Oaktree Investments, Inc. v. Super. Ct. CA4/3

Opinion

Filed 8/21/26 Oaktree Investments, Inc. v. Super. Ct. CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE

OAKTREE INVESTMENTS, INC., et al., G065630 Petitioners, (Super. Ct. No. 30-2024- v. 01430522)

THE SUPERIOR COURT OF OPINION ORANGE COUNTY,

Respondent;

IKON BUILDERS, INC., et al., Real Parties in Interest.

Original proceedings in mandate. H. Shaina Colover, Judge. Petition granted. Halavais & Associates and Coby Halavais for Petitioners. Scheer Law Group and Timothy J. Silverman for Real Parties in Interest. * * * Petitioners Oaktree Investments, Inc. and Oak Branch Investments, LLC (collectively Oaktree) petition for a writ of mandate reversing the denial of their motion for judgment on the pleadings. Oaktree contends it is entitled as a matter of law to quiet title to property it bought at a trustee’s sale pursuant to a deed of trust in favor of Quicken Loans, LLC—even though Quicken’s lien was junior to a foreclosed mechanics lien in favor of real party in interest Ikon Builders, Inc. We agree, holding the mechanics lien expired as to Quicken because Ikon’s foreclosure action did not name Quicken as a defendant. Oaktree thus took title to the property free and clear of the mechanics lien when it bought it at Quicken’s trustee’s sale. We grant the petition. FACTS Ikon recorded a mechanics lien against a San Clemente property on April 6, 2021. On April 22, Quicken recorded a deed of trust on the property securing a loan to the property owner. Ikon filed an action to foreclose the mechanics lien on June 4, 2021, naming only the property owner (not Quicken) as a defendant. Default judgment was entered for Ikon in 2022. The Orange County Sheriff levied upon the property pursuant to Ikon’s judgment in 2023. Oaktree purchased the property on July 22, 2024, at a foreclosure sale pursuant to Quicken’s deed of trust. Real party in interest Canyon Hills Properties, LLC, purchased the property at the sheriff’s auction on July 25, 2024.

2 Oaktree sued Ikon and Canyon Hills for quiet title, declaratory relief, and cancellation. It moved for judgment on the pleadings, contending Ikon “failed to include Quicken Loans as a party Defendant” to its mechanics lien foreclosure action “and the Mechanic’s Lien thus lost priority over the Quicken Loans Deed of Trust.” Oaktree asked the court to take judicial notice of the relevant recorded and filed documents.1 The court continued the hearing on Oaktree’s motion to allow supplemental briefing. It noted Oaktree’s reply brief cited Paramount Securities Co. v. Daze (1933) 128 Cal.App. 515 (Paramount), which the court found “may support a finding that Ikon Builders’ failure to add Quicken Loans, a beneficiary under the Deed of Trust and junior encumbrancer, as a defendant to the suit to enforce the Mechanic’s Lien renders the Mechanic’s Lien barred as against Plaintiffs’ title, which was purchased pursuant to the Deed of Trust.” At the continued hearing, the court issued a detailed, three-page, single-spaced tentative ruling denying the motion. It distinguished Paramount on the grounds that “the mechanic’s lien was likely junior to the deed of trust. In contrast, the mechanic’s lien here was superior to the deed of trust.” It concluded: “Ultimately, Plaintiffs have cited no legal authority holding that a mechanic’s lien that is senior to a deed of trust is extinguished due to the failure to name Quicken Loans as a defendant in the action to foreclose on the mechanic’s lien.”

1 Specifically, Oaktree requested the court take judicial notice of the mechanics lien, Ikon’s complaint, Ikon’s default judgment, the Quicken deed of trust, Oaktree’s trustee’s deed upon sale, the notice of levy, and Canyon Hills’ sheriff’s deed under writ of sale.

3 The court heard argument, adopted its tentative ruling, and denied the motion. While the order did not expressly address the request for judicial notice, we presume the court granted it. (See Aaronoff v. Martinez- Senftner (2006) 136 Cal.App.4th 910, 918–919.) DISCUSSION “A plaintiff is entitled to judgment on the pleadings if its complaint states a cause of action against the defendant and the defendant’s answer does not state facts sufficient to constitute a defense. A motion for judgment on the pleadings, like a general demurrer, tests the allegations of the pleadings at issue, supplemented by any matter of which the trial court takes judicial notice, to determine whether the party has stated a cause of action. Because the trial court’s determination is made as a matter of law, we review the ruling de novo, assuming the truth of all material facts properly pled.” (State Comp. Ins. Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422, 445 [cleaned up].) We exercise our discretion to entertain the writ petition as it turns on a pure question of law based on undisputed, judicially noticed facts. Indeed, after we issued an alternative writ, the parties asked the trial court not to vacate its order “so the matter could proceed to an appellate opinion” “sooner rather than later.”2 Mechanics lien claimants face a strict statutory requirement. “The claimant shall commence an action to enforce a lien within 90 days after recordation of the claim of lien.” (Civ. Code, § 8460, subd. (a).) The 2 We greatly appreciate the trial court’s thoughtful minute order explaining its response to the alternative writ. Neither Ikon nor Canyon Hills subsequently filed a formal return in this court, apparently content to rest on Canyon Hills’ initial informal response.

