Judge Ronald F. Frank, Case 21TRCV00431 2023-05-08 Tentative Ruling

Judge: Ronald F. Frank, Case: 21TRCV00431, Date: 2023-05-08 Tentative Ruling

Case Number: 21TRCV00431 Hearing Date: May 8, 2023 Dept: 8

Tentative Ruling¿

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HEARING DATE: May 8, 2023¿¿

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CASE NUMBER: 21TRCV00431

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CASE NAME: Erin Hughes v. Maritza Hartnett, et al

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MOVING PARTY: Plaintiff, Erin Hughes

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RESPONDING PARTY: Defendants, Farmers Insurance Exchange and Maritza Hartnett

TRIAL DATE: July 10, 2023

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MOTION:¿ (1) Motion for Leave to Amend and File FAC

Tentative Rulings: (1) DENIED

I. BACKGROUND¿¿

A. Factual¿¿

Plaintiff Erin Hughes (“Plaintiff”) is the owner of property located at 2145 Rambla Pacifico in Malibu, California 90265 (the “Property”). Since the Property is in a brush fire zone, Plaintiff’s only option for fire insurance was to purchase it from California Fair Plan (“CFP”), California’s fire insurer of last resort. Besides purchasing a policy from CFP to insure the Property against the peril of fire (the “CFP Policy”), Plaintiff also purchased a supplemental homeowners’ policy from Farmers Insurance Exchange (“Farmers”) to cover other perils not covered by the CFP Policy (the “Farmers Policy”). Plaintiff purchased the CFP Policy and the FIE Policy with the assistance of Farmers® insurance agent, Maritza Hartnett (“Hartnett”).

Less than one month after purchasing both the CFP Policy and the FIE Policy, the Property was destroyed in a fire. After the fire damaged her Malibu Property, Plaintiff made a claim for insurance benefits to CFP as well as Farmers, and claims that she then learned that she was grossly underinsured by Hartnett for the peril of fire as well as deprived of vital coverage which Hartnett did not include such as Extended Coverage, Vandalism, and Mischief.

On June 14, 2022, Plaintiff filed a complaint against Hartnett and Farmers alleging causes of action for: (1) Professional Negligence (against Hartnett); (2) Negligent Misrepresentation (against Hartnett); (3) Breach of Fiduciary Duty (against Hartnett); and (4) Negligent (against Farmers). The basis of Plaintiff’s claim against Farmers is that Hartnett acted as an agent for Farmers in the course and scope of her employment with Farmers. (Complaint (“Compl.”), ¶ 24.) Plaintiff asserts that Farmers breached their duty of care by failing to properly train and supervise Hartnett and are vicariously liable for the acts of Hartnett. (Compl., ¶ 25.)

On April 13, 2023, this Court granted Farmer’s Motion for Summary Judgment. Defendants assert that at the April 13, 2023, hearing, Plaintiff’s counsel did not mention to the Court it had filed the Motion for Leave to Amend her Complaint. On April 24, 2023, the Court entered judgment in favor of Farmers in this action.

However, on April 12, 2023, Plaintiff had filed Leave to Amend her Complaint and File a First Amended Complaint.

B. Procedural¿¿

On April 12, 2023, Plaintiff filed a Motion for Leave to Amend her Complaint. On April 25, 2023, Defendant Maritza Hartnett filed an opposition. On April 25, 2023, Defendant, Farmers also filed an opposition. To date, no reply brief has been filed.

II. REQUEST FOR JUDICIAL NOTICE

Farmers requested that this Court take Judicial Notice of the following:

1. The Complaint filed by Plaintiff in this action on June 14, 2021, attached as Exhibit 1 to Farmers’ RFJN.

2. The Court’s Tentative Ruling on FIE’s motion for summary judgment published on the Court’s website on March 7, 2023, attached as Exhibit 2 to Farmers’ RFJN.

3. The Court’s Tentative Ruling on FIE’s motion for summary judgment published on the Court’s website on April 12, 2023, attached as Exhibit 3 to Farmers’ RFJN.

4. The Judgment entered in favor of FIE on April 24, 2023, attached as Exhibit 4 to Farmers’ RFJN.

5. The complaint filed on May 28, 2021 in the lawsuit styled, Schneider v. Booking.com., et al., Los Angeles County Superior Court Case No. 21STCV20318 (the “Schneider Lawsuit”), attached as Exhibit 5 to Farmers’ RFJN.

6. The answer filed on September 23, 2021 by Plaintiff in the Schneider Lawsuit. attached as Exhibit 6 to Farmers’ RFJN.

7. The complaint filed on August 8, 2021 in the lawsuit styled, Seeler v. Booking.com, etc., et al., Los Angeles County Superior Court Case No. 21STCV29429 (the “Seeler Lawsuit”), attached as Exhibit 7 to Farmer’s RFJN.

