Judge: Teresa A. Beaudet, Case: 21STCV21382, Date: 2023-07-11 Tentative Ruling

Case Number: 21STCV21382    Hearing Date: January 31, 2024    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

On June 7, 2021, Plaintiff R&R Masonry (“R&R”) filed this action against Defendants H.A. Lewis, Inc. (“H.A. Lewis”), Los Angeles Unified School District (the “District”), and U.S. Specialty Insurance Company (“U.S. Specialty”). The Complaint alleges causes of action for (1) breach of contract, (2) quantum meruit, (3) account stated, (4) open book account, (5) enforcement of stop payment notice, (6) enforcement of stop payment notice release bond, and (7) recovery on payment bond.  

In the Complaint, R&R alleges that prior to September 10, 2018, H.A. Lewis entered into a prime contract to provide labor, services, equipment, and materials for a work of improvement known and described as Marshall High School Towe Repair, Contract No. 1810063, Project No. 23A10590. (Compl., ¶ 11.) On or about September 10, 2018, R&R and H.A. Lewis entered into a subcontract for R&R to provide labor, services, equipment, and materials necessary to do a portion of the subject project, identified in the subcontract as “Historical Restoration, Façade Renovation and Masonry.” (Compl., ¶ 12.) H.A. Lewis ordered extra work from R&R, which increased the total compensation under the subcontract to the sum of $1,008,741.80. (Compl., ¶ 13.) R&R alleges that on or about September 30, 2020, H.A. Lewis breached the subcontract by failing to pay the sum then due and owing in the amount of $388,059.94. (Compl., ¶ 15.) 

On July 28, 2021, H.A. Lewis filed a Cross-Complaint against R&R, the District, and Fidelity and Deposit Company of Maryland. On October 24, 2023, H.A. Lewis filed the operative Third Amended Cross-Complaint, asserting causes of action for (1) breach of contract, (2) breach of warranty, (3) breach of subcontract, (4) breach of warranty, (5) recovery on performance bond, (6) intentional fraud (concealment), (7) negligent fraud (concealment), (8) disgorgement, (9) implied contractual indemnity, (10) declaratory relief, and (11) declaratory relief.

On March 24, 2023, the District filed a Cross-Complaint against H.A. Lewis, asserting causes of action for (1) breach of contract and (2) express indemnity.

In the original Cross-Complaint, the District alleges, inter alia, that on or about August 23, 2018, the District and H.A. Lewis entered into a written prime contract (“Contract”) for a construction project known as the Tower Repair project at John Marshall High School (project no. 23A10590) (“Project”). (Cross-Compl., ¶ 5.) The District alleges that H.A. Lewis “breached the Contract by, without limitation, failing to timely and properly perform work on the Project, failing to properly coordinate work on the Project, including the work of its subcontractor R&R, and failing to timely and properly deliver and/or furnish materials to the Project site.” (Cross-Compl., ¶ 17.)

The District further alleges in the Cross-Complaint that “H.A. Lewis is obligated to defend, indemnify, and hold harmless, among others, the District pursuant to, without limitation, Article 6.53 of the General Conditions of the Contract.” (Cross-Compl., ¶ 23.) The District alleges that it “has incurred, and continues to incur, necessary and reasonable attorneys’ fees, consultant fees, and other costs in connection with R&R’s Complaint and Stop Payment Notice, H.A. Lewis’ breaches of Contract, and in prosecuting the instant Cross-Complaint,” and that “[b]y reason of the foregoing, the District is entitled to defense and indemnity from H.A. Lewis.” (Cross-Compl., ¶¶ 25-26.)

The District now moves for leave to file a First Amended Cross-Complaint. H.A. Lewis and U.S. Specialty filed a response to the motion, stating, inter alia, that they “do not oppose the granting of the DISTRICT’s Motion for Leave to File a First Amended Cross-Complaint.” (Response at p. 4:2-3.)

Discussion

Pursuant to Code of Civil Procedure section 473, subdivision (a)(1), “[t]he court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading.” Amendment may be allowed at any time before or after commencement of trial. ((Id., § 576.) “[T]he court’s discretion will usually be exercised liberally to permit amendment of the pleadings. The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified.” ((Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428 [internal citations omitted].) “If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend….” ((Morgan v. Superior Court of Los Angeles County (1959) 172 Cal.App.2d 527, 530.) Prejudice includes “delay in trial, loss of critical evidence, or added costs of preparation.” (Solit v. Tokai Bank, Ltd. New York Branch (1999) 68 Cal.App.4th 1435, 1448.)

A motion to amend a pleading before trial must include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments. (¿¿Cal. Rules of Court, rule 3.1324, subd. (a).)¿¿ The motion must also state what allegations are proposed to be deleted or added, by page, paragraph, and line number.  (¿Cal. Rules of Court, rule 3.1324, subd¿. (a).) Finally, “¿[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.¿” (Cal. Rules of Court, Rule 3.1324, subd. (b).)  

The District submits a “copy of the District’s proposed First Amended Cross-Complaint showing the revisions and additions to the District’s original Cross-Complaint in redline form.” (Rayburn Decl., ¶ 3, Ex. A.) The proposed First Amended Cross-Complaint adds a third cause of action for disgorgement pursuant to Business and Professions Code section 7031(b). ((Ibid.) The proposed First Amended Cross-Complaint also adds additional factual allegations. (Ibid.) 

In the proposed First Amended Cross-Complaint, the District alleges, inter alia, that “R&R failed to replace Rennie Tejeda, the qualifier on its license, within 90 days of his disassociation by death as required by Business and Professions Code section 7068.2(a), which resulted in the automatic suspension of R&R’s contractor’s license on or about 90 days after December 25, 2018.” (Rayburn Decl., ¶ 3, Ex. A, ¶ 46.) The District alleges that “R&R was therefore not a licensed contractor at any time while performing work on the Project.” (Rayburn Decl., ¶ 3, Ex. A, ¶ 47.) The District further alleges that “[p]ursuant to Business and Professions Code section 7031(b), the District is entitled to recover all sums it paid to H.A. Lewis for work performed by R&R, an unlicensed subcontractor, on the Project. Further, H.A. Lewis’ affirmative claim in this action against the District for recovery of monies purportedly still owed to R&R for its work on the Project is barred as a matter of law pursuant to, without limitation, Business and Professions Code section 7031(a).” (Rayburn Decl., ¶ 3, Ex. A, ¶ 49.)

In his supporting declaration, the District’s counsel states that “[t]he District did not discover that R&R was unlicensed during the Project until Rennie Tejeda’s death certificate was produced pursuant to a subpoena to the Los Angeles County Registrar/Recorder in this case in October 2023.” (Rayburn Decl., ¶ 11.) The District asserts that “the new allegations against H.A. Lewis are necessary and proper as they will allow the District to fully adjudicate its claims related to the Project and will allow all of the parties to this action to fully adjudicate their respective claims and/or defenses.” (Mot. at p. 7:17-19.)

As set forth above, in their response, H.A. Lewis and U.S. Specialty state that they “do not oppose the granting of the DISTRICT’s Motion for Leave to File a First Amended Cross-Complaint.” (Response at p. 4:2-3.)

Based on the foregoing, and in light of the lack of any opposition, the Court finds that the District has demonstrated good cause to file the proposed First Amended-Cross-Complaint.    

Conclusion

Based on the foregoing, the District’s motion for leave to file First Amended Cross-Complaint is granted. The Court orders the District to file and serve its First Amended Cross-Complaint within three days of the date of this order. 

The District is ordered to give notice of this order. 

DATED:  January 31, 2024                            ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court