Beware Recording a Premature Mechanics Lien When Work Has Not “Ceased”

Edward Farrell Cummins & White

Edward J. Farrell

Introduction

A recent ruling from the California Court of Appeal establishes that a mechanics lien is unenforceable when the claimant continues to provide repairs after recording its lien. The case, Precision Framing Systems, Inc. v. Luzuriaga (2019) 39 Cal.App.5th 457, provides vital instructions to contractors for when their scope of work “ceases” under the law and how to preserve their lien rights when project repairs arise.

In Luzuriaga, Precision Framing Systems, Inc. was the framing subcontractor on the construction of a veterinary hospital. Precision’s contract stated that the contract price was “for labor, lumber, trusses, and hardware necessary to complete…the project.” On December 23, 2013, the general contractor found that Precision’s work was complete and fully in compliance with the plans and specifications. The city had also approved Precision’s framing work. At that point, Precision believed it had completed its scope of work. However, Precision never received full payment and, accordingly, recorded its mechanics lien claim on January 2, 2014.

Unbeknownst to Precision, however, the city issued two correction notices relating to the project’s trusses prior to January 2. These were not addressed. Precision first became aware of the correction notices sometime between January 20 and 29, 2014. Afterward, it visited the project site on February 12 or 13, 2014, to participate in the coordination and implementation of the truss repair work. Later, Precision, filed a foreclosure of mechanic lien suit against the property owner, Luzuriaga. Luzuriaga claimed the lien was prematurely recorded and, thus, unenforceable under Civil Code § 8414. The trial court agreed and entered judgment for the defendant.

Appellate Court Holding and Reasoning

The appellate court agreed that Precision’s mechanics lien was invalid. Under Section 8414(a), a lien claimant may not enforce a lien unless the claimant records a claim of lien “after the claimant ceases to provide work…” A mechanics lien claim that is filed prematurely is void and cannot be enforced.

The Court of Appeal addressed the question of whether the time to file a lien claim runs from when repairs are done after other work was already completed. The Court determined that the answer to this question and when a contractor’s work actually “ceases” depends on the contractual scope of work. In Precision’s case, the Court found that truss repairs were within its scope of work because its subcontract called for it to supply the trusses “necessary to complete the project” and the project could not be completed so long as the notices of correction were outstanding. The Court also reasoned that Precision’s contract required it to design the trusses which were not properly completed until after the repairs were made. As a result, the Court concluded that the repair of the trusses was part of Precision’s “work”.

The Take-Away

Contractors can avoid the same fate as Precision if they completely understand their contractual scope of work to comply with Civil Code § 8414. California courts will only determine the date work actually ceases based on the contractual scope and not the contractor’s subjective knowledge or belief as to when its work ended. Repair work can be included in a contractor’s scope either explicitly or, as in Precision’s case, impliedly based on the contract’s wording.

A contractor who is unsure as to when its work actually “ceased” should address its contract provisions or seek legal counsel on how to best preserve its lien rights. Here at Cummins & White, LLP, we specialize in counseling and representing subcontractors and materials suppliers on both private and public works of improvement. As such, we routinely advise construction clients on how to best avoid procedural pitfalls to enforcing liens on a variety of works of improvement.