Judge: Elaine Lu, Case: 20STCV37429, Date: 2022-08-11 Tentative Ruling

Case Number: 20STCV37429    Hearing Date: August 11, 2022    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Background

            On September 30, 2020, Plaintiff Patricia Maldonado (“Plaintiff”) filed the instant wrongful termination action.  On June 14, 2021, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants Sherbank Azizi Dental Corp. and Azizi Dental Corporation dba Green Dental & Orthodontics (jointly “Defendants”).  The FAC asserts four causes of action for (1) Wrongful Termination in Violation of Public Policy, (2) Retaliation in Violation of Labor Code § 1102.5, (3) Intentional Infliction of Emotional Distress, and (4) Unfair Business Practices in Violation of Business & Professions Code §§ 17200 et seq.

            On July 30, 2021, Defendants filed a motion to compel arbitration.  On October 21, 2021, the Court granted the parties’ stipulation to submit to this matter to binding arbitration with the American Arbitration Association (“AAA”).  On July 19, 2022, the parties stipulated in court to terminate the arbitration and lift the stay.

            On July 13, 2022, Plaintiff filed the instant motion for leave to amend.  On July 29, 2022, Defendants filed an opposition.  On August 4, 2022, Plaintiff filed a reply.

Request for Judicial Notice

In opposition, Defendants request that the Court take judicial notice of:

1.      The Complaint for the instant action filed on September 20, 2020

2.      The First Amended Complaint for the instant action filed on July 14, 2021

3.      Plaintiff’s FAC filed on November 11, 2021, in the matter entitled Patricia Maldonado v. Sherbank Azizi Dental Corp., Et. Al., American Arbitration Association (“AAA”) Case No.: 01-21-0017-3601

4.      Plaintiff’s proposed second amended complaint filed as an exhibit to the declaration of Liliuokalani Martin on July 13, 2022 in the instant action

5.      Plaintiff’s Proposed Third Amended Complaint (“TAC”) dated June 20, 2022, submitted to the court as Plaintiff’s Proposed Second Amended Complaint (“Proposed SAC”) and attached as Exhibit D to the Declaration of Liliuokalani Martin, filed on July 13, 2022 in the instant action

            As the court may take judicial notice of court records and government records, (See Evid. Code, § 452(c),(d)), the unopposed request for judicial notice is granted. However, the Court will not take judicial notice of the truth of assertions within the court records. (See Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)

Legal Standard

Code of Civil Procedure § 473, subdivision (a)(1) states: “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.” 

Code of Civil Procedure § 576 states that: “[a]ny judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading or pretrial conference order.”

Judicial policy favors resolution of all disputed matters between the parties, and therefore, courts have held that “there is a strong policy in favor of liberal allowance of amendments.” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 296-97; see also Ventura v. ABM Industries, Inc. (2013) 212 Cal.App.4th 258, 268) [“Trial courts are bound to apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial where the adverse party will not be prejudiced.”].)

Pursuant to California Rules of Court, rule 3.1324(a), a motion to amend must: (1) include a copy of the proposed amendment or amended pleading, which must be serially numbered; and (2) state what allegations are proposed to be deleted from or added to the previous pleading and where such allegations are located.  Rule 3.1324(b) requires a separate declaration that accompanies the motion, stating: “(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 reason why the request for amendment was not made earlier.” 

Discussion

Proposed Amendments

            Plaintiff seeks to amend the complaint to add individuals Joseph Azizi and Amanda Raza as defendants.  (Martin Decl. ¶ 20, Exh. D.)  Plaintiff also seeks to add six wage and hour claims for failure to pay wages due, failure to pay overtime, misclassification as independent contractor, failure to provide itemized wage and hour statements, and waiting time penalties.  (Martin Decl. ¶ 20, Exh. D.)  Plaintiff’s Counsel states that the complaint and FAC were handled by another attorney at Plaintiff’s Counsel firm who inadvertently omitted the wage and hour claims.  (Martin Decl. ¶ 9.)  As the instant action was stayed for arbitration, this was the first opportunity that Plaintiff had to move to amend the complaint after requesting Defendants to agree to stipulate to allow for the amendment.  (Martin Decl. ¶¶ 9-19, Exhs. A-C.)  The notice of the motion indicates the specific changes to be made with the proposed second amended complaint.  Further, Plaintiff has filed the proposed Second Amended Complaint.  (Martin Decl. ¶ 20, Exh. D.) 

Opposition

            In opposition, Defendants argue that the Court should deny leave to amend on the grounds that: (1) the wage are time barred, and (2) the amendments are not made in good faith.

            With regard to Defendants’ first contention, it is not apparent that that the wage and hour claims are as a matter of law time-barred.  Pursuant to Code of Civil Procedure section 1281.97, when an action is withdrawn from arbitration on the grounds that the drafting party of an employment arbitration agreement is in material breach by failing to pay required arbitration fees, the employee may withdraw the claim from arbitration.  (CCP § 1281.97(b).)  If the claim is withdrawn from arbitration, “the statute of limitations with regard to all claims brought or that relate back to any claim brought in arbitration shall be tolled as of the date of the first filing of a claim in a court, arbitration forum, or other dispute resolution forum.”  (CCP § 1281.97(c).)  Under this provision, it is quite possible that the statute of limitations may have been tolled if the claims in arbitration relate back to the proposed wage and hour claims.  Therefore, the claims are not necessarily time barred, at least not clearly so as a matter of law.

