Judge: Helen Zukin, Case: 20STCV17331, Date: 2023-03-07 Tentative Ruling
Case Number: 20STCV17331 Hearing Date: March 7, 2023 Dept: 207
Background
This is a personal injury action in which Plaintiff Isac
Hernandez Hernandez (“Plaintiff”) was injured while working at a construction
site in Santa Monica, California. Defendants and Cross-Complainants Shane W.
Josephs, Jennifer L. Josephs, and Josephs Properties (collectively the
“Josephs”) owned the property where Plaintiff was injured. Defendant MRB Construction,
Inc. (“MRB”) brings two motions: (1) a motion for judgment on the pleadings as
to Plaintiff’s Complaint, and (2) a motion for leave to amend its Answer to
Plaintiff’s Complaint to add an affirmative defense claiming Plaintiff’s claims
against it are barred by the exclusivity provisions of the Worker’s
Compensation Act. Plaintiff and the Josephs separately oppose both motions. Cross-Defendants
Zalman N., Inc., and Zalman T. Nemtzov (collectively “Nemtzov”) have joined in
MRB’s motion for judgment on the pleadings only. As both motions concern the
applicability of the Workers’ Compensation Act, the Court will address them
together.
Objections to Evidence
MRB has submitted two identical documents objecting to the
same portions of the Declaration of Walker Macon submitted in connection with
the Josephs’ opposition to MRB’s motion for leave to amend. Those objections to
the Declaration of Walker Macon are OVERRULED.
Legal Standards
A defendant may move for judgment on the pleadings on the grounds
that (1) the court has no jurisdiction of the cause of action alleged in the complaint,
or (2) the complaint does not state facts sufficient to constitute a cause of action
against that defendant. (C.C.P. § 438(c)(1)(B).) The grounds for a motion for judgment
on the pleadings shall appear on the face of the challenged pleading or from any
matter which the court has judicially noticed. (C.C.P. §¿438(d).) A motion may be
made even though the movant has already demurred to the complaint or answer, on
the same ground as is the basis for the motion for judgment on the pleadings, and
the demurrer has been overruled, “provided that there has been a material change
in applicable case law or statute since the ruling on the demurrer.” (C.C.P. § 438(g)(1).)
In reviewing a motion for judgment on the pleadings, the court
“must accept as true all material facts properly pleaded,” but “does not consider
conclusions of law or fact, opinions, speculation, or allegations contrary to law
or facts that are judicially noticed.” (Stevenson Real Estate Services, Inc.
v. CB Richard Ellis Real Estate Services, Inc. (2006) 138 Cal.App.4th 1215,
1219-1220.)
Leave to
amend is permitted under Code of Civil Procedure section 473, subdivision (a)
and section 576. The policy favoring amendment and resolving all matters in the
same dispute is “so strong that it is a rare case in which denial of leave to
amend can be justified. . ..” “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 ‘where no prejudice is shown to the adverse party . . ..
[citation]. A different result is indicated ‘where inexcusable delay and
probable prejudice to the opposing party’ is shown. [Citation].” (Magpali v.
Farmers Group (1996) 48 Cal.App.4th 471, 487.)
A motion
for leave to amend a pleading must also comply with the procedural requirements
of California Rules of Court, Rule 3.1324, which requires a supporting
declaration to set forth explicitly what allegations are to be added and where,
and explicitly stating what new evidence was discovered warranting the
amendment and why the amendment was not made earlier. The motion must also
include (1) a copy of the proposed and numbered amendment, (2) specifications
by reference to pages and lines where allegations would be deleted and added,
and (3) a declaration specifying the effect, necessity and propriety of the
amendments, date of discovery and reasons for delay. (See Cal. Rules of Court,
rule 3.1324, subds. (a), (b).)
Analysis
1. Motion
for Judgment on the Pleadings
MRB argues Plaintiff’s Complaint
alleges it was Plaintiff’s employer and thus Plaintiff’s claims against it are
barred by the exclusivity provisions of the California Workers’ Compensation
Act. Plaintiff’s Complaint was filed on May 6, 2020. On February 16, 2021,
Plaintiff filed an amendment to the Complaint substituting MRB for Doe 1. MRB
is correct that the Complaint alleges the Josephs and MRB “hired Plaintiff to
construct the home and structure of the home on their premises…” (Complaint at
¶13.) It also alleges Plaintiff “was working for” the Josephs and MRB at the
time of the subject accident on February 21, 2019 (id at ¶22) and “was
an employee” of MRB and the Josephs because he was working under their “direct
command” (id at ¶24). The Complaint further alleges Plaintiff was
injured while acting “in the course and scope of his employment” with the
Josephs and MRB. (Id. at ¶25.)
