Judge: Theresa M. Traber, Case: 22STCV09799, Date: 2022-08-11 Tentative Ruling

Case Number: 22STCV09799    Hearing Date: August 11, 2022    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     August 11, 2022                     TRIAL DATE: NOT SET

CASE:                         LGP Equipment Rentals, Inc. v. Joshua Road, LLC, et al.

CASE NO.:                 22STCV09799           

MOTION TO REDUCE OR ELIMINATE MECHANICS LIEN

MOVING PARTY:               Defendant Joshua Road, LLC

RESPONDING PARTY(S): Plaintiff LGP Equipment Rentals, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action, filed on March 21, 2022, asserting claims for breach of contract, foreclosure of a mechanic’s lien, and for common counts. Plaintiff alleges that Defendants breached a contract for rental of construction equipment by allowing the equipment rented to be stolen and refusing to reimburse Plaintiff for the lost equipment.

            Defendant Joshua Road, LLC moves to eliminate the mechanic’s lien on the property owned by Defendant or to reduce the lien from $80,000 to $1,500.

TENTATIVE RULING:

Defendant’s Motion to Eliminate Plaintiff’s Mechanic’s Lien is GRANTED.

DISCUSSION:

            Defendant Joshua Road, LLC moves to eliminate the mechanic’s lien on the property owned by Defendant or to reduce the lien from $80,000 to $1,500.

Legal Standard

“Under California's mechanic's lien law, a mechanic's lien attaches to any interest in a work of improvement and the real property on which it is situated.  The lien is a direct lien, similar to a mortgage, and is imposed as security for payment of sums due the mechanic.” (Wachovia Bank v. Lifetime Industries, Inc. (2006) 145 Cal.App.4th 1039, 1050; see also Cal. Const., art. XIV, § 3.) The California mechanic’s lien statutes are intended “to prevent unjust enrichment of a property owner at the expense of a laborer or material supplier.” (Burton v. Sosinsky (1988) 203 Cal.App.3d 562, 568.) The relevant statute, California Civil Code section 8430, governs amounts permissibly included in mechanic’s liens, and provides for “a direct lien for the lesser of the following amounts: [¶] (1) the reasonable value of the work provided by the claimant. [¶] (2) The price agreed to by the claimant and the person that contracted for the work.” 

 “When a claimant has recorded a mechanic’s lien and then secured a stay of an action to foreclose the lien, an owner must have a speedy court remedy for showing that the lien is invalid.” (Lambert v. Superior Court (1991) 228 Cal.App.3d 383, 389.) Accordingly, a Lambert motion examines the “probable validity of the lien” under Civil Code section 8430. (Id. at p. 388.) The question is “not the ultimate merit of the contractor’s claim but whether the contractor should be entitled to retain the security of the mechanic’s lien . . . pending a resolution of the matter.” (Cal Sierra Construction, Inc. v. Comerica Bank (2012) 206 Cal.App.4th 841, 850.) The court is empowered to reduce or remove the lien to the extent that it does not comply with Civil Code § 8430. 

 In a Lambert motion, the burden is on the claimant-plaintiff to establish the probable validity of the lien. (See Cal Sierra Construction, Inc. v. Comerica Bank (2012) 206 Cal.App.4th 841, 845; Lambert, supra, 228 Cal.App.3d at p. 387.) 

Validity of Lien

            Plaintiff contends that the lien recorded for $80,000 plus interest is valid because this amount represents the reasonable value of the contract between Plaintiff and the subcontractor, Southern Cali, that leased the equipment from Plaintiff which was stolen. Plaintiff contends that the reasonable value of the contract is not only the rent due, but the replacement value of the equipment and loss of initial revenue, and that these amounts are properly encompassed within § 8430(a)(1).

