Opinion
A116917
3-19-2008
Mehdi Mohammadian et al., Plaintiffs and Appellants, v. NEFF RENTAL, INC., Defendant and Respondent.
NOT TO BE PUBLISHED
Mehdi and Fereshteh Mohammadian (the Mohammadians) appeal from a judgment entered after the trial court sustained Neff Rental, Inc.s (Neff) demurrer to their third amended complaint without leave to amend. The Mohammadians contend the trial court erred in ruling that the litigation privilege applied to Neffs act of recording a mechanics lien on their property. We conclude there was no error and affirm the judgment.
FACTUAL AND PROCEDURAL BACKGROUND
The facts are taken from the third amended cross-complaint. In January 2001, the Mohammadians, who own a gas station, entered into a contract with DCM Construction and Services, Inc. (DCM) whereby DCM agreed to retrofit the gas stations gasoline delivery and monitoring system. DCM rented a dump truck from Neff, apparently for use on the Mohammadianss property. DCM did not complete the project and left the property in April 2001, and filed a complaint against the Mohammadians the following month, alleging they breached their duties under the contract by, among other things, failing to pay for work performed by DCM and failing to pay for the delivery of equipment necessary for DCM to complete the project. In June 2001, the Mohammadians filed a cross-complaint against DCM for breach of contract and construction defects.
A document attached to the third amended cross-complaint shows that on February 13, 2001, Neff delivered a dump truck to DCM for use at "15595 Washington Blvd., S.L.," also described as "15595 Washington Blvd., San Leandro, California, 94577." This appears to have been a clerical error, as the Mohammadianss gas station is located at 15595 Washington Avenue in San Lorenzo, California, 94579.
On December 26, 2001, Neff issued a preliminary 20-day notice to DCM and the Mohammadians under Civil Code section 3097, claiming it had not been paid for equipment it leased to DCM for use at the Mohammadianss property. The Mohammadians informed Neff that the notice was improper because DCM left their property on April 2001 and had not returned. On June 6, 2002, Neff recorded a mechanics lien against the Mohammadianss property, claiming it was owed $6,838.85 plus interest for equipment it furnished to the property at the request of DCM. The Mohammadians demanded that Neff release the lien. Neff released the lien on September 11, 2002.
Civil Code section 3097, subdivision (a), provides in part that "every person who furnishes labor, service, equipment, or material for which a lien . . . can be claimed under this title . . . shall, as a necessary prerequisite to the validity of any claim of lien, . . . cause to be given to the owner, . . . the original contractor, . . . and to the construction lender, if any, . . . a written preliminary notice as prescribed by this section."
The lien actually became null and void on September 4, 2002 (90 days after it was filed on June 6, 2002) under Civil Code section 3144, which provides that a lien automatically becomes null and void 90 days after the lien is recorded, unless the claimant files an action to foreclose the lien within that time period.
On September 11, 2002, the Mohammadians filed a first amended cross-complaint against DCM and Neff. In addition to the causes of action they had previously asserted against DCM for breach of contract and construction defects, the Mohammadians asserted causes of action for slander of title, cancellation of instrument and civil conspiracy against DCM and Neff, alleging that Neff recorded a false mechanics lien and that DCM and Neff conspired to record the lien in order to slander the Mohammadianss title to the property. In April 2003, the trial court ordered that the claims involving Neff be severed from the remaining portions of the cross-complaint. After severance, the action involving only DCM and the Mohammadians proceeded to trial, and judgment was entered in favor of DCM.
In June 2006, Neff filed a motion for judgment on the pleadings as to the Mohammadianss second amended cross-complaint against DCM and Neff. Neff claimed the action was barred because all causes of action were based on the filing of a mechanics lien, an act protected by the litigation privilege. The trial court granted Neffs motion "with leave to amend [for the Mohammadians] to articulate a cause of action, if possible, that is not protected by the litigation privilege." The Mohammadians filed their third amended cross-complaint, which contains five causes of action against Neff — slander of title, cancellation of instrument, negligence, abuse of process and unfair business practices — and a cause of action for civil conspiracy against Neff and DCM.
