Case Number: EC050916 Hearing Date: February 13, 2015 Dept: NCD
MOTION FOR SUMMARY JUDGMENT

TENTATIVE RULING (2/13/15)
#3
GC 050916
HUB CONSTRUCTION SPECIALTIES, INC. v. ESPERANZA CHARITIES, INC.

Plaintiff’s Motion for Summary Judgment
Tentative:
Defendants’ Evidentiary Objection is OVERRULED. The parties submitted to the court a “Joint Stipulation as to Operative Facts and Documentary Evidence,” with the understanding that the facts and documents had been stipulated to.

Motion for summary judgment is DENIED. The court finds, after consideration of the Joint Stipulation as to Operative Facts and Evidence and the various arguments of the parties, that plaintiff is unable to establish its claim for foreclosure of the subject mechanic’s lien on the ground it cannot provide sufficient proof of service by documentation of the return receipt of certified mail, a photocopy of the record of delivery and receipt maintained by the post office, showing the date of delivery and to whom delivered, or, the returned envelope itself, as required under the statute in effect at the time the effectiveness of the preliminary notice as given is sought to be established. [See Civil Code § 8052 (b), (“the effectiveness of a notice given or other action taken on a work of improvement before July 1, 2012, is governed by the applicable law in effect before July 1, 2012, and not by this part”), former Civil Code §§ 3114, 3097, 3097.1; Facts 9, 13, Ex. 2].

Dismissal to be entered in favor of defendant Esperanza Charities, Inc.

BACKGROUND:
MOVING PARTY: Plaintiff Hub Construction Specialties, Inc.

RESPONDING PARTY: Defendant Esperanza Charities Inc.

RELIEF REQUESTED:
Summary judgment against defendant Esperanza Charities, Inc. on plaintiff’s second cause of action for foreclosure of mechanic’s lien

Causes of Action: from Complaint
1. Breach of Contract
2. Foreclosure of Mechanic’s Lien

FACTUAL BACKGROUND:
Plaintiff Hub Construction Specialties alleges that from February through April of 2012 it furnished rebar, concrete accessories and supplies to MJ Development Inc. for construction of improvements to property owned by defendant Esperanza Charities, Inc., for which plaintiff has not been paid.

ANALYSIS:
Pursuant to the court’s order of December 1, 2014, this motion is made for purposes of the court determining whether plaintiff has established its second cause of action for foreclosure of mechanic’s lien against defendant Esperanza Charities, pursuant to a Joint Stipulation as to the Operative Facts in this matter.

The elements which must be alleged to state a cause of action for Mechanic’s Lien Foreclosure are:
1) Names of the parties claiming or having an interest in the subject property;
2) Contract to supply and supply of labor, materials, or equipment for work of improvement on the property
3) Giving of preliminary notice to owner (subject to various exceptions)
4) Recordation of claim of lien with County Recorder in county where real property is located less than 91 days before filing of complaint;
5) Notice of completion was recorded less than 60 days or the work of improvement was completed less than 90 days before the claim of lien was recorded;
6) Amount due;
7) Description of real property;
8) Contractor’s license if plaintiff’s task required license.
Civil Code § 8038, 8040, 8042, 3115; Hydrotech Systems Ltd. v. Oasis Waterpark (1991) 52 Cal.3d 988; Sibley Grading Co. v. Crany (1935) 4 Cal.2d 375.

As noted by both sides, the Mechanic’s Liens provisions have been renumbered and reformulated, effective July 1, 2012. Under Civil Code § 8052 (b), “the effectiveness of a notice given or other action taken on a work of improvement before July 1, 2012, is governed by the applicable law in effect before July 1, 2012, and not by this part.”

Plaintiff argues that it has established each element required to be established to entitle it to recover the sum due for material furnished to the project from February 24, 2012, twenty days prior to the service of the preliminary notice on March 16, 2012, which is $53,070.18, plus interest, as stipulated.

Plaintiff argues that defendant’s challenges to the defendant’s claim are without merit.

Issue 1: Esperanza contends that Hub’s preliminary notice is invalid because of the absence of a certified receipt.

It is stipulated that on March 16, 2012, Hub caused a preliminary notice to be mailed by certified mail to the appropriate parties, as attested to by proof of service executed on September 18, 2012. [Fact 9, Ex. 2].

Esperanza argues that Hub is unable to provide proof of service as required under the former statute, which was in effect at the time the preliminary notice was mailed, on March 16, 2012.

Under former Civil Code § 3114:
“A claimant shall be entitled to enforce a lien only if he has given the preliminary 20-day notice (private work) in accordance with the provisions of Section 3097, of required by that section, and has made proof of service in accordance with the provisions of Section 3097.1”

Former Civil Code § 3097 provides, in pertinent part:
“(f) The notice required under this section may be served as follows:
(1) If the person to be notified resides in this state, by delivering the notice personally, or by leaving it at his or her address of residence or place of business with some person in charge, or by first-class registered or certified mail, postage prepaid…”

The stipulated fact here is that the preliminary notice was mailed by Certified Mail. [Fact 9].

Former Civil Code § 3097.1 provides:
“Proof that the preliminary 20-day notice required by Section 3097 was served in accordance with subdivision (f) of Section 3097 shall be made as follows:
(a) If served by mail, by proof of service affidavit described in subdivision (c) of this section accompanied either by the return receipt of certified or registered mail, or by a photocopy of the record of delivery and receipt maintained by the post office, showing the date of delivery and to whom delivered, or, in the event of non delivery, by the returned envelope itself.”

