FILED SEP 22 2025 SUSAN M. SPRAUL, CLERK NOT FOR PUBLICATION U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT

In re: BAP No. NV-25-1040-BLG ROBERT PAUL VANSANT and JUDALINE LAURA DELLIMORE- Bk. No. 24-13398-nmc VANSANT, Debtors. ROBERT PAUL VANSANT; JUDALINE LAURA DELLIMORE-VANSANT, Appellants, v. MEMORANDUM∗ FAITH VISION, INC., Appellee.

Appeal from the United States Bankruptcy Court for the District of Nevada Natalie M. Cox, Chief Bankruptcy Judge, Presiding

Before: BRAND, LAFFERTY, and GAN, Bankruptcy Judges.

INTRODUCTION

Appellants Robert Paul Vansant and Judaline Laura Dellimore-

Vansant appeal an order overruling their objection to a secured claim filed

by Faith Vision, Inc. ("Faith"). Faith's claim was based on a mechanics' lien

and related judgment, which it claimed was secured by the Vansants'

∗ This disposition is not appropriate for publication. Although it may be cited for

whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. 1 residence. The Vansants argued that Faith's claim was not secured because

Faith failed to enforce its notice of mechanics' lien within the statutory

period, and its lien had expired.

The bankruptcy court allowed Faith's claim as filed, ruling that the

mechanics' lien had not expired because Faith commenced a timely

foreclosure action. The Vansants argue that the court erred by focusing only

on whether Faith's complaint provided sufficient notice to the Vansants that

it was seeking to enforce its mechanics' lien. We agree, and conclude that

the court erred by not analyzing whether Faith substantially complied with

Nevada's relevant mechanics' lien statutes. Because Faith did not

substantially comply, its mechanics' lien expired, its judgment was not

secured, and its claim should have been allowed only as a general

unsecured claim. Accordingly, we REVERSE.1

FACTS

A. Prepetition events

Following a fire in 2021, the Vansants hired Faith, a general

contractor, to repair their home (the "Property") for $250,000. When the

Vansants paid Faith only $161,346.05, Faith recorded a "notice of mechanics'

lien" against the Property for the remaining $88,653.95 on December 27,

2022.

Unless specified otherwise, all chapter and section references are to the 1

Bankruptcy Code,

, all "Rule" references are to the Federal Rules of Bankruptcy Procedure, all "NRS" references are to the Nevada Revised Statutes, and all "NRCP" references are to the Nevada Rules of Civil Procedure. 2 On June 22, 2023, five days prior to the expiration of the mechanics'

lien, Faith filed a complaint against the Vansants (and others) in state court

for "Damages and Other Relief." The complaint alleged two causes of

action: breach of contract and breach of the implied covenant of good faith

and fair dealing. In the complaint, Faith identified the Property, discussed

the terms of the construction contract, and stated that it held a perfected

"lien attached as Exhibit 1." It is unknown if Exhibit 1 was attached.

However, the complaint made no mention of a "mechanics' lien." In the

prayer for relief, Faith requested a judgment for $88,653.95 and "[a]n order

requiring the immediate payment of all money due and owing as

determined by this Court, or, in the alternative, that an order issue

providing that the plaintiff may foreclose on the real property to satisfy the

amounts due to plaintiff[.]"

After participating in an arbitration hearing, the arbitrator issued a

decision in favor of Faith, awarding it the statutory maximum of $50,000.2

Thereafter, the state court entered a judgment on arbitration award,

ordering that Faith recover $50,000 from the Vansants. The judgment was

not recorded.

On June 10, 2024, approximately 18 months after the notice of

mechanics' lien was recorded, Faith filed a "motion for leave to proceed

2 The Vansants had filed counterclaims against Faith for breach of contract and breach of the implied covenant of good faith and fair dealing. The arbitrator awarded them nothing on their counterclaims. 3 with foreclosure" based on the judgment ("Motion to Foreclose"). Faith

asserted that it had satisfied "all the requirements of perfecting its lien, and

initiating the required litigation in a timely manner." Before the state court

ruled on the Motion to Foreclose, the Vansants filed for bankruptcy relief. 3

B. Postpetition events

The Vansants filed a chapter 7 bankruptcy case on July 3, 2024. They

listed a mortgage lender with a secured claim against the Property for

$164,409, and claimed all other equity in the Property exempt. The Vansants

listed Faith as an "unsecured" creditor with a "disputed" claim for $50,000.

