I. BACKGROUND 

On July 1, 2019, plaintiff Jining Zhou (“Plaintiff”) filed this action against defendants Said Mohamadreza Siadatan, Silverado Senior Living, Inc., Shenzhen New World II, LLC dba Sheraton Universal Hotel (“the Sheraton”), Enterprise Rental, and Does 1 through 100 for damages arising a motor vehicle v. pedestrian accident in a parking lot. On September 16, 2020, Plaintiff filed amendments to complaint naming Towne Park, LLC (“Towne”) as Doe 1 and Mile Hi Valet Service, Inc. (“MHVS”) as Doe 2. The trial date is currently set for June 26, 2024. 

As relevant to the motion, the Sheraton filed its Answer to Plaintiff’s complaint on August 14, 2019. On November 4, 2020, Towne and MHVS filed their Answer to Plaintiff’s complaint on November 4, 2020.  

On February 21, 2024, the Sheraton filed the instant motion seeking leave to file a cross-complaint against Towne and MHVS (collectively, “Defendants”) for indemnity, declaratory relief, and breach of contract. Defendants oppose the motion, and the Sheraton filed a reply. 

The Sheraton asserts it has a Parking Service Management Agreement (“Agreement”) with Defendants, which mandates that Defendants indemnify the Sheraton for claims of negligence attributable to the misconduct of Defendants or their employees. The Sheraton contends that Defendants’ employee Junior Ordonez (“Ordonez”) was directing traffic from the driveway at the time of the incident. The Sheraton tendered its defense to Defendants after the depositions of Ordonez and Plaintiff, and the parties also participated in mediation on February 1, 2024. However, after receiving no word from Defendants regarding the tender, and mediation failing to result in a settlement, the Sheraton avers it must now file a cross-complaint.  

Defendants argue that the permissive cross-complaint sought by the Sheraton should be denied, because the Sheraton has failed to explain its protracted delay in seeking leave to file its cross-complaint. Defendants contend Ordonez’s deposition was taken three years ago on May 27, 2021, and Plaintiff’s deposition was taken a year and a half ago on September 7, 2022. The Sheraton tendered its defense to Defendants on April 21, 2023, which was ten months before the Sheraton filed the instant motion. Further, Defendants assert that the failed mediation of Plaintiff’s claims is irrelevant to any indemnification claims the Sheraton may have against Defendants, and that there is no justification to seek leave four months away from the trial date.  

Defendants contend they will be prejudiced by the cross-complaint, because the Sheraton’s causes of action for express indemnity and breach of contract will require re-opening discovery to determine the extent of the duties and obligations imposed by the Agreement, thereby necessitating a trial continuance. Lastly, because this is a permissive cross-complaint, Defendants aver the Sheraton is not precluded from pursuing its claims against them in a separate action.  

The Sheraton replies that it did not seek leave earlier because it was participating in two mediations in the hope that the case would settle. The Sheraton also argues its cross-complaint is compulsory because it arises out of the same transaction and occurrence as the complaint, and that discovery would not need to be re-opened since it is not closed.  

II. MOTION FOR LEAVE TO FILE CROSS-COMPLAINT  

A cross-complaint against any of the parties who filed the initial complaint or cross-complaint against the cross-complainant must be filed before or at the same time as the answer to the initial complaint or cross-complaint, which answer must be filed within 30 days of service of the complaint or cross-complaint.  (CCP §§ 412.20(a)(3), 428.50(a), 432.10.)  Any other cross-complaint may be filed at any time before the court has set a trial date.  (CCP §428.50(b).)   

If a party fails to file a cross-complaint within the time limits described above, he or she must obtain permission from the court to file the cross-complaint.  (CCP §§ 426.50, 428.50(c).)  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. (Silver Organizations Ltd. v. Frank (1990) 217 Cal. App. 3d 94, 99.) Leave to file a permissive cross-complaint need only be granted in the interest of justice. (CCP §428.50(c).) Further, where the proposed cross-complaint arises out of the same transaction as plaintiff’s claim, the court must grant leave to file the cross-complaint so long as defendant is acting in good faith. (Code Civ. Proc., § 426.50.) Code Civ. Proc., § 426.50 supplements the authority provided generally to amend pleadings.  

Here, the Sheraton’s proposed cross-complaint against Defendants (who have not asserted any cross-complaint against the Sheraton) is a permissive claim, not compulsory. Just because it arises from the same occurrence as Plaintiff’s complaint does not make it compulsory. (R.L. P'ship v. Superior Ct. (2004) 120 Cal. App. 4th 490, 498 [A compulsory cross-claim is a claim a defendant has against the party who brought the original complaint or cross-complaint, and arises out of the same transaction, occurrence, or series of transactions as the cause of which plaintiff alleges in his complaint].) Cross-complaints against parties other than plaintiffs or cross-complainants are permissive, and while efficiency may be gained by resolving claims in cross-complaints filed in one action, courts may require parties to pursue separate actions. (Insurance Co. of No. America v. Liberty Mut. Ins. Co. (1982) 128 Cal.App.3d 297, 303.) Permission to file a permissive cross-complaint is solely within the trial court's discretion. (Crocker Nat. Bank v. Emerald (1990) 221 Cal. App. 3d 852, 864.) Judges have discretion to deny leave to file permissive cross-complaints, including based upon a finding of unexplained delay, depending upon the interests of justice. (Ibid.)  

The Court is not persuaded by the Sheraton’s argument that it delayed because it “did not want to needlessly alienate one of the parties participating in the mediation with a motion for leave, and risk the mediation failing for this reason.” (Reply; page 2, lines 3-5.) This argument that seeking leave earlier would “alienate” Defendants, and that it would materially affect the disposition of mediation, seems illogical. It behooves any defendant in an action to assert any cross-claims it may have against another party as soon as practicable, based on the information available to it. The Sheraton’s moving papers assert that Ordonez’s deposition confirmed Defendants’ responsibility for Plaintiff’s accident. However, the Sheraton does not properly explain why it waited two years and eight months from Ordonez’s deposition to seek leave, nor why it waited until February 21, 2024 to file the instant motion after tendering defense to Defendants on April 21, 2023. The Sheraton has not met its burden demonstrating that it would be “in the interest of justice” to grant leave to file a cross-complaint, especially since no reasonable excuse was given for the protracted delay, with trial now three and a half months away. (See Crocker Nat. Bank v. Emerald (1990) 221 Cal. App. 3d 852, 864 [Appellate court affirmed trial court did not abuse discretion in denying leave to file a permissive cross-complaint when defendant did not explain delay, knew of facts upon which the causes of action were premised upon years earlier, and sought leave only five months before the trial date.].) 

The Sheraton’s motion for leave to file a cross-complaint is therefore DENIED without prejudice.  

Moving party is ordered to give notice.   

PLEASE TAKE NOTICE: 

Dated this 14th day of March 2024