Judge: Virginia Keeny, Case: 22VECV01959, Date: 2023-01-18 Tentative Ruling
Case Number: 22VECV01959 Hearing Date: January 18, 2023 Dept: W
GELT RESEDA
FEE OWNER, LLC, et al. v. WPIC CONSTRUCTION, LLC, et al.
plaintiffs’
motion to expunge mechanics lien or, in the alternative, for an order to reduce
the amount of such liens
Date of Hearing: January
18, 2023 Trial Date: None set.
Department: W Case
No.: 22VECV01959
Moving Party: Plaintiffs
Gelt Reseda Fee Owner, LLC and Uhon Watermark Fee Owner, LLC
Responding Party: Defendants
WPIC Construction, LLC and Green World Windows and Doors Corp.
BACKGROUND
Plaintiffs Gelt Reseda Fee Owner, LLC
and Uhon Watermark Fee Owner, LLC allege they hired Defendant WPIC
Construction, LLC to build a large mixed-use project known as The Watermark at
the Property. Plaintiff further alleges WPIC hired Defendants Green World
Windows and Doors and SPZ Enterprises Inc. as subcontractors to provide certain
labor, equipment, and material for the Project. The Project was completed on
July 23, 2021, and a Notice of Completion was recorded on July 28, 2021. Plaintiff
alleges Defendants improperly recorded a Mechanics Liens against the Property.
Plaintiff contends the Liens filed by WPIC, Green World, and SPZ are invalid
and unenforceable, as no money is due to the Defendants, Defendants have willfully
overstated the amount of the lien, and the Defendants’ Liens were not recorded
timely pursuant to Cal. Civ. Code 8412(b).
On November 10, 2022, Plaintiffs filed
a complaint against Defendants WPIC Construction, LLC, Green World Windows and
Doors Corp. dba Green World Windows, and SPZ Enterprises Inc. dba Black Diamond
Waterproofing for injunctive and declaratory relief. On November 17, 2022,
Plaintiffs filed a first amended complaint.
On December 22, 2022, WPIC
Construction, LLC filed a cross-complaint against Gelt Reseda Fee Owner, LLC,
Uhon Watermark Fee Owner, LLC and Greystone Servicing Company LLC for
foreclosure of mechanics lien.
On December 29, 2022, Green World
Windows and Doors Corp. dba Green World Windows filed a complaint against
Gelt-Uhon Development Holding, LLC, Gelt Reseda Fee Owner, LLC, Uhon Watermark
Fee Owner, LLC, Greystone Servicing, and WPIC Construction LLC for (1) Breach of
Contract; (2) Foreclosure of Mechanics Lien; (3) Intentional Interference with
Contractual Relations; (4) Promissory Estoppel; (5) Violations of Prompt
Payment Acts; (6) Common Counts; (7) Open Book Account; (8) Accounts Stated; (9)
Quantum Meruit; and (10) Unjust Enrichment.
[Tentative] Ruling
Plaintiffs
Motion to Expunge Mechanics Lien is GRANTED
EVIDENTIARY OBJECTIONS
Defendant Green World Windows and Doors Corp. submits evidentiary
objections to the declaration of Pamela Scott-Belinfante. Defendant WPIC Construction,
LLC also submits evidentiary objections to the declaration of Pamela
Scott-Belinfante.
Green World
Windows Objections Nos. 1-12 are OVERRULED.
WPIC
Objections Nos. 6, 14, and 16 are SUSTAINED.
REQUEST FOR JUDICIAL NOTICE
Defendant WPIC Construction, LLC requests this court take judicial
notice of the following documents: (1) Statement of Completion issued by
the City of Los Angeles, dated June 29, 2022, for the off-site work related to
Watermark project, signed by Anthony Logston, Final Inspector, Inspector of
Public Works (Exh. 1); (2) Inspection Record for the Watermark project, which
identifies a Project Final inspection approval date of August 31, 2022, from
the City of Los Angeles Department of Building and Safety (Exh. 2); and (3) Certificate
of Occupancy for the Watermark project, dated August 31, 2022, signed by
Jeffrey R. Duran, Inspector from the City of Los Angeles Department of Building
and Safety (Exh. 3). Defendant Green World Windows and Doors Corp. also
requests this court take judicial notice the Certificate of Occupancy and Inspection
Record for the Watermark project.
