Judge: Lee W. Tsao, Case: 23NWCV02918, Date: 2024-10-02 Tentative Ruling

Case Number: 23NWCV02918    Hearing Date: October 2, 2024    Dept: C

GARCIA V. SANTA FEE INN, ET AL.

CASE NO.:  23NWCV02918

HEARING:  10/2/2024

#10

TENTATIVE ORDER

The hearing on Plaintiffs Griselda Aguilar Garcia and Juan C. Aguilar’s Motion for Leave to File Second Amended Complaint is CONTINUED October 31, 2024 at 9:30 a.m. in Dept. SE-C. 

Moving party(s) to give notice.

Background

On September 13, 2023, Plaintiff Griselda Aguilar Garcia (“Plaintiff” or “Garcia”) filed an action against Defendants Santa Fe Inn (“Inn”), 6340 Santa Fe, LLC (“6340 Santa Fe”), and Jayesh Patel (“Patel”) arising out of the alleged uninhabitable conditions and insect infestation of a hotel complex owned, managed, operated, and maintained by Defendants.

On January 12, 2024, Plaintiffs Garcia and Juan C. Aguilar (“Aguilar”) filed a First Amended Complaint (“FAC”), the operative pleading in this action, against the Defendants for (1) negligence – premises liability/failure to maintain, failure to warn, (2) negligence per se, (3) negligent infliction of emotional distress, and (4) loss of consortium.

On January 22, 2024, Sai-Pride, LLC dba Santa Fe Inn (erroneously sued as Santa Fe Inn) (“Sai-Pride”) filed an Answer to the FAC.

On February 14, 2024, default was entered against Defendants 6340 Santa Fe and Patel.

On March 18, 2024, pursuant to the stipulation of the parties, the Court made the following orders.  The Court set aside the defaults entered against Defendants 6340 Santa Fe and Patel.  The Court also ordered the Answer, filed on January 22, 2024, by Defendant Sai Pride, stricken.  All three Defendants were ordered to file an answer within ten days of the Court’s order.

On March 19, 2024, Defendants Sai Pride, 6340 Santa Fe, and Patel filed an Answer to the FAC.

On June 20, 2024, Plaintiffs filed the instant Motion for Leave to File Second Amended Complaint (“Motion”).  On July 3, 2024, the Court granted Plaintiffs’ Ex Parte Application for an Order Shortening Time for the Hearing on Plaintiffs’ Motion and advanced the March 19, 2025, hearing date to October 2, 2024.  On September 18, 2024, Defendants filed an Opposition to the Motion and on September 23, 2024, Plaintiffs filed a Reply.

Legal Standard

Leave to amend is permitted under Code of Civil Procedure sections 473, subdivision (a), and 576.  The policy favoring amendment and resolving all matters in the same dispute is “so strong that it is a rare case in which denial of leave to amend can be justified.  [Citation.]”  (Howard v. County of San Diego (2010) 184 Cal.App.4th 1422.)  Notwithstanding the “policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial [citations], 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 (1996) 48 Cal.App.4th 471, 487.)

A motion for leave to amend a pleading must also comply with the procedural requirements of California Rules of Court, Rule 3.1324, which requires a supporting declaration to set forth explicitly what allegations are to be added and where, and explicitly stating what new evidence was discovered warranting the amendment and why the amendment was not made earlier.  The motion must also include (1) a copy of the proposed and numbered amendment, (2) specifications by reference to pages and lines the allegations that would be deleted and added, and (3) a declaration specifying the effect, necessity and propriety of the amendments, date of discovery and reasons for delay.  (See Cal. Rules of Court, Rule 3.1324, subds. (a), (b).)

Analysis

Plaintiffs move for leave to file a Second Amended Complaint (“SAC”) in the instant action.  A copy of the proposed SAC is attached to the declaration of counsel Levik Yarian.  (Yarian Decl. ¶ 23, Ex. 1.)

Counsel Yarian filed a declaration in support of the Motion on June 20, 2024, and, what appears to be, an amended declaration on July 2, 2024.  The Court considers the declaration filed on July 2, 2024.

Plaintiffs’ counsel indicates that he met and conferred with defense counsel prior to filing the instant Motion; however, no resolution was reached, and Defendants were unwilling to stipulate to the filing of a second amended complaint.  (Yarian Decl. ¶¶ 3-5.)

