Judge Edward B. Moreton, Jr., Case 20SMCV01277 2023-01-18 Tentative Ruling

Judge: Edward B. Moreton, Jr., Case: 20SMCV01277, Date: 2023-01-18 Tentative Ruling

Superior Court of California

County of Los Angeles – West District

Beverly Hills Courthouse / Department 205

MOVING PARTY: Plaintiffs The Mayme A. Clayton Library and Museum and Renai v. Clayton, Jr.

RESPONDING PARTY: Defendants Marvin Boateng, Steven Fisher, Fox Hills Ladera Healthy Family Association Inc., Lindsay Hughes and Dr. Ruth Jackson

The First Amended Complaint (“FAC”) alleges that Defendants[1] engaged in a scam to kick Plaintiff The Mayme A. Clayton Library and Museum (“MCLM”) out of its location at the former Culver City courthouse. According to the FAC, the scheme was designed to force MCLM to move its collection of African American books, films and other works of art to Defendant California State University Dominguez Hills (“CSUDH”), so that Defendants could illicitly profit from the collection’s funding capabilities from various governmental agencies.

This hearing is on Plaintiffs MCLM and Renai V. Clayton Jr.’s motion for leave to amend their FAC to add (1) a cause of action for Racketeer Influenced Corrupt Organizations (“RICO”) violations (contained in paragraphs 71-83 of the proposed Second Amended Complaint or “SAC”) and (2) a prayer for relief for treble damages, costs, attorneys fees and other damages allowed under 18 USC §§ 1961-1968. The amendment alleges Defendants were engaged in a scheme to move public funds into private pockets. Plaintiffs allege that Defendants wanted CSUDH to gain possession of MCLM’s collection, so that Defendant Mark Ridley-Thomas could use his public position and influence to send public monies directly to CSUDH. In return, CSUDH would bribe or kickback financial perks to Ridley-Thomas and the other Defendants. Defendants Marvin Boateng, Steven Fisher, Fox Hills Ladera Healthy Family Association Inc., Lindsay Hughes and Dr. Ruth Jackson oppose the request for amendment.

Code of Civ. Proc. § 473(a)(1), provides, in relevant part: “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer.¿ The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code.”

Under California Rules of Court Rule, Rule 3.1324, subdivision (a),¿a motion to amend a pleading shall:

(1) include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments;

(2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph and line number, the deleted allegations are located; and

(3) state what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located.¿

In addition, under California Rules of Court, Rule 3.1324, subdivision (b),¿a¿separate declaration¿must accompany the motion and must specify:¿

The Court’s discretion to grant leave “should be exercised liberally in favor of amendments, for judicial policy favors resolution of all disputed matters in the same lawsuit.”¿ (Kittredge Sports Co. v. Superior Court¿(1989) 213 Cal.App.3d 1045, 1047.)¿ Ordinarily, the Court will not consider the validity of the proposed amended pleading in ruling on a motion for leave since grounds for a demurrer or motion to strike are premature.¿¿The Court, however, does have discretion to deny leave to amend where a proposed amendment fails to state a valid cause of action as a matter of law and the defect cannot be cured by further amendment.¿ (See¿California Casualty General Ins. Co. v. Superior Court¿(1985) 173 Cal.App.3d 274, 281 (overruled on other grounds by¿Kransco v. American Empire Surplus Lines Ins. Co.¿(2000) 23 Cal.4th 390).)¿

Plaintiffs’ declaration in support of the motion satisfies the requirements under CRC Rule 3.1324. Plaintiffs’ counsel identifies the amendments, their effect, and the recently received information that prompted the amendment. (Bowen Decl. ¶¶2-32.)

