Judge: Alison Mackenzie, Case: 23STCV14415, Date: 2025-04-21 Tentative Ruling
Case Number: 23STCV14415 Hearing Date: April 21, 2025 Dept: 55
NATURE OF PROCEEDINGS: Hearing on Plaintiff's Motion
to Leave to File First Amended Complaint and Motion to Compel Arbitration
Plaintiff's Motion
to Leave to File First Amended Complaint is granted and Motion to Compel
Arbitration is
denied.
BACKGROUND
Plaintiff Justin Beimforde filed this action against William
M. Lengyel (Defendant), alleging Defendant breached the terms of their listing
agreements, which gave Plaintiff the exclusive right to represent Defendant in
the sale of certain real property.
The sole cause of action is one count of breach of contract.
Plaintiff filed a Motion to Leave to File First Amended Complaint
(FAC) and a Motion to Compel Arbitration. Defendant filed Oppositions. The Court
considers both motions in this tentative ruling.
LEGAL STANDARD
Motion for Leave to Amend: California Code of Civil
Procedure section 473, subdivision (a)(1) provides, in relevant part: “The
court may, in furtherance of justice, and on any terms as may be proper, allow
a party to amend any pleading or proceeding by adding or striking out the name
of any party, or by correcting a mistake in the name of a party, or a mistake
in any other respect; and may, upon like terms, enlarge the time for answer or
demurrer. The court may likewise, in its discretion, after notice to the
adverse party, allow, upon any terms as may be just, an amendment to any
pleading or proceeding in other particulars; and may upon like terms allow an
answer to be made after the time limited by this code.”
“Leave to amend a pleading … is entrusted to the sound
discretion of the trial court.” Hong Sang Market, Inc. v. Peng (2018) 20
Cal.App.5th 474, 488 (citations omitted). “This discretion should be exercised
liberally in favor of amendments, for judicial policy favors resolution of all
disputed matters in the same lawsuit.” Kittredge Sports Co. v. Superior
Court (1989) 213 Cal.App.3d 1045, 1047. Ordinarily, the court will not
consider the validity of the proposed amended pleading in ruling on a motion
for leave since grounds for a demurrer or motion to strike are premature. See
id. at p. 1048. The court, however, does have discretion to deny leave
to amend where a proposed amendment fails to state a valid cause of action as a
matter of law and the defect cannot be cured by further amendment. See
California Casualty General Ins. Co. v. Superior Court (1985) 173
Cal.App.3d 274, 281, overruled on other grounds by Kransco v. American
Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390.)
Under California Rules of Court Rule 3.1324(a), a motion to
amend a pleading shall (1) include a copy of the proposed amendment or amended
pleading, which must be serially numbered to differentiate it from previous
pleadings or amendments; (2) state what allegations in the previous pleading
are proposed to be deleted, if any, and where, by page, paragraph and line
number, the deleted allegations are located; and (3) state what allegations are
proposed to be added to the previous pleading, if any, and where, by page,
paragraph, and line number, the additional allegations are located.
Under California Rules of Court Rule 3.1324(b), a separate
declaration must accompany the motion and must specify (1) the effect of the
amendment; (2) why the amendment is necessary and proper; (3) when the facts
giving rise to the amended allegations were discovered; and (4) the reasons why
the request for amendment was not made earlier.
Motion to Compel: “On petition of a party to an
arbitration agreement alleging the existence of a written agreement to
arbitrate a controversy and that a party to the agreement refuses to arbitrate
that controversy, the court shall order the petitioner and the respondent to
arbitrate the controversy if it determines that an agreement to arbitrate the
controversy exists….” Code Civ. Proc. § 1281.2. “The party seeking arbitration
bears the burden of proving the existence of an arbitration agreement, and the
party opposing arbitration bears the burden of proving any defense, such as
unconscionability.” Pinnacle Museum Tower Assn. v. Pinnacle Market
Development (US), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle). A
party meets its initial burden simply by reciting the terms of the governing
provision, or by attaching a copy of the provisions. Sprunk v. Prisma LLC
(2017) 14 Cal.App.5th 785, 793. Once the petitioner meets its burden, “the
burden shifts to the party opposing the motion to compel, who may present any
challenges to the enforcement of the agreement and evidence in support of those
challenges.” Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th
1152, 1160.
