Filed 7/29/21 LSG Las Tunas v. A & R Corp. CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
LSG LAS TUNAS, LP, B307534
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No.
v. 19STCV45587)
A & R CORPORATION, INC.,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Barbara A. Meiers, Judge. Appeal dismissed,
and petition for a writ of mandate denied.
Moon & Dorsett and Dana M. Dorsett for Defendant and
Appellant
The Jamison Law Firm, Guy E. Jamison, and Chelsea M.
Clayton for Plaintiff and Respondent.
******
A & R Corporation, Inc. (A&R) recorded a mechanic’s lien
in the amount of $3,571,411.88 (which it later amended to
$3,124,065.97) against a parcel of property on which it worked as
a general contractor. In response to a motion by the property’s
owner to eliminate or reduce the mechanic’s lien, the trial court
reduced the lien to $55,744. A&R appeals. We conclude that we
do not have jurisdiction over this appeal. Construing the appeal
as a petition for a writ of mandate, we conclude that the petition
lacks merit and deny it.
FACTS AND PROCEDURAL BACKGROUND
I. Facts
A. Construction Agreement
In August 2016, LSG Las Tunas, LP (LSG) hired A&R to
serve as its general contractor for a mixed residential and
commercial complex LSG wanted to build on a parcel of property
it owned in San Gabriel, California (the property).
On August 8, 2016, LSG and A&R executed a written
General Contractor Agreement (Agreement). In the Agreement,
A&R promised to build a complex with commercial space on the
ground floor and 35 condominium units on the upper floors for no
more than $12,948,500 and to have the complex “substantially
completed” within 485 days from the start of construction (the
project). The Agreement contemplated that the parties could
alter its terms with “change orders,” but required any such orders
to be in writing and signed by LSG or its agent. The Agreement
also provided that LSG was to retain 10 percent of each payment
to A&R or its subcontractors, and that LSG was required to
2
release those retained funds only upon “Final Completion” of the
project, where “Final Completion” was defined as when “all of the
Work has been finally completed and accepted by” LSG.
A&R began construction on February 20, 2017, so the
initial completion date was 485 days later—that is, in May 2018.
B. Problems and termination of Agreement
Although the parties hotly dispute who is to blame, it is
undisputed that the project ended up with cost overruns and
delays.
On May 30, 2019, the parties entered into a written
amendment to the Agreement, which granted A&R an extension
until October 15, 2019, to complete the project.
After A&R did not complete the project by the extended
deadline, LSG terminated the Agreement on January 25, 2020.
It is undisputed that, at that time, at most 88 percent of the
project was completed.
Two or three weeks after termination, A&R purported to
execute five “change orders” that obligated LSG to pay an
additional $1,876,821.46. None of these change orders was
signed by LSG or by any agent of LSG.
II. Procedural Background
A. LSG’s Lawsuit
On December 19, 2019 (which was after A&R failed to meet
the extended deadline but before LSG terminated A&R), LSG
sued A&R. In the operative first amended complaint filed on
April 10, 2020, LSG sued A&R for (1) breach of contract, (2)
negligence, (3) breach of implied warranty, (4) fraud by deceit
3
and omission, and (5) disgorgement of payments made to an
unlicensed subcontractor.1
B. A&R’s Mechanic’s Lien
On April 23, 2020, A&R recorded a mechanic’s lien against
the property in the amount of $3,571,411.88 for “[g]eneral
contracting services, construct apartments, grading, concrete,
mechanical, electrical, & drywall finishes.”
In a May 15, 2020 email, A&R explained that the debts
comprising the $3,571,411.88 fall into three categories. The first
category consists of money that LSG owed to A&R or its
subcontractors on four different invoices, and which totaled
$999,963.16. The second category consists of money that LSG
retained from its payments to A&R pending final completion, and
which totaled $694,627.26. The third category consists of money
due under the five unsigned change orders dated after the
Agreement’s termination, and which totaled $1,876,821.46.2
C. LSG’s Motion to Reduce or Remove the
Mechanic’s Lien
On May 26, 2020, LSG filed a motion to remove or reduce
A&R’s mechanic’s lien. In its motion, LSG argued that (1) A&R’s
lien was filed prematurely, (2) LSG had already paid the bulk of
1 LSG also sued one of A&R’s subcontractors for
disgorgement, A&R’s attorney for legal malpractice, and an
insurance company for indemnity. However, these claims are not
before us.