Faith filed a secured proof of claim for $51,018.44 based on a "Lien

and related judgment." The Vansants objected to the claim, arguing that it

should be reclassified as an unsecured claim. Under NRS 108.233, argued

the Vansants, Faith had to file a foreclosure action within six months of

3 Without notice of the Vansants' bankruptcy, the state court later entered a minute order granting Faith's Motion to Foreclose, finding that the Vansants were put on "notice" with the foreclosure request in the complaint's prayer for relief. Although that order is void and had no bearing on Faith's claim, we question its correctness due to certain factual and legal errors it contains. For example, the state court found that the lien notice was recorded on June 22, 2023, and that Faith filed its complaint the same day, when in fact the lien notice was recorded on December 27, 2022, and a foreclosure complaint can never be filed the same day as the lien notice because of the 30-day waiting period. See NRS 108.244. The state court further erred in finding that Faith had already obtained a "final" judgment in the matter with the $50,000 arbitration judgment, but judgments for the enforcement of a mechanic's lien are not final until the court orders that the property sale can proceed. Simmons Self-Storage Partners, LLC v. Rib Roof, Inc.,

(Nev. 2011). Perhaps Faith had a final judgment for breach of contract, but that would only indicate that its complaint was not a foreclosure complaint. 4 when it recorded its mechanics' lien. It failed to do so. Instead, Faith sued

them personally for compensatory damages for breach of contract. In

addition, argued the Vansants, Faith also failed to comply with the

foreclosure requirements of NRS 108.239. Faith filed but did not record a lis

pendens when it filed its complaint, and it did not publish or deliver a

notice of foreclosure on known lienholders. Consequently, they argued,

Faith did not commence a proceeding "to enforce" its notice of mechanics'

lien within the meaning of NRS 108.233. Thus, argued the Vansants, the

mechanics' lien lapsed as a matter of law on June 27, 2023, and all Faith held

was a $50,000 general unsecured claim based upon its unrecorded

judgment.

In response, Faith argued that its complaint was a timely-filed

foreclosure action. It complied with the notice pleading requirements of

NRCP 8 by alleging facts regarding the perfected mechanics' lien and

requesting an order of foreclosure in the prayer for relief. Faith argued that

its intent to foreclose was further demonstrated by the Motion to Foreclose,

which it filed once the value of its lien was determined and the Vansants

failed to pay. Therefore, argued Faith, its mechanics' lien had not expired

and its claim was secured.

The bankruptcy court overruled the Vansants' objection and allowed

Faith's secured claim. The court determined that, under Nevada's liberal

notice pleading standard, Faith put the Vansants on notice of the

foreclosure claim when it requested an order of foreclosure in the

5 complaint's prayer for relief. Therefore, Faith's mechanics' lien had not

expired and its claim was secured. This timely appeal followed.

JURISDICTION

The bankruptcy court had jurisdiction under

and

157(b)(2)(B). We have jurisdiction under

.

ISSUE

Did the bankruptcy court err in overruling the Vansants' objection to

Faith's claim?

STANDARDS OF REVIEW

"An order overruling a claim objection can raise legal issues (such as

the proper construction of statutes and rules) which we review de novo, as

well as factual issues (such as whether the facts establish compliance with

particular statutes or rules), which we review for clear error." Veal v. Am.

Home Mortg. Servicing, Inc. (In re Veal),

(9th Cir. BAP 2011).

Under de novo review, we give no deference to the bankruptcy court's

conclusion. Allen v. U.S. Bank, N.A. (In re Allen),

(9th Cir.

