Judge: H. Jay Ford, III, Case: 22SMCV01947, Date: 2025-01-20 Tentative Ruling

Case Number: 22SMCV01947    Hearing Date: January 21, 2025    Dept: O

Case Name:  Malibu Coast Villas, LLC v. Integrated Media Systems, Inc., et al.

SUBJECT:               LEAVE TO FILE CROSS-COMPLAINT

MOVING PARTY:  Defendant Integrated Media Systems Inc.

RESP. PARTY:        Plaintiff Malibu Coast Villas, LLC

TENTATIVE RULING

Defendant Integrated Media System’s Inc.’s motion for leave to file a cross-complaint is GRANTED. Defendant Integrated Media System’s Inc. is ordered to file and serve its proposed cross-complaint within 10 days of this order.

BACKGROUND

This case arises from a breach of contract claim, by and between, the landlord Plaintiff Malibu Coast Villas (“Plaintiff”) and tenants Defendant Integrated Media Systems, Inc. (“Integrated”) and Defendant Mohammad Ahmadi (“Ahmadi”) (collectively, “Defendants”) for property located at 30650 Pacific Coast Highway, Malibu, CA 90265 (“Property”). Plaintiff claims damages on the grounds that Defendants failed to timely make rental payments because of their tenancy at the Property, thus entitling Plaintiff to damages in a sum of no less than ninety-five thousand dollars ($95,000). Plaintiff filed the complaint against Defendants on October 14, 2022.

Leave to File Cross-Complaint

Integrated moves the Court to provide leave for Integrated to file a cross-complaint against Plaintiff, alleging causes of action for (1) Negligence; (2) Breach of Warranty of Habitability; (3) Breach of Implied Warranty of Habitability; (4) Breach of Implied Covenant of Quiet Enjoyment; (5) Nuisance; (6) Unfair Business Practices B & P Code § 17200; (7) Constructive Eviction; and (8) Violation of Tenant Anti-Harassment Ordinance.

 Integrated argues that its claims arise out of the “same transaction or occurrence’ as the events underlying the original complaint, making Integrated’s proposed claims as compulsory counter-claims. Integrated contends that the factual issues underlying both the original complaint and the proposed cross-complaint are logically related because Plaintiff contends that Defendants’ failure to pay rent is a breach of the lease agreement, whilst Defendants contend that Plaintiff breached the same lease agreement, by failing to provide a habitable dwelling fit for human occupancy. Integrated additionally argues that its motion is brought in good faith.

In opposition, Plaintiff contends that Integrated’s motion lacks good faith. Plaintiff argues that Defendants’ discovery responses display that they were aware of the alleged habitability issues, and only waited to file the instant motion after the Court has already granted a trial continuance. Plaintiff claims that Defendants’ inaction, and their delay of nearly 27 months after this action commenced are indicative of bad faith.

Generally, a party must 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. (Cal. Code of Civ. Proc.§ 428.50(a).) 

The court may grant leave to file a cross-complaint if the failure to plead a cause of action was the result of oversight, inadvertence, mistake, neglect, or other cause. (Code Civ. Proc., § 426.50.) Where the proposed cross-complaint arises out of the same transaction as plaintiff’s claim, the court must grant leave to file the cross-complaint as long as defendant is acting in good faith. (Ibid.; see Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 99 [the Court may not “exercise discretion” in the denial of a motion to file a compulsory cross-complaint].) Judicial policy favors resolution of all disputed matters between the parties in the same lawsuit and discretion will usually be exercised liberally to permit amendment of the pleadings. (See Nestle v. Santa Monica (1972) 6 Cal.3d 920, 929.) 

“‘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. [Citation.]’ [Citations.]” (Silver Organizations, supra, 217 Cal.App.3d at p. 100.)

A party may obtain leave of court to file a cross-complaint at any time during the course of a lawsuit, and leave may be granted in the interest of justice. (Code Civ. Proc., §§ 426.50, 428.50; see also Sidney v. Superior Court (1988) 198 Cal.App.3d 710, 718.) “To the extent practicable, all supporting memorandums and declarations must be attached to the notice of motion.” (Cal. Rules of Court Rule 3.1113(j).) 

Firstly, the proposed cross-complaint is premised on compulsory counterclaims, given that the claims in both the original complaint and proposed cross-complaint are based on a breach of the Lease Agreement. [Sattinger v. Newbauer (1954) 123 Cal. App. 2d 365, 369 [“The fundamental reason for allowing cross-complaints is to have a complete determination of a controversy among the parties in the one action, thus avoiding circuity of action”].)

Secondly, the Court does not agree with Plaintiff that there is “substantial evidence” that the instant motion was brought in bad faith. (Silver Organizations, supra, 217 Cal.App.3d at p. 99 [“substantial evidence must support the trial court’s decision”].) In Silver Organizations, the Court found that the trial court erred in denying the defendants leave to file a compulsory cross-complaint. (Ibid.) The Court found that the defendants filing a compulsory cross-complaint on the eve of trial did not imply bad faith because defendants had deferred obtaining counsel pending settlement negotiations, had promptly and diligently pursued counsel after recognizing the contingency of trial, and made the motion to file the cross-complaint after adequately pursuing investigation and formal discovery. (Id. at pp. 100-01.) Similarly, Defendants had retained new counsel and upon pursuing formal discovery to determine proper grounds, now seek to file a cross-complaint against Plaintiff.

When Integrated’s counsel learned that prior counsel had not filed a cross-complaint, current counsel now seeks to file a cross-complaint after conducting their due diligence and collecting all the necessary evidence needed to file the cross-complaint. Further, Plaintiff, because of Integrated’s discovery responses, was made aware of Defendants’ proposed claims premised on habitability problems, supporting a lack of “surprise” or prejudice on Plaintiff’s behalf. Lastly, Integrated’s counsel state that Integrated “intends to abide by the new trial date of April 28, 2025, and is not seeking a trial continuance.” (Motion, page 4.)