2 In later filings, A&R, for the first time, alleged a fourth
category of debts totaling $491,316, but that amount was not
included in the original breakdown and A&R does not defend it
on appeal. We therefore consider it abandoned.
4
the invoices owed to A&R and its subcontractors (the first
category), and (3) A&R was legally precluded from recording a
lien that encompassed retention payments and amounts due
under unsigned change orders (the second and third categories).
In support of its second argument, LSG attached proof of
payment as well as releases from liability from subcontractors for
all but $55,744 of the $999,963.16 allegedly owed in the first
category.
On June 11, 2020, A&R filed its opposition to LSG’s motion.
A month later, on July 10, 2020, A&R filed a partial release of the
mechanic’s lien of $447,345.91 from the first category, which
reduced the total amount of the lien to $3,214,065.97.
On July 9, 2020, LSG filed a reply brief in support of its
motion.
D. A&R’s Cross-Complaint
On July 14, 2020, A&R filed a cross-complaint against LSG
and others. Among other claims,3 A&R sued LSG to foreclose on
its mechanic’s lien.
E. Trial Court’s Order Partially Granting LSG’s
Motion to Reduce the Mechanic’s Lien
On July 27, 2020, the trial court held a hearing on LSG’s
motion. Although the court had previously indicated the hearing
would encompass an evidentiary hearing, the court upon “further
review[]” concluded that no additional evidence was “needed” to
decide the motion. The court elected not to decide whether A&R’s
3 The nine other claims A&R alleges are for (1) breach of
contract, (2) breach of the implied covenant of good faith and fair
dealing, (3) negligence, (4) fraud, (5) negligent misrepresentation,
(6) intentional interference with contractual relations, (7)
negligent interference with a prospective economic advantage, (8)
indemnity, and (9) contribution.
5
lien was prematurely recorded, but ruled it appropriate to reduce
the amount of the lien to the amount of money still owed under
the invoices (the first category)—$55,774. The court reasoned
that proof of payments and releases showed that most of the
alleged unpaid invoices had been paid, that A&R’s lien could not
include money properly retained by LSG because there “clearly”
was a “good faith dispute” over A&R’s final completion of the
project, and that A&R’s lien could not include the money owed
under the change orders because they were unsigned by LSG and
hence inoperative under the Agreement’s plain terms.
The trial court entered its order on September 1, 2020.
F. A&R’s Motion for Reconsideration
In a motion for reconsideration, A&R, for the first time,
argued that LSG’s motion to reduce the lien was procedurally
improper. Following receipt of an opposition from LSG, the trial
court denied the motion as (1) being procedurally improper itself,
and (2) without merit—finding LSG’s motion to be procedurally
appropriate under Lambert v. Superior Court (1991) 228
Cal.App.3d 383 (Lambert).
G. A&R’s appeal
A&R filed this timely appeal.
H. A&R’s writ petition
While this appeal was pending, A&R filed a petition for a
writ of mandate raising the same arguments set forth in this
appeal. We denied the writ without an opinion on October 29,
2020.
DISCUSSION
In this appeal, A&R argues that the trial court erred in
reducing its mechanic’s lien because (1) LSG’s motion to remove
or reduce the lien was procedurally inappropriate, and (2) the
6
court lacked any basis for reducing the amount of the lien. LSG
counters that we lack jurisdiction to entertain A&R’s appeal.
I. Appellate Jurisdiction
As a general rule, we may only entertain appeals from final
judgments. (Code Civ. Proc., § 904.1, subd. (a).) This rule is
designed “‘to prevent piecemeal dispositions and costly multiple
appeals .’” (Howeth v. Coffelt (2017) 18 Cal.App.5th 126, 133-
134.) One corollary of this “one final judgment” rule is that
“‘“interlocutory or interim orders are not appealable.”’” (Id. at p.
