Judge: Elaine Lu, Case: 22STCV39619, Date: 2023-10-05 Tentative Ruling

Case Number: 22STCV39619    Hearing Date: October 5, 2023    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

            On December 21, 2022, Plaintiff Nova Homes, Inc. dba Inland Development (“Plaintiff”) filed the instant breach of construction contract action against Defendant Fred & Jamison, LLC (“Defendant”).  The complaint asserts seven causes of action for (1) Breach of Contract, (2) Open Book Account, (3) Account Stated, (4) Complaint on Mechanic’s lien, (5) Complaint on Mechanic’s lien, (6) Fraud, and (7) Business & Professions Code § 17200 et seq.

            On March 13, 2023, Defendant filed a motion to compel arbitration.  On March 27, 2023, the parties stipulated to stay the instant action pending arbitration. 

            On September 5, 2023, Defendant filed the instant motion to expunge mechanic’s lien.  On September 25, 2023, Plaintiff filed an opposition.  On September 28, 2023, Defendant filed a reply.

Evidentiary Objections

            Defendant has submitted evidentiary objections to the declaration of Ivano Stamegna filed in support of the opposition to the instant motion.  However, these objections are unnecessary because the Court, when reviewing the evidence is presumed to ignore material it knows is incompetent, irrelevant, or inadmissible.  (In re Marriage of Davenport (2011) 194 Cal. App. 4th 1507, 1526.)  Courts are presumed to know and apply the correct statutory and case law and to be able to distinguish admissible from inadmissible evidence, relevant from irrelevant facts, and to recognize those facts which properly may be considered in the judicial decision-making process.  (People v. Coddington (2000) 23 Cal.4th 529, 644.)  Moreover, there is no statutory basis for evidentiary objections in connection with the instant motion.

Legal Standard

            “Claimants enforce their mechanic's liens through foreclosure, and must commence a foreclosure suit within 90 days after recording the lien. (§ 8460, subd. (a).) If a claimant does not timely commence foreclosure proceedings, an owner may file a petition to release the property from the lien. (§ 8480, subd. (a).) Likewise, if foreclosure proceedings are timely commenced, an owner who challenges the validity of the lien may file a motion to remove a mechanic's lien in the pending foreclosure action itself.”   (RGC Gaslamp, LLC v. Ehmcke Sheet Metal Co., Inc. (2020) 56 Cal.App.5th 413, 423.)

            It is immaterial whether the relief is sought while the parties are in arbitration because “[a] party to an arbitration agreement may seek various kinds of provisional remedies from the court without waiving the right to arbitrate the main dispute.”  (Lambert v. Superior Court (1991) 228 Cal.App.3d 383, 388.)  Thus, “an owner may ask the court to remove an improper lien while arbitration is pending.”  (Ibid.) 

Discussion

            Defendant seeks to expunge the mechanic’s lien recorded against Defendant’s property on the grounds that (1) the mechanic’s lien was not timely recorded, and (2) Plaintiff’s willfully recorded an overstated lien.

The Mechanic’s lien was Prematurely Filed

            “To prevail in a foreclosure action, the plaintiff bears the burden of proving, among other things, the validity of the lien. [Citation.] For the lien to be valid, the claim of lien must have been timely recorded in compliance with the applicable statute.”  (Howard S. Wright Construction Co. v. BBIC Investors, LLC (2006) 136 Cal.App.4th 228, 237–238.)  “[T]he timeliness of the recording of a claim of lien is governed by [the Fromer Civil Code Section 3115 now Civil Code section 8412], which provides both an earliest date and a latest date for timely recording.”  (Id. at p.238.)

            As set forth in the current Civil Code section 8412, “[a] direct contractor may not enforce a lien unless the contractor records a claim of lien after the contractor completes the direct contract, and before the earlier of the following times: [¶] (a) Ninety days after completion of the work of improvement. [¶] (b) Sixty days after the owner records a notice of completion or cessation.”  (Civ. Code, § 8412, [italics added].)  “[A] contract is complete for purposes of commencing the recordation period under [the now Civil Code section 8412] when all work under the contract has been performed, excused, or otherwise discharged.”  (Howard S. Wright Construction Co., supra, 136 Cal.App.4th at p.241.)

            Here, Plaintiff recorded a mechanic’s lien against Defendant’s property on December 19, 2022 against Defendant’s real property of 516 S. Oxford Ave, Los Angeles, CA 90020 (“Subject Property”) for a total amount of $9,358,000.00.  (Ko Decl. ¶ 5, Exh. 3; Complaint ¶ 25, Exh. 1.)  At the time the mechanic’s lien was recorded, significant portions of the work under the contract remained to be performed including “building the envelope, installing finishes, finishing windows, finishing interiors (including doors, hardware, plumbing, mechanical, HV AC, appliances, and electrical work), and finishing flooring and cabinetry.”  (Tompkins Decl. ¶ 9.)  Moreover, the Complaint concedes that the construction contract is not complete.  (Complaint ¶ 11, [“Although [Plaintiff] and its subcontractors have continued to work on the PROJECT, [Plaintiff]has not been paid as promised.”].)  Thus, the contract was not fully performed at the time that Plaintiff recorded the mechanic’s lien.

