Judge: Mark H. Epstein, Case: 22SMCV00685, Date: 2024-11-21 Tentative Ruling

Case Number: 22SMCV00685    Hearing Date: November 21, 2024    Dept: I

The motion for leave to file a first amended complaint is DENIED WITHOUT PREJUDICE.  Plaintiff filed a breach of contract case against defendants.  Plaintiff wants to amend the complaint and defendants oppose. 

As plaintiff points out, leave to amend is freely given as a general rule, at least absent prejudice shown.  (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471; Higgins v. Del Faro (1981) 123 Cal.App.3d 558.)  But the rule is not without its limits.  Plaintiff here seeks to add a cause of action for breach of a lease agreement claiming it is a third party beneficiary, and also to seek attorneys’ fees.  Defendants contend that plaintiff has not attached the lease, so it is improper.  The court is not sure defendants are right—it kind of looks like the lease is attached as Exhibit B to the proposed FAC.  On the other hand, while that appears to be the case, plaintiff apparently does not think so because plaintiff apparently seems to agree that the lease is not attached, although plaintiff contends it does not matter.  But even if it is not attached, it need not be.  A complaint can allege a breach of contract either by attaching the contract, quoting the contract, or alleging the effect of the contractual provision that was breached.  As to the merits, whether plaintiff is really a third party beneficiary is a matter better tested by demurrer or summary judgment.

The real issue is that defendants contend that they are prejudiced because the motion to amend is really an attempt to nullify their 998 offer.  More specifically, defendants here have apparently made a 998 offer.  They would like plaintiff to accept the offer or reject it (either outright or by expiration of time).  If rejected, defendants may have the opportunity to recover enhanced costs should they ultimately obtain a judgment more favorable than the 998 offer.  Defendants contend that the proposal to amend the complaint will have the effect of nullifying the 998 offer, and that is what is really motivating plaintiff here.  Plaintiff notes that the 998 offer goes only to the complaint, but not the cross complaint and contends that it is therefore improper.  The court would have thought so as well—that is, a 998 offer must resolve the entirety of the case, not just the complaint but leave the cross-complaint at issue.  But that is apparently not the law.  A 998 offer can be valid even if it goes only to a complaint and not a cross-complaint.  (Westamerica Bank v. MBG Industries, Inc. (2007) 158 Cal.App.4th 109.)  The court sees the nullification of the 998 offer as potential prejudice to the defense.  There are a host of issues, of course, that will surround the effectiveness of the 998 offer if it is rejected and the complaint is later amended.  But defendants ought to have the right to litigate those should the time ever come and not have the effect taken away in this manner.

There is another problem.  The court is unsure why it is that the complaint is being amended now.  These facts were well known to plaintiff for a long time.  The court does not know why plaintiff is only now seeking to add the cause of action.  Plaintiff ought at least to explain the delay.  (Roemer v. Retail Credit Co. (1975) 44 Cal.App.3d 926.)  Plaintiff needs a declaration to accompany the motion to specify the effect of the amendment, why it is necessary, when the facts giving rise to the amendment were discovered, and the reasons why the request was not made earlier.  (Cal.R.Ct. 3.1324 subd. (b).)  The declaration before the court does not address the last two issues.  The court does not understand why plaintiff’s counsel did not fathom the viability of the potential cause of action until now.

Having said all of that, the bar is a low one.  Once the 998 has run its course, and absent some other prejudice, any reasonable explanation by plaintiff’s counsel is likely to be sufficient.