T McGee Electric v. FH II Homebuilders CA4/1

Opinion

Filed 9/22/26 T McGee Electric v. FH II Homebuilders CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

T MCGEE ELECTRIC, INC., D088372 Plaintiff and Appellant, (Super. Ct. No. CIVSB2513274)

v. FH II HOMEBUILDERS, INC. et. al, Defendants and Respondents.

APPEAL from an order of the Superior Court of San Bernardino County, Stephanie Tanada, Judge. Affirmed in part and reversed in part. Lanak & Hanna, Michael K. Murray, Charles K. Stec, and Tyler P. Doremus for Plaintiff and Appellant. Hunt Ortmann Nieves Darling Mah Klein & Lozano, Laurence P. Lubka and John V. McNulty for Defendants and Respondents. INTRODUCTION In this dispute involving a mechanic’s lien, plaintiff T McGee Electric, Inc. (T McGee) appeals from the trial court’s order clarifying the effect of a recorded lien release bond and awarding attorney fees for defendants FH II Homebuilders, Inc. (FH II) and Harco National Insurance Company (Harco; collectively, defendants). T McGee contends the trial court erroneously granted relief because Civil Code1 section 8480, on which defendants predicated their motion for relief, is inapplicable and section 8424, providing for procurement of a lien release bond, does not authorize a court to provide the remedy defendants requested. T McGee maintains that if the court’s order is reversed, the attorney fees award must also be reversed. We agree with T McGee that neither sections 8480 nor 8424 were proper procedural mechanisms by which defendants could obtain the relief sought: a declaration that the recorded lien release bond freed the subject property from T McGee’s mechanic’s lien. The substance of defendants’ motion, however, was one for declaratory relief. We conclude the trial court’s order granting such relief was correct: defendants’ recorded lien release bond was itself insufficient to put the public on notice that the property had been released from the lien, and defendants therefore were entitled to a judicial decree declaring the effect of a lien release bond consistent with the dictates of section 8424. Accordingly, we affirm the portion of the trial court’s order clarifying the effect of the lien release bond. Because the award of attorney fees was premised on prevailing on a motion under section 8480 and the defendants have not relied on any other statute to support the fees award, we reverse that portion of the order granting defendants attorney fees. BACKGROUND FH II is the general contractor for the development of a residential construction project at a property owned by Rialto Apartments LLC (Rialto).

1 Undesignated statutory references are to the Civil Code.

2 Around late 2023 and 2024, FH II entered into contracts with T McGee for the project’s electrical work. When FH II failed to pay amounts allegedly due under the contracts, T McGee, on February 20, 2025, recorded a mechanic’s lien against the property in the amount of $385,725.94. In early April 2025, Rialto and FH II obtained a “release of lien bond” and recorded it at the County of San Bernadino County Clerk’s Recorder’s Office pursuant to section 8424, subdivision (a). (Capitalization omitted.) Under this provision, a property owner or contractor affected by a mechanic’s lien can obtain a “release of the real property from the claim of lien by recording a lien release bond.” (§ 8424, subd. (a).) The lien release bond FH II and Rialto recorded, provided: “RELEASE OF LIEN BOND “Bond No: 0824079 “Know all men by these presents, that Rialto Apartments, LLC, a California limited liability company as Principal and Harco National Insurance Company, as surety, a corporation of the State of Illinois and authorized to transact surety business in the State of California are held and firmly bound unto T McGee Electric, Inc. as Obligee, in the aggregate amount of Four Hundred Eighty Two Thousand One Hundred Fifty Seven and 43/100--- $(482,157.43).

“Whereas, a lien statement has been filed of record per copy attached hereto and made a part hereof as Exhibit A [a copy of the February 20, 2025 mechanic’s lien.]

“Whereas, said lien will be released provided this Bond be furnished to Obligee.

“Now, therefore, the condition of this obligation is such that, if the above bound Rialto Apartments, LLC, a California 3 limited liability company shall well and truly pay any and all judgments which may be rendered against the said property in favor of the aforesaid Obligee, its successors or assigns, in any action or proceeding to enforce said lien then this obligation shall be null and void, otherwise to remain in full force and effect.

“Furthermore, it is hereby agreed, this bond shall be deemed released upon the filing of a release and/or satisfaction of lien, executed by the lien holder, with respect to the subject lien.”