In August 2006, Neff filed a demurrer to the Mohammadianss third amended cross-complaint on the same ground on which it based its motion for judgment on the pleadings. The trial court found the litigation privilege applied, sustained the demurrer without leave to amend, and entered judgment in favor of Neff. The Mohammadians filed a timely notice of appeal.
DCM is not a party to this appeal.
DISCUSSION
Standard of Review
"The standard of review for an order overruling a demurrer is de novo. The reviewing court accepts as true all facts properly pleaded in the complaint in order to determine whether the demurrer should be overruled. [Citation.] A general demurrer will lie where the complaint `has included allegations that clearly disclose some defense or bar to recovery. [Citation.]" (Casterson v. Superior Court (2002) 101 Cal.App.4th 177, 182-183, original italics.)
Was The Filing of a Mechanics Lien a Privileged Communicative Act?
"The litigation privilege, as codified in Civil Code section 47, subdivision (b), shields, among other things, any `publication or broadcast made `[i]n any . . . judicial proceeding. The privilege is `absolute in nature (Silberg v. Anderson (1990) 50 Cal.3d 205, 215), and its `principal purpose . . . is to afford litigants and witnesses . . . the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions (id. at p. 213)." (Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 830.)
"The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action." (Silberg v. Anderson, supra, 50 Cal.3d at p. 212 (Silberg).) The privilege has been extended to "`any publication . . . that is required [citation] or permitted [citation] by law in the course of a judicial proceeding to achieve the objects of the litigation, even though the publication is made outside the courtroom and no function of the court or its officers is invoked. (Albertson v. Raboff (1956) 46 Cal.2d 375, 380-381 (Albertson).) Thus, our courts have extended the protections of the litigation privilege to `the recordation of a notice of lis pendens (id. at p. 381), `the publication of an assessment lien (Wilton v. Mountain Wood Homeowners Assn., Inc. (1993) 18 Cal.App.4th 565, 570 (Wilton), and `the filing of a claim of mechanics lien in conjunction with a judicial proceeding to enforce it (Frank Pisano & Associates v. Taggart (1972) 29 Cal.App.3d 1, 25 (Pisano).)" (Olszewski v. Scripps Health, supra, 30 Cal.4th at pp. 830-831.)
Albertsons holding that a lis pendens is absolutely privileged was partially abrogated by an amendment to Civil Code section 47, subdivision (b)(4), which now provides that a recorded lis pendens is not privileged unless it identifies a previously filed action that affects the title or right of possession to the property. "This amendment may have been prompted by concerns that lis pendens were often filed by parties without any legitimate claim." (See Wilton, supra, 18 Cal.App.4th at p. 569, fn. 1.) We are not aware of any similar concerns with respect to mechanics liens, and Civil Code section 47 does not contain a limitation on the applicability of the litigation privilege to mechanics liens.
In Pisano, the plaintiffs recorded a mechanics lien on a piece of land and subsequently filed an action to foreclose the lien. (Pisano, supra, 29 Cal.App.3d at pp. 9, 11.) The landowners filed a cross-complaint, asserting a disparagement of title claim against the plaintiffs. (Ibid.) Pisano held the absolute privilege barred the landowners cross-complaint because the filing of a mechanics lien "is clearly authorized by law [citation] and it is related to an action to foreclose." (Id. at p. 25.) Other courts have agreed with Pisano. Wilton, supra, 18 Cal.App.4th at page 569, explained that Pisano applied the litigation privilege to the filing of a mechanics lien because mechanics liens are "a first step in foreclosure actions to remedy defaults, and are thus closely related to judicial proceedings." LiMandri v. Judkins (1997) 52 Cal.App.4th 326, 347 (LiMandri), which discussed Pisano, stated that a mechanics lien is protected by the litigation privilege because it "must be filed to come into being as a tangible, enforceable lien. [Citation.] . . . [T]he filing of a mechanics lien . . . is a statutory prerequisite to the pursuit of a judicial remedy for default. (See [Civil Code] §§ 1367, 3144.) [It] is privileged . . . because it relates directly to the judicial action which can be instituted to foreclose the lien."
Because a mechanics lien is authorized by law and is directly related to a judicial action to foreclose the lien, Neffs act of recording a mechanics lien on the Mohammadianss property was absolutely privileged.
