Judge: Gregory Keosian, Case: 20STCV16415, Date: 2023-02-21 Tentative Ruling

Case Number: 20STCV16415    Hearing Date: February 21, 2023    Dept: 61

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

Cross-Defendants Defendants Phe.no LLC, Phenomenon Holdings LLC, Phenomenon Blocker LLC and Sleeping Bear Capital LLC Motion for Summary Judgment 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 brach 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.

II.                MOTION FOR SUMMARY JUDGMENT

A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.”  (Code Civ. Proc. § 437c, subd. (a).) “[I]f all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law,” the moving party will be entitled to summary judgment.  (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment.  (Code Civ. Proc. § 437c, subd. (f)(2).)

The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact.  (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; accord Code Civ. Proc. § 437c, subd. (p)(2).)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto.  (Aguilar, supra, 25 Cal.4th at 850.)  The plaintiff may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto.  (Ibid.)  To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence.  (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Cross-Defendants Phe.no LLC, Phenomenon Holdings LLC, Phenomenon Blocker LLC and Sleeping Bear Capital LLC (Cross-Defendants) seek summary judgment or adjudication against the causes of action for intentional and negligent misrepresentation alleged against them in Cross-Complainants’ Cappello Global, LLC and Camden Financial Services Cross-Complaint. Cross-Defendants argue that the claims are based on representations made during negotiations of a contract with Phenomenon Marketing and Entertainment, and that Cross-Complainants’ principal, who conducted the negotiations, admitted that no one made any misrepresentations during these negotiations. (Motion Exh. 4 at pp. 43–44.)

Misrepresentation is an element of both claims for intentional and negligent misrepresentation. (National Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc. (2009) 171 Cal.App.4th 35, 50; Manderville v. PCG&S Group, Inc. (2007) 146 Cal.App.4th 1486, 1498.) Here, Cross-Defendants have satisfied their initial burden to show the absence of triable issues as to the making of any misrepresentations. Cross-Complainants have filed a notice of non-opposition to the motion.[1]

The motion is therefore GRANTED.