Judge: Holly J. Fujie, Case: 22STCV18501, Date: 2024-02-15 Tentative Ruling

Case Number: 22STCV18501    Hearing Date: February 15, 2024    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Defendant Revel Management Group, LLC (“Moving Defendant”)

RESPONDING PARTY: Plaintiff

The Court has reviewed the moving, opposition and reply papers. 

BACKGROUND

This action arises out of a business relationship. The currently operative first amended complaint (the “FAC”) alleges: (1) breach of oral/implied operating agreement; (2) breach of implied covenant of good faith and fair dealing; (3) breach of fiduciary duty; (4) judicial dissolution by manager; (5) judicial dissolution by member; (6) accounting; (7) breach of oral contract; (8) breach of implied-in-fact contract; (9) violation of Corporations Code section 17704.10, subdivision (g); (10) unjust enrichment; (11) quantum meruit; (12) willful misclassification; (13) willful refusal to pay wages earned; (14) failure to indemnify employee for costs and expenditures; (15) declaratory relief; (16) injunctive relief; (17) constructive trust; and (18) Business and Professions Code section 17200. 

On December 11, 2023, Moving Defendant filed amotion for leave to file a cross-complaint (the “Motion”).  The proposed cross-complaint (the “XC”) alleges: (1) intentional interference with contractual relations; (2) intentional interference with prospective economic relations; and (3) misappropriation of trade secrets against Plaintiff and third parties Alexandra Del Salto (“Del Salto”) and The Muse Agency, LLC (“Muse”).  (Declaration of Kasey Diba (“Diba Decl.”) ¶ 2, Exhibit A.) 

EVIDENTIARY OBJECTIONS

            Moving Defendant’s objections to the Declaration of Mohamad Hadwan (“Hadwan Decl.”) numbers 1-3 are OVERRULED.  Moving Defendant’s objection to the Hadwan Declaration number 4 is SUSTAINED.

DISCUSSION

Under California Code of Civil Procedure (“CCP”) section 426.30, a party against whom a complaint has been filed and served who fails to allege in a cross-complaint any related cause of action which, at the time of serving his answer to the complaint, he has against the plaintiff may not thereafter assert the unpleaded related cause of action against the plaintiff in any other action.  (CCP § 426.30, subd. (a).)  A related cause of action is a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.  (CCP § 426.10, subd. (c).) 

CCP section 426.50 provides that a party who fails to plead a cause of action subject to the requirements of this article, whether through oversight, inadvertence, mistake, neglect, or other cause, may apply to the court for leave to amend his pleading, or to file a cross-complaint, to assert such cause at any time during the course of the action.  (CCP § 426.50.)  The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend a pleading or to file a cross-complaint.  (Id.)  A policy of liberal construction of CCP section 426.50 to avoid forfeiture of causes of action is imposed on the trial court.  (Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 98-99.)  A motion for leave to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result.  (Id. at 99.)  Factors such as oversight, inadvertence, neglect, mistake or other cause are insufficient grounds to deny the motion unless accompanied by bad faith.  (Id.)  Bad faith is defined as the 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.  (Id. at 100.)  Substantial evidence must support the court’s decision that a defendant has not acted in good faith.  (Id. at 99.)  The statutory terminology allows the court some modicum of discretion in determining whether or not a defendant has acted in good faith, however.  (Gherman v. Colburn (1977) 72 Cal.App.3d 544, 559.)  For example, the court may interpret a party’s delay in seeking to file a cross-complaint as evidence of lack of good faith, especially when coupled with a long history of litigation between the parties.  (See id.)

Moving Defendant learned the information underlying the allegations in the proposed XC after deposing Plaintiff and Del Salto on October 17, 2023 and October 25, 2023, respectively.  (See Diba Decl. ¶¶ 4-11.)  Plaintiff argues that the Motion was not brought in good faith because Moving Defendant learned of Plaintiff’s relationship with Muse through discovery early in this litigation and Moving Defendant only sought leave to file the XC after Plaintiff rejected its settlement offer.  (See Hadwan Decl. ¶¶ 3-4.) 

The Court finds that Moving Defendant’s general awareness of Muse and its previous settlement attempt do not demonstrate that the Motion was not brought in good faith.  The Motion sets forth specific facts regarding the allegedly wrongful conduct of Plaintiff and Del Salto in connection with Muse that Moving Defendant learned in depositions in late October.  (See Diba Decl. ¶¶ 7-11.)  Moving Defendant acted promptly thereafter to request leave to file the XC.  The Court therefore GRANTS the Motion.  Moving Defendant is ordered to file the proposed XC within five court days of the date of this order.

Moving party is ordered to give notice of this ruling. 

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar. 

  Dated this 15th day of February 2024