Picerne Construction Corp. v. Castellino Villas
199 Cal. Rptr. 3d 257
Cal. Ct. App.2016Background
- Picerne Construction contracted to build an 11‑building apartment complex (Castellino Villas). Construction progressed through mid‑2006; city issued certificates of occupancy between May 3 and July 25, 2006. Owner did not release retained funds.
- Picerne and subcontractors continued work after July 25, 2006 (notably grip tape on stair treads installed Sept. 15, 18, 19, 2006; roofing work continued into Sept. 2006). Owner signed an "Owner’s Acceptance of Site" on Sept. 8, 2006.
- Picerne recorded a mechanic’s lien on Nov. 28, 2006 and filed a foreclosure complaint Dec. 29, 2006 (initially naming Doe defendants). The parties arbitrated related claims; arbitration and later proceedings produced awards, settlements, and a Bankruptcy Court plan incorporating a settlement.
- The trial court (bench) found Picerne’s lien timely, valid, senior to Bank of the West, and fixed a foreclosure judgment (later adjusted by this appeal).
- Castellino and Bank of the West appealed, raising timeliness of the lien recording, judicial estoppel, whether each building was a separate "residential unit," and errors in lien-amount calculation; Bank of the West also argued Picerne’s suit against it was time‑barred.
Issues
| Issue | Plaintiff's Argument (Picerne) | Defendant's Argument (Castellino / Bank) | Held |
|---|---|---|---|
| Timeliness of lien recording under former Civ. Code § 3115 | Lien recorded within 90 days after "completion" (owner acceptance on Sept. 8, 2006), so timely | Recording period began at substantial completion (e.g., city COs July 25, 2006); lien untimely | Court held "completion" means actual completion / owner acceptance; substantial evidence supports Sept. 8, 2006; lien timely recorded |
| Judicial estoppel (contradictory positions in arbitration v. trial) | Picerne may litigate lien timeliness in state court post‑arbitration and bankruptcy settlement | Castellino: Picerne argued earlier completion in arbitration to avoid delay liquidated damages, so should be estopped | Court rejected application of judicial estoppel; no clear, inconsistent positions requiring estoppel |
| Whether each apartment building is a separate "residential unit" under § 3131 (multiple filing windows) | Single work of improvement; one completion governs | Each building is a separate residential unit → separate 90‑day deadlines; many buildings’ liens untimely | Court held the project was a single residential unit for § 3131 purposes (no separate titles or separate notices); single filing window applied |
| Amount of lien and related offsets (principal, setoffs, subcontractor settlements, interest/penalties) | Lien should reflect arbitration principal net of prompt payment penalties, setoffs, settlements; include prejudgment interest and prompt payment penalties appropriately | Castellino argued trial court overstated principal, failed to subtract setoff, should deduct unpaid subcontractor liens and defense costs, and exclude certain interest/penalties | Court adjusted judgment: correct principal = $1,366,338.91; must subtract $115,453.50 setoff and $176,222.10 paid to settling subcontractors; trial court properly included prejudgment interest and 2% prompt‑payment penalties; final modified lien $2,416,855.06 |
| Whether Picerne’s foreclosure suit against Bank of the West was time‑barred under § 3144 for failing to name bank within 90 days | Picerne filed foreclosure within 90 days and used Doe defendants, later substituting Bank when it learned of bank’s interest | Bank: Picerne knew or should have known bank’s interest and thus needed to name bank within 90 days | Court found substantial evidence that Picerne lacked actual knowledge of Bank of the West’s deed of trust; naming as Doe and later substituting satisfied § 3144; suit not time‑barred |
Key Cases Cited
- Moorefield Constr., Inc. v. Intervest–Mortgage Inv. Co., 230 Cal.App.4th 146 (Cal. Ct. App.) (standard of review and statutory interpretation for former § 3115)
- T.O. IX, LLC v. Superior Court, 165 Cal.App.4th 140 (Cal. Ct. App.) (mechanic’s lien statutory purpose and liberal construction)
- Connolly Dev., Inc. v. Superior Court of Merced County, 17 Cal.3d 803 (Cal.) (mechanic’s lien principles; lien attaches to owner’s interests)
- Coast Central Credit Union v. Superior Court, 209 Cal.App.3d 703 (Cal. Ct. App.) (failure to timely record lien precludes enforcement)
- MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., 36 Cal.4th 412 (Cal.) (doctrine and elements of judicial estoppel)
- Union Supply Co. v. Morris, 220 Cal. 331 (Cal.) (completion requires contractually required work to be finished; post‑amendment interpretation)
- Scott, Blake & Wynne v. Summit Ridge Estates, 251 Cal.App.2d 347 (Cal. Ct. App.) (completion = when contractor completed contractual obligations)
- Hammond Lumber Co. v. Yeager, 185 Cal. 355 (Cal.) (owner acceptance and occupancy support completion finding)
- Howard S. Wright Constr. Co. v. BBIC Investors, LLC, 136 Cal.App.4th 228 (Cal. Ct. App.) (interpreting "completes his contract" phrase; not dispositive on "completion" issue)