Removal of Buildings Is a "Work of Improvement" For the Purposes of a Mechanical Lien

In United Rentals Northwest v. Snider Lumber Products, (--- Cal.Rptr.3d ---, Cal.App. 5 Dist., June 18, 2009) a California Court of Appeal considered whether an equipment rental company that rented equipment to a subcontractor for the removal of kilns from a property, but was never paid for the rentals, could record a mechanic's lien against the property. The court ruled that the kilns were buildings and that the removal of buildings falls within the definition of a "work of improvement" under the mechanic's lien statutes, allowing for a mechanic's lien to be recorded against the property.

Facts
Snider Lumber Products Inc. ("Snider") and Sierra Pacific Industries ("Sierra") were the owners of a sawmill at Chinese Camp in Tuolumne County. In 2006, Snider and Sierra embarked on a project to remove 10 lumber drying kilns from their property. They hired Midway United ("Midway") to remove the kilns, which in turn subcontracted the job to John Stuart Mechanical ("Stuart"). Stuart rented removal equipment from United Rentals Northwest, Inc. ("United"). During the removal project, there was a dispute between Midway and Stuart, resulting in Stuart leaving the project. Snider hired a new contractor to finish the job using its own equipment.

United was never paid for the use of its equipment and filed a mechanic's lien on the property in the amount of $60,602.99. Snider and Sierra filed a motion to remove the lien, arguing that the removal of the kilns was not a "work of improvement" subject to a mechanic¿s lien because the kilns were personal property and not buildings. Further, they argued that in any event, removal of the kilns did not benefit the property. The trial court agreed and ordered the lien removed. United appealed.

Decision
Civil Code Section 3110 provides that lessors of equipment "contributing to a work of improvement" shall have a lien against the property for the value of the use of the equipment. Section 3106 provides a list of definitions of "work of improvement" including "the demolition of buildings" and "the removal of buildings." That definition covers the removal of the kilns, the court said, because the kilns were buildings -- they were structures that were two stories tall, attached to concrete foundations, enclosed thousands of square feet of space, and had windows, doors and staircases.

The court rejected Snider and Sierra's argument that the removal did not benefit the property and therefore was not an "improvement." The court stated that even though following the removal, the land was in a state of "cluttered disrepair," the statue says nothing about whether the land must be left in an orderly state. Further, the statute does not say that anything else must be done after removal to confer benefits on the land. "In any event, when owners hire contractors to remove buildings, they presumably want the buildings removed, so the removal is an improvement and a benefit from the owners' perspective," the court said. Further, the court determined it was irrelevant that the improvement was not complete when the kilns were removed since Section 3110 says activity "contributing to" a work of improvement is what gives rise to a lien.

In sum, United's equipment was rented and used to improve Snider and Sierra's property by removing the kilns. Therefore, the court concluded that United has a proper lien on Snider and Sierra's property. The trial court's judgment was reversed.