Judge Gail Killefer, Case Number: 25STCV02529, Date: 2025-03-17 Tentative Ruling

TENTATIVE: Plaintiffs’ motion to expunge Defendant Whitestone’s mechanics’ lien is denied.

On January 29, 2025, Maneeja Noory and Laila Tajyar (collectively “Plaintiffs”) filed a Complaint for declaratory relief against Whitestone Builders Inc. (“Defendant” or “Whitestone”).

The Complaint alleges that on or about November 13, 2021, Plaintiffs entered a written contract with Defendant Whitestone to construct the “core and shell” of a custom home and related site improvements, including a large underground cistern, on the Property (“the Project”) under a Prime Construction Contract (the “Contract”). (Compl., ¶ 7, Ex. A.) Plaintiffs assert that Whitestone breached the contract when it failed to cure certain deficiencies and complete the work. Plaintiffs seeks declaratory relief that the mechanics’ lien recorded by Whitestone is invalid under Civ. Code § 8412.

Defendant Whitestone filed a Cross-Complaint against Plaintiffs ALLEGING: (1) Foreclosure of mechanic’s lien; (2) Breach of Contract – Payment and Performance Defaults; (3) Breach of Contract – Repudiation; (4) Petition for Arbitration and Stay Proceedings (CCP § 1281.5); (5) Account Stated; (6) Violation of Civ. Code § 8800; (7) Goods and Services Rendered; (8) Unjust Enrichment/Quantum Meruit; and (9) Conversion.

Plaintiffs now move to expunge the mechanics’ lien. Defendant Whitestone opposes the Motion. Plaintiffs filed a reply that was grossly untimely, but the court nevertheless considered it. The matter is now before the court.

expunge mechanicS’ Lien

After a mechanic’s lien has been recorded, “[t]he owner of property or the owner of any interest in property subject to a claim of lien may petition the court for an order to release the property from the claim of lien if the claimant has not commenced an action to enforce the lien within the time provided in Section 8460.” (Civ. Code, § 8480(a).) A claimant must commence an action to enforce a lien within 90 days of recording the lien. (Civ. Code, § 8460(a).) Section 8460 further provides that “[i]f the claimant does not commence an action to enforce the lien within that time, the claim of lien expires and is unenforceable.” (Civ. Code, § 8460(a).) Section 8460 also provides that the 90-day time limit to commence an action to enforce a lien does not apply if there was an agreement to extend credit and a notice of that fact was recorded within 90 days after recordation of the claim of lien or 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. (Civ. Code, § 8460(b).)

Plaintiffs have submitted evidentiary objections to the Declaration of Pier Prenga and the Declaration of Defense Counsel Johanna Monon, 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 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.) The court is unaware of any legal authority that requires the court to rule on evidentiary objections on a motion, except as to a motion for summary judgment or summary adjudication (CCP § 437c(q) or a special motion to strike (CCP § 425.16 (b)(2)).

The court declines to rule on these objections. The court is aware of the rules of evidence, and how much weight, if any, should be given to any of the proposed evidence.

Plaintiffs move to expunge the mechanics’ lien on the basis that it is invalid because Defendant Whitestone recorded the lien before it completed its work on the project at issue. Civ. Code § 8412 states:

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:

The law revision commission comments notes for section 8412 states: “A contract is complete within the meaning of this section when the contractor's obligations under it are substantially performed, excused, or otherwise discharged.” (See Howard S. Wright Construction Co. v. BBIC Investors, LLC (2006) 136 Cal.App.4th 228, 241.) The appellate court in Howard explained that a lien may be recorded when the contract is complete, meaning “when all work under the contract has been performed, excused, or otherwise discharged.” (Id. at p. 241; see also Perazzi v. Doe Estates Co. (1919) 40 Cal.App. 617, 619 [claim of lien was not prematurely recorded where all work actually agreed upon and requested had been done, notwithstanding discussion of a larger project].)

