BILL ANALYSIS �
AB 456
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Date of Hearing: April 5, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 456 (Wagner) - As Amended: March 17, 2011
As Proposed to be Amended
SUBJECT : MECHANIC'S LIENS: STAY OF LITIGATION PENDING
ARBITRATION
KEY ISSUE : SHOULD THE PROCEDURE BE CLARIFIED FOR REQUESTING A
STAY OF MECHANICS' LIEN LAWSUITS PENDING ARBITRATION?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This non-controversial bill is intended to clarify that
mechanics' lien claimants in construction disputes may seek a
stay of litigation pending the outcome of arbitration to which
the parties agree, without any necessity to move for an order to
compel arbitration, provided that if any party opposes the
motion to stay the action on the ground that the party objects
to arbitration of the dispute, the court shall determine whether
the claim of lien or any relevant issue, question or dispute is
subject to arbitration before staying the action. Supporters
believe this revision will be helpful in providing guidance to
the court when there is no dispute about the need for and
relevance of a pending arbitration proceeding.
SUMMARY : Clarifies procedures for certain stays of litigation.
Specifically, this bill clarifies that mechanics' lien claimants
in construction disputes may seek a stay of litigation pending
the outcome of arbitration to which the parties agree, without
any necessity to move for an order to compel arbitration,
provided that if any party opposes the motion to stay the action
on the ground that the party objects to arbitration of the
dispute, the court shall determine whether the claim of lien or
any relevant issue, question or dispute is subject to
arbitration before staying the action.
EXISTING LAW :
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1)Provides that any person who proceeds to record and enforce a
mechanics' lien claim by commencement of an action does not
thereby waive any right of arbitration the person may have
pursuant to a written agreement to arbitrate, if, in filing an
action the claimant either: (1) includes an allegation in the
complaint that the claimant does not intend to waive any right
of arbitration, and intends to move the court, within 30 days
after service of the summons and complaint, for an order to
stay further proceedings in the action; or (2) at the same
time that the complaint is filed, the claimant files an
application that the action be stayed pending the arbitration
of any issue, question, or dispute that is claimed to be
arbitrable under the agreement and that is relevant to the
action to enforce the claim of lien. (Code of Civil Procedure
Section 1281.5.)
2)Requires that within 30 days after service of the summons and
complaint, the claimant shall file and serve a motion and
notice of motion pursuant to Section 1281.4 to stay the action
pending the arbitration of any issue, question, or dispute
that is claimed to be arbitrable under the agreement and that
is relevant to the action to enforce the claim of lien. The
failure of a claimant to comply with this subdivision is a
waiver of the claimant's right to compel arbitration. (Code
of Civil Procedure Section 1281.5.)
COMMENTS : The author argues that this bill is needed to clarify
existing law regarding the stay of litigation pending
arbitration of certain construction disputes.
Code of Civil Procedure section 1281.5 deals with arbitration of
construction disputes when there is a right to a mechanics lien.
It allows the lien foreclosure lawsuit to be filed to satisfy
the statute of limitations and notice to potential purchasers,
but requires that the arbitration be commenced promptly and
allows the lawsuit to be stayed.
According to the author, the statute has caused some confusion
because it has not been clear in some cases whether the claimant
must also file a motion to compel arbitration.
Supporters state that such a motion is frequently unnecessary
because the parties do not dispute that the claim is arbitrable.
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In these circumstances, it is sensible to stay any court
proceeding while the arbitration, once started, continues to be
prosecuted. The sponsors contend that requiring a motion to
compel arbitration is not only superfluous but only serves to
"clog up" the courts.
The author's proposed amendments largely clarify and refocus the
bill appropriately. However, the Committee recently received
further suggested revisions from the Judicial Council. The
author and sponsor have committed to continuing to work with the
Committee and the Judicial Council to ensure that any remaining
concerns are addressed satisfactorily.
Author's Clarifying Amendments. To better capture the intent of
the bill, the author proposes the following clarifying
amendments:
1281.5. (a) Any person who proceeds to record and enforce a
claim
of lien by commencement of an action pursuant to Title 15
(commencing
with Section 3082) of Part 4 of Division 3 of the Civil Code,
does
not thereby waive any right of arbitration the person may have
pursuant to a written agreement to arbitrate, if, in filing an
action
to enforce the claim of lien, the claimant does either of the
following:
(1) Includes an allegation in the complaint that the claimant
does
not intend to waive any right of arbitration, and intends to
move
the court, within 30 days after service of the summons and
complaint,
for an order to stay further proceedings in the action.
(2) At the same time that the complaint is filed, the
claimant
files a motion an application that the action be stayed pending
the
arbitration of any issue, question, or dispute that is claimed
to be
arbitrable under the agreement and that is relevant to the
action to
enforce the claim of lien.
(b) Within 30 days after service of the summons and
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complaint, the
claimant shall file and serve a motion and notice of motion
pursuant
to Section 1281.4 to stay the action pending the arbitration of
any
issue, question, or dispute that is claimed to be arbitrable
under
the agreement and that is relevant to the action to enforce the
claim
of lien. Notwithstanding section 1281.4, the claimant may make a
motion
to stay the action pending arbitration even if none of the
parties to the action
has filed an application for an order to arbitrate the
controversy, provided that
if any party opposes the motion to stay the action on the ground
that
the party objects to arbitration of the dispute, the court shall
determine whether the claim of lien or any relevant issue,
question or dispute is subject to arbitration before staying the
action. The failure of a claimant to comply with this
subdivision
is a waiver of the claimant's right to compel arbitration.
(c) The failure of a defendant either to file for a court
order to arbitrate pursuant to Section 1281.2 or to commence
demand
arbitration pursuant to an agreement to arbitrate at or before
the time the defendant answers the complaint filed pursuant to
subdivision (a) is a waiver of the defendant's right to
compel arbitration.
REGISTERED SUPPORT / OPPOSITION :
Support
California Fence Contractors' Association (co-sponsor)
California Chapter of the American Fence Association
(co-sponsor)
Engineering Contractors' Association (co-sponsor)
Marin Builders' Association (co-sponsor)
Flasher Barricade Association (co-sponsor)
California Chamber of Commerce
Civil Justice Association of California
AB 456
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Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334