133.) An order is interlocutory—and hence generally not
appealable—if, notwithstanding the order, “issue[s are] left for
future consideration” by the trial court. (Griset v. Fair Political
Practices Com. (2001) 25 Cal.4th 688, 698.) Here, the validity
and amount of the debt that A&R claims LSG owes are still “left
for future consideration.” The trial court’s order merely reduced
the amount of A&R’s mechanic’s lien that operates solely to
secure potential debt during the pendency of the action to
establish that debt. (Cal Sierra Construction, Inc. v. Comerica
Bank (2012) 206 Cal.App.4th 841, 850 (Cal Sierra).) Indeed, the
trial court’s order did not even finally adjudicate the lien, as the
court left the lien partially intact rather than removing it
entirely; thus, there has been no “judgment” determining that “no
lien exists” and “remov[ing] the lien form the public records.”
(Howard S. Wright Construction Co. v. Superior Court (2003) 106
Cal.App.4th 314, 318 (Howard S. Wright Construction).)
A&R responds with three grounds it asserts provides
appellate jurisdiction to review the interlocutory order reducing
the amount of its lien. First, it argues that because the trial
court’s order reducing the amount of the mechanic’s lien also
directs A&R to record that order in the public records, the order
7
constitutes a mandatory injunction and is therefore appealable
under Code of Civil Procedure section 904.1, subdivision (a)(6).
We reject this argument because it equates ministerial acts with
mandatory injunctions; if accepted, nearly every interlocutory
order would be appealable (since most court orders require a
party to give notice or undertake some other ministerial act) and
our Legislature’s careful delineation of appellate jurisdiction
would be thrown out the proverbial window. Second, A&R argues
that the trial court’s order is “an . . . order . . . entered in an
action to redeem real . . . property from . . . a lien thereon,
determining the right to redeem and directing an accounting” and
is therefore appealable under Code of Civil Procedure section
904.1, subdivision (a)(8). (Italics added.) Although the order
reducing the amount of the mechanic’s lien could be viewed as an
order entered in an action to redeem real property from a lien
thereon, that action was not to “determin[e] the right to redeem”
and to “direct[] an accounting,” and thus falls outside the
language of this statutory ground for appellate jurisdiction.
Third, A&R argues that Howard S. Wright Construction, supra,
106 Cal.App.4th at p. 318, held that “the grant of a motion to
remove a mechanic’s lien” is effectively “a final[] appealable
judgment.” That is true, but as noted above, the trial court’s
order in this case just reduced the mechanic’s lien; it did not
remove it entirely.
We need not linger on this question of appellate
jurisdiction, because we retain the discretion to construe A&R’s
appeal as a petition for a writ of mandate (Olson v. Cory (1983)
8
35 Cal.3d 390, 400-401), and elect to exercise that discretion in
this case.4
II. The Law of Mechanic’s Liens, Generally
By mandate of the California Constitution and by statute,
“contractors, laborers, and suppliers” have the right to record a
so-called “mechanic’s lien” against any property “upon which they
have bestowed labor or furnished material for the value of such
labor done and material furnished,” at least for “private works of
improvement” like the project in this case. (Cal. Const., art. XIV,
§ 3; Civ. Code, § 8000 et seq.; United Riggers & Erectors, Inc. v.
Coast Iron & Steel Co. (2018) 4 Cal.5th 1082, 1092; Connolly
Development, Inc. v. Superior Court (1976) 17 Cal.3d 803, 826
(Connolly); RGC Gaslamp, LLC v. Ehmcke Sheet Metal Co., Inc.
(2020) 56 Cal.App.5th 413, 422 (RGC Gaslamp); Basic Modular
Facilities v. Ehsanipour (1999) 70 Cal.App.4th 1480, 1483-1484
(Basic Modular).)5
A general contractor may record a mechanic’s lien against
property for which it is overseeing construction as long as it (1)
gives notice to the property’s owner prior to recording the lien (§§
8200, subds. (a)(1) & (c), 8410, 8400, subd. (a)), and (2) records
the lien against the property (§ 8416). Once the lien is recorded,
the lien encumbers title to the property and has priority over
subsequently recorded instruments. (Tracy Price Associates v.