Defendants argue that Plaintiffs have not identified any recently discovered information as it relates to them. The Court disagrees. While Defendants’ actions as MCLM board members are the same as alleged in earlier complaints, the amendment provides a new explanation for why they acted as they did, namely they were participating in a racketeering enterprise set up to “move public funds into private pockets.” The enterprise was headed up by Defendant Ridley-Thomas who used his authority as Los Angeles County Board of Supervisor for the Second District to terminate MCLM’s over-decades-long lease at the former Culver City courthouse. Defendant Ridley Thomas and his alleged fixer, Defendant Anthony Samad, then directed MCLM’s Board Members (Defendants Marvin Boateng, Ruth Jackson, Steven Fischer, and Lindsay Hughes) to vote in favor of moving MCLM’s collection to Defendant CSUDH. Once MCLM’s collection was moved to CSUDH, Defendant Ridley Thomas could then direct public funds to CSUDH ostensibly to maintain and help grow the collection. In return, CSUDH would use the public funds to pay kickbacks, bribes and other financial incentives to Defendants.

Defendant Boateng also argues Plaintiffs have not alleged the elements of a RICO claim. The elements of a RICO claim include (1) conduct, (2) of an enterprise, (3) through a pattern of, (4) racketeering activity. (McMartin v. Children’s Institute International (1989) 212 Cal.App.3d 1393, 1406.) Boateng does not explain why the amendment fails to allege any of these elements. He only conclusorily states that “Plaintiff failed to state the elements of RICO against Mr. Boateng and therefore the amendment is a sham and should not be permitted.” At best, his arguments are suited for a demurrer or motion to strike and do not support a denial of the amendment. (See California Casualty General Ins. Co., 173 Cal.App.3d at 281.)

Defendants next argue that Plaintiffs unreasonably delayed in moving to amend their complaint. But Plaintiffs’ counsel avers that he only uncovered the facts supporting the new RICO claim in March to May 2022. (Bowen Decl. ¶¶19-32.) Plaintiffs sought to add the RICO claim in May 2022 when they filed a First Amended Complaint with a RICO claim, but Plaintiffs later withdrew the claim when Defendants complained the added claim was outside the scope of the leave to amend granted by the Court after sustaining Defendants’ demurrer. While Plaintiffs removed the RICO claim, the allegations supporting the claim and the additional defendants who headed up the alleged RICO enterprise (Ridley Thomas and Samad) were left in the First Amended Complaint. In other words, the factual bases for Plaintiffs’ RICO claim has been part of the operative complaint since June 17, 2022 when Plaintiffs re-filed their First Amended Complaint. Plaintiffs then filed their first motion to amend on July 28, 2022 which the Court denied on November 15, 2022 because the motion did not comply with the requirements of California Rules of Court, Rule 3.1324(b). Plaintiffs later filed a renewed motion to amend on December 21, 2022. (Bowen Decl. ¶¶35, 40.) On these facts, the Court cannot conclude Plaintiffs unreasonably delayed in seeking amendment.

Even assuming there was delay, delay alone will not justify denying leave to amend. Although it is true “a court may deny a good amendment in proper form where there is unwarranted delay in presenting it,” it remains the case that “where there is no prejudice to the adverse party, it may be an abuse of discretion to deny leave to amend.” (Fair v. Bakhtiari (2011) 195 Cal.App.4th 1135, 1147; see also Kittredge Sports co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048 (“[Defendant] contends [Plaintiff] unreasonably delayed moving to amend… [e]ven if this were so, it is an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment.”)); Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761 (“[I]t is an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment.”); Thompson Pacific Construction, Inc. v. City of Sunnyvale (2007) 155 Cal.App.4th 525, 545 (“In spite of this policy of liberality, a court may deny a good amendment in proper form where there is unwarranted delay in presenting it. On the other hand, where there is no prejudice to the adverse party, it may be an abuse of discretion to deny leave to amend.”) (citations omitted).

Prejudice exists, for example, where the plaintiff unduly delayed in seeking leave to amend, and the amendment will require a trial continuance and a reopening of discovery on the eve of trial. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 488 (“Where the trial date is set, the jury is about to be impaneled, counsel, the parties, the trial court, and the witnesses have blocked the time, and the only way to avoid prejudice to the opposing party is to continue the trial date to allow further discovery, refusal of leave to amend cannot be an abuse of discretion”).) Here, we are not at the eve of trial. Trial has not yet been set, and there is no discovery cut-off.

