Judge: Colin Leis, Case: 22STCV19891, Date: 2023-11-30 Tentative Ruling

Case Number: 22STCV19891    Hearing Date: November 30, 2023    Dept: 74

Daniel Alexander Roescheisen v. NCLA Beauty, Inc., et al.

Defendant NCLA Beauty, Inc.’s Motion for Leave to File Cross-Complaint

The court considered the moving papers. The court will exercise its discretion and consider the untimely opposition. (Code Civ. Proc., § 1005, subd. (b) [“All papers opposing a motion . . . shall be filed with the court . . . at least nine court days . . . before the hearing.”].)

BACKGROUND 

            This action arises from a contractual dispute.

            On June 17, 2022, Plaintiff Daniel Alexander Roescheisen (Plaintiff) filed a complaint against Defendants NCLA Beauty, Inc., Elin Minh Dannerstedt, and Anh-Thu Dannerstedt (Defendants). The complaint alleges breach of contract, breach of implied covenant of good faith and fair dealing, intentional interference with contractual relations and conspiracy, breach of fiduciary duties, accounting, defamation per quod, and voidable transfers and recovery.

            On June 28, 2023, Defendants filed this motion for leave to file a cross-complaint.

DISCUSSION 

            Defendants’ proposed cross-complaint alleges cross-claims against Plaintiff for breach of fiduciary duties and misappropriation of trade secrets. Under Code of Civil Procedure section 428.10, subdivision (a), Defendants always have the option of asserting any cause of action they have against Plaintiff. The proposed cross-complaint also alleges a cross-claim for misappropriation of trade secrets against a new party, Paper Cosmetics, Inc. Under Code of Civil Procedure section 428.10, subdivision (b), Defendants can cross-complain against a new party only if the cross-claim arises out of the same transaction, occurrence, or series of transactions or occurrences set forth in the complaint. The complaint alleges the parties entered an agreement, which gave Plaintiff access to Defendant NCLA Beauty, Inc.’s accounting. (Complaint, ¶      15.) Meanwhile, the cross-complaint alleges that Plaintiff exploited this access to disclose trade secrets to Paper Cosmetics, Inc. (Cross-Complaint, ¶¶ 29-31.) Paper Cosmetics, Inc. in turn improperly used those trade secrets. (Cross-Complaint, ¶ 31.) Thus, the cross-claim arises out of the same transaction alleged in the complaint.

            In his untimely opposition, Plaintiff contends Defendants have brought this motion in bad faith. (Code Civ. Proc., § 426.50 [“The court . . . shall grant, upon such terms as may be just to the parties, leave . . . to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith.”].) That is, Defendants withdrew their prior cross-complaint on November 11, 2022, and waited months to seek leave to file this one. But Defendants withdrew the prior cross-complaint without prejudice, and Plaintiff has not persuaded the court that Defendants acted in bad faith. Moreover, courts must liberally construe Code of Civil Procedure section 426.50, to avoid forfeiture of causes of action.

CONCLUSION 

The court grants Defendants’ motion for leave to file a cross-complaint.

Defendants shall give notice.