Western Landscape Construction v. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASS'N

This case concerns the proper application of construction industry release forms worded in the statutory language of former Civil Code section 3262, subdivision (d)(1). Until the statute was recently amended, forms with this wording were commonly submitted by subcontractors when applying for progress payments. The forms operated to release certain stop notice and mechanic’s lien rights in return for a progress payment. The specific question in this case concerns whether these forms release a subcontractor’s stop notice and mechanic’s lien rights with respect to “retention” payments—payments relating to work already done but which are not presently paid, which instead are withheld until completion of 100 percent of the subcontractor’s work. The trial court in this case relied upon a dictum in Halbert’s Lumber, Inc. v. Lucky Stores, Inc. (1992) 6 Cal.App.4th 1233 [ 8 Cal.Rptr.2d 298 ], to find that the subcontractor in this case lost its lien rights as to retention payments by using the statutory forms. We respectfully find that if the dictum is construed to state what the trial court thought it stated, it does not correctly state the law. We will therefore reverse and…