Judge Ashfaq G. Chowdhury, Case Number: 23GDCV01613, Date: 2024-07-18 Tentative Ruling

Judge: Ashfaq G. Chowdhury, Case: 23GDCV01613, Date: 2024-07-18 Tentative Ruling

Case Number: 23GDCV01613 Hearing Date: July 18, 2024 Dept: E

Hearing Date: 07/18/2024 – 8:30am
Case No: 23GDCV01613
Trial Date: 04/07/2025
Case Name: PINK PLASTIC LLC, a Virginia limited liability company; v. 1725 VICTORY LLC, a California limited liability company; and DOES 1-50

[TENTATIVE RULING ON MOTION FOR LEAVE TO FILE CROSS-COMPLAINT]

RELIEF REQUESTED
“Defendant 1725 Victory, LLC (“Victory”) will and hereby does move the above-referenced court, located at South Glendale Avenue in Glendale, California, for leave to file a cross-complaint for breach of contract, breach of the covenant of good faith and fair dealing, and breach of guaranty against Plaintiff Pink Plastic, LLC and its guarantor Maramawit G. Dorsey (the “Proposed Cross-Complaint”) on the following grounds:

1. Victory’s Proposed Cross-Complaint arises from the same contract and events already at issue in this case. (See Defendant's Proposed Cross-Complaint attached as Exhibit “A,” and see Plaintiff’s Verified Complaint on file with this Court.)

2. Leave is mandatory where the cross-claims are compulsory and there is no evidence of bad faith on the part of the moving party. (Code. Civ. Proc. § 426.50; Silver Orgs. v. Frank (1990) 217 Cal.App.3d 94, 98-99.)

3. Even if the cross-claims are considered permissive rather than compulsory, the interests of justice would nevertheless warrant an Order granting this Motion for Leave. (Code Civ. Proc. § 428.50.)

4. Granting this Motion for Leave would not cause any delay or prejudice any party.

5. Leave is necessary to advance justice, to facilitate judicial economy, and to accommodate the resolution of all outstanding issues within a single action. Absent leave, the parties would suffer prejudice as duplicative actions could result in potentially inconsistent rulings.

6. Victory has acted in good faith, diligently seeking leave to file its Proposed Cross-Complaint.

This motion is brought pursuant to the provisions of Section 426.50 of the Code of Civil Procedure and is based upon this notice, the attached memorandum of points and authorities and exhibits thereto, the documents on file with the Court in this action, on any matters of which this Court may take judicial notice, and upon all argument, evidence and papers properly presented to the Court at the time of the hearing on this motion.”

(Mot. p. 1-2.)

BACKGROUND
On 07/28/2023, Plaintiff, Pink Plastic LLC, filed the instant action against Defendant, 1725 Victory LLC. The Complaint alleges three causes of action for: (1) Breach of Contract, (2) Breach of Covenant of Good Faith and Fair Dealing, and (3) Negligent Misrepresentation.

Plaintiff’s Complaint alleges that on or about August 25, 2022, Plaintiff and Defendant entered into a commercial lease. (Compl. ¶ 7.) The causes of action stem from allegations that there was a leak in the roof and that Defendant failed to uphold its obligations under the terms of the lease.

Defendant filed its Answer on 10/13/2023.

Defendant filed the instant motion on 6/20/2024.

PROCEDURAL ANALYSIS
Moving Party: Defendant, 1725 Victory, LLC
Responding Party: Plaintiff, Pink Plastic

Moving Papers: Notic/Motion; Witkin Declaration; Request for Judicial Notice; Emami Declaration; Proof of Service

Opposition Papers: Opposition

Reply Papers: Reply

Proof of Service Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP § 1005(b)): Ok
Proper Address (CCP §1 013, § 1013a, § 1013b): Ok

ANALYSIS
Compulsory vs. Permissive Cross-Claims
Movant argues that leave to file a cross-complaint is warranted whether its claims are considered compulsory under CCP § 426.50 or permissive under 428.50.

Opposition makes no argument as to whether the instant cross-complaint would be a compulsory or permissive cross-complaint.

Because Opposition did not seem to make any argument as to whether the cross-complaint here would be compulsory or permissive, the Court will put both legal standards below.

Legal Standard Compulsory Cross-Complaint
Code of Civil Procedure section 426.10 et seq. sets forth California’s “compulsory cross-complaint" statute. (Code Civ. Proc., § 426.10 et seq. [titled “Compulsory Cross-Complaints"].) Therein, Code of Civil Procedure section 426.30 provides, “if a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.” (Ibid.) Related cause of action means “a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.” (CCP §426.10(c).

