Timber and Wool Custom Floors Inc vs Catherine Stout et al

Case Number

24CV05146

Case Type

Hearing Date / Time

Fri, 08/29/2025 - 10:00

Nature of Proceedings

Motion: Expunge

Tentative Ruling

Timber and Wool Custom Floors, Inc. v. Catherine Stout, et al.          

Case No. 24CV05146

           

Hearing Date: August 29, 2025                                            

HEARING:  Defendants’ Motion to Expunge Mechanics Lien of Plaintiff Timber and Wool Custom Floors, Inc.           

ATTORNEYS:        For Plaintiff Timber and Wool Custom Floors, Inc.: Kevin R. Nimmons, Reicker Pfau, Pyle & McRoy LLP

                                    For Defendants and Cross-Complainants Catherine Stout and Arthur Stout: Adam T. Carralejo, Thyne Taylor Fox Howard LLP

                                    For Cross-Defendants Timber and Wool Custom Floors and Cynthia Baker: Daniel A. Crespo, Catherine Legaspi, Bremer Whyte Brown & O’Meara LLP

                                    For Cross-Defendant E&Q Floors, LLC dba Rivafloors: David S. Lee, Heather Ingle Gernhardt, Lee Landrum & Ingle      

TENTATIVE RULING:

For the reasons set forth herein, defendants’ motion to expunge Mechanics lien of plaintiff is granted.

Background:

This action commenced on September 17, 2024, by the filing of the verified complaint by plaintiff Timber and Wool Custom Floors, Inc. (plaintiff) against defendants Catherine Stout and Arthur Stout (collectively “defendants”) for: (1) Foreclosure of Mechanics Lien, (2) Breach of Contract, and (3) Quantum Meruit.

As alleged in the complaint:

Defendants are the owners of real property located at 315 Elderberry Drive, Goleta (the “property”). (Compl., ¶¶ 2, 3.)

On January 25, 2024, plaintiff provided an estimate to defendants to provide hardwood flooring, installation and related services to the property, including: (1) replacement of all hardwood flooring, (2) removal and disposal of all existing baseboards, existing glued-down hardwood flooring over concrete subfloor, (3) grinding and preparing concrete for new glue down installation, and (4) providing and installing new baseboards (the “contract”). (Compl., ¶ 10 & Exh. A.) The estimate total was $103,869.49. (Id. at ¶ 11.) Soon thereafter, plaintiff and defendants agreed to the services and costs contained in the contract and, at the direction of defendants, plaintiff began performing the contract. (Id. at ¶ 12.)

By agreement between the parties, some of the services contained in the contract were removed creating a new total amount for labor and services of $91,742.18. (Compl., ¶ 13.)

On February 1, 2024, defendants paid plaintiff $51,545.49 to cover material that plaintiff had ordered to install into the property. (Compl., ¶ 16.) Between March 4, 2024, and March 5, 2024, plaintiff removed the defendants’ flooring to install new flooring. (Id. at ¶ 17.) By April 13, 2024, plaintiff completed the installation of the new flooring. (Id. at ¶ 18.) Defendants owed plaintiff a remaining balance of $40,196.69, which they attempted to collect from defendants, but they were ignored. (Id. at ¶¶ 19, 20.)

On June 27, 2024, before 90 days after completion of the improvement work, plaintiff filed a Mechanics Lien on the property in the amount of $40,196.69. (Compl., ¶ 21 & Exh. B.) On the same day, plaintiff served defendants with the Mechanics Lien and Notice of Mechanics Lien. (Id. at ¶ 22.)

On January 10, 2025, defendants filed their verified answer to the complaint, admitting some allegations, denying some allegations, partially admitting some allegations, and claiming a lack of information to either admit or deny other allegations. In addition, defendants asserted 20 affirmative defenses. As relevant to the present motion, defendants assert as their twentieth affirmative defense that the contract is illegal because it is in violation of Business & Professions Code section 7159, et seq.

On May 27, 2025, defendants filed a cross-complaint against plaintiffs, as well as Cynthia Baker and E&Q Floors, LLC for: (1) Violation of Business and Professions Code section 7159, (2) Breach of Contract, (3) Recission, (4) Negligence – Construction Defect, (5) Intentional Misrepresentation, (6) Negligent Misrepresentation, and (7) False Promise.

