Judge: Malcolm Mackey, Case: 21STCV25426, Date: 2023-01-19 Tentative Ruling

Case Number: 21STCV25426    Hearing Date: January 19, 2023    Dept: 55

GIA REDEVELOPMENT, LLC v. QUANTA FINANCE, LLC            21STCV25426

Hearing Date:  1/19/23,  Dept. 55

#9:   MOTION FOR LEAVE TO FILE CROSS-COMPLAINT.

Notice:  Okay

Opposition

MP:  Defendant REBECCA DARNELL.

RP:  Plaintiff

Summary

On 7/12/21, Plaintiff GIA REDEVELOPMENT, LLC filed a Complaint, alleging that defendants, QUANTA FINANCE, LLC, and 1SHARPE OPPORTUNITY INTERMEDIATE TRUST, as holder, and assignee, of a construction-related deed of trust, on 5055 Mount Helena Ave, Los Angeles, wrongfully foreclosed, during when Plaintiff genuinely disputed a grossly inflated pay-off amount, thereby interfering with Plaintiff’s attempted sale of its property, to co-Defendant REBECCA DARNELL, who has taken possession of the property without paying rent.

The causes of action are:

1)      QUIET TITLE TO REAL PROPERTY

2)      WRONGFUL FORECLOSURE - VIOLATION OF CIVIL CODE SECTION 2924

3)      ACCOUNTING

4)      CONSPIRACY

5)      VIOLATION OF BUSINESS AND PROFESSIONAL CODE SECTIONS 17200, ET SEQ.

6)      INTENTIONAL INTERFERENCE OF PROSPECTIVE ECONOMIC ADVANTAGE.

7)      UNJUST ENRICHMENT.

MP Positions

Moving party requests an order allowing leave to file a proposed Cross-Complaint, on grounds including the following:

·         The proposed cross-complaint arises out of the same transaction or occurrence as does the complaint and is a related cause of action. Code of Civil Procedure § 426.50. as

·         The Cross-Complaint was not pleaded earlier because at the time of filing the Answer, it was not predictable that moving party’s damages would increase as the result of monetary inflation and increased home values.

·         Mrs. Darnell had locked in a mortgage rate of 2.875% to buy the property at the time the lawsuit had been filed. Now, mortgage rates are significantly higher at around 5.875%, and continue to go higher as the Federal Government raises interest rates to fight inflation.  Additionally, property values increased, meaning that should Mrs. Darnell be unable to purchase the property at the contracted price of $1,500,000, she would not likely find a similar home at that price.

RP Positions

Opposing party advocates overruling, for reasons including the following:

·         Plaintiff would be prejudiced if leave were to be granted, as trial is set for 4/10/23.

·         The motion is a tactic to avoid paying Plaintiff, despite having taken possession of subject property for over 13 months without consideration.

·         The Cross-Complaint could have been filed with the Answer.  The rise in interest rates and real property values were not an unpredictably overnight event, but had taken place incrementally since the filing of the Complaint.

Tentative Ruling

The motion is granted.

The proposed Cross-Complaint may be served and filed as a separate document within 10 days.

Trial set for 4/10/23 is continued to December 4, 2023 at 9:00 a.m., to allow time to prepare a defense to the Cross-Complaint.

Final Status Conference is continued to November 21, 2023 at 8:30 a.m.

The Court finds that it was not bad faith to delay filing the Cross-Complaint until such time that fluctuating market conditions had increased the alleged sum of monetary damages to the point that a counter-suit was subjectively worthwhile to moving party.

Leave to file compulsory cross-complaints must be granted where moving parties acted in good faith.  CCP §426.50; Silver Organizations, Ltd. v. Frank (1990) 217 Cal.App.3d 94, 98-99.  In reviewing a denial of leave to file a compulsory cross-complaint, appellate courts review the entire record for any substantial evidence of bad faith, defined as, “dishonest purpose, moral obliquity, sinister motive, furtive design or ill will.”  Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 100.