Judge Robert S. Draper, Case 19STCV25230 2022-08-02 Tentative Ruling

Plaintiff Hype Factor, LLC’s Motion for Leave to Amend its Answer is GRANTED. Hype Factor, LLC is to file the First Amended Answer within five days.

Plaintiff Hype Factor, LLC’s Motion to Strike the Cross-Claim and Answer of Defendant JFF Entertainment, LLC if it Does Not Get Reinstated is GRANTED. JFF Entertainment, LLC’s Answer and purported Cross-Claim will be stricken if JFF Entertainment does not submit evidence of its reinstatement or affirmative attempts at reinstatement within THIRTY DAYS of the filing of Hype Factor, LLC’s First Amended Answer.

This is a breach of contract matter. The complaint alleges as follows. Plaintiff Hype Factor, LLC (“Hype Factor”), owned by Sean Kilbane (“Kilbane”) is an entertainment company that contracted with Defendant JFF Entertainment, LLC (“JFF”), principled by Defendant John Fitzpatrick (“Fitzpatrick”). (Compl. ¶¶ 24-29.) The contract provided that Hype Factor was to ensure that Fabletics, LLC performed their tasks under the contract, and that JFF was to ensure that social media talent Catherine Paiz (“Paiz”) performed her tasks under the contract. (Compl. ¶ 25.) Fitzpatrick/JFF held themselves out to be Paiz’s talent manager. (Compl. ¶ 21.) Paiz failed to perform under the contract because Fitzpatrick and JFF failed to inform Paiz about the agreement and because JFF/Fitzpatrick were not Paiz’s talent manager. (Compl. ¶ 54.)

On April 1, 2022, Hype Factor, LLC filed the instant Motion for Leave to Amend its Answer and Motion to Strike Defendants’ Cross-Claim and Answer.

When a party moves to amend a pleading, “courts generally should permit amendment to the complaint at any stage of the proceedings, up to and including trial. [Citations.]” (Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 175.) In ruling on this type of motion, prejudice to another party is the main concern. (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486.) The type of prejudice the court is to be concerned with should be something beyond simply having to cope with a potentially successful new legal theory of recovery that has been revealed during discovery. (Ibid.) Instead, the court should look for delays in the trial date, loss of critical evidence, extensive increase in the costs of preparation and other similar circumstances that create prejudice to another party. (Melican, supra, 151 Cal.App.4th at p. 176.)

Here, Plaintiff seeks to add an affirmative defense for Litigation Privilege, and to update Plaintiff Counsel’s contact information.

Plaintiff notes that JFF Entertainment had its corporate charter revoked by the Delaware Secretary of State on June 1, 2021. (Exh. A.) As Plaintiff correctly contends, “[a] corporation whose powers have been suspended for nonpayment of the corporate franchise tax lacks capacity to sue in California courts; and, if sued, it lacks capacity to defend. (Rev. & Tax. C. § 23301.) Additionally, “[s]uspension of a corporation provides an opposing party with an affirmative defense that, when timely raised, prevents the corporation from prosecuting or defending an action in a California Court.” (Bourhis v. Lord (2013) 56 Cal.4^th 320, 324.)

Upon review of Plaintiff’s proposed Amended Answer, and the evidence supporting that amendment, the Court finds that leave to amend is proper. And, as there is no Opposition from Defendants, the Court finds no prejudice to Defendants.

Accordingly, Plaintiff’s Motion for Leave to File an Amended Answer is GRANTED. Plaintiff has five days to file the Amended Answer.

The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436(a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Id., § 436(b).) The grounds for a motion to strike are that the pleading has irrelevant, false or improper matter, or has not been drawn or filed in conformity with laws. (Id. § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Id. § 437.)

Here, Plaintiff notes that, as JFF Entertainment is a suspended Corporation, and as discussed above it is incapable of prosecuting or defending itself in California courts. Accordingly, Plaintiff moves to strike JFF Entertainment’s Answer and Cross-Claim[1], effective on August 2, 2022, the day of the instant hearing.

The Court concurs that JFF Entertainment’s prolonged suspended corporate status is good cause to strike the Answer and Cross-Claim. However, as the policy of this Court is to hear all issues on their merits where possible, the Court will allow JFF Entertainment one last opportunity to remedy their corporate status before striking their Answer and opening the door to default.

Accordingly, Plaintiff’s Motion to Strike JFF Entertainment’s Answer and Cross-Claim is GRANTED. JFF Entertainment has thirty days from the filling of Plaintiff’s First Amended Answer to file with this Court evidence of affirmative efforts to rectify their corporate status; otherwise, its Answer and Cross-Claim will be stricken.

[1] Plaintiff also notes a number of procedural defects in JFF Entertainment’s Cross-Claim that very likely renders the Cross-Claim susceptible to a Motion to Strike. As Plaintiff does not move to strike on these grounds, the Court will not address them here.

Hype Factor, LLC; Plaintiff, vs. John fitzpatrick, et al.; Defendants.	Case No.:	19STCV25230
	Hearing Date:	August 2, 2022

	[TENTATIVE] RULING RE: plaintiff Hype factor, llc’s motion for leave to amend its answer; plaintiff hype factor, llc’s motion to strike the cross-claim AND answer of jff entertainment if it does not get reinstated