Pacific Coast Refrigeration, Inc. v. Badger

• Decision Date: 16 October 1975
• Court: California Court of Appeals Court of Appeals
• Parties: PACIFIC COAST REFRIGERATION, INC., a California Corporation, Plaintiff and Respondent, v. Doug BADGER and Florence Badger, Defendants and Appellants. Civ. 33794.

Page 786

124 Cal.Rptr. 786

52 Cal.App.3d 233

PACIFIC COAST REFRIGERATION, INC., a California Corporation, Plaintiff and Respondent, v. Doug BADGER and Florence Badger, Defendants and Appellants.

Civ. 33794.

Court of Appeal, First District, Division 1, California.

Oct. 16, 1975.

Roland S. Mallory, Graves & Mallory, Oakland, for plaintiff and respondent.

John A. Klein, Santa Rosa, for defendants and appellants.

THE COURT: ^*

Defendants have appealed from a judgment ordering foreclosure of a mechanic's lien asserted against a parcel of land in which they hold title of record as joint tenants. They contend that the land, which was part of the whole of a planned shopping center, is not required for the convenient use and occupation of another portion of the proposed shopping center on which is situated the work of improvement to which the plaintiff contributed work, labor and materials. The defendant Florence Badger further contends that the plaintiff failed to take proper steps to perfect any lien rights against her interest as co-tenant in the property.

An examination of the record indicates that the findings of fact and the conclusions of law and judgment of the trial court cannot be sustained in material particulars. The judgment must be reversed and the case must be remanded with instruction to enter judgment for the defendants.

The facts are not greatly disputed. It is only the legal conclusions to be drawn therefrom that give rise to the controversy. The uncontradicted facts applicable to both issues, most of which are embrached in the findings of the trial court, are as follows:

On December 11, 1957, a deed was recorded conveying to 'Douglas Badger and Florence Badger, his wife, in Joint Tenancy' five acres of land, more or less, bounded on the west by a railroad right of way, on the south by Dry Creek Road, and on the east by Healdsburg Avenue. By deed recorded September 13, 1965 the Badgers conveyed away the northerly 2.12 acres of the property. They were left with a parcel that measured, according to the description in the lease referred to below, upon which description plaintiff rests its claim, 336.50 feet on the east along Healdsburg Avenue, 389.15 on the north along the boundary of the land conveyed away, 333.11 feet on the west along the railroad right of way, and 364.20 feet on the south along Dry Creek Road. It contained 2.89 acres.

On August 26, 1966 the Badgers, in contemplation of leasing the southeast corner for a service station recorded a record of survey map of the property which reflected a square parcel roughly 150 feet on each side of the intersection at the southeast corner.

On June 1, 1966, 'Douglas Badger, and Florence Badger, his wife,' as 'Landlord' leased all of their remaining property, including the proposed service station site, to 'W. S. Lee' as "Tenant." On July 29, 1966 a 'Memorandum of Lease,' executed and acknowledged by each of the foregoing parties and containing a legal description of the property by metes and bounds, was recorded.

On March 22, 1967 a deed was recorded conveying strips of land along Healdsburg Avenue and Dry Creek Road to the City to Healdsburg, apparently for street widening purposes. On July 18, 1967 a deed of trust executed on May 26, 1967 by William S Lee and Patsy P. Lee, his wife, and Douglas Badger and Florence Badger, his wife, was recorded. The Badgers joined in executing the deed of trust in accordance with a subordination agreement contained in the lease. This deed of trust covered 0.644 acres of the total property described by metes and bounds. This site is identified as 'Building Site' on an exhibit produced for identification by the defendants and appears on other title company plats which are in evidence. In addition to that property, the trustors conveyed a non-exclusive easement for parking, driveway, walkway and common areas over all of the remainder of the property Except a rectangular parcel in the southeast corner with interior dimensions of 110 feet east and west parallel to Dry Creek Road, and 140 feet north and south parallel to Healdsburg Avenue. It is this excepted parcel and the fee underlying the easement which are the subject of dispute in this action.