Defendant Whitestone does not challenge Plaintiff’s assertion that the Contract was not fully completed, but asserts that it was entitled to record a lien for uncompleted work pursuant to the Parties’ Contract and Plaintiffs’ failure to pay for work completed. Defendant Whitestone asserts that on September 15, 2024, it submitted to Plaintiffs an application for payment and invoice in the sum of $916,346.25 for construction and material provided up to that date. (Prenga Decl. ¶ 5, Ex. 2.) A copy of the Parties Contract is attached as Exhibit 1 of the Pier Prenga Declaration and as Exhibit A to the Dustin Lozano Declaration. Section 5.1 of the Contract entitled “Applications for Payment” allows the Defendant to submit multiple applications for payment prior to the completion of all work. (Id., Ex. 1, § 5.2.) Section 5.3 also permits “Progress Payments.” (Id. § 5.3.) Accordingly, the Contract allowed Defendant Whitestone to seek payment before all work was completed on the Property.

Defendant Whitestone asserts that after it submitted an application for payment, Plaintiffs had 5 days to submit any dispute or objection to the invoice, according to Section 5.3.2 of the Contract. (Prenga Decl., ¶ 6.) Plaintiffs failed to make the payment and breached the Contract. (Id. ¶ 7.) Consequently, Whitestone issued a “ ‘Notice of Intent to Stop Work’ to Plaintiffs on October 24, 2024, informing them of their default and Whitestone’s intent to suspend work under Contract § 5.3.3, which permits suspension after five days’ notice if undisputed amounts remain unpaid. This section also states that such failure excuses Whitestone from performance and resulting delays.” (Id. ¶ 8, Ex. 3.)

Whitestone agreed to a payment plan with Plaintiffs for the outstanding invoice wherein “Plaintiffs promised to pay $350,000 by November 2, 2024, and the remaining $369,672.98 by December 10, 2024.” (Prenga Decl., ¶ 10, Ex. 4, 4.1A.) “Plaintiffs promised to pay $350,000 by November 2, 2024, and the remaining $369,672.98 by December 10, 2024.” (Id. ¶ 12.) On December 9, 2024, Plaintiffs emailed Whitestone to inform Defendant that they could not pay the invoice or the remainder of the project. (Id. ¶ 14, Ex. 5.) Work had ceased on the Project and Whitestone proceeded to record the mechanics’ lien for payment not received. (Id. ¶¶ 11, 15-18, Ex. 6.)

“If a contract could never be deemed complete under [Civ. Code, § 8412] unless all the work was performed, a contract cut short by mutual termination or the owner's material breach would never be ‘complete [ ],’ the contractor could never timely record its claim of lien, and its lien could never be enforced. This would not only be contrary to common sense, it would conflict with legal authority.” (Howard, supra, 136 Cal.App.4th at p. 241.) “It would also be contrary to the Legislature's intent to fairly balance the interests of contractors and property owners, since it would certainly place the contractor at a severe disadvantage.” (Id. at p. 241.)

The facts support the finding that the Lien was for work completed up to August 30, 2024, and pursuant to the Parties’ Contract, Defendant Whitestone was entitled to seek payment for that work prior to completing all work on the Project. (Prenga Decl., ¶ 18.) When Plaintiffs failed to make the payment, Whitestone was entitled to record a lien. (Howard, supra, 136 Cal.App.4th at p. 243 [“Anticipatory breach arises where a party repudiates performance of its obligations before they come due; if sufficiently significant, the anticipatory breach discharges the other party's obligations and creates in the other party the right to pursue remedies for breach immediately.”].) Defendant Whitestone asserts it informed Plaintiffs that a lien would be recorded on December 9 and December 12 of 2024, and proceeded to record the lien on December 13, 2024. (Prenga Decl., ¶ 18.) Plaintiffs admit that it did not issue a Notice of Default, asserting that the substantial work and repairs needed to be done, until December 19, 2024, when it issued the Notice of Default, which was after the lien was recorded. (Lozano Decl., ¶ 4, Ex. B.) The Parties specifically agreed that under Section 5.3.2 of the Contract, Plaintiffs had 5 days to dispute or object to the invoice. (Prenga Decl., ¶ 7; Ex. 1, § 5.3.2.)

Plaintiffs rely on Precision Framing Systems Inc. v. Luzuriaga (2019) 39 Cal.App.5th 457 to assert that the lien was recorded prematurely and should be expunged. In Precision, Precision was “the framing subcontractor” responsible for trusses necessary to complete the project. (Id. at p. 460.) Precision believed it had completed the scope of its work and recorded a mechanic’s lien on January 2, 2014. (Id. at p. 461.) Afterward, Precision became aware of the correction notice and helped carry out repairs on the trusses. (Id. at p. 462.)