BAP 2012). Factual findings are clearly erroneous if they are illogical,

implausible, or without support in the record. Retz v. Samson (In re Retz),

(9th Cir. 2010).

DISCUSSION

A. Legal standards for claim litigation

A claim is "deemed allowed" unless a party in interest objects.

6 § 502(a). A procedurally compliant proof of claim is prima facie evidence of

the validity and amount of the claim. Rule 3001(f). To defeat a prima facie

valid claim under § 502(a), an objecting party must present sufficient

evidence to overcome the proof of claim's presumption of validity or

amount. Margulies Law Firm, APLC v. Placide (In re Placide),

(9th Cir. BAP 2011). If the objector produces sufficient evidence to rebut the

Rule 3001(f) presumption, the burden of production shifts back to the

claimant to prove the validity and amount of its claim by a preponderance

of the evidence.

However, the claimant ultimately bears the burden of

persuasion.

B. The bankruptcy court erred in overruling the claim objection.

Mechanics' liens are a creature of state statute, whose object "is to

secure payment to those who perform labor or furnish material to improve

the property of the owner." Schofield v. Copeland Lumber Yards, Inc.,

(Nev. 1985) (citing Peccole v. Luce & Goodfellow, Inc.

(Nev. 1949)). The Vansants have not challenged the validity of Faith's notice

of mechanics' lien or the amount of its claim. They argue only that Faith

failed to timely enforce the lien, resulting in an unsecured judgment and

claim.

NRS 108.239 governs actions to enforce a notice of mechanics' lien in

Nevada, setting forth notice requirements and the procedure to sell the

property and distribute the proceeds. APCO Constr., Inc. v. Zitting Bros.

Constr., Inc.,

, 1029 (Nev. 2020); Simmons Self-Storage Partners,

7 LLC,

. NRS 108.239 states what a lien claimant must do

when seeking to foreclose on a mechanics' lien. First, the complaint must

state "the particulars of the demand" and include "a description of the

property to be charged with the lien." NRS 108.239(1). Contemporaneously

with the complaint and summons, the foreclosing lien claimant must also

file and record a notice of pendency of the action (lis pendens). NRS

108.239(2)(a) (referencing NRS 14.010, which mandates recording a lis

pendens in actions affecting real property). The foreclosing lien claimant

must also cause a "notice of foreclosure" to be published for three successive

weeks in a local newspaper, notifying all persons holding or claiming a

notice of mechanics' lien on the property of the opportunity to file and serve

a written statement of facts in the foreclosing lien claimant's action. NRS

108.239(2)(b). The foreclosing lien claimant must also mail or deliver to any

lienholders of record the notice of foreclosure as published. NRS 108.239(4).

Faith concedes that it did not record a lis pendens, publish a notice of

foreclosure, or deliver a notice of foreclosure to other recorded lienholders

as required by NRS 108.239(2) and (4). According to the arbitrator's

decision, Faith failed to provide even a proof of service for the complaint

and summons on two named (and not dismissed) defendant lienholders. It

is also arguable that Faith's complaint did not state "the particulars of the

demand" as required by NRS 108.239(1), with the foreclosure request buried

in the prayer for relief. On its face, the complaint is for a contract action, not

for the enforcement of a mechanics' lien. It is not clear if a copy of the

8 mechanics' lien was attached to the complaint, but no date for when the

notice of lien was recorded was disclosed so that the state court could

determine if the alleged enforcement action was timely. As noted above and

applicable here, an action to enforce a mechanics' lien must be filed within

six months after the date on which the notice of lien was recorded, or it

expires. See NRS 108.233(1)(a), (2).

Although NRS 108.239 appears to require strict compliance with use

of the word "shall" in subsections (2) and (4), Nevada courts instruct that

"the mechanic's lien statutes are remedial in character and should be

liberally construed." Las Vegas Plywood & Lumber, Inc. v. D & D Enters.,

(Nev. 1982); accord Iliescu v. Steppan,

, 934 (Nev.

