Judge: Colin Leis, Case: 21STCV46146, Date: 2023-02-23 Tentative Ruling

Case Number: 21STCV46146    Hearing Date: February 23, 2023    Dept: 74

Superior Court of California

County of Los Angeles – CENTRAL District

Department 74

MOVING PARTIES:             Plaintiff Sanh Tran, individually, by and through power of attorney Hailey Cho aka Jenny Tran

RESPONDING PARTIES:    Defendant Eddie J. McGee

Motion for Leave to File Second Amended Complaint and to Vacate Trial Date

The court considered the moving papers, opposition, and reply papers filed in connection with this motion.

BACKGROUND

Plaintiff Sanh Tran filed this action in December 2021. Plaintiff filed his First Amended Complaint (“FAC”) in September 2022 against Defendants Eddie J. McGee and Nationwide Life and Annuity Insurance Company (“NLAIC”)[1], alleging the following causes of action: (1) breach of fiduciary duty; (2) negligence, negligent supervision, negligent training, and negligence per se; (3) negligent misrepresentation; (4) violation of Business & Professions Code § 17200, et seq.; and (5) financial elder abuse under Welfare & Institutions Code § 15600, et seq.

As alleged in the FAC, Plaintiff is a retiree of the U.S. Postal Service. During his more than 30 years working for the postal service, he regularly contributed to Thrift Saving Plan (“TSP”), a federal retirement account. Before Plaintiff retired, he attended a financial counseling session hosted by Federal Employee First Alliance during which McGee, a NLAIC agent, advised him that he should liquidate his TSP account and use the proceeds to buy a Nationwide New Heights Annuity for $236,640.62, a price that was 80% of Plaintiff’s net worth. McGee represented that the NLAIC annuity was a safe investment with great returns and benefits. However, it was later discovered that this annuity was not suitable for Plaintiff’s needs because of its high fees and costs and the low returns it generated.

            Plaintiff moves for leave to file a Second Amended Complaint. McGee opposes.

LEGAL STANDARD

Under Code of Civil Procedure section 473, subdivision (a)(1), “[t]he court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading.”  Amendment may be allowed at any time before or after trial begins. (Code Civ. Proc., § 576.) “[T]he court’s discretion will usually be exercised liberally to permit amendment of the pleadings. The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified.” (Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428 (internal citations omitted).) “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend….”  (Morgan v. Sup. Ct. (1959) 172 Cal.App.2d 527, 530.) Prejudice includes “delay in trial, loss of critical evidence, or added costs of preparation.” (Solit v. Tokai Bank, Ltd. New York Branch (1999) 68 Cal.App.4th 1435, 1448.)

A motion to amend a pleading before trial must include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments. (Cal. Rules of Court, rule 3.1324(a).) The motion must also state what allegations are proposed to be deleted or added, by page, paragraph, and line number.  (Cal. Rules of Court, rule 3.1324(a).) Finally, a separate supporting declaration specifying the effect of the amendment, why the amendment is necessary and proper, when the facts giving rise to the amended allegations were discovered, and the reason the request for amendment was not made earlier must also accompany the motion. (Cal. Rules of Court, rule 3.134(b).)

DISCUSSION

Plaintiff seeks leave to file a Second Amended Complaint in order to add newly discovered facts, a new legal theory for the fourth and fifth causes of action premised on a class action theory of liability, and a new defendant, i.e. FEFA Advisors, LLC.

Plaintiff’s motion satisfies the requirements of California Rules of Court, rule 3.1324. (See generally Evans Decl., Exhs. 1-2.) Plaintiff’s counsel attests that new facts have been discovered from McGee’s December 2022 deposition and documents produced by NLAIC that show FEFA Advisors, LLC’s contribution to Plaintiff’s alleged injury was greater than previously known. (Motion at pp. 5-6; Evans Decl. ¶ 4, Exhs. C-I.) The Second Amended Complaint seeks to add FEFA Advisors, LLC as a new defendant and to allege new facts to support class action liability for the fourth and fifth causes of action (violation of Business & Professions Code § 17200, et seq. and financial elder abuse under Welfare & Institutions Code § 15600, et seq., respectively). (Motion at pp. 5-7, 10-11; Evans Decl. ¶ 11.) Plaintiff reasons that pursuing a class action is necessary because McGee testified during his deposition that federal employees aged 65 or older constituted over 80% of his clientele, to which he sold 50 to 60 Nationwide New Heights Annuities. (Evans Decl. ¶ 4, Exh. C.) Moreover, Plaintiff contends the motion is timely because he filed it soon after McGee’s deposition and NLAIC’s production of documents, and thus the SAC would not result in any prejudice to the defendants. (Motion at pp. 8-10; Evans Decl. ¶ 10.) Last, Plaintiff requests that the court vacate the current trial date based on the need to conduct further discovery directed at FEFA Advisors, LLC and to support Plaintiff’s class action claims. (Motion at pp. 12-13.)

McGee opposes Plaintiff’s motion. McGee argues Plaintiff’s motion is untimely because Plaintiff has known throughout the litigation of FEFA Advisors, LLC’s existence since Plaintiff’s claims involve an event that FEFA Advisors, LLC hosted. (Opposition at pg. 3.) Only recently, however, has Plaintiff learned of the extent of the entanglement between McGee and FEFA Advisors, LLC’s. Accordingly, Plaintiff’s motion is timely.

McGee also contends granting Plaintiff’s motion would prejudice McGee because the SAC will require him to develop a new defense strategy and to engage in class discovery, which would be unreasonable based on the current September 18, 2023 trial date. (Opposition at pp. 4-5.) The court notes, however, that discovery is still in its early stages. (Evans Decl. ¶¶ 6-9.) Moreover, good cause exists to vacate the current trial date.

CONCLUSION

The court grants Plaintiffs’ motion for leave to file a Second Amended Complaint.

The court orders Plaintiffs to file its amended complaint within five days of this order.

The court vacates the September 18, 2023 trial date.

The court sets a trial setting conference on ________, 2023 at 8:30 in Department 74.

Plaintiff is ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  February 23, 2023

_____________________________

Colin Leis

Judge of the Superior Court