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Strict Compliance with Statutory Provisions Governing Proof of Service of 20-Day Preliminary Notice is Not Required

In a new case, Hub Construction Specialties, Inc. v. Esperanza Charities, Inc. (filed February 8, 2016, Second District, Div. Eight) 2016 S.O.S. 787, the Court held that under the prior mechanic's lien code (Former Civ. Code, § 3097.1, subd. (a); Stats. 2010, ch. 697, § 16 [repealed].) strict compliance with proof of service provisions was not required when there was evidence that there had been strict compliance with the provisions regarding service of notice.

Plaintiff Hub Construction Specialties, Inc., was a material supplier to the general contractor on a construction project on property owned by Defendant Esperanza Charities, Inc. The general contractor failed to pay Plaintiff $81,857.55 for the materials. On March 16, 2012, Plaintiff served a 20-Day Preliminary Notice by Certified Mail, to the general contractor, the Defendant, and the project construction lender. It was uncontested that Plaintiff paid the postage for certified mail and that the general contractor, the Defendant, and the project construction lender received the 20-Day Preliminary Notice. Plaintiff did not, however, request or pay for a "Return Receipt" the certified mail of the notices.

On December 27, 2012, Plaintiff timely recorded a mechanic's lien against the property for $81,857.55 which remained unpaid. On February 6, 2013, Plaintiff filed a complaint to foreclose the mechanic's lien. Plaintiff sought a judgment for foreclosure of the mechanic's lien, and defendant sought a judgment that the lien was invalid and an order expunging the lien. In a Summary Judgment Procedure, the trial court denied Plaintiff's motion for summary judgment and ordered the property released from Plaintiff's lien. The court found Plaintiff could not provide sufficient proof of service by documentation of the return receipt of certified mail as required under Former Civ. Code, § 3097.1.

Defendant contended in its arguments for summary judgment that strict compliance with the statutory provisions regarding proof of service of the 20-Day Preliminary Notice. Defendants had previously admitted in discovery that they had been served with the 20-Day Preliminary Notice, and that they had in fact received the notice. These facts were stipulated to during the summary judgment proceedings. Defendants argued in the summary judgment proceedings that regardless of Plaintiff's strict compliance with the notice provisions, and Defendant's actual receipt of the notice, Plaintiff's lien was unenforceable due to failure to strictly comply with the proof of service requirements under Former Civil Code §3097.1.

Former Civil Code §3097.1 provided that: "Proof that the preliminary 20-day notice required by Section 3097 was served in accordance with subdivision (f) of Section 3097 shall be made as follows: [¶] (a) If served by mail, by the proof of service affidavit described in subdivision (c) of this section accompanied either by the return receipt of certified or registered mail, or by a photocopy of the record of delivery and receipt maintained by the post office, showing the date of delivery and to whom delivered, or, in the event of nondelivery, by the returned envelope itself."

The Trial Court agreed with Defendants and ordered the lien expunged. Plaintiff's appealed.

The Appellate Court in their opinion reviewed a number of cases stating that strict compliance with the notice requirements of former Civil Code section 3097 is necessary, as well as other cases holding that substantial compliance with other provisions of the mechanic's lien law suffices under some circumstances. The Court concluded that while the principle of strict construction applies to "the manner or form of serving notice upon an affected party" (Harold L. James, Inc. v. Five Points Ranch, Inc. (1984) 158 Cal.App.3d 1, 6, it does not extend to matters of proof in a case where the defendant has admitted that notice was served in the statutorily prescribed manner. The court states "We do not disagree with the rule that strict compliance with the notice requirements of former Civil Code section 3097 is required. It is undisputed that plaintiff complied with that statute. We merely decline to extend the rule of strict construction to the proof of service requirements of former §3097.1. In short, in a case where defendant has admitted that notice was served in the statutorily prescribed manner, plaintiff need not comply with the statutory requirements for proving that notice was served in the statutorily prescribed manner" (emphasis in original).

It should be noted that this case would not have arisen under the current statutes. Former Civil Code §3097.1, has been replaced by §8118. Civil Code §8118 requires in pertinent part that if the notice is given by mail, the declaration is to be accompanied by either: 1) Documentation provided by the United States Postal Service showing that payment for certified mail, or express mail; 2) Documentation provided by an express service carrier showing that payment was made; 3) A return receipt, delivery confirmation, signature confirmation, tracking record, or other proof of delivery or attempted delivery provided by the United States Postal Service, or a photocopy of the record of delivery and receipt maintained by the United States Postal Service; or 4) A tracking record or other documentation provided by an express service carrier.

This case is nonetheless instructive as to the courts thinking with regard to which portions of mechanic's lien law require strict compliance and which portions will be liberally construed by the court.

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