Judge: Stephen P. Pfahler, Case: 21CHCV00946, Date: 2023-03-29 Tentative Ruling

Case Number: 21CHCV00946    Hearing Date: March 29, 2023    Dept: F49

Dept. F-49

Date: 3-29-23

Case #21CHCV00946

Trial Date: N/A

LEAVE TO AMEND

MOVING PARTY: Defendants/Cross-Complainants, Opportunity, Inc., et al.

RESPONDING PARTY: Plaintiff/Cross-Defendant, Bankunited, N.A.

RELIEF REQUESTED

Motions for Leave to File a Second Amended Cross-Complaint

SUMMARY OF ACTION

On August 2, 2018, Defendants Opportunity, Inc. and Jumana Sweis obtained a $1,759,650 commercial loan from Plaintiff BankUnited, N.A. Opportunity and Sweis also executed a Commercial Security Agreement and Collateral Assignment of intellectual property. Defendant Wesley Black executed a separate Unconditional Guarantee of the loan, and Unconditional Limited Guarantee for the value of the intellectual property.

According to Plaintiff, Defendants failed to make any payments due as of March 2021, thereby leaving an outstanding principal balance of $1,634,763.57.

On December 10, 2021, Plaintiff filed a complaint for Breach of Note, Breach of Unconditional Guarantee, Breach of Limited Guarantee, Judicial Foreclosure, Claim and Delivery, and Unjust Enrichment. Defendants answered the complaint. On January 21, 2022, defendant Mortgage Electronic Registration Systems, Inc. answered. On March 9, 2022, defendants Opportunity, Inc., Juana Sweis, and Wesley Black answered the complaint. On March 10, 2022, Opportunity, Inc., Juana Sweis, and Wesley Black filed a cross-complaint against EKJ Holdings & Investments, LLC, Bill Jula, Janis Krums, David Chessler, and BankUnited, N.A. for Fraud and Deceit (seller defendants), Breach of Contract, Unfair Business Practices, Common Counts (seller defendants), Fraud and Deceit (BankUnited), Fiduciary Breach, Constructive Fraud, and Common Counts (BankUnited).

On August 11, 2022, the clerk entered defaults against Household Finance Corporation of California, and HSBC Bank USA, N.A., respectively.

On October 18, 2022, Opportunity, Inc., Juana Sweis, and Wesley Black, filed a first amended cross-complaint. Bankunited answered the first amended cross-complaint on February 3, 2023.

RULING: Granted

Cross-Complainants, Opportunity, Inc., Juana Sweis, and Wesley Black move for leave to file a second amended cross-complaint. The proposed amended pleading seeks to add new party J. Alexis Investments, LLC, new causes of action for negligent misrepresentation and breach of the covenant of good faith and fair dealing, and new factual allegations against existing new and existing cross-defendants. The motion comes following the substitution of new counsel by moving parties in October 2022, and a review of the action by new counsel. The motion was filed on January 3, 2023, and after an attempt to secure a stipulation for the proposed pleading.

Plaintiff/Cross-Defendant Bankunited in a vigorous opposition provides a counter-narrative opinion on the merits of Defendants/Cross-Complainants decisions in entering the financing agreement, and the position of Bankunited at the time of the underlying transaction. The statement relies on citation to the deposition of Sweis among other items. [Declaration of David Perl.] Bankunited describes the proposed amended pleading as “futile,” thereby constituting a legal basis for denial. The argument relies on a denial of any duty owed to defendants as a financial institution, and factual challenges to the basis of the misrepresentation claim. Finally, Bankunited asks for the court to preserve the July 6, 2023, motion for summary adjudication date, for the purpose of allowing Bankunited to file a “amended” motion.

Cross-Complainants in reply respond to the opposition with a substantive arguments as to the factual basis and legal merits of the proposed amended pleading. Moving Parties also submit a supplemental declaration with deposition testimony exhibits.

A motion for leave to amend must comply with the requirements set forth in California Rules of Court Rule 3.1324, which states as follows:

“(a)      Contents of motion

A motion to amend a pleading before trial must:

(1)               Include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments;

(2)               State what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph, and line number, the deleted allegations are located; and

(3)               State what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located.

(b)        Supporting declaration

A separate declaration must accompany the motion and must specify:

(1)        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…” (emphasis added).

Dilatory delays and prejudice to the opposing parties is a valid ground for denial. (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490.) Prejudice exists where the amendment would require delaying the trial, resulting in loss of critical evidence, or added costs of preparation such as an increased burden of discovery. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488.)

Leave to amend is generally liberally granted. (Code Civ. Proc., § 473(a); Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 296.) The court will not generally consider the validity of the proposed amended pleading in ruling on a motion for leave, instead deferring such determinations for a demurrer or motion to strike, unless the proposed amendment fails to state a valid claim as a matter of law. (Kittredge Sports Co. v. Sup.Ct. (Marker, U.S.A.) (1989) 213 Cal. App.3d 1045, 1048; California Casualty Gen. Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 280–281 disapproved of on other grounds by Kransco v. American Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390.)

The motion basically complies with the California Rules of Court regarding the proposed changes based on a summary of the proposed changes and additional causes of action. [See motion Declaration of Anne Singer.] The motion however lacks a copy of the proposed pleading with the articulated proposed changes.

The court finds Plaintiff also complies with the diligence requirement. New counsel substituted into the case in October 2022. Counsel represents a delay in receiving the file from prior counsel, and an effort to secure a stipulation before filing the instant motion. The court finds no basis of prejudice. No trial date is set in the instant action. Potential impacts to the scheduled motion for summary adjudication insufficiently demonstrates substantial prejudice.

As for the challenges to the merits of the proposed amended pleading, nothing in the arguments, as a matter of law, establish a legal bar to the minimally articulated proposed changes. The court declines to consider extrinsic factual argument. The court instead defers any potential consideration to a demurrer, motion to strike, or the sought after motion for summary adjudication.

On the request to specially set the MSJ, the court directs cross-defendant to the available resources within the court electronic reservation and filing system. The court declines to specially set any “amended” motion for summary adjudication, especially given the lack of a responsive pleading, and a disinclination toward predicting the potential decisions of responding party in regards to any potential challenge to the pleading itself. Again, no trial date is set on this action, thereby leaving sufficient time to timely reserve a summary adjudication date.

Cross-Complainants are ordered to separately file the second amended cross-complaint, within 10 days of this order.

Motion for summary adjudication remains scheduled for July 6, 2023.

Defendants/Cross-Complainants to give notice to all parties.