Judge Gary I. Micon, Case Number: 21STCV20196, Date: 2024-03-26 Tentative Ruling

Judge: Gary I. Micon, Case: 21STCV20196, Date: 2024-03-26 Tentative Ruling

Case Number: 21STCV20196 Hearing Date: March 26, 2024 Dept: F43

Dept. F43

Date: 3-26-24

Case #21STCV20196, Chad Perrigo, et al. vs. Jorge Edmondo Castaneda Rodriguez

Trial Date: 6-24-24

MOTION FOR LEAVE TO FILE CROSS-COMPLAINT

MOVING PARTY: Defendant Thunder Ridge Transport, Inc.

RESPONDING PARTY: Plaintiffs Chad Perrigo and Alexa Perrigo

RELIEF REQUESTED

Defendant Thunder Ridge requests that it be allowed to file a cross-complaint against fellow Defendant Fames

RULING: Motion for leave to file cross-complaint is granted.

SUMMARY OF ACTION

Plaintiff Chad Perrigo (Plaintiff) filed this action after being in an accident with Defendant Jorge Edmondo Castaneda Rodriguez. Rodriguez was delivering packages for the USPS as the time of the accident. The USPS has contracted with Defendant Thunder Ridge Transport, Inc. (Thunder Ridge), which had subcontracted with Defendant Fames Transport, Inc. (Fames). Thunder Ridge is now seeking to file a cross-complaint against Fames based on the subcontract agreement between the parties.

Thunder Ridge filed its answer to Plaintiff’s complaint on August 10, 2023. Thunder Ridge did not file a cross-complaint at that time. Thunder Ridge filed its motion for leave to file cross-complaint on February 5, 2024. It seeks to allege four causes of action against Fames for breach of contract, equitable indemnity, contribution, and declaratory relief.

Plaintiffs Chad Perrigo and Alexa Perrigo (Plaintiff) oppose Thunder Ridge’s motion. Plaintiffs argue that Thunder Ridge’s motion should be denied because the subcontract upon which Thunder Ridge’s proposed cross-complaint is based has Missouri choice of law and forum selection provisions. Next, Plaintiffs argue that Thunder Ridge’s motion is untimely as both a compulsory and permissive cross-complaint. Finally, Plaintiffs argue that, alternatively, the Court should sever Thunder Ridge’s cross-complaint.

Thunder Ridge’s reply argues that there is no evidence that it intends to pursue the cross-complaint in the state of Missouri. Next, Thunder Ridge argues that its proposed cross-complaint is related to the subject matter of Plaintiffs’ complaint, is compulsory, and will not prejudice any party. Finally, Thunder Ridge argues that severance would be premature.

ANALYSIS

First, the subcontract between Thunder Ridge and Fames included a choice of law provision that indicated that disputes between the parties related to that agreement would be tried in Missouri state court under Missouri state law. (TAC, Ex. 3, ¶ 20.)

The parties to a contract may expressly agree on what law is to control their contract. (Fageol Truck & Coach Co. v. Pacific Intdem. Co. (1941) 18 Cal.2d 731, 731.) When the place of making a contract and the place of performance are in foreign jurisdictions, a contractual provision that the contract is to be construed pursuant to the laws of the foreign state amounts to a selection by the parties of the laws of the state to govern the contract. (Ury v. Jewelers Acceptance Corp. (1964) 227 Cal.App.2d 11, 17.) There is a strong policy favoring the enforcement of choice of law provisions agreed to by parties to a contract, particularly in contracts involving commercial entities. (1-800-Got-Junk? LLC v. Superior Court (2010) 189 Cal.App.4th 500, 512.) The same is true of forum selection clauses. (Net2Phone, Inc. v. Superior Court (2003) 109 Cal.App.4th 583, 588.)

While it is clear that the parties chose Missouri state court to adjudicate matters related to their agreement, it is not clear whether that is a sufficient reason to deny Thunder Ridge’s motion for leave to file a cross-complaint. The case with the current parties is already pending in Los Angeles Superior Court. In order to send it to Missouri, Thunder Ridge’s cross-complaint against Fames would likely first have to be severed, and then a change of venue filed. As discussed below, the Court rejects the argument that Thunder Ridge’s cross-complaint should be severed. Thunder Ridge’s cross-complaint is also directly related to Plaintiffs’ action against it and Fames. Additionally, Thunder Ridge is the Missouri corporation and the choice of law and forum selection provisions were for its benefit. Arguably it has waived these provisions by filing this cross-complaint in California. Fames has also not objected to the filing of the cross-complaint in California, and it too may have waived, or be willing to waive these provisions. The Court will not deny Thunder Ridge’s motion based on the choice of law and forum selection provisions in the parties’ agreement, at least absent an indication that one or both parties decline to waive them.