E&Q Floors filed their answer to the cross-complaint on July 3, 2025. Plaintiff and Baker filed a demurrer to the cross-complaint and a motion to strike portions of the cross-complaint, which is scheduled for hearing on November 14, 2025.

On May 2, 2025, defendants filed the present motion to expunge plaintiff’s mechanics lien on the property, arguing that because plaintiff failed to provide defendants with the Mechanics Lien Warning required by Business & Professions Code section 7159, subdivision (e)(4), plaintiff cannot establish the probable validity of the mechanics lien.

Plaintiff opposes the motion, essentially arguing that Business & Professions Code section 7159 does not contain any language barring it from recording a lien for failure to provide the Mechanics Lien Warning.

Analysis:

“ ‘A mechanic’s lien is a claim against real property, which may be filed if a claimant has provided labor or furnished materials for the property and has not been paid. [Citation.]’ ” [Citation.] Thus, “ ‘ “[it] is a procedural device for obtaining payment of a debt [owed] by a property owner for the performance of labor or the furnishing of materials used in construction.” ’ [Citation.]” [Citation.]” (Precision Framing Systems Inc. v. Luzuriaga (2019) 39 Cal.App.5th 457, 464.)

“ ‘While the essential purpose of the mechanics’ lien statutes is to protect those who have performed labor or furnished material towards the improvement of the property of another (citation), inherent in this concept is a recognition also of the rights of the owner of the benefited property. It has been stated that the lien laws are for the protection of property owners as well as lien claimants * * *.’ ” [Citations.]” (R. D. Reeder Lathing Co. v. Allen (1967) 66 Cal.2d 373, 379; accord Rental Equipment, Inc. v. McDaniel Builders, Inc. (2001) 91 Cal.App.4th 445, 449-450.)

“A motion to remove a mechanic’s lien is recognized as a device that allows the property owner to obtain speedy relief from an unjustified lien or a lien of an unjustified amount without waiting for trial on the action to foreclose the lien. [Citation.] The inquiry upon such motion is likewise limited to the “ ‘probable validity’ ” of the lien. [Citation.]” (Howard S. Wright Construction Co. v. Superior Court (2003) 106 Cal.App.4th 314, 318.)

Business & Professions Code section 7159, subdivision (e)(4) specifies that the following “shall be provided to the owner as part of the contract form as specified or, if otherwise authorized under this subdivision, may be provided as an attachment to the contract:” (Italics added.)

“A notice with the heading “ ‘Mechanics Lien Warning’ ” written as follows:

“ ‘MECHANICS LIEN WARNING:

“Anyone who helps improve your property, but who is not paid, may record what is called a mechanics lien on your property. A mechanics lien is a claim, like a mortgage or home equity loan, made against your property and recorded with the county recorder.

“Even if you pay your contractor in full, unpaid subcontractors, suppliers, and laborers who helped to improve your property may record mechanics liens and sue you in court to foreclose the lien. If a court finds the lien is valid, you could be forced to pay twice or have a court officer sell your home to pay the lien. Liens can also affect your credit.

“To preserve their right to record a lien, each subcontractor and material supplier must provide you with a document called a ‘ “Preliminary Notice.” ’ This notice is not a lien. The purpose of the notice is to let you know that the person who sends you the notice has the right to record a lien on your property if they are not paid.

“BE CAREFUL. The Preliminary Notice can be sent up to 20 days after the subcontractor starts work or the supplier provides material. This can be a big problem if you pay your contractor before you have received the Preliminary Notices.

“You will not get Preliminary Notices from your prime contractor or from laborers who work on your project. The law assumes that you already know they are improving your property.

“PROTECT YOURSELF FROM LIENS. You can protect yourself from liens by getting a list from your contractor of all the subcontractors and material suppliers that work on your project. Find out from your contractor when these subcontractors started work and when these suppliers delivered goods or materials. Then wait 20 days, paying attention to the Preliminary Notices you receive.