The Complaint thus clearly alleges
Plaintiff was an employee of MRB and was injured in the course and scope of his
employment. However, this is not the end of the inquiry, and the Court must
examine the allegations of the Complaint to determine whether it also states
facts which would negate the application of the Workers’ Compensation Act. (Doney
v. Tambouratgis (1979) 23 Cal.3d 91, 97 [“An exception to this general rule
of pleading and proof by the defendant appears in the situation where the
complaint affirmatively alleges facts indicating coverage by the act. Then,
unless the complaint goes on to state additional facts which would negative the
application of the act, no civil action will lie”].)
The Complaint also alleges MRB was
“subject to the workers’ compensation insurance and safety laws” and yet “had
no workers [sic] compensation insurance for Plaintiff and his work related
injuries.” (Complaint at ¶¶26-27.) The exclusivity provisions of the Act do not
apply where an employer fails to maintain workers’ compensation insurance
coverage. (Labor Code § 3706 [“If any employer fails to secure the payment of
compensation, any injured employee or his dependents may bring an action at law
against such employer for damages, as if this division did not apply”].)
As set forth above, the Court must
accept these factual allegations as true in ruling on MRB’s motion for judgment
on the pleadings. Taken together, the factual allegations of the Complaint do
not establish Plaintiff’s claims against MRB are barred by the exclusivity
provisions of the Workers’ Compensation Act. While the Complaint does allege
MRB was Plaintiff’s employer, it also alleges additional facts which negate the
application of the act. While MRB has shown Plaintiff filed a workers’
compensation claim against MRB and its insurer, Plaintiff has shown he has
requested MRB and its insurer be dismissed from that action on the basis that
MRB was not Plaintiff’s employer. MRB’s motion for judgment on the pleadings
based on the exclusivity provisions of the Act is thus DENIED.
2. Motion
for Leave to Amend
MRB separately moves for leave to
amend its Answer to Plaintiff’s Complaint to add an affirmative defense that
Plaintiff’s claims against it are barred by the exclusivity provisions of the
Workers’ Compensation Act.
Plaintiff argues MRB has failed to
satisfy the procedural requirements imposed by California Rule of Court, rule
3.1324(b) in bringing its motion for leave to amend. Rule 3.1324(b) provides:
A separate
declaration must accompany the motion and must specify:
(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.
MRB’s motion attached a
declaration of counsel which sufficiently sets out the effect of the proposed
amendment and why the amendment is necessary and proper. (Shenian Decl. at
¶¶1-3.) However, MRB has not provided any declaration or explanation as to when
it discovered the facts which give rise to the need for the amendment or why
the request for amendment was not made earlier.
MRB argues the proposed amendment
is necessary in light of the allegations in Plaintiff’s Complaint, discussed
above, which claim Plaintiff was employed by MRB at the time of the subject
accident. MRB first appeared in this action on August 18, 2021. MRB has thus
been on notice of the allegations in Plaintiff’s Complaint for approximately
one and a half years, including the claim that MRB was acting as Plaintiff’s
employer at the time of his injury. MRB offers no explanation as to why it has
waited 18 months to seek this amendment on the eve of trial.
Indeed, it appears in the
intervening time, MRB was aware of this issue, as it was asked in written
discovery and at deposition whether it was Plaintiff’s employer. In its
September 27, 2021, responses to written discovery, MRB expressly denied acting
as Plaintiff’s employer, stating “Plaintiff was not an employee of Responding
Party. He was not hired by, supervised by or paid by Responding Party.
Plaintiff was employed by the general contractor and framing subcontractor,
Zalman Nemtzov and/or Zalman N., Inc.” (Ex. 3 to Macon Decl. at 4.) MRB
supplemented its responses to written discovery on May 25, 2022, but did not
alter or amend the assertion that it was not Plaintiff’s employer. (Ex. 4 to
Macon Decl.) At deposition, MRB’s owner, Marvin Ramos, testified that MRB had no records of ever employing
Plaintiff and maintained he had never met Plaintiff. (Ex. 1 to Macon Decl. at
20:24-21:5; 90:20-25.)