If a cross-complaint is not filed at the time of an answer, leave of court must be obtained to file a cross-complaint. (Brown & Wiel, CAL.PRAC. GUIDE: CIV.PRO.BEFORE TRIAL (The Rutter Group 2004), at § 6:555.)

If the proposed cross-complaint is compulsory, i.e., “related” to the subject matter of the complaint. leave of court must be granted so long as the defendant is acting in “good faith.” (CCP §§ 426.30 and 426.50; Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 98-99; AL Holding Co. v. O’Brien & Hicks, Inc. (1999) 75 Cal.App.4th 1310, 1313-1314.]

On the other hand, if the proposed cross-complaint is permissive – i.e., not necessarily “related” to the subject matter of plaintiff’s complaint – leave of court may be granted “in the interest of justice” at any time during the action. (CCP §§ 428.10(a) and 428.50(c).) Nonetheless, unless it would interfere with the trial date or otherwise prejudice the actions, courts are generally inclined to grant leave to file any cross-complaint against the plaintiff, reflecting the judicial policy of settling all disputes between the plaintiff and the defendant(s) in the same lawsuit if possible. (Brown & Weil, CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2004), at §§ 6:508 and 6:564.)

Thunder Ridge argues that its cross-complaint is compulsory because it is related to the subject matter of Plaintiff’s complaint. Thunder Ridge’s cross-complaint is directly tied to Plaintiffs’ complaint because Thunder Ridge filed the cross-complaint in order to require Fames to indemnify it in Plaintiff’s action. (Proposed Cross-Comp., ¶¶ 9-10.) However, because the cross-complaint is not against Plaintiffs, and instead is against another Defendant, it is more likely to be permissive rather than compulsory. Furthermore, cross-complaints for indemnity are transactionally related to the main action and are therefore permissive cross-complaints under CCP § 428 et seq. (Time for Living, Inc. v. Guy Hatfield Homes (1991) 230 Cal.App.3d 30, 38-39.)

Plaintiffs argue that Thunder Ridge’s cross-complaint was untimely because it was not filed at the same time as the answer pursuant to CCP § 426.30. However, this section deals exclusively with compulsory cross-complaints that are filed against a plaintiff. The proper section to look at is CCP § 428.50, which 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.”

Based on Section 428.50(c), leave to file a cross-complaint may be granted in the interest of justice at any time during the course of the action. Section 428.50(a) would not apply because Thunder Ridge has not filed a cross-complaint against Plaintiffs. Section 428.50(b) would not apply because the Court has set a date for trial. That leaves subdivision (c), which authorizes the filing of a cross-complaint at any time with leave of the court if it is in the interest of justice.

The trial in this matter begins in June 2024. There is a chance that granting leave to file the cross-complaint may affect that trial date. However, it is unlikely that it would prejudice Plaintiffs or other parties in this matter, as the dispute in Thunder Ridge’s cross-complaint hinges on whether Fames will indemnify it. Furthermore, plaintiffs are reminded that when they and the other parties stipulated to the June 24, 2024, trial date they also stipulated to continue the court’s OSC re: referral to a long cause court until May 29, 2024, with their long cause trial documents submitted by May 17, 2024. By doing so, all parties must have been aware that the long cause referral process would likely cause a trial delay.

The Court is also not persuaded by Plaintiffs’ arguments that Thunder Ridge waited too long to file the cross-complaint. It was a matter of months between Thunder Ridge filing its answer to Plaintiff’s complaint and filing its cross-complaint against Fames. The case that Plaintiffs cite in which a court used its discretion to deny a motion for leave to file a cross-complaint, Crocker Nat. Bank v. Emerald (1990) 221 Cal.App.3d 852, involved a party that waited years into a case to file the cross-complaint. That is not so in this instance.

Finally, Plaintiffs argue that Thunder Ridge’s cross-complaint should be severed from the rest of the case so that Plaintiffs are not prejudiced. The opposition to a motion for leave to file a cross-complaint is not the proper place to make this argument. Plaintiffs should file a motion for severance of the cross-complaint if they wish to seek severance.

Thunder Ridge’s motion for leave to file cross-complaint is granted. The proposed cross-complaint is deemed filed as of the date of the hearing on this matter.

Moving party to give notice.