Judge: Stephen P. Pfahler, Case: 22STCV34045, Date: 2024-09-04 Tentative Ruling

Case Number: 22STCV34045    Hearing Date: September 4, 2024    Dept: 68

Dept. 68

Date: 9-4-24

Case: 22STCV34045 lead case related to 23STCV04024

Trial Date: 2-25-25 c/f 7-22-24

EXPUNGE MECHANICS LIEN

MOVING PARTY: Defendant/Cross-Defendant/Cross-Complainant, Satila America Corporation

RESPONDING PARTY: Unopposed/Defendant/Cross-Defendant, Current Electric, Inc.

RELIEF REQUESTED

Motion to Expunge Mechanics Lien

SUMMARY OF ACTION

22STCV34045

On January 15, 2004, Defendants Satila America Corporation, Current Electric, Inc., and Michael James Delaney, opened a credit account with Plaintiff Walters Wholesale Electric Co. (Walters). Walters alleges an unpaid balance due of $125,313.42 as of March 26, 2022. Plaintiff also alleges the filing of a Mechanic’s Lien on an unspecified property.

On October 21, 2022, Walters Wholesale Electric Co. filed a complaint for Breach of Contract, Material Sold and Delivered, Open Book Account, Account Stated, Breach of Personal Guaranty, Foreclosure of Mechanic’s Lien, and To Enforce Stop Payment Notice. Claim. On December 2, 2022, the clerk entered a default against Satila America Corporation. On January 27, 2023, Current Electric, Inc. and Delaney answered the complaint. On the same date, Current Electric, Inc. filed a cross-complaint against Wholesale Electric Co. and Satila America Corporation for Foreclosure on Mechanic’s Lien; Breach of Contract; Reasonable Value of Work, Labor, and Services; Quantum Meruit; Violation of Prompt Payment Statutes; and, Implied Indemnity. The cross-complaint alleges a $1,648,185.86 contract for labor and materials with Satila America Corporation for electrical contractor on an unspecified project. Current Electric, Inc. alleges an unpaid balance of $630,168.58.

On March 2, 2023, Satila America Corporation answered the complaint and filed cross-complaint against Current Electric, Inc. for Breach of Contract, Indemnity, Declaratory Relief, Quantum Meruit, Open Book Account, and Account Stated. Satila America Corporation filed a 170.6 challenge which led to reassignment of the case from Department 16 to Department 68.

On June 8, 2023, Satila America Corporation filed a first amended cross-complaint for Breach of Contract, Indemnity, Declaratory Relief, Quantum Meruit, Open Book Account, and Account Stated. On August 8, 2023, the court sustained the unopposed demurrer to the fourth cause of action for quantum meruit without leave to amend.

23STCV04024

On February 23, 2023, Rexel USA, Inc. filed a complaint for Breach of Contract, Common Counts, Foreclosure of Mechanic’s Lien, Recovery on Mechanic’s Lien Release Bond, and Breach of Guarantee against Current Electric, Inc., Michael Delaney, and Satila America Corporation. Rexel USA, Inc. alleges contracts with Defendants for certain improvements to an unspecified project, whereby certain unspecified materials were provided with a stated value of $108,108.68.

On August 3, 2023, Current Electric, Inc. and Michael Delaney answered the complaint. On the same date, Current Electric, Inc. filed a cross-complaint for Foreclosure on Mechanic’s Lien; Breach of Contract; Reasonable Value of Work, Labor, and Services; Quantum Meruit; Violation of Prompt Payment Statutes; and, Implied Indemnity. The cross-complaint alleges a $1,648,185.86 contract for labor and materials with Satila America Corporation for electrical contractor on an unspecified project. Current Electric, Inc. alleges an unpaid balance of $630,168.58. Rexel USA, Inc. and Satila America Corporation answered the Current Electric Cross-Complaint on September 7, and 20, 2023, respectively. Satila America Corporation also filed a cross-complaint against Current Electric, Inc. for Breach of Contract, Indemnity, and Declaratory Relief. Current Electric, Inc. answered the Satila America Corporation cross-complaint on October 24, 2023.

On October 16, 2023, the court deemed the cases related. On August 12, 2024, the court entered the stipulation of the parties, whereby the Walters Wholesale Electric complaint in 22STCV34045 and the cross-complaint of Current Electric, Inc. against Wholesale Electric Co. against, were dismissed with prejudice.

