Judge: Douglas W. Stern, Case: 21STCV35475, Date: 2023-03-14 Tentative Ruling

Case Number: 21STCV35475    Hearing Date: March 14, 2023    Dept: 68

J.C. Edwards Corporation vs. Growth Network Holdings, Inc., et al., Case No. 21STCV35475

Motion for Leave to File a Cross-Complaint

Moving Party:           Defendant Growth Network Holdings, Inc.

Responding Party:    None

MOVING PARTY’S POSITION

            Defendant Growth Network Holdings was sued by Plaintiff for various causes of action related to a breach of contract. Defendant answered Plaintiff’s complaint on January 10, 2022, with a general denial of all causes of action and affirmative defenses. On December 9, 2022, Defendant retained new counsel, who reviewed the file and other information and found that Plaintiff had also breached the contractual relationship by failing to provide Defendant with packaging for Defendant’s product and brand launches in 2019.

            After discovering this information, Defendant’s counsel drafted a cross-complaint, attached to the Antigua Declaration as Exhibit B, and filed this motion. Defendant’s basis for this motion is that the cross-complaint is compulsory and that there is no bad faith present.

            Plaintiff has not filed any opposition to Defendant’s motion.

ANALYSIS

            A compulsory cross-complaint arises out of “related causes of action” as to the

original complaint in a matter. (CCP § 426.30.) “Related causes of action” are actions

that arise out of the “same series of transactions or occurrences” as those alleged in the

original complaint. (CCP § 426.10(c).)

            A cross-complaint which is compulsory must be brought in the original action between the parties or the right to bring such action is lost. (CCP § 426.30.) CCP § 426.50 instructs that unless there is a showing of bad faith, upon a properly noticed and served motion, a court “shall grant” leave of court to file a compulsory cross-complaint. Bad faith in the context of bringing a Cross Complaint is defined as: “implying or involving actual or constructive fraud, or a design to mislead or deceive another, . . . not simply bad judgement 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.” (Silver Organizations LTD. v. Frank (1990) 217 Cal.App.3d 94, 100.)

            In Align Technology, Inc. v. Tran, et al. (2009) 179 Cal.App.4th 949 the Court held that the “spirit and intent” of the compulsory cross-complaint statutes, “...requires that the entire contractual relationship be deemed included with the word ‘transaction’ in cases sounding in contract.” (Id. at 962.)

            Defendant’s proposed cross-complaint arises out of the same contract as the one in Plaintiff’s complaint. Therefore, it would be included in the same transaction or occurrence as in Plaintiff’s complaint. Further, there is not any indication that Defendant has filed this motion in bad faith. Because Defendant has shown that its cross-complaint arises out of the same transaction or occurrence as the original complaint and because there is no indication of bad faith, there is no reason to deny Defendant’s motion.

            Defendant motion for leave to file a cross-complaint is GRANTED.