Judge: Teresa A. Beaudet, Case: 21STCV26414, Date: 2022-07-29 Tentative Ruling

Case Number: 21STCV26414    Hearing Date: July 29, 2022    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

Plaintiff Power House, LLC (“Plaintiff”) filed this action on July 19, 2021 against Defendants Rachel Morya Garza Perez, Jesus Perez, Jesus Garza Perez, Jr., Jesus Perez, Jr., and Rosa I. Villalobos (“Villalobos”). The Complaint contains one cause of action for declaratory relief.

In the Complaint, Plaintiff alleges that as of May 3, 2018, Villalobos was the owner in fee simple of real property located at 1419-1419 ½ W. 105^th Street, Los Angeles, California 90047 (the “1419 Property”) and 1425 West 105^th Street, Los Angeles, California 90047 (the “1425 Property”). (Compl., ¶¶ 8, 9, 12.) Plaintiff alleges that on January 10, 2021, Rachel Morya Garza Perez and Jesus Perez, although not having been on title to either the 1419 Property or the 1425 Property for nearly a decade, obtained a default quiet title judgment against Villalobos, Rebecca Gallardo, and Johnny Marshall Perez, in the Los Angeles Superior Court lawsuit entitled Rachel Morya Garza Perez, et al. v. Rebecca Gallardo, et al., Case No. BC719251 (the “2021 Judgment”). (Compl., ¶ 13.) 

On March 31, 2021, a Grant Deed was recorded pursuant to which Villalobos conveyed title in fee simple to both the 1419 Property and 1425 Property to Power House, LLC (the “Power House Grant Deed”); with Power House, LLC (“Power House”) having paid approximately $2.00M for the purchase of both properties. (Compl., ¶ 14.) Power House acquired title to both the 1419 Property and the 1425 Property without actual notice or knowledge of the 2021 Judgment, and without constructive notice or knowledge of the 202l Judgment as it was not recorded prior to the recording of the Power House Grant Deed. (Compl., ¶ 15.) 

On May 24, 2021, a Quitclaim Deed was recorded pursuant to which Jesus Perez purportedly conveyed his interest, if any, in the 1419 Property to Rachel Morya Garza Perez. (Compl., ¶ 20.) On May 25, 2021, a Quitclaim Deed was recorded pursuant to which Jesus Perez purportedly conveyed his interest, if any, in the 1425 Property to Rachel Morya Garza Perez. (Compl., ¶ 21.) Plaintiff alleges that Rachel Morya Garza Perez and/or Jesus Perez are currently attempting to sell both the 1419 Property and the 1425 Property, and are doing so without recognition or acknowledgment of the Power House Grant Deed or of Power House’s prior purchase of both of the subject properties. (Compl., ¶ 23.) Plaintiff seeks a judicial determination of its and defendants’ rights and interests in and to the 1419 Property and 1425 Property. (Compl., ¶ 26.)

Plaintiff now moves for an order permitting the filing of a First Amended Complaint. Rachel Morya Garza Perez and Jesus Perez (jointly, “Defendants”) oppose. 

Evidence

The Court grants Defendants’ Request for Judicial Notice as to Exhibits “A” and “C”.  

The Court rules on Defendants’ evidentiary objections to the Declaration of David S.

Bartelstone as follows:

            Objection 1: overruled

            Objection 2: overruled

            Objection 3: overruled

            Objection 4: overruled

            Objection 5: overruled

The Court rules on Defendants’ evidentiary objections to the Declaration of Ada Ruiz as follows:

            Objection 1: overruled

            Objection 2: overruled

The Court rules on Defendants’ evidentiary objections to the Declaration of S. David Schreiber as follows:

            Objection 1: overruled

            Objection 2: overruled

            Objection 3: overruled

The Court rules on Defendants’ evidentiary objections to the Declaration of Edwin Wen as follows:

Objection 1: overruled

Objection 2: overruled

Objection 3: overruled

Objection 4: overruled

Discussion

Pursuant to Code of Civil Procedure section 473(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. (Code Civ. Proc., § 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(a).) The motion must also state what allegations are proposed to be deleted or added, by page, paragraph, and line number. (Ibid.) Finally, a separate supporting declaration specifying the effect of the amendment, why the amendment is necessary and proper, when the facts giving rise to the amended allegations were discovered, and the reason why the request for amendment was not made earlier must also accompany the motion. (Cal. Rules of Court, rule 3.1324(b).)

The Court finds that Plaintiff has complied with the procedural requirements of Cal. Rules of Court, rule 3.1324. Plaintiff’s counsel’s supporting declaration includes the proposed amendments to the Complaint in a redlined document showing the differences between Plaintiff’s Complaint and the proposed First Amended Complaint. (Bartelstone Decl., ¶ 2, Ex. 1.) Plaintiff seeks to amend the Complaint to change the name of Plaintiff from Power House, LLC to High Power House, LLC, and also seeks to add three additional causes of action for declaratory relief, among other proposed amendments to the Complaint. 