In the event a party fails to file a compulsory cross-complaint concurrently with his or her answer, CCP §426.50 provides the following available remedies:

A party who fails to plead a cause of action subject to the requirements of this article, whether through oversight, inadvertence, mistake, neglect, or other cause, may apply to the court for leave to amend his pleading, or to file a cross-complaint, to assert such cause at any time during the course of the action. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend the pleading, or to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith. This subdivision shall be liberally construed to avoid forfeiture of causes of action.

(CCP §426.50)

“A policy of liberal construction of section 426.50 to avoid forfeiture of causes of action is imposed on the trial court. A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.” (Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 98-99.)

Legal Standard Permissive Cross-Complaint
Under CCP § 428.10:

A party against whom a cause of action has been asserted in a complaint or cross-complaint may file a cross-complaint setting forth either or both of the following:

(a) Any cause of action he has against any of the parties who filed the complaint or cross-complaint against him. Nothing in this subdivision authorizes the filing of a cross-complaint against the plaintiff in an action commenced under Title 7 (commencing with Section 1230.010) of Part 3.

(b) Any cause of action he has against a person alleged to be liable thereon, whether or not such person is already a party to the action, if the cause of action asserted in his cross-complaint (1) arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause brought against him or (2) asserts a claim, right, or interest in the property or controversy which is the subject of the cause brought against him.

(CCP § 428.10(a)-(b).)

Under CCP § 428.50:

(a) A party shall file a cross-complaint against any of the parties who filed the complaint or cross-complaint against him or her before or at the same time as the answer to the complaint or cross-complaint.

(b) Any other cross-complaint may be filed at any time before the court has set a date for trial.

(c) A party shall obtain leave of court to file any cross-complaint except one filed within the time specified in subdivision (a) or (b). Leave may be granted in the interest of justice at any time during the course of the action.

(CCP § 428.50(a)-(c).)

Discussion
Defendant seeks leave to file a cross-complaint against Plaintiff and its guarantor Maramawit G. Dorsey.

A significant amount of both parties’ arguments in moving, opposition, and reply papers are irrelevant for purposes of this motion, as both parties waste time disputing the merits of this case.

The proposed cross-complaint appears to assert causes of actions which arise out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the Plaintiff alleges in the Complaint. The proposed cross-complaint pertains to the same exact lease as the Complaint and allegations pertaining to the alleged source of the leak. The cross-complaint also seeks to add a new party, Dorsey, because of allegations that Defendant and Dorsey executed a Guaranty and that Dorsey breached the Guaranty.

Further, Movant appears to have acted in good faith, Movant does not appear to have acted in bad faith, and it would be in the interest of justice to grant leave to file the proposed cross-complaint.

The Opposition’s arguments are unpersuasive and unavailing.

The Court notes that Movant’s motion was centered around the allegation that there was a third-party roof inspection report that Pink Plastic commissioned which evidenced that the roof was not leaking but that instead the HVAC was leaking. Movant alleged that Pink Plastic concealed this report until April 2024.

TENTATIVE RULING
Defendant’s motion for leave to file a cross-complaint is GRANTED. Defendant is to file and serve its cross-complaint within 15 days of this order.

The Court reminds Defendant of the service obligations set forth in CCP § 428.60:

A cross-complaint shall be served on each of the parties in an action in the following manner:

(1) If a party has not appeared in the action, a summons upon the cross-complaint shall be issued and served upon him in the same manner as upon commencement of an original action.

(2) If a party has appeared in the action, the cross-complaint shall be served upon his attorney, or upon the party if he has appeared without an attorney, in the manner provided for service of summons or in the manner provided by Chapter 5 (commencing with Section 1010) of Title 14 of Part 2 of this code.

(CCP § 428.60(1)-(2).)

The Court GRANTS judicial notice of requests 2 and 3. The Court will likely deny request for judicial notice 1. Defendant seeks judicial notice of the entire record in the instant case “for the limited purpose of establishing the fact that no one, including Pink Plastic ever attached a copy of the Report to any pleading or motion in the instant case, and not for the truth of the claims asserted.” With RJN 1, Defendant seeks judicial notice of “the pleadings and papers filed in the proceedings in the instant case.” However, the Court will not be going through every document filed in this case to determine if Pink Plastic ever attached a copy of “the Report.” If this issue is ever leally relevant, then Movant can bring up this issue on whatever motion it is legally relevant on. For now, it does not appear to be legally relevant or dispositive for purposes of determining how to rule on the instant motion.