Judge: Lisa R. Jaskol, Case: 23STCV16544, Date: 2025-05-27 Tentative Ruling

Case Number: 23STCV16544    Hearing Date: May 27, 2025    Dept: 28

Having considered the moving, opposition, and reply papers, the Court rules as follows. 

BACKGROUND 

On July 14, 2023, Plaintiffs San Louis Textile, Inc. and 3121 Payou LLC filed this action against Defendants Ritz Systems, Inc. (“Ritz”), Sanad IO Mustafa (“Mustafa”), Blackbird Distribution, LLC (“Blackbird”), Kapil Kumar (“Kumar”), and Does 1-100 for negligence, gross negligence, negligence per se, trespass, private nuisance, violation of Health and Safety Code section 13007, and breach of lease agreement. 

On August 28, 2023, Blackbird and Kumar filed answers. 

On December 6, 2024, Plaintiffs filed a notice of settlement stating that Plaintiffs had conditionally settled their claims against Blackbird and Kumar. 

On December 16, 2024, the Court found that case numbers 23STCV16544, 24STCV12281, and 24STCV14446, are related within the meaning of California Rules of Court, rule 3.300(a).  Case number 23STCV16544 became the lead case.  The cases were assigned to Department 28 of the Spring Street Courthouse for all purposes. 

On January 9, 2025, Ritz and Mustafa filed an answer. 

On February 20, 2025, Ritz and Mustafa (“Defendants”) filed a motion for leave to file a cross-complaint.  The motion was set for hearing on April 25, 2025.  The Court continued the hearing to May 27, 2025.  On April 30, 2025, Defendants filed a notice of errata.  On May 13, 2025, Plaintiffs filed an opposition.  On May 19, 2025, Defendants filed a reply. 

No trial date is currently scheduled. 

PARTIES’ REQUESTS 

Defendants ask the Court for leave to file a cross-complaint. 

Plaintiffs ask the Court to deny the motion. 

LEGAL STANDARD 

Code of Civil Procedure section 426.50 provides:           

“A party who fails to plead a cause of action subject to the requirements of this article, whether through oversight, inadvertence, mistake, neglect, or other cause, may apply to the court for leave to amend his pleading, or to file a cross-complaint, to assert such cause at any time during the course of the action. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend the pleading, or to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith. This subdivision shall be liberally construed to avoid forfeiture of causes of action.” 

(Code Civ. Proc., § 426.50.) 

Code of Civil Procedure section 428.10 provides: 

“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.) 

Code of Civil Procedure section 428.50 provides: 

“(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.) 

“A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.”  (Silver Org. Ltd. v. Frank (1990) 217 Cal.App.3d 94, 99.)  “Cross-complaints for comparative equitable indemnity would appear virtually always transactionally related to the main action.”  (Time for Living, Inc. v. Guy Hatfield Homes/All American Development Co. (1991) 230 Cal.App.3d 30, 38.) 

DISCUSSION 

Defendants ask for leave to file a cross-complaint against (1) Plaintiffs, (2) Payam Yousefian and Faraz Yousefian, Plaintiffs’ owners, officers, and managers, (3) Blackbird, (4) Kumar, and (5) third parties Brayan Abayan and D/AQ Corporation.  According to Defendants, their claims against the cross-defendants arise from the same transactions or series of transactions addressed in Plaintiffs' complaint.  In particular, Defendants assert that “[t]he same fire alleged in the Complaint caused over $16 million in business losses to [Defendants].  Plaintiffs’ conduct caused the fire and [Defendants] were induced into the subject property sustaining damages by Plaintiffs’ fraud.”  (Motion p. 1.) 

In opposition, Plaintiffs contend the motion is untimely, Defendants are not acting in good faith, the proposed cross-complaint asserts claims for fraud and breach of contract that are unrelated to the cause of the fire, and Plaintiffs would be prejudiced by the filing of a cross-complaint. 

The Court has reviewed the parties’ filings and the proposed cross-complaint.  Plaintiffs have not shown that Defendants acted in bad faith in seeking to file their cross-complaint or shown that Plaintiffs will suffer prejudice.  In addition, the claims asserted in Defendants’ cross-complaint – including the claims against the third-party cross-defendants – are sufficiently related to the claims alleged in Plaintiffs’ complaint.  (See L. Edmon & C. Karnow, Cal. Practice Guide: Civil Procedure Before Trial (Rutter 2024) ¶ 6:525, p. 6-165 ["it is sufficient that the claims refer to the same property or controversy--even if not arising at the same time or out of the same series of events"].) 

The Court grants the motion. 

CONCLUSION 

The Court GRANTS the motion for leave to file a cross-complaint filed by Defendants Ritz Systems, Inc. and Sanad IO Mustafa.  The Court orders Defendants Ritz Systems, Inc. and Sanad IO Mustafa to file and serve their cross-complaint within 10 days. 

Moving parties are ordered to give notice of this ruling. 

Moving parties are ordered to file the proof of service of this ruling with the Court within five days.