Judge Michael P. Linfield, Case 20STCV11695 2023-02-06 Tentative Ruling

Plaintiffs brought this derivative action for the benefit of nominal Defendant Ahavath Israel Congregation, Inc (“AIC”). Plaintiffs allege that Defendants have misused AIC’s assets, by among other things, granting am unfairly one-sided lease to Defendant J.E.T.S. Synagogue. Plaintiffs bring this action for (1) rescission of lease, (2) rescission of deed, (3) money had and received, (4) conversion, (5) breach of fiduciary duty, and (6) unjust enrichment.

If a plaintiff wishes to amend a complaint after the answer has been filed or after the demurrer has been filed and after the hearing on the demurrer, or if he or she has lready amended the complaint “of course,” permission of the court must be obtained before the amendment will be allowed. (CCP §§ 473(a)(1), 576.) A motion for leave to amend must state with particularity what allegations are to be amended. Namely, it must state what allegations in the previous pleading are proposed to be deleted and/or added, if any, and where, by page, paragraph, and line number. (CRC, Rule 3.1324(a)(2)-(3).) The motion must be accompanied by a 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 reasons why the request for amendment was not made earlier. (CRC, Rule 3.1324(b).) The motion must also be accompanied by the proposed amended pleading, numbered to differentiate it from the prior pleadings or amendments. (CRC, Rule 3.1324(a)(1).) It is within the court’s discretion to require compliance with Rule 3.1324 before granting leave to amend. (Hataishi v. First American Home Buyers Protection Corp.¿(2014) 223 Cal.App.4th 1454, 1469.)

Motions for leave to amend the pleadings are directed to the sound discretion of the court. “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading . . . .” (CCP § 473(a)(1); see CCP § 576.) Policy favors liberally granting leave to amend so that all disputed matters between the parties may be resolved. (See Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428.) Absent prejudice to the adverse party, the court may permit amendments to the complaint “at any stage of the proceedings, up to and including trial.” (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761 [internal quotes omitted].)

Although denial is rarely justified, a judge has discretion to deny leave to amend if the party seeking the amendment has been dilatory, and the delay has prejudiced the opposing party. (Morgan v. Sup.Ct. (1959) 172 Cal.App.2d 527, 530; see also Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490). An opposing party is prejudiced where the amendment would necessitate a trial delay along with a loss of critical evidence, added preparation expense, increased burden of discovery, etc. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488.

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. The court, however, does have discretion to deny leave to amend where a proposed amendment fails to state a valid cause of action as a matter of law and the defect cannot be cured by further amendment. (See California Casualty General Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 281 (overruled on other grounds by Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390).)

Plaintiffs seek leave to file a First Amended Complaint. They contend the amendments are “minor in nature and seek to correct the inadvertent mistake in the parties against whom Plaintiffs have pled the Second Cause of Action for Rescission of Deed,” and “to amend the prayer for relief to add two equitable remedies: constructive trust, and accounting.” (Mtn. 3: 7-10.) In particular, “Defendants AIC, Jose Herrera, and J.E.T.S. Synagogue were inadvertently omitted” from the Second Cause of Action, and “Defendants Shul and Jewish Center Ahavath Israel, Inc. and Ministerios Cristianos Guerreros de Jehova, neither of whom is a party to the deed, were inadvertently included.” (Mtn. 4: 3-8.) Thus, the amended pleading would swap the Defendants, thus pleading the second cause of action against Michael Rosenberg, Jose Herrera, AIC, and J.E.T.S. Synagogue. Plaintiffs will add no additional allegations or causes of action.

Defendant JETS opposes the amendment. Defendant argues the amended pleading “would require additional discovery and possibly re-opening the depositions of plaintiffs.” (Opp. 2: 9-10.) It also notes that it filed a motion for summary judgment the same day Plaintiffs sought leave to amend the Complaint. That motion was only directed toward the unjust enrichment claim, the only claim presently asserted against JETS. Defendant also disputes that the failure to name these Defendants in the rescission claim was a mistake. “Rather,” Defendant argues, “plaintiffs most likely realized late in the game their unjust enrichment claim would not provide them with the desired relief, and therefore they had to add JETS as a defendant to the rescission claim.” (Opp. 2: 16-18.)

Defendant also attacks the merits of the proposed amendment, arguing Plaintiffs lack standing to bring the rescission claim. However, the court need not address that issue now, as the “better course of action” is to permit the amendment, “and then let the parties test its legal sufficiency in other appropriate proceedings.” (Atkinson v. Elk Corp. (2003) 109 Cal. App. 4th 739, 760.)

Second, it is settled that leave to amend is appropriate even in the face of a pending motion for summary judgment. (Prue v. Brady Co./San Diego (2015) 242 Cal. App. 4th 1367, 1385 [“a complaint need not be made before a hearing on a motion for summary judgment; rather, it may be made at the hearing or any time before entry of judgment.”].)

Finally, there is little to Defendant’s concern that it will be unable obtain a hearing date on a future motion for summary judgment before trial. If a moving party files a motion for summary judgment “within the time limits set by section 437c, they have a right to have their motion heard before the start of trial.” (Cole v. Superior Ct. of San Diego Cnty. (2022) 303 Cal. Rptr. 3d 296, 299.) “[C]alendaring issues are not a basis on which the trial court can refuse to hear a timely filed summary judgment motion, absent an indication that it was defective under section 437c.” (Id.) Thus, any timely filed motion for summary judgment will be heard before trial.

For these reasons, Plaintiff has demonstrated that leave to amend is appropriate. This is consistent with the “policy of great liberality in allowing amendments at any stage of the proceeding so as to dispose of cases upon their substantial merits.” (Bd. of Trustees v. Superior Ct. (2007) 149 Cal. App. 4th 1154, 1163.)

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.