Judge Michael Small, Case Number: 23STCV25427, Date: 2024-02-06 Tentative Ruling

Judge: Michael Small, Case: 23STCV25427, Date: 2024-02-06 Tentative Ruling

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

Case Number: 23STCV25427 Hearing Date: February 6, 2024 Dept: 57

Pending before the Court is the motion of Defendant Jay G. Foonberg (“Foonberg”) for leave to file a cross-complaint against Plaintiff Maria Carson (“Carson”). For the reasons set forth herein, the Court is granting the motion.

FACTUAL AND PROCEDURAL BACKGROUND

This case began on October 18, 2023 when Carson sued Foonberg and the law firm Foonberg operates, Jay G. Foonberg Legal Management Corporation (FLMC”) (erroneously sued as Law Office of Jay G. Foonberg). Carson’s complaint contains two categories of causes of action. First, under the Fair Employment and Housing Act, Carson alleges gender-based employment discrimination, sexual harassment in the workplace, retaliation for complaining about the harassment, and wrongful termination. Second, under various provisions in the California Labor Code, Carson alleges that she was misclassified as independent contractor instead of an employee and not paid all the wages that she was due.

On November 17, 2023, Foonberg and FLMC filed a timely answer to Carson’s complaint. Less than a month later, on December 11, 2023, Foonberg and FLCM each filed a substitution of attorney, memorializing the replacement of their former counsel with new counsel, Linda Guthmann Krieger (“Krieger). On Foonberg’s behalf, Krieger contacted counsel for Carson on December 26, 2023 seeking a stipulation that would allow Foonberg to file a cross-complaint against Carson. Carson’s counsel declined to stipulate to the filing. Shortly thereafter, on January 10, 2024, Foonberg moved for leave to file a cross-complaint against Carson. Foonberg’s proposed cross-complaint was attached to the motion. It alleges financial elder abuse and intentional infliction of emotional distress against Carson.

GOVERNING LAW

The parties agree that the claims that Foonberg seeks to bring against Carson are compulsory cross- claims, and that Foonberg’s ability to file a cross-complaint asserting those claims after he already has answered Carson’s complaint is governed by Code of Civil Procedure Section 426.50. In full, Section 426.50 states as follows:

A party who fails to plead a cause of action subject to the requirements of this article, 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.)

The statutory directive that Section 426.50’s authorization for a party who failed to assert compulsory cross-claims when answering a pleading should be “liberally construed” embodies the principle that “[i]t is preferable that the parties have their day in court.” (Foot’s Transfer and Storage Co. v. Superior Court (1980) 114 Cal.App.3d 897, 904.) Section 426.50 also directs that leave to file a cross-complaint containing compulsory cross-clams shall be granted as long as the party seeking leave “acted in good faith.” This phrase has been construed to require there to be “substantial evidence” of bad faith by the moving party in order for a court to deny leave to file compulsory cross-claims. (Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 99.) In California law, “[t]he usual meaning of ‘substantial evidence’ is evidence that is of ‘ponderable legal significance,’ ‘reasonable in nature,’ ‘credible,’ ‘and of solid value,’ ‘and substantial proof of the essentials which the law requires in a particular case.’” [Citation.] (California Renters Legal Advocacy & Education Fund v. City of San Mateo (2021) 68 Cal.App.5th 820, 852.) That is the meaning of “substantial evidence” for purposes of Section 426.50 as well. (Silver, supra, 217 Cal.App.3d at p. 99.) “The term “bad faith” means the “‘opposite of good faith, generally implying or involving 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; . . it contemplates a state of mind affirmatively operating with furtive design or ill will.’” [Citation] (Id. at p. 100.) Delay in seeking leave 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 file a cross-complaint under Section 426.50. (Id. at p. 101.) Similarly, delay by the cross-complainant may cause prejudice to the plaintiff, and prejudice may point to bad faith. In and of itself, however, prejudice is not substantial evidence of bad faith justifying denial of leave to amend. (Ibid; see also Foot’s Transfer, supra, 114 Cal.App.3d at pp. 903-904.)

ANALYSIS

The declaration that Kriger filed in support of Foonberg’s motion for leave to file a cross-complaint against Carson states that Foonberg’s cross-claims were not pleaded earlier, at the time of Foonberg’s answer to Carson’s complaint, because Foonberg’s former counsel failed to recognize that Foonberg had claims of his own against Carson. Kriger’s declaration further states that when she substituted in the case as Foonberg’s counsel, reviewed the case file, and interviewed Foonberg, she recognized that there was evidence on which Foonberg could assert claims for elder abuse and intentional infliction of emotional distress against Carson.

Carson contends that Foonberg “acted in bad faith by taking over a month to seek leave to file a Cross-Complaint when he could have filed one at the time Defendants filed their Answer.” (Opposition, 3.) The Court disagrees with that assessment. The slight gap of just shy of two months between the filing of Foonberg’s answer on November 17, 2023 and the filing of Foonberg’s motion for leave to file a cross-complaint on January 10, 2024 is insufficient evidence of bad faith on Foonberg’s part. Kriger’s declaration credibly explains the reason for the short delay: namely, that Foonberg’s prior counsel inadvertently failed to recognize the basis of Foonberg’s cross-claims. Krieger’s declaration also states that Kriger reached out to Carson’s counsel within two weeks after Kriger substituted in as counsel for Foonberg -- December 11, 2023 was the substitution date, and December 26, 2023 was the outreach date -- to inquire whether Carson would stipulate to the filing of the cross-complaint. Krieger’s prompt action are not the stuff of bad faith.

Furthermore, as noted above, prejudice arising from a delay in the filing of a cross-complaint may, along with other factors, evince bad faith. But here, Carson has not made any showing at all of how she has been prejudiced by the minimal delay in the filing of the proposed cross-complaint. Carson filed her complaint just four months ago. If discovery has even commenced, it necessarily is in its nascent stages. A case management conference has not yet been held, and, correspondingly, the case has not yet been set for trial.

Nor was it bad faith for Foonberg’s new counsel, Kriger, to have a different view of the evidence in the case, than Foonberg’s prior counsel. A new lawyer may see things differently for a client than a previous lawyer. Carson has failed to show the presence of bad faith arising from the changed perspective that Krieger offered Foonberg when she substituted in the case.

CONCLUSION

Foonberg’s motion for leave to file a cross-complaint is granted. Foonberg is directed to file and serve by February 13, 2024 the proposed cross-complaint that was attached to his motion.