Judge: Mark A. Young, Case: 20SMCV00819, Date: 2023-03-28 Tentative Ruling
Case Number: 20SMCV00819 Hearing Date: March 28, 2023 Dept: M
CASE NAME: Yang v. Venice
Business Partners Inc., et al.
CASE NO.: 20SMCV00819
MOTION: Motion
for Leave to Amend
HEARING DATE: 3/28/2023
Legal
Standard
If a party
wishes to amend a pleading after an answer has been filed, or after a demurrer
has been filed and after the hearing on the demurrer, or if he or she has
already amended the pleading as a matter of course, the party must obtain permission
from the court before amendment. (CCP §§ 473(a)(1), 576.)
Motions
for leave to amend the pleadings are directed to the sound discretion of the
court. “The court may, in furtherance of justice, and on any terms as may be
proper, allow a party to amend any pleading . . ..” (CCP § 473(a)(1); see CCP §
576.) Policy favors liberally granting leave to amend so that all disputed
matters between the parties may be resolved. (See Howard v. County of San Diego (2010) 184 Cal.App.4th 1422,
1428.) Absent prejudice to the adverse party, the court may permit amendments
to the complaint “at any stage of the proceedings, up to and including trial.”
(Atkinson v. Elk Corp.
(2003) 109 Cal.App.4th 739, 761 [internal quotes omitted].) Where leave is
sought to add entirely new claims, the court may grant leave to amend if the
new claims are based on the same general set of facts, and the amendment will
not prejudice the opposing party. (Austin
v. Massachusetts Bonding & Ins. Co. (1961) 56 Cal.2d 596, 600-602; Glaser v. Meyers (1982) 137 Cal.App.3d 770, 777 [holding
trial court did not abuse its discretion in permitting amendment of complaint,
which originally alleged constructive eviction, to allege retaliatory eviction
where the new claim was based on the same general set of facts].)
Although
denial is rarely justified, a judge has discretion to deny leave to amend if
the party seeking the amendment has been dilatory, and the delay has prejudiced
the opposing party. (Morgan v. Superior
Court (1959) 172 Cal.App.2d 527, 530; Hirsa v. Superior Court
(1981) 118 Cal.App.3d 486, 490). An opposing party is prejudiced where the
amendment would necessitate a trial delay along with a loss of critical
evidence, added preparation expense, increased burden of discovery, etc. (Magpali
v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488 [leave properly
denied where plaintiff sought leave on the eve of trial, nearly two years after
the complaint was originally filed and gave no explanation for the delay which
prejudiced defendant who did not discover or depose many of the witnesses who would
support the new allegations and had not marshaled evidence in opposition of the
new allegations].)
Procedurally,
a motion for leave to amend must state with particularity what allegations are
to be amended. Namely, it must state what allegations in the previous pleading
are proposed to be deleted and/or added, if any, and where, by page, paragraph,
and line number. (CRC, Rule 3.1324(a)(2)-(3).) The motion must be accompanied
by a declaration specifying: (1) the effect of the amendment; (2) why the amendment
is necessary and proper; (3) when the facts giving rise to the amended
allegations were discovered; and (4) the reasons why the request for amendment
was not made earlier. (CRC, Rule 3.1324(b).) The motion must also be
accompanied by the proposed amended pleading, numbered to differentiate it from
the prior pleadings or amendments. (CRC, Rule 3.1324(a)(1).) It is within the
court’s discretion to require compliance with Rule 3.1324 before granting leave
to amend. (Hataishi v. First American Home Buyers Protection Corp. (2014)
223 Cal.App.4th 1454, 1469.)
Analysis
Plaintiff moves for leave to amend
and file a proposed First Amended Complaint (FAC). Plaintiff’s motion generally meets the
procedural requirements. Plaintiff provides the proposed pleading, as well as a
redlined version of the original complaint, which identifies every change. (Garber
Decl., Ex. B.) Plaintiff provides that the proposed FAC will expand upon the
initial allegations and assert further theories of liability that were absent
from the original complaint. For instance, there are additional allegations as
to alter ego liability between Michael Levine, Venice Business Partners, Inc.,
VBP Motorsports, LLC, d.b.a. VBP Motorsports I, LLC, and VBP Motorsports II,
LLC; an additional cause of action against Michael Levine concerning specific
intentional misrepresentations and deceitful omissions; and the proposed
Declaratory Relief cause of action as to the Mercedes G650 Landaulet.
That said, the declaration of
counsel is ambiguous as to when the underlying facts of the amendment were
discovered. Plaintiff asserts that discovery, deposition testimony, and
Levine’s declarations made in support of various motions and oppositions made
clear that Levine used VBP, Motorsports I and Motorsports II as a way to
defraud Yang, avoid liability, and co-mingle funds and assets for the benefit
and convenience of each Defendant. Counsel provides the subject discovery.
(Garber Decl., Exs. C-F.) The deposition
of Levine took place on Sept. 18, 2020. Supplemental discovery responses were
provided on Sept. 15, 2020. Otherwise,
Counsel does not provide when the facts that form the basis of the new causes
of action were discovered. Further, Levine provides information that Plaintiff
was aware of VBPI’s intent to title the G-Wagen with a Montana entity well
before execution of the Note and his subsequent loan to VBPI. Levine notes that
during the deposition of VBPI’s person most knowledgeable (PMK), the PMK
testified that the G-Wagen was titled in a Montana entity as a method to
mitigate tax exposure. (Levine Depo. at 37:19-38:10.) The Court therefore can
only reasonably conclude that these facts were discovered towards the end of
2020.
Considering this apparent
knowledge, counsel does not attempt to explain why Plaintiff’s request for
amendment was not made earlier. Plaintiff did not attempt to serve the newly
added defendants until the doe amendment two years later, on November 30, 2022.
Plaintiff did not attempt to plead the new fraud-based causes of action until
after the motion to quash was denied and the demurrer was sustained to the
initial complaint on February 7, 2023. Thus, the Court does find that there was
substantial, unexplained delay in filing this motion for leave to amend.
That said, the Court does not find
any substantive prejudice stemming from this delay. Currently, no trial date is
set. Thus, Defendants will have adequate time to prepare for trial. The
amendments rely on the same general set of facts as previous allegations. The FAC
mostly contains new legal theories of liability such as the alter ego and fraud
causes of action. Defendants only generally cite that there would be an
increased burden of discovery and ligation costs. Defendants, however, do not
explain how the new allegations and entities would unduly increase the costs
and fees incurred in discovery or preparing for trial. Certainly, Defendants
are not substantively prejudiced by the delay, such as an inability to conduct
meaningful discovery to defend this action. Conversely, Plaintiff may be
prejudiced if he is not allowed to assert all potentially supported legal
theories of recovery.
Any substantive issues with the
allegations may be addressed in a procedurally proper attack on the pleadings.
Given the liberal policy of
amendment, Plaintiff’s motion for leave to amend is accordingly GRANTED.