Judge: Nathan Vu, Case: 2020-01144491, Date: 2022-12-12 Tentative Ruling

Please Note: The hearing on this matter is scheduled for 8:30 A.M.

Motion for Leave to Amend

Plaintiffs Insight Environmental Engineering & Construction, Inc.’s and CeSight Joint Venture’s motion for leave to file first amended complaint is GRANTED.

Plaintiffs shall file and serve the First Amended Complaint attached as Exhibit 1 to the memorandum of points and authorities within 10 days of this ruling.

Plaintiffs Insight Environmental Engineering & Construction, Inc. and CeSight Joint Venture move for leave to amend the Complaint to add a second cause of action for breach of fiduciary duty and to file the First Amended Complaint against Defendant SMTD Law LLP.

Standard for Leave to Amend Pleadings

Leave to amend should be granted liberally at all stages of the proceedings in order to accomplish substantial justice for both parties and to resolve cases on their merits.  (Code Civ. Proc., § 473, subd. (a); Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 488-489; IMO Development Corp. v. Dow Corning (1982) 135 Cal.App.3d 451, 461.)  ”If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend . . . .” (Morgan v. Superior Court (1959) 172 Cal.App.2d 527, 530, citations and quotations omitted.)

Prejudice that may support denying amendment includes “delay in trial, loss of critical evidence, or added costs of preparation.”  (Solit v. Tokai Bank, Ltd. New York Branch (1999) 68 Cal.App.4th 1435, 1448.) Nonetheless, “[t]he power to permit amendments is interpreted very liberally as long as the plaintiff does not attempt to state facts which give rise to a wholly distinct and different legal obligation against the defendant.” (Herrera v. Superior Court (1984) 158 Cal.App.3d 255, 259.)

It is “an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment.” (Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048.)  It is also an abuse of discretion to refuse amendment where that “results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense.” (Morgan v. Superior Court, supra, 172 Cal.App.2d at p. 530.) This is true even if leave to amend is sought as late as the time of trial. (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564-565.) 

Under California Rules of Court Rule 3.1324(a), a motion to amend a pleading shall: (1) include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located.

Under California Rule of Court Rule 3.1324(b), a separate declaration must accompany the motion and must specify (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.  

Merits

Plaintiffs have procedurally and substantively met the standard for the court to grant leave to amend. Plaintiffs have included a copy of the proposed pleading with the motion, have detailed that no allegations have been deleted, and have identified that paragraphs 59-68 have been added. Plaintiffs also have explained that the effect of the amendment is to add a new cause of action.

Further, Plaintiffs assert that the amendment is necessary and proper because of the discovery of new facts that established the possibility of breaches of fiduciary duty that go above legal malpractice. Plaintiffs also state that the facts were learned during the deposition of Ali Salamirad on 08/23/2022, which explains why the amendment was not made sooner. Given the case law which requires the court to liberally grant leave to amend, the court finds good cause to grant the motion.

Defendant argues that Plaintiffs have failed to specify the effect of the amendment in that they have not explained the additional burden that the amendment would impose on Defendant in terms of time spent and expense incurred. Defendant cites to case law, statute, or rule to support its argument that “effect of the amendment” means effect of the amendment on the defendant. In addition, Defendant’s definition would require the Plaintiffs to speculate on Defendant’s litigation strategy and preparation, and/or to obtain information and documents that are protected by the attorney-client privilege and attorney work-product doctrine.

The plain meaning of “effect of the amendment,” when read in context in Rule 3.1324(a), is the effect of the amendment on the pleading. In this case, Plaintiffs has explained that the effect of the amendment is to add an additional cause of action for breach of fiduciary duty.

Defendant also argues that Plaintiffs have not explained why they did not seek to amend the Complaint sooner because the breach of fiduciary claim is “essentially a regurgitated version of facts alleged in support of Plaintiffs’ legal malpractice claim. . . .” This is incorrect. Plaintiffs did not learn the specific details of how the case was handled by the Defendant until they took the deposition of Salamirad. Those facts form the basis of Plaintiffs’ breach of fiduciary duty cause of action.

Defendant argues that it would be prejudiced by this amendment. Defendant makes general arguments that it will be required to rework its entire discovery and pre-trial plan, but Defendant fails to offer any evidence of what discovery it has already propounded, what additional discovery it will be required to conduct, and how much time Defendant will need to conduct that additional discovery. Indeed, Defendant repeatedly points out that the facts and issues raised in Plaintiffs’ malpractice claim overlap with the new breach of fiduciary claim, reducing the burdens placed on Defendant. Further, to the extent the breach of fiduciary cause of action is based on different facts, those facts are within the knowledge of Defendant to a much greater extent than Plaintiffs.

The trial in this matter is set for 04/17/2023. This gives Defendant ample time to prepare.

Plaintiffs shall give notice of this ruling.