In May 2025, T McGee filed a complaint alleging, in part, foreclosure of mechanic’s lien as to Rialto. After correspondence with defense counsel, T McGee filed an amended complaint omitting the claim to foreclose the mechanic’s lien as to Rialto and raising a claim on “release of mechanic[’]s lien bond” only as to the surety Harco.2 (Capitalization omitted.) Defendants answered the complaint and also sent T McGee a demand letter, requesting T McGee execute and record a release of the mechanic’s lien. Defendants warned that if T McGee failed to do so, they would “file a motion seeking a court order to remove the Mechanic[’]s Lien[ ] and seek the statutorily authorized attorney’s fees associated therewith, pursuant to . . . [s]ection 8480 et seq.” When T McGee did not voluntarily release its mechanic’s lien, defendants filed a motion for an order releasing the property from the mechanic’s lien under sections 8480 through 8488. Defendants argued they had recorded a lien release bond consistent with section 8424, but T McGee had refused to release the underlying mechanic’s lien causing a cloud to remain on Rialto’s title. Defendants sought attorney fees of $4,250 in connection with the motion.

2 Rialto is not named as a party in the amended complaint.

4 T McGee countered that section 8480 was inapplicable. That section, according to T McGee, provides relief in the form of a release only when a lien claimant has failed to bring an action to enforce their lien within 90 days. T McGee maintained that relief was unnecessary because, under section 8424, subdivision (c), recordation of defendants’ lien release bond had functioned to release the property from the claim of lien automatically and defendants’ assertion that the lien itself had to be released was without authority. T McGee contended it should be entitled to attorney fees under section 8488 as the prevailing party. Defendants replied that they were not requesting the mechanic’s lien be “extinguish[ed],” but they needed the trial court’s intervention to remove the impact of its existence in the chain of title. Defendants added that relief was available regardless of whether section 8480 applies, given that property owners can file a Lambert motion3 to remove a mechanic’s lien in a foreclosure action. After a hearing, the trial court entered an order granting defendants’ motion. The order provided, “The Property . . . is to be released from [T McGee’s] Mechanic’s Lien, recorded . . . on February 20, 2025” and “Bond to remain in place.” The court also awarded attorney fees to defendants in the amount of $4,250 for “prosecuting the [m]otion.” Defendants recorded the order at the County of San Bernadino County Clerk’s Recorder’s Office. DISCUSSION I. Recordation of Lien Release Bond T McGee maintains defendants were not entitled to any further remedy after recordation of the lien release bond, and the trial court’s order granting 3 Lambert v. Superior Court (1991) 228 Cal.App.3d 383 (Lambert).

5 relief based on their section 8480 motion was “procedurally improper.” T McGee adds that section 8424 is also not a proper avenue of relief to support the court’s order. These are questions of law we review de novo. (Amdahl Corp. v. County of Santa Clara (2004) 116 Cal.App.4th 604, 611.) A. Mechanic’s Lien Law We begin with an overview of relevant aspects of California’s mechanic’s lien law. Mechanic’s liens are derived from our state Constitution. “Mechanics, persons furnishing materials, artisans, and laborers of every class, shall have a lien upon the property upon which they have bestowed labor or furnished material for the value of such labor done and material furnished; and the Legislature shall provide, by law, for the speedy and efficient enforcement of such liens.” (Cal. Const., art. XIV, § 3.) A mechanic’s lien thus gives a contractor, supplier, or laborer a security interest in real property to secure the right to be compensated for the labor or materials provided. (Crosno Construction, Inc. v. Travelers Casualty & Surety Co. of America (2020) 47 Cal.App.5th 940, 950.) Sections 8000 through 9566, accordingly, “set forth a comprehensive statutory scheme to resolve payment disputes in . . . construction projects” with the primary goal of protecting a “laborer or material supplier who improves an owner’s property by assuring payment for the value of work done.” (RGC Gaslamp, LLC v. Ehmcke Sheet Metal Co., Inc. (2020) 56 Cal.App.5th 413, 422 (RGC Gaslamp).) Yet, because a mechanic’s lien constitutes a taking which can “severely hamper [the] ability to sell or encumber . . . property” (Connolly Development, Inc. v. Superior Court (1976) 17 Cal.3d 803, 812 (Connolly)), the statutory scheme also “reflects a balancing of interests between property owners and claimants” (RGC Gaslamp, supra, 56 Cal.App.5th at p. 422). While claimants 6 are provided a right to security, property owners are provided a “variety of measures by which [they] can protect [themselves] against the impact of such a lien,” which are aimed at providing owners speedy recourse. (Connolly, at p. 807.) One of those measures is the “release bond procedure,” whereby a bond may be substituted for the property as the object to which the claim of lien attaches. (Hutnick v. United States Fidelity & Guaranty Co. (1988) 47 Cal.3d 456, 463 (Hutnick); § 8424.) As described by our high court, “[t]he purpose of the release bond procedure is to provide a means by which, before a final determination of the lien claimant’s rights and without prejudice to those rights, the property may be freed of the lien, so that it may be sold, developed, or used as security for a loan.” (Hutnick, at p. 462.) Section 8424 provides for the procedure whereby the property owner subject to a recorded claim of lien may obtain a “lien release bond.” The bond must be equal to 125 percent of the amount of the lien and be executed by an admitted surety insurer. (§ 8424, subd. (b).) The bond can be recorded before or after a foreclosure action to enforce the claim of lien, but “[o]n recordation of the bond, the real property is released from the claim of lien and from any action to enforce the lien.” (Id., subd. (c).) Once notice of the bond is given to the claimant, the claimant must commence “an action on the bond within six months[.]” (Id., subd. (d).) “The recording of the release bond does not extinguish the lien; rather, the bond is substituted for the land as the object to which the lien attaches. (See Marsh, Cal. Mechanics’ Lien Law (3d rev. ed., 1988) § 8.28 [‘The recordation of the bond in effect transfers the claim of lien from the owner’s land to the bond.’].)” (Hutnick, supra, 47 Cal.3d at p. 463.)

