Judge: Joseph Lipner, Case: 24STCV04638, Date: 2024-10-08 Tentative Ruling

Case Number: 24STCV04638    Hearing Date: October 8, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendant Cavalry Holdings, LLC (“Cavalry”) moves for leave to file a cross-complaint against Plaintiff Dana Brunetti (“Plaintiff”).

The Court GRANTS the motion.  The Cross-Complaint filed by Cavalry without permission on August 23, 2024 shall be deemed properly filed. Plaintiff shall file a response within 20 days.

Background

This is an employment case.

On June 14, 2018, Cavalry hired Plaintiff to work as Cavalry’s Chief Content Officer pursuant to a written contract (the “Employment Agreement”). Plaintiff alleges that on September 1, 2022, Cavalry stopped paying Plaintiff as agreed under the Employment Agreement. Plaintiff alleges that Plaintiff left the company on January 31, 2023, having no choice after several months of not being paid.

Plaintiff filed this action on February 26, 2024, raising claims for (1) breach of written contract; (2) breach of implied covenant of good faith and fair dealing; (3) failure to pay wages; (4) waiting time penalties; (5) constructive wrongful termination in violation of public policy; and (6) unfair business practices.

On May 2, 2024, Cavalry filed an answer.

On August 23, 2024, Cavalry filed the Cross-Complaint, raising claims for (1) breach of written contract; (2) breach of implied contract; (3) goods and services rendered; and (4) negligent misrepresentation.

On August 29, 2024, Cavalry moved for leave to file a cross-complaint. Plaintiff filed an opposition. Cavalry did not file a reply.

Legal Standard

Where a defendant wishes to bring a cross-complaint against a plaintiff who already filed a complaint against said defendant, the defendant should file said cross-complaint before or at the same time as it files the answer to the complaint. (Code Civ. Proc., § 428.50 (a).) Otherwise, the defendant shall apply for leave to file a permissive cross-complaint, which the court may grant “in the interest of justice at any time during the course of the action.” (Code Civ. Proc., §§ 426.50, 428.50.)

Any cause of action which is related to a complaint that a plaintiff already filed and served against the defendant qualifies as a compulsory cross-complaint so long as it existed at the time the defendant/cross-complainant served its answer to the complaint. (Code Civ. Proc., §§ 426.30, 426.10.) Causes of action that qualify as compulsory cross-complaints are waived if not asserted. (Ibid.)

If such a cross-complaint is compulsory rather than permissive, the court must grant the motion for leave, unless it is determined that the defendant/cross-complainant seeking to file the compulsory cross-complaint is operating in bad faith. (Ibid.; see also Silver Orgs. v. Frank (1990) 217 Cal.App.3d 94, 98-99 [section 426.50 must be liberally construed to avoid forfeiture of causes of action].)

Discussion

Plaintiff argues that Cavalry’s motion should be stricken because Cavalry filed the Cross-Complaint before filing the motion. Plaintiff cites no authority indicating that the Court must strike the motion on this basis. Because Cavalry subsequently filed an otherwise procedurally proper motion for leave to file a cross-complaint, the Court will treat the filed Cross-Complaint as a proposed cross-complaint.

Cavalry alleges in the proposed Cross-Complaint that Plaintiff failed to perform the duties provided for under the Employment Agreement during Plaintiff’s employment. Because the claims in the Cross-Complaint existed at the time that Cavalry served its answer, they are compulsory, and the Court must grant leave to amend unless it finds that Cavalry is operating in bad faith.

“ ‘ “Bad faith” is defined as “[t]he 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; ... it contemplates a state of mind affirmatively operating with furtive design or ill will. [Citation.]” [Citations.]’ ” (Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 100, quoting Pugh v. See's Candies, Inc. (1988) 203 Cal.App.3d 743, 764.)

Courts hesitate to make a finding of bad faith where the sole basis is delay. In Silver Organizations Ltd. v. Frank, the Court of Appeal found that a mere delay of less than six months between the filing of the complaint and the hearing on the motion for leave to file a cross complaint did not suggest dishonest purpose, moral obliquity, sinister motive, furtive design, or ill will. (Ibid.)

Plaintiff argues that Cavalry’s motion is made in bad faith because it did not seek leave to file the Cross-Complaint until roughly six months after the filing of the Complaint. Plaintiff argues that the only reasonable inference from this delay is that Cavalry seeks leave to file the Cross-Complaint to pressure Plaintiff to settle this case for an amount that Plaintiff would not otherwise accept. The Court is not prepared to make such a finding solely on the basis of delay.

Plaintiff argues that the fact that Cavalry did not raise its claims until after Plaintiff filed the Complaint suggests that they may be retaliatory in nature. However, Code of Civil Procedure, sections 426.50 and 428.50 obviate such an inference. Compulsory cross-claims are waived if not asserted in an action where they could be raised. Thus, a party that may have otherwise waited longer to assert its claims, or not asserted them at all, may feel rushed to raise its claims by the threat of losing them entirely. Inferring bad faith from the assertion of a cross-claim alone would run counter to the purpose of the statutes enabling cross-complaints.

The Court does not find that Cavalry seeks to file a cross-complaint in bad faith.

The Court therefore grants the motion.