Truestone, Inc. v. Simi West Industrial Park II

• Decision Date: 27 December 1984
• Citation: 209 Cal.Rptr. 757,163 Cal.App.3d 715
• Parties: TRUESTONE, INC., Plaintiff and Appellant, v. SIMI WEST INDUSTRIAL PARK II aka Atoian and Associates, Defendant and Respondent. Civ. B003485.
• Court: California Court of Appeals Court of Appeals

Page 757

209 Cal.Rptr. 757

163 Cal.App.3d 715

TRUESTONE, INC., Plaintiff and Appellant, v. SIMI WEST INDUSTRIAL PARK II aka Atoian and Associates, Defendant and Respondent.

Civ. B003485.

Court of Appeal, Second District, Division 6, California.

Dec. 27, 1984.

As Modified on Denial of Rehearing

Jan. 24, 1985.

John F. Fay of Loughman & Fay, Ventura, for defendant and respondent.

GILBERT, Associate Justice.

Truestone, Inc. (Truestone) seeks to recover the cost of materials delivered and used in construction on real property owned by Simi West Industrial Park II, aka Atoian and Associates (Atoian). The trial court granted a motion for summary judgment and dismissed the complaint as to Atoian. We reverse the summary judgment as to Truestone's actions to foreclose its mechanic's lien and to recover on an account stated.

FACTS

On June 9, 1981, Truestone filed a complaint joining an action for breach of contract against Vista Builders, Inc. (Vista) with an action to foreclose a mechanic's lien against Atoian. The first amended complaint filed April 12, 1982, incorporated common counts for unjust enrichment and an account stated.

In the action to foreclose the mechanic's lien, Truestone alleges that Atoian owned property on Easy Street in Simi Valley and entered a construction contract with Vista, directly or through a general contractor. On August 20, 1979, Vista purchased construction materials worth over $21,000 from Truestone on an open account. Between January 1 and April 30, 1981, Truestone delivered the construction materials to the Atoian property where they were used in the work of improvement. Truestone demanded but has received no payment. On January 30, 1981, within 20 days after furnishing the materials, Truestone served a preliminary 20-day notice on Atoian and on the construction lender by mail in accordance with Civil Code section 3097. ¹ On March 13, 1981, Truestone stopped delivering materials and recorded a verified mechanic's lien claim for the unpaid contract price or the reasonable value of the materials.

Each common count realleges the construction contract between Atoian and Vista, the open account transaction between Vista and Truestone, the delivery and use of the materials, and nonpayment. The first also alleges that Vista became indebted to Truestone for materials delivered at its request and that Atoian was unjustly enriched thereby.

The second further alleges that on January 11, 1982, an account was stated in writing between Atoian and Truestone by a letter incorporated in the complaint. In the letter, Atoian acknowledges that Truestone is a creditor for $17,898 by reason of materials supplied to the development and that Atoian has a plan for settlement of a dispute with one of the contractors which has resulted in a lawsuit against the project and the freezing of construction funds. Atoian proposes to pay Truestone $12,170 in 45 days as full settlement, conditioned upon resolution of its lawsuit, and the agreement of at least 80 percent of its creditors to accept similarly reduced payments.

Atoian's answer filed May 11, 1982, admits ownership of the property and the contract with Vista but denies liability and challenges the validity of the mechanic's lien.

On August 31, 1983, Atoian filed a motion for summary judgment. In the motion Atoian claims that Truestone's failure to give statutory 20-day preliminary notice renders the mechanic's lien invalid. Grigor Atoian, principal owner of Atoian, alleges in his declaration that he opens all the mail, and that no preliminary notice was served by Truestone. Truestone and its general manager admitted during pretrial discovery that the 20-day preliminary notice was sent by first class regular rather than the required certified/registered mail ( § 3097) and that Truestone had no proof of service ( § 3097.1).

Atoian challenged the unjust enrichment count claiming there was no allegation that it promised to pay Truestone, and no promise may be implied in law where the facts show that Atoian contracted to pay Vista for the materials. To do so would circumvent the mechanic's lien law. Finally, Atoian argued that its letter of January 11, 1982, represented an offer to compromise and was not an account stated. In addition, it also argued that Atoian and Truestone had no prior business transaction(s) with one another.

Hearing was scheduled for September 8, 1983. On September 6, 1983, Truestone opposed the motion. Truestone asserted that the mechanic's lien claim presented a triable issue because Grigor Atoian admitted to Truestone that he received the first 20-day notices sent, and that he knew Truestone was an unpaid materials supplier, thus satisfying the purpose of the statutory notice requirement. In addition, Truestone stated that a triable issue existed with respect to each common count based on Atoian's personal promise to pay Truestone for the materials delivered.

