Judge Ronald F. Frank, Case Number: 21TRCV00085, Date: 2024-01-23 Tentative Ruling

Judge: Ronald F. Frank, Case: 21TRCV00085, Date: 2024-01-23 Tentative Ruling

Case Number: 21TRCV00085 Hearing Date: January 23, 2024 Dept: 8

Tentative Ruling¿¿

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HEARING DATE: January 23, 2024¿¿

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CASE NUMBER: 21TRCV00085

CASE NAME: Aries Global Logistics, Inc. v. Valley of the Sun Cosmetics, LLC, et al

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MOVING PARTY: Plaintiff, Aries Global Logistics, Inc.

RESPONDING PARTY: Cross-Defendants Clean Beauty Concepts, LLC and Mad Engine, LLC

TRIAL DATE: Not Set.

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MOTION:¿ (1) Motion for Leave of Court to File Third Amended Complaint

Tentative Rulings: (1) GRANTED. Despite the Opposition’s claim of prejudicial delay, procedural shortcomings and the likelihood of demurring to the TAC, the case has not been set for trial, a 5-month delay from the July deposition to the December motion is not unreasonable, and leave to amend is liberally granted in California

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I. BACKGROUND¿¿¿

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A. Factual¿¿¿

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On February 5, 2021, Plaintiff, Aries Global Logistics, Inc. (“Plaintiff”) filed a Complaint against Defendant, Valley of the Sun Cosmetics, LLC, and DOES 1 through 50. Plaintiff subsequently DOE’d in Defendants, Ajmal Shehzad and Sofia Shehzad. On September 20, 2022, Plaintiff filed a First Amended Complaint. On May 9, 2023, Plaintiff filed a Second Amended Complaint (“SAC”) alleging causes of action for: (1) Breach of Written Contract; (2) Declaratory Relief; (3) Injunctive Relief; (4) Breach of the Covenant of Good Faith and Fair Dealing; (5) Quantum Meruit; (6) Account Stated; and (7) Fraud.

Plaintiff now files a Motion for Leave to file Third Amended Complaint (“TAC”).

B. Procedural¿¿¿

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On December 28, 2023, Plaintiff filed this Motion Leave of Court to File Third Amended Complaint. On January 9, 2024, Cross-Defendants, Clean Beauty Concepts, LLC and Mad Engine, LLC filed an opposition. On January 16, 2024, Plaintiff filed a reply brief.

II. ANALYSIS¿¿

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A. Legal Standard

Leave to amend is permitted under Code of Civil Procedure section 473, subdivision (a) and section 576. The policy favoring amendment and resolving all matters in the same dispute is “so strong that it is a rare case in which denial of leave to amend can be justified. . ..” “Although courts are bound to apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial [citations], this policy should be applied only ‘where no prejudice is shown to the adverse party . . .. [citation]. A different result is indicated ‘where inexcusable delay and probable prejudice to the opposing party’ is shown. [Citation].” (Magpali v. Farmers Group (1996) 48 Cal.App.4th 471, 487.)

A motion for leave to amend a pleading must also comply with the procedural requirements of California Rules of Court, Rule 3.1324, which requires a supporting declaration to set forth explicitly what allegations are to be added and where, and explicitly stating what new evidence was discovered warranting the amendment and why the amendment was not made earlier. The motion must also include (1) a copy of the proposed and numbered amendment, (2) specifications by reference to pages and lines the allegations that would be deleted and added, and (3) a declaration specifying the effect, necessity and propriety of the amendments, date of discovery and reasons for delay. (See Cal. Rules of Court, rule 3.1324, subds. (a), (b).)

B. Discussion

Here, Plaintiff seeks to add the following amendments to its proposed Third Amended Complaint:

1. Adding alter ego allegations against VOTS, CBC, and Mad Engine;

2. Adding a cause of action for Fraudulent Conveyance against Defendants VOTS, Ajmal Shehzad, and Sofia Shehzad; and

3. Adding a cause of action for Intentional Interference with Contractual Relations against Cross-Complainant/Cross-Defendant CBC and Cross-Defendants Mad Engine, Daish Gajiani, and Faizan Bakali.

Plaintiff asserts that it has acted diligently and expeditiously in seeking this amendment, without inexcusable delay. This is because Plaintiff contends that the evidence giving rise to this motion was intentionally withheld from Plaintiff by Defendant VOTS until November 2023. Specifically, the Court notes that Plaintiff has included the fact that on October 16, 2023, just three days after Mr. Martinez substituted in s counsel for VOTS, he asserted apologies for the unnecessary delays by the former counsel, and asserted that VOTS had not been transparent in its discovery responses. Plaintiff further argues that Cross-Defendant, Clean Beauty Concepts, LLC (“CBC”) would likely be opposing this motion and argue Plaintiff could have sought the information from them, but Plaintiff argues that they withheld the same documents previously withheld by Defendant VOTS. These withheld documents allegedly – according to Plaintiff – made it apparent that Cross-Defendants, CBC and Mad Engine, were not simply third parties, as Plaintiff has assumed and pleaded in its previous complaints. Instead, once Plaintiff received the withheld discovery, it asserts that the evidence indicated that CBC and Mad Engine were actually controlling VOTS’s actions in this manner.

In their opposition, Cross-Defendants, CBC and Mad Engine concede that VOTS’s discovery violations are inexcusable, but argues that Plaintiff omits any mention of the “facts” it claims to have gleaned from these late-produced documents, which Cross-Defendants argue were all testified to by Shehzad at a July 11, 2023 deposition. Plaintiff argues in its reply brief that Shehzad actually failed to produce the previously withheld documents that Plaintiff asserts give rise to the filing of this motion.

Cross-Defendants, CBC and Mad Engine also argue that they will suffer extreme prejudice because of the amendments as this case has been going on for nearly three years, and during the three years, Cross-Defendants were merely named in this case solely on indemnity, contribution, and apportionment cross-claims. As such, Cross-Defendants note they had no need to conduct discovery on, or otherwise concern themselves with Plaintiff’s underlying claims. This Court disagrees that Cross-Defendants will suffer “extreme prejudice.” They have not had to spend exorbitant amounts of time and money on discovery that the opposing parties assert will likely need to be redone based on the new allegations. Further, as pointed out by Plaintiff, Cross-Defendants have just elected to file a cross-complaint almost contemporaneously with the filing of this motion. Arguably such a filing would open Cross-Defendants up to the same alleged prejudice they claim they will suffer by the filing of Plaintiff’s TAC.

Here, the Court’s tentative ruling is to GRANT Plaintiff’s motion for leave to file a TAC. The Court will address the procedural shortcomings on demurrer and the opposition’s merits arguments on dispositive motion.

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