THE LITIGATION PRIVILEGE FOR THE RECORDING OF A MECHANIC’S LIEN IS AN ABSOLUTE PRIVILEGE

In the recent decision in RGC Gaslamp, LLC v. Ehmcke Sheet Metal Co., Inc. (2020), the Fourth Appellate District held that a trial court properly granted an anti-SLAPP motion because the recording of a mechanic’s lien is protected by the litigation privilege under Civil Code Section 47(b).  The holding is consistent with prior cases dealing with the protection afforded to mechanic’s liens under the litigation privilege.  What makes the holding in RCG Gaslamp important is the fact that the party recording the mechanic’s lien admittedly had no valid claim to enforce the mechanic’s lien.

The right of a contractor, subcontractor or material provider to record a mechanic’s lien is confirmed by the California constitution (Cal. Const. Art. XIV, § 3.)  As provided therein: “Mechanics, persons furnishing materials, artisans, and laborers of ever class, shall have a lien upon the property upon which they have bestowed labor or furnished material for the value of such labor and material furnished…”  In that regard, a mechanic’s lien gives a contractor or supplier a security interest in real property to secure the right of payment for work performed or materials delivered.  Civil Code sections 8000 to 9566 set forth a detailed statutory framework to file and enforce mechanic’s liens.

The recordings of a mechanics lien “may severely hamper [the owner’s] ability to sell or encumber that property.”  (Connolly Development, Inc. v. Superior Court (1976) 17 Cal.3d 803, 812.)  To allow an owner to contest the validity of a mechanic’s lien without leaving in place the lien against the property, Civil Code section 8424 allows an owner to record a mechanic’s lien release bond in the amount of 125% of the lien claim.  “On the recordation of the bond, the real property is released from the claim of lien and from any action to enforce the lien.”  (Civil Code section 8424(c).)

The recording of a mechanic’s lien is a privileged act because it is a necessary act to enforce the constitutional lien created in the California constitution.  In that regard, Civil Code 47(b) protects acts taken in the course of litigation and it applies to the recording of a mechanic’s lien because the act of recording a mechanic’s lien is a prerequisite to a foreclosure action to enforce the lien.

In RCG Gaslamp, the subcontractor first recorded a mechanic’s lien to recoup payment it contended was due for sheet metal fabrication and installation work done on a hotel project in San Diego.  The owner then secured a mechanic’s lien release bond to release the lien.  Thereafter, the subcontractor recorded three more mechanic’s liens, each identical to the first.  In response, the owner filed a lawsuit against the subcontractor for quiet title, slander of title and declaratory and injunctive relief.  The subcontractor filed a motion to strike the lawsuit under the anti-SLAPP statute (Code Civ. Proc. §425.16) on the basis that the recording of the mechanic’s liens was protected under the litigation privilege.

The Fourth District Court of Appeal upheld the decision of the trial court to strike the owner’s complaint.  As noted by the Court in RCG Gaslamp, even the filing of an admittedly invalid lien is protected under the litigation privilege of Civil Code section 47(b).  Not only did the subcontractor successfully strike the owners complaint, but as authorized under the anti-SLAPP statute, the subcontractor was awarded attorneys’ fees and costs in excess of $30,000.

RCG Gaslamp is an important decision to lien claimants.  There now exists case law holding that the recording of a mechanic’s lien is absolutely privileged, even if it is invalid or unlawful.

Author’s Bio:  Michael G Kerbs

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