BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 2654 (Morrell)
As Amended June 11, 2012
Hearing Date: July 3, 2012
Fiscal: No
Urgency: Yes
RD
SUBJECT
Mining Liens: Definitions
DESCRIPTION
Operative July 1, 2012, existing law provides for mining liens
for labor performed in any mining claim or claims, or in or upon
any real property worked as mine, as specified, and defines
"mine" to mean a mining claim or real property worked on as a
mine.
This urgency measure would revise the definition of a "mine" as
a mining claim or real property worked on as a mine, including
any quarry or pit, from which rock, gravel, sand, or other
mineral-containing property is extracted by any mining or
surface mining operation. The bill would state that these
provisions are declarative of existing law.
This bill would also state the legislative intent to supercede
the holding of a California Appellate Court decision in Sukut
Construction Inc. v. Rimrock CA, LLC (2011) 199 Cal.App.4th.
817.
BACKGROUND
The California Constitution provides that mechanics, persons
furnishing materials, artisans, and laborers of every class
shall have a lien upon the property upon which they have
bestowed labor or furnished material for the value of the labor
done and the material furnished. It also requires the
Legislature to provide, by law, for speedy and efficient
enforcement of those liens. (Cal. Const. art 14, Sec. 3.) To
(more)
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effectuate that constitutional requirement, the California Civil
Code provides for lien procedures for works of improvement and
specifies the obligations, rights, and remedies of those
involved in the project. (See Civ. Code Secs. 3082 et seq. and
8160 et seq.)
Similarly, under Civil Code Section 3060, California law also
provides for mining liens and also provides for enforcement of
those liens in the same manner as provided for works of
improvement (including mechanics liens), pursuant to specified
sections of existing law. Section 3060, as made operative on
July 1, 2012 due to the delayed implementation of SB 189
(Lowenthal, Ch. 697, Stats. 2010), explicitly defines a mine for
the purposes of that section to mean a mining claim or real
property worked on as a mine.
In 2011, the 4th District Court of Appeal in Sukut Construction
Inc. v. Rimrock CA, LLC (2011) 199 Cal.App.4th. 817 (review
denied) ruled against a contractor seeking to enforce a mining
lien, holding that a quarry is not a mine under Section 3060,
based on the materials extracted, and therefore that the
contractor was not entitled to enforce a lien under that
section. (The court did not decide the issue of whether the
contractor could have enforced a mechanic's lien instead,
holding that the plaintiff was judicially estopped from doing
so.)
This urgency measure would state the intent of the Legislature
to supercede the holding of that case and revise the definition
of "mine" to include a quarry or pit, from which rock, gravel,
sand, or other mineral-containing property is extracted by any
mining or surface mining operation. The bill would also state
that these provisions are declarative of existing law.
CHANGES TO EXISTING LAW
Existing law provides that mechanics, persons furnishing
materials, artisans, and laborers of every class shall have a
lien upon the property upon which they bestowed labor or
furnished material for the value of such labor done and material
furnished. (Cal. Const., art. 14, Sec. 3.)
Existing law sets forth obligations and rights of contributors,
owners, construction lenders, and persons otherwise involved in
an improvement to real property, in what is informally known as
the mechanics lien statute. (Civ. Code Secs. 3082 et seq.,
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operative until July 1, 2012; 8160 et seq., operative July 1
2012.)
Existing law , operative as of July 1, 2012, provides that any
person who performs labor in a mine, either in the development
of it or in working on it by the subtractive process, or
furnishes materials to be used or consumed in it, has a lien
upon the mine and the works owned and used by the owners for
milling or reducing the ores from the mine, for the value of the
work or labor done or materials furnished by each, as specified,
and defines a "mine" as a mining claim or real property worked
on as a mine. Existing law also provides such liens are
enforceable in the same manner as works of improvement,
including mechanics liens, as specified. (Civ. Code Sec. 3060;
a prior version of this section, which was substantially similar
became inoperative as of July 1, 2012.)
This bill would, until July 1, 2012, define "mine" to mean a
mining claim or real property worked on as a mine, including any
quarry or pit, from which rock, gravel, sand, or any other
mineral-containing property is extracted by any mining, or
surface mining, operation. The bill would provide that this
section would be repealed as of January 1, 2013, unless a later
enacted statute that becomes operative on or before July 1,
2013, deletes or extends that date.