Plaintiff relies on case law under which the former section required strict compliance with these requirements. See Truestone, Inc. v. Simi West Industrial Park II (2nd Dist. 1984) 163 Cal.App. 3d 715, 721 (“because strict compliance with [Civil Code § 3097] is required, a claim of actual notice or substantial compliance is irrelevant,” citing IGA Aluminum Products, Inc. v. Manufacturers Bank (1982) 130 Cal.App.4th 699.) Plaintiff does not have a return receipt, and evidently no photocopy of the record of delivery, or a returned envelope. [See Fact 13].

The current section, effective July 1, 2012, now permits proof of the service of the notice to include documentation that certified mail was paid for:
“(b) If the notice is given by mail, the declaration shall be accompanied by one of the following:

(1) Documentation provided by the United States Postal Service showing that payment was made to mail the notice using registered or certified mail, or express mail….”
Civil Code § 8118.

The Law Revision Commission Comments to the new section accordingly state that “Proof that payment was made to the United States Postal Service or an express service carrier for an approved method of delivery is also sufficient.”

The stipulated facts include a Certified Mail Manifest from the U.S. Postal Service showing that Hub furnished postage to serve the notice by Certified Mail. [Fact No. 10, Ex. 3]. (Defendant has objected to this stipulated fact, an anomaly. If defendant found the fact objectionable, it apparently should not have stipulated to it. In any case, the argument is that it is irrelevant, as the current section does not apply here.)

Accordingly, it appears that if the former section is applied, Hub cannot provide sufficient proof of notice by simply pointing to the proof that certified postage was paid for, and the notice was received. Again, the stipulated facts include the fact that “There is no signed return receipt.” [Fact 13].

As noted above, under Civil Code § 8052 (b), “the effectiveness of a notice given or other action taken on a work of improvement before July 1, 2012, is governed by the applicable law in effect before July 1, 2012, and not by this part.”

The argument that the proof of service itself was not signed until September does not appear to change the fact that at the time the notice was in fact given and the action taken to give the notice, the previous statute was in effect. If what plaintiff is truly urging here is that the notice was not given until September, this would raise issues of whether plaintiff would then be entitled to anything, as evidently no materials were supplied within 20 days of that date. See Civil Code § 8204:
“(a) A preliminary notice shall be given not later than 20 days after the claimant has first furnished work on the work of improvement. If work has been provided by a claimant who did not give a preliminary notice, that claimant shall not be precluded from giving a preliminary notice at any time thereafter. The claimant shall, however, be entitled to record a lien, give a stop payment notice, and assert a claim against a payment bond only for work performed within 20 days prior to the service of the preliminary notice, and at any time thereafter.”

The matter as now presented appears to come down to a situation where plaintiff is unable to prove by acceptable proof that it complied with the preliminary notice requirements as then in effect, and the motion is denied, with no judgment enforcing the mechanic’s lien to be entered here.

Issue 2—Mechanic’s lien not timely recorded within 90 days of the date Hub last furnished material to the project.

Under Civil Code § 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.”

Here, defendant argues that the stipulated facts include that Hub last provided rebar to the project on April 10, 2012. This is not included in the stipulated facts, nor is any date when Hub last provided rebar, materials or services. In any case, even if there were some date upon which Hub’s services were concluded, Hub relies on Civil Code § 8050, which provides:
“(a) “Work of improvement” includes, but is not limited to:

(1) Construction, alteration, repair, demolition, or removal, in whole or in part, of, or addition to, a building, wharf, bridge, ditch, flume, aqueduct, well, tunnel, fence, machinery, railroad, or road.

(2) Seeding, sodding, or planting of real property for landscaping purposes.

(3) Filling, leveling, or grading of real property.

(b) Except as otherwise provided in this part, “work of improvement” means the entire structure or scheme of improvement as a whole, and includes site improvement.”

Plaintiff’s argument, then, is that the work of improvement, including the entire scheme of improvement, was not completed until December 3, 2012, the date Esperanza designated as the completion date on its Notice of Completion. [See Ex. 6].

Here, the stipulated facts do not directly indicate any date when the work was completed, either by Hub or on the project as a whole. The date of “completion” of a project under the mechanic’s lien statutes is generally a question of fact. Hammond Lumber Co. v. Yeager (1921) 185 Cal. 355.

The stipulated facts include that on December 12, 2012, ECI recorded a Notice of Completion, reciting that the project was completed on December 3, 2012. [Fact No. 16, Ex. 6]. It is also stipulated that on December 27, 2012, Hub caused to be recorded a mechanic’s lien, which was recorded within 30 days following the recording of the NOC. [Fact 17, Ex. 7]. Although the parties appear to agree that the 30 day window does not extend the ninety day window, under these circumstances, with no facts presented to the court which would suggest that the ninety day window had expired (and with documentation showing completion occurred as represented by defendant on December 3, 2012, so that the ninety day window was satisfied), the court cannot find that this mechanic’s lien was not timely recorded within 30 days of the recording of the NOC.

The motion is accordingly not denied on this ground.

Issue 3—Initiation of suit on February 6, 2013 was untimely, as not within 90 days after recordation of the notice of lien
Defendant argues that plaintiff cannot establish entitlement to enforce the lien under Civil Code § 8460, which 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.”

Defendant relies on a lien recorded on March 22, 2012, which it is stipulated was subsequently released. [Fact No. 15]. The lien sought to be enforced here is that recorded on December 27, 2012. [Fact 17, Ex. 7]. This action was filed on February 6, 2013, which was within 90 days of the recording of that lien. [Fact 18, Ex. 8]. (The fact evidently erroneously refers to a lien recorded 11/27/12 rather than 12/27/12—but the action would still have been filed within ninety days of either date). The motion is not denied on this ground.