Breach of Contract & Foreclosure of Mechanics Lien

By October 20, 2011 Commercial Litigation

COURT FINDS MECHANICS LIEN VALID MASONRY SUB-CONTRACTOR AWARDED SERVICE FEES, INTEREST & LEGAL COSTS

Highlights

Based on their expertise in construction law, Cummins & White, LLP, successfully represented the owner of a masonry contractor when the developer and its general contractor failed to remit payment for performed work.

Cummins & White successfully used case law to establish that their client furnished qualified laborers and labor in accordance with the mutually binding contract entered into by the Plaintiff and Defendants, resulting in an award of more than $50,000 in owed payment, as well as interest.

Despite the Plaintiff’s decision to produce the Preliminary Notice in-house, rather than using a professional lien processing company, resulting in the client’s failure to receive a return receipt, Cummins & White was able to couple supplemental evidence with legal precedent to prove the Plaintiff’s case.

Attorney

Case Study

Cummins & White, LLP, successfully represented Harris Building Supply, Inc., doing business as Harris Fence Company (Plaintiff) in litigation brought against property developers, La Jolla Village Development Group and its general contractor H & H Construction, Inc. (Defendants). Harris Fence Company filed several causes of action against the two separate entities, including breach of contract and foreclosure of mechanic’s lien, and demanded more than $50,000 for unpaid construction services, as well as interest. The judge found the mechanics lien to be valid, after Jim Wakefield established conclusively that Harris Fence provided the masonry services, awarding Harris Fence full payment of service fees, plus interest, costs and attorney fees.

Background

In July of 2000, a commercial fencing contractor (Plaintiff) entered into agreement with general contractor H & H Construction, Inc. to serve as the prime masonry sub-contractor on the Village Point project for the La Jolla Village Development Group. The commercial fencing contractor furnished qualified masons and masonry work between July 2000 and November 2000, and provided invoices for payment.

In accordance with Title XV, Chapter 1 (§3082 et seq.) of the California Civil Code, the commercial fencing contractor sent a Preliminary Notice, dated July 24, 2000 to H&H Construction and La Jolla Village by certified mail. The Defendants denied receiving the Notice, and at trial, the fencing contractor could not produce evidence of a return receipt verifying delivery of the Notice.

After several invoices went unpaid, the fencing contractor ceased work on Village Point, recorded a Mechanic’s Lien and subsequently sued La Jolla Village Development Group and its general contractor, H & H Construction, claiming breach of contract and requesting foreclosure of the Mechanic’s Lien. Damages sought totaled more than $50,000.

Legal Strategy

Jim Wakefield of Cummins & White, LLP, created and executed a litigation plan designed to demonstrate that the fencing contractor performed in accordance with the sub-contract agreement between his company and the general contractor. To prove to his client’s case, Mr. Wakefield used the following strategy:

  • Established that the Plaintiff company performed in accordance with its contractual responsibilities and complied with
    its obligations as set forth in Title XV, Chapter 1 (§3082 et seq.) of the California Civil Code.
  • Established that irrespective of the Defendant’s denial of receipt and the Plaintiff’s inability to produce a return receipt, a certified letter is deemed complete when the letter is deposited in the mail, according to Civil Code Section 3097 (f)(3).
  • Established that both defendants were well aware of the work of improvement performed by the Plaintiff from the first day the Plaintiff appeared on the job.
  • Established that there was no evidence to support the Defendant’s counter claims of breach of contract or negligence.

By clearly substantiating these facts and relying on solid legal precedent, Mr.Wakefield was able to prove that the Mechanic’s Lien was valid, and as such, the Plaintiff was entitled to recover the value of work performed for each lineal foot of masonry set by the Plaintiff’s employees. He was further able to prove that the Defendants were not entitled to an offset for work performed by other masonry sub-contractors.

Result/Implication

The judge found in favor of the commercial fencing contractor, holding that his company performed in accordance with its contractual responsibilities, thus validating the Mechanic’s Lien. The Plaintiff was awarded monies for payment of contracted work performed, breach of contract, and interest calculated on that work, as well as suit costs and attorney fees.

The owner of the commercial fencing company was pleased with the verdict. He was particularly impressed with Cummins & White’s ability to compile and successfully use alternate forms of documentation, in conjunction with correlating case law, as proof with which to supplement missing evidence, which was not available as a result of the Plaintiff’s company processing their own records.  “Although we failed to send the Preliminary Notice with a return receipt of delivery, Cummins & White was still able to prove that we provided the services for the project by establishing that the developer and contractor knew we were actually on the job site.”

While pleased with the result of the case, Mr. Wakefield offered, “If our client had processed the preliminary notice using Certified Mail with Return Receipt, or if they had requested “Proof of Receipt” from the USPS within 24 months from the serving of the preliminary notice, the case may have settled early on, saving the client time and significant legal fees.”