Judge Robert S. Draper, Case 19STCV45113 2022-08-11 Tentative Ruling

Plaintiff Purushottam Patel’s Motion for Leave to File a Fifth Amended Complaint is GRANTED. Plaintiff is to file the Fifth Amended Complaint within five days of the issuance of this Order.

This is action for Breach of Contract and Fraud. The operative Fourth Amended complaint (“FAC”) alleges as follows.

Plaintiff Purushottam Patel (“Plaintiff”) operates the Welcome Inn. (FAC ¶ 10(iv).) Plaintiff hired Defendant Automatic Data Processing Insurance Agency, Inc. (“ADP”) to do payroll services for the business. (FAC ¶ 10(I).) Plaintiff’s Agreement with ADP required ADP to obtain worker’s compensation coverage for Plaintiff’s business. (FAC ¶ 10(iii).) ADP contracted with Defendant Travelers Property Casualty Company of America (“Travelers”) to provide worker’s compensation coverage for the Welcome Inn. (FAC ¶ 10(ix).) ADP told Plaintiff that the Inn would have workers compensation insurance so long as its payroll was processed by ADP. (FAC ¶ 11.)

In January of 2016, Plaintiff’s entire staff quit; Plaintiff had no employees from February 1, 2016, to July 31, 2016. (FAC ¶ 14.) Defendants told Plaintiff that so long as he continued to pay a bimonthly minimum payment to ADP, his worker’s compensation coverage would continue when he hired new employees. (FAC ¶ 15.) Plaintiff continued to pay these minimums and understood that his coverage continued. (FAC ¶¶ 16-19.)

In April of 2016, Plaintiff received a notice of intent for cancellation for nonpayment of insurance premiums. (FAC ¶ 22.) When Plaintiff contacted Travelers, Travelers informed Plaintiff that he would have to speak with ADP. (Id.) When Plaintiff spoke with ADP, ADP informed Plaintiff that this was Traveler’s mistake[1]. (Id.)

In September 2016, Plaintiff was informed by “conversation with ADP, Travelers, Travelers-A and DOES 2 to 1000” that the policy was cancelled erroneously due to a glitch in Traveler’s computer system, and that his policy was up to date. (FAC ¶ 30.)

In April 2017, Plaintiff informed ADP and Travelers that a workers compensation claim had been filed by a former Welcome Inn employee. (FAC ¶ 39.) ADP and Travelers informed Plaintiff that they did not have a record of Plaintiff being covered during this time period, but they would defend Plaintiff in the Worker’s Compensation action because the lack of coverage had been due to clerical error. (FAC ¶ 44.) On December 15, 2017, Travelers refunded $967 to Plaintiff, but did not inform him that they were canceling his coverage and would not defend him in the compensation action. (FAC ¶ 46.) Travelers has not defended Plaintiff in the compensation action. (Id.)

On November 24, 2021, the Court sustained Travelers’ Demurrer in part, and overruled it in part. The Court granted Plaintiff twenty days to amend.

On January 20, 2022, Travelers filed a Demurrer to the Fourth Amended Complaint and a Motion to Strike. Relevant here, the Motion to Strike argued that Plaintiff exceeded the limited leave to amend the Court granted following the Demurrer to the Third Amended Complaint by adding a second breach of contract cause of without first seeking leave to amend.

On May 4, 2022, this Court (Hon. Douglas W. Stern presiding) sustained the Demurrers as to the Fourth Cause of Action for Fraud without leave to amend, sustained the Demurrers to the Second and Third Causes of Action with thirty days leave to amend, and granted Travelers’ Motion to Strike without prejudice to a properly filed motion for leave to amend.

On June 3, 2022, Plaintiff attempted to file a Fifth Amended Complaint. His filing was rejected by the Clerk as he did not seek leave to amend.

Plaintiff Purushottam Patel moves the Court for leave to file a Fifth Amended Complaint.

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 a First Cause of Action against Travelers for Breach of Insurance Contract and Statutory Violation of Insurance Code Under Code of Civil Procedure Section 473.

Plaintiff explains that there was a delay in adding this cause of action as Plaintiff’s Counsel did not obtain the relevant Insurance Policy (the “Policy”) until September 7, 2021. Plaintiff then attached the Policy to the Third Amended Complaint but did not add a cause of action for statutory violation.

Then, Plaintiff attempted to add the new cause of action to the Fourth Amended Complaint without seeking leave to amend. The Court found that this exceeded the limited leave resulting from the Court’s order sustaining Defendants’ Demurrer to the Third Amended Complaint and struck the new Cause of Action from the Fourth Amended Complaint without prejudice.

Plaintiff now seeks leave to file a Fifth Amended Complaint containing the statutory violation cause of action.

The Court finds that there is good cause to add the proposed cause of action, and that Plaintiff properly explains the delay in adding said cause of action. Additionally, as no Defendant submitted an Opposition to the instant motion, the Court finds that there is no prejudice to any party.

Accordingly, Plaintiff’s Motion for Leave to File a Fifth Amended Complaint is GRANTED. Plaintiff is to file the proposed Fifth Amended Complaint within five days of the issuance of this Order.

[1] This is the Court’s interpretation of the allegations. The Fourth Amended Complaint alleges that Plaintiff “received a notice of intent for cancellation for nonpayment of insurance primum in the amount of $3,670.00” but does not indicate from whom Plaintiff received this notice. However, Exhibit G to the Demurrer is a notice of cancellation from Defendant ADP. Next, the Fourth Amended Complaint alleges that “Plaintiff thereafter called ADP in April of 20199 [sic] and Plaintiff was told that the information provided on notice was for direct billing service and Plaintiff had talk to ADP. Plaintiff informed Travelers that the Policy was on hold.” The Court believes that this was a mistake, and that Plaintiff initially contacted ADP, who told Plaintiff that he had to contact Travelers.

PURUSHOTTAM PATEL, Plaintiff; vs. TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, et al., Defendants.	Case No.:	19STCV45113
	Hearing Date:	August 11, 2022

	[TENTATIVE] RULING RE: Plaintiff purushottam patel’s motion for leave to file fifth amended complaint.