4 We acknowledge that this court has already rejected a writ
from A&R in this case which presented the same arguments
asserted here. However, as that writ was summarily denied, we
find it appropriate to issue this opinion and explicitly address the
merits of A&R’s arguments.
5 All further statutory references are to the Civil Code unless
otherwise indicated.
9
Hebard (1968) 266 Cal.App.2d 778, 787; RGC Gaslamp, supra, 56
Cal.App.5th at p. 422.)
In Connolly, supra, 17 Cal.3d 803, our Supreme Court held
that a mechanic’s lien constitutes a taking of the owner’s
property through state action (id. at pp. 811, 815), but held that a
contractor’s right to record such a lien—even without any
prerecording judicial review of the lien’s validity—did not offend
procedural due process because there existed “a variety of
measures [or mechanisms]” by which an owner could obtain
provisional relief from a mechanic’s lien or “speedy” judicial
review of such a lien, either before or immediately after its
recording. (Id. at p. 807; see also § 8480, subd. (b) [noting that
statutory method for seeking to release a mechanic’s lien is not
exclusive, even when that method is not followed by a timely
action to foreclose on the lien].)
Connolly enumerated a few of those postlien mechanisms,
such as (1) the owner’s statutory right to seek release of the
mechanic’s lien upon posting a bond in the amount of 125 percent
of the lien (Connolly, supra, 17 Cal.3d at p. 808; § 8424), and (2)
the owner’s right to file an action for declaratory or injunctive
relief challenging the mechanic’s lien, and then to seek more
immediate relief within that action by moving for a preliminary
injunction (Connolly, at pp. 822-823).
Lambert, supra, 228 Cal.App.3d 383, enumerated an
additional postlien mechanism—namely, that the owner may file
a motion in the contractor’s pending action to foreclose on a
mechanic’s lien. (Id. at pp. 386-387.) Lambert noted that
Connolly had not listed this as a possible “speedy,” postlien
mechanism for obtaining judicial review of a mechanic’s lien, but
held that Connolly’s list of mechanisms was meant to be
10
illustrative—not exhaustive. (Id. at p. 387.) Subsequent
decisions have allowed so-called “Lambert motions” by owners.
(E.g., RGC Gaslamp, supra, 56 Cal.App.5th at p. 423, fn. 8; cf.
Cal Sierra, supra, 206 Cal.App.4th at p. 846 [lenders may not file
a Lambert motion].)
III. Merits
A. Procedural vehicle
A&R argues that the trial court erred in entertaining LSG’s
motion to reduce its mechanic’s lien because, in A&R’s view,
Lambert authorizes a property owner to file such a motion only
when the facts are identical to those in Lambert—that is, when
the contractor has already filed an action to foreclose on the lien.
Because the viability of procedural vehicles for judicial review of
mechanic’s liens presents a question of law, our review is de novo.
(Kaanaana v. Barrett Bus. Servs., Inc. (2021) 11 Cal.5th 158,
165.)
We conclude there was nothing wrong with LSG’s motion
for three reasons.
First, A&R has forfeited its right to challenge the
procedural propriety of LSG’s motion by waiting until its motion
for reconsideration to object on this ground and further failing to
argue on appeal that the trial court erred in denying LSG’s
motion for reconsideration. (See Code Civ. Proc., § 1008, subd.
(g).) Up until its motion for reconsideration, in its papers and at
the hearing, A&R treated LSG’s motion as procedurally
appropriate under Lambert and instead argued why LSG was not
entitled to relief under Lambert.
Second, the facts of this case do mirror those in Lambert.
Although there was no action to foreclose upon the mechanic’s
lien pending at the time LSG filed its motion, A&R filed its cross-
11
complaint alleging a foreclosure claim before the trial court heard
LSG’s motion. As a result, there was a pending action by a
contractor to foreclose upon the lien at the time the trial court
considered and granted LSG’s motion. Lambert is on all fours.
Lastly, we reject A&R’s contention that Lambert should be
limited to its facts. Connolly held that California’s expedited
mechanic’s lien procedures do not offend the procedural due
process rights of property owners because owners are able to
obtain speedy pre- or postlien, judicial review of those liens.
