Judge: Bruce G. Iwasaki, Case: 22STCV11771, Date: 2022-08-02 Tentative Ruling

Case Number: 22STCV11771    Hearing Date: August 2, 2022    Dept: 58

Judge Bruce G. Iwasaki



Hearing Date:             August 2, 2022

Case Name:                TruConnect Communications, Inc. v. Ground Floor Marketing LLC, et. al.

Case No.:                    22STCV11771

Matter:                        Motion for Leave to File First Amended Complaint

Moving Party:             Plaintiff TruConnect Communications Inc.

Responding Party:      Defendant Ground Floor Marketing LLC


Tentative Ruling:      The Motion for Leave to File the First Amended Complaint is granted. Plaintiff is ordered to file its First Amended Complaint within 10 days.




            Plaintiff TruConnect Communications, Inc. (Plaintiff or TruConnect) filed the Complaint on April 7, 2022, alleging a breach of contract against Defendant Ground Floor Marketing LLC (Defendant or Ground Floor). 


            TruConnect manages a free wireless telephone program for qualified, low-income households.  In May 2021, TruConnect contracted with Ground Floor.  As part of the agreement, TruConnect sent cellular devices to Ground Floor (with zero paid upfront), and Ground Floor was to provide the devices to qualified individuals who enrolled in the programs. 


            On March 22, 2022, TruConnect exercised its right to terminate the contract and demanded that Ground Connect return the devices or remit payment of $978,899.00 for the 20,446 devices within seven days.  After Ground Floor failed to return the devices and pay the invoice, TruConnect sued for breach of contract.


            After filing the Complaint, TruConnect alleged that it discovered an online seller with the pseudonym “mr.hikmat642” selling its inventory online through eBay.  TruConnect asserts that this seller is or is connected to Ground Floor because: (1) the seller shipped from Meriden, Connecticut, which is the same location in which TruConnect shipped its devices to Ground Floor; and (2) TruConnect purchased a phone from the seller and the phone’s IMEI code matched one of TruConnect’s prior devices.  On June 21, 2022, TruConnect obtained a preliminary injunction to enjoin Ground Floor from selling any of the devices.


Motion for leave to file amended complaint


            TruConnect asserts that after filing the initial complaint, it discovered that Ground Floor may have committed fraud.  Specifically, TruConnect contends that it believed John C. Merrill and Marisha Voloshin oversaw Ground Floor; however, when the process server attempted service on Ground Floor, he served “Roger Cohen,” who then explained that Ms. Voloshin was no longer working there.  TruConnect avers that the Connecticut Secretary of State’s Office identifies Ms. Voloshin as its managing member, but the provided business addresses were invalid.  Thus, TruConnect believes Ground Floor was established for the appearance of a legitimate company so that the individual Defendants could obtain the devices and resell them.


            TruConnect seeks leave to amend its complaint to add causes of action for intentional interference with prospective economic relations, negligent interference with prospective economic relations, aiding and abetting interference with prospective economic relations, fraud, and violation of Penal Code section 496 (receiving stolen property).


            Ground Floor opposes.  It argues that the amended complaint “attempts to change the nature of the liability sought to be enforced,” the claim for interference with prospective economic advantage is invalid, and that the new pleading is a sham amendment.


            TruConnect replied, stating that amendments are liberally allowed, the validity of a cause of action is properly challenged on demurrer, and that this is not a sham amendment because there are no contradictions to the initial complaint.


            TruConnect requests judicial notice of court records and “business details” from the Connecticut Secretary of State’s Office.  The request is granted.  (Evid. Code, § 452, subds. (c), (d).) 


            None of Defendant’s arguments in opposition has merit.  The Court grants Plaintiff’s motion for leave to amend the complaint.


Legal Standard


            The court may, in furtherance of justice, allow a party to amend any pleading upon any terms as may be proper.  (Code Civ. Proc., §§ 473, subd. (a), 576.)  Courts liberally grant leave to amend in light of a strong policy favoring resolution of all disputes between parties in the same action.  (Nestle v. Santa Monica (1972) 6 Cal.3d 920, 939; Morgan v. Superior Court (1959) 172 Cal.App.2d 527, 530.)  Accordingly, requests for leave to amend generally will be granted unless the party seeking to amend has been dilatory in bringing the proposed amendment, and the delay in seeking leave to amend will cause prejudice to the opposing party if leave to amend is permitted.  (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490; see also Armenta ex rel. City of Burbank (2006) 142 Cal.App.4th 636, 642 [“instances justifying the court’s denial of leave to amend are rare.”].)  Absent prejudice, delay alone is insufficient to deny leave to amend.  (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564-565.) The decision on a motion for leave is directed to the sound discretion of the trial court.  (See Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2014) ¶¶ 6:637 et seq.)

