Judge: Anne Richardson, Case: 22STCV17466, Date: 2023-10-12 Tentative Ruling

Case Number: 22STCV17466    Hearing Date: December 14, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Pleadings

On May 26, 2022, Plaintiff Creditors Adjustment Bureau, Inc. (CAB)—as assignee of interests held by State Compensation Insurance Fund (Assignor or State Fund)—sued Defendant J and S Painting, Inc. (J&S) and Does 1 through 10 pursuant to a Complaint alleging claims of (1) Breach of Contract, (2) Open Book Account, (3) Account Stated, and (4) Reasonable Value.

The claims arise from allegations that Defendant J&S and Assignor entered into a written agreement wherein the State Fund agreed to provide a policy of workers compensation insurance to J&S, bearing Policy No. 9246526-19 and providing coverage for the period of February 28, 2019 through February 28, 2020, for which J&S agreed to pay premiums in accordance with the terms and conditions of said policy, only for J&S to default on payments in the amount of $132,150.74.

On June 22, 2023, J&S sued CAB pursuant to a Cross-Complaint alleging claims of Conversion and Negligence.

The claims arise from allegations that CAB has failed to release the $98,969.45 levied from a J&S bank account, in violation of an order made by this Court on June 9, 2023. (The June 9th order set aside a September 27, 2022 default judgment previously entered against Defendant J&S, which supported a January 19, 2023 writ of execution that resulted in the challenged levy.)

Motion Before the Court

On November 6, 2023, CAB moved for an order that allows CAB to file a First Amended Complaint (FAC) in this action. The proposed FAC is attached to the motion as Exhibit 1.

On November 30, 2023, J&S opposed the motion.

On December 5, 2023, CAB replied to the opposition.

CAB’s motion is now before the Court.

Motion for Leave to Amend

Legal Standard

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.”

Under California Rules of Court Rule, rule 3.1324, subdivision (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, subdivision (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.

“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 (Kittredge Sports).) 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; however, the Court 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 (California Casualty), overruled on other grounds by Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390, 403-406; see also Kittredge Sports, supra, 213 Cal.App.3d at p. 1048 [“[E]ven if the proposed legal theory is a novel one, ‘the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings’” (quoting California Casualty, supra, at p. 280)].)

However, leave to amend may also be properly denied when “the insufficiency of the proposed amendment is established by controlling precedent and . . . [can]not be cured by further appropriate amendment.” (California Casualty, supra, 173 Cal.App.3d at pp. 280-281; see, e.g., Foxborough v. Van Atta (1994) 26 Cal.App.4th 217, 231 [not an abuse of discretion to deny leave to amend when “proposed amendment would have been futile because it was barred by the statute of limitations” with no indication of relating back to the original complaint].)

Further, if a good amendment is proposed in proper form, a long, unwarranted and unexcused delay in presenting it may be a good reason for denial. (Roemer v. Retail Credit Co. (1975) 44 Cal.App.3d 926, 939-940.) In most cases, the factors for timeliness are: (1) lack of diligence in discovering the facts or in offering the amendment after knowledge of them; and (2) the effect of the delay on the adverse party. (Id. at p. 940.) If the party seeking the amendment has been dilatory, and the delay has prejudiced the opposing party, the judge has discretion to deny leave to amend. (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490.) Prejudice exists where the amendment would require delaying the trial, resulting in loss of critical evidence, or added costs of preparation such as an increased burden of discovery. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488.)

Order for Leave to Amend: GRANTED.

I. Cal. Rules of Court, rule 3.1324

Here, the motion for leave to amend satisfies California Rules of Court, rule 3.1324, subdivision (a)(1) by attaching a copy of the proposed FAC. (Mot., Brown Decl., Ex. 1.)

The motion also satisfies California Rules of Court, rule 3.1324, subdivisions (a)(2)-(3) by giving a detailed breakdown of the additions and/or deletions to the pleadings. (Mot., pp. 4-8; Mot., Brown Decl. ¶ 9 at pp. 11-15.)

Last, the motion satisfies California Rules of Court, rule 3.1324, subdivisions (b)(1)-(4) by providing the information required by this rule. (Mot., Brown Decl., ¶¶ 1-8.)

II. Other Arguments

In opposition, J&S argues that this motion should be denied based on false information (e.g., seeking to add a cause of action to the FAC for monies that are not owed) and based on litigation missteps by CAB. The opposition also makes certain objections to CAB’s motion and its evidence. (Opp’n, pp. 3-5.)

In reply, CAB argues that liberal discretion in support of amendments should be applied here, and that J&S has failed to raise any reasons why it would be prejudiced by the filing of a FAC.

The Court finds in favor of CAB.

Here, J&S’s opposition does not show that, as a matter of law, the allegations in the proposed FAC are fatally defective. Absent such a showing, “… ‘[t]he preferable practice [is] to permit the amendment and allow the parties to test … legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings.’” (Kittredge Sports, supra, 213 Cal.App.3d at p. 1048, quoting California Casualty, supra, at p. 280.)

CAB’s motion is therefore GRANTED.

For these reasons, the Court need not rule on J&S’s objections.

Conclusion

Plaintiff Creditors Adjustment Bureau, Inc.’s Motion for Order Allowing Plaintiff to File First Amended Complaint is GRANTED.

Plaintiff Creditors Adjustment Bureau, Inc. SHALL file its FAC with the Clerk within three court days of this order.