Plaintiff indicates that High Power House is the entity that made the offer to Villalobos to purchase the two subject properties which are the subject of this lawsuit. (Wen Decl., ¶ 1.)  ProActive Escrow, Inc. was involved in the sale of the subject properties. (Ruiz Decl., ¶ 1.) ProActive Escrow, Inc. mistakenly identified the grantee on the Grant Deed as “Power House LLC” rather than “High Power House, LLC” and had the seller and grantor, Villalobos, sign the Grant Deed with the erroneous designation of the grantee. (Ruiz Decl., ¶ 4.) On June 29, 2022, Plaintiff’s counsel received from Villalobos a signed Corrective Grant Deed in favor of High Power House LLC as the grantee. (Bartelstone Decl., ¶ 6, Ex. 5.)

Plaintiff’s counsel indicates that shortly after being retained to handle this matter in July of 2021, he became aware that the Grant Deed from Villalobos to Plaintiff mistakenly identified the grantee as “Power House LLC” instead of “High Power House LLC.” (Bartelstone Decl.,      ¶ 8.) Plaintiff decided to file suit in the name of the identified grantee on the Grant Deed, Power House, LLC, the record owner of both properties, and intended to obtain a corrective grant deed informally with Villalobos or formally through the Court via a name change application or motion for leave. (Bartelstone Decl., ¶ 10.) During the week of May 9, 2022, Plaintiff’s counsel first learned why an error had been made in the Grant Deed, i.e., that ProActive Escrow, Inc. had made a mistake when preparing the Grant Deed. (Bartelstone Decl., ¶ 21.)

In addition, in January of 2022, Plaintiff’s counsel determined that several declaratory relief causes of action were needed based on factual and legal claims of which they had become aware since being retained in July of 2021, related to Rachel Morya Garza Perez’s prior 2013 lawsuit and 2018 lawsuit. (Bartelstone Decl., ¶ 15.) Plaintiff’s counsel indicates that they spent months investigating and researching the 2013 and 2018 lawsuits, and “decoding and transcribing the sometimes illegible court filings in an effort to read Ms. Perez’s legal and factual arguments concerning her claims.” (Bartelstone Decl., ¶ 23.)

In their opposition, Defendants assert that Plaintiff’s motion proposes amendments barred by the statute of limitations, and that “Plaintiff’s Argument of Res Judicata are Irrelevant and Ungrounded.” (Opp’n at p. 9:14-15; 10:18.) But the asserted legal deficiency of the proposed amendment does not warrant denial of leave to amend. (See Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048 [“the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings”].)

Defendants also repeatedly refer to the subject Grant Deed as “counterfeit” but fail to present evidence in support of this assertion. As noted above, Plaintiff provides evidence that the escrow company mistakenly identified the grantee on the subject Grant Deed as “Power House LLC” rather than “High Power House, LLC.” (Ruiz Decl., ¶ 4.)

Defendants also oppose on the grounds that they will be prejudiced by the amendments because Defendants will have to defend against new causes of action, which will require incurring additional costs for discovery. The Court finds that in light of the May 24, 2023 trial date, Defendants will have sufficient time to participate in discovery and defend against the new causes of action. As Plaintiff notes, any unfair surprise or additional costs that can occur when leave is sought immediately before or during trial do not exist here. Moreover, as set forth above, “[t]he 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, supra, 184 Cal.App.4th 1422, 1428.)

Defendants also assert that they “have litigated to protect their rights and interests in the Perez Property since 2013.” (Opp’n at p. 12:18-20.) But as Plaintiff notes, the relevant analysis of any asserted prejudice concerns proposed amendments to the Complaint in this action, not prejudice resulting from different proceedings which began in 2013.

Lastly, Defendants assert that there was unwarranted delay by Plaintiff in seeking leave to amend. Defendants contend that the key facts at issue in the proposed First Amended Complaint were known, or should have been known, to Plaintiff before the original Complaint was filed on July 19, 2021. The Court finds that Plaintiff’s counsel’s supporting declaration demonstrates that there was not unwarranted delay in seeking the proposed amendments. The Court also notes that delay alone, absent prejudice, does not warrant denial of a motion for leave to amend. ((Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564 [“Where no prejudice is shown to the adverse party, the liberal rule of allowance prevails.”].)

Conclusion

Based on the foregoing, Plaintiff’s motion for leave to file a First Amended Complaint is granted. The Court orders Plaintiff to file and serve the First Amended Complaint within 3 days of the date of this Order.

Plaintiff is ordered to give notice of this Order.

DATED:  July 29, 2022                                  ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court