Judge: Douglas W. Stern, Case: 21STCV33160, Date: 2022-08-23 Tentative Ruling

Case Number: 21STCV33160    Hearing Date: August 23, 2022    Dept: 52

Tentative Ruling:

Defendants Charlie Lac and Ying Chin Wu’s Demurrer to First Amended Complaint

Defendants Charlie Lac and Ying Chin Wu demur to all nine causes of action alleged in the first amended complaint by plaintiffs Along Comes Mary LLC and Mary Ruggles.

Lac and Wu demur in part on the grounds that plaintiffs were required to allege their causes of action as a compulsory cross-complaint in a prior case, Premium Escrow, Inc. v. Along Comes Mary, LLC, et al., No. 18STLC02532.  That case is pending before Judge Katherine Chilton at the Spring Street Courthouse, Department 25.

As the court ruled on defendants Lac and Wu’s demurrer to the initial complaint, all nine of plaintiff Mary Ruggles’ causes of action (but not Along Comes Mary, LLC’s causes of action) are barred under the compulsory cross-complaint statute, CCP § 426.30.  The first amended complaint makes no relevant changes. 

“[I]f a party against whom a complaint has been filed and served fails to allege in a cross-complaint any related cause of action which (at the time of serving his answer to the complaint) he has against the plaintiff, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.”  (CCP § 426.30(a).)  A “related cause of action” is one that “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.”  (CCP § 426.10(c).)  “Section 426.30 is an affirmative defense that completely disposes of any cause of action to which it applies.”  (Chao Fu, Inc. v. Chen (2012) 206 Cal.App.4th 48, 56.)

Plaintiffs’ reliance on Los Angeles v. Amidor (1903) 140 Cal.400 (Amidor) is misplaced.  They contend that case stands for the proposition that compulsory cross-claims are not permitted in an interpleader action.  “A defendant in an interpleader cannot, by a counterclaim or cross-complaint, change the character of the action.”  (Id. at p. 401.)  That rule, however, applies only to cross-complaints against the plaintiff stakeholder, not between the other claimants:

An interpleader action is traditionally viewed as two suits: one between the stakeholder and the claimants to determine the stakeholder’s right to interplead, and the other among the claimants to determine who shall receive the funds interpleaded.  [Citations.]  As against the stakeholder, claimants may raise only matters which go to whether the suit is properly one for interpleader.

(State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 612, italics added; see also Amidor, supra,  140 Cal. At p. 401 [defendant to interpleader could not file cross-complaint because the “only relief which a defendant can have against the plaintiff in such a suit is to have the action dismissed”.)

Here, Lac and Wu filed a cross-complaint against Mary Ruggles (and others), not the plaintiff who filed the interpleader action.  Their cross-complaint is not a complaint in interpleader.  It is an action for fraud.  It alleges Ruggles misrepresented that the real property at 515 W. Olive Ave. in Monrovia had 1,311 square feet of living space.  (¶ FR-2.a.)  It further alleges the property “at most had slightly over 1,000 square feet of living space.”  (¶ FR-2.b.)  In reliance on that misrepresentation, Lac and Wu entered a contract to purchase the property.  (¶ FR-5.) 

That same contract for sale of 515 W. Olive Ave. is the basis for all of plaintiffs’ claims against Lac and Wu in this action.  These are related causes of action.  Under CCP § 426.30(a), Mary Ruggles was required to file those causes of action by cross-complaint in the other case.

On June 30, 2022, however, Judge Chilton granted judgment on the pleadings on Lac and Wu’s cross-complaint with leave to amend.  The court’s file in that action shows the court received a first amended cross-complaint on August 8, 2022.  The first amended cross-complaint has not yet been filed. 

The court exercises its discretion to continue this hearing.  Depending on what happens in case No. 18STLC02532, defendants Lac and Wu may soon be able to establish grounds for sustaining a demurrer to Mary Ruggles’ claims without leave to amend.  Continuing this hearing serves judicial economy.  It would be inefficient to rule on this demurrer now when Lac and Wu may have a dispositive defense soon.

            The hearing on the demurrer by defendants Charlie Lac and Ying Chin Wu to plaintiffs’ first amended complaint is hereby continued to January 9, 2023, at 9:00 a.m.