Topic: Construction Law
Timing is everything when it comes to construction payment disputes.
The California constitution and civil code provide significant remedies
for contractors and suppliers who do not get paid what they are owed on a
construction project. However, this is true only if the contractor or
supplier carefully follows all of the rules that the legislature mandates for perfecting a claim.
I’ve frequently discussed requirements relating to preliminary
notices because often it is a defective preliminary notice that
precludes recovery in a construction dispute. But there are strict rules
relating to mechanic’s liens as well. In most construction projects, if
the contractor or supplier records its lien within 90 days of
completing its work, the lien is valid and enforceable. Many times,
however, there is a real question of when the work was completed.
In a recent case, Picerne Construction Corp. v. Castellino Villas
(February 2016), the California Court of Appeals considered the
question. In that case, Castellino Villas was an 11-building apartment
complex. Various buildings in the complex were completed at different
times, and the City of Elk Grove issued certificates of occupancy as
each building was completed.
Picerne Construction recorded its lien within 90 days of the last
work the company did on the project. Castellino Villas objected to the
validity of the liens because certificates of occupancy had been issued
for all building more than 90 days before Picerne Construction recorded
its lien, and even punch list items on most of the buildings had been
completed more than 90 days prior to recording the lien. Castellino
argued that the work was substantially completed and only “trivial work”
was done in the 90-day period. In fact, the only work that was done on
the project 90 days before the lien was recorded was the placement of
grip tape on some of the stair treads.
The appellate court acknowledged that various other courts have
reached different results concerning the validity of mechanic’s liens on
similar facts. However, the appellate court noted that opinions that
found mechanic’s liens invalid were typically those written before the
statute defining completion had been amended in 1926, or were opinions
that relied on those older opinions. The appellate court ultimately
concluded that completion of construction occurs when the contractor or
supplier completes its work on the contract. And in doing so, it
rejected opinions that found a construction project was complete when it
was “substantially completed.”
The appellate court reasoned that public policy supports a finding
that completion means completion of all of the work on the contract.
Harkening back to the origination of mechanic’s lien statutes, the
appellate court noted that law is primarily intended for the benefit of
those who provide materials and labor to a construction project.
Interpreting completion as completing the entire work on the contract
provides workers and suppliers with the maximum time possible to assert
their rights. Anything less would deprive a contractor or supplier of
the benefit of the protection of the statutes.
This is the most carefully considered opinion on this issue in some
time. Trial courts usually look to well thought out appellate opinions
to support their decisions. We believe it likely that the standard for
completion set forth in Picerne Construction Corp. v. Castellino Villas will be the standard used by trial courts in the future.