“PAY WITH JOINT CHECKS. One way to protect yourself is to pay with a joint check. When your contractor tells you it is time to pay for the work of a subcontractor or supplier who has provided you with a Preliminary Notice, write a joint check payable to both the contractor and the subcontractor or material supplier.

“For other ways to prevent liens, visit CSLB’s internet website at www.cslb.ca.gov or call CSLB at 800-321-CSLB (2752).

“REMEMBER, IF YOU DO NOTHING, YOU RISK HAVING A LIEN PLACED ON YOUR HOME. This can mean that you may have to pay twice, or face the forced sale of your home to pay what you owe.’ ”

Defendants contend, and point to the verified complaint as proof, that plaintiff did not comply with the requirement to provide the Mechanics Lien Warning and therefore the mechanics lien is invalid and should be expunged. In support of their argument, defendants rely on Lambert v. Superior Court (1991) 228 Cal.App.3d 383 (Lambert) for the proposition that the court is permitted to order the expungement of a defective mechanics lien.

Plaintiff does not deny that it failed to provide the Mechanics Lien Warning.

In opposition, plaintiff argues that Lambert “does not apply and is entirely distinguishable.” (Opp., p. 2, ll. 13-14.) Plaintiff further argues that: “Lambert simply holds that consequential damages are not recoverable through a mechanics lien. Unlike in Lambert, Plaintiff is not seeking delay damages and has claimed only the unpaid contract balance for actual labor, materials, and services furnished.” (Id. at p. 3, l. 26 – p. 4, l. 1.) Despite plaintiff’s argument, that is not the sole holding in Lambert.

Plaintiff appears to miss the point for which defendants cite Lambert. Defendants rely on Lambert for the authority that allows them to remove a mechanics lien for which plaintiffs are unable to establish probable validity. It is not limited to consequential damages, but rather to anything that may render the lien invalid.

“[Former] Civil Code section 3143 [(now Civil Code section 8424)], mentioned in the trial court’s ruling, provides one method for removing a mechanic’s lien. It permits an owner who disputes a lien to release the property from the lien by posting a surety bond equal to one and one-half times the amount of the claim. But owners assert, with some support, that such a release bond may not be available to an individual owner, who will usually be required to post liquid collateral in the amount of the bond. [Citation.]

“[Former] Civil Code section 3143 is not the exclusive means for removing a mechanic’s lien. Connolly Development, Inc. v. Superior Court, supra, 17 Cal.3d at pages 813-814, found that “ ‘the recording of a mechanics’ lien, deprives the landowner of a significant property interest, and thus constitutes a ‘taking’ within the meaning of the federal and state due process clauses.’ ” (Fn. omitted.) Due process would not be provided if a claimant’s unjustified lien or a lien of an unjustified amount could be removed only by pledging collateral in excess of the amount claimed.

“Connolly explained that other remedies are available to an owner both before and after the recording of a mechanic’s lien or a stop notice: “ ‘Before recording a mechanics’ lien or filing a stop notice, the claimant must serve a preliminary notice upon the owner, the contractor, and the construction lender. [Citations.] Upon receipt of such a notice from one not entitled to claim a lien, the owner or lender may immediately file suit to enjoin the claimant from asserting his lien. [Citation.] By the use of a temporary restraining order if necessary [citation], the plaintiff could secure a hearing before the lien was imposed. [¶] Even after the lien has been recorded, or the stop notice filed, the owner in many instances could seek a mandatory injunction ordering the claimant to release the lien. [Citations.] In any event, the owner need not wait until the claimant sues to enforce the lien; the imposition of that lien, and the owner’s denial of its validity, comprise a controversy sufficient to permit an immediate suit for declaratory relief. [Citation.] Such a declaratory relief action can claim priority on the calendar of the trial court. [Citation.] Thus by filing an action for injunctive or declaratory relief, the owner or lender can obtain a hearing either before imposition of the lien or within a reasonable period thereafter.’ ” [Citation.]” (Lambert, supra, 228 Cal.App.3d at p. 386.)