2017); Hardy Cos. v. SNMARK, LLC,

(Nev. 2010). As

such, Nevada courts apply the doctrine of "substantial compliance" to the

state's mechanics' lien statutes. If there is substantial compliance with the

statutes, "notices, liens and pleadings arising out of those statutes will be

liberally construed in order to effect the desired object." Schofield,

(citations omitted); see also Hardy Cos.,

; Las Vegas

Plywood & Lumber, Inc.,

. Substantial compliance has been

defined as "compliance with essential matters necessary to ensure that

every reasonable objective of the statute is met." Williams v. Clark Cnty. Dist.

Att'y,

(Nev. 2002). However, "[f]ailure to either fully or

substantially comply with the mechanic's lien statute will render a

mechanic's lien invalid as a matter of law." Hardy Cos.,

9 (discussing NRS 108.245, which governs pre-lien notices for mechanics'

liens) (citing Schofield,

(holding that a notice of lien may not

"be so liberally construed as to condone the total elimination of a specific

requirement of the statute" and determining that a notice of lien omitting

certain provisions required by NRS 108.226 was invalid)). The burden is on

the proponent to establish substantial compliance. Las Vegas Convention &

Visitors Auth. v. Miller,

(Nev. 2008) (analyzing

substantial compliance with a ballot-initiative statute).

Most of Nevada's mechanics' lien cases involve disputes over a notice

or perfection of a lien (NRS 108.226 & 108.227) or a pre-lien notice (NRS

108.245). See Hardy Cos.,

(pre-lien notice); Bd. of Trs. v.

Durable Devs., Inc.,

(Nev. 1986) (pre-lien notice); Schofield,

(notice of lien/perfection); Las Vegas Plywood & Lumber,

Inc.,

(notice of lien/perfection). In such cases, the Nevada

Supreme Court has held that substantial compliance with the mechanics'

lien statutes will suffice if the property owner receives actual notice and is

not prejudiced. See Hardy Cos.,

; Durable Devs., Inc.

; Las Vegas Plywood & Lumber, Inc.,

.

We could not locate a case, and the parties have cited none, where the

Nevada Supreme Court has considered whether a lien claimant has

substantially complied with NRS 108.239, when it has not recorded a lis

pendens or published or delivered a notice of foreclosure. This is assuming

that the complaint here sufficed for purposes of the statute. The Vansants

10 cite to Simmons Self-Storage Partners, LLC,

, and argue that

compliance with the requirements of NRS 108.239 is mandatory to

commence an action to enforce a mechanics' lien. In Simmons Self-Storage

Partners, LLC, the Nevada Supreme Court recited generally the

requirements for a mechanics' lien foreclosure action as set forth in NRS

108.239.

. But the court was not deciding the lien claimant's

substantial compliance with the statute. The issue there was finality of

judgments in a mechanics' lien enforcement action. Thus, the Vansants may

be overstating its authority.

In a case where a "notice of lien" was recorded but not served on the

property owner as required by NRS 108.227, the Nevada Supreme Court

determined that the mechanics' lien was not perfected and the foreclosure

action failed. See Fisher Bros., Inc. v. Harrah Realty Co.,

(Nev. 1976). In another "notice of lien" case, the Nevada Supreme Court

held that a lumber supplier did not substantially comply with NRS 108.227

because the notice failed to include certain statutorily required information,

namely the material terms of the supplier/lien claimant's contract with the

general contractor, and the property owners had no personal knowledge of

their contract or its terms. See Schofield,

. On the other

hand, substantial compliance was found when a lien claimant's only failure

was posting the notice of lien at the respondent's place of business instead

of the property which was the subject of the lien, but the respondent

11 received actual notice of the lien's existence from the lien claimant by mail.

See Las Vegas Plywood & Lumber, Inc.,

.