            Plaintiff is mistaken: the statute provides not for a lien for the reasonable value of the contract but the reasonable value of the work done. Plaintiff cites no law standing for the proposition that the reasonable value of the work done includes the price or replacement of stolen equipment, or the loss of rental revenue from the theft of that equipment. That proposition would be contrary to the purpose of the statute to prevent a property owner from being unjustly enriched at the expense of the laborer. Plaintiff contends that Defendant is being unjustly enriched because it “could have stolen the Skidsteer for its own use.” This accusation, unsupported by facts or evidence, is not only flagrantly improper but insufficient to support Plaintiff’s position. The Court fails to see how Defendant was unjustly enriched by a piece of expensive construction equipment being stolen while it was on Defendant’s property.

            Plaintiff has also failed to show that the claimed breach of contract damages included within the lien are proper. Civil Code § 8430(c) expressly authorizes the inclusion of breach of contract damages in a lien, but nevertheless limits the amount of the lien to the reasonable value of the work provided by the claimant. Further, breach of contract damages are not available against a property owner unless the complaint shows the existence of a contract between the owner and the claimant. (Golden Gate Bldg. Materials Co. v. Fireman (1928) 205 Cal. 174, 177-78.) Plaintiff does not allege, either in the Complaint or in its opposition, that Defendant had entered into a contract with Plaintiff for the use of the equipment, but rather that Defendant entered into a contract with an unlicensed subcontractor. (Declaration of Lanai Gomez ISO Opp. Exh. A.)

            The Court finds that Plaintiff has failed to show the probable validity of the lien beyond the rental value of the Skidsteer for the five days it was on Defendant’s property. The Court now turns to the issue of service of the preliminary notice.

Preliminary Notice

            To record a valid lien, the claimant must serve a preliminary notice that complies with all statutory requirements. (Civ. Code § 8200(b).) Civil Code § 8102 requires that the notice include certain information to the extent known to the person giving the notice, including the contact information of the reputed owner, the direct contractor, and any construction lender, as well as, if the person giving the notice is a claimant, a general statement of the work provided, the name of the person to or for whom the work is provided, and a statement or estimate of the claimant’s demand, less all just credits and offsets. (Civ. Code § 8102(a).) Variance from the requirements of subdivision (a) of section 8102 does not invalidate a notice so long as it substantially informs the owner of the information required in the notice. (Civ. Code § 8102(b).)

            Defendant contends that the notice is invalid because the preliminary notice stated that the direct contractor was “Cherry Development,” which allegedly contracted for the equipment. (See Complaint Exh. A.) Defendant contends that this error rendered the notice inadequate to provide it with the information required in the notice, since no contractor by that name was ever involved in this matter and is not identified in the Complaint. Plaintiff, in opposition, concedes that the notice was erroneous, arguing that it mistakenly believed that Cherry Development was the general contractor for the work at Defendant’s property, based on information provided by Southern Cali. (Gomez Decl. ¶¶ 8-10.)

It cannot be said as a matter of law that a notice of mechanic’s lien that names a completely unrelated entity as a general contractor and only states that the lien is for “equipment rental” is sufficient to substantially inform an owner of the basis for a lien on its property. As stated by Defendant in reply, Plaintiff’s primary case in support, Indus. Aslphalt v. Garrett Corp. (1986) 180 Cal.App.3d 1001, is inapplicable. In that case, the Court of Appeal held that a notice of lien was not invalid where the owner received proper notice, but an original contractor did not. (Indus. Asphalt v. Garrett Corp., supra,  at p. 1006.) Here, it is the owner itself that is contesting the lack of adequate notice of the lien or its basis. The Court agrees. Even considering the leeway afforded a claimant under the statutory scheme, the Court cannot conclude that a notice which names an utterly unrelated party as the direct contractor and as the person who contracted for the equipment rental is sufficient to put an owner on notice of the basis for a mechanic’s lien. The Court therefore finds that the lien is not compliant with § 8102 of the Code of Civil Procedure and is therefore invalid.

            Accordingly, Defendant’s Motion to Eliminate Plaintiff’s Mechanic’s Lien is GRANTED.

CONCLUSION:

            Accordingly, Defendant’s Motion to Eliminate Plaintiff’s Mechanic’s Lien is GRANTED.

Moving party to give notice.

IT IS SO ORDERED.

Dated: August 11, 2022                                  ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.