The court grants Defendants’ request for judicial notice.
DISCUSSION
Plaintiffs Gelt Reseda Fee Owner, LLC
and Uhon Watermark Fee Owner, LLC move for an order to expunge the mechanic's
lien recorded on September 26, 2022 by Defendant WPIC Construction, LLC (“WPIC”)
in the sum of $910,715.86 in the records of the County of Los Angeles, State of
California, as document number 20220937728 (“WPIC Lien”) and the mechanic's
lien recorded on October 19, 2022 by Defendant Green World Windows and Doors
Corp. dba Green World Windows (“Green World”) in the sum of $74,884.29 in the
records of the County of Los Angeles, State of California, as document number
20221002431 (“Green World Lien #2”). In the alternative, Plaintiffs move for an
order to reduce the amount of such Iiens as determined by the court. Plaintiffs
make the motion on the grounds WPIC and Green World have each recorded untimely
and willfully overstated a fraudulent mechanic's liens on real property owned
by Plaintiffs which amounts to an unconstitutional taking of Plaintiffs’
significant property interests. In addition, Plaintiffs are contractually
required to remove such wrongful liens pursuant to their agreement with their lender,
Greystone Servicing Company LLC.
California's Constitution provides:
“Mechanics, persons furnishing materials, artisans, and laborers of every
class, shall have a lien upon the property which they have bestowed labor or
furnished material for the value of such labor done and material furnished; and
the Legislature shall provide, by law, for the speedy and efficient enforcement
of such liens.” (Cal. Const., art. XIV § 3.) The purpose of a mechanics' lien
is to prevent unjust enrichment of a property owner at the expense of laborers
or material suppliers.¿(Abbett Electric Corp. v. California Fed. Savings
& Loan Assn.¿(1991) 230 Cal.App.3d 355, 360.)¿“The mechanics' lien is
the only creditors' remedy stemming from constitutional command and our
courts¿“have uniformly classified the mechanics' lien laws as remedial
legislation, to be liberally construed for the protection of laborers and
materialmen.”¿(Wm. R. Clarke Corp. v. Safeco Ins. Co.¿(1997) 15 Cal.4th
882, 889.)
Section 3123(b)¿authorizes the lien
claimant to include in the lien any amount due for labor, services, equipment
or materials furnished, based on a written modification of the contract¿or¿as
a result of the rescission, abandonment or breach of the contract. In such
events, the lien amount may not exceed the reasonable value of the labor,
services, equipment or materials furnished by the claimant.
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 an unjustified amount without waiting for trial on
the action to foreclose the lien. (Lambert v. Superior Court (1991) 228
Cal.App.3d 383, 387.) The inquiry upon such motion is likewise limited to the
“probable validity” of the lien. (Id.) 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 S. Wright Construction Co. v. Superior Court
(2003) 106 Cal.App.4th 314, 318.) The lien claimant has the burden of
establishing the validity of the lien. (Selby Constructors v. McCarthy¿(1979)
91 Cal.App.3d 517, 526.) However, the actual amount due on the lien presents a
question of fact for the trial court. (Howard A. Deason & Co. v. Costa
Tierra Ltd.¿(1969) 2 Cal.App.3d 742, 754–757.)
Procedural Requirements
Defendant Green World argues Plaintiffs
failed to comply with the procedural requirements of Civil Code section 8480,
et seq. and as such, Plaintiffs’ motion must be denied. Defendant Green World
contends Plaintiffs failed to comply with Civil Code section 8484 because Plaintiffs
did not file a verified petition as required and failed to provide them with a
demand that Green World remove its lien which “states the grounds for the
demand” as required by Civil Code section 8482.
Plaintiffs argue Civil Code section
8480, et seq. is inapplicable because it is a remedy afforded to owners when a
mechanic’s lien claimant fails to foreclose its lien within 90 days of
recording. The court agrees. Civil Code section 8480 provides “[t]his article
does not bar any other cause of action or claim for relief by the owner of the
property.” As a result, Plaintiffs did not need to comply with Civil Code
sections 8482 and 8484 before filing their complaint.
