Judge Randolph M. Hammock, Case Number: 22STCV32887, Date: 2023-11-03 Tentative Ruling

Judge: Randolph M. Hammock, Case: 22STCV32887, Date: 2023-11-03 Tentative Ruling

Plaintiff Wong Properties Limited Partnership owns a 44-unit apartment building at 3320 Rowena Avenue, Los Angeles, CA. Plaintiff alleges it contracted with Defendants Drake Real Estate Group and Christopher Charles Drake whereby Defendants would manage the property. Plaintiff alleges that Defendants presented a plan for interior renovations of the apartments. Defendants, however, allegedly failed to disclose that the renovations involved a full-scale electrical upgrade. Defendants retained Defendant AAG Services, Inc. as subcontractor to conduct the electrical work. Plaintiff alleges Defendants failed to finalize permits for the electrical work, and that the work was substandard. The Los Angeles Housing and Community Investment Department (“HCID”) later found that the electrical work violated the Los Angeles Municipal Code, resulting in a “lockout.” Plaintiff contends that remedying the electrical work is estimated to cost over $1 million, and the lost rent resulting from the lockout has been approximately $600,000. Plaintiffs brings causes of action against Drake Real Estate Group and Drake for (1) breach of management agreement, (2) negligence, and (4) negligent misrepresentation, and against AAG for (3) negligence.

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 amend to file a First Amended Complaint. The proposed amendment would add a new cause of action for indemnification against Defendant Drake. Plaintiff contends the parties’ Management Agreement contains an Indemnification clause which gives rise to the cause of action. (Raucher Decl., ¶ 2, Ex. A.) While Plaintiff had been aware of the Management Agreement, it contends it did not learn of the availability of indemnification until the Ninth Circuit’s opinion this year in Epic Games, Inc. v. Apple, Inc. (9th Cir. 2023) 67 F.4th 946.

Plaintiff’s 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 Raucher Decl.)

Defendants oppose the amendment. Most of Defendants’ opposition challenges Plaintiff adding Defendant Katie Drake to this lawsuit. However, she is not the subject of the motion for leave to amend. Plaintiff added Katie Drake as a defendant by a doe amendment on September 8, 2023. It was permitted to do so, and need not (and rightfully did not) seek leave to amend.

Regarding the addition of the cause of action for indemnification, Defendants contend Plaintiff’s amendment is untimely. Defendants argue it is “disingenuous” for Plaintiff to suggest it only became aware of the availability of indemnification through the Ninth Circuit’s opinion this year in Epic Games, Inc. That contention may be a fair one.

Be that as it may, and most important, Defendants have not demonstrated they will be unduly prejudiced by the amendment. The addition of the indemnification claim hardly changes the action—indeed, it is based on the same facts already alleged in the Complaint. Trial is not set until December of 2024, leaving Defendants ample time to prepare for the new claim.

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.