Judge Mark E. Windham, Case 20STLC02864 2023-05-16 Tentative Ruling

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TCR Services, Inc. v. Great American Ins. Co., et al

MOTION FOR LEAVE TO AMEND COMPLAINT AND TO RECLASSIFY ACTION

(CCP §§ 473(a); 403.040)

Plaintiff TCR Services, Inc.’s Motion for Leave to Amend the Complaint and Reclassify Action and Transfer Case is GRANTED. PLAINTIFF IS TO FILE AND SERVE THE FIRST AMENDED COMPLAINT AND PAY THE RECLASSIFICATION FEE WITHIN 20 DAYS OF THIS ORDER. UPON FILING OF THE FIRST AMENDED COMPLAINT AND PAYMENT OF THE RECLASSIFICATION FEE, THIS CASE IS RECLASSIFIED AS AN UNLIMITED CIVIL CASE AND TRANSFERRED TO THE RECLASSIFICATION/TRANSFER DESK FOR REASSIGNMENT OF THE CASE TO AN INDEPENDENT CALENDAR COURT.

Plaintiff TCR Services, Inc. (“Plaintiff”) filed the instant action for breach of construction contract and related claims against Defendants AWI Builders, Inc. (“Defendant AWI”), Great American Insurance Company and The Hanover Insurance Company (“Defendants”) on March 30, 2020. Due to various motions challenging the pleadings, Defendants did not file an answer until August 27, 2021. On March 6, 2023, Plaintiff added American Contractors Indemnity Company as a doe defendant. (Amendment to Complaint, filed 03/06/23.)

Plaintiff filed the instant Motion for Leave to Amend the Complaint and to Reclassify Action as an Unlimited Case on March 10, 2023. Defendants filed an opposition on April 27, 2023 (and corrected opposition on May 1, 2023) and Plaintiff replied on May 2, 2023. Although the opposition was not timely served and the corrected opposition was even more untimely, it does not appear that Plaintiff was prejudiced in its ability to reply. The Court will consider all the papers filed regarding the Motion.

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. . . .” “Although courts are bound to apply a 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 (emphasis added).) Where a proposed amendment opening an entirely new substantive area of injury on the eve of trial without any explanation for why the major change had not been made long before, denial of leave is appropriate ordered in the court’s discretion. (Id.)

Also, a motion for leave to file an amended pleading must comply with Cal. Rules of Court, Rule 3.1342, which requires a supporting declaration setting 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. (Cal. Rules of Court, Rule 3.1324, subd. (a)-(b).)

The Motion is accompanied by a declaration that complies with Cal. Rules of Court, Rule 3.1342. (Motion, Weissman Decl.) The supporting declaration of Plaintiff’s counsel indicates what proposed changes are to be made and where, and the effect of those amendments. (Id. at ¶¶3, 6.) The declaration also states that these changes are the result of information sought through public records requests made to the City of Pasadena over the past two-and-a-half years and which Plaintiff only received at the end of February 2023. (Id. at ¶5.)

Defendants argue that Plaintiff is seeking amendment and reclassification because it failed to provide a timely response to a Request for Statement of Witnesses and Evidence, which would be grounds for Defendants to exclude evidence at trial, but only in the limited jurisdiction court. (See Code Civ. Proc., §§ 96-97.) Plaintiff persuasively dispute that its failure to serve a response to Defendants’ Request for Statement of Witnesses and Evidence bars it from presenting evidence. Code of Civil Procedure section 97 only bars evidence due to a failure to respond to a request made in compliance with section 96. (Code Civ. Proc., § 97, subd. (a).) Defendants’ Request for Statement of Witnesses and Evidence was not served in compliance with Code of Civil Procedure section 96 because it was not served “no more than 45 days or less than 30 days prior to the date first set for trial.” (See Code Civ. Proc., § 96, subd. (b).) This

Also, Defendants contend that Plaintiff has been dilatory in seeking the information on which the proposed amendments are based because Plaintiff has conducted no formal discovery and the information was publicly available through the City of Pasadena’s records. However, the opposition does not provide evidence to support the contention that the change orders Plaintiff recently obtained from the City of Pasadena could have been acquired earlier. (See Opp., Sire, Jr. Decl.) Plaintiff points out that it sought the change orders from the City of Pasadena instead of from Defendants based on concerns that Defendants’ records were not accurate, which is a point of contention between the parties in this action. Finally, that this action was filed more than three years ago is also not evidence of delay by Plaintiff, but rather, various continuances sought by all parties and the Court. The Court finds that Plaintiff has not inexcusably delayed in seeking leave to amend.

