Interiors by K.C. v. Wells Fargo Bank



























Filed 2/27/13 Interiors by K.C. v. Wells Fargo Bank CA4/2













NOT TO BE
PUBLISHED IN OFFICIAL REPORTS



California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.







IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA>



FOURTH
APPELLATE DISTRICT



DIVISION TWO






>

INTERIORS BY K.C., INC., Plaintiff and Appellant, v. WELLS FARGO BANK, N.A., Defendant and Respondent.

E054702 (Super.Ct.No. RIC517931) OPINION

APPEAL from the Superior
Court
of
Riverside
County. Paulette
Durand-Barkley, Temporary Judge.
(Pursuant to Cal.
Const., art. VI, § 21.) Reversed.

Robert S. Lewin for Plaintiff and
Appellant.

Pite Duncan, Diane E. Bond, and Laurel
I. Handley for Defendant and Respondent.

This action was filed to foreclose on a
mechanic’s lien. On March 22, 2011,
the trial court sustained the demurrer of defendant and respondent Wells Fargo
Bank, N.A. to plaintiff’s alleged second cause of action without leave to
amend. Judgment was filed and entered on
July 8, 2011. Plaintiff and appellant Interiors by K.C.,
Inc., filed its notice of appeal on September 30, 2011.

I.

STANDARD OF REVIEW

A demurrer is used to test the
sufficiency of the factual allegations of the complaint to state a cause of
action. (Code Civ. Proc., § 430.10,
subd. (e).) The facts pled are
assumed to be true and the only issue is whether they are legally sufficient to
state a cause of action. “In reviewing
the sufficiency of a complaint against a general demurrer, we are guided by
long-settled rules. ‘We treat the demurrer as admitting all
material facts properly pleaded, but not contentions, deductions or conclusions
of fact or law. [Citation.] We also consider matters which may be
judicially noticed.’ [Citation.] Further, we give the complaint a reasonable
interpretation, reading it as a whole and its parts in their context. [Citation.]
When a demurrer is sustained, we determine whether the complaint states
facts sufficient to constitute a cause of action. [Citation.]
And when it is sustained without leave to amend, we decide whether there
is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its
discretion and we reverse; if not, there has been no abuse of discretion and we
affirm. [Citations.] The burden of proving such reasonable
possibility is squarely on the plaintiff.
[Citation.]” (>Blank v. Kirwan (1985) 39 Cal.3d 311,
318.)

II

ALLEGATIONS OF THE COMPLAINT

Plaintiff’s complaint was filed on January 23, 2009. The first and third causes of action are
against Thomas M. Curry for breach of
contract and common counts.

This case concerns only the second
alleged cause of action to foreclose a mechanic’s lien, which plaintiff filed
against the property on October
27, 2008.

The complaint alleges that plaintiff
entered into a contract with Curry to provide improvements on Curry’s home in
Temecula. The contract is not attached
to the complaint, but the complaint alleges that the contract “provided for
interior improvements, floor coverings, plumbing, tiles, lighting and cabinetry
related to a residence and separate garage, pursuant to certain plans and
specifications for a total contract price, after revisions and additions, of
$200,000.” The complaint further alleges
that Curry breached the agreement by failing to pay the balance due of $34,292.


The second cause of action alleges
that plaintiff recorded a mechanic’s lien for $34,292, plus interest and costs,
on October 27, 2008. The plaintiff seeks an order allowing
plaintiff to foreclose on that mechanic’s lien.

Plaintiff also alleges that
defendant and KeyBank N.A. are banks that have security interests in the
property and that those security interests are junior to plaintiff’s mechanic’s
lien. Plaintiff requests a lien priority
date based on the date of commencement of the project and seeks to foreclose on
its mechanic’s lien.

III

THE DEMURRER

Defendant filed its demurrer to the
complaint on February
4, 2011.
The demurrer alleges that the complaint fails to state a cause of
action.

The accompanying memorandum of
points and authorities argues that the mechanic’s lien is invalid because it is
not based on work that constitutes a permanent improvement to the real
property.

Defendant also requested the court to take
judicial notice of the recorded mechanic’s lien pursuant to Evidence Code
sections 452 and 453. Although not shown
in the minute order, the trial court apparently did so.