This bill would, operative July 1, 2012, define "mine" to mean a
mining claim or real property worked on as a mine, including any
quarry or pit, from which rock, gravel, sand, or any other
mineral-containing property is extracted by any mining, or
surface mining, operation.
This bill would state that the above provisions are declarative
of existing law.
This bill would state legislative intent to supercede the 4th
District Court of Appeal's holding in Sukut Construction, Inc.
v. Rimrock, CA LLC (2011) 199 Cal.App.4th 817.
This bill is an urgency measure and would go into immediate
effect.
COMMENT
1. Stated need for the bill
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According to the author:
Article XIV, Section 3 of the California Constitution
guarantees lien rights for contractors. İThat section] reads,
"İm]echanics, persons furnishing materials, artisans, and
laborers of every class, shall have a lien upon the property
upon which they bestowed labor or furnished material for the
value of such labor done . . ."
Unfortunately, a recent State Appellate Court decision (Sukut
v. Rimrock (2011) 199 Cal.App.4th 817) jeopardizes the lien
rights of contractors that perform work at mines or rock
quarries. The court determined that a rock quarry is not a
mine. This finding defies the actual meaning of a rock quarry
and makes Civil Code Section 3060 inapplicable to contractors
that work at rock quarries, denying the constitutional
guarantee of Article XIV, Section 3.
The lien is nothing more than collateral to ensure payment.
If a contractor or material supplier is not paid for work
performed, the statutes ultimately authorize a contractor to
foreclose on the property in order to recover the amount owed.
AB 2654 amends Civil Code Section 3060, the mining lien law,
to define the term "mine" to include "a mining claim or real
property worked on as a mine, including any quarry or pit,
from which rock, gravel, sand, or any other mineral-containing
property is extracted by any mining or surface mining,
operation." . . .
AB 2654 İalso] declares the intent of the legislature to
supersede İsic] the holding in Sukut Construction, Inc. v.
Rimrock, CA LLC (2011) 199 Cal.App.4th 817.
2. Mines, minerals, and quarries
This bill seeks to clarify a definition of mine in existing law,
for the purpose of a mining lien, and explicitly includes in
that definition quarries or pits, from which rock, gravel, sand,
or any other mineral-containing property is extracted by any
mining, or surface mining, operation. In doing so, it states
it is declarative of existing law, and also intends to supercede
the case of Sukut Construction, Inc. v. Rimrock CA LLC (2011)
199 Cal.App.4th. 817.
The California Constitution provides that laborers of every
class shall have a lien upon the property upon which they
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bestowed labor or furnished material for the value of such labor
done and material furnished, and requires the Legislature to
provide for the laws governing the enforcement of such liens.
California law, Civil Code Section 3060, provides for mining
liens and the enforcement of such liens in the same manner as
works of improvement, including mechanics liens. Existing law,
as became operative July 1, 2012, defines "mine" to mean a
mining claim or real property worked on as a mine. A prior
version of the statute, which is no longer in operative,
essentially provided the same. While not providing for an
explicit definition of a mine for the purposes of such liens,
the prior version provide that any person who performs labor in
any mining claim or claims, or in or upon any real property
worked as mine has a lien upon the same and the works owned and
used by the owners for milling or reducing the ores from the
same, for the value of the work or labor done or materials
furnished by each respectively, as specified. Though a quarry
by its plain meaning is often understood as an "open-pit mine"
from which rock or minerals are extracted, neither the prior
version, nor the current version of Section 3060 defined mine to
expressly account for different variations of mines or types of
materials extracted that were relevant in determining whether a
lien attaches or not.
a. Section 3060's mining liens under Sukut Construction
By revising the definition of a mine, this bill seeks to
supercede the case of Sukut Construction, Inc. v. Rimrock CA
LLC (2011) 199 Cal.App.4th 817 (review denied). In Sukut, the
Fourth District appellate court held that a quarry was not a
mine within the meaning of the mining lien statute as the
contractor did not claim that its work at the quarry involved
a vein, lode, or ore deposit, or that it had acquired a right
of possession to the adjoining surface. There, the plaintiff,
Sukut Construction, had completed surface mining of aggregate
materials at the Otay Valley Quarry (Quarry) for the owner and
the operator of the quarry; and contended that Quarry is a
"mine" and the hard rock products extracted from it are
"minerals;" therefore, Sukut was entitled to record and
enforce a mining lien. The superior court had found that
"although a quarry may be a surface mine, the quarry here was
not a mine. (Rimrock) İthe operator of the quarry] was
breaking up and removing hard rock. There is no evidence that
minerals were extracted therefrom." (Id. at 822-823.)