“Contractor reads too much from Connolly. The court upheld the constitutionality of a “ ‘ “taking” ’ ” of property by mechanic’s lien. In doing so it did not define or limit the procedures for removing liens. The court mentioned restraining orders, injunctions, and declaratory relief actions only to illustrate ways an owner could seek relief before a claimant sued to enforce a lien. It did not suggest that an owner could not challenge a lien by a motion to remove in a claimant’s action to enforce the lien.

“If a claimant has not yet imposed a lien or, having imposed it, has not yet sued to foreclose it, an owner’s speediest remedy is through proceedings for injunctive or declaratory relief. But where a claimant has already brought an action to foreclose a lien, the owner may more easily file a motion in the pending action. Connolly is premised on the availability of speedy remedies. An owner’s right to use the speediest remedy should not be lost because a claimant has won the race to the courthouse.” (Lambert, supra, 228 Cal.App.3d at p. 387.)

Defendants cite Lambert primarily for the proposition that it is permissible to attack the mechanics lien by way of the present motion. Defendants are correct.

The question then becomes whether plaintiff can establish the probable validity of the mechanics lien. Plaintiff argues that the lien is valid despite the omission of the Mechanics Lien Warning.

Plaintiff’s first argument is that the mechanics lien is valid because the mechanics lien is authorized pursuant to Civil Code sections 8018 and 8050, subdivision (a), as well as Civil Code section 8430, subdivision (a), for the reasonable value of the work provided. (Opp., p. 4, ll. 19-27.) Civil Code section 8018 simply defines “direct contractor.” Civil Code section 8050, subdivision (a) simply defines “work of improvement.” Civil Code section 8430, subdivision (a) explains that a lien is a “direct lien” if it the lesser of “[T]he reasonable value of the work provided by the claimant,” or “[t]he price agreed to by the claimant and the person that contracted for the work.” The sections do not provide support for the probable validity of the mechanics lien. Rather, they provide definitions and in no way negate the requirement of providing the Mechanics Lien Warning.

Plaintiff’s second argument is that Business & Professions Code section 7159 provides no authority to expunge a lien for failure to provide a Mechanics Lien Warning. In making this argument, plaintiff cites to subdivision (e)(3)(C). That subdivision states: “A statement informing the buyer that the contractor’s failure to comply with the requirements of this paragraph does not preclude the recovery of compensation for work performed based upon legal or equitable remedies designed to prevent unjust enrichment.” In making this argument, plaintiff conflates two separate issues. Defendants, by way of the present motion, are not making any claim that plaintiff is precluded from proceeding with its causes of action for breach of contract or quantum meruit. Rather, defendants are challenging the validity of the mechanics lien. Plaintiff’s argument, that “[d]efendants cite no statutory authority or case law holding that failure to include the notices set forth in section 7159(e) invalidate a mechanics lien,” (Opp., p. 5, ll. 9-10) is incorrect. Defendants have provided ample authority that the requirement to provide a Mechanics Lien Warning is mandatory, and that the failure to do so makes the lien invalid.

“ ‘ “ ‘Mechanics’ liens are entirely of statutory creation, and the statute must be looked to both for the right to the lien and the mode by which it can be enforced. The right to a mechanic’s lien depends upon a compliance with the statute, and in order that a valid lien may arise and be enforced, the claimant must strictly, or at least substantially, observe and comply with the provisions of the statute, none of which may be regarded as unessential.’ ” ’ [Citation.]”[Citation.]” (Precision Framing Systems Inc. v. Luzuriaga, supra, 39 Cal.App.5th at pp. 464-465, italics added.)

“In order to perfect a Mechanics lien, a preliminary notice must be given in strict compliance with the statutory requirements. Where notice does not meet those requirements a lien cannot attach to funds or property.” (IGA Aluminum Products, Inc. v. Manufacturers Bank (1982) 130 Cal.App.3d 699, 705.)

“A motion to remove a mechanic’s lien should be granted only when the lienholders [] fail to make a threshold showing of the “ ‘probable validity of the lien.’ ” [Citation.]” (Manela v. Stone (2021) 66 Cal.App.5th 90, 102.)

Plaintiff has not made a threshold showing of the probable validity of the lien, because plaintiff did not provide the required Mechanics Lien Warning. Defendants’ motion to expunge the mechanics lien will be granted.