Knapp Development & Design v. Pal-Mal Properties, Ltd.

Knapp Devélopment & Design (KDD) appeals from summary judgment entered against it in its action to foreclose a mechanic’s lien.

Facts

Joan Knapp is president and majority shareholder of KDD, and is also general partner and majority owner of Real Holding Company (RHC), a limited partnership. RHC acquired title to a parcel of property in the Pacific Palisades which it began to develop as Palisades Village Center. KDD became the general contractor on the project. Some years after the project was started, Pal-Mal Properties, a limited partnership, was formed to obtain additional funding for the project. RHC was one of the limited partners, and it transferred title to Palisades Village Center to Pal-Mal. Pal-Mal obtained a loan from Independent Investors Trust (Independent).

Pal-Mal failed to make payments to Independent on the note, and in July 1982, Independent sent Pal-Mal a notice of default and election to sell. KDD demanded payment for the work it had performed on the property. When no payment was made, KDD filed a mechanic’s lien and brought this action to foreclose on the mechanic’s lien. KDD recorded a hs pendens giving notice of the foreclosure…