It was nearly a year ago that the Fourth Appellate District Court of Appeal made it clear that a subcontractor’s right to record a mechanic’s lien is protected, but that the lien is not a weapon to be swung like a sword in disputes.
Subcontractor Ehmcke Sheet Metal Company recorded a mechanic’s lien to get paid for sheet metal fabrication and installation work in a downtown San Diego hotel project.
Slander and anti-SLAPP
After project owner, RGC Gaslamp, LLC, bonded around the lien, Ehmcke released the lien and then proceeded to record successively three more mechanic’s liens—each exactly like the first one. RGC then sued for quiet title (if the owner prevails in a quiet title action, no more title challenges can be brought) and slander of title (when someone publishes an untrue, disparaging statement about a property that could reduce the property’s value).
Ehmcke responded with an “anti-SLAPP” motion that asked for early dismissal of a “Strategic Lawsuit against Public Participation.”
The trial court granted Ehmcke’s motion and dismissed RGC’s slander of title lawsuit. The court also awarded Ehmcke its attorney fees.
The Court of Appeal weighs in
The Court of Appeal held that, before a foreclosure lawsuit can be filed, a mechanic’s lien must be recorded, making the mechanic’s lien a protected prelitigation activity. The court noted that this is true whether or not the subcontractor had the right to file the liens or intended to foreclose them.
The court also held that RGC’s slander of title claim did not contain even “minimal merit.”
The Court of Appeal upheld the trial court’s ruling, which meant for RGC the dismissal of its lawsuit and for Ehmcke, an award of its attorney fees.
Owners have options
The court noted that owners in similar predicaments can challenge the validity of the lien by seeking declaratory judgment or injunctive relief; the owner can ask a court to order the contractor to release all duplicate liens; and, if a contractor tries to foreclose an invalid lien, the owner can ask a court to order the lien released.
This case makes clear that, even in the face of seemingly improper conduct, such as the successive recording of four consecutive mechanic’s liens, an impacted party must choose their remedies carefully.