Judge: Joseph Lipner, Case: 23STCV05285, Date: 2023-08-22 Tentative Ruling

Case Number: 23STCV05285    Hearing Date: April 16, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendants and Cross-Complainants Prestige Global Solutions, LLC (“Prestige”) and Sabrina Rindels (collectively, “Defendants”) move for leave file a permissive cross-complaint against Cross-Defendants Brad Hakala and The Hakala Law Group (“Hakala Law”) (collectively, “Cross-Defendants”).

The Court GRANTS Defendants’ motion.

Background

This case relates to a failed transaction for the purchase of CBD isolate. Plaintiffs The Englander Group, f/k/a Tower Marketing and Investments, LLC (“Englander Group”) and Harvey Englander allege that Defendants entered into a contract with Plaintiffs to deliver CBD isolate purchased form a third-party supplier, but failed to deliver the products to Plaintiffs. Plaintiffs also allege that Defendants made certain misrepresentations surrounding the transaction.

Defendants allege in the proposed cross-complaint that Rindels entered into a partnership with Brad Hakala, her attorney, in 2017. The purpose of the alleged partnership was to procure and sell marijuana and CBD isolate. Defendants allege that Hakala and Rindels agreed to form a corporate entity, and that Hakala facilitated the initial filing with the California Secretary of State in 2018, listing himself as the service agent and point of contact for that entity. Defendants allege that Rindels was not listed on the form in any way.

Defendants allege that Hakala and Rindels entered into an agreement with Englander for the sale of $1.6 million in CBD isolate, but that Hakala and Rindels’ supplier never delivered the CBD isolate to them after being sent the funds to pay for it.

            Defendants allege that, after the transaction failed, Hakala took actions to insulate himself and his law firm from potential liabilities. Defendants allege that Hakala prepared a statement of information for the California Secretary of State which he had Rindels sign, identifying Rindels as the Managing Member of Prestige. Defendants allege that this alteration was executed without Rindels’ full knowledge and consent, shifting the appearance of managerial responsibility solely to her. Defendants also allege that, in support of an ex parte application against the third-party supplier, Hakala drafted an affidavit which he directed Rindels to sign which positioned her as the primary actor in the transactions. Defendants allege that Hakala never disclosed his interest in the transactions to Plaintiffs.

Plaintiff filed this action on March 9, 2023. The operative complaint is now the First Amended Complaint (“FAC”), which raises claims for (1) breach of contract; (2) fraud by intentional misrepresentation; and (3) negligent misrepresentation.

On August 22, 2023, the Court set trial for this matter on July 22, 2024.

Defendants filed a Cross-Complaint against Hakala and Hakala Law on March 13, 2024, raising claims for (1) fraud by intentional misrepresentation; (2) fraud by concealment; (3) breach of contract; and (4) breach of fiduciary duty by attorney. Defendants mistakenly filed the Cross-Complaint without seeking leave of the Court because they did not realize that it was necessary to do so.

Defendants filed this motion for leave to file a cross-complaint on March 21, 2024. No party filed an opposition.

Legal Standard

“A party against whom a cause of action has been asserted in a complaint or cross-complaint may file a cross-complaint setting forth either or both of the following:

(a) Any cause of action he has against any of the parties who filed the complaint or cross-complaint against him. Nothing in this subdivision authorizes the filing of a cross-complaint against the plaintiff in an action commenced under Title 7 (commencing with Section 1230.010) of Part 3.

(b) Any cause of action he has against a person alleged to be liable thereon, whether or not such person is already a party to the action, if the cause of action asserted in his cross-complaint (1) arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause brought against him or (2) asserts a claim, right, or interest in the property or controversy which is the subject of the cause brought against him.”

(Code Civ. Proc., § 428.10.)

            “When a person files a cross-complaint as authorized by Section 428.10, he may join any person as a cross-complainant or cross-defendant, whether or not such person is already a party to the action, if, had the cross-complaint been filed as an independent action, the joinder of that party would have been permitted by the statutes governing joinder of parties.”

(Code Civ. Proc., § 428.20.)

“All persons may be joined in one action as defendants if there is asserted against them:

            (1) Any right to relief jointly, severally, or in the alternative, in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences and if any question of law or fact common to all these persons will arise in the action; or

              (2) A claim, right, or interest adverse to them in the property or controversy which is the subject of the action.”

(Code Civ. Proc., § 379, subd. (a).)

            “(a) A party shall file a cross-complaint against any of the parties who filed the complaint or cross-complaint against him or her before or at the same time as the answer to the complaint or cross-complaint.

(b) Any other cross-complaint may be filed at any time before the court has set a date for trial.

(c) A party shall obtain leave of court to file any cross-complaint except one filed within the time specified in subdivision (a) or (b). Leave may be granted in the interest of justice at any time during the course of the action.”

(Code Civ. Proc., § 428.50.)

Discussion

Because trial has already been set, Defendants must seek leave to file the cross-complaint against a new party.

Here, the allegations of the Cross-Complaint arise out of the same series of transactions as the Complaint. Defendants allege that Hakala was Rindels’ partner in the underlying transactions, but set Rindels up to take the fall when the transactions fell through. Further, joinder of Cross-Defendants is permissible because the Cross-Complaint alleges that Hakala should be partially liable to Plaintiffs on Plaintiffs’ claims.

The Court grants the motion for leave to file a cross-complaint.