Judge Holly J. Fujie, Case Number: BC683350, Date: 2024-05-17 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

MOVING PARTY: Plaintiffs Linda Spinella (“Linda”)[1], individually and in the right of and for the benefit of Biafora Family Limited Partnership (“BFLP”) and Ruth Ann Biafora (“Ruth”)

RESPONDING PARTY: Cross-Complainants and Plaintiffs in BC713448, BFLP, Joseph R. Biafora, Jr. (“Joseph Jr.”) and Diana Biafora Sparagna (“Diana”)

On April 15, 2002, the BFLP was formed by a written limited partnership agreement between Joseph Biafora, Sr. (“Joseph Sr.”) and his wife, Stefi Biafora (“Stefi”). Plaintiffs Linda and Ruth and Defendants Diana Biafora Sparagna (“Diana”), Joseph R. Biafora, Jr. (“Joseph Jr.”) and Stephen Biafora (“Stephen”) are the children of Joseph Sr. and Stefi and are siblings. Brenda Navarro (“Brenda”) was also a sibling who is now deceased. Brenda’s interest in BFLP is held by the Rayna Stephanie Alice Navarro Special Needs Trust dated October 1, 2010 (the “Trust”), of which Diana is the trustee. Linda, Ruth, Diana, Joseph Jr., Stephen and the Trust are the limited partners of BFLP.

The currently operative complaint is the Second Amended Complaint filed by Linda and Ruth on April 16, 2018. Linda and Ruth allege that Diana, Joseph Jr. and Stephen committed unlawful acts in conducting the affairs of BFLP, misappropriated partnership assets for their personal use, committed waste and mismanagement of the partnership and failed to distribute money and property due to Plaintiffs in accordance with their interests in BFLP. Plaintiffs allege in the SAC: (1) a claim for dissolution of partnership; (2) individual claims to enforce partnership rights; (3) derivative claim to enforce partnership rights; (4) individual claims for breach of contract; (5) derivative claim for breach of contract; (6) individual claims for breach of fiduciary duty; (7) derivative claim for breach of fiduciary duty; (8) individual claims for receiving or withholding stolen property (Penal Code §496); (9) derivative claim for receiving or withholding stolen property (Penal Code §496); (10) individual claims for money had and received; (11) derivative claim for money had and received; (12) individual claims for quasi contract and unjust enrichment; (13) derivative claim for quasi contract and unjust enrichment; (14) accounting; (15) failure to pay wages and benefits; (16) quiet title to 350 Paseo De Playa, #231; (17) quiet title to 469 Corvette Street.

On July 10, 2018, BFLP, Joseph Jr. and Diana filed their own separate action against Linda and Ruth (Case No. BC713448) alleging (1) declaratory relief and (2) breach of partnership agreement. On that same day, BFLP, Joseph Jr. and Diana filed a cross-complaint in this action alleging (1) breach of contract; (2) common count – money lent and owed; (3) common count – account stated; (4) theft, embezzlement, misappropriation, conversion; (5) fraud – false promise; (6) fraud – intentional misrepresentation; (7) negligent misrepresentation; (8) defamation; and (9) intentional interference with inheritance expectancy.

On October 30, 2018, BC713448 was consolidated with BC683550. BC685330 was designated the lead case. A bench trial began on April 6, 2023 and is scheduled to resume on May 29, 2024.

Plaintiffs Linda and Ruth move for leave to file a Third Amended Complaint based on recent events that took place during the Phase I bench trial. During the trial, Plaintiffs allege that it became apparent that Defendants’ designated appraiser, Steven Lee, was not a “certified independent business appraiser” required under Section 9.04 of the BFLP Partnership Agreement. Plaintiffs contend Defendants’ failure to properly designate an independent appraiser in accordance with section 9.04 of the BFLP Partnership Agreement was a breach of the Partnership Agreement and nullified Defendants’ vote on September 5, 2019 to expel Plaintiffs from BFLP pursuant to Section 9.04.

Plaintiffs ask that the Court grant them leave to amend pursuant to CCP §473(a) and 576. Plaintiffs propose to (1) add additional claims for breach of Section 9.04 of the BFLP Partnership Agreement; (2) add a claim for declaratory relief regarding the impact of Defendants’ failure to comply with Section 9.04 of the BFLP Partnership Agreement. Plaintiffs argue this is proper grounds to allow them to amend to conform to proof. Plaintiffs argue they are not changing the legal theories or facts alleged but asserting entirely new claims based on events that transpired during the trial. Plaintiffs argue no prejudice will result, because the issues raised by the proposed amendments were already fully tried before the Court. Plaintiffs argue there will also be no prejudice because the trial is protracted and spread out over months.

Defendants argue that leave to amend is not warranted here and would unduly prejudice them. Defendants argue that Plaintiffs have had Steven Lee’s appraisal report since August 2020. Defendants argue Steven Lee is now deceased and Defendants have a new expert, Richard Lee, who has already been deposed. Defendants argue the only basis for the claim that Steven Lee was not a qualified appraiser under Section 9.04 is the hearsay testimony of Webb. Defendants argue the Court should deny leave to amend and allow the trial on the buyout proceeding under Section 9.04 proceed. Defendants argue Steven Lee’s qualifications are irrelevant at this point, given that the Court has already appointed a neutral appraiser to serve as the tie breaker.

