Delmastro & Eells v. Taco Bell Corp., 228 Ariz. 134

Delmastro & Eells, Inc. filed a mechanic's lien against Taco Bell Corp.'s property (Block 3) within the Riverside Crossing III complex after starting work in January 2008 on the Tutor Time Child Care Center on Block 1.
Taco Bell acquired title to Block 3 and recorded its deed on June 18, 2008, after Delmastro began the project.
Delmastro served three preliminary twenty-day notices (Jan 17, 2008; Jun 24, 2008; Oct 16, 2008) describing labor/materials for Tutor Time at 2190 W. River Road but did not name Taco Bell or Block 3.
Delmastro recorded a lien in January 2009 against property including Block 3 and later amended to foreclose against Block 3 in May 2009.
Taco Bell moved for summary judgment asserting the lien was invalid for defective notices and failure to apportion value; the trial court granted summary judgment and dismissed the foreclosure count and ruled on the § 33-420(A) counterclaim.
The Arizona Court of Appeals affirmed, holding the preliminary notices failed to meet § 33-992.01(C)/(C)(4) sufficiency and thus the lien was invalid, and Delmastro had reason to know of the invalidity under § 33-420(A).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the lien was valid given defective preliminary notices	Delmastro contends notices substantially complied	Taco Bell argues notices were legally defective	Lien invalid; notices insufficient; foreclosure denied
Whether the notices sufficiently described the jobsite to identify Block 3	Descriptions identified Tutor Time at 2190 W. River Road	Descriptions did not identify Block 3 or the broader complex as the lien site	Descriptions insufficient to identify the property; substantial compliance not met
Whether the recording of the lien and lis pendens supports a § 33-420(A) liability finding	Disputes over invalidity should not automatically trigger liability	Owner had no knowledge of the invalidity; no liability under § 33-420(A)	Delmastro had reason to know the lien was invalid; § 33-420(A) summary judgment proper

Westinghouse Elec. Supply Co. v. Western Seed Prod. Corp., 119 Ariz. 377 (App. 1978) (standard for sufficiency of description in preliminary notices (stranger-to-transaction test))
Smith Pipe & Steel Co. v. Mead, 130 Ariz. 150 (Ariz. 1981) (substantial compliance and identification concepts in notices)
Fagerlie v. Markham Contracting Co., 227 Ariz. 367 (App. 2011) (liberal construction of lien statutes; substantial compliance required)
MLM Constr. Co. v. Pace Corp., 172 Ariz. 226 (App. 1992) (liberal construction; mechanism for lien compliance)
Pence v. Glacy, 207 Ariz. 426 (App. 2004) (when lien claimant participates in creating document, 'reason to know' may be fact-specific)
Coventry Homes, Inc. v. Scottscom Partnership, 155 Ariz. 215 (App. 1987) (explains 'reason to know' concept and scienter)
Wyatt v. Wehmueller, 167 Ariz. 281 (1981) (discusses damages and scienter concepts related to liens)
Hatch Cos. Contracting v. Ariz. Bank, 170 Ariz. 553 (App. 1991) (discusses knowledge of the law and liability under § 33-420)
Orme Sch. v. Reeves, 166 Ariz. 301 (1990) (summary judgment standards and entitlement when no genuine dispute)
Williams v. A.J. Bayless Markets, Inc., 13 Ariz. App. 348 (App. 1970) (general appellate standard cited regarding summary judgment)
Diaz v. Phx. Lubrication Serv., Inc., 224 Ariz. 335 (App. 2010) (standard for evaluating factual inferences in record)