FILED
NOT FOR PUBLICATION OCT 21 2010
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
WEST CHARLESTON LOFTS I, LLC, et Nos. 09-16313 & 09-16887
al.,
D.C. No. 2:09-CV-00392-PMP-
Plaintiffs – Third Party LRL
Defendants – Appellees,
v.
MEMORANDUM *
R&O CONSTRUCTION COMPANY,
Defendant – Appellant,
v.
CHARLES G. HALL, et al.,
Third Party Defendants
– Appellees.
Appeal from the United States District Court
for the District of Nevada
Philip M. Pro, District Judge, Presiding
Argued and Submitted October 8, 2010
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: BEEZER and GRABER, Circuit Judges, and CARNEY,** District Judge.
Appellant R&O Construction Company (“R&O”) appeals two orders by the
district court. The first granted Plaintiff-Appellees West Charleston Lofts I, LLC
and WCL Commercial, LLC’s (“WCL”) motion to expunge mechanics’ liens filed
by R&O. The second granted WCL’s motion to dismiss R&O’s third party
complaint and counterclaims to foreclose on those mechanics’ liens and obtain
recovery for unjust enrichment. WCL hired R&O to build a 40-unit condominium
project in Las Vegas, Nevada. The district court’s orders were premised on its
holding that R&O’s mechanics’ liens were premature and frivolous pursuant to
Nevada Revised Statutes § 108.2275 because the final payment of $682,595
remaining under the parties’ contract was not payable until several major punch list
items were completed or fixed. We review de novo the district court’s construction
of the relevant statutory provisions of Nevada law as well as its grant of WCL’s
motion to dismiss. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). We
reverse, reinstate R&O’s liens, and remand for further proceedings.
The district court erred in concluding that R&O had no statutory right to the
final payment and that the parties’ contract was controlling on the issue. The
**
The Honorable Cormac J. Carney, United States District Judge for the
Central District of California, sitting by designation.
2
Nevada Legislature enacted the Prompt Payment Act to protect contractors from
the harm that they suffer when owners unfairly withhold payment, including final
payment on projects that are substantially complete and available for use. Nevada
Revised Statutes § 624.620(1)(b)(2), which is part of the Prompt Payment Act,
specifically provides that “any money remaining unpaid . . . is payable to the prime
contractor within 30 days after” the owner receives “[a] certificate of occupancy
issued by the appropriate building inspector or other authority.” Under
§ 624.620(2)-(3), an owner can withhold the final payment for work or labor that
has not been performed or that is not materially in compliance with the parties’
agreement only if the owner provides appropriate notice before the final payment
is due explaining in reasonable detail the reason for withholding. Appropriate
notice of withholding from the owner pursuant to § 624.620(3) triggers
§ 624.620(4), which gives the contractor the opportunity to correct any condition
or reason for withholding and provide a notice of correction to the owner that
renews the owner’s obligation to make prompt payment. Most significantly, any
“condition, stipulation or provision in an agreement which” (1) limits or waives the
contractor’s rights or (2) relieves the owner of its statutory obligations “is against
public policy and is void and unenforceable.” Nev. Rev. Stat. §
624.622(2). The Prompt Payment Act’s requirement that the final payment be
3
made to the contractor supersedes any provision in the parties’ agreement
providing for payment on a later date. To construe the detailed provisions of the
Prompt Payment Act otherwise would render those provisions meaningless and
contravene the purpose of the legislation.
It was undisputed before the district court that a Certificate of Occupancy
was issued for the project, but that WCL never made the final payment under the
parties’ agreement. WCL gave no notice of withholding. Consequently, R&O was
entitled to file mechanics’ liens on the project to secure the outstanding amount
due under the contract. Because the district court expunged R&O’s mechanics’
liens and dismissed R&O’s third party complaint and counterclaims based on its
erroneous construction of § 624.620, we must reverse the district court’s orders,
reinstate the mechanics’ liens, and remand for further proceedings. In light of our
disposition, we need not address R&O’s other grounds for appeal.
REVERSED; MECHANICS’ LIENS REINSTATED; AND REMANDED.
4