Judge: Christopher K. Lui, Case: 21STCV46724, Date: 2024-04-11 Tentative Ruling
Case Number: 21STCV46724 Hearing Date: April 11, 2024 Dept: 76
Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein. Counsel must contact the staff in Department 76 to inform the Court whether they wish to submit on the tentative, or to argue the matter. As required by Rule 3.1308(a), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue.
Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776.
Per Rule of Court 3.1308, if notice of intention to appear is not given, the Court may adopt the tentative ruling as the final ruling.
Plaintiff alleges that Defendants defrauded him into taking out a short term bridge loan with exorbitant up-front costs and an enormous balloon payment after one-year, as a step toward obtaining a reverse mortgage.
Plaintiff Roberto Bustamante moves for leave to file a First Amended Complaint.
TENTATIVE RULING
Plaintiff Roberto Bustamante’s motion for leave to file a First Amended Complaint is GRANTED, subject to conditions stated herein. Plaintiff is to file a stand-alone copy of the First Amended Complaint, which shall be deemed served as of the date of this order.
Motion For Leave To Amend
Plaintiff Roberto Bustamante moves for leave to file a First Amended Complaint on the following grounds: (1) since filing his Complaint, Plaintiff has filed Doe amendments substituting the true names of Defendants Doe 1 and Doe 2 and must amend the Complaint to include more specific allegations against these newly added Defendants; and (2) Plaintiff hopes to clarify existing claims and theories by adding additional
information learned in the discovery process.
The proposed Verified First Amended Complaint (“1AC”) clarifies Plaintiff’s existing alter-ego allegations against Defendant corporations and adds information about their joint enterprise and agency allegations.
Plaintiff argues that subsequent developments in 2023 necessitate amendments on several fronts. First, Plaintiff’s counsel obtained a declaration in February 2023 from a former NACA Law employee which shed critical light on Defendants’ operations. Vossler Decl. ¶ 18. Second, Plaintiff took the deposition of a current NACA Law employee in December 2023 and received written discovery responses from Defendant Professional Business Management Corporation (PBM) in January 2024, of which confirmed specifically, that (for-profit) PBM pays the salaries of all (nonprofit) NACA Law employees; this raises important questions about licensing, requiring Plaintiff to amend complaint to allege such licensing violations. Id. ¶¶ 18-22. Plaintiff also seeks to clarify existing allegations for the benefit of all parties, and proposed FAC also adds allegations specific to Sindey Avalos and Anthony Cara, who were substituted into this action as Doe 1 and Doe 2 after the Complaint was filed. See ROA; Vossler Decl. ¶¶ 15-16.
Defendant argues that, with regard to information learned in “February 2023…from a former employee of NACA Law”, this purported information was learned over a year before the request for amendment was made. Moreover, there is no explanation or reason provided as to why the request for amendment was not made earlier. Therefore, as to this issue, there is an inexcusable delay for over one year.
Second, Defendant argues, with regard to information “confirmed during deposition of purported NACA Law employee Olga Garnica,” Plaintiff has misstated the deposition testimony: Ms. Garnica confirmed that she undertakes work for SERVE ALL, HELP ALL, INC., DBA THE NONPROFIT ALLIANCE OF CONSUMER ADVOCATES and receives a paycheck from PBM; however, Ms. Garnica denied that she earned any commission. See Declaration 3. Notwithstanding, there was no
new information learned at the deposition that was not already within Plaintiff’s knowledge as of February 2023 as mentioned above. As such, as to this issue, there is no explanation or reason provided as to why the request for amendment was not made earlier and there is an inexcusable delay for over one year.
Third, Defendant argues, with regard to the assertion that “PBM’s role was further clarified in responses to Plaintiff’s requests for production, received in January 2024”, Plaintiff has not stated what facts giving rise to the amended allegations were discovered in January 2024. Instead, Plaintiff just regurgitates the due date of when documents that were produced pursuant to a discovery request. As such, there is no explanation or reason provided as to why the request for amendment was not made earlier and/or no explanation of facts giving rise to the amended allegations.
Fourth, Defendant argues, with regard to the assertion that “Discovery of Defendants’ related wrongdoing, such as Peter Nisson’s disbarment, has been ongoing, occurred throughout 2022 and 2023” Plaintiff only avers discovery of one fact: Peter Nisson’s disbarment. First, Peter Nisson’s disbarment is likely irrelevant as the disbarment was not related to Plaintiff’s case whatsoever. See Declaration 4. Second, Peter Nisson was disbarred on 7/1/2022—nearly two years ago. See Declaration 5. As such, there is no explanation or reason provided as to why the request for amendment was not made earlier and/or no explanation of facts giving rise to the amended allegations.
Finally, Defendant argues, with regard to information learned when “Plaintiff took the deposition of Defendants Mary and Bobby Ford on July 28 and 31, 2023”, this is necessarily information that was learned nearly a year before the request for amendment was made. Moreover, there is no explanation or reason provided as to why the request for amendment was not made earlier. Therefore, as to this issue, there is an inexcusable delay for nearly one year.
Defendant argues that the delay will cause prejudice in the form of a delay in trial, due to opening up new fields of inquiry without explanation for the delay in the request for leave to amend. Defendant also argues that Plaintiff has already sat for deposition and Plaintiff will not agree to another deposition.
