Judge: Michael Small, Case: 22STCV02890, Date: 2024-05-29 Tentative Ruling

Inform the clerk if you submit on the tentative ruling. If moving and opposing parties submit, no appearance is necessary.

Case Number: 22STCV02890    Hearing Date: May 29, 2024    Dept: 57

The Court is granting Defendant's motion under Code of Civil Procedure Section 426.50 for leave to file a cross-complaint   Yes, Defendant's motion comes very late in the litigation, with trial just around the corner. But, as set forth below, under the standards of Section 426.50, the late date of the motion is not cause to deny it.

 The cross-claims that Defendant seeks to assert are compulsory because they arise out of the "same transaction, occurrence, or series of transactions or occurrences as the cause of action which the [P]laintiff alleges in his complaint.” (Section 426.10(c); see K.R.L. Partnership v. Superior Court (2004) 120 Cal.App.4th 490, 498.)  A defendant who fails to bring a compulsory cross-claim against the plaintiff forfeits the right to bring the claim in some future litigation against the plaintiff. (Section 426.30(a).)  

 Section 426.50 is designed to protect against that forfeiture.  It provides as follows: “A party who fails to plead a cause of action subject to [these] requirements, whether through oversight, inadvertence, mistake, neglect, or other cause, may apply to the court for leave to amend his pleading, or to file a cross-complaint, to assert such cause at any time during the course of the action. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend the pleading, or to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith. This subdivision shall be liberally construed to avoid forfeiture of causes of action.” (§ 426.50.) 

 Section 426.50 motions are rarely denied.  “A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.” (Silver Organizations Ltd. v. Frank) (1990) 217 Cal.App.3d 94, 99, emphasis added)  Section 426.50   been construed to require “substantial evidence” of bad faith, the opposite of good faith, by the would-be cross-complainant in order for the court to deny leave to file the cross-complaint. (Ibid.)  Bad faith connotes “actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake . . . but by some interested or sinister motive[,] . . . not simply bad judgment or negligence, but rather . . . the conscious doing of a wrong because of a dishonest purpose or moral obliquity . . . . .”  [Citation]  (Id. at p. 100.)

Delay in seeking leave to amend to file a compulsory cross-claim may point to bad faith.  But in and of itself, delay is an inadequate basis on which to deny leave to amend under Section 426.50.  (Id. at p. 101.)  Delay by the cross-complainant may cause prejudice to the plaintiff.  But prejudice, too, does not, in and of itself, add up to substantial evidence of bad faith justifying denial of leave to amend.  (Ibid.)

 In the Court's view, Plaintiff has failed to demonstrate by substantial evidence that Defendant's motion for leave to file compulsory cross-claims against Plaintiff at this late date in the litigation manifests bad faith by the Defendant.  Accordingly, the Court is granting Defendant’s motion.  Defendant shall file and serve the proposed cross-complaint b June 3, 2024.