Judge: Mel Red Recana, Case: 23STCV24070, Date: 2024-08-26 Tentative Ruling
Case Number: 23STCV24070 Hearing Date: August 26, 2024 Dept: 45
Hearing
date: Monday, August 26, 2024
Moving
Party: Plaintiff / Cross-Defendant Hoi
Ying Eugenie Lai
Responding
Party: Defendant/ Cross-Plaintiff Irene
Chan
Defendant
Irene Chan’s Motion for Leave to File Second Amended Complaint
The Court
considered the moving papers, opposition, and reply.
The
motion is GRANTED.
Background
On June 29,
2021, Plaintiff Hoi Ying Eugenie Lai (“Lai”) filed a Complaint against
Defendant Irene (“Chan”) Chan for two causes of action: (1) specific performance;
and (2) constructive trust and exemplary damages for fraud in the inducement.
Plaintiff alleges that on September 3, 2019, Plaintiff entered into an oral
agreement with Defendant Chan and her son to purchase a piece of real property
in Temple City, California, via quitclaim deed. Plaintiff alleges Defendant
breached the agreement and made false promises to induce Plaintiff’s
performance. On May 30, 2024, Plaintiff filed a First Amended Complaint
(“FAC”), maintaining the second cause of action for specific performance and
removing the cause of action for constructive trust. In addition to maintaining
the second cause of action for (2) specific performance, Plaintiff’s FAC added
the following causes of action: (1) quiet title; (3) breach of contract; (4)
breach of quasi-contract/unjust enrichment; (5) promissory estoppel; (6)
intentional misrepresentation; (7) negligent misrepresentation; and (8)
declaratory relief.
On June 7, 2023,
Defendant Chan filed her Cross-Complaint against Plaintiff Lai and added
Cross-Defendant Global West Real Estate Corporation (“Global”) for (1) breach
of fiduciary duty; (2) intentional fraud; (3) negligent misrepresentation; (4)
elder abuse; (5) financial elder abuse; (6) intentional infliction of emotional
distress; (7) negligence; and (8) unfair competition.
On November 20,
2023, Cross Defendant Global filed its cross complaint against both Plaintiff
Lai and Defendant Chan for (1) indemnity; (2) contribution; (3) declaratory
relief; (4) attorney fees; and (5) breach of independent contractor agreement.
On February 20,
2024, Plaintiff Lai filed the instant Motion for Leave to File a Second Amended
Complaint, along with the Declaration of Plaintiff’s attorney, Shirin Buckman,
and a Proposed Order.
On August 13,
2024, Defendant Chan filed her Opposition, along with the Declaration of her
attorney, Robert C. Hsu.
On August 20,
2024, Plaintiff Lai filed a Reply.
Legal
Standard
Motion
for Leave to Amend
The court may, in furtherance of justice, and on such terms as may be
proper, allow a party to amend any pleading. (CCP §§ 473, 576.) Judicial policy
favors resolution of all disputed matters between the parties and, therefore,
leave to amend is generally liberally granted. (Howard v. County of San
Diego (2010) 184 Cal.App.4th 1422, 1428.) Ordinarily, the court will not
consider the validity of the proposed amended pleading in ruling on a motion
for leave since grounds for a demurrer or motion to strike are premature. (Kittredge
Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048.)
The application for leave to amend should be made as soon as the need
to amend is discovered. (See CRC, Rule 3.1324(b)(3)-(4) [separate declaration
accompanying the motion must specify when the facts giving rise to the amended
allegations were discovered and why the request for amendment was not made
earlier].) The closer the trial date, the stronger the showing required for
leave to amend. (See Duchrow v. Forrest (2013) 215 Cal.App.4th 1359,
1377-78.) If the party seeking the amendment has been dilatory, and the delay
has prejudiced the opposing party, the court has the discretion to deny leave
to amend. (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490.)
Prejudice exists where the amendment would require delaying the trial,
resulting in loss of critical evidence, or added costs of preparation such as
an increased burden of discovery. (Magpali v. Farmers Group, Inc. (1996)
48 Cal.App.4th 471, 486-488.)
Discussion
Moving Argument
Plaintiff provides that on February 7, 2024,
Plaintiff discovered that Defendant had fraudulent transferred her “undivided”
50% in the subject property, via a quitclaim Deed, to the Irene Chan Living
Trust (herein “Trust”) dated December 12, 2023, which was recorded with the
County of Los Angeles on December 28, 2024 (Buckman Decl., Ex. 1.) That same
day, Plaintiff’s counsel attempted to meet and confer with defense counsel via
email to stipulate to a Second Amended Complaint. (Buckman Decl., ¶ 4, Ex. 4.)
However, Plaintiff’s counsel received no response and proceeded to file the
instant motion on February 20, 2024. Plaintiff’s motion evidences an amended
version of the FAC with the relevance amendments appearing in red. (Buckman
Decl., Ex. 2.) Plaintiff seeks to amend the Complaint by adding a seventh and
eighth cause of action for (7) fraudulent transfer and (8) injunctive and
declaratory relief. The facts underlying the additional causes of action arise
from the recent February 20, 2024, alleged fraudulent transfer and creation of
the Trust. Additionally, Plaintiff seeks to name the Trust as a second
Defendant by amending the Defendants to include “Irene Chan Living Trust Dated
December 12, 2023, a revocable trust.” Plaintiff contends that Defendant has
been compromising Plaintiff’s interest in the Property surreptitiously by
secretly transferring an undivided interest into her Trust so that Plaintiff
cannot reach it despite Plaintiff going out of pocket hundreds of thousands of
dollars managing the Property while Defendant has contributed nothing. (Mot.,
pg. 6.) Thus, if Defendant encumbers or obligates the property, Plaintiff’s
financial well-being will be irreparably harmed since Defendant transferred an
undivided interest in the property which means that each interest-holder owns
the full property. (Id.) Critically, as soon as the Trust is named as a
Defendant in this matter, Plaintiff intends to immediately file an injunction
to prevent any transfer or encumbrance of interest in the property by the Trust
before this matter is concluded. (Id.)
