Judge: Armen Tamzarian, Case: 20STCV13190, Date: 2022-12-16 Tentative Ruling
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Case Number: 20STCV13190 Hearing Date: December 16, 2022 Dept: 52
Defendant R&H Automotive Group,
Inc.’s Motion for Leave to File Cross-Complaint
Defendant R&H Automotive Group, Inc. (R&H) moves for
leave to file a cross-complaint against plaintiff American Honda Finance
Corporation.
Evidentiary Objections
Defendant R&H makes
one objection to the declaration of Bryan King Sheldon in support of
plaintiff’s opposition. The objection is
overruled.
Leave to File Cross-Complaint
R&H’s proposed cross-complaint would allege
compulsory-crossclaims against plaintiff American Honda Financing Corporation. When a party fails to timely bring compulsory
crossclaims, “whether through oversight, inadvertence, mistake, neglect, or
other cause,” the court may grant leave to file a cross-complaint “at any time
during the course of the action” so long as the moving party “acted in good
faith.” (CCP § 426.50.) This provision is “liberally construed to
avoid forfeiture of causes of action.” (Ibid.)
Denying leave to file a compulsory cross-complaint requires
“bad faith of the moving party.” (Silver Organizations Ltd. v. Frank
(1990) 217 Cal.App.3d 94, 99; accord CCP § 426.50.) “Bad faith” implies “ ‘actual or constructive
fraud, or a design to mislead or deceive another, or a neglect or refusal to
fulfill some duty or some contractual obligation, not prompted by an honest
mistake ..., but by some interested or sinister motive[,] ... not simply bad
judgment or negligence, but rather ... the conscious doing of a wrong because
of dishonest purpose or moral obliquity; ... it contemplates a state of mind
affirmatively operating with furtive design or ill will.’ ” (Id. at p. 100.) Finding bad faith requires “substantial
evidence.” (Ibid.)
Though R&H delayed over two years before filing this
motion, the court finds insufficient evidence of bad faith. The evidence falls short of showing R&H
has engaged in “unusually reprehensible” efforts to delay the litigation. (Foot’s Transfer & Storage Co. v.
Superior Court (1980) 114 Cal.App.3d 897, 903.) Much of the delay can be attributed to
R&H’s suspension by the Franchise Tax Board. While suspended, R&H could not move for
leave to file a cross-complaint.
Conditions
Plaintiff argues that if
the court grants this motion, defendant R&H should be required to post an
undertaking of $250,000. Courts may
grant leave to file a cross-complaint “upon such terms as may be just to the
parties.” (CCP § 426.50.) Plaintiff seeks to apply the standard for
requiring a plaintiff (or cross-complainant) who resides out of state to post
an undertaking under Code of Civil Procedure section 1030. Plaintiff provides no authority that a court
can impose such a condition for granting a motion to file an untimely
cross-complaint with compulsory crossclaims.
That condition would be excessive in this case. The court exercises its discretion not to impose
any conditions on defendant R&H.
Disposition
Defendant R&H
Automotive Group, Inc.’s motion for leave to file a cross-complaint is granted.
Defendant R&H
Automotive Group, Inc. is ordered to file its cross-complaint forthwith.
Defendant R&H
Automotive Group, Inc.’s Motion to Reopen Discovery
Defendant
R&H Automotive Group, Inc. moves to reopen discovery under Code of Civil
Procedure section 2024.050. Section 2024.050, subdivision (b) provides:
In exercising its discretion to grant or deny this
motion, the court shall take into consideration any matter relevant to the
leave requested, including, but not limited to, the following:
(1) The necessity and the reasons for the
discovery.
(2) The diligence or lack of diligence of the
party seeking the discovery or the hearing of a discovery motion, and the
reasons that the discovery was not completed or that the discovery motion was
not heard earlier.
(3) Any likelihood that permitting the discovery
or hearing the discovery motion will prevent the case from going to trial on
the date set, or otherwise interfere with the trial calendar, or result in
prejudice to any other party.
(4) The length of time that has elapsed between
any date previously set, and the date presently set, for the trial of the
action.
Upon weighing all the
relevant matters, the court finds good cause to partially reopen
discovery.
First, defendant makes
only a minimal showing of the necessity and reasons for reopening
discovery. R&H states it “seeks the
deposition and documents of plaintiff and several of its employees because
defendant it needs to prepare for trial and understand the facts supporting the
allegations contained in the operative complaint as well as obtain evidence
related to its cross-complaint.” This vague
explanation applies to any discovery.
Moreover, as plaintiff
argues, co-defendants Hooman Nissani and Babbak Sarraf have the same interest
in this action as R&H. They could
and should have done nearly all the discovery R&H needs, except discovery
on the cross-complaint. R&H argues
the individual co-defendants are not similarly situated because R&H
operated the Acura dealership and was the obligor on plaintiff’s loans. R&H gives no reason why that matters. R&H, Nissani, and Sarraf are defending against
the same claims. Most of the evidence on
both sides will be the same for these defendants.
Second, defendant shows
little diligence and gives no good excuse for not completing discovery. Defendant relies on the fact that it was
suspended by the Franchise Tax Board from September 2021 to October 2022. But defendants answered on June 26,
2020. R&H could and should have filed
its cross-complaint at that time, as required under Code of Civil Procedure
section 428.50(a). R&H had over a
year to conduct discovery between its answer and its suspension. It did little discovery. R&H does not have a satisfactory
explanation for not doing more discovery before its suspension.
Third, R&H states it
can complete its discovery before the trial on February 8, 2023.
Fourth, the case was
initially set for trial on May 5, 2021.
The trial has been continued several times, totaling nearly two years.
After considering all
relevant factors, the court finds it appropriate to partially reopen discovery—with
significant limits.
Disposition
Defendant
R&H Automotive Group, Inc.’s motion to reopen discovery is hereby granted in part.
The
court hereby reopens discovery
for defendant R&H Automotive Group, Inc. only—not any other defendants—with
the following limits: R&H Automotive Group may take up to four
depositions. Each notice of deposition
may include a maximum of 15 document requests.
Any deposition of plaintiff’s person(s) most knowledgeable shall be
limited to a maximum of 12 matters of examination. R&H Automotive Group may propound no more
than 35 requests for production, 35 requests for admission, and 35 special
interrogatories.
As
for plaintiff American Honda Finance Corporation, the court hereby reopens discovery without any additional limits beyond those
under the Civil Discovery Act.
Fact
discovery must be completed by January 20, 2023. Any discovery motions shall be heard no later
than January 30, 2023.