Judge Kerry Bensinger, Case Number: 23STCV10150, Date: 2024-10-02 Tentative Ruling

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This is a fraud action. Reliant Life Shares, LLC (Reliant) is in the business of life settlement investments.[1] In 2016, Plaintiff Joseph Perry (Plaintiff or Perry) heard a Reliant radio advertisement about life settlement investments and contacted Reliant to learn more. Perry spoke with Reliant’s agent Stanley Thomas (Thomas) and soon after invested $120,000 into life settlement investments with Reliant. In 2019, despite being assured by Thomas that Perry would likely not have to pay out-of-pocket premiums,[2] Perry began having to pay premiums. The last communication Perry received Reliant was in July 2022. Thereafter, Perry became concerned about the legitimacy of his investment with Reliant.

On December 14, 2022, the California Department of Financial Protection and Innovation (DFPI) issued a Cease and Desist Order to Reliant and its agents because of false statements and material omissions regarding the performance, maturities, life expectancy projections, estimated payout periods, and premium calls of the RLS investments. Perry learned of the Cease and Desist Order in late 2022-early 2023. The misstatements and omissions cited by DFPI were identical to or similar to those made to Perry. To date, Perry has not been repaid most of his principal and has had to pay a substantial amount of premiums. Further, Perry has not received any interest, dividends, or return from most of his RLS investments.

On May 5, 2023, Plaintiff commenced this action against Reliant and Does 1-50 for (1) fraud-intentional misrepresentation, (2) negligent misrepresentation, (3) fraud-omissions, (4) breach of fiduciary duty, (5) professional negligence, and (6) recission.

On April 4, 2024, and June 7, 2024, Plaintiff filed amendments to the Complaint naming Scott Grady; PB Consulting, LLC; 18LS, LLC; PB Consulting #2, LLC; Sean Michaels; Laforce Holdings, LLC; and Bank of Utah as Does 1-7, respectively.

The court may, in its discretion and after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading, including adding or striking out the name of any party, or correcting a mistake in the name of a party, or a mistake in any other respect.¿ (Code Civ. Proc., § 473, subd. (a)(1).)¿ “Public policy dictates that leave to amend be liberally granted.”¿ (Centex Homes v. St. Paul Fire & Marine Ins. Co. (2015) 237 Cal.App.4th 23, 32.)¿ “Although courts are bound to apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial . . . this policy should be applied only ‘where no prejudice is shown to the adverse party.’¿ [Citation].¿ A different result is indicated ‘where inexcusable delay and probable prejudice to the opposing party’ is shown.¿ [Citation.]” ¿(Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 487.)¿¿

A motion to amend a pleading must include a copy of the proposed amendment or amended pleading which must be serially numbered to differentiate it from previous pleadings or amendments and must state what allegations in the previous pleading are proposed to be deleted or added, if any, and where, by page, paragraph, and line number, the allegations are located. (Cal. Rules of Court, Rule 3.1324(a).)¿ The motion shall also be accompanied by a declaration attesting to the effect of the amendment, why the amendment is necessary and proper, when the facts giving rise to the amended allegations were discovered, and why the request for amendment was not made earlier.¿ (Cal. Rules of Court, Rule 1.324(b).)¿¿

In ruling on a motion for leave to amend the complaint, the court does not consider the merits of the proposed amendment, because “the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings.”¿ (Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048.)¿ While the court may deny leave to amend where the proposed amendment is insufficient to state a valid cause of action or defense, such denial is most appropriate where the insufficiency cannot be cured by further amendment—i.e., where the statute of limitations has expired or the insufficiency is established by controlling caselaw. (California casualty Gen. Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 280-281, disapproved on other grounds in Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390.)¿¿

Plaintiff seeks leave to file the proposed first amended complaint for the following reasons: (1) to add factual allegations pertaining to the seven recently added DOE defendants; (2) to specify which causes of action are asserted against each of the defendants; and (3) to specify the alleged misconduct of the seven recently added DOE defendants. (Steuer Decl., ¶ 2.) The proposed first amended complaint also adds factual allegations about events which occurred or were first discovered after the complaint was filed, and allegations of false representations, material omissions and breaches of duty that were first discovered after the complaint was filed. (Id.)

The motion complies with the requirements of California Rules of Court, rule 3.1342(a). Further, because the motion is unopposed, the court finds no prejudice will result if leave is granted to file the amended complaint.

The unopposed Motion for Leave to file the First Amended Complaint is GRANTED. The First Amended Complaint is deemed filed and served on this date. Plaintiff is directed to separately file the First Amended Complaint within five court days of this order.

Kerry Bensinger

Judge of the Superior Court

[1] As alleged in the Complaint, “Life settlement investments are contracts whereby an insured sells the benefits of his or her life insurance policy(s) to a third party purchaser/investor at a discount, in exchange for immediate cash. The third party investor becomes the beneficiary of the policy(s) and is thereby entitled to a death benefit equal to the face value of the policy upon the insured’s demise, if the policy is valid and kept in force. The third party investor, which was Reliant in this case, then sells fractional interests in the benefits of the policies to retail investors.” (Complaint, ¶ 5.)

[2] As alleged in the Complaint, premiums might have to be paid if the insured out-lived their projected life expectancies. (Complaint, ¶ 7.)