Judge: H. Jay Ford, III, Case: 20SMCV01704, Date: 2022-10-11 Tentative Ruling

Case Number: 20SMCV01704    Hearing Date: October 11, 2022    Dept: O

  Case Name:  Core Financial Partners, Inc. v.  Vitela

SUBJECT:                 MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT

MOVING PARTY:   Plaintiff Core Financial Partners

RESP. PARTY:         Defendant/X-Complainant Jose Vitela

TENTATIVE RULING

            Plaintiff Core Financial Partners’ Motion for Leave to File Second Amended Complaint is GRANTED.

            Plaintiff’s declaration in support of the motion satisfies the requirements under CRC Rule 3.1324.  Plaintiff identifies the amendments, their effect, and the information that prompted the amendment.  See Dec. of J. Mendelson, ¶¶3-26.

“Courts must apply a policy of liberality in permitting amendments at any stage of the proceeding, including during trial, when no prejudice to the opposing party is shown.”  P&D Consultants, Inc. v. City of Carlsbad (2010) 190 Cal.App.4th 1332, 1345.  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 Id.  (leave to amend properly denied where plaintiff offered no explanation for one-year delay in seeking leave to amend, amendment was requested after trial readiness conference, amendment would require additional discovery and amendment would likely trigger a demurrer or other pretrial motions); 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”).

            Plaintiff filed this motion for leave more than two years after the action was initially filed on 11-10-20.  Plaintiff claims it only recently discovered evidence supporting Silicon Beach’s potential liability for using Plaintiff’s confidential information.  Plaintiff claims this evidence also supports a claim for intentional interference and violation of Penal Code §502.  Based on a review of the original complaint and the FAC, it appears Plaintiff knew of facts that would have supported naming Silicon Beach as a defendant and alleging the proposed new causes of action when it filed the original complaint.  See Complaint, ¶¶2, 3, 25, 27-30, 35, 36, 39, 40, 51, 58, 63, 68, 73, Prayer for Relief ¶3.  Plaintiff’s factual allegations naming Silicon Beach indicate potential liability, not merely awareness of Silicon Beach’s existence.

            However, the mere fact that Plaintiff delayed in seeking leave does not alone justify denial of leave to amend.  Defendant fails to establish any prejudice as a result of this delay.  Because the original complaint and FAC have always made Silicon Beach a central party to the relevant events, the proposed addition of Silicon Beach would not significantly expand the scope of discovery. 

            The Court acknowledges the proposed amendments could potentially cause further delay. However, the trial date is four months away.  If a trial continuance is required, the Court will revisit the issue closer to that time. Defendant fails to make any showing of prejudice that would require denial.  There is no showing that evidence will be lost, nor is the motion brought on the eve of trial.

            Finally, Defendant’s arguments regarding the substantive merits of Plaintiff’s proposed additions are improper at this stage.  Ordinarily, the validity of an amendment is not grounds for denial of leave to amend and its legal sufficiency should be tested in other appropriate proceedings.  See Atkinson v. Elk Corp. (2003) 109 Cal.App.4^th 739, 760.  “Leave to amend should be denied only where the facts are not in dispute, and the nature of the plaintiff's claim is clear, but under substantive law, no liability exists and no amendment would change the result.”  Edwards v. Superior Court (2001) 93 Cal.App.4th 172, 180  (reversing denial of leave to amend based on trial court’s erroneous application of CCP §364 as an affirmative defense).  A court’s discretion to deny an amendment based on its “substantive vitality” is most appropriately exercised in “cases in which the insufficiency of the proposed amendment is established by controlling precedent and where the insufficiency could not be cured by further appropriate amendment.”  California Casualty Gen. Ins. Co. v. Supr. Ct. (1985) 173 Cal.App.3d 274, 280-281 (disapproved of on other grounds).  Where the legal sufficiency of a proposed amendment is “a novel question almost certain to be tested in an appellate court, the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings.”  Id. at 281. 

            Defendant is not arguing that the claims are futile based on a clear legal issue apparent from the face of the proposed complaint that is not curable by amendment, such as the statute of limitations.  Defendant is arguing that the claims lack evidentiary support, which is outside the scope of a motion for leave to amend.

            Defendant also relies heavily on the Court’s ruling on the motion for preliminary injunction, as if it were a binding and final adjudication of the merits of the case.  “Neither this court's rulings on appeal nor the trial court's orders granting and denying the respective applications for preliminary injunctions are final adjudications which bind the court at trial.”  Jomicra, Inc. v. California Mobile Home Dealers Assn. (1970) 12 Cal.App.3d 396, 402. 

A ruling on an application for PI is not an adjudication of the ultimate rights in controversy.  See Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, 286.  It merely represents the trial court's discretionary decision whether defendant should be restrained from exercising a claimed right pending trial.  Id.  Indeed, the court may not adjudicate the final merits of the case under the guise of issuing a preliminary injunction.  See Yee v. American Nat'l Ins. Co. (2015) 235 Cal.App.4th 453, 458. 

            Plaintiff’s Motion for Leave to Amend is GRANTED.  Plaintiff should file its proposed SAC under separate cover today.