Palomar Grading v. Wells Fargo

I. INTRODUCTION

The Great Recession hit Southern California’s Inland Empire region – roughly defined as Riverside and San Bernardino counties – particularly hard. This is one of a number of cases which have, in the aftermath of that recession, finally made their way to this court. The appeal stems from financial difficulties encountered in the construction of a Kohl’s department store in Beaumont. The developer of the store was Inland-LCG Beaumont, LLC (Inland) a Utah firm and the general contractor a Texas firm, 361 Group Construction Services, Inc. (361). Somewhere in the process of construction the money dried up and 361 refused to pay its subcontractors for work they had done. Those subcontractors included Cass Construction (Cass), TNT Grading Inc. (TNT), Palomar Grading & Paving (Palomar Grading) and R3 Contractors (R3). These four subcontractors recorded mechanic’s liens and sued to foreclose those liens. With one exception they obtained judgments of foreclosure. The one exception was TNT, who, by the time of the trial to foreclose its mechanic’s lien, was a suspended corporation and thus unable to prosecute an action. The two current owners of the property, Kohl’s and…