Schmitt

J. — Northstate Asphalt, Inc. (Northstate), a corporation owned by William and James Schmitt (the Schmitts), installed site improvements at the Sylvan Trails subdivision in Shasta County. Northstate was not paid for the work. It sued defendant Tri Counties Bank (TCB), successor in interest to the construction lender, as well as the developer and others, for breach of contract and to foreclose on a mechanic’s lien. TCB appeals from the judgment entered in favor of the Schmitts, as assignees of Northstate, following a court trial.

TCB raises three questions on appeal: (1) Did Northstate’s mechanic’s lien as site improver take priority over TCB’s prior recorded deed of trust under Civil Code section 3137? (2) If Northstate’s mechanic’s lien did not have priority over TCB’s deed of trust, are the Schmitts entitled to an equitable lien requiring TCB to transfer title to two lots in Sylvan Trails? (3) Was TCB entitled to credit against the judgment for the $50,000 settlement paid by the developer to the Schmitts for attorney fees? We conclude the trial court correctly decided the first and third questions. For this reason, we need not address the question whether the Schmitts…