Faith's deviations from the requirements of the subject statutes are far

more egregious. Faith did not just leave out terms of a contract in its notice

of lien, or post a lien notice at the wrong location; it failed to comply with

any of the notice requirements to enforce a mechanics' lien under NRS

108.239. Even under the most liberal of standards, we fail to see how Faith's

failure to record a lis pendens or to publish or deliver a notice of foreclosure

could ever constitute substantial compliance. Far from substantial

compliance, what occurred here was essentially no compliance. Even if the

complaint could be construed as a proper foreclosure complaint, Faith's

failure to do anything besides file a complaint and lis pendens falls

woefully short of what is required under the statute. It does not appear that

Faith even attempted to comply with NRS 108.239, and it has offered no

explanation as to why it did not do so. "[T]ypically, failure to even attempt

to comply with a statutory requirement will result in a lack of substantial

compliance." Las Vegas Convention & Visitors Auth.,

.

Faith argues that its oversight in failing to record a lis pendens did

not defeat substantial compliance with NRS 108.239, when the Vansants

had actual notice of the foreclosure action, participated in it, and were not

prejudiced. First, it is not clear that the Vansants knew this was a

foreclosure action. Further, while the Vansants might not have been

prejudiced by Faith's failure to record a lis pendens, a lis pendens is not just

12 for the benefit of the property owner. It is also for the benefit of any

purchaser or encumbrancer of an affected property. See NRS 14.010(3). A

notice of lis pendens serves the public policy goal of providing

"constructive notice to the world that a dispute involving real property is

ongoing." Weddell v. H20, Inc.,

(Nev. 2012), abrogated on

other grounds by Tahican, LLC v. Eighth Jud. Dist. Ct.,

(Nev. 2023)

(citing NRS 14.010(3)). See also Leven v. Frey,

(Nev. 2007)

(holding in the context of recording a judicial lien renewal, that the

"recording requirement's main purpose is to procure reliability of title

searches," and that "substantial compliance" with this requirement "is not

supportable, as it would undermine the Legislative intent that the debtor

and third parties be promptly notified that the lien on the debtor's real

property has continued.").

Faith does not offer any argument regarding its failure to publish a

notice of foreclosure and deliver the notice to known lienholders. Notice to

interested third parties is paramount in an action to enforce a mechanics'

lien, which is why they are protected under the statute. Under NRS

108.239(2)(b) and (3), all other persons holding or claiming a notice of

mechanics' lien must receive notice so that they may join the action by filing

and serving a written statement of facts on the lien claimant and other

parties adversely interested. And under NRS 108.239(4), all other

lienholders of record are entitled to be served with the notice of foreclosure

so they too can join in the proceeding to protect their lien interests. As the

13 Vansants argued, notice to their mortgage lender and other interested

parties, including other mechanics' lien claimants such as any unpaid

suppliers and subcontractors, would have allowed them to intervene to

protect their interests in the Property. See NRS 108.236; NRS 108.239(7), (9),

(10) (during an enforcement action, the court will determine priorities, enter

judgment on the lienable amounts, and order the property sold); Simmons

Self-Storage Partners, LLC,

. That Faith did not record a lis

pendens or publish and deliver a notice of foreclosure demonstrates either

that it was ignorant of the process, or that its complaint was not an action to

enforce its mechanics' lien.

Nothing in the record suggests that any interested third parties had

actual notice of Faith's intent to foreclose despite Faith's failure to publish

or deliver notice. In fact, the majority of the named defendants in the action

were not served with the complaint and summons, the Vansants' mortgage

lender was not even named, and only the Vansants were served with the

Motion to Foreclose, which apparently was Faith's belated attempt to

pursue lien enforcement. Clearly, these third parties who were entitled to a

notice of foreclosure were prejudiced by the lack of notice, so substantial

compliance was lacking. See Las Vegas Plywood & Lumber, Inc.,

(holding that substantial compliance is met where actual notice occurs

and there is no prejudice to the party entitled to notice); see also Leven,

(noting that if a statute is specific regarding manner of notice,

Nevada courts strictly construe statutory "time and manner" requirements,

14 whereas substantial compliance may be sufficient for "form and content"

requirements). Indeed, notice appears even more critical in a mechanics'

lien enforcement action given their superior priority status. See NRS

108.225.