7 Section 8480, on which defendants predicated their motion, permits a release of property from a claim of lien when a lien expires and becomes unenforceable for failure to timely commence an action on the lien. When a claimant timely records a claim of lien, the claimant must enforce the lien within 90 days of recordation; if the claimant fails to do so—either because they are unwilling to do so, cannot be found, or have become incompetent— the lien expires. (§ 8460, subd. (a).) Because “the lien is recorded and a matter of public record,” section 8480 provides a mechanism whereby the “property owner [can] make the fact that the lien is now null and void . . . also a matter of public record” (Solit v. Tokai Bank, Ltd. New York Branch (1999) 68 Cal.App.4th 1435, 1443) by petitioning the court for an order to “release the property from the claim of lien” (§ 8480, subd. (a); Solit, at p. 1443). Such an order in favor of the property owner, when recorded, has the effect of releasing from the lien the property described in the order. (§ 8490, subd. (c) [recordation of a court order releasing property from the claim of lien removes any cloud on the owner’s title stemming from the recorded lien].) In Connolly, our Supreme Court highlighted other procedural safeguards outside the mechanic’s lien statutory scheme available to property owner’s in furtherance of their due process rights. (Connolly, supra, 17 Cal.3d at p. 803.) Mainly, “California law . . . offers equitable remedies which the owner . . . can employ to obtain a speedy hearing on the probable validity of the lien.” (Id. at p. 822.) Connolly indicated an owner could pursue, for example, a temporary restraining order upon notice of lien (Code Civ. Proc., § 527) or an order seeking declaratory and injunctive relief after recordation but before an action is commenced (id., § 1060). (Connolly, at pp. 822–823.) From this due process discussion in Connolly, our Court of Appeal established an additional procedural protection that applies after a 8 foreclosure action is commenced. (Lambert, supra, 228 Cal.App.3d at p. 387.) In this context, to obtain speedy relief a property owner may bring what is known as a Lambert motion to remove a mechanic’s lien instead of waiting for trial on the action to foreclose the lien. (Ibid. [in such a motion, the issue is “the probable validity of the lien”]; Howard S. Wright Construction Co. v. Superior Court (2003) 106 Cal.App.4th 314, 318 [“[T]he grant of a [Lambert] motion to remove a mechanic’s lien is essentially a judgment on the underlying foreclosure action that no lien exists.”].) B. Analysis At the outset, we agree with T McGee that defendants’ motion was improperly premised on section 8480. That provision, as noted, allows a property owner to obtain a release of property from a claim of lien when the recorded lien has expired and become unenforceable due to the claimant’s failure to bring an action to enforce the lien within 90 days. There is no dispute T McGee timely brought an action to foreclose on the lien and later, when the bond was substituted for the property, an action on the bond. Thus, the claim of lien never expired or became unenforceable for failure to commence an action. Section 8480 has no applicability. Defendants were not entitled to the remedy under this section.4 4 The language of the trial court’s order does not allow for an inference that it relied on section 8480 in granting defendants relief; the court only referenced the statute in passing when noting defendants relied on that provision. T McGee’s argument that the court reversibly erred by granting the motion under section 8480 would require us to presume error based on the court’s silence and depart from a fundamental principle of appellate procedure that a trial court’s judgment is presumed correct and error must be affirmatively shown. (Jameson v. Desta (2018) 5 Cal.5th 594, 609.) This we will not do.