A party requesting leave to amend must state what allegations in the previous pleading are proposed to be deleted and added, as well as specify where, by page, paragraph, and line number, the changes are located.  (Cal. Rules of Court, rule 3.1324(a)(1)-(3).) The moving party must also attach the proposed amended pleading with a declaration by counsel, describing (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) why the request was not made earlier.  (Cal. Rules of Court, rule 3.1324(b)(1)-(4).) 



            Plaintiff TruConnect complied with the Rules of Court.  Counsel’s declaration attache a copy of the proposed First Amended Complaint.  (Cole Decl., ¶ 6, Ex. A.) Counsel describes the newly added paragraphs and allegations. (Id. at ¶¶ 6(a)-(f).)  He also provides the reason for the amendment (new evidence) and the new facts supporting the allegations.  (Id. at ¶¶ 4, 5, 7, 8, 13-17.)  These facts suggest that Defendants’ subsequent actions of listing the phones online and separately selling them may give rise to other theories of liability such as fraud.


            Defendant does not address the issue of prejudice.  Instead, it asserts that the amendment changes the theory of liability, contains invalid causes of action, and is a sham.  None of these contentions have merit.


            To the extent that Defendant is arguing that the damages and theories of liability may be different, this is irrelevant if the amendment is based on the same set of operative facts.  (Amaral v. Cintas Corp. No. 2 (2008) 163 Cal.App.4th 1157, 1199-1200.)  Defendant’s only cited case, Klopstock v. Superior Court of San Francisco (1941) 17 Cal.2d 13, 20 (Klopstock) is factually distinguishable and does not stand for the blanket proposition that new causes of action are not permitted in amendments.


            In Klopstock, the decedent was a stockholder and the plaintiff, acting as executor of the estate, sued on behalf of the corporation to compel the other shareholders to repay wrongfully withdrawn sums.  (Klopstock, supra, 17 Cal.2d at p. 15.)  Judgment was entered in favor of the estate, but the Court of Appeal reversed because the estate was not a party to the action.  (Id. at pp. 15-16.)  The plaintiff then sought to amend the complaint to substitute in the newly appointed executor.  The California Supreme Court stated the amendment was consistent with “modern theories of code pleading, which would permit amendment in the discretion of the court unless an attempt is made to present an entirely different set of facts by way of the amendment.”  (Klopstock v. Superior Court of San Francisco, supra, 17 Cal.2d at pp. 19-20.)  While amendments with the effect of stating a distinct cause of action were not permitted, “the test is not whether under technical rules of pleading a new cause of action is introduced, but rather, the test is whether an attempt is made to state facts which give rise to a wholly distinct and different legal obligation against the defendant.”  (Id. at p. 20.)


            Klopstock was in response to defendant’s prior demurrer and involved an amendment as to the plaintiff and the capacity in which she sued.  This is not the case here.  TruConnect is not substituting itself out as a plaintiff.  It is alleging new causes of action under the same set of operative facts, i.e., the contract that provided the cellular devices to Defendant.  The factual allegations are consistent between both pleadings.


            As to Defendant’s argument that the claim for interference with prospective economic advantage is insufficient, this is properly addressed at demurrer.  (Kittredge v. Sports Co. (1989) 213 Cal.App.3d 1045, 1048.) 


            Defendant also contends the proposed amendment is a “sham” pleading.  This argument fails.  The sham pleading doctrine provides that allegations in the original pleading that were vulnerable to demurrer cannot simply be omitted without explanation in the amended pleading.  (Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379, 384.)  The policy requires the pleading party to explain the inconsistency.  If he fails to do so, “the court may disregard the inconsistent allegations and read into the amended complaint the allegations of the superseded complaint.”  (Ibid.)


            Defendant does not indicate what allegations are inconsistent, merely arguing that the proposed amendments “take[] this case in an entirely different direction.”  The Court has reviewed both pleadings and does not find any inconsistencies.


            Finally, Defendant has failed to address any issues of prejudice that it may suffer.  This case was only filed on April 7, 2022, and a trial date has not been set.  Even if discovery has begun, it is still in the early stages and Defendant has not shown that it would suffer any prejudice.  “Where no prejudice is shown to the adverse party, the liberal rule of allowance prevails.”  (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564-565 [finding that it may be an abuse of discretion to deny leave to amend if no prejudice is shown]; see also Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761.)


            Given the “ ‘great liberality in permitting amendments to the complaint at any stage of the proceedings,’ ” the Court grants the motion. (Atkinson v. Elk Corp., supra, 109 Cal.App.4th at p. 761; see Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428.)  Plaintiff is ordered to file its First Amended Complaint within 10 days.