Civil Code section 3110 provides that "lessors of equipment . . . and all persons . . . leasing equipment to be used . . . in . . . contributing to a work of improvement shall have a lien upon the property upon which they have . . . leased equipment . . . for the value of the use of such . . . equipment, . . . whether . . . furnished at the instance of the owner or of any person acting by his authority or under him as contractor or otherwise. For the purposes of this chapter, every contractor, subcontractor . . . or other person having charge of a work of improvement or portion thereof shall be held to be the agent of the owner." The Mohammadians contest the validity of Neffs lien but do not assert that Neffs status as a lessor of equipment precluded it from recording a mechanics lien.
The Absence of a Subsequent Foreclosure Action
The Mohammadians contend that Neffs mechanics lien did not constitute a communication "made in judicial or quasi-judicial proceedings," was not recorded to "achieve the objects of [any] litigation," and had no "connection or logical relation to [any] action." (See Silberg, supra, 50 Cal.3d at p. 212.) Relying on language from Pisano that the litigation privilege attaches to "the filing of a claim of mechanics lien in conjunction with a judicial proceeding to enforce it," (Pisano, supra, 29 Cal.App.3d at p. 25, italics added), the Mohammadians contend the litigation privilege does not apply in this case because Neff did not "file or even contemplate any litigation in which the lien would have been arguably relevant or part of the subject matter." We disagree.
Although an action to foreclose the mechanics lien had been filed in Pisano, the court did not limit its application of the litigation privilege to cases in which a foreclosure action has been filed or contemplated. Instead, it held, more generally: "The recording of the claim of lien is clearly authorized by law [citation] and it is related to an action to foreclose. [Citation.] [¶] We conclude, therefore, that the absolute privilege attached in the present case." (Pisano, supra, 29 Cal.App.3d at p. 25.)
Further, in Wilton, supra, 18 Cal.App.4th at page 570, which relied on Pisano in holding that the litigation privilege applies to homeowners assessment liens, the privilege applied even though the homeowners association had not decided, at the time it filed the lien, whether it was going to file an action to foreclose the lien. Noting that claimants to a homeowners assessment lien have the option of enforcing the lien either by judicial foreclosure or by private power of sale, Wilton held the privilege should apply regardless of whether the claimants ultimately pursued an action to foreclose, or elected to enforce their rights outside the litigation process. (Id. at pp. 569-570.) Wilton stated: "To conclude otherwise would make the privilege hinge upon factual inquiries into which remedy associations intended to use, and might lead associations to resort to judicial foreclosure in every case simply to avoid the risk of tort liability. There is no reason to flood the courts with such cases." (Id. at p. 570.)
Although Wilton involved the filing of a homeowners assessment lien, we believe its reasoning applies in this case. The trial court here expressed similar concerns about requiring a party to file a foreclosure action in order to be protected by the litigation privilege. It summarized and rejected the Mohammadianss argument, as follows: "You file a mechanic[]s lien. You say, whoops . . . and you withdraw it, youre exposed [to the risk of tort liability]. But if youre [clever] enough to file a lawsuit and the next day dismiss the lawsuit, now I am in . . . litigation [and protected by the litigation privilege]. So we should encourage people to file frivolous lawsuits so they can dismiss them and therefore be [protected]." We conclude the litigation privilege applies to the filing of a mechanics lien, even if a subsequent action to foreclose the lien is not filed or contemplated.
The Mohammadians cite Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 33-34 (Edwards) for the proposition that the litigation privilege does not attach to a prelitigation statement unless the statement is made in "good faith and [with] serious consideration" of an imminent lawsuit. Relying on Edwards, they assert the litigation privilege does not apply in this case because Neff could not have seriously or in good faith contemplated filing a foreclosure action because it knew or should have known that its lien was invalid.
Edwards, however, is inapposite because it involved prelitigation statements, and not the filing of a mechanics lien. Edwards involved an attempt to apply the litigation privilege to statements made by a developer and an insurance company many years before a lawsuit was commenced. (Edwards, supra, 53 Cal.App.4th at pp. 23-24.) Noting that "[i]n the present litigious society, there is always at least the potential for a lawsuit any time a dispute arises between individuals or entities," Edwards held that more than a "vague `anticipation of litigation" is required before the litigation privilege attaches to a statement made before a lawsuit is filed. (Id. at p. 33.)