9 We also agree with T McGee that section 8424 did not provide defendants a basis for bringing a motion to obtain an order releasing the property from the claim of lien. When defendants recorded the lien release bond, the subject property was released from the claim of lien by operation of law. (See § 8424, subd. (c) [“[o]n recordation of the bond, the real property is released from the claim of lien and from any action to enforce the lien.”]; RGC Gaslamp, supra, 56 Cal.App.5th at p. 424 [“ ‘The recording of the release bond does not extinguish the lien; rather, the bond is substituted for the land as the object to which the lien attaches.’ ”].) In its place, the bond remained as security for T McGee’s claim of lien. (RGC Gaslamp, at p. 424 [“Once a release bond is recorded, it becomes the lien claimant’s sole recourse for collecting sums due.”].) While the statute provides that recordation automatically releases the property from the claim of lien, it does not otherwise provide a mechanism or remedy for obtaining a court order stating the same. Where we disagree with T McGee is its contention that because defendant’s motion lacked a proper procedural basis—and indeed defendants have offered none on appeal—the trial court’s order must be reversed. While defendants labeled their motion as one brought under section 8480, our reading of their motion indicates that defendants effectively sought declaratory relief as to the effect of the lien release bond because, despite the filing of the bond, a cloud allegedly remained on Rialto’s title. (Foster v. Sexton (2021) 61 Cal.App.5th 998, 1020 [we “look past the pleading’s label and examine its substance” to discern a party’s legal theory].) Whether a surety, once an action is commenced on the bond, may obtain equitable declaratory relief by filing a motion for a judicial decree as to the effect of the lien release bond is unanswered in our jurisprudence.

10 Defendants below contended that if relief was not proper under Civil Code section 8480, their motion could proceed as a Lambert motion. Yet, their filing was not in the character of a Lambert motion, which seeks to remove a mechanic’s lien entirely, given that defendants did not ask to have the lien extinguished. Instead, because their motion sought declaratory relief, the proper procedural vehicle was a cross-complaint. (See Code Civ. Proc., § 1060 [declaratory relief in the form of a motion is not provided for]; Babb v. Superior Court (1971) 3 Cal.3d 841, 845, fn. 1 [declaratory judgment statute “authorizes actions for declaratory relief only in the form of complaints and cross-complaints”].) Neither the mechanic’s lien statutes nor the policy favoring laborers and materialmen prohibits a cross-complaint for declaratory relief to clarify the effect of a lien release bond once an action is commenced to foreclose on the bond.5 Accordingly, we hold that to the extent a lien release bond is insufficient to put the public on notice that the property has been released from the claim of lien, the surety in an action to foreclose on the bond may bring a cross-complaint for declaratory relief to clarify the effect of the lien release bond consistent with section 8424. We recognize that such a request is arguably superfluous because recordation of the lien release bond has the automatic effect of releasing the property from the claim of lien. (See § 8424, subd. (c).) But, to prohibit the availability of equitable relief on this basis ignores the reality that a recorded, but deficiently worded, lien release bond 5 We note that Connolly did not limit the equitable remedies available to property owners and we divine nothing from our high court’s reasoning that would prohibit equitable relief effectively clearing a cloud on a property owner’s title when a lien release bond is facially insufficient.

