JOHN GOETTEN CONSULTING CIVIL ENGINEERS INC v. CROCKER NATIONAL BANK

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Court of Appeal, Fourth District, Division 3, California.

JOHN G. GOETTEN CONSULTING CIVIL ENGINEERS, INC., Plaintiff and Appellant, v. CROCKER NATIONAL BANK, Defendant and Respondent.

G003151.

Decided: June 30, 1987

Nathan D. La Moure, for plaintiff and appellant. Tremaine, Shenk, Stroud & Robbins and Terence McGauhey, Los Angeles, for defendant and respondent.

Plaintiff John G. Goetten Consulting Civil Engineers, Inc. (Engineers) appeals from an order granting summary judgment in favor of defendant Crocker National Bank (Crocker).   Engineers amended its complaint to substitute Crocker as a fictitious defendant after the 90–day time period provided by Civil Code section 3144.   Crocker moved for summary judgment on the ground Engineers had actual knowledge of its identity at the time it filed the complaint and was therefore barred by the statute of limitations from proceeding with its action against Crocker.   The trial court granted the motion and Engineers appeals.

I

In 1976, Engineers entered into a contract with The Goeden Company (Goeden) to provide works of improvement on real property in Orange County owned by Goeden, designated as parcel 4 and tracts 11139 and 10870.   Goeden obtained a construction loan from Crocker for $5.9 million and executed a deed of trust dated September 16, 1980 naming Crocker as beneficiary.

In April 1983, Engineers was owed $67,924 for work performed on tracts 11139 and 10870 and $9,198 for work performed on parcel 4.   On June 24, 1983, it filed mechanic's liens against the properties in the foregoing amounts.   Shortly thereafter, Engineers ordered title reports, known as “litigation guarantees,” from Lawyers Title Insurance Corporation (Lawyers) to ascertain the names of the necessary defendants to a foreclosure action.   After obtaining the title reports, Engineers filed two separate foreclosure actions;  one was filed in municipal court and one in superior court.   The action in municipal court was for $9,198 due on the parcel, and named Crocker as one of the defendants.   The action in superior court was for $67,924 due on the tracts and named several defendants, including Goeden, but did not name Crocker.

In January 1984, Crocker answered the municipal court complaint, claiming an interest in parcel 4 superior to Engineers' mechanic's lien based on the $5.9 million deed of trust recorded in 1980.1  The following month, Engineers amended the superior court complaint to name Crocker as Doe 1.  Crocker answered the complaint and raised as an affirmative defense Engineers' failure to comply with Civil Code section 3144, which provides that an action to foreclose on a mechanic's lien must be brought within 90 days of the date the lien is recorded.

In August, Crocker moved for summary judgment on the ground Engineers knew when it filed the complaint that Crocker was the construction lender and could not avoid the statute of limitations by amending the complaint to substitute Crocker in as a Doe defendant.   In support of the motion, Crocker attached the title report ordered by Engineers, the deed of trust in favor of Crocker recorded in 1980, and Engineers' answers to interrogatories in which it admitted receiving the title report prior to filing the complaint.   The court denied the motion for summary judgment.

In May 1985, Engineers moved to have the municipal court action transferred to superior court and consolidated with the foreclosure action on tracts 11139 and 10870.

In July, with the motion for consolidation still pending, Crocker renewed its motion for summary judgment on the same grounds as the earlier motion, but offered additional evidence.   In addition to the title report and requests for admission submitted with the previous motion, Crocker attached certified copies of the tract maps prepared by Engineers which recited Crocker's “ownership interest” in tracts 11139 and 10870 on the face of the documents.   Also attached were excerpts from the deposition of John Goetten, president of Engineers and copies of seven different preliminary title reports on the two tracts which he admitted receiving during the period from 1980 to 1982.   Each report reflected Crocker's interest in the property pursuant to the deed of trust recorded in 1980.

Engineers opposed the motion on the ground a triable issue of fact existed as to whether it had actual knowledge of Crocker's ownership interest when it filed the complaint.   Engineers also argued, alternatively, that Crocker had waived its right to assert the statute of limitations by not raising it before the motion for summary judgment.

