LSG Las Tunas v. A & R Corp. CA2/2
B307534
| Cal. Ct. App. | Jul 29, 2021Background
- LSG hired A&R in Aug 2016 to build a mixed-use project for a fixed maximum price; contract required written, signed change orders and allowed LSG to retain 10% of payments until "Final Completion."
- Construction began Feb 2017; project delayed and over budget; parties executed an extension to Oct 15, 2019; LSG terminated A&R on Jan 25, 2020 when project was ~88% complete.
- A&R recorded a mechanic’s lien (originally $3,571,411.88, later amended to $3,124,065.97) breaking the claimed debt into: unpaid invoices (~$999,963), retained funds (~$694,627), and five post-termination unsigned change orders (~$1,876,821).
- LSG moved to reduce/remove the lien, producing payment records and subcontractor releases that cleared most unpaid invoices except $55,744; LSG argued retainage was not due pre-final completion and unsigned change orders were unenforceable.
- The trial court reduced the lien to $55,744, eliminating the retainage and the unsigned change-order amounts; A&R appealed, the appellate court dismissed the appeal for lack of jurisdiction, treated it as a writ petition, and denied relief.
Issues
| Issue | LSG's Argument | A&R's Argument | Held |
|---|---|---|---|
| Appealability / Jurisdiction | Order is interlocutory and not appealable; reviewable by writ | Order is appealable as a mandatory injunction or under CCP §904.1(a)(8) | Appeal dismissed for lack of jurisdiction; court converted appeal to writ and denied it |
| Procedural vehicle (Lambert motion) | Owner may move to reduce lien in pending action; Lambert-type relief is available even if foreclosure suit not yet filed | Lambert limited to facts where contractor already sued to foreclose; motion was procedurally improper | Motion was proper; A&R forfeited its procedural challenge and Lambert applies (cross-complaint foreclosing lien was filed before hearing) |
| Unpaid invoices (first category) | Payment records and releases show only $55,744 remains unpaid | Facts must be construed in lien claimant’s favor; evidentiary hearing required | Trial court did not abuse discretion; LSG’s proof was undisputed, A&R offered no contrary evidence, no hearing required |
| Retainage & unsigned change orders (second & third categories) | Retainage contractually withheld until Final Completion; unsigned change orders are unenforceable per contract | Retainage governed by Civ. Code §8812; unsigned change orders recoverable under §8430 as work following owner breach | Trial court properly excluded retainage (contract controls and court found good-faith dispute); excluded unsigned change orders (contract required signatures; §8430 inapplicable) |
Key Cases Cited
- Connolly Development, Inc. v. Superior Court, 17 Cal.3d 803 (1976) (mechanic’s-lien recording constitutes state action but owners have post-lien remedies and speedy judicial review).
- Lambert v. Superior Court, 228 Cal.App.3d 383 (1991) (owner may move in pending action to challenge a mechanic’s lien — so-called "Lambert" motion).
- Howard S. Wright Constr. Co. v. Superior Court, 106 Cal.App.4th 314 (2003) (standard for probable validity of a mechanic’s lien and review of reductions).
- Cal Sierra Constr., Inc. v. Comerica Bank, 206 Cal.App.4th 841 (2012) (mechanic’s-lien proceedings secure potential debt during pendency and owner remedies).
- Basic Modular Facilities v. Ehsanipour, 70 Cal.App.4th 1480 (1999) (liens may encompass work from contract modifications when modifications are valid).
- United Riggers & Erectors, Inc. v. Coast Iron & Steel Co., 4 Cal.5th 1082 (2018) (mechanic’s-lien statutory framework and rights of claimants).