Judge: David B. Gelfound, Case: 23CHCV01497, Date: 2024-03-08 Tentative Ruling

Case Number: 23CHCV01497    Hearing Date: March 8, 2024    Dept: F49

LOS ANGELES SUPERIOR COURT

NORTH VALLEY DISTRICT

DEPARTMENT F49

MOTION FOR LEAVE TO FILE CROSS-COMPLAINT

Motion filed: 12/12/23

MOVING PARTY: Defendants Valdez Innovations Inc., Ricardo Valdez, and Oscar Valdez (the “moving Defendants”) 

RESPONDING PARTY: Plaintiffs Rigoberta Rosales and Hector Rosales (“Plaintiffs”)
NOTICE: ok 

RELIEF REQUESTED: An order granting the moving Defendants leave to file their Cross-Complaint.

TENTATIVE RULING: The motion is GRANTED.

BACKGROUND

This action arises from an automobile accident that occurred on May 28, 2021, in which Defendant Ricardo Valdez allegedly caused injuries to Plaintiff Rigoberta Rosales.

Prior to the commencement of the present action, on February 23, 2023, Plaintiff Rigoberta Rosales and Defendant Ricardo Valdez entered into a Release of All Claims Agreement (“Release Agreement”) to settle the matter for the sum of $100,000.00. (12/12/23 Taouk Decl., ¶ 4, Ex. “A,” Opp’n., at 2.)

On May 23, 2023, Plaintiffs filed their Complaint against the moving Defendants, Star Waggons, LLC, and Does 1 to 20, alleging general negligence and motor vehicle liability across four causes of action.

On August 21, 2023, Defendant Star Waggons, LLC filed its Cross-Complaint against the moving Defendants and Does 1 to 50 for express indemnity, implied indemnity, apportionment, and contribution.

On September 15, 2023, the moving Defendants filed their Answer to the Complaint. Subsequently, on September 25, 2023, the moving Defendants filed their Answer to Star Waggons, LLC’s Cross-Complaint.

On December 12, 2023, the moving Defendants filed the instant Motion for Leave to File Cross-Complaint (the “Motion”) against Plaintiffs.

On February 26, 2024, Plaintiffs opposed the Motion. Subsequently, on February 29, 2024, the moving Defendants replied. 

ANALYSIS

Code of Civil Procedure section 428.50 provides:¿¿ 

¿¿ 

“(a) A party shall file a cross-complaint against any of the parties who filed the complaint or cross-complaint against him or her before or at the same time as the answer to the complaint or cross-complaint.¿¿ ¿¿ 

(b) Any other cross-complaint may be filed at any time before the court has set a date for trial.¿¿ ¿¿ 

(c)¿A party shall obtain leave of court to file any cross-complaint except one filed¿within¿the time¿specified in subdivision (a)¿or¿(b).¿ Leave may be granted in the interest of justice at any time during the course of the action.”¿¿ 

¿¿ 

(Code Civ. Proc., § 428.50.)¿¿¿ 

“A party who fails to plead a cause of action subject to the requirements of this article, whether through oversight, inadvertence, mistake, neglect, or other cause, may apply to the court for leave to amend his pleading, or to file a cross-complaint, to assert such cause at any time during the course of the action. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend the pleading, or to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith.¿ This subdivision shall be liberally construed to avoid forfeiture of causes of action.”¿ (Code Civ. Proc., § 426.50.) (Underlines added.)¿¿ 

The Court of Appeals has explained: “The legislative mandate is clear. A policy of liberal construction of section 426.50 to avoid forfeiture of causes of action is imposed on the trial¿court. A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.” (Silver Organizations Ltd. v. Frank¿(1990) 217 Cal.App.3d 94, 98–99 (Silver Organizations).) “‘Bad faith,’ is defined as ‘[t]he opposite of ‘good faith,’ generally implying or involving actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake . . ., but by some interested or sinister motive[,] . . . not simply bad judgment or negligence, but rather . . . the conscious doing of a wrong because of dishonest purpose or moral obliquity; . . . it contemplates a state of mind affirmatively operating with furtive design or ill will.” (Id. at 100.)¿¿ 

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A cross-complaint is compulsory when a related cause of action existed at the time of serving the defendant’s answer to the complaint.¿ (Code Civ. Proc. § 426.30, subd. (a); see also Crocker Nat. Bank v. Emerald (1990) 221 Cal.App.3d 852, 864.)¿ A related cause of action is “. . . a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.”¿ (Code Civ. Proc. § 426.10, subd. (c).)¿ Leave must be granted to file a compulsory cross-complaint when the defendant is acting in good faith.¿ (See Code Civ. Proc. § 426.50.)¿¿ 

A.    Compulsory Cross-Complaint

The moving Defendants’ proposed cross-complaint is compulsory because it arises from the same transaction or occurrence as alleged in the Complaint, pursuant to Code of Civil Procedure section 426.10(c).

