Angeles Electric Co. v. Superior Court

A subcontractor on a construction project received payment for an antecedent debt from a general contractor. As a result, the subcontractor released its mechanic’s lien against the project owner’s property. The general contractor then made an assignment for benefit of creditors. In this case of first impression in California, we hold that release of the mechanic’s lien did not constitute “new value” to the general contractor under the contemporaneous exchange exception to the rule allowing an assignee for benefit of creditors to recover preferential payments.

Factual and Procedural Summary

The essential facts in the case are not disputed, and may be simply stated. Petitioner, Angeles Electric Company (Angeles) is the defendant in an action commenced by Steven M. Spector, the real party in interest in this proceeding. Spector is the assignee for benefit of creditors of Buckley Construction Corporation (Buckley). Buckley is a general contractor, and Angeles is one of its subcontractors. Within 90 days before the assignment, Buckley paid $55,585.57 to Angeles for materials Angeles had furnished to the construction project. Angeles furnished Buckley with a mechanic’s lien…