Judge: Gregory Keosian, Case: 20STCV16415, Date: 2023-02-14 Tentative Ruling

Case Number: 20STCV16415    Hearing Date: February 14, 2023    Dept: 61

Cross-Complaintants Cappello Global, LLC and Camden Financial Services’ Motion for Leave to File a First Amended Cross-Complaint is GRANTED.

Cross-Complainant to provide notice.

I.                   MOTION FOR LEAVE TO FILE AMENDED COMPLAINT

Code Civ. Proc. section 473 subd. (a)(1) states that:

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.

“The trial court has discretion to permit or deny the amendment of the complaint, but instances justifying the court's denial of leave to amend are rare.” (Armenta ex rel. City of Burbank v. Mueller Co. (2006) 142 Cal.App.4th 636, 642.)

“Although 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 [Citations], this policy should be applied only ‘[w]here no prejudice is shown to the adverse party . . .’ [Citation.] A different result is indicated ‘[w]here inexcusable delay and probable prejudice to the opposing party’ is shown. [Citation.]” (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 487.)

Pursuant to California Rule of Court Rule 3.1324, “[a] motion to amend a pleading before trial must: (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.”

Such a motion must include a supporting declaration 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 reasons why the request for amendment was not made earlier.” (CRC Rule 3.1324, subd. (b).)

Here, Cross-Complainants Cappello Global, LLC and Camden Financial Services (Cross-Complainants) seek to amend their Cross-Complaint to add Roe Defendants — now including Cross-Defendants Phe.no, LLC; Phenomenon Holdings, LLC, Phenomenon Blocker, LLC, and Sleeping Bear Capital (collectively Roe Defendants) — as defendants to their first cause of action for breach of contract, presently only alleged against cross-defendants Phenomenon Marketing and Entertainment LLC and Phenomenon Marketing and Entertainment, Inc.

Cross-Complainants argue that the failure to include Roe Defendants in the first cause of action was a product of inadvertence and mistake, which they only realized once Roe Defendants filed their motion for summary judgment on December 6, 2022. (McKibbon Decl. ¶ 8.) Cross-Complainants further argue that Roe Defendants will suffer little prejudice from permitting this amendment, since Cross-Complainants discovery responses made reference to provisions of the contract implying that they were incorporated as parties to the agreement. (McKibbon Decl. Exh. 5.)

Roe Defendants in opposition argue that Cross-Complainants deliberately omitted them from the breach of contract claim, based on the strategic decision not to allege that claim against entities that were not signatories to the agreement. (Opposition at pp. 1–2.) As early as December 2021, Roe Defendants objected to interrogatories directed against them on the grounds that the questions pertained to contracts they had not signed, and were related to a breach of contract claim they were not parties to. (Opposition at pp. 3–4.) They argue that allowing leave under the present motion would frustrate the objectives of their motion for summary judgment, currently directed against the claims for intentional and negligent misrepresentation. (Opposition at pp. 6–7.) Allowing the amendment would require further discovery and dispositive motions, likely to delay trial in this matter beyond the May 2023 date for which it is currently set. (Opposition at p. 8.) Roe Defendants further argue that the proposed amendment would be futile, since language in a contract purporting to bind a party does not bind them if they did not agree to be so bound. (Opposition at pp. 8–10.)

Roe Defendants are correct in their characterization of this motion’s delay and the prejudice likely to result from permitting amendment. Despite the declaration of Cross-Complainants’ counsel, the failure to include Roe Defendants within the original cause of action for breach of contract was not the product of mistake or inadvertence, but a strategic decision to allege the claim for breach of contract against the contract’s actual signatory, Phenomenon Marketing and Entertainment. (XC ¶¶ 48–58.) If the Cross-Complaint itself gave not enough notice of the nature of the claim, Roe Defendants’ discovery responses in December 2021 would have made the matter clear. (Mall Decl. ¶ 2, Exh. 1.) Likewise, the present motion is likely to prejudice Roe Defendants and the other parties to this action by requiring additional discovery and motion practice, and likely a continuance of trial in order to accommodate the same.

However, it is unlikely that such prejudice can be avoided by denying leave to amend. This is because, as Cross-Complainants argue, the four-year limitations period for their breach of contract claim, accruing in March 2019, has not yet expired. (Motion at pp. 9–10.) As such, the most likely effect of denying leave to amend here would be Cross-Complainants’ filing of a new lawsuit against Roe Defendants. This being the case, there is little to be gained from denying the proposed amendment.

The motion is therefore GRANTED.