Plaintiffs acknowledge that causes of action arise out of the same transaction or occurrence if the factual or legal issues are logically related, and the term “transaction” is to be construed broadly. (Opp’n., at 3.) Despite this, Plaintiffs argue that the issues raised by the proposed cross-complaint are completely severable from the issues raised by the Complaint. (Id., at 2.) This argument should fail.

Here, the proposed cross-complaint alleges against Plaintiffs (1) express indemnity, (2) breach of contract, and (3) declaratory relief. (12/12/23 Taouk Decl., ¶ 7.) These causes of action are directly related to the duties and performance stipulated in the Release Agreement, which outlines the release of liability concerning the automobile accident that occurred on May 28, 2021. Consequently, the enforcement of the Release Agreement is logically connected to the accident and the injuries for which the Complaint is seeking damages.

Therefore, the Court determines that the proposed cross-complaint is compulsory; consequently, Code of Civil Procedure section 426.50 applies to the instant Motion.

B.     Absence of Bad Faith from the Moving Defendants

Here, the moving Defendants contend that their failure to file a cross-plaint before or at the same time as their Answer was due to a good faith mistake and inadvertent delay, arguing that the moving Defendants’ counsel’s firm Hanger, Steinberg, Shapiro & Ash ALC (“HSSA”) was making efforts to informally resolve the matter by enforcing the terms of the Release Agreement. (12/12/23 Taouk Decl., ¶ 4.) This argument is supported by an email presented by the moving Defendant, dated August 24, 2023, showing communications between both parties’ counsel regarding the possibility of filing a dismissal pursuant to the terms of the Release Agreement. (12/12/23 Taouk Decl., Ex. “C.”)

Furthermore, the moving Defendants argue that HSSA’s scope of representation was initially limited, as it was only retained to represent Defendant Richardo Valdez. It was not officially representing all moving Defendants until September 14, 2023, merely one day prior to its filing of the Answer. (Mot., at 5.) Consequently, the moving Defendants maintain that if leave is not granted,  Defendants Valdez Innovations and Oscar Valdez’s right to file any cross-complaint on their behalf will be prejudiced. (Mot., at 8.)

Conversely, Plaintiffs first argue that the moving Defendants acted in bad faith by waiting over four months to seek leave from the Court to file the proposed cross-complaint. (Opp’n., at 2.) However, the force of this argument is diminished by the Court’s review of the case records, which show that the moving Defendants filed their Answer on September 15, 2023 – the deadline that Plaintiffs argue applies to the filing of a cross-complaint. Subsequently, on October 12, 2023, HSSA promptly reserved the soonest available hearing date for the Motion. (Reply, at 4.)

Secondly, Plaintiffs argue that Defendants’ Motion was made in bad faith because the moving Defendants lack standing in the proposed cross-complaint as none of them are signatories to the Release Agreement. (Opp’n., at 2.) Without deciding the merits of the proposed cross-complaint, which has not been filed, the Court finds Plaintiffs’ argument unconvincing. The Court notes a flawed reasoning that the potential lack of merit in a pleading can override the procedural right to file it. In other words, the Court must not evaluate and rule on the substantive merits before the matter is officially brought before the Court.

Considering the evidence that HSSA was retained by the moving Defendants on September 14, 2023, and engaged in numerous attempts to meet and confer with Plaintiffs’ counsel before filing the Motion, to settle the disputes informally (Reply., at 5), the Court finds no evidence demonstrating the moving Defendants’ “dishonest purpose” or contemplation of “a state of mind affirmatively operating with furtive design or ill will.” (See Silver Organizations, supra, 217 Cal.App.3d at 98-99.)

Therefore, the Court concludes that the moving Defendants’ Motion was not made in bad faith. Consequently, the Court GRANTS the Motion for Leave to File Cross-Complaint.

CONCLUSION

Defendants Valdez Innovations Inc., Ricardo Valdez, and Oscar Valdez’s Motion for Leave to File Cross-Complaint is GRANTED.

Defendants Valdez Innovations Inc., Ricardo Valdez, and Oscar Valdez are ordered to file their Cross-Complaint within 15 days of the hearing, and to submit proof of service within the same 15-day period.

Moving party is ordered to provide notice of this order.