Source: https://www.wolfflaw.com/the-california-constitution-gives-contractors-subcontractors-and.html
Timestamp: 2019-04-24 00:19:11+00:00

Document:
The California Constitution Gives Contractors, Subcontractors and Material Suppliers Constitutional Rights to Record Mechanics Liens and to Serve Public Works Stop Payment Notices.
Many years ago, wealthy individuals would use a person with few assets as their “general contractor”, who would then buy materials and hire workers and subcontractors to do most of the work.
Once the work was substantially finished, the owner would refuse to pay the phoney “general contractor”, who of course was then insolvent or bankrupt and unable to pay his laborers, subcontractors and suppliers, who thus then had no real way to get paid for their labor, work or materials.
Therefore, at a Constitutional Convention to amend the California Constitution in 1878-1879, the Workingmens’ Party succeeded in adding a mandatory Mechanics Lien right to the California Constitution, to protect the rights of laborers, contractors and suppliers to get paid..
Consequently, the California Constitution now grants mechanics lien rights to all those who furnish labor or material to a construction project.
California Constitution, Article XIV § 3.
Solit v. Tokai Bank (1999) 68 Cal. App. 4th 1435, 1446.
Hampton v. Christensen (1905) 148 Cal. 729, 737.
Hutnick v. United States Fidelity & Guaranty Co. (1988) 47 Cal. 3d 456, 462; Wm. R. Clarke Corp. v. Safeco Ins. Co.(1997) 15 Cal. 4th 882, 889.
Solit v. Tokai Bank (1999) 68 Cal. App. 4th 1435, 1442.
Because mechanics liens are not available where the construction project is performed on the property of the State or its political subdivisions (such as on CalTrans highway construction or other State or local County, City or District public construction jobs), in order to satisfy the Constitutional mandate to “give the laborer and materialman security for their claims." the Legislature therefore created rights to Stop Payment Notices, and Payment Bond requirements, for such public works projects. See generally, Civil Code §§ 9350 et seq; 9550 et seq.
N.V. Heathorn, Inc. v. County of San Mateo (2005) 126 Cal. App. 4th 1526, 1535.
Washington Internat. Ins. Co. v. Superior Court (1998) 62 Cal. App. 4th 981, 986.
Pub Cont. Code § 10223.
(1) “A person that provides work for a public works contract, if the work is authorized by a direct contractor..."
"Work of improvement" includes, but is not limited to: "construction, alteration, repair...in whole or in part, of, or addition, to a ...bridge,...or road." Civ. Code §8049.
In addition, the California Supreme Court has stated that a person furnishing labor or materials used in, on, or about the performance of public work may avail himself or herself of the stop payment notice procedure, providing the work or materials is furnished at the instance of the prime or direct contractor or a subcontractor having charge, in whole or in part, of the project. Theisen v. Los Angeles County (1960) 54 Cal.2d 170, 177; see also George F. Kennedy, Inc. v. Miles & Sons Constr. Div. (1970) 5 Cal.App.3d 516, 520.
The California Supreme Court further stated that "one who agrees with the prime contractor to perform a substantial specified portion of the work of construction which is the subject of the general contract in accord with the plans and specifications by which the prime contractor is bound has 'charge of the construction' of that part of the work of improvement (citation omitted) and is a subcontractor although he does not undertake to himself incorporate such portion of the projected structure into the building." Theisen, 54 Cal.2d at 183.
The material involved in Theisen consisted of 64 doors custom made in accordance with the architect's specification.
The California Supreme Court in Theisen held that the subcontractor/material supplier was entitled to invoke the stop payment notice procedure as a subcontractor/supplier.
The benefit to the construction contractor or supplier of having these Constitutional and statutory rights and remedies is that you may still be able to recover payment EVEN IF the owner or general contractor becomes insolvent or declares Bankruptcy, provided there is equity in the property, money still unpaid by the public agency, or the claims on the bond do not exceed the amount of the payment bond!!
Further, these laws also require that the unpaid claimant who has no direct contract with the property owner have previously served a 20-Day Preliminary Lien Notice (See related article) or a Payment Bond Notice..
Also, to “perfect” or enforce Mechanics Liens, Stop Payment Notice claims, or Public Works Payment Bond claims, suit must be filed very soon (sometimes as soon as 90 days after recording or serving, as discussed in the related articles above), or your Constitutional and statutory rights to such remedies may expire and become invalid!!!
Additionally, there are many technicalities to making proper and effective claims under or to these payment remedies.
Therefore, if you have not been paid, it is best to consult with an experienced Construction attorney very early on, to make sure you don’t make fatal missteps or errors, and to secure your right to be paid what is owed to you.
N.B. The contents of this Article DO NOT constitute legal advice or create an attorney-client relationship, and you may NOT rely on it without seeking legal advice regarding your particular, unique situation from a competent California Construction lawyer or Employment Law attorney.
Please also note that factual situations vary, and statutes, regulations and case law are frequently changing and evolving, and these materials thus also may be or become outdated or incorrect.
For further information on this topic and how the current law may apply to your particular contract, job and issues, Contact Us via email, phone (415)788-1881 or visit our website at www.wolfflaw.com for other contract information.
© George W. Wolff (2016), all rights reserved.

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