“Leave to amend is in general required to be liberally granted (citation omitted), provided there is no statute of limitations concern. Leave to amend may be denied if there is prejudice to the opposing party, such as delay in trial, loss of critical evidence, or added costs of preparation. (Citation omitted.)” (Kolani v. Gluska (1998) 64 Cal.App.4th 402.) Where an additional theory of liability is proposed against an existing defendant, this is not prejudice which would justify the denial of leave to amend. (See Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490. See also Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761: “[I]t is irrelevant that new legal theories are introduced as long as the proposed amendments 'relate to the same general set of facts.' [Citation.]" (Citation omitted.))
Cal. Rules of Court Rule 3.1324(b) states:
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.
(Cal. Rules of Court, 3.1324(b).)
Although the motion does not clearly set forth where the proposed additions and changes are made, as required by Cal. Rules of Court Rule 3.1324(a)(2) & (3), the proposed changes are set forth in the redlined version of the proposed First Amended Complaint, attached as Exhibit A to the Declaration of Sil Vossler.
The motion was filed on March 13, 2024. The Vossler Declaration does not provide a satisfactory explanation for the delay in bringing this motion for leave to amend. While additional allegations pertaining to Doe defendants is the preferred practice, the delay in seeking leave to amend is not adequately explained when such information was originally discovered in mid-2023. (Vossler Decl., ¶¶ 8, 22.) Likewise, the asserted need to include allegations pertaining to Defendant Nisson’s disbarment, which occurred after the Complaint was filed (Vossler Decl., ¶ 21), is not relevant to the instant motion, as such facts are not relevant to Plaintiff’s theory of liability, and if they were would likely require a supplemental complaint and not an amendment. Purported facts concerning PBM’s payment of NACA Law’s employees salaries and NACA Law’s inadequate funding were “confirmed” in a December 2023 deposition of Olga Garnica, which is more recent. (Vossler Decl., ¶¶ 10, 19.) However, counsel admits he first learned this information in February 2023. (Vossler Decl., ¶ 18.)
In that the proposed 1AC seeks to add alter-ego and joint enterprise allegations (Vossler Decl., ¶ 11), this appears to be proper, as alter ego defendants may be added even post-judgment, so adding such theories at this point is not prejudicial.
“‘Under section 187, the trial court is authorized to amend a judgment to add additional judgment debtors. … As a general rule, “a court may amend its judgment at any time so that the judgment will properly designate the real defendants.” … Judgments may be amended to add additional judgment debtors on the ground that a person or entity is the alter ego of the original judgment debtor. … “Amendment of a judgment to add an alter ego ‘is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant. … “Such a procedure is an appropriate and complete method by which to bind new … defendants where it can be demonstrated that in their capacity as alter ego of the corporation they in fact had control of the previous litigation, and thus were virtually represented in the lawsuit.” …’ …” ’ [Citations.] ‘The decision to grant an amendment in such circumstances lies in the sound discretion of the trial court. “The greatest liberality is to be encouraged in the allowance of such amendments in order to see that justice is done.”’” (Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 508 [121 Cal. Rptr. 3d 118].)
(Danko v. O'Reilly (2014) 232 Cal. App. 4th 732, 735-36.)
Plaintiff also admits that the 1AC adds a theory Defendants Amin, Gharib, Pepe
Abad, Poe-Abad, Avalos, Cara, Nisson, and Tran are individually liable for financial abuse because they “assisted” the financial abuse of Plaintiff by their corporate forms, with actual knowledge of the ongoing scam. (Vossler Decl., ¶ 13.)
The 1AC appears to also add a new theory of liability that NACA Law and PBM acted as unlicensed mortgage brokers in originating the loan. (Vossler Decl., ¶ 14.) The amendments will also allow Plaintiff to pursue new legal theories stemming
from the same set of general facts. (Vossler Decl., ¶ 17.)
Where an additional theory of liability is proposed against an existing defendant, this is not prejudice which would justify the denial of leave to amend. (See Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490; see also Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761: “[I]t is irrelevant that new legal theories are introduced as long as the proposed amendments 'relate to the same general set of facts.' [Citation.]" [Citation omitted].)
Courts must apply a policy of liberality in permitting amendments at any stage of the proceeding, including during trial, when no prejudice to the opposing party is shown. (Huff v. Wilkins (2006) 138 Cal.App.4th 732, 746 [41 Cal. Rptr. 3d 754].) “However, ‘ “even if a good amendment is proposed in proper form, unwarranted delay in presenting it may—of itself—be a valid reason for denial.” ’ ” (Ibid.; see Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 488 [55 Cal.Rptr.2d 225] [“Where the trial date is set, the jury is about to be impaneled, counsel, the parties, the trial court, and the witnesses have blocked the time, and the only way to avoid prejudice to the opposing party is to continue the trial date to allow further discovery, refusal of leave to amend cannot be an abuse of discretion.”].)
(P&D Consultants, Inc. v. City of Carlsbad (2010) 190 Cal.App.4th 1332, 1345.)
Trial is currently set for August 12, 2024. This may not give Defendants sufficient time to conduct discovery. However, trial is not imminent, and additional theories of liability do not justify denial of leave to amend under these instances. The explanation for the delay in seeking leave to amend is not the most persuasive, but the Court will permit leave to amend on condition that Plaintiff shall sit for a second session of deposition pertaining to the new allegations if Defendants deem such to be necessary. Moreover, if Defendants need more time to conduct discovery and to bring motions for summary judgment, they may bring a noticed motion for continuance of the trial date.
As such, the Court in its discretion will allow Plaintiff to file the amended complaint, subject to the foregoing conditions.
Plaintiff’s motion for leave to file a First Amended Complaint is GRANTED. Plaintiff is to file a stand-alone copy of the First Amended Complaint, which shall be deemed served as of the date of this order.