11 may fail to inform the public that the property has, indeed, been released from the claim of lien. That is what occurred here. The bond instrument did not unequivocally release the property from T McGee’s mechanic’s lien. The instrument was titled “release of lien bond” (capitalization omitted), listed an aggregate amount of $482,157.43, and incorporated a “lien statement” by attaching it as “Exhibit A” (which was the mechanic’s lien). However, the instrument did not state the bond was being recorded pursuant to section 8424 or reference the statute at all. The bond instrument also did not identify T McGee as a mechanic’s lien claimant, without reference to the attached “Exhibit A,” and it did not track the language of the statute by indicating, for example, that the bond was being recorded to enable the property to be automatically freed of the lien. (Compare Frank Curran Lumber Co. v. Eleven Co. (1969) 271 Cal.App.2d 175, 181–182 & fn. 1 [surety lien release bond was given pursuant to former § 1193.2 (now § 8424) where bond instrument expressly referenced statute in title and body, referred expressly to a “ ‘Materialman’s Lien’ ” against the property, and language followed substance of the statute by indicating bond had been obtained to “ ‘enable the realty . . . to be freed from the [e]ffect of said claim of lien’ ”].) Lacking express reference to section 8424 and containing no language that the property had been released from the lien, the bond in this case was insufficient to put the public on notice that the property had been released from the mechanic’s lien. Under these circumstances, defendants appropriately sought declaratory relief to clarify the effect of their recorded bond, but improperly did so in the form of a motion under section 8480. This procedural anomaly does not require reversal because, even if defendants had properly filed a 12 cross-complaint, the trial court reached the correct result. (D’Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 19 [trial court’s decision will not be disturbed on appeal if it reached the right result, albeit for the wrong reason].) The effect of the court’s order was to grant defendants the declaratory relief they sought: the order released the property from the mechanic’s lien consistent with the dictates of section 8424. Indeed, the court’s order did no more than what would have been accomplished through recordation of a sufficiently worded bond. The court’s order, and its subsequent recording at the County of San Bernardino County Clerk’s Recorder’s Office, properly served to clarify what defendants had attempted to accomplish through operation of law by recordation of the bond.6 T McGee’s remaining argument is that the court’s order eliminated the surety’s obligation under the bond. T McGee points to the language in the recorded bond, that “this bond shall be deemed released upon the filing of a release and/or satisfaction of lien, executed by the lien holder, with respect to the subject lien.” We are not persuaded. A close reading of the trial court’s order reveals it did not order release of the mechanic’s lien. Instead, the court ordered that the property be released from the lien, the effect being that the lien attaches to the bond. Defendants later recorded this order at the County of San Bernardino County Clerk’s Recorder’s Office. Under these circumstances, 6 T McGee protests that allowing the trial court’s order to stand in this context will deprive it of its security by cancelling the lien. But, allowing declaratory relief under the present circumstances in no way deteriorates lienor’s rights because the relief allowed conforms to the dictates of section 8424 in furtherance of the Legislature’s intent. The court’s order, accordingly, has not extinguished the lien and T McGee is free to pursue its action against the bond.

13 T McGee, the lien holder, neither executed nor filed a release of its mechanic’s lien as to eliminate Harco’s obligations under the terms of the bond. The recording of the court’s order is not a qualifying event under the language of the bond that would operate to eliminate the surety’s obligations. II. Attorney Fees T McGee next maintains that the trial court improperly awarded defendants prevailing party attorney fees related to its “[m]otion” under section 8480. The court did not specify the grounds on which it was awarding defendants $4,250 in attorney fees. To the extent the court may have relied on section 8488, this was error. Section 8488, subdivision (c) provides for prevailing party attorney fees on a petition under section 8480. (See §§ 8480 through 8488 [relating to procedures for release orders for expired liens]; see also Koudmani v. Ogle Enterprises, Inc. (1996) 47 Cal.App.4th 1650, 1660 [noting party who prevailed in a petition for release of a lien that was untimely prosecuted was entitled to fees under former § 3154, subd. (f) (now § 8488, subd. (c))].) But defendants’ “[m]otion,” as explained, was a request for equitable declaratory relief, not a motion under section 8480. Assuming the court awarded attorney fees to defendants under section 8488, the award was erroneous. We are otherwise aware of no contract or statute that would allow an award of attorney fees related to defendants’ request for relief. (See Code Civ. Proc., § 1021; Trope v. Katz (1995) 11 Cal.4th 274, 278–279 [California follows the American rule, which requires that each party to the lawsuit pays their own attorney fees unless specifically provided for by statute or contract]; Royster Construction Co. v. Urban West Communities (1995) 40 Cal.App.4th 1158, 1169 [“The ‘black letter law’ . . . bars recovery of attorney fees in mechanic’s lien actions,” including actions to foreclose on the bond].)

14 We accordingly reverse the award of prevailing party attorney fees in favor of defendants. DISPOSITION The portion of the trial court’s order releasing the property from T McGee’s mechanic’s lien and keeping the bond in place, is affirmed. The trial court’s award of attorney fees in favor of defendants is reversed. In the interest of justice, the parties are to bear their own costs on appeal. (See Cal. Rules of Court, rule 8.278(a)(5).)

MCCONNELL, P. J.

WE CONCUR:

BUCHANAN, J.

KELETY, J.