The counter declarations show that Truestone's contract administrator became aware on January 3, 1981, that Vista's account was past due. Because Truestone's policy was to stop deliveries on overdue accounts in the absence of a payment arrangement, she told Shawn Campbell, the General Manager about the past due account. On January 5 Campbell telephoned Grigor Atoian. Atoian admitted that Vista had identified Truestone as a supplier and that he had received two 20-day notices Truestone mailed in December 1980 which he discarded because of the incorrect property address. Atoian acknowledged he was having trouble with Vista and said he "would take care of the matter in regard to the money owed" Truestone. He also promised Campbell to "personally pay for the materials supplied to Vista ... for said job if TRUESTONE would continue to furnish said materials." Relying on this promise, Truestone authorized and continued to make deliveries of materials to the project. Truestone also mailed corrected 20-day notices to Atoian on January 30 and March 4, 1981, for $12,976 and $5,363.11, respectively.

The trial judge granted the motion for summary judgment, awarded Atoian costs and dismissed Truestone's complaint as to Atoian.

DISCUSSION

I

We are circumspect in our review of motions for summary judgment. Summary judgment may be granted where "... all the papers submitted show there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." (Code Civ.Proc., § 437c, subd. (c).) "It is a drastic remedy eliminating trial and therefore the moving party's declarations must be strictly construed and the opposing party's declaration liberally construed. [Citation.] If there is any issue of material fact to be tried, summary judgment must be denied. [Citation.]" (Hepp v. Lockheed-California Co. (1978) 86 Cal.App.3d 714, 717, 150 Cal.Rptr. 408.) Inferences may be drawn from the facts where these are the only reasonable inferences, but the court may not weigh one inference against another or against other evidence, and every reasonable doubt must be resolved in favor of the complaint. (Hooks v. Southern Cal. Permanente Medical Group (1980) 107 Cal.App.3d 435, 442, 165 Cal.Rptr. 741.)

Truestone concedes the defective service ( § 3097) and absence of statutory proof of service affidavit. ( § 3097.1.) Section 3097 states that a supplier of materials "... must, as a necessary prerequisite to the validity of any claim of lien, ... cause to be given to the owner ... a preliminary notice as prescribed by this section." (Emphasis added.)

Because strict compliance with the statute is required, a claim of actual notice or substantial compliance is irrelevant. (IGA Aluminum Products, Inc. v. Manufacturers Bank (1982) 130 Cal.App.3d 699, 181 Cal.Rptr. 859.) "[Section 3097] clearly states that proper notice is a prerequisite to perfecting a mechanic's lien, and that if service of the notice is accomplished by mail, the notice must be sent by registered or certified mail." (Id. at p. 704, 181 Cal.Rptr. 859.)

In IGA, plaintiff, a materialman under a subcontract on a construction project, sued the construction lender to foreclose a mechanic's lien. The engrossed settled statement stated that the written 20-day notice was defective because it was not delivered by certified or registered mail. Defendant did not acknowledge receipt of the notice. In addition, there was no evidence of a contract between plaintiff and defendant. The court denied plaintiff recovery. Here, Grigor Atoian allegedly admitted to Shawn Campbell his knowledge that Truestone supplied materials to the project, and the Atoian company also allegedly made a separate promise to pay Truestone for all materials delivered pursuant to the contract with Vista.

Section 3097 provides an exception to the notice requirement for "... one under direct contract with the owner ..." which the IGA court did not reach. This statutory exception is valid because the owner is generally apprised of potential lien claims by those with whom he deals directly, whereas it is difficult for him to learn of potential liens by those not under direct contract. (Borchers Bros. v. Buckeye Incubator Co. (1963) 59 Cal.2d 234, 28 Cal.Rptr. 697, 379 P.2d 1.) The purpose of the statutory notice requirement is to give the owner advance information of the identities of any unpaid claimants who may perfect liens against his property if their debts remain unsatisfied. (Id. at p. 240, 38 Cal.Rptr. 697, 379 P.2d 1.) Here there is a factual issue concerning the existence of a contract between Truestone and Atoian.

In some cases, even where there is no contractual relationship between the parties, actual knowledge may estop the property owner from asserting the notice requirements of section 3097. The extent of the property owner's knowledge and the time it was acquired may be a significant variable. Section 3129 establishes a presumption that all construction work performed on property with the owner's knowledge ...