Attached to the opposition were the declarations of John G. Goetten, and his attorney, Nathan D. La Moure.   La Moure stated he telephoned Lawyers before preparing the complaint and was told (by an unnamed person) that Crocker was not a necessary party.   He then prepared the complaint.   It was not until after the complaint had been prepared that he received the title report showing Crocker's ownership interest.   He admitted he received the title report several days before filing the complaint.   Goetten's declaration stated he did not personally know, at the time he signed the complaint, that Crocker had an ownership interest in the property.

The court granted the motion for summary judgment and Engineers appeals.

II

 Civil Code section 3144, subdivision (a) provides, “No lien provided for in this chapter binds any property for a longer period of time than 90 days after the recording of the claim of lien, unless within that time an action to foreclose the lien is commenced in a proper court․”   A person who furnishes labor or materials on a work of improvement is entitled to file a mechanic's lien on the property where the improvement is located.   Once recorded, the mechanic's lien constitutes a direct lien on the property and takes priority over all encumbrances recorded after the improvement work commenced.  (Grinnell Fire Protection Systems Co. v. American Sav. & Loan Assn. (1986) 183 Cal.App.3d 352, 355, 228 Cal.Rptr. 292.)

 The lien, however, terminates 90 days after it is recorded unless an action to foreclose is brought within that period of time.   The 90–day period is a statute of limitations and “all parties to be bound by the judgment must be joined in the foreclosure action within 90 days of the filing of the mechanic's lien․”  (Id., at p. 357, 228 Cal.Rptr. 292.)   Only those parties joined within the 90–day period are bound by the judgment.

In Riley v. Peters (1961) 194 Cal.App.2d 296, 15 Cal.Rptr. 41, materialmen failed to join a trustee under a deed of trust and subsequent owners under that deed as parties to the foreclosure action until after the 90–day period had expired.   The subsequent owners successfully sued to quiet title against the materialmen and the judgment was upheld on appeal.   Failure to name all interested parties to the foreclosure action within the 90–day period barred any claims of priority against those not named.

 A holder of a mechanic's lien may, however, protect its right to assert the lien over parties after the 90–day period by naming fictitious defendants in the foreclosure action.   However, a defendant may only be substituted in as a fictitious defendant after the 90–day period if plaintiff did not have actual knowledge of the defendant's identity at the time the foreclosure action was filed.  “California Code of Civil Procedure section 474 provides that a plaintiff may designate a defendant by a fictitious name when the plaintiff is ignorant of the true name of the defendant.   The purpose of the section is remedial.   It is liberally construed to prevent the running of the statute of limitations where the plaintiff does not have actual knowledge of the name of the defendant.  [Citation.]   The ignorance of which Code of Civil Procedure section 474 speaks is actual ignorance, and a plaintiff will not be refused the right to use a Doe pleading even where the plaintiff's lack of actual knowledge is attributable to plaintiff's own negligence.  [Citation.]”  (Grinnell Fire Protection Systems Co. v. American Sav. & Loan Assn., supra, 183 Cal.App.3d 352, 359, 228 Cal.Rptr. 292, emphasis added.)

 Here, Engineers filed its foreclosure action on September 22, 1983, within 90 days of the June 24 filing of the mechanic's lien.   However, it was not until five months later that it sued Crocker by naming it as Doe 1.  Thus, Engineers' claim against Crocker will survive the bar of the statute of limitations only if Crocker was properly sued as a fictitious defendant.   This turns on whether Engineers had actual knowledge of Crocker's identity at the time it filed the foreclosure action.   The undisputed facts are that Engineers did have such knowledge and the court therefore properly granted summary judgment.

