Judge Randolph M. Hammock, Case Number: 20STCV12797, Date: 2023-11-16 Tentative Ruling

In or around the latter part of 2017, Defendant Robert Clippinger (“Clippinger”) approached Plaintiffs for the purpose of obtaining their investment in the purchase and subsequent development of the real property located at 4730 El Camino Avenue, Carmichael, California, 95608 (the “Property”). The Property consists of a ninety-five (95) unit multi-family community. In the course of the negotiations with Clippinger, Plaintiffs were represented by FundOpp Capital, Inc. d/b/a “Alpha Investing” (“Alpha”) who acted as the Plaintiffs’ intermediary and/or agent for purposes of the transaction. The primary individual representatives for Alpha are Daniel Cocca (“Cocca”) and Fark Tari (“Tari”).

Plaintiffs and Defendant then entered into a written Agreement and collectively invested $985,000, whereby Defendant would manage the property and development project. Plaintiffs allege that Defendant Clippinger made misrepresentations to Plaintiffs prior to and after executing the contract. They also allege Defendant breached the contract and his fiduciary duty to Plaintiffs based on his mismanagement of the project and his commingling of project funds. Defendant eventually sold the Property to a third party for a value purportedly less than its fair value.

A stand-alone FAC must be filed and served to all current parties within 10 days. Any new parties must be served in a timely manner as provided by law.

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 already amended the complaint “of course,” permission of the court must be obtained before the amendment will be allowed. (CCP §§ 473(a)(1), 576.)

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 move for leave to amend to file a First Amended Complaint. By the proposed amendment, Plaintiffs seek treble damages, costs of suit and attorney’s fees pursuant to Penal Code section 496 including subsection (c) as against Defendant Robert Clippinger.

Plaintiffs’ motion complies with CRC Rule 3.1324(a) as it provides 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); see Cohen Decl.)

Plaintiffs represent that while conducting research for a separate case “a couple of months ago,” counsel found the July 2022 California Supreme Court case of Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333. Plaintiffs contend this case allows a limited partner to recover treble damages and attorney’s fees for fraudulent diversion of partnership’s cash distributions under California Penal Code § 496(c). (Cohen Decl. ¶ 3.) Plaintiffs’ contend the facts here resemble those in Siry, and therefore seek to add a request for treble damages to the Complaint.

Defendant Clippinger, who is in pro per, has not filed an opposition to the motion. 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].) Defendants have not demonstrated they will be unduly prejudiced by the amendment. It appears the request for treble damages is based on the same set of facts and circumstances as developed up to this point.

Therefore, leave to amend is appropriate. This conclusion 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.) The court makes no conclusion on the merits as to the new claim. Rather, 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.)

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.