November 20, 2012
The CLTA Litigation Committee has approved filing a brief in a case where the Court of Appeal granted a stay of trail court proceedings and issued an Order to Show Cause. The issue is whether the standard for recovery of a mechanics’ lien against owners who were not a party to the construction contract is a reasonable value standard or the lesser of the contract price or reasonable value. The trial court expressed the view that since there was no agreed to price or contract between the contractor and homeowners, a reasonable value standard applied. A related issue is whether the owners can assert defenses as third party beneficiaries, notwithstanding the trial court’s view that the contract is not relevant due to a lack of privity between the owners and contractor.