The Court of Appeal affirmed the superior court ruling,
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relying in part on statutory rules of interpretation and a
California Supreme Court case which clarified the definition
of a "mining claim" as used in the predecessor statute to
Section 3060 as "that portion of a vein or lode and of the
adjoining surface or of the surface and subjacent material, to
which a claimant has acquired the right of possession." (Id.
at 828, citing Williams v. S.C. Mining Association (1884) 66
Cal. 193, 198.) The plaintiff did not claim its work at
Quarry involved a vein, lode or ore deposit, or that it had
acquired a right of possession to the adjoining surface
-rather, because the contractor worked on crushing rocks used
for, among other things, constructing roads, the court found
it was not entitled to enforce a mining lien under Section
3060. The court took note that both a prior U.S. Supreme
Court case and a California Supreme Court case applied the
ordinary meaning of the terms to distinguish between a quarry
from a mine based on the materials extracted. (Id. at
828-829.) For example, gravel, in different contexts,
seemingly could be excluded from the definition of a mineral.
(See id. at 831.) (The plaintiff was, as a matter of
procedure, held to be judicially estopped from claiming its
lien was instead valid as a "work of improvement" for the
purposes of a mechanic's lien statute in that case.) In
support of the bill, the Associated General Contractors writes
that the Sukut decision "jeopardized mining lien rights for
contractors working at a mine."
In addition to revising the definition of a mine in expressly
include "a quarry or pit, from which rock, gravel, sand, or
any other mineral-containing property is extracted by any
mining, or surface mining, operation," this bill would state
the legislative intent to supercede the Sukut case. Staff
notes that the Sukut decision did not necessarily state that a
quarry can never constitute a mine for the purposes of a
mining lien. Still, to the extent that it could be construed
as such, or that it could otherwise be construed to mean a
quarry is not a mine for the purposes of the mining lien
statute where extracting rock or gravel, it appears
appropriate for the Legislature, charged by the California
Constitution to provide for the enforcement of liens, to
clarify the type of mine subject to a lien for the purposes of
the mining lien statute.
b. Author's amendment to strike "declaratory of existing
law" and technical amendment
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To avoid any interference with potential pending litigation,
and recognizing that other courts not in the Fourth District
Appellate court are not bound by that decision and may
conclude different with respect to quarries and mines, and
recognizing the ambiguity in the law insofar as a court of
appeal could have drawn the conclusion that quarries were not
encompassed in the meaning of a mine for the purposes of
Section 3060 and mining liens, the following amendment is
suggested:
Author's Amendment :
Page 3, strike lines 27-28
The following technical amendment to the definition of a mine
proposed by this bill is also suggested, in order to avoid
creating an exhaustive list:
Author's Amendment :
Page 2, line 22 after "including" insert ", but not limited
to,"
Page 3, line 3, after "including" insert ", but not limited
to,"
3. Urgency clause
Committee staff notes that this bill contains an urgency clause,
stating the necessity for the bill to take immediate effect as
follows: In its holding in Sukut Construction, Inc. v. Rimrock
CA, LLC (2011) 199 Cal.App.4th 817, the Fourth District Court of
Appeal misapplied Section 3060 of the Civil Code as it was
intended by the Legislature. In order to properly apply the law
as intended by the Legislature, it is necessary that this act
take effect immediately.
Support : Associated General Contractors; Southern California
Contractors Association
Opposition : None Known
HISTORY
Source : None Known
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Related Pending Legislation : None Known
Prior Legislation :
SB 189 (Lowenthal, Ch. 697, Stats. 2010), among other things,
reorganized, restated, and modernized the language of statutes
relating to works of improvement. Provisions related to works
of improvement, including sections governing mechanics liens,
currently located at Civil Code Section 3082 et seq. will be
repealed on July 1, 2012, with the revised and recast provisions
to be located under Civil Code Section 8000 et seq., operative
July 1, 2012. In doing it amended Section 3060, relating to
mining liens, and provided a direct definition of a mine as "a
mining claim or real property worked on as a mine."
Prior Vote :
Assembly Floor (Ayes 75, Noes 0)
Assembly Judiciary Committee (Ayes 10, Noes 0)
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