Judge Mark C. Kim, Case 21LBCV00061 2023-04-06 Tentative Ruling

Judge: Mark C. Kim, Case: 21LBCV00061, Date: 2023-04-06 Tentative Ruling

Case Number: 21LBCV00061 Hearing Date: April 6, 2023 Dept: S27

1. Background Facts

Plaintiff, Morning Angel Home Care, Inc. filed this action against Defendants, Country Villa Belmont Heights Healthcare Center and Belmont Heights Healthcare Center, LLC for breach of contract, account stated, quantum meruit, and unfair competition. Plaintiff alleges it entered into two contracts with Defendants pursuant to which Plaintiff was to provide personnel to Defendants for their nursing home; the two contracts had different payment periods and payment rates, but were substantially similar, and contained attorneys’ fees and costs provisions. Plaintiff alleges Defendants breached both contracts. Plaintiff alleges Defendants breached Contract One and owe $8248 plus late fees, costs, and attorneys’ fees. Plaintiff alleges Defendants breached Contract Two and owe $86,610 plus late fees, costs, and attorneys’ fees.

On 2/09/22, Plaintiff filed a Notice of Settlement of Entire Case. On 10/27/22, the Court denied Plaintiff’s motion to enforce settlement on the grounds that the parties’ settlement was based on a mutual mistake of fact, and thus cannot stand. The dispute was created by Defendant’s discovery, after settlement, of a large payment that was not discussed by the parties or included in their agreed-upon spreadsheet concerning payments already made. Defendants tendered the settlement with a clear and unequivocal statement that it was for the total amount due and owing. Defendants requested the Court to find their payment to be in accord and satisfaction, such that nothing more is due and owing. The Court refused to grant Defendants’ request given that there was no motion by Defendants for affirmative relief and the 10/27/22 hearing only concerned Plaintiff’s motion to enforce settlement.

On 3/1/23, Defendants filed a motion for leave to file amended answer and request for sanctions. On 3/23/23, Plaintiff filed its opposition. On 3/28/23, Defendants filed a reply.

2. Motion for Leave to Amend

a. Relief Sought

Defendants seek leave to add an affirmative defense of accord and satisfaction. Defendants claim that new facts developed supporting an additional affirmative defense against Plaintiff’s claims which was not available at the time of the original answer. Specifically, after the parties’ settlement discussions, the parties agreed to a settlement and Plaintiff never provided any additional invoices or information that would justify that payment of $458 was not in satisfaction and accord to settle the matter underlying this lawsuit. Defendants claim they tendered the remaining payment to Plaintiff in good faith to settle and the proposed amendment to add an affirmative action of accord and satisfaction is necessary.

b. Parties’ Positions

Defendants claim new facts justify the amendment of its answer, that Plaintiff will not be prejudiced by the proposed amendments, the proposed amendments will not delay trial, and denial of the proposed amendments would prejudice Defendants.

Plaintiff argues that Defendants unilaterally claim an offset based upon amounts allegedly paid to Plaintiff prior to the execution of the Settlement Agreement, such that the tendered check for $458.00 cannot satisfy the $50,000 owed under the Settlement Agreement. Plaintiff also argues that it never agreed to modify the terms of the Settlement Agreement, which required Defendant to pay $50,000, and that no writing of the modification exists. Plaintiff contends that there exists no grounds for an accord and satisfaction defense because such conditions never occurred in this case, and Defendants cannot satisfy the required elements for accord and satisfaction under California Uniform Commercial Code section 3311.

In reply, Defendants claim that they need not prove the merits of their defense for purposes of this motion as it is not a motion for summary judgment. Defendants point out that Plaintiff fails to address any of the arguments such as why Plaintiff would be prejudiced by the proposed amendments. Defendants also argue that Plaintiff makes numerous, factually incorrect or misplaced statements: (1) Plaintiff’s argument related to written modification has no merit or relevance; (2) the settlement check was tendered to Plaintiff after the settlement agreement as executed; (3) the Settlement Agreement did not itemize the invoices and Defendant should have known which invoices it paid or did not pay; and (4) the Court previously found that California Commercial Code section 3311 applies, contrary to Plaintiff’s argument.

c. Analysis

A party can amend its complaint only with permission of the court pursuant to the provisions of CCP §§ 472(a) and 473. The court may, in furtherance of justice and on any proper terms, allow a party to amend any pleading by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect. (CCP § 473(a)(1); Branick v. Downey Savings & Loan Association (2006) 39 Cal.4th 235, 242.) As judicial policy favors resolution of all disputed matters between the parties, leave to amend is generally liberally granted. (Kolani v. Gluska (1998) 64 Cal.App.4th 402, 412.) The court may deny the plaintiff’s leave to amend if there is prejudice to the opposing party, such as delay in trial, loss of critical evidence, or added costs of preparation. (Id.)

A motion to amend a pleading before trial must (1) include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located. (CRC, Rule 3.1324(a).) A separate supporting 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 reason why the request for amendment was not made earlier must accompany the motion. (Id., Rule 3.1324(b).)

Here, Defendants provide sufficient support as to why its proposed amendments are necessary and in the furtherance of justice. Defendants point to new facts which support an additional affirmative defense. The parties dispute whether Defendants’ payment of $458 constitutes a satisfaction and accord to settle the matter. Contrary to Plaintiff’s assertions, Defendants need not prove all elements to this defense at this stage. Nonetheless, the Court found in that California Commercial Code section 3311 applies. (See 10/27/22 Minute Order p. 3 [“The Court finds §3311 applies. There was a bona fide dispute concerning the amount due. This dispute was created by the discovery, after settlement, of a large payment that was not discussed by the parties or included in their agreed-upon spreadsheet concerning payments already made. Defendants tendered the settlement with a clear and unequivocal statement that it was for the total amount due and owing. Plaintiff cashed and check, and has not repaid the amount within 90 days after cashing it.”].)

Plaintiff also provides no arguments to refute Defendants’ contention that Plaintiff will not be prejudiced by the proposed amendments, that the proposed amendments will not delay trial, and that denial of the proposed amendments would prejudice Defendants. However, the Court does not agree with Defendants’ assertion that Plaintiff makes factually incorrect statements. Although they may have no merit and be misplaced, Defendants fail to show how Plaintiff’s statements were entirely fabricated or untruthful. Furthermore, some statements Defendants point to relate to Plaintiff’s arguments and opinions rather than assertions of fact.

3. Sanctions

Contrary to Defendants’ assertions, the Court finds insufficient evidence to support a finding that Plaintiff’s actions were in bad faith, frivolous, or solely intended to cause unnecessary delay. Although Plaintiff did not ultimately prevail in this motion, the Court does not find that Plaintiff’s failure to stipulate was entirely unjustified. Plaintiff offered arguments in which it believed there were no grounds for an accord and satisfaction defense. The Court disagrees with Plaintiff, and finds that there are sufficient facts to support Defendants’ claim. However, Plaintiff’s arguments were not totally unreasonable. Finally, there is no evidence whatsoever that Plaintiff’s refusal to stipulate was in bad faith.

4. Conclusion

In light of the foregoing, the Court GRANTS Defendants’ motion for leave to amend to file a first amended answer and DENIES Defendants’ request for sanctions.