Opposition
On
Opposition, Defendant sets forth that she does not oppose the filing of a SAC
by Plaintiff. (Opp., pg. 4.) Instead, she takes issue with the facts alleged by
Plaintiff therein because such facts do not constitute the new causes of
actions and are demurrable. (Id.) Moreover, Defendant did not transfer
or sell her Property to a third party to deprive Plaintiff of her alleged
rights of the Property. Instead, Defendant contends that because she is an
elderly woman in her 80s in poor health, she transferred her half of the
Property to the revocable living Trust for estate planning and probate
avoidance purposes. (Id. at pg. 5.) Given the Trust is living and
revocable, Defendant points out that the assets within it are fully susceptible
to collection by creditors and/or Plaintiff. Thus, contrary to Plaintiff’s
allegations, Defendant did not transfer the Property with the intent to hinder,
delay, or defraud Plaintiff. (Id.) As such, Plaintiff’s contention that
Defendant transferred her interest in secret, with no notice to Plaintiff,
despite it being publicly recorded, is mistaken. (Id. at pgs. 5-6.)
Defendant also
states that Plaintiff’s statement in her nineth cause of action for injunctive
and declaratory relief is mistaken in stating that a lis penden
prohibits Defendant from transferring the Property because it does not. (Id.)
Instead, it puts a cloud on the title. (Id.) Moreover, the injunctive
and declaratory relief Plaintiff seeks is a remedy and not a cause of action so
should be dismissed under the SAC.
Next, Defendant
does not object to Plaintiff adding Defendant’s Living Trust to the litigation
but asks that Defendant Irene Chan, as an individual, be removed in lieu of Defendant
Living Trust, given she no longer personally owns the Property as an
individual. Defendant contends that Plaintiff should not name both Defendant
individually and Defendant’s Trust in the lawsuit.
Lastly,
Defendant states that if Plaintiff insists on an injunction to the Property,
then Defendant believes the injunction should be mutual and apply to both
Plaintiff and Defendant.
Reply
On Reply,
Plaintiff argues that there are two reasons why both Defendant Irene Chan as an
individual and the Living Trust should be named as Defendants. First, (1)
Defendant Irene Chan as an individual created a contract with Plaintiff and fraudulently
acquired Plaintiff’s payment for full title of the house. (Reply., pg. 2.)
Thus, Defendant’s conduct as an individual is at issue in the third through
eighth causes of action. In addition, the first and second causes of action
apply to both Defendant Irene Chan and to the Living Trust because it is now
necessary for the Court to order the Trust and not Defendant Chan to quiet
title and specifically perform on contract by transferring back the 50%
undivided interest. (Id.)
Second, (2) if
Defendant does pass away during litigation, given the status of her health,
successor Trustees must be replaced as Defendants and because Defendant Chan refuses
to provide any documents to Plaintiff, it is not clear who that is and how to
reach Defendant’s undivided 50% interest. As such, discovery must be conducted
on the Trust, as Defendant refuses to provide it as an individual. Moreover,
the injunction must be applied against the Trust in order to protect the
Trust’s 50% undivided interest in the property while litigation is still
pending.
Analysis
The Court finds that pursuant to California case law, the Court does
not ordinarily consider the validity of the proposed amended pleading in ruling
on the motion for leave given the grounds for a demurrer or motion to strike
are premature. (Kittredge Sports Co. v. Superior Court (1989) 213
Cal.App.3d 1045, 1048.) Thus, the Court declines to comment as to the validity
of Plaintiff’s amendments therein. Instead, the Court considers that the trial
date is November 12, 2024. Additionally, Plaintiff appears to have applied for
leave to amend within a timely manner subsequent to learning of the transferred
interest because(1) the Irene Chan
Living Trust is Dated December 12, 2023, (2) Plaintiff learned of it on
February 7, 2024, and (3) Plaintiff filed the instant motion on February 20,
2024 after Defense counsel failed to respond to her meet and confer email. The
Court further notes that Defendant does not argue the amendments risk
prejudicing Defendant and neither party indicates the amendments would
necessitate a delay in trial.
The Court finds Defendant does not provide any legal authority or set
forth legal argument in contending that Plaintiff should not name both
Defendant Irene Chang, as well as the Living Trust as Defendants. Moreover,
Plaintiff’s arguments are persuasive and demonstrate Plaintiff could be
prejudiced if forced to name only one Defendant. Defendant’s suggestion that an
injunction be mutual is premature at this stage, as no injunction is presently
before the Court. At this time, the Court seeks only to determine if it is in
the furtherance of justice to grant Plaintiff leave to amend and for the
foregoing reasons, the Court finds it is so.
Dated: August 26 2024
_______________________
MEL RED RECANA
Judge of the
Superior Court