Judge John J. Kralik, Case Number: 21BBCV00565, Date: 2023-09-15 Tentative Ruling

Plaintiff Christo J. Halekakis (“Plaintiff”) alleges that he and Defendant Nico Halekakis aka Nick J. Halekakis (“Nico Halekakis”) are brothers and that Nico Halekakis is married to Defendant Megan T. Lorick Halekakis fka Megan T. Lorick (“Megan Halekakis”). The property at issue is located at 10926 Hartsook Street, North Hollywood, CA 91601.

Plaintiff alleges that he purchased the property at an auction sale by making a deposit of $36,000 and took title solely in his name. He alleges that he then opened escrow to purchase the property with Megan Halekakis as joint 50/50 owners as tenants in common on March 14, 2011, such that he deposited an additional $17,000, she deposited $35,300, and the balance was financed. Plaintiff alleges that Megan Halekakis deeded her ½ interest to herself, Plaintiff, and Nico Halekakis equally as tenants in common, such that Plaintiff had 66-2/3%, Megan Halekakis had 16-2/3%, and Nico Halekakis had 16-2/3% ownership interest in the property as tenants in common. Plaintiff alleges that the parties reached an oral agreement to rent the property and that they would take equal distribution of profits. He alleges that they worked together to renovate the property.

Plaintiff alleges that he was listed on several deeds as tenants in common with his parents John and Sophia Halekakis. However, Nico Halekakis threatened Plaintiff with criminal and civil prosecution if the properties were not moved over to his name. Plaintiff alleges that he signed deeds moving the properties jointly owned by him and his parents to Nico Halekakis’s name on October 11, 2019. He alleges that Nico Halekakis also insisted that he transfer the grant deed for the subject property so that he and Megan Halekakis could refinance the property, but Plaintiff refused to and did not sign over any documents regarding the subject property.

Plaintiff alleges that he discovered in May 2021 when he was reviewing his property ownership that a deed was recorded on January 4, 2021 purporting to transfer Plaintiff’s interest in the subject property to Nico and Megan Halekakis, which he alleges is a forged deed.

The complaint, filed June 18, 2021, alleges causes of action for: (1) cancellation of instrument and damages (forgery); (2) accounting; (3) money had and received; and (4) partition of real property.

On October 31, 2023, Defendants Nick J. Halekakis and Megan T. Lorick Halekakis (“Defendants”) filed a motion for leave to file a cross-complaint. On November 14, 2023, Defendants filed an addendum to the motion.

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. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend the pleading, or to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith. This subdivision shall be liberally construed to avoid forfeiture of causes of action.

Defendants move for leave to file the proposed cross-complaint. A copy of the proposed cross-complaint is attached as Exhibit A to the Addendum to the Motion for Leave to File Cross-Complaint. The proposed cross-complaint is alleged against Plaintiff and alleges a single cause of action for breach of written contract wherein they seek over $500,000 in damages. (Proposed Cross-Complaint, ¶8.)

Defendants argue that they had difficulty obtaining counsel at the commencement of the action and then they were represented by ineffectual counsel. (N. Halekakis Decl., ¶2.) They argue that their recently withdrawn counsel (on October 2, 2023) did not complete discovery, engage in any attempts to resolve the matter, nor file a cross-complaint. Nick Halekakis states that he and his wife did not feel qualified to analyze the facts and law to prepare a cross-complaint and that their prior counsel failed to file a cross-complaint despite their requests because he “never got around to it.” (Id., ¶¶2-3.) Defendants argue that Plaintiff has always been aware that Defendants asserted that he was in breach of the agreement and even stated so in their third affirmative defense in the answer.[1] (Id., ¶2.) Thus, they argue that Plaintiff will not be prejudiced if the Court were to grant this motion.

In opposition, Plaintiff argues that Defendants have not shown that they have met the standard for a mandatory cross-complaint and have not shown oversight, inadvertence, mistake, neglect, or other cause for a compulsory cross-complaint. Plaintiff argues that the case was filed 2 years ago on June 18, 2021 and that Defendants were represented by counsel Jared Barry for 15 months. Plaintiff argues that in order to accommodate Defendants and Mr. Barry, he agreed to continue trial from September 6, 2022 to February 2023 and then again to September 2023. Plaintiff argues that this motion is simply a delay tactic in light of the upcoming trial date of February 5, 2024. He argues that Defendants are experienced litigants who were able to file an answer and respond to discovery. Plaintiff also argues that discovery could have been conducted at any time by defendants and that the facts regarding this motion were already in Defendants’ possession.

Plaintiff argues that if this motion is granted, the Court should impose certain conditions pursuant to CCP § 426.50 such that: (1) Defendants pay $50,000-$75,000 as a condition of granting the motion to cover Plaintiff’s legal fees to defend against the cross-complaint and for Defendants’ wasted delay; (2) a continuance of trial so that Plaintiff can file a motion with respect to the cross-complaint and conduct discovery; (3) a one-way reopening of motion and discovery cut-offs in favor of Plaintiff only as it would be grossly unfair for Defendants to engage in additional discovery or motion practice; and (4) an order that Defendants have waived their attorney-client privilege with their former counsel Mr. Barry such that Plaintiff would be entitled to all written/oral correspondence between Defendants and Mr. Barry.