RULING: Denied.

Evidentiary Objections to the Declaration of Ted Grebelius

·         Numbers 1, 4, 6, 9, 11, 13, 14, 15, 16, 17, 22: Overruled.

·         Numbers 7, 8, 18, 19, 23: Sustained.

Defendant/Cross-Defendant/Cross-Complainant, Satila America Corporation (Satila) moves expunge the mechanic’s lien of Defendant/Cross-Complainant Current Electric, Inc. The motion depends on a factual challenge to the amount in dispute and identified in the mechanic’s lien. Defendant/Cross-Complainant Current Electric, Inc. in opposition challenges the propriety of the motion as a means of making a factual determination as to the validity of the disputed amounts, and responds to factual challenges as matter of good faith determination and lacking in any willful misstatements.

(The electronic filing system shows Current Electric filed two sets of opposition. The court relies on the 5:19 p.m. filed opposition and disregards the 4:36 p.m. filed opposition barring legally supported and precisely cited argument from Satila America Corporation challenging reliance on the later filed opposition.)

Satila in reply maintains the motion is procedurally proper. Satila then reiterates the “overstated” items in the mechanics lien.

The motion itself relies on Civil Code section 8422, subdivision (c).

“(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. ...

(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.)

The timing of the initiation of the action remains undisputed. (Civ. Code, § 8460.) Satila presents the single Civil Code section, case citation regarding the right to a “speedy” resolution of the claim, and an evidentiary challenged declaration, in an effort to challenge the validity of disputed balance stated in the lien. (See Lambert v. Superior Court (1991) 228 Cal.App.3d 383, 387.) The motion itself otherwise lacks any other legal support regarding the actual standard of review for expungement.

“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. (Citation.) The inquiry upon such motion is likewise limited to the ‘probable validity’ of the lien. (Citation.)” (Howard S. Wright Construction Co. v. Superior Court (2003) 106 Cal.App.4th 314, 318.)

“Proceedings for the foreclosure of a mechanics' lien are proceedings in equity in which the court will apply equitable principles. (Citation.) Such an action being one in equity, the court has jurisdiction to hear and determine all the issues in order to do complete justice by deciding the entire case. (Citations.) [¶] ... ‘Liens of mechanics or materialmen will not be held invalid unless they tend to defraud or fail to impart notice.’ (citation.)” (Burton v. Sosinsky (1988) 203 Cal.App.3d 562, 572.)

In considering the admissible portions of the Declaration of Grebelius, the court acknowledges the payments made and the change orders. The court also takes particular note of certain underpinning assumptions, such as the work and labor valuation, and liquidated damages representation. The Grebelius declaration lacks specific articulated and enumerated explanation supporting said conclusion or factual basis of all entries. In other words, the actual declaration lacks any specific evidence of the total contract price, and/or value of work and material provided, and instead only cites to records of change orders and payments made to other third party contractors to allegedly complete the work, with assumptions of liquidated damages and valuations. Even assuming and accepting the admissible conclusions of Grebelius regarding total payment sufficiently justifies the subject motion as a basis for complete satisfaction of all debt, the Declaration of Michael Delaney categorically challenges the claimed offsets and maintains a balance remains due. Delaney maintains the disputed amounts were personally calculated in determining the claimed balance due. [Declaration of Michael Delaney.]

The burden lies with the challenging party to establish the invalid lien. The court finds no way to verify the compete satisfaction of the contract based solely on the Grebelius declaration especially when contrasted against the Delaney declaration. The court finds the unchallenged declaration of Delaney sufficiently specific and explanatory. The reply insufficiently addresses the evidentiary challenges and counterclaims.

The court therefore declines to find a matter of law or in equity that Satila makes a sufficient showing of “probable validity” that NO remaining balance due on the lien remains due, thereby rendering the lien improper. (Civ. Code, § 8422, subd. (c); Howard S. Wright Construction Co. v. Superior Court, supra, 106 Cal.App.4th at p. 318; Burton v. Sosinsky (1988) 203 Cal.App.3d at p. 572.)

The motion is DENIED.

Trial remains set for February 24, 2025.

Satila America Corporation to give notice to all remaining parties.