(Connolly, supra, 17 Cal.3d at pp. 821-828.) Connolly articulated
two of the available mechanisms, and Lambert articulated a
third. Connolly and Lambert nowhere state that the mechanisms
they identify are the sole mechanisms. Nor would they, because
limiting the mechanisms by which owners can obtain speedy,
postlien judicial review of a contractor’s mechanic’s lien would
make postlien review less available and thus make it more likely
that California’s procedures violate the owner’s due process
rights. More specifically, LSG’s resort to a Lambert-type motion
in this case makes sense. At the time LSG filed its initial
complaint in December 2019, A&R had not yet filed its
mechanic’s lien. When A&R did so in April 2020, LSG availed
itself of a logical mechanism for obtaining judicial review of that
lien—namely, filing a motion in LSG’s already pending case.
A&R seems to suggest that LSG should have either (1) filed a
second lawsuit for declaratory and injunctive relief (which would
inevitably be consolidated with this case), as suggested in
Connolly, or (2) waited for A&R to file a claim to foreclose on the
lien, as occurred in Lambert. Because LSG won the “race to the
courthouse,” A&R argues, LSG must be forced to wait even
longer. But A&R’s suggestions would end up delaying judicial
12
review of the lien, which is wholly at odds with the rationale of
Connolly.
B. Consideration of Lambert motion
When a property owner files a motion to eliminate or
reduce a mechanic’s lien, the contractor bears the burden of
establishing the “probable validity” of the propriety and amount
of its lien by a preponderance of the evidence. (Lambert, supra,
228 Cal.App.3d at p. 387 [adopting probable validity standard];
Cal Sierra, supra, 206 Cal.App.4th at p. 850 [same]; accord,
Connolly, supra, 17 Cal.3d at p. 822 [noting mechanisms for
“obtain[ing] a speedy hearing on the probable validity of the
lien”]; Basic Modular, supra, 70 Cal.App.4th at p. 1485 [“[t]he
lien claimant has the burden of establishing the validity of the
lien”]; Howard S. Wright Construction, supra, 106 Cal.App.4th at
p. 319 [same].) This standard requires the contractor to prove a
‘“prima facie case”’ by establishing the ‘“probable outcome of the
litigation”’ in its favor. (Howard S. Wright Construction, at pp.
319-320.) We review a trial court’s determination of the probable
validity of a mechanic’s lien for an abuse of discretion, reviewing
subsidiary factual findings for substantial evidence and
subsidiary legal rulings—such as the meaning of statutes—de
novo. (Id. at p. 320; Basic Modular, at p. 1485; Cal Sierra, at p.
850; Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244,
1250.)
1. Unpaid invoices to A&R and its subcontractors
(the first category)
The trial court did not abuse its discretion in reducing the
portion of the lien designed to secure payment of unpaid invoices
from $999,963.16 to $55,744 because LSG provided proof of
payment and corresponding releases from liability that pertained
13
to all but $55,744 on those invoices. Indeed, the fact of payment
is undisputed because all that A&R offered in response was its
criticism that LSG had not provided A&R with sufficient
paperwork to verify the payments. Critically, A&R did not offer
any evidence to suggest that LSG had not, in fact, paid the
amounts reflected in the checks and releases. Because the
undisputed facts support the trial court’s reduction of the lien
amount for the first category, the court’s ruling regarding the
first category was supported by substantial evidence and was not
an abuse of discretion.
A&R responds that the trial court’s reduction is defective
because (1) the court erroneously construed the facts in the light
most favorable to LSG, when the law requires that the facts be
construed in the light most favorable to a mechanic’s lien
claimant (citing Connolly, supra, 17 Cal.3d at pp. 826-827;
Schmitt v. Tri Counties Bank (1999) 70 Cal.App.4th 1234, 1242;
and Solit v. Tokai Bank (1999) 68 Cal.App.4th 1435, 1442); and
(2) the court erroneously denied A&R an evidentiary hearing.
A&R’s arguments lack merit. To begin, the court did not
construe the facts in the light most favorable to LSG; instead, it
relied on evidence that LSG presented regarding payment of the
invoices and A&R’s failure to refute LSG’s evidence with contrary
evidence. Although there were several facts in dispute between
the parties, the payments made to satisfy the invoices cited as
the basis for the mechanic’s lien was not one of those facts in
dispute. Further, the cases A&R cites all require statutes to be
construed in favor of mechanic’s lien claimants—not the facts.