On reply, Plaintiffs reiterate that Steve Lee was not a qualified appraiser under Section 9.04 and Defendants are therefore in breach of Section 9.04. Plaintiffs argue they only discovered that Steve Lee was unqualified to serve as an appraiser at trial. Plaintiffs argue there will be no prejudice to Defendants if the amendments are allowed. Plaintiffs argue that, contrary to Defendants’ position, the qualifications required of an appraiser under Section 9.04 are not subject but objective. Plaintiffs argue they only stipulated to the applicability of Section 9.04 based on their belief that Defendants had complied with Section 9.04, which Plaintiffs discovered at trial that Defendants did not do. Plaintiffs argue they should be entitled to amend the complaint to seek a declaratory order finding that the expulsion vote was void.

“A pleading may be amended at the time of trial unless the adverse party can establish prejudice. Where a party is allowed to prove facts to establish one cause of action, an amendment which would allow the same facts to establish another cause of action is favored, and a trial court abuses its discretion by prohibiting such an amendment when it would not prejudice another party. A variance between pleading and proof does not justify the denial of an amendment to conform pleading to proof unless the unamended pleading ‘misled the adverse party to his prejudice in maintaining his action or defense upon the merits.” (South Bay Building Enterprises, Inc. v. Riviera Lend-Lease, Inc. (1999) 72 Cal.App.4^th 1111, 1124.)

“It is of course settled that the allowance of amendments to conform to the proof rests largely in the discretion of the trial court and its determination will not be disturbed on appeal unless it clearly appears that such discretion has been abused. Such amendments have been allowed with great liberality and no abuse of discretion is shown unless by permitting the amendment new and substantially different issues are introduced in the case or the rights of the adverse party prejudiced.” (Trafton v. Youngblood (1968) 69 Cal.2d 17, 31 (affirming denial of amendment to conform to proof that would have added claim for offset for reasonable value of defendant attorney’s services, where issue of reasonable value of attorney’s services was not before court and plaintiff client did not have opportunity to offer evidence on such issue during trial).) “[A]mendments of pleadings to conform to the proofs should not be allowed when they raise new issues not included in the original pleadings and upon which the adverse party had no opportunity to defend.” (Id.)

“The cases on amending pleadings during trial suggest trial courts should be guided by two general principles: (1) whether facts or legal theories are being changed and (2) whether the opposing party will be prejudiced by the proposed amendment. Frequently, each principle represents a different side of the same coin: If new facts are being alleged, prejudice may easily result because of the inability of the other party to investigate the validity of the factual allegations while engaged in trial or to call rebuttal witnesses. If the same set of facts supports merely a different theory ... no prejudice can result. The basic rule applicable to amendments to conform to proof is that the amended pleading must be based upon the same general set of facts as those upon which the cause of action or defense as originally pleaded was grounded. [¶] As stated by a leading treatise, in ruling on a motion to amend a complaint to conform to proof, the court is usually guided by whether: there is a reasonable excuse for the delay; the change relates to the facts or only to legal theories; and the opposing party will be prejudiced by the amendment.” (Duchrow v. Forrest (2013) 215 Cal.App.4^th 1359, 1378-1379.)

Whether an amendment to conform to proof is proper depends in part on the evidence already presented during Phase I of the trial. If the evidence presented at trial: (1) establishes Plaintiffs’ proposed causes of action, (2) the proposed amendments would “not raise new issues not included in the original pleadings and upon which the adverse party had no opportunity to defend” and (3) the amendments would not prejudice Defendants, leave to amend would be granted. (Trafton, supra, 69 Cal.2d at 31.)

Plaintiffs’ requested amendments would add completely new claims based on evidence presented at trial. These claims would introduce “new and substantially different issues,” which Defendants have not had an opportunity to conduct discovery and would be unable to adequately defend. Trial has already commenced. Steve Lee, the allegedly unqualified appraiser has died. A neutral appraiser was appointed by the Court and is set to testify when trial recommences on May 29, 2024. Defendants have retained a new appraiser, who has already been deposed. The evidence presented at trial also did not establish the newly proposed causes of action, which include new allegations that the expulsion vote triggering the entire buyout process was null and void due to Defendants’ use of Steve Lee as an appraiser.

Plaintiffs’ proposed Third Amended Complaint to Conform to Proof therefore fails to satisfy the criteria for leave to amend. Plaintiffs’ proposed Third Amended Complaint “raise new issues not included in the original pleadings and upon which the adverse party had no opportunity to defend” and the amendments would not prejudice Defendants. The evidence presented at trial also did not establish Plaintiffs’ proposed causes of action.

The Court further notes that the various appraisers’ qualifications can and will be weighed by the Court in its analysis of the issues in Phase One and the proposed new causes of action are unnecessary and would distract from the issues being tried.

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.

Hon. Holly J. Fujie

Judge of the Superior Court

[1] All family members are referred to by their first names in an attempt to avoid confusion between persons with the same names, and not from any disrespect.