Judge: John J. Kralik, Case: 22BBCV00610, Date: 2022-10-07 Tentative Ruling

Case Number: 22BBCV00610    Hearing Date: October 7, 2022    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.    Allegations           

Plaintiff Alice Azoulay (“Plaintiff”) alleges that she is the owner of property located at 5212 Teesdale Ave., Valley Village, CA 91607.  She alleges that the property sustained fire damage on July 31, 2018.  She alleges she met with Defendant Pacific Building Contractors, Inc. (“Defendant”) on May 2, 2019 for construction work needed to return the property to a livable condition.  She alleges that she signed a contract with Defendant, wherein Defendant falsely assured her that her home would be built only with insurance monies at top notch construction quality.  Plaintiff alleges that Defendant completed the work on November 30, 2021 and throughout the project, Defendant was paid by Plaintiff’s insurance company.  Plaintiff alleges that after her husband passed away, she listed the property for sale, found a buyer, and the property was in escrow set to close on July 29, 2022.  However, on Defendant’s completion date of November 30, 2021 when Defendant ceased all further work on the property, Defendant demanded further monies above Plaintiff’s insurance funds in amounts ranging from $90,000 to $191,000.  Plaintiff alleges that she requested a detailed explanation of the debt, but Defendant failed to provide a basis for the amount and recorded a fraudulent and defective mechanic’s lien on the property. 

The complaint, filed August 23, 2022, alleges a single cause of action for declaratory relief.   

B.     Motion on Calendar

On September 6, 2022, Plaintiff filed a motion for an order discharging and declaring void the mechanic’s lien recorded by Defendant on July 14, 2022 with the Los Angeles Recorder’s Office, Instrument Number 20220724869. 

The Court is not in receipt of an opposition brief.

LEGAL STANDARD

The purpose of a mechanics lien is to prevent private property owners from obtaining a benefit to their property without paying the cost for it.  (Cal Sierra Construction, Inc. v. Comerica Bank (2012) 206 Cal.App.4th 841, 848.)  The California Constitution directs the Legislature to provide for the speedy and efficient enforcement of mechanics liens in Article XIV, section 3.  The mechanics lien system is the only creditors’ remedy stemming from a constitutional mandate.  (Connolly Development, Inc. v. Superior Court (1976) 17 Cal.3d 803, 810.)  The Legislature enacted the current statutory scheme for mechanics liens at Civil Code §§ 8000 to 9566 and it has been operative since July 1, 2012. 

Civil 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:

(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.)  A work of improvement is completed upon the occurrence of any of the following events: “(1) Actual completion of the work of improvement. (2) Occupation or use by the owner accompanied by cessation of labor. (3) Cessation of labor for a continuous period of 60 days. (4) Recordation of a notice of cessation after cessation of labor for a continuous period of 30 days.”  (Civ. Code, § 8180(a).) 

            In addition, section 8422 states:

(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.

(Civ. Code, § 8422.)

Civil Code § 8460 provides:

(a) The claimant shall commence an action to enforce a lien within 90 days after recordation of the claim of lien. If the claimant does not commence an action to enforce the lien within that time, the claim of lien expires and is unenforceable.

(b) Subdivision (a) does not apply 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. In that event the claimant shall commence an action to enforce the lien within 90 days after the expiration of the credit, but in no case later than one year after completion of the work of improvement. If 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.)  “The 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).)

Civil Code § 8484 identifies the requirements for the petition for a release order, which include the following:

(a) The date of recordation of the claim of lien. A certified copy of the claim of lien shall be attached to the petition.

(b) The county in which the claim of lien is recorded.

(c) The book and page or series number of the place in the official records where the claim of lien is recorded.

(d) The legal description of the property subject to the claim of lien.

(e) Whether 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.

(f) That the owner has given the claimant notice under Section 8482 demanding that the claimant execute and record a release of the lien and that the claimant is unable or unwilling to do so or cannot with reasonable diligence be found.

(g) Whether an action to enforce the lien is pending.

(h) Whether the owner of the property or interest in the property has filed for relief in bankruptcy or there is another restraint that prevents the claimant from commencing an action to enforce the lien.

(Civ. Code, § 8484.) 

Sections 8486 and 8488 identify the procedures for setting the hearing and the burdens of proof at the hearing.  The petitioner has the initial burden of producing evidence on those matters.  The petitioner has the burden of proof as to the issue of compliance with the service and date for hearing requirements of this article.  The claimant has the burden of proof as to the validity of the lien.

Under section 8486(b), the petitioner shall serve a copy of the petition and a notice of hearing on the Respondent at least 15 days before the hearing.  Section 8486(b) requires service to be made in the same manner as service of summons, or by certified or registered mail, postage prepaid, return receipt requested, addressed to the claimant as provided in Section 8108. 

Under section 8490, a court order dismissing a cause of action to enforce a lien or releasing property from a claim of lien shall include the following information:

(1) The date of recordation of the claim of lien.

(2) The county in which the claim of lien is recorded.

(3) The book and page or series number of the place in the official records where the claim of lien is recorded.

(4) The legal description of the property.

(Civ. Code, § 8490(a).)

DISCUSSION

Plaintiff seeks a release of the mechanic’s lien from the subject real property because the mechanic’s lien was not timely recorded by Defendant pursuant to Civil Code, § 8412 and the lien included erroneous information with the intent to defraud pursuant to Civil Code, § 8422.  A copy of the recorded mechanic’s lien is attached as Exhibit A to the moving papers.

