Facts

On Oct. 12, 2017, Sunniva Production Campus LLC and Orr Builders entered into a written construction agreement wherein plaintiff Orr Builders agreed to construct a large commercial building. The Contract set forth that Orr Builders would construct the Sunniva Campus Project, which consisted of a 322,500-square-foot warehouse in Cathedral City. The Subject Property is a state-of-the-art cannabis cultivation and production facility.
Orr Builders began performing significant work by Jan. 10, 2018 by delivering equipment, preparing the foundation for construction, and by commencing vertical construction at the Subject Property. Subcontractors were already on site performing significant work.
On March 14, 2018, Sunniva contracted with Bobs LLC, an interim lender, to assist in financing the construction of the Subject Property. On Sept. 1, 2020, Bobs LLC agreed to provide $27 million and recorded a deed of trust with the County of Riverside. Bob's LLC recorded its deed of trust on March 14, 2018, over two months after significant construction had commenced at the Subject Project by Plaintiff Orr Builders.
On June 8, 2018, Plaintiff entered into an additional contract with Sunniva that included further construction on the Subject Property.
Sunniva breached the Contract with Plaintiff by failing and refusing to pay for labor, materials and equipment provided by Plaintiff Orr Builders and its subcontractors. As a direct and proximate result of Sunniva's breach of the Contract, Orr Builders suffered significant damages.
The Subject Property was appraised at $86 million as of July 2020, with an estimated upside appraisal of $112,000,000.00 when fully operational.

As a result of Sunniva's breach, Plaintiff filed its Mechanic's Lien against Sunniva on Feb. 7, 2020, with the Recorder's Office for the County of Riverside. Sunniva also breached its contract with Bobs LLC.

On July 20, 2020, Plaintiff received notice of a foreclosure sale on the Subject Property that was initiated by defendant Bobs LLC.

Plaintiff subsequently filed a lawsuit against Sunniva on Feb. 28, 2020.

On July 27, 2020, Plaintiff Orr Builders amended its complaint to include Defendant Bobs LLC in its foreclosure of mechanic's lien cause of action.
As an interim construction hard money lender, Bobs LLC accepted the risks of Plaintiff's mechanic's lien taking priority over Bobs LLC's deed of trust. In fact, Bobs LLC was acutely aware of this risk and attempted to attain insurance against this exact risk.

PLAINTIFF'S CONTENTIONS: Plaintiff Orr Builders a licensed general building contractor commenced work on the Subject Property on or about October of 2017.
Defendant Bobs LLC was an interim lender for work at the Subject Property who got involved in the project in March of 2018. Defendant Bobs LLC's construction loan for the Subject Property was valued at over twenty million dollars ($20 million).

On Dec. 20, 2019, Plaintiff Orr ceased work on the Subject Property due to Sunniva's breach of contract for lack of payment. Plaintiff Orr Builders at this time had outstanding invoices from September through to December of 2019 totaling millions of dollars for completed work that was owing and past due.

On Feb. 7, 2020, Plaintiff Orr Builders recorded a Mechanics' Lien with the Recorder's Office for the County of Riverside against the Subject Property per California Civil Code section 8416. The Lien was recorded within the time prescribed by law.

In September of 2020, Bobs LLC acquired possession of the Subject Property in its own initiated foreclosure sale for $25 million. The Subject Property's as-is market value was held at $86.3 million with the potential to be worth $112 million when completed.

Although Plaintiff Orr Builders had a valid and superior claim to that exercised by Defendant Bobs LLC, Plaintiff Orr had still not been paid for materials and services rendered, even though Defendant Bobs LLC had acquired the Subject Property with a windfall of tens of millions of dollars. No party challenged the quality of construction or the costs associated with construction of the Subject Property. Plaintiff simply wanted to get paid.

DEFENDANT'S CONTENTIONS: Bobs LLC contended that plaintiff's mechanics lien was invalid and not enforceable against the new owner of the Subject Property (Bobs LLC). Indeed, Bobs LLC argued that Plaintiff did not timely commence its action against Bobs LLC and that Plaintiff was barred, as a matter of law, from seeking to foreclose its mechanic's lien as against Bobs LLC.

Settlement Discussions

Orr Builders issued a CCP 998 offer to compromise to Bobs LLC in the amount of $2.7 million. The offer was rejected by Bobs LLC. Defendant Bobs LLC offered $1,000,000.00 to Plaintiff a week before the commencement of trial. The offer was rejected.

Damages

Orr Builders was owed several million dollars in providing labor, equipment and materials for the construction of the Subject Property.

Result

Judgment in favor of plaintiff for $4,153,374.

Length

five days