PEREZ RECONSTRUCTION CONTRACTORS, INC., A CALIFORNIA CORPORATION VS TRACEY RENE WASHINGTON

Tentative Rulings

Case Number: 20STLC00124    Hearing Date: September 15, 2020    Dept: 26

DEMURRER

(CCP §§ 430.31, et seq.)

TENTATIVE RULING:

Cross-Defendant Perez Reconstruction Contractors, Inc. dba PRC’s Demurrer to the third cause of action for slander of title in the First Amended Cross-Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.

ANALYSIS:

Plaintiff Perez Reconstruction Contractors, Inc. dba PRC (“Cross-Defendant PRC”) filed the instant action for breach of construction contract and related claims, including foreclosure of mechanic’s lien against Defendant Tracey Rene Washington (“Cross-Complainant”) on January 7, 2020.

On March 2, 2020, Cross-Complainant filed a Cross-Complaint, then filed a First Amended Complaint on April 17, 2020. The First Amended Cross-Complaint makes claims for (1) breach of contract; (2) good faith and fair dealing; (3) slander of title; (4) recovery on license bond; and (5) declaratory relief against Cross-Defendant PRC and Business Alliance Insurance Company.

On May 15, 2020, Cross-Defendant PRC filed the instant Demurrer to the third cause of action of the First Amended Cross-Complaint. Cross-Complainant filed an opposition on September 2, 2020 and Cross-Defendant PRC replied on September 8, 2020.

Discussion

The Court finds that the Demurrer is supported by a meet and confer declaration as required by Code of Civil Procedure section 430.41. (Schiller Decl., filed 5/15/20.) Cross-Defendant demurs to the cause of action for slander of title for failure to allege sufficient facts to state a cause of action. (Citing Code Civ. Proc., § 430.10, subd. (e).) The elements of a cause of action for slander of title are “(1) a publication, (2) which is without privilege or justification, (3) which is false, and (4) which causes direct and immediate pecuniary loss.” (Alpha & Omega Development, LP v. Whillock Contracting, Inc. (2011) 200 Cal.App.4th 656, 664 (citing Manhattan Loft, LLC v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040, 1051).)

The third cause of action for slander of title alleges that on or about July 16, 2019, the parties entered into a contract authorizing Cross-Defendant PRC to perform emergency mitigation services on Cross-Complainant’s property. (First Amended X-Compl., ¶13.) On August 16, 2019, Cross-Defendant PRC request payment in the amount of $11,468.96, which was inconsistent with both the Schedule of Progress Payments and the material alteration to the contract. (Id. at ¶20.) On or about September 20, 2019, Contractor sent an invoice requesting payment in the amount of $14,737.91. (Id. at ¶28.) There continued to be problems with Cross-Defendant’s work under the contract, but it continued to send invoices to Cross-Complainant. (Id. at ¶¶22-40.) The Cross-Complaint alleges that Cross-Defendant “willfully and knowingly included in its invoices amounts for labor and materials not actually furnished and sought to recover more money than their performance warranted.” (Id. at ¶41.) This culminated in Cross-Defendant asserting a mechanics lien on the property known as Instrument Number 20191094159 dated October 14, 2019. (Id. at ¶8.) Finally, Cross-Complainant alleges that Cross-Defendant recorded the mechanic’s lien with “reckless disregard” for its truth, falsity, or validity and as a result, filing the meritless lien caused Plaintiff to suffer wrongful disparagement of title and pecuniary loss. (Id. at ¶56.)

Cross-Complainant points to Seeley v. Seymour (1987) 190 Cal.App.3d 844, 857 for the proposition that “[t]he recordation of an instrument facially valid but without underlying merit will, of course, give rise to an action for slander of title.” (Seeley v. Seymour (1987) 190 Cal.App.3d 844 (citing Forte v. Nolfi (1972) 25 Cal.App.3d 656, 685-686).) Neither Seeley nor Forte, however, concerned the recording of a mechanic’s lien nor addressed the existence of a privilege with respect to the instruments in question. Also, the statement on which Cross-Complainant relies in Seeley is arguably dicta given that the Court of Appeals found the instrument recorded in that case to be facially invalid.

Cross-Defendant cites to more current case law addressing the existence of a privilege to make statements in connection with litigation, including recording a mechanic’s lien. In Frank Pisano & Associates v. Taggart (1972) 29 Cal.App.3d 1, 25, the Court of Appeals specified that “[i]f the publication has a reasonable relation to the action and is permitted by law, the absolute privilege attaches. (Frank Pisano & Associates v. Taggart (1972) 29 Cal.App.3d 1 (emphasis added).) This reiterated the holding of the California Supreme Court: “It is our opinion that the [litigation] privilege applies to any publication, such as the recordation of a notice of lis pendens, that is required (e.g., Code Civ. Proc., § 749) or permitted (e.g., Code Civ. Proc., § 409) by law in the course of a judicial proceeding to achieve the objects of the litigation . . . .” (Albertson v. Raboff (1956) 46 Cal.2d 375, 381.)

Finally, Alpha & Omega Development, LP v. Whillock Contracting, Inc. (2011) 200 Cal.App.4th 656, 662, directly addressed the privilege that attaches to recording a mechanic’s lien and filing a lis pendens. (Alpha & Omega Development, LP v. Whillock Contracting, Inc. (2011) 200 Cal.App.4th 656.) The Court of Appeals held that a party cannot prevail on a cause of action for slander of title based on the filing of such a lis pendens because the litigation privilege set forth in Civil Code section 47 applies regardless of the merits of the document. (Id. at 667 [“there is no ‘lack of evidentiary merit exception’ under subdivision (b)(4) of Civil Code section 47.”].) Addressing cases that have ruled to the contrary, Alpha & Omega Development, LP found the plain language of Civil Code section 47, subdivision (b) controlling. (Id. at 667-668.) Because the statute expressly sets forth exceptions to the litigation privilege, additional exceptions based on the merits cannot be implied. (Ibid.)

Therefore, the Cross-Complaint fails to state a cause of action for slander of title against Cross-Defendant PRC with respect to the recording of the mechanic’s lien.

Conclusion

Cross-Defendant Perez Reconstruction Contractors, Inc. dba PRC’s Demurrer to the third cause of action for slander of title in the First Amended Cross-Complaint is SUSTAINED WITHOUT LEAVE TO AMEND.

Moving party to give notice.