ANALYSIS FOR MOTION FOR LEAVE
TO AMEND
I. Procedural Requirements
Defendant argues that Plaintiff fails to meet the requirement
of California Rules of Court, Rule 3.1324(a)(3) by stating by page, paragraph,
and line number the additional allegations are located. The Court disagrees.
Plaintiff’s motion lists all substantial revisions of the Complaint. Mot. at p.
7:16-8:1. The changes are so substantial that to list them line by line would
amount to listing every line of the Complaint. The Court reads Plaintiff’s
motion as deleting the entire contents of the first original Complaint and
replacing it with the entire contents of the FAC. Accordingly, the Court finds
that Plaintiff’s motion substantially complies with Rule 3.1324(a)(3)
requirements.
II. Contents of Motion
Defendant argues that the motion should be denied because it
does not make any changes to the contents of the pleading.
First, Plaintiff seeks to change the named plaintiff from
Justin Beimforde, the individual, to JUSTIN BEIMFORDE
REAL ESTATE BROKER, INC.
Second, Plaintiff pleads additional
factual allegations, including jurisdiction, venue, Doe defendants, and factual
allegations common to all counts.
Third, Plaintiff splits the single
cause of action for breach of contract into two causes, one for each listing
agreement.
Fourth, the FAC adds a request for
attorney’s fees.
Defendant argues that the change from
Plaintiff, the individual, to his eponymously named corporation is meaningless.
The Court disagrees. These are separate legal entities, and the Court sees no
reason not to allow Plaintiff to properly name the party bringing this action.
Second, Defendant argues that there is
no effect to pleading two counts of breach of contract based on the two listing
agreements, because the two parcels of land at issue are connected and were
sold together under one agreement. Defendant claims that amending the Complaint
to separate the causes of action is a waste of judicial resources and
attorneys’ fees.
This argument is without merit. First,
there are two listing agreements corresponding with separate parcels of land.
Therefore, it seems entirely appropriate to list the breach of each agreement
as a separate cause of action. Second, if Defendant were concerned with
conserving judicial resources and minimizing attorney’s fees, he could have
stipulated to this motion.
III. Timeliness of Motion
Defendant argues that Plaintiff fails to identify why he did
not seek permission to file an amendment earlier.
The Court disagrees. Plaintiff recently obtained new
counsel, whose review of the Complaint led him to conclude that these
amendments were necessary. Kosnett Decl. ¶ 5.
Leave to amend is liberally granted, and there is no
requirement that a party could not have filed the amendment earlier, only that
they explain why they did not.
Accordingly, Plaintiff’s Motion to file a First Amended
Complaint is granted. Plaintiff shall file and serve the FAC within 7 days of
this order.
ANALYSIS FOR MOTION TO COMPEL
I. Arbitration Agreement
This lawsuit concerns Defendant’s alleged breach of the
parties’ two listing agreements that the parties entered for the sale of real
property. Two listing agreements were necessary, because the property was
divided into two separate parcels, Los Angeles County Assessor Parcel No.
2833-006-022 (022) and 2833-006-023 (023). Both listing agreements contain an
identical arbitration provision. It is undisputed that Plaintiff and Defendant
each initialed under the arbitration agreement in the 023 listing agreement,
but only Defendant initialed under the 022 listing agreement. Mot. at p.
4:15-16; Opp. at p. 2:1-3.
The terms of the agreement provide that “ANY CONTROVERSY
ARISING UNDER OR RELATING TO THIS AGREEMENT SHALL BE DETERMINED BY BINDING ARBITRATION
TO BE CONDUCTED BY: THE AMERICAN ARBITRATION ASSOCIATION…USING THE COMMERCIAL
RULES ESTABLISHED BY SUCH ORGANIZATION OR IF NONE THE AMERICAN ARBITRATION
ASSOCIATION’S COMMERCIAL RULES. ARBITRATION HEARINGS SHALL BE HELD IN THE
COUNTY WHERE THE PROPERTY IS LOCATED.”
I. Waiver
Defendant argues that Plaintiff has waived his right to
arbitrate.
