Judge: Jon R. Takasugi, Case: 22STCV33389, Date: 2024-03-21 Tentative Ruling

Case Number: 22STCV33389    Hearing Date: March 21, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Plaintiff’s motion for leave to amend to file an FAC is GRANTED.

            On 10/12/2022, Plaintiff Goldberger (Plaintiff) filed suit against Back to Baltimore, Inc., Alex Ginzburg, and Dongkwan “Tony” Lee, alleging: (1) breach of contract; (2) fraud and concealment; (3) conversion in violation of Penal Code section 496; and (4) money had and received.

            On 2/21/2024, Plaintiff moved for leave to amend to file a first amended complaint (FAC).

Discussion

            Plaintiff argues that good cause exists to grant leave to amend to allow new facts to be alleged.

            After review, the Court agrees.

            Plaintiff does not seek to add any new causes of action. Rather, Plaintiff seeks to add new allegations that Defendants knowingly concealed that it had an outstanding bank loan (Loan), and that per the terms of the parties’ Agreement, the Loan would have to be paid back before Plaintiff could be repaid. The existence of this Loan has a significant impact on Plaintiff’s claims, as Plaintiff now claims he was defrauded into entering the Agreement at issue in this action based on concealment.

            In opposition, Defendant contends that Plaintiff’s claim is without merit because:

Plaintiff has always been told that there was no “Revenue Waterfall” in this case as that term has been defined in the Amended And Restated Production Financing / Loan Agreement which is the agreement underlying this lawsuit. All Plaintiff had to do was to read the single page of the Agreement entitled “Revenue Waterfall” to understand that repayment of any loans made by any financial institution took precedence to any payment directly to Plaintiff.

            (Opp., 2:16-20.)

            However, while this speaks to Plaintiff’s knowledge of the repayment hierarchy, this does not speak to Plaintiff’s contention that Defendant concealed the fact that any such loan subject to this provision existed.

            Plaintiff submitted evidence that Defendants failed to disclose the Loan until January 2024 in three regards:

First, after avoiding service as mentioned above, Defendants filed Answers to Plaintiff's Complaint in January and February 2023. The Answers filed by Defendants, however, never mentioned any third-party loan.

Second, Plaintiff served Form Interrogatories upon Defendants on April 14, 2023, which Defendants responded to on May 29, 2023. This included Form Interrogatory No. 15.1 which required Defendants to "identify each denial of a material allegation and each special or affirmative defense...and for each state all facts on which you base the denial or special or affirmative defense. Even after Plaintiff demanded further response, Defendants’ amended responses still failed to mention any purported Bank Loan as part of its affirmative defenses. 

Third, Plaintiff served a document request along with a deposition notice served in May 2023 for B2B's PMK, and pursuant to an agreement of counsel, Defendants produced all of the documents supposedly responsive thereto (without objection) prior to the deposition, on July 31, 2023. As explained further:

Plaintiff was concerned that the documents produced were threadbare and sought to meet and confer with Defendant, through a letter of August 30, 2023. This included meeting and conferring about requests where any Bank Loan should have been responsive (e.g., a request for communications between the individual Defendants and third parties concerning the Film, or for documents relating to "the production of the Film, including all documents relating to the budget or expenses"). In response, on September 20, 2023, Defendants' counsel again took the position that "I am just as interested as you are in any documents that may contribute to the resolution of this case. However, what you have received represents all documents responsive to your client's document requests that are currently in the custody, control, or possession of my clients" and again failed to mention or even allude to the existence of the Bank Loan.

            (Motion, 5: 15-24.)

            After learning of the alleged Loan at the January 2024 deposition, and upon receiving a copy of the PMK’s deposition transcript on February 12, 2024, Plaintiff moved for leave to amend. Accordingly, the Court declines to find unreasonable delay.

            Moreover, Defendants argue that they will be prejudiced because their motion for summary judgment is built on the original Complaint. However, this ignores that Plaintiff’s evidence indicates that Defendants failed to disclose the existence of a Bank loan. As such, any prejudice would be the result of Defendants’ own conduct. Additionally, "if summary judgment is granted on the ground that the complaint is legally insufficient, but it appears from the materials submitted in opposition to the motion that the plaintiff could state a cause of action, the trial court should give the plaintiff an opportunity to amend. (Leek v. Cooper (2011) 194 Cal. App. 4th 399.) As such, not only would it greatly prejudice Plaintiff he would likely be entitled to a continuance to Defendants’ motion for summary judgment based on the recent discovery of these additional facts.

The policy favoring leave to amend is so strong that it is an abuse of discretion to deny an amendment unless the adverse party can show meaningful prejudice. (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761.) Here, the Court finds insufficient evidence of prejudice to Defendants to deny amendment.

Based on the foregoing, Plaintiff’s motion for leave to amend to file an FAC is granted. 

It is so ordered.

Dated:  March    , 2024

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar.  For more information, please contact the court clerk at (213) 633-0517.