The court also did not err in denying A&R an evidentiary
hearing. An evidentiary hearing is only required upon a showing
of good cause. (Lambert, supra, 228 Cal.App.3d at p. 387.)
14
Because the court applied the law to the undisputed facts before
it, and because A&R made no proffer (to the trial court or on
appeal) as to what evidence it would have adduced at an
evidentiary hearing to dispute the facts presented by LSG, an
evidentiary hearing would have served no purpose.
2. Retention payments (the second category)
The trial court did not abuse its discretion in eliminating
the $694,627.26 portion of A&R’s lien representing the aggregate
total of the 10% of each invoice amount that LSG retained
because it is undisputed that (1) the Agreement entitled LSG to
retain those amounts—and hence they were not due to A&R—
until the project was “Finally Complet[ed]” and accepted as such
by LSG, and (2) the project was, at best, 88 percent complete and
had most certainly not been accepted by LSG.
A&R’s sole response is that section 8812 permits a property
owner to retain funds from a “direct contractor” only “[i]f there is
a good faith dispute between the owner and direct contractor as
to a retention payment due” (§ 8812, subds. (a) & (c)), and the
trial court here made no finding of a “good faith dispute” between
LSG and A&R. We reject this argument for two reasons. First,
LSG has retained payments due pursuant to the Agreement, not
section 8812. A&R has not cited any authority for the proposition
that section 8812 displaces—rather than merely supplements—
contractual provisions defining the prerequisites for when an
owner must release retained funds to a contractor.
Second, even if we viewed section 8812 as controlling, the trial
court expressly found that there “clearly” was a “good faith
dispute” over A&R’s final completion of the project.
15
3. Unsigned change orders (the third category)
The trial court did not abuse its discretion in eliminating
the $1,876,821.46 portion of A&R’s lien reflecting the money
owed on five posttermination change orders because it was
undisputed that (1) the Agreement required all change orders to
be signed by LSG or its agent, and (2) none of the change orders
at issue were signed by LSG or its agent.
A&R responds that it is still entitled to assert a lien over
the five unsigned, posttermination change orders by virtue of
section 8430, which in pertinent part provides that a lien
claimant may “includ[e] in a claim of lien work performed . . . as a
result of . . . breach of the contract” between the owner and
contractor. (§ 8430, subd. (c), italics added.) In support of this
argument, A&R cites Basic Modular, supra, 70 Cal.App.4th at p.
1484. Based on this authority, A&R argues that it is entitled to
include the debt reflected in the unsigned change orders because
those orders followed LSG’s breach of the Agreement by
terminating A&R. A&R is wrong for two reasons. First, section
8430 by its plain terms does not apply. Section 8430 only applies
to work performed as a result of a breach of contract; the breach
of contract A&R alleges is its termination; and A&R did not
perform any work as a result of its termination because its work
on the project stopped the moment it was terminated. Thus, the
posttermination change orders fall outside of section 8430’s
ambit. Second, the absence of LSG’s signature on the change
orders means that, under the terms of the Agreement, those
orders are simply nullities. A&R points to Basic Modular as
proof that a lien can be asserted to collect on work performed
pursuant to the oral modification of a contract. (Basic Modular,
at p. 1485 [so noting].) But Basic Modular accepted the oral
16
modification in that case as valid; here, the modification alleged
to be effected by the five unsigned change orders in this case is
invalid because those orders do not comply with the Agreement’s
requirements for a valid modification. In sum, section 8430 does
not empower us to rewrite the parties’ contract.6
DISPOSITION
The appeal is dismissed, and the petition for a writ of
mandate is denied. LSG is entitled to its costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
______________________, J.
HOFFSTADT
We concur:
_________________________, Acting P.J.
ASHMANN-GERST
_________________________, J.
CHAVEZ
6 Because we affirm the trial court’s ruling on this basis, we
have no occasion to decide whether the court’s ruling is also
correct because the unsigned change orders sought to collect
“delay damages” that may not be included in a mechanic’s lien.
17