in part. We refer to this procedure as a “Lambert motion.”” Cal Sierra Construction, Inc. v. Comerica Bank (2012) 206 Cal.App.4th 841, 845.

 

            Civil Code § 8422 provides:

 

“(a) Except as provided in subdivisions (b) and (c), erroneous information contained in a claim of lien relating to the claimant's demand, credits and offsets deducted, the work provided, or the description of the site, does not invalidate the claim of lien.

(b) Erroneous information contained in a claim of lien relating to the claimant's demand, credits and offsets deducted, or the work provided, invalidates the claim of lien if the court determines either of the following:

(1) The claim of lien was made with intent to defraud.

(2) An innocent third party, without notice, actual or constructive, became the bona fide owner of the property after recordation of the claim of lien, and the claim of lien was so deficient that it did not put the party on further inquiry in any manner.

(c) Any person who shall willfully include in a claim of lien labor, services, equipment, or materials not furnished for the property described in the claim, shall thereby forfeit the person's lien.”

 

Discussion

 

            Plaintiff filed this action to enforce their mechanic’s lien on January 13, 2023. Thirteen months later, Defendant filed the instant motion, asking the court to do one of two things: either (a) reduce the amount of the lien from $5,873,626.25 to $2,011,484.70, or (b) invalidate the lien altogether on the ground that Defendant willfully inflated the amount of the lien.

 

            The motion was accompanied by the Declaration of Kerry D. Christopher, which detailed counsel’s efforts to resolve the dispute about the items that had been included in the lien amount. Defense counsel sent Plaintiff an email on December 4, 2023, and another on December 15, 2023. (Declaration of Kerry D. Christopher ¶¶ 3-5). Subsequent emails and telephone calls passed between counsel over the ensuing weeks, but little of substance was discussed. (Id. ¶¶ 6-13). After a period of silence, conversations were renewed, but little of substance was discussed. (Id. ¶¶ 14-18). This motion followed.

 

            After filing this motion, Defendant brought an ex parte application seeking to shorten time for hearing. The primary basis for the application was Defense’s need to refinance their construction loan. (Declaration of Evan L. Kasper filed February 20, 2024). Judge Anne Richardson, sitting in Department 40, granted the application and set the hearing for March 1, 2024, shortening the briefing period significantly.

 

            In their opposition, Plaintiff does not dispute Defendant’s history of their discussions prior to the motion. Plaintiff does, however, represent that they have already reduced the amount of the lien to $3,590,650.83. They also ask the court for more time to address the issues raised in the motion, as they have the burden of proof but were not given the statutory time to prepare their papers. (Opposition p. 10). After the opposition was filed, the case was transferred to this department via a notice of related cases. The hearing was subsequently re-set in this department for the instant date.

 

            The adjustment of the precise lien amounts is an issue of accounting which the parties ought to be able to work out among themselves. Defendant has already voluntarily given Plaintiff more than half the reduction they have asked for. The practical hurdle appears to be the difficulty of communication between the two sides.

 

            The court understands that a quick resolution of the lien amount is very important to Defendant’s financial situation. However, the amount of the lien has now shrunk by over $2 million. And while the reduction was triggered by this motion, in the sense that this is what it took to get Plaintiff’s attention, it was nevertheless a voluntary measure. This demonstrates to the court that additional close attention from counsel and from the respective parties has the potential to resolve, or at least focus, the issues even further.

 

            Given the size and nature of the changes that have taken place since the motion has been filed, this court is not convinced that a decision on expedited briefing (much of which is now moot) remains necessary. The court also observes that Defense’s financial success is in Plaintiff’s practical interest – if Defense founders, there remains no one to pay any judgment the Plaintiff may win. In these circumstances, the appropriate measure is to give the parties a chance to work out a solution on their own, with the option to come back with more focused briefing on a more normal time scale, if necessary.

 

Conclusion

 

            Because there has been a significant change in circumstances, and because the primary obstacle to resolution seems to be a lack of communication, the motion is TAKEN OFF-CALENDAR. Counsel are ordered to meet and confer, in person or by video conference, regarding the items in dispute. This conference is to take place on or before April 22, 2024. A corporate representative of each party is also to be present at the conference. Any agreement on the proper amount of the lien is to be reduced to a stipulation and order for this court’s signature by April 29, 2024. If there is any dispute left after the conference, Defendant Venture may file a renewed motion, to which Plaintiff may respond via the ordinary briefing schedule.