Judge: Mark H. Epstein, Case: 19SMCV01619, Date: 2023-02-03 Tentative Ruling

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Case Number: 19SMCV01619    Hearing Date: February 3, 2023    Dept: R

Plaintiffs Sam Hakim (“Hakim”) and Aitan Segal (“Segal”) filed separate actions that were eventually consolidated against defendants Mauricio Umansky, UMRO Realty Corporation, Mauricio Oberfeld, and 3620 Sweetwater Mesa for issues surrounding the sale of a property.  On July 15, Hakim filed and served Amendments to the operative Second Amended Complaint (“SAC”) adding Matthew Dugally, The Dugally Group, LLC, Oberfeld Development Corporation, Sweetwater Holdings LLC, and FASP as DOE defendants.

Currently before the court is defendants Matthew Dugally, The Dugally Group, LLC, Oberfeld Development Corporation, and Sweetwater Holdings LLC (collectively “DOE defendants”) motion to dismiss and demurrer to the SAC.  FASP is a DOE defendant but not a moving party.  Hakim opposes.  This matter previously came on before the court in September 2022.  (9/2/22 MO.)  At that point, the court indicated that it was worried about plaintiffs’ delay in adding the DOE defendants.  It questioned prejudice, however, where the prior trial date had been continued.  The court noted that it might overrule the demurrers.  It continued the hearing for prior simultaneous briefing on the motion to dismiss.  The parties have since submitted their declarations.  Also before the court is Hakim’s application to continue the hearing on the summary judgment motion.  Segal joins that application.

The court notes that there is currently no trial date and a TSC is set for hearing today as well.

Preliminarily, the parties’ evidentiary objections filed with their prior filings are OVERRULED.  They are unhelpful and do not dispose or address any material evidence.

“Code of Civil Procedure section 474 provides that ‘[w]hen the plaintiff is ignorant of the name of a defendant, he must state that fact in the complaint, . . . and such defendant may be designated in any pleading or proceeding by any name, and when his true name is discovered, the pleading or proceeding must be amended accordingly . . . .’  ‘The phrase “ignorant of the name of a defendant” is broadly interpreted to mean not only ignorant of the defendant's identity, but also ignorant of the facts giving rise to a cause of action against that defendant.’  (Fuller v. Tucker (2000) 84 Cal.App.4th 1163, 1170; see McClatchy v. Coblentz, Patch, Duffy & Bass, LLP (2016) 247 Cal.App.4th 368, 371–372 [accord].)  ‘ “[T]he relevant inquiry when the plaintiff seeks to substitute a real defendant for one sued fictitiously is what facts the plaintiff actually knew at the time the original complaint was filed.” ’  (Fuller, at p. 1170, italics omitted.)”  (San Diego Navy Broadway Complex Coalition v. California Coastal Com. (2019) 40 Cal.App.5th 563, 579, parallel citations omitted.)  “In our view, three lessons may be drawn from Barrows: First, section 474 includes an implicit requirement that a plaintiff may not ‘unreasonably delay’ his or her filing of a Doe amendment after learning a defendant's identity.  Second, a defendant named in an action by a Doe amendment under section 474 may challenge the amendment by way of an evidence-based motion, which argues that the plaintiff ‘unreasonable delayed’ his or her filing of the challenged amendment.  Third, ‘unreasonable delay’ within the meaning of ‘Barrows’ includes a prejudice element, which requires a showing by the defendant that he or she would suffer prejudice from plaintiff's delay in filing the Doe amendment.”  (A.N. v. County of Los Angeles (2009) 171 Cal.App.4th 1058, 1066–1067.)

The DOE defendants contend that Hakim unreasonably delayed adding them as defendants because he knew of their identity and the extent of their involvement (especially Dugally) since early on in this case.  They detail various dates where either written discovery or oral testimony was provided that discussed or implicated the DOE defendants’ purported role in the wrongful acts.  They further contend they will suffer prejudice.  Trial, they note, was only a few months away (as of the date they filed their filed papers) and they need to take discovery on the theories of liability as alleged against them.  They further claim prejudice to the other defendants, whose motions for summary judgment will no longer be to the operative pleading.

Hakim disagrees.  He admits he knew of Dugally and the other DOE defendants but emphasizes he did not have enough evidence indicating that they were involved in the conspiracy.  He points to documents produced in February and March 2022.  In February and March 2022, Hakim received “key documents” regarding the DOE defendants’ profits from the scheme.  In December 2021, he received the Eisner emails, which he states was further evidence of the DOE defendants’ involvement.  Hakim emphasizes that these smoking guns came thereafter and he was being judicious in deciding whether to add them as defendants.  He says that he was trying to avoid cluttering this case with many defendants.  As for prejudice, Hakim dismisses it as the regular prejudice involved in litigating a case. Hakim contends there is nothing special about the prejudice claimed by the DOE defendants. He states that the DOE defendants would be able to make use of much of the discovery already done in this case and they would stand to benefit from the other MSJs filed by the existing defendants. Hakim notes that no new theories of liability are being added here.

