Judge: Daniel S. Murphy, Case: 23STCV17914, Date: 2025-06-02 Tentative Ruling

Case Number: 23STCV17914    Hearing Date: June 2, 2025    Dept: 32

BACKGROUND

            On July 31, 2023, Plaintiff Ruth Ann Isaacs Hamilton filed this action against Defendants Axos Bank, S&L and 4505 Santa Rosalia Lender LLC. Plaintiff filed the operative First Amended Complaint on December 11, 2023, asserting causes of action for (1) violation of Civil Code section 1671, (2) elder abuse, (3) conversion, (4) unfair competition, (5) breach of contract, and (6) violation of Penal Code section 496. The fifth and sixth causes of action were subsequently stricken by demurrer.

            This dispute arises out of Defendants’ alleged misconduct in connection with a certain loan agreement and real property. Plaintiff alleges that Defendants improperly assessed Plaintiff for late charges, default judgment interest rates, and other penalties in connection with the subject loan agreement.

            On May 1, 2025, Plaintiff filed the instant motion for leave to file a second amended complaint. Defendant Axos Bank filed its opposition on May 19, 2025. Plaintiff filed her reply on May 23, 2025.

LEGAL STANDARD

The court may, in furtherance of justice, and on such terms as may be proper, allow a party to amend any pleading. (Code Civ. Proc, §§ 473(a), 576.) 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. (Duchrow v. Forrest (2013) 215 Cal.App.4th 1359, 1377.) In determining the extent of prejudice to the opposing party, the court must consider various factors, such as whether the amendment would delay trial or increase the discovery burden. (Demetriades v. Yelp, Inc. (2014) 228 Cal.App.4th 294, 306.)

A motion for leave to amend a complaint must be accompanied by a declaration that explains: (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 Ct., Rule 3.1324(b).)

DISCUSSION

            Plaintiff seeks to add causes of action for fraud, negligent misrepresentation, negligence, and violation of Commercial Code section 9210. (Vallier Decl., Ex. B.) Plaintiff discovered the facts underlying these causes of action during discovery. (Id., ¶ 6.) Specifically, “Plaintiff learned of substantial inconsistencies in Loan statement rates, fees, and requested payments, details surrounding Plaintiff’s payments on the Loan to both Defendants, Defendants’ actions of incorrectly applying Plaintiff’s payments, nondisclosure of material facts and false representations, and Defendants Axos and Rosalia’s collusive relationship with each other. Plaintiff also uncovered through discovery that Rosalia failed to conduct any due diligence in taking on the Loan from Axos.” (Ibid.) The most recent document production occurred on April 22, 2025. (Id., ¶ 7.) 

            Plaintiff has made the required showing under Rule 3.1324(b). In opposition, Defendant argues that Plaintiff unreasonably delayed in bringing the amendment, considering the subject discovery was propounded back in March 2024. (See Vallier Decl. ¶ 5.) However, Defendants were producing documents as recently as April 22, 2025. (Id., ¶ 7.) Plaintiff filed this motion promptly afterwards, on May 1, 2025. Plaintiff cannot be expected to prepare an amendment before discovering all the relevant facts. Moreover, Defendant does not specify any undue discovery burden or otherwise articulate any real prejudice from the amendment. Trial is currently set for March 2026, and the parties may move to continue trial should more time be needed. Thus, the motion is timely.

            Defendant’s remaining arguments target the merits of the proposed causes of action. These arguments are better suited for a demurrer or motion for summary judgment. While a court has discretion “to deny leave to amend when the proposed amendment is insufficient to state a cause of action or defense,” this should only be done “in cases in which the insufficiency of the proposed amendment is established by controlling precedent and where the insufficiency could not be cured by further appropriate amendment.” (Cal. Casualty Gen. Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 280-81.) That is not the case here. The Court does not find Plaintiff’s proposed claims to be so facially meritless or readily precluded by law that Plaintiff should be barred from even filing the amended complaint. Instead, “the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings.” (Id. at p. 281.) Defendant remains free to challenge the amended complaint by subsequent motion.

CONCLUSION

            Plaintiff’s motion for leave to file second amended complaint is GRANTED.