The Precision Court found that under Civ. Code § 8414, a mechanics lien “other than a direct contractor may not enforce a lien unless the claimant records a claim of lien within the following times: (a) After the claimant ceases to provide work.” (Precision, supra, 39 Cal.App.5th at p. 465.) The court found that the repairs were within the scope of work required by Precision such that the its work was not completed, and the lien was prematurely recorded. “As long as the notices of correction were outstanding, the project could not be completed. If the notices of correction were traceable to a flaw in the architect's design, arguably Precision would be entitled to extra compensation for the repairs; nevertheless, the repairs constituted ‘substantial work necessary to the completion of the contract ....’ ” (Id. at p. 469.) Precision is distinguishable because Whitestone did cease to provide work, while the subcontractor in Precision provided repair work after it had recorded the lien.

Plaintiffs fail to show Whitestone did not cease work on the Project prior to filing the lien. Plaintiffs fail to show that Whitestone was required to complete all work under the contract rather than exercise its right to cease work for non-payment. Moreover, Plaintiffs do not challenge the fact that Defendant completed work on the project up until August 30, 2024, nor do their moving papers show why the lien does not reflect the work actually performed up to that time as supported by the September 15, 2024, invoice. (Prenga Decl., ¶ 5, Ex. 2.) Whitestone further asserts that the $367,672.98 lien “reflects the total unpaid value of work and materials provided up to August 30, 2024, despite the work ceasing on or about November 1, 2024.” (Id. ¶ 18, Ex. 7.) Therefore, there is no evidence before the court to question the validity or the sum of Defendant’s lien.

Based on the above, the court finds that Defendant Whitestone did not prematurely record the lien and denies Plaintiffs’ Motion.

Defendant Counsel requests attorney’s fees under Section 15.3.2 of the Contract for the sum of $7,455.27. (Manon Decl., ¶¶ 5-9.) Whitestone has not prevailed on the Contract and cannot claim attorney’s fees pursuant to the Contract. (See Abbett Electric Corp. v. California Fed. Savings & Loan Assn. (1991) 230 Cal.App.3d 355, 357 [“ ‘[I]f indeed a contract exists, then that is the separate source of attorney's fees; it is not the lien which creates the right.’ ”]; Civ. Code § 1717.)

However, Civ. Code § 8488 allows for reasonable attorney fees to a prevailing party to a petition to release the property from a lien. (See Koudmani v. Ogle Enterprises, Inc. (1996) 47 Cal.App.4th 1650, 1660[Mechanics’ lien claimant, as the prevailing party on petition to release property from lien, was entitled to award of attorney fees].) “A mechanics' lien claimant may be the prevailing party in such an action, in which case the claimant is entitled to recover such attorney's fees not to exceed the statutory limit.” (44 Cal. Jur. 3d Mechanics’ liens § 202.)

Plaintiffs had no notice that Defense counsel could seek attorney’s fees under section 8488 and neither party has addressed why attorney’s fees should not be awarded to defense counsel under Civ. Code § 8488 or if the provision only applies to petitions to release the lien under Civ. Code § 8484 or if they extend to this Lambert Motion^{^[1]} to remove a mechanics’ lien. Therefore, the court will address the question of reasonable attorney fees at the hearing.

Plaintiffs’ motion to expunge Defendant Whitestone’s mechanics’ lien is denied.

[1] “This Motion is made pursuant to Lambert v. Superior Court, 228 Cal. App. 3d 383 (1991) and California Civil Code section 8412 on the grounds that the mechanics lien is invalid because Whitestone recorded the Lien before it completed its work at the project at issue.” (Motion at p. 2:-5.) “A motion to remove a mechanic's lien is recognized as a device that allows the property owner to obtain speedy relief from an unjustified lien or a lien of an unjustified amount without waiting for trial on the action to foreclose the lien.” (Howard, supra, 106 Cal.App.4th 314 at p. 318; see also Lambert v. Superior Court (1991) 228 Cal.App.3d 383, 279.) “However, unlike the grant of a motion to expunge the notice of lis pendens, the grant of a motion to remove a mechanic's lien is essentially a judgment on the underlying foreclosure action that no lien exists—a judgment that, upon recordation, removes the lien from the public records” (Howard, at p. 318.)