The recording of a mechanics lien, however, is not the same as making a statement, which may or may not be related to a lawsuit that may or may not be instituted at some point in the future. Instead, it is an act specifically "authorized by law" to achieve the object of litigation, and is part of a statutory scheme that is designed to remedy certain defaults. (Wilton, supra, 18 Cal.App.4th at p. 569.) Thus, it is inherently related to a judicial proceeding, and is a document that "must be filed to come into being as a tangible, enforceable lien;" it is a "statutory prerequisite to the pursuit of a judicial remedy for default." (LiMandri, supra, 52 Cal.App.4th at p. 347.) Accordingly, we decline to extend Edwards analysis to the filing of a mechanics lien.
We acknowledge that A.F. Brown Electrical Contractor, Inc. v. Rhino Electric Supply, Inc. (2006) 137 Cal.App.4th 1118, 1127-1128 (A.F. Brown) applied the good faith and serious consideration test to the filing of a stop notice, but we decline to follow the case. A.F. Brown provides no explanation as to why the test, which has been applied to prelitigation statements, should also apply to the filing of liens.
Deficiencies in the Lien
The Mohammadians contend the litigation privilege does not apply because Neffs mechanics lien was "illegal [and] unauthorized by law" and Neff "had no right to record its perjured lien in the first instance." They describe various ways in which the lien was improper, including, among other things, that the preliminary 20-day notice was not properly served, and that Neff filed the lien even though it knew or should have known the lien contained false information.
Pisano explained, however, that any deficiencies in the lien or the lien procedure are "a matter of defense to the [foreclosure] action and [do] not militate against the privilege." (Pisano, supra, 29 Cal.App.3d at p. 25.) Pisano noted that in Albertson, "the filing of a lis pendens was held to be privileged notwithstanding it was later held in the action that the person filing the lis pendens was not entitled to any relief." (Pisano, at p. 25, fn. omitted.) Similarly, here, any deficiencies in the mechanics lien recorded by Neff relate to whether Neff would have been entitled to relief in a foreclosure action, and not to whether the litigation privilege protects Neff from liability for recording the lien.
The Mohammadians also contend the lien was unauthorized because Neff filed the lien for an improper purpose — "as a tactical ploy to get DCM to make payment or otherwise force DCM to cooperate with Neff." The litigation privilege, however, applies regardless of whether malice is involved. (Silberg, supra, 50 Cal.3d at p. 216.)
We do not believe that our decision will, as appellants assert, "open[] the gates to judicially authorized fraud and abuse" by prompting contractors to file fraudulent mechanics liens. Should this occur, however, it would be up to the Legislature to limit the litigation privilege for mechanics liens as it did with respect to lis pendens (see fn. 5, ante).
The gravamen of the third amended complaint is directed at the privileged act of filing a mechanics lien.
The Mohammadians assert the litigation privilege does not apply because "the gravamen of [the] complaint is directed at Neffs tortious courses of conduct and not communicative acts." They rely on LiMandri, supra, 52 Cal.App.4th at page 345, which held the litigation privilege did not apply to a cause of action for intentional interference with contractual relations because the claim was only tangentially related to the filing of a lien, and was "only one act in the overall course of conduct alleged in [the] cause of action."
In contrast, here all of the causes of action against Neff are based primarily on its privileged act of recording a mechanics lien. The third amended cross-complaint alleges Neff slandered the Mohammadianss title to their property by recording a false mechanics lien on their property. It alleges Neff acted negligently in issuing a false 20-day preliminary notice and lien. It alleges Neff engaged in abuse of process and unfair business practices by recording a false mechanics lien. It alleges Neff conspired with DCM to record a false mechanics lien in order to slander the Mohammadianss title to their property. LiMandri does not support the Mohammadianss position that the litigation privilege does not apply.
DISPOSITION
The judgment is affirmed. Neff shall recover its costs on appeal.
We Concur:
Simons, J.
Needham, J.