Judge: Katherine Chilton, Case: 21STLC06169, Date: 2022-08-23 Tentative Ruling

Case Number: 21STLC06169     Hearing Date: August 23, 2022    Dept: 25

PROCEEDINGS:      MOTION TO RECLASSIFY TO UNLIMITED CIVIL CASE

MOVING PARTY:   Defendants/Cross-Complainants Armen and Flora Vartanian

RESP. PARTY:         None

MOTION TO RECLASSIFY

(CCP § 403.040)

TENTATIVE RULING:

Defendants/Cross-Complainants Vartanians’ Motion to Reclassify (incorrectly named Motion to Transfer) is CONTINUED to SEPTEMBER 26, 2022 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE.  Defendants/Cross-Complainants Vartanians are ordered to serve supplemental papers addressing the issues discussed herein on the opposing party at least 16 court days before the next scheduled hearing and file it with the Court at least 5 court days before the next scheduled hearing.  Failure to do so may result in the Motion being placed off calendar or denied.

SERVICE: 

[ X ] Proof of Service Timely Filed (CRC, rule 3.1300)                 OK

[ X ] Correct Address (CCP §§ 1013, 1013a)                                     OK

[ X ] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b))                     OK

OPPOSITION:          Non-Opposition filed on June 24, 2022  [   ] Late                      [   ] None

REPLY:                     None filed as of August 19, 2022.               [   ] Late                      [X] None

ANALYSIS:

I.                Background

On August 23, 2021, Plaintiff Picture Build (“Plaintiff”) filed a complaint against Defendants Armen and Flora Vartanian (collectively, the “Vartanians”) and Rate Rabbit, Inc. (“Rate Rabbit”), (collectively “Defendants”), asserting claims for: (1) Breach of Contract; (2) Account Stated; (3) Quantum Meruit; and (4) Foreclosure of Mechanic’s Lien.  This case is based on a written agreement (the “Agreement”) between Picture Build, on the one hand, and the Vartanians, on the other hand.  Pursuant to the Agreement, the Vartanians contracted Picture Build to perform hardscape and landscape home improvement work at their residence (the "Project").  The Complaint alleges that subsequent to entering into the Agreement, several change orders, including reductions in the scope of work, were agreed to by Picture Build and the Vartanians.  Picture Build alleges that it incurred additional costs for which it submitted claims to the Vartanians.  However, the Vartanians allegedly failed to compensate Picture Build for its costs and/or services.  (Compl. ¶¶ 7-10, 14.)

On January 31, 2022, the Vartanians filed an Answer and a Cross-Complaint against Cross-Defendants Picture Build, Brian Michael Godley (“Godley”), and Hudson Insurance Company (“Hudson”), (collectively “Cross-Complainants”), asserting claims for: (1) Breach of Contract; (2) Negligence; (3) Violation of Bus. and Prof. Code, § 7160; (4) Recovery Against Contractor’s License Bond; and (5) Unlicensed Practice and Disgorgement.

            On April 19, 2022, Cross-Defendant Godley’s Demurrer to the Cross-Complaint was sustained with 20 days leave to amend.  (4-19-22 Minute Order.)  The Vartanians filed an Amended Cross-Complaint on May 4, 2022, but Godley filed a Demurrer to the Amended Cross-Complaint, which was sustained without leave to amend.  (7-7-22 Minute Order.)

On June 3, 2022, after filing the Amended Cross-Complaint, the Vartanians filed the instant Motion to Reclassify (incorrectly named “Motion to Transfer Action”) (“Motion”).  On June 24, 2022, Cross-Defendants Picture Build and Godley filed a Notice of Non-Opposition to the Motion.  No reply was filed.

II.              Legal Standard

Code of Civil Procedure § 403.040 allows a plaintiff to file a motion for reclassification of an action within the time allowed for that party to amend the initial pleading.  (Code Civ. Proc., § 403.040(a).)  “A party may amend its pleading once without leave of court at any time before an answer, demurrer, or motion to strike is filed, or after a demurrer or motion to strike is filed if the amended pleading is filed and served no later than the date for filing an opposition to the demurrer to motion to strike.  (Code Civ. Proc., § 472(a).)  If the motion is made after the time for the plaintiff to amend the pleading, the motion may only be granted if (1) the case is incorrectly classified; and (2) the plaintiff shows good cause for not seeking reclassification earlier.  (Code Civ. Proc. § 403.040(b).)

In Walker v. Superior Court (1991) 53 Cal.3d 257, 262, the California Supreme Court held that a matter may be reclassified from unlimited to limited only if it appears to a legal certainty that the plaintiff’s damages will necessarily be less than $25,000.  (Walker v. Superior Court (1991) 53 Cal.3d 257.)  If there is a possibility that the damages will exceed $25,000.00, the case cannot be transferred to limited.  (Ibid.)  This high standard is appropriate in light of “the circumscribed procedures and recovery available in the limited civil courts.”  (Ytuarte v. Superior Court (2005) 129 Cal.App.4th 266, 278.)

In Ytuarte, the Court of Appeal examined the principles it set forth in Walker and held that “the court should reject the plaintiff’s effort to reclassify the action as unlimited only when the lack of jurisdiction as an ‘unlimited’ case is certain and clear.”  (Ytuarte, supra, 129 Cal.App.4th at 279 (emphasis added).)  Nevertheless, the plaintiff must present evidence to demonstrate a possibility that the damages will exceed $25,000.00 and the trial court must review the record to determine “whether a judgment in excess of $25,000.00 is obtainable.”  (Ibid.)

III.            Discussion

Defendants/Cross-Complainants Vartanians seek to reclassify this action as an unlimited civil action on grounds that their First Amended Cross-Complaint (“FAC”) seeks damages “in excess of $150,000” because they will have to hire a new contractor and subcontractors to complete the project.  (FAC ¶¶ 13, 19.)

The initial Cross-Complaint, seeking damages in excess of $150,000, was filed on January 31, 2022, and Cross-Defendants have filed answers and demurrers subsequent to filing of the Cross-Complaint.  Thus, the Vartanians must show good cause for not seeking reclassification earlier.  Nothing in the Motion or attached counsel’s declaration explains why the Vartanians did not seek reclassification earlier.

Furthermore, other than referring to the FAC’s general statement seeking damages in excess of $150,000, there are no estimates or proof in the form of declaration or exhibits to demonstrate that a judgment above $25,000 is obtainable.

            Defendants/Cross-Complainants have not their burden of showing good cause for reclassification or that a judgment above $25,000 is obtainable.  Given that Cross-Defendants Picture Build and Godley have filed a Notice of Non-Opposition to the Motion to Reclassify, the Court continues the hearing to allow Defendants/Cross-Complainants an opportunity to file supplemental papers showing good cause and supporting a request for damages above $25,000.

IV.           Conclusion & Order

For the foregoing reasons, Defendants/Cross-Complainants Vartanians’ Motion to Reclassify (incorrectly named Motion to Transfer) is CONTINUED to SEPTEMBER 26, 2022 at 10:00 a.m. in Department 25 at the SPRING STREET COURTHOUSE.  Defendants/Cross-Complainants Vartanians are ordered to serve supplemental papers addressing the issues discussed herein on the opposing party at least 16 court days before the next scheduled hearing and file it with the Court at least 5 court days before the next scheduled hearing.  Failure to do so may result in the Motion being placed off calendar or denied.

Moving party is ordered to give notice.