Monthly Lien Law Update: September 2019

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PG&E bankruptcy results in mechanic liens against hundreds of Sacramento County homes

The tragedy of 2017 Camp wildfire continues to harm California residents. PG&E was forced into bankruptcy when it was found to be responsible for the historic wildfire which resulted in many deaths and caused over $1 billion in damage. PG&E’s liability for the wildfires prevented it from being able to pay its subcontractors for over $3.8 million of work performed on PG&E utilities located on customer properties. PG&E’s failure to pay forced these subcontractor to file liens against each of the residential properties to protect their payment rights. Now, over 900 residents in Sacramento County have mechanic liens against their homes.

Residents complain they never signed a contract or agreed to any work, so they should not be liable for the construction debt.  Most of these home owners did not know a lien was filed against their property until being denied financing related to their homes. These liens are preventing the residents from being unable to obtain loans against the equity in their homes, refinance mortgages, or even sell their homes. A local contraction lawyer, Ken Grossbart, explained, “These homes could be foreclosed upon”.  Now, local media is investigating this story to uncover the extent to which the PG&E liabilities are affecting California home owners.




Penn Dutch Market’s line of customers turns into line of creditors, some with mechanic liens.

Penn Dutch Meat & Seafood Market, a popular market with several locations in South Florida, advertised a going-out-of-business sale this month which pack its stores with bargain hunting shoppers. The customer’s fortune is a result of Penn Dutch’s financial misfortune. It all started in March of this year when the dangerous bacteria listeria was found at one of Penn Dutch’s locations. All food production at the market was shut down as inspectors began their investigation into the cause and scope of the problem.

Also during this time, Penn Dutch was in the middle of constructing a new location. Shortly after the discovery and investigation of the listeria, Penn Dutch began missing payments to its construction contractors and suppliers building the new Penn Dutch Meat & Seafood Market location. This led to five construction companies filing liens against the new location property. The mechanic liens total over $75,000 for work and supplies including drywall, concrete, electrical and construction materials. They were only the first in a growing list of companies Penn Dutch failed to pay.

In July, several Penn Dutch produce and meat suppliers also began not receiving payments. This resulted in the filing of several lawsuits this month. Also, several former employees sued Penn Dutch this month for failing to give 60 days’ notice prior to termination and seeking 60 days back pay and benefits. So far, however, Penn Dutch has not indicated any plans to file for bankruptcy. Regardless, of the creditors lining up for payment from Penn Dutch, the construction companies have the best chance of receiving payment because they were able to secured their payment rights by filing mechanic liens against the Penn Dutch property.