The enforcement of a contractual arbitration provision is
governed by Code of Civil Procedure section 1281.2, which provides in pertinent
part: ‘On petition of a party to an arbitration agreement alleging the
existence of a written agreement to arbitrate a controversy and that a party
thereto refuses to arbitrate such controversy, the court shall order the
petitioner and respondent to arbitrate the controversy if it determines that an
agreement to arbitrate the controversy exists, unless it determines that: [¶]
(a) The right to compel arbitration has been waived by the petitioner… .”
“[I]n determining whether a party to an arbitration
agreement has lost the right to arbitrate by litigating the dispute, a court
should treat the arbitration agreement as it would any other contract, without
applying any special rules based on a policy favoring arbitration. That is,
courts should apply the same procedural rules that they would apply to any
other contract.” Quach v. California Commerce Club, Inc. (2024) 16
Cal.5th 562, 583 (Quach).
“To establish waiver under generally applicable contract
law, the party opposing enforcement of a contractual agreement must prove by
clear and convincing evidence that the waiving party knew of the contractual
right and intentionally relinquished or abandoned it.” Id.
at p. 584. “Under the clear and convincing evidence standard, the
proponent of a fact must show that it is ‘highly probable’ the fact is true.” Ibid.
(quoting Conservatorship of O.B. (2020) 9 Cal.5th 989, 995 “The waiving
party's knowledge of the right may be ‘actual or constructive.’” Ibid (quoting
Outboard Marine Corp. v. Superior Court (1975) 52 Cal.App.3d 30, 41. “Its
intentional relinquishment or abandonment of the right may be proved by
evidence of words expressing an intent to relinquish the right or of conduct
that is so inconsistent with an intent to enforce the contractual right as to
lead a reasonable fact finder to conclude that the party had abandoned it.” Ibid.
“[T]here is no requirement that the party opposing enforcement of the
contractual right demonstrate prejudice or otherwise show harm resulting from
the waiving party's conduct.” Id. at p. 585.
A. Knowledge of the Right to Compel Arbitration
To meet the first element of waiver, Defendant must show by
clear and convincing evidence that Plaintiff knew of the arbitration provision.
See Quach, supra,16 Cal.5th at p. 584.
There is no dispute that Plaintiff was aware of the
arbitration provision in the listing agreement. In addition to initialing under
the arbitration provision, Plaintiff previously filed (and subsequently
withdrew) a motion to compel arbitration on March 4, 2024. Therefore, the Court
concludes, by clear and convincing evidence, that Plaintiff knew of his right
to compel arbitration in this case.
B. Intentional Relinquishment or Abandonment
Next, Defendant must show by clear and convincing evidence
that Plaintiff intentionally relinquished or abandoned his right to compel
arbitration. See Quach, supra,16 Cal.5th at p. 584.
“It is well established that a four- to six-month delay in
enforcing the right to arbitrate may result in a finding of waiver if the party
acted inconsistently with the intent to arbitrate during that window.” Semprini
v. Wedbush Securities Inc. (2024) 101 Cal.App.5th 518, 527.
As noted above, Plaintiff previously filed a motion to
compel arbitration on March 4, 2024. Plaintiff filed a notice of withdrawal of
the motion to compel arbitration on June 3, 2024. In his Reply, Plaintiff
argues that his withdrawal of his request for arbitration should not be taken
as an indication that he did not seek to arbitrate the case, but as a recognition
that his motion, which he filed pro per, was not likely to succeed, and he should
have his newly hired counsel draft a new one. Reply at p. 2:14-18.
The Court finds this unpersuasive. At the time Plaintiff
withdrew the motion to compel arbitration, Defendant’s motion to dismiss was
set for a hearing four days later. There would be no time to file a new motion
to compel arbitration beforehand, nor did he. Under the circumstances,
Plaintiff’s motion must be viewed as a desire to litigate the motion to dismiss
(a motion on which he ultimately prevailed) on the merits. Moreover, in two
Case Management Statements dated December 28, 2023, and April 12, 2024 (after
he filed his original motion to compel arbitration), Plaintiff checked the box indicating
his openness to nonbinding judicial arbitration, but did not check the box for
binding private arbitration. These show that Plaintiff changed his mind about
binding arbitration, leading up to his withdrawal of his motion.
The Court finds by clear and convincing evidence that
Plaintiff’s conduct was inconsistent with his intent to compel arbitration.
Accordingly, Plaintiff’s motion to compel arbitration is denied.