Defendant relies on the description of work
performed in the recorded mechanic’s lien as the basis for its demurrer. The printed portion of the form states that
the amount stated in the form ($34,292) is due for “the following labor,
services, and/or materials furnished by claimant.” Following that phrase is the handwritten
insertion: “interior furnishings,
accessories, freight [and] window treatments.”

Based on the handwritten portion,
defendant argued that plaintiff was attempting to assert a mechanic’s lien for
an improper purpose because the items stated were not a permanent and valuable
improvement to the property.

After hearing the demurrer on March 22, 2011,
the trial court issued its order sustaining the demurrer without leave to
amend. Plaintiff appeals.

IV

PLAINTIFF’S ARGUMENT ON APPEAL

To demonstrate that the trial court
erred, plaintiff makes three arguments:
(1) the lien is valid because the statement in the claim of lien
meets the requirements of Civil Codehref="#_ftn1" name="_ftnref1" title="">^[1] section 3084, subdivision (a)(3)href="#_ftn2" name="_ftnref2" title="">^[2];
(2) even if the statement in the lien is inadequate, the allegations of
the work done in the complaint control over the statement of work done in the
recorded lien; and (3) an error in the recorded lien in the description of work
performed does not invalidate the mechanic’s lien.

Turning to the first argument,
section 3084, subdivision (a)(3), provides:
“(a) ‘Claim of lien’ or ‘mechanic’s lien’ means a written
statement, signed and verified by the claimant or by the claimant’s agent,
containing all of the following:
[¶] . . . [¶]
(3) A general statement of the kind of labor, services, equipment,
or materials furnished by the claimant.”

Plaintiff contends that the “general
statement” requirement is liberally construed, and that a mechanic’s lien only
needs to contain a statement that materials were furnished to the
property. Plaintiff cites >Johnson v. Smith (1929) 97 Cal.App.
752. In that case, the “general
statement” requirement was construed under prior statutes. The court found that, “[i]f it be conceded
that the claim of lien for ‘materials furnished’ was defective in that it
contained no specification of the ‘kind’ of materials . . . it is
clear that the defect is not of vital importance” because there was no intent
to defraud and no innocent third party suffered because of the error. (Id.
at pp. 753-754.)

The
comparable current statute is section 8416.
It is followed by new section 8422.
Section 8422 is set out in full below.href="#_ftn3" name="_ftnref3" title="">^[3] Under that section, erroneous information
does not invalidate the lien unless there was intent to defraud or harm an
innocent third party.

Although
the predecessor statute to section 8422, former section 3118, dealt only with
forfeiture of a lien for certain willful misstatements, the 2012 restatement of
the mechanic’s lien law combined those provisions with the provisions of
section 3261. The first two paragraphs
of section 8411 are derived from section 3261.
Thus, the statutory revision did not make substantive changes in this portion
of the law. (See generally § 8052;
Legis. Counsel’s Dig., Sen. Bill No. 189 (2009-2010 Reg. Sess.) Stats.
2010, ch. 697; 37 Cal. Law Revision Com. Rep. (2007) p. 527.)

The statutes (including §
3261) and the cases under earlier versions of the law were in accordance with
the current section 8422. (See, e.g., >Borello v. Eichler Homes, Inc. (1963)
221 Cal.App.2d 487, 493-494; Wand Corp.
v. San Gabriel Valley Lumber Co. (1965) 236 Cal.App.2d 855, 858-859; >Callahan v. Chatsworth Park, Inc. (1962)
204 Cal.App.2d 597, 606-610; Brooks v.
Duskin (1958) 159 Cal.App.2d 629, 633-634.)
The legislative history, as discussed in a recent case, supports this
view. (Guam Resorts, Inc. v. G.C. Corp. (2012) 2012 Guam 13.)

Defendant argues, however, that it
does not question the “statutory adequacy” of the lien’s general
statement. Instead, it contends that the
recorded mechanic’s lien shows, on its face, that the lien was asserted for an
impermissible purpose and is therefore void as a matter of law. Defendant therefore concludes that the claim
of lien “very specifically identifies the materials provided and those
materials simply cannot form the basis for a mechanic’s lien.”

V

DISCUSSION

Article XIV, section 3 of the
California Constitution provides:
“Mechanics, persons furnishing materials, artisans, and laborers of
every class, shall have a lien upon the property upon which they have bestowed
labor or furnished material for the value of such labor done and material
furnished; and the Legislature shall provide, by law, for the speedy and
efficient enforcement of such liens.”