Defendants argue there is prejudice because they filed a lengthy anti-SLAPP motion and propounded and responded to multiple sets of discovery. According to Defendants, the new RICO claim will require them to prepare, plan and implement new sets of discovery, new witnesses, new research and new motions. The Court notes, however, that the factual basis for the RICO claim has been part of the operative complaint since June 2022, and therefore, to the extent Defendants wanted to conduct discovery on these facts, they had the opportunity to do so. Defendants have also failed to show they could have filed an anti-SLAPP motion on the RICO claim. Regardless, even if Defendants will need to conduct further discovery and potentially file new motions, this does not rise to the level of prejudice found to warrant denial of leave to amend. Indeed, it is an abuse of discretion to deny leave to amend even if sought as late as the time of trial. (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 563-565.)

Defendants’ authorities do not support a denial of the amendment. In Roemer v. Retail Credit Co. (1975) 44 Cal.App.3d 926, the defendant requested leave to amend its answer at the close of its case and prior to giving instructions to the jury. (Id. at 938.) Additionally, in Roemer, the court found that the defendant was aware of the evidence necessitating amendment at the time of the first trial but did not seek leave to amend until over three years later at its second trial. (Id. at 940.) Unlike in Roemer, Plaintiffs here aver they discovered the relevant evidence in March to May 2022, amended their complaint to add the facts supporting the RICO claim in June 2022, and sought amendment shortly thereafter (in July 2022) to add the RICO claim itself.

Defendants’ citation to Hirsa v. Sup. Ct. (1981) 118 Cal.App.3d 486, is equally unavailing. In Hirsa, the defendant argued that the plaintiff engaged in an unwarranted delay in presenting the amendment. (Id. at 490.) However, the court did not find that the plaintiff was dilatory nor that the defendant would suffer prejudice from any delay. (Id.) The court noted that as defendant was already named in the original complaint, it could not be prejudiced by the addition of an additional theory of liability against it. (Id.) Accordingly, the court granted plaintiff leave to amend the complaint with an additional cause of action. (Id.) Hirsa therefore supports the Court’s ruling here.

Defendants’ citation to Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4^th 471 is similarly unhelpful. In Magpali, the plaintiff filed an amendment to add a cause of action on the eve of trial. (Id. at 486.) Plaintiff did not give an explanation for leaving the new claim out of the original complaint or bringing the request to amend so late. (Id.) In addition, prejudice to the defendant was clearly shown because it had not discovered or deposed many of the witnesses who would support or refute the new allegations. (Id. at 487.) Here, unlike in Magpali and as noted above, Defendants have not shown they will be prejudiced as there is neither a trial date nor a discovery cut off set in this case.

Finally, Defendants argue that if the Court permits the amendment, it should impose conditions. Specifically, Defendants ask that Plaintiffs be forced to pay the fees and costs of Defendants in preparing for trial related to the RICO violations. The Court does not conclude such conditions are warranted in this case where there has been no unreasonable delay and no showing of prejudice. (See, e.g., Ensoltech v. Ensol Battery, 2020 Cal. Super. LEXIS 65977 at *2-*3 (denying request for attorneys’ fees as condition for amendment where defendant has not shown proposed amendment would result in postponement of trial, nor has defendant shown it has been prejudiced by proposed amendment); Dovichi v. De La Vergene, 2009 Cal. Super. LEXIS 14118 at *2 (denying request for attorneys’ fees as a condition for granting leave to amend answer where plaintiff has not shown unreasonable delay by defendant or prejudice to plaintiff).)

Based on the foregoing, the Court GRANTS Plaintiffs’ motion for leave to file the second amended complaint.

[1] Defendants are Marvin Boateng, Steven Fisher, Fox Hills Ladera Healthy Family Association Inc., Lindsay Hughes, Dr. Ruth Jackson, Mark Ridley-Thomas, Dr. Anthony Samad, and Board of Trustees of the California State University.