LEGAL NEWS


The Project ‘Completion’ Paradox I


By Garret Murai, Wendel, Rosen, Black & Dean LLP


f you’re a contractor you know the importance of project completion. Not only because it often triggers


final payment, warranty periods and other contractual requirements, but just as importantly, because it sets the deadline for you to record a mechanics lien, serve a stop payment notice and make a payment bond claim. But when exactly does “completion”


occur? Surprisingly, that question can be more difficult to answer than you think.


The Project “Completion” Paradox


Civil Code section 8180, which


applies to private works projects, and Section 9200, which applies to public works projects, define when project completion occurs. While the defini- tions vary, the chart on this page shows the criteria normally used.


entity?” Is it receipt of sign off by the building department? Is it receipt of a certificate of occupancy? Or is it something else? And therein lies the paradox. Te definitions need definitions.


The Picerne Construction Example A good illustration of these diffi-


culties can be seen in the recent case of Picerne Construction Corp. v. Castellino Villas, California Court of Appeals for the Tird District, Case No. C071197 (February 18, 2016). Note: Picerne involved the predecessor


statute to Civil Code section 8180 – Civil Code section 3086 – nevertheless it is instructive. In Picerne, the general contractor


Picerne Construction Corp. (Picerne) entered into a construction contract with Castellino Villas (Castellino) for the construction of an apartment complex in Elk Grove, California. Te project consisted of 11 separate apartment buildings. During


construction a number of events took place that would later became important to


the case: 


Te City


of Elk Grove issued several certificates of occupancy, the last of which was issued


Fair enough. But . . .


 What is “actual completion?” Is it receipt of operation and mainte- nance manuals and warranties? Is it receipt of a final pay application?


 What is “occupation or use?” Is it turning on the utilities? Moving furniture in? Or do people have to be using the facility for its intended purpose?


 What is “cessation of labor?” Does it only include physical labor at the site? How about work performed off site? How about work performed at the home office?


 What is “acceptance by a public 18 July/August 2016


on July 25, 2006. However, at the time, Picerne was still performing work, including straightening valleys in roofs, installing nailers and hips on roof edges, and nailing trim.


 On August 28, 2006, Castellino signed a document accepting buildings 1, 3, 4 and 6 through 11 as being complete. At the time, Picerne was still completing punch list work on buildings 2 and 5, including the installation of grip tape on stair treads.


 On September 8, 2006, Castellino issued a document entitled


“Owner’s Acceptance of Site” and Castellino began renting apartments in October 2006.


 On November 28, 2006, Picerne recorded a mechanics lien on the property after it was not paid its retention and on December 29, 2006 filed suit to foreclose on its mechanics lien.


 On April 30, 2007, Picerne recorded a notice of completion stating that the project was completed on April 20, 2007. Following trial, the trial court


entered a judgment in favor of Picerne and ordered that the property be sold to satisfy Picerne’s mechanics lien. Castellino appealed.


The Court of Appeals Decision On appeal, Castellino argued that


Picerne had not timely recorded its mechanics lien because Picerne did not record its mechanics lien within 90 days of “substantial completion” of the project under former Civil Code section 3115 (now CC 8410), which it argued was the date the City of Elk Grove issued its final certificate of occupancy, on July 25, 2006. In support of its argument,


Castellino argued that cases construing the predecessor statute to Civil Code section 3115, Code of Civil Procedure section 1187, had held that “any trivial imperfection in the said work, or in the construction of any building, improvement, or structure, or of the alteration, addition to, or repair thereof, shall not be deemed such a lack of completion as to prevent the filing of any lien.” And, here, argued Castellino, after the City of Elk Grove issued its final certificate of occupancy on July 25, 2006, only minor, trivial work (i.e., the roof work and installation of grip tape on the stair treads ) was left to be completed by Picerne. Te Court of Appeals disagreed.


California Constructor


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