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(A
version of this article will appear in the California
Construction Law Reporter, published by the West Group.)
By James E. Acret
A
tenant filed for bankruptcy before completion of substantial
renovations for which it had contracted. The unpaid contractor
recorded a mechanic's lien. Owner defended against the contractor's
mechanic's lien on the ground that owner had posted and
recorded a notice of non-responsibility. Owner moved to
expunge contractor's notice of lis pendens and simultaneously
moved to "remove" the mechanic's lien. The trial
court granted the motion to expunge and the motion to remove.
The Court of Appeal issued a writ commanding the Superior
Court to vacate its orders. Howard S. Wright Construction
Co. v. Superior Court, 106 Cal.App.4th 314, 130 Cal.Rptr.2d
649, 2003 DJDAR 1829 (2003).
Expungement
vs. Motion to Remove. A notice of lis pendens may be
expunged if the trial court finds that the plaintiff "has
not established by a preponderance of the evidence the probable
validity of the real property claim." Code of Civil
Procedure §405.32. An order expunging a notice
of lis pendens is not appealable, but it may be reviewed
on a petition for writ mandate. CCP §405.39.
A
motion to "remove" a mechanic's lien is recognized
as a device that allows a property owner to obtain speedy
relief from an unjustified lien. Lambert v. Superior
Court, 228 Cal.App.3d 383 (1991). The grant of a motion
to remove a mechanic's lien is essentially a judgment that
no lien exists, which, upon recordation, removes the lien
from the public record. Civil Code §3148. Here,
in the interest of judicial economy, the Court of Appeal
reviewed both the judgment and the expunging order.
Expungement:
Unlike other motions, the burden is on the party opposing
a motion to expunge to establish the probable validity of
the underlying claim. CCP §405.30. The Legislature
intended to make the "probable validity" standard
equivalent to that applicable under the attachment law.
The Court of Appeal independently reviewed the effect and
significance of the undisputed evidence and drew its own
legal conclusions.
Participating
owner doctrine: When property is subject to a lease
and the lessee contracts for improvements without the lessor's
knowledge, the lien attaches only to the lessee's leasehold
interest. English v. Olympic Auditorium, Inc., 217
Cal. 631 (1933). But, improvements constructed with the
owner's knowledge are deemed to be at the instance of the
owner unless the owner gives a notice of non-responsibility.
Civil Code §3129. And, a notice of non-responsibility
is ineffective if the owner "caused the work of improvement
to be performed." Civil Code §3094. A tenant
may be treated as an agent of the owner when the tenant
is required by the lease to make improvements. Ott Hardware
Co. v. Yost, 69 Cal.App.2d 593 (1945); Los Banos
Gravel Co. v. Freeman, 58 Cal.App.3d 785 (1976). But
if improvements are optional with the tenant, the notice
of non-responsibility is effective. English v. Olympic
Auditorium, Inc., supra.
Here,
by the terms of the lease, the premises were to be converted
from warehouse use to a property to be used only for telecommunications
purposes. Manufacturing, warehousing or inventory distribution
were prohibited. The parties contemplated that the premises
would be outfitted as part of the tenant's global fiber
optics network. A written supplement to the lease described
"initial alterations" bringing telecommunication
cabling to the building and adding air conditioning and
a back-up generator. The lease required the tenant to obtain
the owner's approval of the plans and specifications and
called for the owner to be paid a fee of $5,000 a month
for its efforts in overseeing construction. The alterations
were of a permanent, not a temporary, nature. The undisputed
evidence showed that the contractor was likely to succeed
on its claim and, therefore, had established the probable
validity of its lien. It is for the trial court to determine
at trial whether the defendant property owner actually was
a participating owner.
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©2003 Thelen Reid Brown Raysman & Steiner LLP
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