206 Cal. App. 4th 131
Cal. Ct. App.2012Background
- Shady Tree Farms delivered 959 trees to Granite Park between Aug 12 and Nov 10, 2008 for about $3.2 million; 47 trees planted, others stored on site.
- Trees died; Granite Park entities failed to pay, leaving Shady Tree unpaid except a $25,000 deposit.
- Shady Tree recorded a materialman’s lien against JEG, Zone, and Foundation on Feb 3, 2009 for $1,959,244.50 plus interest.
- Omni Financial held an $18 million construction loan to Zone, secured by a deed of trust; Omni foreclosed in June 2009.
- Omni and City of Fresno moved to remove Shady Tree’s lien and expunge lis pendens; trial court granted the removal and later judgment on the pleadings for Omni.
- On appeal, Shady Tree contends it was not required to give a 20-day preliminary notice; the issue is whether failure to serve notice prevents foreclosure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 20-day notice was required under §3097 before foreclosing | Shady Tree: not required due to direct contract with owner | Omni: notice required under §3097(a) or (b) regardless of direct contract | Shady Tree must give 20-day notice; not exempt; judgment upheld |
Key Cases Cited
- Kim v. JF Enterprises, 42 Cal.App.4th 849 (Cal. App. 1996) (mechanic’s lien requires notice and filing within statutory limits)
- Kodiak Industries, Inc. v. Ellis, 185 Cal.App.3d 75 (Cal. App. 1986) (section 3097(b) interpreted with ‘the contractor’ as general/prime contractor)
- Westfour Corp. v. California First Bank, 3 Cal.App.4th 1554 (Cal. App. 1992) (interpreting §3097(b) where ‘contractor’ means general contractor)
- Connolly Development, Inc. v. Superior Court, 17 Cal.3d 803 (Cal. 1976) (mechanic’s lien laws are remedial and construed to protect laborers/materialmen)
- Harold L. James, Inc. v. Five Points Ranch, Inc., 158 Cal.App.3d 1 (Cal. App. 1984) (liberal construction of mechanics’ lien acts but not to defeat notice requirements)