Walsh v. Misenar (In Re Morrell)

42 B.R. 973
CourtDistrict Court, N.D. California
DecidedJuly 10, 1984
DocketC-84-0091 RFP
StatusPublished
Cited by7 cases

This text of 42 B.R. 973 (Walsh v. Misenar (In Re Morrell)) is published on Counsel Stack Legal Research, covering District Court, N.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Walsh v. Misenar (In Re Morrell), 42 B.R. 973 (N.D. Cal. 1984).

Opinion

ORDER

PECKHAM, Chief Judge.

I. INTRODUCTION

This is an appeal from a decision in Bankruptcy Court granting summary judgment in favor of defendant-appellee Black & Veatch. The Bankruptcy Court held that appellee has an enforceable lien on certain property in debtor’s bankruptcy estate. Plaintiff-appellant Edward M. Walsh, trustee for debtor Richard J. Morell, appeals that decision and conversely asks for summary judgment in his favor. Jurisdiction is based upon section 1334 of Title 28 of the United States Code (1976), which grants district courts original jurisdiction over all matters and proceedings in bankruptcy.

The issues on appeal are:

(1) whether appellee has a valid mechanic’s lien when, due to the fault of the debt- or, no construction or visible improvement *975 ever commenced on the property against which the lien is asserted; and

(2) whether appellee timely filed its notice of claim of mechanic’s lien.

The court upholds the decision of the bankruptcy judge in part, finding that ap-pellee has a valid mechanic’s lien on the property in question. But the court does not rule on the timeliness of appellee’s lien claim. Rather, the court remands the case to the bankruptcy judge to make factual findings on that issue. Appellee has also asked for attorneys’ fees; the court denies that request.

II.FACTS

Appellee, a firm of licensed architects and engineers, contracted with debtor to prepare drawings and specifications for a proposed improvement on debtor’s property located in Pittsburg, California. Appellee performed the contract and completed the plans in late August of 1979. But the debtor never commenced construction of the project, and failed to pay appellee the contract price of $14,000. On September 3, 1980, appellee recorded its notice of claim of lien against debtor’s property, claiming $18,657.33, the contract price increased by change orders and extra work.

On April 15,1981, an involuntary petition under Chapter 7 of the Bankruptcy Code was filed against debtor, who had fled the state. Walsh was appointed trustee of debtor’s estate, which included the realty in Pittsburg. On May 26, 1981, the matter was converted into a Chapter 11 case.

In October of 1982, Walsh filed an adversary proceeding to determine the validity of various claims against the property, including appellee’s claim arising under the mechanic’s lien. On January 24, 1983, the bankruptcy judge determined that the property was subject to two encumbrances — a first deed of trust recorded on April 16, 1976, and a second deed of trust recorded on December 1, 1976. Walsh contended that appellee’s mechanic’s lien claim was invalid because the notice of the lien was untimely, and there was no improvement on the land against which a lien could attach. Both parties filed cross-motions for summary judgment. On December 9, 1983, the Bankruptcy Court granted appel-lee’s motion, ordered Walsh to pay appellee the amount of the lien, and denied Walsh’s motion for summary judgment. This appeal arises from that judgment.

III.STANDARD OF REVIEW

Summary judgment is proper “ ‘[ojnly where there is no genuine issue of any material fact or where viewing the evidence and the inferences which might be drawn therefrom in the light most favorable to the adverse party, the movant is clearly entitled to prevail as a matter of law.’ ” Radobenko v. Automated Equipment Corp., 520 F.2d 540, 543 (9th Cir.1975), quoting Caplan v. Roberts, 506 F.2d 1039, 1042 (9th Cir.1974). A bankruptcy judge’s conclusions of law are subject to de novo review in the district court. See, e.g., In re Bubble-Up Delaware, Inc., 684 F.2d 1259, 1262 (9th Cir.1982); In re Visiting Home Services, Inc., 643 F.2d 1356, 1359 (9th Cir.1981). There are no disputed facts in this case, so the court need not resolve whether the bankruptcy judge’s findings of fact are reviewable under the standard of clear error or under the less deferential standard of General Order 24 of the Northern District of California. See Morrissey v. Frank, 717 F.2d 100 (3d Cir.1983).

IV.DISCUSSION

A. Validity of Appellee’s Mechanic’s Lien

The bankruptcy judge ruled that appellee Black & Veatch has a mechanic’s lien upon debtor’s Pittsburg property, even though no on-site construction ever commenced. But California courts have never squarely decided whether an architect’s claim for services rendered in the preparation of drawings and plans is lienable against the interest of the one who contracted for the services when, through the fault of the owner of such interest, no actual work on the ground commenced. See Tracy Price Associates v. Hebard, 266 Cal.App.2d 778, 788, 72 Cal.Rptr. 600, 606 (1968). Appellant argues that the bankruptcy judge *976 erred by not applying the rule that actual work on the ground must begin before a mechanic’s lien arises. Appellee counters that that rule only applies in cases in which other security claimants assert rights in the same property. According to appellee, this court should follow the reasoning of a Minnesota case, Lamoreaux v. Andersch, 128 Minn. 261, 150 N.W. 908 (1915), and allow the lien to stand.

The purpose of a mechanic’s lien is to secure to mechanics, materialmen, and anyone else who contributes labor or materials to an improvement, payment for the labor performed or materials furnished. See Nolte v. Smith, 189 Cal.App.2d 140, 144, 11 Cal.Rptr. 261, 263 (1961). It also serves to discourage a casual attitude toward payment of obligations incurred in the construction of an improvement. See Selby Constructors, Inc. v. McCarthy, 91 Cal.App.3d 517, 525, 154 Cal.Rptr. 164, 168-69 (1979). Section 15 of Article XX of the California State Constitution guarantees mechanic’s liens to persons who contribute toward an improvement of real property. This constitutional mandate has been made effective through the enactment of section 3110 of the California Civil Code (West 1974), which provides:

Mechanics, materialmen, contractors, subcontractors, lessors of equipment, artisans, architects, registered engineers, licensed land surveyors, machinists, builders, teamsters, and draymen, and all persons and laborers of every class performing labor upon or bestowing skill or other necessary services on, or furnishing materials or leasing equipment to be used or consumed in or furnishing appliances, teams, or power contributing to a work of improvement shall have a lien upon the property upon which they have bestowed labor or furnished materials

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Bluebook (online)
42 B.R. 973, Counsel Stack Legal Research, https://law.counselstack.com/opinion/walsh-v-misenar-in-re-morrell-cand-1984.