Department 58

Hearing Date: October 30, 2024

Case Name: 1149 South LA Street Fashion District, LLC, et al. v. People’s Properties, LLC, et al.

Case No.: 23STCV01994

Motion: Motion for Leave to Amend Complaint

Moving Party: Plaintiffs 1149 South LA Street Fashion District, LLC and 1135 South LA Street Fashion District, LLC

Responding Party: Defendants People’s Properties, LLC, Unrivaled Brands, Inc., and Bernard Steimann

Tentative Ruling: Plaintiff’s Motion for Leave to Amend Complaint is GRANTED.

Background

This action arises from an alleged breach of a commercial lease and a written guaranty. On January 30, 2023, Plaintiffs 1149 South LA Street Fashion District, LLC and 1135 South LA Street Fashion District, LLC (collectively, “Plaintiffs”) filed their original Complaint against Defendants People’s Properties, LLC (“People’s”), Unrivaled Brands, Inc. (“Unrivaled”), and Bernard Steimann (“Steimann”) (collectively, “Defendants”) alleging causes of action for (1) breach of written contract, (2) breach of written guaranty, (3) breach of implied covenant of good faith and fair dealing, (4) waste, and (5) declaratory relief.

In the original Complaint, Plaintiffs alleged that Unrivaled remained in possession of the commercial properties located at 1149 South Los Angeles Street in Los Angeles, California (“1149 Property”) and 1135 South Los Angeles Street in Los Angeles, California (“1135 Property”) (collectively, the “Subject Premises”), which Plaintiffs owned and are the subject of the instant dispute. Pursuant to Unrivaled’s continuing possession, and its continuing obligation to pay rent pursuant to this possession, Plaintiffs originally sought to pursue damages under Civil Code § 1951.4, which allows Plaintiffs to sue for rent as it comes due.

On April 10, 2024, Unrivaled filed its Answer to the Complaint.

On April 14, 2023, People’s and Steimann filed their answers to the Complaint.

After the Complaint was filed, Plaintiffs learned, through communications with Unrivaled’s Counsel, that Unrivaled ceased occupying the Subject Premises on March 21, 2024, and purportedly relinquished possession of the Subject Premises to Plaintiffs. (Serova Decl., ¶ 4, Exh. C.)

On June 28, 2024, Plaintiffs filed a Substitution of Attorney noting that Greenberg Glusker LLP substituted in as Plaintiffs’ Counsel of record.

On September 11, 20224, Plaintiffs’ Counsel sent a request to Unrivaled, People’s, and Steimann for stipulation to file a First amended Complaint. (Serova Decl., ¶ 8.)

On September 17, 2024, Counsel for Unrivaled stated that he had been unable to respond because of ongoing arbitration preparations. (Serova Decl., ¶ 8, Exh. E.)

On October 2, 2024, Counsel for People’s and Steimann agreed to stipulate to Plaintiffs’ amendments. (Serova Decl., ¶ 8, Exh. D.) No further response was received from Unrivaled Counsel. (Id., Exh. E.)

On October 2, 2024, Plaintiffs filed the instant Motion for Leave to Amend

Discussion

Plaintiffs seek leave to amend its original Complaint to allege a new basis for remedy, based on Unrivaled’s relinquishment of possession of the Subject Premises, and to dismiss two of the five originally pled causes of action to narrow the scope of issues for trial.

As stated above, while Unrivaled remained in possession, Plaintiffs sought remedies under Civil Code § 1951.4, suing for rent as it came due. However, since Unrivaled has relinquished possession, Plaintiffs instead seek relief under Civil Code § 1951.2 to collect all rent due through the end of the lease term (less mitigation damages).

Plaintiffs also seek to dismiss the third cause of action for breach of the implied covenant of good faith and fair dealing and fifth cause of action declaratory relief. Plaintiffs state that these claims are unnecessarily redundant to the causes of action for breach of written contract and written guaranty.

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(a), 576.) California courts liberally exercise discretion to permit the amendment of pleadings 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.) Absent a showing of prejudice, delay in seeking to amend, by itself, generally will not justify a denial of leave to amend. (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564-565.) Thus, the policy favors amendment in the absence of both unexcused delay and prejudice. 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.)

Further, pursuant to California Rules of Court, rule 3.1324(a), “a motion to amend a pleading before trial must: [¶] (1) Include a copy of the proposed amendment or amended pleading …; [¶] (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 were, by page, paragraph, and line number, the additional allegations are located.” (Id.) The motion to amend a pleading must also include a supporting declaration specifying (1) the effect of the amendment, (2) why the amendment is necessary, (3) when the facts giving rise to the amended allegations were discovered, and (4) why the proposed amendment was not made earlier. (CRC, rule 3.1324(b).)

Analysis

Here, Plaintiff has complied with all requirement of California Rules of Court, rule 3.1324. Plaintiffs’ Counsel submitted a verified declaration setting forth, as described above, that the amendment became necessary when Plaintiffs learned that Unrivaled has ceased occupancy of the Subject Premises and relinquished possession to Plaintiffs. (Serova Decl., ¶ 4, Exh. C.) Plaintiffs’ prior counsel was informed of Unrivaled’s relinquishment on March 18, 2024. (Ibid.) Plaintiffs’ re-possession of the Subject Premises allegedly provided Plaintiffs with the proper factual predicate to seek damages due for the entire period of Unrivaled’s tenancy, amounting to nearly $3,600,000, pursuant to Civil Code § 1951.2. (Id., ¶ 6.) Plaintiffs also provide a reasonable basis for why the proposed amendment could not be made earlier; Plaintiffs substituted counsel on June 28, 2024, and the Plaintiffs’ new Counsel attempted to meet and confer with Defendants to stipulate to this amendment rather than seek leave of the court. (Id., ¶¶ 5, 8.)

In conjunction with their motion, Plaintiffs filed a red-lined copy of the First Amended Complaint that demonstrates the revisions against Plaintiffs’ original Complaint (Serova Decl., ¶ 2, Exh. A), and a clean copy of the proposed First Amendment Complaint with the revisions accepted (Id. ¶ 3, Exh. B). The Plaintiffs’ memorandum of points and authorities also provides a line-by-line description of the proposed amendments to the Complaint. (Mot., p. 2:25-6:22.)

The Court also finds no basis that granting leave to amend the Complaint will prejudice Defendants. As established above, Plaintiffs did not unduly delay filing this motion. Defendants have also all been aware of the factual circumstances giving rise to these proposed amendments since March 21, 2024, when Unrivaled relinquished possession of the Subject Premises. In fact, People’s and Steimann both stipulated to the amendments, through their joint counsel, on October 2, 2024, prior to Plaintiffs filing this motion. (Serova Decl., ¶ 8.) Further, Unrivaled’s failure to stipulate does not demonstrate any basis for prejudice; Unrivaled was the party whose actions gave rise to the new factual scenario that warranted such amendment and will not suffer any deprivation of critical evidence since trial is not set until April 28, 2025. (See Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-89.)

Accordingly, Plaintiffs’ motion for leave to amend its original Complaint and file the proposed First Amended Complaint is GRANTED.