            Plaintiff does not contend otherwise.  Instead, in its opposition, Plaintiff asserts that “[Plaintiff]'s obligations to [Defendant] were ‘substantially performed, excused or otherwise discharged’ when [Defendant] terminated [Plaintiff] from the Project.”  (Opp. at p.8:1-3.)  However, Plaintiff’s own evidence reflects that Defendant did not terminate Plaintiff until January 17, 2023.  (Stamegna Decl. ¶ 11; Ko Decl. ¶ 6, Exh. 4.)  Thus, the mechanic’s lien recorded on December 19, 2022 -- almost a full month before Plaintiff’s termination – was premature and is therefore invalid.

            As the failure to timely record the mechanic’s lien is dispositive, the Court declines to address the applicability of whether the lien is also invalid under Civil Code section 8422(c).

Attorneys’ Fees

            Defendant claims that it is entitled to an award of attorneys’ fees pursuant to the contract between Plaintiff and Defendant, which provides:

If any party brings an action in connection with the performance, breach or interpretation of the Contract Documents or in the event of the arbitration of any claim, dispute or other matter arising out of or relating to the Contract Documents, the prevailing party in such action or arbitration proceeding shall be entitled to recover from the non-prevailing party its reasonable costs and expenses of such litigation or arbitration proceeding, including attorneys' fees, court costs, costs of investigation and other costs reasonably related to such litigation or arbitration proceeding.

(Ko Decl. ¶ 3, Exh. 1 (A102) at § 15.8.)

            “In any action on a contract, where the contract specifically provides that attorney's fees and costs, which are incurred to enforce that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the party prevailing on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney's fees in addition to other costs.”  (Civ. Code, § 1717(a).)  “The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment.”  (Civ. Code, § 1717(b)(1).)  “[T]he party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.”  (Civ. Code, § 1717(b)(1).)

“The determination of the party prevailing on the contract for purposes of awarding attorney fees under section 1717 must be made independently of the determination of the party prevailing in the overall action for purposes of awarding costs under Code of Civil Procedure section 1032. [Citations]  The prevailing party determination under section 1717 must be based on the results of the litigated contract claims, ‘without reference to the success or failure of noncontract claims.’ [Citations]“  (Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 239.)  “When a party obtains a simple, unqualified victory by completely prevailing on or defeating all contract claims in the action and the contract contains a provision for attorney fees, section 1717 entitles the successful party to recover reasonable attorney fees incurred in prosecution or defense of those claims. [Citation.] If neither party achieves a complete victory on all the contract claims, it is within the discretion of the trial court to determine which party prevailed on the contract or whether, on balance, neither party prevailed sufficiently to justify an award of attorney fees.” (Scott Co. v. Blount, Inc. (1999) 20 Cal.4th 1103, 1109; de la Cuesta v. Benham (2011) 193 Cal.App.4th 1287, 1294.)  “Section 1717 . . . makes it clear that the party who obtains greater relief on the contract action is the prevailing party entitled to attorney fees under section 1717, regardless of whether another party also obtained lesser relief on the contract or greater relief on noncontractual claims.” (Frog Creek Partners, LLC v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515, 531; see also Douglas E. Barnhart, Inc. v. CMC Fabricators, Inc. (2012) 211 Cal.App.4th 230, 239–240.)

            Here, the claim for attorneys’ fees is premature.  As set forth in the parties’ agreement, the prevailing party in an action or arbitration proceeding is entitled to attorneys’ fees.  The action is still ongoing.  The Court has determined merely that the mechanic’s lien was invalid as prematurely filed -- not that Plaintiff is not entitled to any amount under the complaint.  Similarly, the Court has not determined that all of Plaintiff’s claims are without merit.  While the expungement of the mechanic’s lien may be a factor in eventually determining a prevailing party, the success on a mere motion does not itself entitle a party to attorneys’ fees pursuant under the parties’ agreement.

            Accordingly, Defendant’s request for attorneys’ fees is denied without prejudice.

CONCLUSION AND ORDER

Based on the foregoing, Defendant Fred & Jamison, LLC’s motion to expunge the mechanic’s lien is GRANTED.

The mechanic’s lien that Plaintiff recorded against 516 S. Oxford Ave, Los Angeles, CA 90020 on December 19, 2022, as reduced on May 9, 2023 through the partial release, is expunged.

Moving Party to give notice and file proof of service of such.

DATED: October ___, 2023                                                   ___________________________

                                                                                                Elaine Lu

                                                                                                Judge of the Superior Court