In her declaration, Plaintiff states that she met Craig Robert Grillo of Defendant on May 2, 2019 to perform work on the property following fire damage.  (Pl.’s Decl., ¶¶3-4, Ex. B.)  She states that after her husband passed away, she listed the property for sale, found a buyer, and entered escrow, which was anticipated to close on July 29, 2022.  (Id., ¶5.)  She states that Defendant completed its work on the home on November 30, 2021 and Mr. Grillo emailed her on April 5, 2022 stating that all work on the home had been completed on November 30, 2021 and she was cleared to move back into the property.  (Id., ¶6, Exs. F-G.)  She states that from November 30, 2021, Defendant continuously demanded further monies from Plaintiff, despite Defendant’s representations that she would not have to pay Defendant out of pocket and that all work would be paid through her insurance monies.  (Id., ¶¶4, 7.)  She states that she requested an explanation of the debt, but Defendant refused to provide a basis for the debt amount.  (Id.)  She states that when the work was completed on November 30, 2021, Defendant initially demanded approximately $90,000 from Plaintiff, but Defendant’s most recent demand (approximately 3 weeks old) was for $191,000.  (Id., ¶8.)  She states that due to Defendant’s recording of a lien, she was unable to close escrow on July 29, 2022 and is now in breach of the purchase agreement.  (Id., ¶9.)  She states that she never recorded a notice of completion or cessation and did not know that she needed to record these documents.  (Id., ¶10.) 

The Court reviews the requirements of Civil Code, § 8484, which is necessary for this type of motion:

(a)-(c) The mechanic’s lien was recorded on July 14, 2022 in the Official Records of the County of Los Angeles, California as Document Number 20220724869.  (Mot., Ex. A.)

(d) The legal description of the subject property is not provided.

(e) Plaintiff has not discussed whether an extension of credit has been granted under section 8460.

(f) Plaintiff has given Defendant notice that Defendant remove the lien, but Defendant’s counsel refused the demand. (Mot. at p.4, Ex. D.)

(g) Plaintiff has not discussed whether an action to enforce the lien is pending.

(h) Plaintiff has not discussed whether she has filed for relief in bankruptcy or there is another restraint that prevents Defendant from commencing an action to enforce the lien. 

As such, the requirements under Civil Code, § 8484 have not been met.

            Next, the Court turns to Plaintiff’s substantive arguments regarding whether Defendant timely recorded the mechanic’s lien pursuant to Civil Code, § 8412.  Defendant completed the work on November 30, 2021, Defendant obtained LADBS’s project final approval on November 30, 2021, and Plaintiff did not record a notice of completion or cessation.  (Mot., Exs. C, F, G; Pl.’s Decl., ¶10.)  Thus, Defendant’s deadline to record the mechanic’s lien was within 90 days of November 30, 2021, which would be February 28, 2022.  According to Exhibit A, the mechanic’s lien was recorded on July 14, 2022.  Thus, Defendant’s recording of the mechanic’s lien was untimely.  Accordingly, there is substantive merit to grant this motion pursuant to Civil Code, § 8412.

            In addition, Plaintiff moves pursuant to Civil Code, § 8422, arguing that Defendant’s mechanic’s lien includes erroneous information and the claim of lien was made with the intent to defraud.  The mechanic’s lien states that the amount due after deducting all just credits and offsets is $191,121.21.  (Mot., Ex. A.)  Plaintiff argues that Defendant deleted standard language from the form mechanic’s lien and refers to Exhibit F, but Exhibit F is the April 5, 2022 email from Mr. Grillo to Plaintiff stating that the property’s construction was finalized on November 30, 2021; Exhibit F is essentially identical to Exhibit G.  Plaintiff argues that Defendant deleted language that stated: “together with interest thereon at the rate of 10 percent per annum from _____, is due claimant for the following labor, services, equipment and/or materials furnished by Claimant: _____.”  (Mot. at p.8.)  Plaintiff argues that the only reason Defendant may have deleted this language was to keep the completion date ambiguous, but Plaintiff argues that Defendant already admitted in his own email dated April 5, 2022 that the completion date was November 30, 2021.  Plaintiff argues that this deletion amounts to a showing that the lien was recorded with an intent to defraud.

            At this time, the Court finds that section 8422 is also a valid basis for granting this motion. Defendant’s April 5, 2022 email discloses the date of the project’s completion, showing that the Defendant was well aware that its mechanic’s lien was being filed late.  Failing to disclose this on the recorded lien itself shows its consciousness of this impropriety, as does its acknowledgment that Plaintiff could move back into the property. 

            The Court would be inclined to grant this motion as there is substantive merit pursuant to Civil Code, §§ 8412 and 8422.  However, the requirements of Civil Code, § 8484 have not been satisfied.  Thus, the Court will continue the hearing on the matter in order to provide Plaintiff an opportunity to file a supplemental brief to address section 8484’s requirements.

CONCLUSION AND ORDER

Plaintiff’s motion to discharge the mechanic’s lien is continued to October 21, 2022 at 8:30 a.m.  Plaintiff or Plaintiff’s counsel is ordered to file a supplemental declaration with the information required under Civil Code, § 8484 by October 13, 2022 by the end of the business day.  No further briefing shall be permitted.

            Plaintiff shall provide notice of this order.