Judge Randolph M. Hammock, Case Number: 21STCV29301, Date: 2024-12-16 Tentative Ruling

In 2014, Defendant Long Beach Unified School District contracted with T.B. Penick and Sons, Inc., for the construction of the new Browning High School in Long Beach. Plaintiff Western Surety, as the surety on the project, now brings five causes of action for breach of contract against the District seeking the release of funds withheld on stop payment notices and potential backcharges.

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).)

Plaintiff moves for leave to file a First Amended Complaint. [FN 1] In the Complaint, Plaintiff asserts causes of action for breach of contract seeking the release of funds withheld by Defendant on stop payment notices and certain backcharges. Plaintiff now seeks to file a First Amended Complaint asserting additional allegations and claims based on additional backcharges—the “HVAC backcharge” and the “expansion joints backcharge”—and additional amounts allegedly owed for “Potential Change Orders” (“PCOs”) and for “excused and compensable delay.” (Mtn. p. 6-7.) Accordingly, by the First Amended Complaint, Plaintiff will assert a (6) Sixth Cause of Action for breach of contract pertaining to release of funds withheld for expansion joints, a (7) Seventh Cause of Action for release of funds withheld for HVAC issues, and an (8) Eighth Cause of Action for breach of contract pertaining to amounts owed for PCO’s and for excused and compensable delay.

Plaintiff asserts that “[a]t the time the Complaint was filed, there were ongoing discussions and investigations regarding other amounts potentially owed to Western under the Browning Contract for backcharges, excusable delay, compensable delay, and for at least 18 unpaid PCOs. While these issues were not ripe for adjudication at the time the Complaint was filed, it has become clear that the District has no intention of compensating Western for those items, making the issues ripe, and amendment to the Complaint viable.” (Mtn. 9: 11-16.)

Defendant opposes leave to amend. First, Defendant argues the proposed amendment would be futile because Plaintiff has not complied with the Government Claims Act on the new claims. Second, and relatedly, Defendant argues the amendment would be prejudicial because it would subvert the legislative purpose of the Government Code requirements, and because it introduces new facts and legal theories. Finally, Defendant argues the proposed eighth cause of action is barred by the statute of limitations.

First, while the court recognizes the claim presentment requirement, its applicability need not be addressed when ruling on this motion. 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.) At this time, the court takes no position on whether Plaintiff’s previous code claim covers the new allegations. Additionally, in certain circumstances, a public entity may be estopped from asserting plaintiff's failure to file a timely claim. (John R. v. Oakland Unified School Dist. (1989) 48 Cal.3d 438, 445.) There are also tolling issues that could permit an otherwise untimely notice of claim. Thus, this issue exceeds what is appropriately addressed at this time. Similarly, whether the statute of limitations might bar the new Eighth Cause of Action is not at issue in this motion. Defendant may test that issue by demurrer or other dispositive motion at a later date.

Second, there is no evidence that Defendant will suffer undue prejudice by the amendment. The fact that the amendment may necessitate further discovery and delay is not reason to deny the motion. Courts have explained that “it is irrelevant that new legal theories are introduced as long as the proposed amendments 'relate to the same general set of facts.' [Citation.]” (Atkinson v. Elk Corp., (2003) 109 Cal. App. 4th 739, 761.) 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.)

Judge of the Superior Court

FN 1 - Strictly speaking, because the new causes of action arguably arose after the filing of the original complaint, the proper amendment is a supplemental complaint. “A ‘supplemental’ pleading is used to allege facts occurring after the original pleading was filed. [Citation.] In contrast, the additional allegations in an ‘amended’ pleading address matters that had occurred before the original pleading was filed.” (Foster v. Sexton (2021) 61 Cal.App.5th 998, 1032.) Code of Civil Procedure section 464, subdivision (a) provides: “The plaintiff and defendant, respectively, may be allowed, on motion, to make a supplemental complaint or answer, alleging facts material to the case occurring after the former complaint or answer.” As with amended pleadings, a motion to file supplemental pleadings is addressed to the sound discretion of the court and the same policy favoring liberality in amending pleadings applies. (Louie Queriolo Trucking, Inc. v. Sup.Ct. (1967) 252 Cal.App.2d 194, 197.) Whether construed as a supplemental complaint or amended complaint, the same analysis applies for this motion.