Regarding the probability of prejudice to Defendants, they do not dispute that they have been provided with the public records as Plaintiff obtained them, or that they were thereafter able to conduct depositions while in possession of the records. Defendants also take contradictory positions arguing that they would be prejudiced by the amendment because discovery is now cut-off, but then argue that the discovery should remain cut-off if the amendment is allowed. This demonstrates that the way to alleviate any prejudice to Defendants is to reopen discovery and extend the cutoff dates. No trial date in this action is currently set and a trial setting conference is to be held concurrently with this hearing. (Minute Order, 05/05/23.) This will allow the Court to reopen discovery if needed to investigate the amendment.

Nor would reclassification prejudice Defendants in their ability to conduct a defense of this action since they would have access to all discovery tools available in the unlimited jurisdiction court. Defendants have not shown that they would be unable to investigate and defend Plaintiff’s claims as amended.

Finally, the Court will not rule at this time regarding whether the proposed amendment is barred by the statute of limitations. Defendants will have the opportunity to appropriately challenge the amended complaint after it is filed and served.

Plaintiff also moves for reclassification of this action to a court of unlimited jurisdiction based on the new allegations. Code of Civil Procedure section 403.040 allows a plaintiff to file a motion for reclassification of an action within the time allowed for that party to amend the initial pleading. (Code Civ. Proc., § 403.040, subd. (a).) If the motion is made after the time for the plaintiff to amend the pleading, the motion may only be granted if (1) the case is incorrectly classified; and (2) the plaintiff shows good cause for not seeking reclassification earlier. (Code Civ. Proc., § 403.040, subd. (b).) In Ytuarte v. Superior Court (2005) 129 Cal.App.4th 266, 278, the Court of Appeals examined the principles it set forth in Walker v. Superior Court (1991) 53 Cal.3d 257and held that “the court should reject the plaintiff's effort to reclassify the action as unlimited only when the lack of jurisdiction as an unlimited case is certain and clear.” (Ytuarte v. Superior Court (2005) 129 Cal.App.4th 266, 279.) The plaintiff must present evidence to demonstrate a possibility that the damages will exceed $25,000.00, then the trial court must review the record to determine “whether a judgment in excess of $25,000.00 is obtainable.” (Ibid.)

Plaintiff’s Motion to Reclassify is supported by the declaration of its counsel, which as the Court noted above, demonstrates a basis for leave to amend and good cause for the timing of the request to reclassify. The proposed amendments include additional damages in the total amount of $41,548.78 based on other rejected and reduced change orders that were not alleged in the original complaint. (Motion, Weissman Decl., ¶¶3-4.) This demonstrates the possibility that Plaintiff’s damages will exceed the jurisdictional limit of the Court.

Therefore, the requirements for reclassification of the action to a court of unlimited jurisdiction are satisfied.

Plaintiff TCR Services, Inc.’s Motion for Leave to Amend the Complaint and Reclassify Action and Transfer Case is GRANTED. PLAINTIFF IS TO FILE AND SERVE THE FIRST AMENDED COMPLAINT AND PAY THE RECLASSIFICATION FEE WITHIN TEN (10) DAYS OF THIS ORDER. UPON FILING OF THE FIRST AMENDED COMPLAINT AND PAYMENT OF THE RECLASSIFICATION FEE, THIS CASE IS RECLASSIFIED AS AN UNLIMITED CIVIL CASE AND TRANSFERRED TO THE RECLASSIFICATION/TRANSFER DESK FOR REASSIGNMENT OF THE CASE TO AN INDEPENDENT CALENDAR COURT.