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Philmont Mgmt. v. 450 S. Western Ave., LLC (In re 450 S. Western Ave., LLC)

Philmont Mgmt. v. 450 S. Western Ave., LLC (In re 450 S. Western Ave., LLC)

United States Bankruptcy Appellate Panel for the Ninth Circuit

November 23, 2021, Filed

BAP No. CC-21-1116-LFS, Bk. No. 2:20-bk-10264-ER, Adv. No. 2:21-ap-01030-ER

Opinion

 [*895]  LAFFERTY, Bankruptcy Judge:

INTRODUCTION

Philmont Management, Inc. ("Philmont"), appeals the bankruptcy court's order dismissing with prejudice its adversary proceeding against chapter 111 debtor 450 S. Western Ave., LLC ("Debtor"). Philmont sought a determination of the validity of its mechanic's lien against the Debtor's real property, which arose from tenant improvements Philmont constructed in 2017. The bankruptcy court dismissed Philmont's complaint with prejudice under Civil Rule 12(b)(6), applicable via Rule 7012, because it found that Philmont had not timely perfected its lien under California law, nor had it preserved its lien by filing a timely notice under § 546(b); thus, the complaint did not state a claim upon which relief could be granted, and amendment would be futile.

] We AFFIRM. We publish to address an issue we declined to decide in Village Nurseries v. Gould (In re Baldwin Builders), 232 B.R. 406, 412-13 (9th Cir. BAP 1999): we hold that the time for filing [**2]  a notice under § 546(b) is not tolled by § 108(c).

FACTS

Debtor filed a chapter 11 bankruptcy petition on January 10, 2020. Debtor's primary asset was a three-story, 80,316-square-foot shopping center located at South Western Avenue and 5th Street in Los Angeles, California (the "Property"), valued on Debtor's schedules at $63.9 million.

A. The adversary complaint

In February 2021, Philmont filed an adversary complaint seeking a determination of the validity, priority, or extent of its mechanic's lien on the Property. The relevant allegations of the complaint are paraphrased as follows:

• In 2017, Debtor contracted with Philmont to perform tenant improvements at the Property. Philmont performed the work as requested and billed Debtor $1,835,561.32 for labor  [*896]  and materials. Debtor's chief financial officer and chief operating officer informed Philmont that its invoices would not be paid until June 2018. When the promised payments were not received, Philmont timely recorded its mechanic's lien on July 18, 2018.2 Complaint, ¶¶ 9-11.

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633 B.R. 894 *; 2021 Bankr. LEXIS 3241 **; 71 Bankr. Ct. Dec. 20; 2021 WL 5492765

In re: 450 S. WESTERN AVE., LLC, Debtor.PHILMONT MANAGEMENT, INC., Appellant, v. 450 S. WESTERN AVE., LLC, Appellee.

Prior History:  [**1] Appeal from the United States Bankruptcy Court for the Central District of California. Ernest M. Robles, Bankruptcy Judge, Presiding.

In re 450 S. W., LLC v. 450 S. W., LLC, 2021 Bankr. LEXIS 1667, 2021 WL 2528426 (Bankr. C.D. Cal., May 10, 2021)

CORE TERMS

perfection, mechanic's lien, notice, bankruptcy court, recording, tolled, foreclosure action, commencement of the action, give notice, automatic stay, re-recording, liens, enforcement action, deadline, untimely, motion to dismiss, sale of property, pre-petition, lienholder, equitable, expired

Governments, Legislation, Statute of Limitations, Time Limitations, Bankruptcy Law, Judicial Review, Standards of Review, De Novo Standard of Review, Civil Procedure, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Abuse of Discretion, Pleadings, Amendment of Pleadings, Leave of Court, Complaints, Requirements for Complaint, Real Property Law, Liens, Nonmortgage Liens, Mechanics' Liens, Priorities & Recording, Recording Acts, Business & Corporate Compliance, Contract Formation, Consideration, Detrimental Reliance, Contracts Law, Estoppel, Equitable Estoppel, Elements of Equitable Estoppel, Equitable Estoppel, Scope of Stay, Exceptions to Stay, Perfection of Property Interests, Tolling