Court Opinion

ID: 177691
Source: CourtListenerOpinion
Date Created: 2010-10-22 00:02:12+00
Date Added: 2024-06-11T17:25:42.663651
License: Public Domain

FILED
                           NOT FOR PUBLICATION                              OCT 21 2010

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

WEST CHARLESTON LOFTS I, LLC, et                 Nos. 09-16313 & 09-16887
al.,
                                                 D.C. No. 2:09-CV-00392-PMP-
                    Plaintiffs – Third Party     LRL
                    Defendants – Appellees,

  v.
                                                 MEMORANDUM *
R&O CONSTRUCTION COMPANY,

                    Defendant – Appellant,

  v.

CHARLES G. HALL, et al.,

                   Third Party Defendants
                  – Appellees.

                    Appeal from the United States District Court
                             for the District of Nevada
                      Philip M. Pro, District Judge, Presiding

                      Argued and Submitted October 8, 2010
                            San Francisco, California

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: BEEZER and GRABER, Circuit Judges, and CARNEY,** District Judge.

      Appellant R&O Construction Company (“R&O”) appeals two orders by the

district court. The first granted Plaintiff-Appellees West Charleston Lofts I, LLC

and WCL Commercial, LLC’s (“WCL”) motion to expunge mechanics’ liens filed

by R&O. The second granted WCL’s motion to dismiss R&O’s third party

complaint and counterclaims to foreclose on those mechanics’ liens and obtain

recovery for unjust enrichment. WCL hired R&O to build a 40-unit condominium

project in Las Vegas, Nevada. The district court’s orders were premised on its

holding that R&O’s mechanics’ liens were premature and frivolous pursuant to

Nevada Revised Statutes § 108.2275 because the final payment of $682,595

remaining under the parties’ contract was not payable until several major punch list

items were completed or fixed. We review de novo the district court’s construction

of the relevant statutory provisions of Nevada law as well as its grant of WCL’s

motion to dismiss. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 2005). We

reverse, reinstate R&O’s liens, and remand for further proceedings.

      The district court erred in concluding that R&O had no statutory right to the

final payment and that the parties’ contract was controlling on the issue. The

      **
             The Honorable Cormac J. Carney, United States District Judge for the
Central District of California, sitting by designation.

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Nevada Legislature enacted the Prompt Payment Act to protect contractors from

the harm that they suffer when owners unfairly withhold payment, including final

payment on projects that are substantially complete and available for use. Nevada

Revised Statutes § 624.620(1)(b)(2), which is part of the Prompt Payment Act,

specifically provides that “any money remaining unpaid . . . is payable to the prime

contractor within 30 days after” the owner receives “[a] certificate of occupancy

issued by the appropriate building inspector or other authority.” Under

§ 624.620(2)-(3), an owner can withhold the final payment for work or labor that

has not been performed or that is not materially in compliance with the parties’

agreement only if the owner provides appropriate notice before the final payment

is due explaining in reasonable detail the reason for withholding. Appropriate

notice of withholding from the owner pursuant to § 624.620(3) triggers

§ 624.620(4), which gives the contractor the opportunity to correct any condition

or reason for withholding and provide a notice of correction to the owner that

renews the owner’s obligation to make prompt payment. Most significantly, any

“condition, stipulation or provision in an agreement which” (1) limits or waives the

contractor’s rights or (2) relieves the owner of its statutory obligations “is against

public policy and is void and unenforceable.” Nev. Rev. Stat.                 §

624.622(2). The Prompt Payment Act’s requirement that the final payment be

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made to the contractor supersedes any provision in the parties’ agreement

providing for payment on a later date. To construe the detailed provisions of the

Prompt Payment Act otherwise would render those provisions meaningless and

contravene the purpose of the legislation.

      It was undisputed before the district court that a Certificate of Occupancy

was issued for the project, but that WCL never made the final payment under the

parties’ agreement. WCL gave no notice of withholding. Consequently, R&O was

entitled to file mechanics’ liens on the project to secure the outstanding amount

due under the contract. Because the district court expunged R&O’s mechanics’

liens and dismissed R&O’s third party complaint and counterclaims based on its

erroneous construction of § 624.620, we must reverse the district court’s orders,

reinstate the mechanics’ liens, and remand for further proceedings. In light of our

disposition, we need not address R&O’s other grounds for appeal.

REVERSED; MECHANICS’ LIENS REINSTATED; AND REMANDED.

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