Sullivan Hill’s Construction and Insurance Litigation practice group, successfully represented Balboa Phase II, LLC, (“Balboa”), a residential developer, and its lien release bonding company, in an arbitration matter regarding a dispute over a mechanic’s lien recorded by a general contractor. The general contractor recorded mechanic’s lien against our client’s property which included alleged contract balance owing and delay damages. Balboa demanded that the general contractor reduce its lien to reflect the alleged contract balance owing on the grounds that existing legal precedent prohibits the inclusion of delay damages in a mechanic’s liens. The general contractor refused to reduce its lien by the amount of delay damages within its lien.
We filed a motion on behalf of Balboa under Cal. Civ. Code § 8422 which allows a court to remove/invalidate a mechanic’s lien in its entirety where a lien claimant willfully includes amounts in the lien that the claimant knows are not the proper subject of a lien. In the alternative, we requested that the Arbitrator reduce the lien to the contract balance. The statute has been amended in recent years to add an additional requirement that the party moving to eliminate the lien must show that the lien claimant had “intent to defraud” in recording or maintaining the lien.
Despite vigorous opposition from the general contractor, the Arbitrator granted Balboa’s motion, and ordered the general contractor to remove its mechanic’s lien in its entirety from Balboa’s property. Moreover, the Arbitrator confirmed that the lien release bonding company should be dismissed as a party from the Arbitration.
Sullivan Hill’s Construction and Insurance Litigation practice group is one of the largest and best known in California. Our attorneys specializing in construction law assist owners, developers, public entities, general contractors, subcontractors, sureties and financial institutions in a variety of legal issues and disputes that arise in both private and public construction projects.