The mechanic’s lien law carries out
this provision by requiring that the mechanic’s lien (§ 8026) be done by a
contractor (§ 8012) for work (§ 8048) done on a work of improvement (§
8050). In issue here is defendant’s
contention that the lien does not, as a matter of law, involve alteration to a
building under section 8050.

               Such issues are normally determined by applying the definition of a fixture in section 660.  Under that section, if a thing is permanently attached to a building it is a fixture.  (10 Miller & Starr, Cal. Real Estate, >supra, §§ 28.11, p. 28-44 [“[m]aterials must be physically incorporated into a work of improvement for a lien to attach”], 28.18.)

> Without using the term “fixture,” the parties extensively argue whether the items named in the mechanic’s lien are permanent improvements to the home or not. For example, plaintiff argues that interior furnishings include, by dictionary definition, “fittings,” and that fittings are defined as a piece of fixed equipment or furniture. Plaintiff also argues that accessories can be attached to the home under the dictionary definition. Although not mentioned by plaintiff, it could equally be argued that window treatments include, for example, drapery hardware attached to the walls with nails or screws. (See § 660.)> Defendant argues that the items listed in the lien “simply cannot form the basis for a mechanic’s lien.” It argues that the term “furnishings” is defined as movable and impermanent items, and that accessories also fall within this category. “The material supplied must be made a part of the work of improvement. The supplier cannot have a lien if the materials remain personal property. For instance, materials such as sound systems, carpet, flooring, wall coverings, and other furnishings may be installed in such a manner that they remain semi-movable personal property and the supplier of such materials would not be entitled to a mechanics lien . . . .” (10 Miller & Starr, Cal. Real Estate, >supra, § 28.11, pp. 28-44, 28-45, fns. omitted.)> We decline to resolve this argument. In our view, the issue should not be decided on demurrer. Plaintiff has pled that the property was improved by the materials and labor of plaintiff. As noted >ante, the pleading of such a statement is generally sufficient to meet the statutory requirement. (>Johnson v. Smith, supra, 97 Cal.App. 752, 753-754.) Even if the information in the lien was wrong or inaccurate, the mechanic’s lien is still valid in the absence of a showing of intent to defraud or an innocent third party is involved. (§ 8422.)

While it is entirely proper to use judicially
noticed matters to test the sufficiency of the complaint on demurrer (>Daar v. Yellow Cab Co. (1967) 67 Cal.2d
695, 716), defendant uses the mechanic’s lien description of the work to raise
factual issues as to the nature of the work performed by plaintiff. Evidence is needed to allow the trier of fact
to resolve these factual issues. They
cannot and should not be resolved on demurrer by resorting to dictionary
definitions.

The cases that concern a vague or erroneous
description of the property in the mechanic’s lien are analogous: “In Union
Lbr. Co. v. Simon [(1907)] 150 Cal.751, 757-758 [89 P. 1077,1081], it is
said that whether the description in any particular case is sufficient for
identification is a question of fact to be determined by the jury or the court
upon a consideration of the circumstances of that case; that this provision of
the statute implies that evidence may be received for the purpose of
determining its sufficiency, and such evidence will include the purpose for
which the description is required as well as the persons who are to be affected
by it; that if there appear enough in the description to enable a party
familiar with the locality to identify the premises intended to be described
with reasonable certainty, to the exclusion of others, it will be sufficient;
that if the description identifies the property by reference to the facts, that
is, if it points clearly to a piece of property and there is no other one that
will answer the description, it is sufficient.”
(Credit Bureau of San Diego, Inc.
v. Williams (1957) 153 Cal.App.2d 834, 836.)

More generally, “Whether there has been substantial
compliance with the statutory requirements is a question of fact that is
determined by a judge, and not a jury, as an issue in equity.” (10 Miller & Starr, Cal. Real Estate, >supra, § 28.47, p. 28-162,
citing Distefano v. Hall (1963) 218
Cal.App.2d 657, 678.)

We therefore find the facts pled in the
complaint, which are assumed to be true, are legally sufficient to state a
cause of action for foreclosure of plaintiff’s mechanic’s lien. The trial court therefore erred in sustaining
the demurrer without leave to amend.

VI

DISPOSITION

The judgment is reversed. Appellant is awarded costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS



RICHLI

J.



We concur:





HOLLENHORST

Acting
P. J.





CODRINGTON

J.