BLOIS COMPANY v. IMPERIAL BANK

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Court of Appeal, Second District, Division 4, California.

R.W. BLOIS COMPANY & Blois Construction, Inc., Cross-Complainants and Appellants, v. IMPERIAL BANK, Cross-Defendant and Respondent.

Civ. 69899.

Decided: February 17, 1984

Siple & Orrock and Karen A. Kurta, Ventura, for cross-complainants and appellants. Levinson & Lieberman, Inc., and Eric V. Rowen, Beverly Hills, for cross-defendant and respondent.

The case at bench turns on a single problem of pleading in actions to enforce mechanic liens.   Cross-complainants performed work and furnished materials for a housing project.   They duly filed a mechanic's lien on the property, to recover monies unpaid to it.   Within 90 days after recording the notice of lien, cross-complainants filed its cross-complaint for foreclosure in an action theretofore filed by another claimant, naming several “Doe” defendants under the fictitious name statute (Code of Civ.Proc., § 474).   Later, more than 90 days after the lien was recorded, cross-complainants discovered that respondent bank had, after the cross-complainants had begun work but before the cross-complaint was filed, recorded a deed of trust on the property, to secure its construction loan on the project.

When cross-complainants discovered the existence of that trust deed, it amended its pleading to substitute the bank for one of the “Doe” defendants.   The bank thereupon demurred to the amended cross-complaint on the ground that the amendment was barred by the 90 day statute of limitations applicable to suits to foreclose mechanic's liens.   The demurrer was sustained without leave to amend and this appeal followed.1  We affirm.

As far as we are advised, and as far as we can discover, the particular issue here before us is new.   The briefs do no more than to tell us settled rules applicable to all mechanic's lien cases, namely:  (a) although section 474 speaks of a “plaintiff who is ignorant of the name of a defendant,” case law has long interpreted that phrase to mean ignorance of the fact that a defendant was one against whom a plaintiff might have a cause of action, even though the plaintiff did know the name of the defendant;  (b) the 90 day period for filing a foreclosure suit is a statute of limitations;  (c) if a potential defendant is not named in the foreclosure suit, foreclosure does not affect that defendant's rights;  but (d) a defendant properly named as a “Doe” defendant in a foreclosure suit timely filed may be brought in by amendment even after the 90 day period has run.2

 It is here admitted that the cross-complainants knew of the existence of the bank and that it was the construction lender on the project;  it denies actual knowledge of the trust deed securing that loan until after the foreclosure action was filed and until after the 90 day period had run.   The issue, therefore is this:  May a plaintiff avail himself of section 474 as long as it has no actual knowledge of the potential claim of the defendant it later seeks to bring into the action, or is the mechanic's lien suitor not “ignorant” if, although it lacks actual knowledge, it is on notice of the possibility of the defendant's involvement and has means to verify the possibility.   We conclude that in order legally to avail itself of section 474, a plaintiff must use all reasonable means to ascertain the facts making the defendant a proper party.

 As the briefs before us show, that is the rule as to actions based on causes of action other than foreclosure of mechanic's liens.   Discovery of the possible adverse claimants is easy and inexpensive.   A title report from a title company, routine in all real estate transactions, requires little effort or small cost.   Good practice would require that a person seeking to collect by a foreclosure action money due him will be careful to see that his foreclosure eliminates any and all claimants junior to his lien.   We see no reason to excuse nonuse of such a simple and obvious means of discovery.

The judgment is affirmed.

FOOTNOTES

1.   The Notice of Appeal is from the Order sustaining the demurrer.   However, we are officially advised that a final judgment of dismissal has since been entered.   Pursuant to rule 2, California Rules of Court, we treat the Notice of Appeal as a premature but effective appeal from the final judgment eventually entered.

2.   Since the rules set forth in the text, and elaborately explained to us in the briefs, are hornbook law, not disputed or subject to dispute, we see no reason to extend this opinion by citation of the numerous authorities in which those rules have long since been expounded.

KINGSLEY, Associate Justice.

WOODS, P.J., and AMERIAN, J., concur.