The record reflects, and the court found that W. S. Lee, the tenant under the lease from the Badgers, subleased the property to Lee Bros. Value World, Inc., a California corporation, for the purpose of the construction of a shopping center. The sublessee had plans drawn up for the construction of a shopping center which was to include a supermarket, a service station, building space for other stores and a large parking lot and common area. Lee Bros. Value World, Inc. entered into a contract with Page Construction Company for the construction of the supermarket, and further entered into two separate contracts with plaintiff, Pacific Coast Refrigeration, Inc., a California corporation duly licensed to perform refrigeration and general contracting services, for the engineering and installation of a refrigeration underground and an air-conditioning underground in the supermarket element of the shopping center. During the period from August 1, 1967 to October 1, 1967 the plaintiff provided labor and materials to the supermarket job site in an amount in excess of its claim. On September 27, 1967 a bankruptcy petition was filed for Lee Bros. Value World, Inc.

On October 10, 1967 plaintiff sent its invoice in the amount of $12,240 to the sublessee, with whom it had contracted and a copy to defendant Douglas Badger. A certified mail receipt shows that pursuant to the provisions of section 1193 of the Code of Civil Procedure, a pre-lien notice was mailed to 'Doug Badger,' 'Redwood Electric Co., Owner or Reputed Owner' and was delivered to 'Redwood Electric K.M. Badger' October 26, 1967. On December 18, 1967 plaintiff recorded its 'Claim of Lien' for $12,240.00. It refers to the property as follows: 'That parcel of land in the County of Sonoma described in the Memorandum of Lease dated June 2, 1966 and recorded June (sic. July) 29, 1966 in Book 2223 of Official Records of Sonoma County at page 308.' It recites, 'That the name of the owner and reputed owner of said property is Doug Badger, Redwood Electric Company.' On March 11, 1968 plaintiff filed this action against 'Doug Badger, individually and doing business as Redwood Electric Company, Redwood Electric Company, a Corporation, Lee Bros. Value World, Inc. and Does One through Doe Ten.' The complaint alleged that the whole of the property described in its claim of lien is required for the convenient use and occupancy of the building and improvements to which the plaintiff furnished materials, equipment and labor.

Under the threat of the Bank of America foreclosing its deed of trust, plaintiff and defendants in effect worked together to see if their respective interests in the land could be salvaged. While working together, plaintiff and plaintiff's attorneys, and defendants and defendants' attorneys did not realize that the Bank of America deed of trust did not cover the entire property subject to plaintiff's claim of lien. The Bank of America assigned its beneficial interest in the deed of trust to Borden, Inc., and that deed of trust was foreclosed by sale to the assigned beneficiary and a trustee's deed to Borden, Inc. conveving the portion of the premises the subject of the deed of trust was recorded December 23, 1969.

In January 1972 plaintiff engaged and substituted new attorneys in the case. They discovered the true names of the owners of record, and that they owned the underlying fee to the parking lot easement and that the service station corner had not been subject to the deed of trust. On May 16, 1972 defendant 'Doug Badger, individually and doing business as Redwood Electric Company,' filed an answer to the original complaint in which for lack of information and belief he denied the allegation relating to the materials, equipment and labor supplied by the plaintiff and the amount due therefor. He alleged as affirmative defenses that the plaintiff had failed to give preliminary notice of his claim as required by section 1193 of the Code of Civil Procedure, and that plaintiff had failed to record its claim of lien in timely manner. By failure to deny he admitted the allegation concerning the description of the property involved and that it was required for the convenient use and occupancy of the building.

On August 9, 1972, after its motion to file an amended complaint was granted, the plaintiff filed an amended complaint to foreclose a mechanic's lien against 'Doug Badger, Florence Badger, his wife, and Does One through Ten.' Following the interposition of a demurrer by the defendant Florence Badger a second amended complaint to foreclose a mechanic's lien was filed containing allegations aimed at emasculating certain special defenses asserted by her. (See part II below.) In their answer to this complaint the Badgers denied that the whole of the property against which plaintiff made claim was required for the convenient use and occupancy of the building.

Other facts relating to the special defenses of the defendant Florence Badger are alluded to in part II.

I

The heart of the controversy revolves about the provisions formerly found in section 1183.1 of the Code of Civil Procedure (Stats.1951, ch. 1159, § 1, p. 2492) and now restated in section 3128 of the Civil Code (Stats.1969, ch. 1362, § 2, p. 2763, operative Jan. 1, 1971) reading as follows: 'The liens provided for in this chapter shall attach to the work of improvement and the land on which it is situated Together with a convenient space about the same or so much as may be required for the convenient use and occupation thereof, if at the commencement of the work or of the furnishing of the materials for the same, the land belonged to the person who caused such work of improvement to be constructed, but if such person owned less than a fee...