The Josephs
relied on MRB’s September 2021 discovery responses in reaching a settlement
with Plaintiff on October 8, 2021. The Josephs agreed to settle Plaintiff’s
claims against them for $4,000,000 on the belief that they could seek indemnity
and contribution from MRB and Nemtzov based on MRB’s representation that it did
not employ Plaintiff and Nemtzov’s lack of worker’s compensation coverage.
While courts in
this state must apply a liberal policy in favor of permitting amendments, this
policy is not without its limits. In particular, as set forth above, a long
delay in seeking amendment coupled with prejudice to the non-moving party will
justify the denial of a request to amend. Courts have found prejudice where a
proposed amendment would have materially changed a non-moving party’s decision
to settle. (See, e.g., Duchrow v. Forrest (2013) 215 Cal.App.4th 1359, 1381 [finding non-moving
party prejudiced by proposed amendment because timely knowledge of the claims
sought to be added by amendment would have impacted her decision to accept or
reject a prior settlement offer].)
The Court finds MRB has not been
diligent in seeking the amendment now sought only a week before trial is
scheduled to stary. The Court also finds the Josephs have demonstrated they
were prejudiced by MRB’s long and unexplained delay in seeking this amendment.
MRB argues it must be allowed to assert this affirmative defense because it goes
to the Court’s subject matter jurisdiction to hear Plaintiff’s claims and thus
cannot be deemed waived. The California Supreme Court expressly rejected this
argument in Doney v. Tambouratgis. There the Court found defendant had waived the
defense of the exclusivity of the Workers’ Compensation Act by failing to
assert it as an affirmative defense. The Court explained such waiver did not
improperly confer subject matter jurisdiction on the trial court because the
trial court retained jurisdiction over the plaintiff’s claims at common law in
the absence of the statutory provisions of the act:
We do not believe that the conclusion we here reach
results in the improper “conferral” of subject matter jurisdiction by means of consent,
waiver, or estoppel. [Citations.] Here, as in Popejoy v. Hannon, supra, 37 Cal.2d 159,
plaintiff was “pursuing a common law remedy which existed before the enactment of
the statute and which continues to exist in cases not covered by the statute.” ( Id., at p. 173-174.)
The trial court clearly
had subject matter jurisdiction over such an action unless and until it was properly
demonstrated that the case was one “covered by the statute” due to the presence
therein of the conditions of compensation set forth in section 3600 of the Labor
Code. As indicated above, such a demonstration may occur in one of two ways -- i.e.,
either by the plaintiff through alleging facts indicating coverage under the act
in his pleadings, or by the defendant through setting up the affirmative defense
of coverage in responsive pleadings and proceeding to prove the existence of the
requisite conditions. When, as in this case, no such demonstration has been made
in either fashion, the court properly proceeds to exercise its existing jurisdiction
to enforce the common law remedy.
(Doney, supra, 23 Cal.3d at 98-99.) The Court found it
of no consequence that defendant had raised the defense in a motion for nonsuit
during trial and in subsequent post-trial motions. (Id. at 99.) Under Doney,
a defendant may thus be deemed to have waived the exclusivity provisions of the
Worker’s Compensation Act by failing to timely allege and prove the existence
of the requisite conditions triggering the application of the Act.
The same follows
for MRB, who has inexplicably delayed for 18 months in bringing this motion and
has repeatedly represented in the course of discovery that it was not
Plaintiff’s employer and thus not relying on the exclusivity provisions of the
Worker’s Compensation Act. The injection of this new affirmative defense into
this case one week before trial is scheduled to start will necessarily
prejudice all parties who relied on MRB’s discovery responses in preparing this
case for trial. “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.” (Magpali v. Farmers Group
(1996) 48 Cal.App.4th 471, 488.)
MRB’s motion for leave to amend
its Answer is DENIED.
Conclusion
MRB’s motion for judgment on the pleadings is DENIED. MRB’s
motion for leave to amend its Answer to Plaintiff’s Complaint is DENIED.