Timeliness of Recorded Liens
Plaintiffs first argue both WPIC and Green
World failed, by many months, to record their liens in a timely manner.
Plaintiffs contend work on the Project was completed on July 23, 2021, and Gelt
recorded the Notice on July 28, 2021. Pursuant to 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.) Pursuant to Civil Code section 8414, “[a]
claimant 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. (b) Before the earlier of the following times:
(1) Ninety days after completion of the work of improvement. (2) Thirty days
after the owner records a notice of completion or cessation. (Civ. Code, §
8414.)
Plaintiffs contend that WPIC was a direct contractor, and therefore had 60 days from
July 28, 2021 (plus a couple of additional days for service by certified mail)
to record a mechanic's lien but did not do so until 14 months later, September
26, 2022. Moreover, Green World, as a subcontractor, had 30 days from July 28,
2021 (plus a couple of additional days) to record their mechanics lien. They
did not record their first mechanics lien until 14 months later, and the
mechanics lien at issue here until 15 months later, October 19, 2022. As a
result, regardless of whether the time to record is measured from the date the
Notice was recorded (July 28, 2021) or from the date of actual completion of
the Project (July 23, 2021), the recorded mechanics liens are untimely.
Both WPIC and Green World argue the
contract work at the Watermark Project did not stop once the first Notice of
Completion was filed. Both parties
contend the Notice of Completion was prematurely filed because work on the
Project continued all the way to at least August 31, 2022 when the City issued
a Certificate of Occupancy upon its final inspection. Civil Code § 8182
provides that an owner may record a Notice of Completion within 15 days after
the date of completion of a work of improvement. Civil Code section 8180
defines “completion” as 1) actual completion, 2) occupation by the owner
accompanied by a cessation of labor, 3) cessation of labor for a continuous
period of 60 days, or 4) recordation of a Notice of Cessation after a cessation
of labor for a continuous period of 30 days. “The provision in subdivision (b)
for acceptance by a public entity refers to acceptance pursuant to a legislative
enactment of the public entity and not to inspection and approval or issuance
of a certificate of occupancy under building regulations.” (§ 8180. Acts
signifying completion, West's Ann.Cal.Civ.Code § 8180.)
Defendant WPIC argues their work continued
well after the recording of the Notice of Completion on July 28, 2021, through
September 15, 2022, including work on a new balcony waterproofing system, unit
water damage repairs, LID planter plant replacement, additional waterproofing,
sidewalk signage, and sidewalk patching. (Bohling Decl. ¶¶11-12.)
In reply, Plaintiff argues the work
completed after the Notice of Completion was not part of the agreement but for repair
of poor work or performed more than one year after the Notice was recorded.
Plaintiff contends when the Certificate of Occupancy was issued or when the
final inspection took place has no bearing on when the work was “completed” for
the purposes of recording mechanics liens. Pamela Scott-Belinfante, declares
under penalty of perjury, that on July 23, 2021, work ceased on the Project,
and Gelt occupied and began to use the improved building. (Scott-Belinfante
Decl. ¶2.) She further attests Gelt established business offices in one of the buildings
and began to sign leases and move tenants into residential units shortly thereafter.
(Scott-Belinfante Decl. ¶2.)
The court is troubled by Plaintiff’s
claim that they began to occupy the building upon the alleged completion of
work in July 2021 as a Certificate of Occupancy was not issued until a year
later. (See Cal. Code Regs., tit. 24, pt. 2, § 111.1.) Regardless, completion
is not just defined as occupation but also as cessation of labor for a
continuous period of 60 days. Plaintiff claims the work completed July 23,
2021. Although notice of completion alone is not sufficient to show the date of
substantial completion (Los Angeles Unified School District v. Torres
Construction Corp. (2020) 57 Cal.App.5th 480, 511), according to WPIC, they
did not work on the Project again until December 30, 2021 – more than sixty
days after the alleged cessation of labor. The only work performed, according
to defendant WPIC during that sixty day period, was replacing some dead plants
in the planters. That is insufficient to
establish continuous work. Moreover, none of the additional work appears to
have been part of the plans or necessary for use of the Project. As such, it
appears there was an actual and continuous stoppage of work on the project.
Accordingly, the court finds the
mechanics liens were not timely recorded.