Faith contends that the Vansants' arguments about the enforceability

of its mechanics' lien are barred by both the doctrines of claim and issue

preclusion. Faith argues that the Vansants failed to raise, and should have

raised, this issue in the state court prior to entry of the judgment, and

further, enforceability was litigated in the Motion to Foreclose. As we have

noted, Faith's complaint did not appear to be a lien enforcement action,

especially when combined with Faith's other failures of not recording a lis

pendens or providing notice to third parties. The arbitrator did not discuss

the issue of foreclosure, referring only to Faith's contract claims. And the

arbitrator referred to the other defendants named in the complaint as

"extraneous," which is contrary to a foreclosure action since at least two of

them were current lienholders. Thus, the Vansants cannot be faulted for not

raising something that did not appear to be at issue.

Further, under Nevada law, a mechanics' lien enforcement judgment

is not final until the court orders that the property can be sold. Simmons Self-

Storage Partners, LLC,

. Although the state court later

entered a minute order granting Faith's Motion to Foreclose, it was entered

after the Vansants filed for bankruptcy, in violation of the automatic stay.

Hence, the order was void and not entitled to full faith and credit by the

15 bankruptcy court. See Gruntz v. Cnty. of L.A. (In re Gruntz),

,

1082 & n.6 (9th Cir. 2000) (noting that actions taken in violation of the

automatic stay are void and that a state court decision is not entitled to

preclusive effect under Rooker-Feldman when that decision is void ab initio).

Consequently, without a final judgment of foreclosure, neither claim nor

issue preclusion is applicable here. See Five Star Cap. Corp. v. Ruby,

(Nev. 2008), holding modified by Weddell v. Sharp,

(Nev.

2015) (stating that under Nevada law claim preclusion requires a "final

judgment [that] is valid" and issue preclusion requires that "the initial

ruling must have been on the merits and have become final").

Faith also contends that it had to get the amount owed by the

Vansants reduced to a sum certain and obtain a judgment before it could

proceed with a foreclosure action. The statutes do not contemplate the

process Faith suggests. NRS 108.239 provides that the lien claimant files the

foreclosure complaint and contemporaneously complies with all notice

requirements, the court determines the lienable amount(s) and priority of

the lien(s), and the court enters a judgment ordering that the property be

sold and the proceeds distributed accordingly. See NRS 108.239(7), (10); see

also Simmons Self-Storage Partners, LLC,

(discussing the

mechanics' lien enforcement process). Thus, the amount owed to a lien

claimant is decided in the foreclosure action. In addition, and contrary to

the Vansants' argument, arbitration is permitted in a mechanics' lien

enforcement action under NRS 108.239(9), and, upon request, the court may

16 stay the action to foreclose pending the outcome of the arbitration. Any

party receiving an award from the arbitrator can seek an order from the

court in the foreclosure action confirming the award and, if applicable,

obtain a sale order. So, Faith was not wrong in choosing arbitration. But if it

wanted to enforce its mechanics' lien, it needed to file a foreclosure action,

not a contract action. Of course, it was free to seek both within the six-

month period, or it could simply file a civil action seeking to recover the

debt based on contract or other claims subject to the statute of limitations

for such actions. See NRS 108.238. In choosing the latter, however, one does

not get the statutory benefit of a mechanics' lien.

Because Faith failed to substantially comply with NRS 108.239, its

complaint was not a proper foreclosure action. Consequently, its lien

expired on June 27, 2023, its claim was not secured, the Vansants' objection

should have been sustained, and the claim should have been allowed only

as a general unsecured claim. That the complaint may have satisfied NRCP

8 to put the Vansants on notice of Faith's intent to enforce its notice of

mechanics' lien missed the point. While the complaint itself might be

subject to a notice pleading standard, the steps required to enforce the lien

are far more specific. The issue before the bankruptcy court was whether

Faith substantially complied with the notice requirements of NRS 108.239

sufficient to constitute an enforcement action. The court erred by not

applying this standard.

17 CONCLUSION

For the reasons stated above, we REVERSE.

18