According to Plaintiffs, the discovery process has revealed new information that necessitates the filing of the SAC.  Discovery efforts have revealed that Defendant 6340 Sant Fe is a “shell” entity and “is involved in a ‘sham’ business relationship with SAI-PRIDE LLC (“SAI LLC”) disguised as a lease agreement.”  (Yarian Decl. ¶ 21A.)  Members of 6340 Santa Fe have not treated the LLC as an independent entity and there is evidence to establish piercing of the corporate veil.  (Id. at ¶ 21B.)  Moreover, the relationship between Sai-Pride and 6340 Santa Fe is not a true landlord-tenant relationship, as revealed by the evidence gathered, but rather a business relationship in which the “alleged landlord has maintained and continues to maintain control over issues relevant to the allegations and defenses of this case.”  (Id. at ¶ 21C.)  This new evidence will also allow Plaintiffs to seek punitive damages.  (Id. at ¶¶ 21D-21E.)

Plaintiffs also argue that filing the SAC is necessary for the purpose of judicial economy because it would allow the existing dispute to be fully litigated without the need to add additional defendants, file motions for punitive damages, or initiate other related actions.  (Yarian Decl. ¶¶ 24, 28.)  Trial is currently set for April 30, 2025, and will not need to be continued, and the filing of the SAC would not cause Defendants to suffer any prejudice.  (Id. at ¶¶ 27, 29, 32-33.)  Defense counsel will most likely represent the two additional defendants, Mahendra Somabhai Ahir and Pallavi Ahir, who are members of Defendant Sai-Pride.  (Id. at ¶ 31.)

In opposition, Defendants argue that Plaintiffs have failed to comply with the California Rules of Court and have filed a procedurally defective Motion.  First, the SAC does not delineate what allegations are to be deleted and what allegations are to be added in a clear manner, “leaving Defendants to attempt to decipher the proposed SAC themselves.”  (Oppos. p. 3.)  As a result, Defendants find the allegations in the Motion and the SAC confusing and contradictory, particularly in regard to alter ego liability.  Second, the Notice of the Motion does not comply with California Rules of Court, rule 3.1110, subdivision (a), as it does not present the relief requested and the grounds for requesting such relief.

Defendants also argue that they and the newly added defendants would be prejudiced by the filing of the SAC as discovery would have to restart six months before trial to address the new allegations regarding alter ego liability, breach of contract, and punitive damages.  Since these allegations, claims, and the new defendants were not part of the FAC, if the Motion is granted, additional extensive discovery would be required, the SAC would be subject to demurrer and/or motion to strike, and a continuance would have to be sought as the parties would not be ready for trial.  Thus, the parties would have to expend additional costs to litigate the case.

In their Reply, Plaintiffs argue that the changes sought in the SAC are so substantial “that a detailed chart of the changes would be an exercise in futility.”  (Reply p. 2.)  The parties met and conferred regarding the SAC; thus, Defendants are aware of the changes to be made, including the new claims, addition of punitive damages, and inclusion of two new defendants.  These changes “render a line-by-line analysis unnecessary and at best ceremonial.”  (Ibid.)  In case the Motion is denied on this procedural basis, Plaintiffs request a 30-day continuance to present the differences between the FAC and SAC.

Plaintiffs also contest the need to continue the trial date after the filing of the SAC.  Defense counsel represents all the defendants and witnesses and has represented the person most knowledgeable of these entities during depositions.  Discovery is nearly completed as both Plaintiffs have been deposed and all named Defendants have been deposed.  Defendants have been on notice regarding the alter ego liability claims and have been questioned about the formalities of the LLCs and their operational practices.  As stated in the Motion, discovery has revealed additional evidence to establish piercing of the corporate veil.  Defendants have also been on notice regarding the breach of contract claim as it arises from the motel stay agreement between Plaintiffs and Defendants.  Finally, the claim for punitive damages was included in the original complaint but was removed from the FAC.  Additional discovery has revealed that a claim for punitive damages is indeed justified.

As noted by Defendants, Plaintiffs’ Motion does not clearly specify the allegations to be added or removed and, thus, does not comply with California Rules of Court, rule 3.1324, subdivision (a).  Although Plaintiffs argue that the substantial changes do not warrant a detailed delineation of these changes, they do not present any authority that waives the requirements of Rule 3.1324 when substantial changes are proposed in an amended complaint.

For this reason, the Court continues the hearing on the Motion and provides Plaintiffs an opportunity to file additional papers clearly specifying the allegations to be added and removed, in compliance with Rules of Court, rule 3.1324, subdivision (a).

The hearing on Plaintiffs Griselda Aguilar Garcia and Juan C. Aguilar’s Motion for Leave to File a Second Amended Complaint is CONTINUED TO October 31, 2024 at 9:30 a.m. in Department SE-C.  At least 9 court days before the next scheduled hearing, Plaintiffs must file and serve supplemental papers addressing the errors discussed herein.  Failure to do so may result in the Motion being placed off calendar or denied.  Defendant may file a supplemental opposition by at least 5 court days before the next scheduled hearing.