The evidence of Engineers' actual knowledge of Crocker's identity is overwhelming and undisputed.   Crocker submitted the title report ordered by Engineers naming Crocker as a necessary party.   Engineers' attorney admitted receiving the title report prior to the time he filed the complaint.   Crocker offered certified copies of final tract maps prepared by Engineers between 1980 and 1982 which disclosed Crocker's interest in the property on their face page.   Preliminary title reports ordered by Engineers were admitted into evidence which also disclosed Crocker's interest in the property pursuant to the deed of trust.   Crocker also offered excerpts from the deposition of John Goetten in which he acknowledged receiving the title reports.   Finally, the municipal court action filed by Engineers naming Crocker as a necessary party because of its $5.9 million trust deed on the property proved Engineers knew Crocker's identity.

The only evidence offered by Engineers to dispute Crocker's claim of actual knowledge was the declaration of John Goetten in which he denied knowing Crocker had an interest in the property when he read and signed the complaint.   Contrary to Engineers' assertion, this is not sufficient to create a triable issue of fact.   First, John Goetten does not deny knowing Crocker's identity when the complaint was filed;  more importantly, John Goetten's knowledge, or claimed lack thereof, is not the critical factor.   Rather, it is the knowledge of Engineers, the party who filed the foreclosure action, that is relevant.   Engineers prepared the ownership certificates of the final tract maps reflecting Crocker's interest in the property;  Engineers received the preliminary title reports disclosing Crocker's interest;  and finally, counsel for Engineers admitted receiving the title report listing Crocker as a necessary party before the complaint was filed.

Engineers' claim against Crocker is barred by the statute of limitations if Engineers had actual knowledge of Crocker's identity when it filed its original complaint.   Crocker presented an abundance of evidence establishing that fact;  Engineers presented no evidence to the contrary.   The court therefore properly granted summary judgment in favor of Crocker.  “When there is no dispute over the decisive facts, the question of limitations is one of law, amenable to disposition by summary judgment.  [Citations.]”  (Wells Fargo Bank v. Superior Court (1977) 74 Cal.App.3d 890, 895, 141 Cal.Rptr. 836.)

III

 Engineers makes several other arguments, all without merit.   It first contends Crocker waived its right to assert the statute of limitations by raising it for the first time at the motion for summary judgment.   The record belies that contention.   Crocker raised the bar of the statute of limitations of Civil Code section 3144 as an affirmative defense in its answer to the complaint.   That is sufficient.  (See Petersen v. W.T. Grant Co. (1974) 41 Cal.App.3d 217, 115 Cal.Rptr. 874.)

Engineers also raises objections to the evidence offered by Crocker in support of its motion.   The record reveals Engineers did submit written evidentiary objections below;  however, Engineers claims the court failed to rule on them.   However, there was no court reporter present at the hearing and therefore no reporter's transcript;  neither does the record contain a written ruling or minute order for this court to review.   We therefore have no way of knowing the court's ruling on the objections.

 Nevertheless, a review of the record reveals that Engineers' evidentiary objections are without merit and the summary judgment motion was supported by admissible evidence.  Code of Civil Procedure section 437c, subdivision (b), expressly permits admissions, answers to interrogatories, depositions and matters of which judicial notice can be taken to be used in support of a motion for summary judgment.   The final tract maps were certified copies of records from the Orange County Recorder and therefore subject to judicial notice, as was the title report, which was included in the record as part of the first motion for summary judgment and was properly authenticated at that time.   Engineers' answers to interrogatories and the deposition of its president were also properly admitted.  (Code.Civ.Proc., § 437c, subd. (b).)

Lastly, Engineers contends the motion to consolidate the municipal court action naming Crocker with the superior court action moots the question of actual knowledge.   However, the record reveals the parties agreed to settle the municipal court action.   Crocker agreed to pay the $9,198 and Engineers agreed to dismiss Crocker from the action.   That being the case, whether the municipal court action was consolidated is irrelevant as far as Crocker is concerned.

The judgment is affirmed.   Respondent is entitled to costs on appeal.

FOOTNOTES

1.   Sometime in 1984, Goeden filed a petition for bankruptcy.   During the course of those proceedings and pursuant to a settlement agreement, Crocker was permitted to foreclose on the deeds of trust executed by Goeden and thus became record owner of tracts 11139 and 10870 and parcel 4.

WALLIN, Associate Justice.

TROTTER, P.J., and CROSBY, J., concur.

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