Legal Question in Credit and Debt Law in California

Santa Clara County double dipping

I’m a Gen Builder who sold some high end doors to another builder. Upon receiving payment I paid my suppliers accordingly. One of my suppliers (we’ll call him S1) got into financial trouble and after a ton of pressure from the Prime Contractor he came clean he didn’t have the money for materials. He brought in a 3rd party supplier (a supplier to a supplier we will call him S2) to bail him out. Short story it was a disaster, S2 was paid a deposit from S1. One of the doors delivered and installed was rejected by customer as it was not built to spec. S2 refused to make it right and proceeded to deliver and install 3 remaining garage doors and due to the failure on the first door, client canceled the final entry door and demanded a refund. Since I gave S1 the money which he lost, we negotiated a wash on finals and told S1 if he finished the open jobs and fixed the first door there was enough money remaking to satisfy S2. They never fixed the first door and never installed 2 of the garage doors so the prime contractor fired me and S1 after a settlement was negotiated. 6 months later S2 identifies himself to the Prime contractor and home owners saying he was never paid a dime (a lie) and was placing liens for the full contract price (my contract price), not the S1 agreed sub contract price but my contracted price. Now he’s filed liens (not foreclosed yet) on both properties and now filed liens agains my house for the total of both in the amount of MY original contract price. My question is I’ve read something about double dipping and inflating claims being considered criminal. Would this criminal behavior be worthy of jail and should I press charges before or after getting the liens removed due to fraud?

Asked on 1/20/22, 9:37 pm

1 Answer from Attorneys

Timothy McCormick Schneider, Holtz & Hutchison

Liens are like lawsuits; they are just claims not assertions of absolute truth. He can't collect any more than he is entitled to no matter how much he puts in the lien. Also, like lawsuits, if entitled to lien properties, you can lien all the properties each for the full amount, just as if there are multiple people liable to you, you can sue each one for the full amount and they have to sort out contribution if one pays the full amount. The only time false claims and incorrect multiple claims become criminal is when they are submitted to a government agency in some circumstances.

The one thing that sounds like it probably is illegal in this scenario, is putting a lien on your house. If none of the labor and materials went into your house, and he does not have a judgment against you, a lien on your house is slander of title, entitling you to attorneys fees and costs to remove it and probably punitive damages, unless he removes it immediately on demand.

Read more
Answered on 1/21/22, 3:32 pm

Related Questions & Answers

More Credit, Debt and Collections Law questions and answers in California