The court has reviewed the additional evidence filed by the parties.  It does not change the original analysis much.  Instead, what has changed is the fact that there is no longer a trial date.

The court agrees that Hakim delayed adding the DOE defendants to this action.  This case has been pending for a long time—it was filed about 29 months ago—and has been heavily litigated.  The DOE defendants are correct that documents disclosing Dugally’s role in this venture came pretty early in this action.  It is unclear why Dugally at least was not added sooner.  While Hakim emphasizes that the purported “smoking gun” came recently because that is when he discovered that the DOE defendants actually earned money from the scheme, the law does not require a “smoking gun.”  Hakim was required to add the DOE defendants once he was aware of the basic facts giving rise to a cause of action against the DOE defendants.  Hakim only needed to know about the DOE defendants’ involvement in the scheme.  The evidence in front of the court strongly suggests that Hakim knew about their involvement well before February 2022.  As an example, it exhibits related to Oberfeld and Dugally discussing the deal and how it was going to work were produced back in 2020.

But while there is delay, the court is hard-pressed to find prejudice.  As Hakim previously noted, the DOE defendants cast many of their prejudice arguments based on a stale trial date.  The motion is now being heard at a time when that prejudice has evaporated.  That means that the DOE defendants can take additional discovery, as long as it is not duplicative of discovery already taken. Hakim makes much of the fact that the DOE defendants are also represented by Eisner, which represents the Oberfeld defendants.  But that does not mean the DOE defendants and the Oberfeld defendants are one and the same.

Where the court has to balance Hakim’s potential forfeiture of claims against curable prejudice to the added defendants, protecting against forfeiture will prevail.  And case law counsels that, more often than not, leave should be granted.  The DOE defendants notably do not raise any statute of limitations issues and the court will not penalize Hakim for purportedly taking a judicious approach to adding parties to an already complicated case.  The motion is (somewhat reluctantly) GRANTED.

The DOE defendants also demur to the third, fourth, fifth, and sixth causes of action on the ground of failure to state sufficient facts.  (See Code Civ. Proc., § 430.10, subd. (e).)  Their main argument is that there are no specific allegations as to their wrongful acts.  The DOE defendants assert that all the alleged wrongful acts are those of other defendants and given the allegations, DOES are excluded from the causes of action based on those facts.

The court does not agree, nor would such a hyper-technical reading of the operative complaint make sense.  Prior to any designation of the named defendants as the “Defendants,” the SAC contains general allegations: “Hakim currently does not know the true names and capacities of the defendants sued as Does 1 through 10, inclusive, and therefore sues these defendants by fictitious names.  Hakim will amend the Second Amended Complaint to add the true names and capacities of these defendants when they are ascertained.  Each of the fictitiously named Doe defendants is responsible in some manner for the events and happenings alleged in this Complaint and for Hakim's damages.  [¶] Each defendant at all times mentioned in this Second Amended Complaint was an agent, principal, master, servant, employee, employer, partner and/or joint venture of each of the other defendants, and in doing the things, acts and omissions alleged in this Second Amended Complaint was acting within the course and scope of that agency, employment or representation, with the knowledge, consent, ratification and approval of each of the other defendants.  Any allegation referring to a single defendant refers to all such defendants, jointly and severally.”  (SAC, ¶¶7-8, emphasis added.)

From this language, all the defendants, both named and DOE, are acting as each other’s agent or partner (or in some similar capacity).  Any reference to a single defendant refers to all other defendants.  That is why the cases cited by the DOE defendants are not particularly helpful here.  The DOE defendants take issue with this, but it seems specific enough for pleading purposes.  Any acts alleged against the other defendants are alleged against them.  They can take discovery on which specific acts of the named defendants are attributed to them, or authorized/ratified by them.  There are no new allegations or theories of liability against them, and the legal theories are readily understandable.  The demurrers are OVERRULED.

The court has also considered the ex parte to continue the MSJ.  The court had expressed a hope it would complete its ruling before it left on January 20 for a teaching assignment.  Sadly, that was not to be.  The court has therefore not yet ruled.  The court does not blame defendants for that, but it remains a reality.  Given that, the court is inclined to GRANT the ex parte request to continue the motions.  The court agrees that plaintiffs need to know what evidence they can rely upon and they need to complete the depositions before being forced to oppose.  The court understands why defendants would not want multiple depositions depending on the outcome of the motions and cannot quibble with the point.  But again, it leaves plaintiffs with the need for a continuance.  Plaintiffs’ proposed briefing schedule makes sense and the court will adopt it absent some reason not to do so.  The court is also aware of the stack of documents the parties have asked it to review to ascertain work product.  The court is working its way through the stack.