Case Number: 21STCV03905    Hearing Date: February 15, 2023    Dept: 40

Background 

Plaintiff Olga Banuelos alleges that she and her parents were previously joint tenants of 1805 Workman St. Los Angeles (the “Property”), that in June 2001, her parents—allegedly fraudulently—removed her as a joint tenant. As a result, and unbeknownst to Plaintiff, in 2014, when Plaintiff’s father died, Ruperta Banuelos (“Ruperta”), her mother, became the sole owner. In 2020, Ruperta sold the Property to Defendant Pyramid Investments, Inc. (“Pyramid Investments”) for $615,000.

Plaintiff alleges the following causes of action:

(1)   Quiet Title against Pyramid Investments;

(2)   Cancellation of Deeds against Ruperta and Pyramid Investments;

(3)   Money Had and Received Against Ruperta;

(4)   Accounting against Ruperta;

(5)   Unlawful or Fraudulent Business Practice against Defendant Melissa Solgonick;

(6)   Trespass against Pyramid Investments; and

(7)   Invasion of Privacy Against Pyramid Investments. 

On April 21, 2021, the Court sustained without leave to amend Defendant Melissa Solgonick’s demurrer. On June 1, 2021, Defendant Melissa Solgonick was dismissed with prejudice.

On August 5, 2021, the Court sustained in part without leave to amend Pyramid Investments’ demurrer to the Complaint as to the sixth and seventh causes of action. 

On October 31, 2022, Pyramid Investments filed a motion for summary judgment, which is set to be heard on March 9, 2023. 

On January 5, 2023, Pyramid Investments moves for leave to file a cross-complaint against Plaintiff pursuant to Code of Civil Procedure § 426.50, which the Court will GRANT.

Motion for Leave to File Cross-Complaint: GRANTED 

Discussion: Defendant Pyramid Investment moves pursuant to Code of Civil Procedure § 426.50 for leave to file a cross-complaint against Plaintiff seeking to add two causes of action: (1) imposition of an equitable lien and (2) declaratory relief.

Under Code of Civil Procedure § 428.50, the Court may grant leave to file a cross-complaint in the interest of justice at any time during the course of the action. ¿A policy of liberal construction of section 426.50 to avoid forfeiture of causes of action is imposed on the trial court.  (Silver Orgs. v. Frank (1990) 217 Cal.App.3d 94, 98-99.) ¿A motion to file a cross-complaint at any time during the course of the action must be granted unless substantial evidence of bad faith is demonstrated. ¿(Id.) ¿Bad faith involves conduct, not prompted by an honest mistake, but by some sinister motive, not simply bad judgment or negligence, but rather the conscious doing of a wrong because of dishonest purpose or moral obliquity. ¿(Id.) ¿Bad faith contemplates a state of mind affirmatively operating with furtive design or ill will. ¿(Id.)  Code of Civil Procedure § 426.10 defines a cross-complaint as compulsory when its claims arise from the same transaction, occurrence, or series of transactions or occurrences as the claims in the complaint.  

Here, a review of the proposed cross-complaint demonstrates that Pyramid Investments is seeking to pursue the following causes of action against Plaintiff: (1) imposition of an equitable lien, and (2) declaratory relief. (Motion; Veiguela Decl. ¶ 3, Exh. A.) Pyramid Investments asserts that, assuming it is unsuccessful on its motion for summary judgment and the case proceeds to trial, the filing of a cross-complaint is needed to protect its interests. (Motion at pp 5-7.; Veiguela Decl. ¶5.) Pyramid Investments reasons that, as an innocent purchaser and if Plaintiff succeeds at trial, it would be entitled to reimbursements from Plaintiff for expenditures related to the purchase and maintenance of the Property since March 2020, in accordance with Plaintiff’s claimed ownership in the Property. (Id.) Pyramid Investments claims that without the inclusion of the proposed cross-complaint, Plaintiff would be unjustly enriched because she would own the Property free and clear of the Bank of America loan and 2014 Deed of Trust that encumbered the Property. (Motion at pg. 6.)

Based on this information, the claims in the cross-complaint arise from the same transaction, occurrence, or series of transactions or occurrences as the claims in the Complaint. Thus, Pyramid Investments’ motion seeks leave to file a compulsory cross-complaint, which must be granted unless there is substantial evidence of bad faith. (Silver Organizations Ltd., supra, 217 Cal.App.3d at 98-99.) While Defendants could have sought leave to file their cross-complaint sooner, there is no indication of bad faith because Pyramid Investments was attempting to resolve this case informally through settlement. (Motion at pg. 6; Veiguela Decl. ¶ 7.) In opposition, Plaintiff asserts that Pyramid Investments has been dilatory in seeking relief and is attempting to pressure her into unfavorable settlement terms with the inclusion of the cross-complaint. (Opposition at pg. 3.) However, these arguments are not persuasive. As pointed out in Pyramid Investments’ reply, the instant motion was reserved before the motion for summary judgment was filed and before settlement discussions began. (Reply at pg. 2.) This does not support the contention that the requested relief is a tactic to pressure Plaintiff to settle. Moreover, courts are to construe the provision permitting leave to file a cross-complaint liberally in order to avoid forfeiture of causes of action. (Code Civ. Proc. § 426.50.) Therefore, there is no evidence of substantial bad faith that would prevent Pyramid Investments from filing a compulsory cross-complaint.

Conclusion

Pyramid Investments’ Motion for Leave to File Cross-Complaint is GRANTED.