In any event, while there may be deficiencies in the proposed Second Amended Complaint, there is no requirement that a critical inquiry be made into the merits of the amendment on a request for leave to amend.  (See Ruiz v. Santa Barbara Gas & Elec. Co. (1912) 164 Cal. 188, 196 [ “The usual and orderly way to test the sufficiency of an amended complaint is, in the first instance, by demurrer, after the same has been filed, when the questions presented in regard thereto may be considered and determined, and leave given to the pleader to amend if the pleading be held insufficient and the court deem it proper that the party should have such leave.”].)  Rather, the proper challenge to deficiencies to a pleading is through a demurrer or motion to strike.  Similarly, evidentiary deficiencies should be addressed in a motion for summary judgment and/or summary adjudication.

As to the claimed bad faith in bringing the instant motion, the Court finds Defendants’ contention to be without merit.  “‘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.”  (Silver Organizations Ltd. v. Frank (1990) 217 Cal. App. 3d 94, 100, [internal citations omitted].) 

The fact that the original complaint does not assert a claim for wage and hour claims does not imply fraud but rather merely suggests an honest mistake in failing to include those claims in the complaint and FAC.  At most, Defendants note that Plaintiff should have brought the wage and hour claim earlier – which Plaintiff’s Counsel admits Plaintiff should have been done but did not due because of inadvertent error. 

Further, while there has been some delay in bringing the instant motion for leave to amend, leave to amend is liberally granted.  In fact, “trial courts are to liberally permit such amendments, at any stage of the proceeding[.]”  (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 488–489.)  Rather, to justify a denial of a motion for leave to amend, the delay must have caused prejudice to the adverse parties.  (See Fair v. Bakhtiari (2011) 195 Cal.App.4th 1135, 1147, [“[W]here there is no prejudice to the adverse party, it may be an abuse of discretion to deny leave to amend.”].)  Accordingly, the Court turns to Defendants’ claims of prejudice.

Prejudice

In opposition, Defendants claims they will suffer prejudice from additional costs in litigation and increased burden of discovery.  Additional discovery costs may support a claim for prejudice. (Miles v. City of Los Angeles (2020) 56 Cal.App.5th 728, 739 [“Prejudice exists where the proposed amendment would require delaying the trial, resulting in added costs of preparation and increased discovery burdens.”].) 

However, Defendants fail to indicate what the quantum of additional discovery will be necessary beyond the discovery that has been completed in the absence of amendment.  In fact, there is no indication that any discovery has occurred in the instant action as the matter at all because the arbitration did not proceed due to Defendants’ failure to pay the arbitration fees.  Rather, the parties have only mediated.  (Martin Decl. ¶¶ 9-19.)  Thus, there is little to no indication of what additional quantum of discovery will be required due to these changes.  Regardless, trial has not even been set for the instant action.  Thus, Defendants have sufficient time to conduct discovery, including discovery of the allegations and parties to be added.  In sum, Defendants fail to identify any prejudice, and it would be an abuse of discretion to deny the instant motion for leave to file a second amended complaint. 

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

CONCLUSION AND ORDER

Based on the foregoing, Plaintiff Patricia Maldonado’s motion for leave to file a second amended complaint is GRANTED.

Plaintiff is to file and serve the proposed Second Amended Complaint no later than August 15, 2022.

Provided that Plaintiff timely files and serves the Second Amended Complaint by August 15, 2022, Defendants are to each file a responsive pleading no later than September 20, 2022. 

The Court notes that Defense Counsel has filed motions to be relieved as counsel.  Defense Counsel must file and serve new, amended proposed orders on form MC-053 making the following revisions:

-          Replacing in item 7a: “September 22, 2022 at 8:30 am in Dept 26, 111 N. Hill Street, L.A., CA 90012”

-          Replacing in item 7b: “Case Management Conference”

-          Adding to item 8: “September 20, 2022 due date for filing Defendants’ answer, demurrer or other responsive pleading. Failure to file a responsive pleading by 9/20/22 may result in entry of default”;

-          Keeping in item 8: “2/1/23 at 8:30 am in Dept 26, 111 N. Hill Street, L.A., CA 90012 – Hearing on Plaintiff’s Motion for Sanctions for Defendants’ failure to pay arbitration fees”

-          Adding to item 9: “Failure to appear at trial will result in: (1) the Court deeming that Defendant waives Defendant’s appearance for trial, (2) the trial proceeding in Defendant’s absence, and (3) the entry of judgment against Defendant in any amount of damages proven at trial.”

-          Adding to item 13: “A corporation must be represented by licensed counsel in proceedings before this Court. Client is ordered to file a substitution of counsel within 14 days of service of this signed order and to appear on September 22, 2022 at 8:30 am in Department 26 with its new counsel.  Client’s failure to timely retain new counsel or failure to appear on September 22, 2022 may result in the answer being stricken, the entry of default and default judgment against Client, and the dismissal of the cross-complaint.  Moving Counsel is ordered to file proof of service of this signed order on all parties within 3 days.”

Moving Parties are ordered to provide notice of this order and file a proof of service of such.

DATED: August 11, 2022                                                      ___________________________

                                                                                          Elaine Lu

                                                                                          Judge of the Superior Court