4 consequence for failing to commence an action is catastrophic. “If the claimant does not commence an action to enforce the lien within that time, the claim of lien expires and is unenforceable.” (Ibid.) Here, Ikon commenced its enforcement action on June 4, 2021, within 90 days after the April 6, 2021, recordation of its mechanics lien. That does not end the inquiry, however. The problem is that Ikon failed to name Quicken as a defendant in its June 2021 enforcement action, even though Quicken had recorded its deed of trust in April 2021. That oversight carried consequences. The claimant “must name all parties intended to be bound by an action to foreclose a mechanic’s lien within the time specified” by statute. (Grinnell Fire Protection System Co. v. American Sav. & Loan Assn. (1986) 183 Cal.App.3d 352, 354.) “It has long been established in this state that all persons with an interest in the subject real property at the time suit is brought to enforce a mechanic’s lien on that property must be made parties to the suit. If they are not made parties, ‘they are, in no respect, bound by the decree or proceedings thereunder.’” (Monterey S.P. Partnership v. W.L. Bangham, Inc. (1989) 49 Cal.3d 454, 459 (Monterey S.P.).) When a mechanics lien is foreclosed “without obtaining a proper adjudication of the priority of [the] mechanic’s lien relative to the interest under [a] deed of trust,” the mechanics lien claimant can no longer “assert priority over” the deed of trust. (Monterey S.P., supra, 49 Cal.3d at p. 459, fn. 3.) A purchaser pursuant to the deed of trust “would own the property free and clear of the mechanic’s lien . . . .” (Ibid.) Because everyone with an interest in the property must be named in the enforcement action, the consequence of a mechanic lien claimant’s failure to name even a junior lienholder is just as dire as if the 5 action were not filed at all—the mechanics lien “expires and is unenforceable” against the junior lienholder. (Civ. Code, § 8460, subd. (a).) A treatise cited by Oaktree explains this consequence. “The beneficiary of any trust deed, or any other person who has a lien on the property, who is not joined as a party is not bound by the decree of foreclosure and may quiet title against the lien after the 90-day period expires. When a junior lienor is not made a defendant in the action, upon the expiration of the 90-day period, the mechanics lien is not enforceable against the junior lienor and, upon a foreclosure of the mechanics lien, the title of the purchaser remains subject to the junior lien. [Fn. omitted.]” (9 Miller & Starr, Cal. Real Estate (4th ed. 2026) § 32:58.) Because Ikon did not name Quicken in its enforcement action, Quicken would have been entitled to “quiet title against the lien after the 90- day period expire[d].” (9 Miller & Starr, supra, § 32:58.) “[U]pon foreclosure of the mechanics lien” in the June 2021 default judgment, the property’s title “remain[ed] subject to” the Quicken deed of trust. (Ibid.) Ikon had no right thereafter to enforce its mechanics lien by levying upon the property and having it sold to Canyon Hills. While the trial court correctly turned to Paramount for guidance, we read that rather cryptic case to support Oaktree. There, the mechanics lien was created in April 1925, a junior deed of trust was recorded in May 1925, the property was sold at a trustee’s sale in November 1928, and the property was sold (again) pursuant to the mechanics lien in March 1929. (Paramount, supra, 128 Cal.App. at pp. 515–516.) Paramount held that the trustee’s sale purchaser could enforce the 90-day limitations period and quiet title against the mechanics lien claimant. (Paramount, supra, 128 Cal.App. at pp. 516–517, 522.) It held that 6 the mechanics lien “was barred by the running of the statutory period within which an action could be brought to foreclose.” (Id. at p. 522.) It rejected the claimant’s assertion that “since the action to foreclose the materialman’s lien was commenced against the owner of the property within the statutory period, and as to the owner’s rights duly foreclosed, appellant as the successor in interest of a junior encumbrancer is not entitled to the benefit of the statute fixing a limitation upon the time within which actions to foreclose such liens must be commenced.”3 (Id. at p. 516.) Paramount devotes more of its space to summarizing the parties’ contentions and cases from various jurisdictions than to plainly stating its holding. A treatise aptly summarizes Paramount: “Where the trustee and the beneficiary under a subordinate deed of trust are not made defendants [in an enforcement action], the purchaser at a subsequent sale under such deed of trust will take title to the property free and clear of the mechanics lien.” (44 Cal.Jur.3d (2026) Mechanics’ Liens, § 160.) Applying Paramount here, we reject Ikon’s assertion that just because it foreclosed its mechanics lien against the prior owner within 90 days, Oaktree (as the successor to Quicken) was not entitled to the benefit of the 90-day limitations period. (See Paramount, supra, 128 Cal.App. at p. 516.) Instead, the mechanics lien “was barred by the running of the statutory period.” (Id. at p. 522.) Because Quicken was not made a defendant in the enforcement action, Oaktree as the purchaser at the subsequent trustee’s 3 Paramount uses “mechanic’s lien” and “materialman’s lien” to describe the lien in favor of a lumber company. (Paramount, supra, 128 Cal.App. at pp. 515 [identifying party], 516 [using both terms].)

7 sale took title “free and clear” of the mechanics lien.4 (Monterey S.P., supra, 49 Cal.3d at p. 459, fn. 3; 44 Cal.Jur.3d, supra, § 160.) DISPOSITION Let a peremptory writ of mandate issue directing respondent court to vacate its order denying Oaktree’s motion for judgment on the pleadings and to enter a new and different order granting the motion. Oaktree shall recover its costs in this proceeding.

SCOTT, J.

WE CONCUR:

DELANEY, ACTING P. J.

GOODING, J.

4 We are not obligated to hold otherwise by the pre-Civil War case suggesting that when a lienholder who is not named in the enforcement action later acquires the property, it “possesses the legal title, subject only to the previous incumbrance of the mechanics’ lien.” (Whitney v. Higgins (1858) 10 Cal. 547, 554.) That case long predates Monterey S.P., section 8460, and that statute’s predecessor, former section 3144.