8. The answer filed on October 4, 2021 by Plaintiff in the Seeler Lawsuit, attached as Exhibit 8 to Farmers’ RFJN.

The Court GRANTS Farmers’ request and takes judicial notice of the above. The Court on its own motion also takes judicial notice of its Minute Order in this case dated January 19, 2023, indicating the Court’s tentative ruling to grant Farmer’s then-pending motion for Summary Judgment but calling for supplemental briefs to be filed for a re-scheduled March 8, 2023 hearing as to matters argued at the January 19 hearing.

III. ANALYSIS¿

A. Legal Standard

Leave to amend is permitted under Code of Civil Procedure section 473, subdivision (a) and section 576. “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

Plaintiff now seeks to add allegations including the following:

(1) Hartnett was negligent when inputting information on the insurance application (PFAC, ¶ 11(n) and ¶ 24.(n));

(2) Hartnett negligently used “Farmer’s replacement cost estimator 360 to underinsure Plaintiff’s property ...” (PFAC, ¶ 11.(o) and ¶ 24.(o))

(3) Hartnett was negligent in failing to inform Plaintiff that the policy issued by FIE “would not cover a property offered for rent on a short term basis” (PFAC, ¶ 11.(p) and ¶ 24.(p));

(4) FIE breached policy no. 33294-58-20 issued to Plaintiff by not agreeing to defend Plaintiff in connection with the Schneider Lawsuit, the Seeler Lawsuit, and “other cases” (PFAC, ¶¶ 29-31).

Plaintiff argues that it is in the interest of justice to allow her to file an FAC. Plaintiff basis this contention on the fact that she learned facts during the depositions of Maritza Hartnett and Leslie Clark, taken in March of 2023. Plaintiff claims that during these depositions, Plaintiff discovered that while Hartnett was in the course and scope of being an agent for Farmers, she made material mistakes and/or misrepresentations in completing the insurance application of Erin Hughes, which allegedly misrepresented vital property description as well as the existence of prior claims on the property, did not perform or disclose performance of prior claims CLUE report which was required by Farmers to bind the policy which would have revealed prior claims on the property, negligently used the 360 Value property replacement software used by Farmers in grossly underinsuring the property of Plaintiff. Plaintiff further argues that Defendants will not be prejudiced because the amendment is based on discovery of the misrepresentations and violations concealed by the Defendants, and since trial is scheduled for July 10, 2023.

In opposition, Defendant Hartnett notes that Plaintiff’s attempt to allege additional bases for her professional negligence cause of action will require Defendant Hartnett to engage in further discovery at the closing stages of this matter, with a trial date in July and a discovery cutoff less than 45 days from the date of the hearing on this motion. Furthermore, Plaintiff has already been deposed and adding specific allegations as to the information she provided to Defendant Hartnett deprives Defendant Hartnett of the opportunity to examine Plaintiff on these new allegations. Plaintiff was deposed in this matter on December 8, 2022. (Colleen J. Downes Decl. ¶4).

Harnett also argues that the motion should be denied for its unwarranted delay in seeking this amendment. Here, Hartnett argues that Plaintiff waited until after the trial had been continued twice and after Defendant Farmers Insurance Exchange’s Motion for Summary Judgment had been filed and heard before conducting the discovery cited in its motion. Hartnett notes that there is a trial date on calendar for July 10, 2023, with a discovery cutoff in early June, adding additional, specific allegations of misconduct on the part of Ms. Hartnett prejudices Ms. Hartnett in that there is insufficient time to conduct discovery on the specific factual issues raised by Plaintiff’s motion. Thus, Hartnett argues Plaintiff’s Motion for Leave should be denied as it dilatory and unduly prejudicial to Defendant Hartnett.

Farmers also filed an opposition, arguing that the new negligence allegations against Harnett do not assist Plaintiff as most of the proposed new allegations in paragraphs 11 and 24 of the PFAC involve alleged negligent conduct by Hartnett pertaining to the CFP Policy. (See PFAC, ¶ 11.(n) and (o) and ¶ 24 (n) and (o).) Further, Farmers note this Court has already determined that Farmers is not vicariously liable for Hartnett’s conduct pertaining to the CFP Policy.

Farmers also argues that with regard to Plaintiff’s proposed new breach of contract cause of action against Farmers, Plaintiff gives no explanation for the delay. Farmers also asserts that Mr. Gruzman’s declaration fails to set forth when facts giving rise to the amended allegations were discovered and why the request to add a breach of contract cause of action was not made earlier, violating California Rules of Court 3.1324, subdivision (b). In fact, the Court notes that it appears Plaintiff has had this evidence for quite some time, especially as some of this evidence was cited in Plaintiff’s opposition to Farmers’ Motion for Summary Judgment.