The grounds for denying a motion such as this are narrow. The Court “shall grant” the motion if the party seeking to assert the mandatory cross-complaint acts in “good faith.” This is the rare case where a party seeking to assert a late cross-complaint is acting in bad faith.

First, there is no doubt that Defendants have been aware of their claim that the Plaintiff Christo Halekakis breached an investment contract relating to the subject property at the time they filed their answer on October 1, 2021. As noted in the moving papers, Plaintiffs referred to this contract in their Third Amended Defense of the Answer, and then subsequently in their discovery responses. Defendants’ answer in this case is extraordinarily professional for pro per litigants, and goes on for 5 pages; yet Mr. Nico Halekakis asks this court to believe he was incapable of adding a three-page cross-complaint referencing the same agreement he had just referenced in his answer.

Defendant Nico Halekakis has acted as his own attorney in this case for extended parts of the case, as has Defendant Megan T. Halekakis. Having observed them and having read their self-drafted papers the Court is convinced that they were at all times capable of filing the requested cross-complaint, yet declined to do as part of strategy to delay and frustrate the case. Mr. Nico Halekakis’ unsupported statement that he and his wife “did not feel qualified to analyze the facts and law” regarding this cross-complaint is disingenuous and fails to address their history as self-represented litigants. At the relevant time when the cross-complaint should have been filed they obviously felt qualified to assert the same claim as an affirmative defense. The answer itself speaks in a tone of complete self-confidence and self-righteousness, as if the author feels absolutely qualified to make categorical legal proclamations and absolute factual assertions with certainty.[2] Whatever his legal qualifications, the author of that document was not experiencing any doubt as to such qualifications at that time. The Court further finds that Nico Halekakis’ statement regarding this reasoning to be not credible as it is not backed by persuasive evidence that would obviously be in Defendants’ control.[3]

Mr. Nico Halekakis’ statement that he requested his former counsel to file the cross-complaint is likewise not credible. If such a communication had taken place, it is highly likely that it would have been commemorated in writing or commemorated by notes.[4] Yet no writing was produced to support these supposed communications, and the former counsel has not verified that they took place. If this motion was truly based on neglect of counsel, a declaration of that counsel should have been filed.[5]

The matter of a cross-complaint was only brought to the Court after Defendants had fully exhausted their tactic of delaying trial by firing their previous counsel and then refusing to relieve him of his duties, while also refusing to allow him to act on their behalf.[6] Their bad faith behavior towards their own counsel caused a delay of nearly two months while his status was adjudicated by the Court. Defendants then failed to bring in new counsel until it became obvious that the Court would tolerate no further delay on that account. This conduct is further evidence of their bad faith in connection with this cross-complaint as it shows their calculated efforts to delay the trial.

Defendants’ previous failure to make discovery is also evidence of their bad faith. If they had a $500,000 breach of contract claim that had been placed in issue by their own pleading, it would have behooved them to produce that contract as well as all documents showing that breach of contract. Certainly, they would have been advised to do so by counsel, and there is no evidence that counsel did not so advise them. Yet Defendants’ motion fails to rebut Plaintiff’s assertion that they previously verified that they had no documents to produce. (See Opposition at 4.) Once again, Defendants’ actions show a lack of credibility.

Finally, it appears that the cross-complaint itself is without merit and seems calculated to cause delay while its lack of merit is ferreted out by extensive discovery and motion practice. It references a written agreement dated March 8, 2011, yet that agreement is not attached, and as noted above, Defendants have previously verified that documents regarding this transaction do not exist. Second, while being vague as to precisely when the alleged breach of agreement took place, it seems that all or most such breaches took place in the 18 months after the written agreement was allegedly signed in 2011, which would be about ten years before this litigation was filed. Given that the cross-complaint is fatally vague and obviously demurrable on statute of limitations grounds, it seems to be just another delaying tactic.

Defendants Nick J. Halekakis and Megan T. Lorick Halekakis’s motion for leave to file the proposed cross-complaint is denied.

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[1] The third affirmative defense is for Anticipatory Repudiation, which alleges: “These answering Defendants are informed and believe and on such information and belief allege that Plaintiff breached his contract, if any, with Defendants, and that by reason of said breach of contract, Defendants have been excused of their duties to perform all obligations set forth in said contract.”

[2] See October 1, 2021 Answer at 4-5. Defendants filed the answer as self-represented litigants.

[3] See Evidence Code § 412.

[4] If the direction to file a cross-complaint was made at the outset of the representation, it is likely that it would have been mentioned in the retainer agreement regarding the scope of services. Yet that agreement is not produced.

[5] It is true that by placing their communications with counsel in issue, Defendants have waived the attorney-client privilege, but not as broadly as Plaintiff’s counsel suggests. The privilege has been waived as to any communications or work-product that mention the cross-complaint. If such communications were truly made, they should have been produced in support of the motion.

[6]See the Court’s minute order of August 18, 2023.

Superior Court of California

County of Los Angeles

Department B