Lastly, Farmers argues, like Hartnett did, that granting Plaintiff leave to amend would unfairly prejudice Farmers. Farmers notes it has expended substantial time and expense in litigating this action, including filing its motion for summary judgment. Farmers further explains that after three rounds of briefing – and ample opportunity for Plaintiff to raise any issue she wanted – the Court has entered judgment in favor of Farmers. Farmers argues that at this point, Plaintiff’s remedy is an appeal. Furthermore, Farmers contends that if Plaintiff's PFAC as against Farmers is allowed to proceed, Farmers would be required to start fresh: to explore new defenses, to engage in the expense and burden of conducting additional discovery, and to seek leave of court to file another motion for summary judgment within a very short time frame. Based on the above, Farmers contends this amendment would unfairly prejudice it.

This Court notes that Plaintiff’s motion includes a copy of the proposed first amended complaint, specifications by reference to pages and lines of the allegations that are to be added, as well as the effect and necessity of the proposed amendment.

CONCLUSION

The Court’s tentative ruling is to DENY leave to amend. In deciding to deny the motion, the Court exercises its discretion to weigh the totality of the circumstances, including but not limited the proximity of the trial, the asserted prejudice to the opposing parties, the diligence or lack of diligence of the moving party in seeking leave to amend, previous continuances and leave to file other pleadings, equitable considerations such as fair notice to the Court and to the opposing parties promptly after the claimed need to amend was discovered, the merits of the proposed amendment, as well as the asserted prejudice to the moving party if the amendment were not permitted.

The trial is two months away, having already been continued. The Motion for Summary Judgment was filed October 31, 2023, and was heard for the first time on January 19, 2023, four months before this motion for leave to amend was filed. The Court prepared and posted a tentative ruling in advance of the January 19 hearing to facilitate oral argument and to give counsel the benefit of the Court’s thinking on the motion. Plaintiff had already filed opposition to the MSJ, but as a result of the oral argument at the January 19 hearing the Court granted leave for plaintiff to file a supplemental brief and to complete then-pending discovery to facilitate a full presentation of the facts at a continued hearing set for March 8, 2023 on the MSJ. The Court did not conduct a full hearing on the continuance date of March 8, 2023, because plaintiff applied ex parte for an order continuing the hearing a second time even though the Court had already posted a second tentative ruling that was 9 single-spaced pages in length in advance of the March 8 continued hearing date. Plaintiff did not seek leave to amend the Complaint even at that late date, but the Court granted the second continuance to allow other discovery to be completed so that Plaintiff would have a fuller and fairer opportunity to file opposition evidence and argument. The Court granted the second hearing continuance for over another month, setting a third hearing date on April 13, 2023. Plaintiff thus had the benefit of the Court’s reasoning and analysis as to not only the issues raised in the first round of briefing by all sides, but also the second round.

On April 13, 2023, after posting now a third tentative ruling for the same motion, the Court conducted a hearing and granted Farmer’s MSJ. Unbeknownst to the Court, 63 minutes before midnight on April 12 Plaintiff e-filed a motion for leave to file a first amended complaint. The declaration supporting the motion for leave to amend states that the deposition of defendant Hartnett and senior underwriter Clark had taken place on March 17 and 24, 2023, 3-4 weeks before the motion for leave to amend was filed. The supporting declaration does not indicate any meet and confer with defense counsel before filing the motion. The motion does not seek a postponement or vacating of the trial date. The motion does not offer a further deposition of Plaintiff at plaintiff’s expense. The supporting declaration does not attempt to excuse the delay between the completion of the two depositions where the additional facts were claimed to have been discovered and the filing of the motion. The supporting declaration does not excuse or attempt to explain why the 11^th-hour motion was filed hours before the hearing, the third hearing, on the Farmers motion for summary judgment. The Court does not recall whether the belated motion for leave to amend was mentioned at the April 13 hearing.

Taking all of these elements into consideration, weighing the assertions of prejudice lodged by both defendants were the Court to grant the requested amendment two months before trial against the asserted prejudice to Plaintiff if the amendment were not permitted, weighing the Court’s general predisposition to granted leave to amend even up to the time of trial in the absence of substantial and unfair prejudice tot eh opposing parties, the diligence or lack of diligence of the moving party in notifying the Court of the intention to amend, and the other factors discussed herein, the Court exercises its discretion to deny leave to amend. The Court considered several alternatives, such as permitting leave to amend only as to Ms. Hartnett and not Farmers, vacating the trial date as a condition of granting the motion in whole or in part, and other options. Farmers and Ms. Hartnett would, in the Court’s view, be substantially prejudiced were the Court to grant leave to amend, even if the trial date were vacated or continued.

The Court concludes that the motion should be denied, and that the trial date shall stand (absent stipulation of the remaining parties to postpone it for good cause shown). Plaintiff and Ms. Hartnett are entitled to a fair resolution of their dispute, not further delay.