Judge: Theresa M. Traber, Case: 22STCV32035, Date: 2024-01-31 Tentative Ruling
Case Number: 22STCV32035 Hearing Date: January 31, 2024 Dept: 47
Tentative Ruling
Judge Theresa M. Traber, Department 47
HEARING DATE: January 31, 2024 TRIAL
DATE: NOT SET
CASE: ACCO Engineered Systems, Inc. v. MPT of
Los Angeles PMH, L.P. et al.
CASE NO.: 22STCV32035 
MOTION
FOR LEAVE TO FILE CROSS-COMPLAINT
MOVING PARTY: Defendants Alta Los Angeles Hospitals, Inc. and
Prospect Medical Holdings, Inc.
RESPONDING PARTY(S): Plaintiff ACCO
Engineered Systems, Inc.
STATEMENT
OF MATERIAL FACTS AND/OR PROCEEDINGS:
This is an action for breach of contract filed on September 30, 2022. A First Amended Complaint was filed on July
25, 2023. Plaintiff alleges that
Defendants have failed to pay money owed for the installation of HVAC equipment
at a hospital facility owned and operated by Defendants.
Defendants Alta Los Angeles
Hospitals, Inc. and Prospect Medical Holdings, Inc. move for leave to file a
compulsory cross-complaint.
TENTATIVE RULING:
Defendants
Alta Los Angeles Hospitals, Inc. and Prospect Medical Holdings, Inc.’s Motion
for Leave to File a Cross-Complaint is GRANTED.
Defendants are ordered to file a
clean standalone copy of the proposed Cross-Complaint within 10 days of this
order.
DISCUSSION:
Defendants Alta Los Angeles
Hospitals, Inc. and Prospect Medical Holdings, Inc. move for leave to file a
compulsory cross-complaint.
//
Legal Standard
Parties generally must file a cross-complaint against the
party who filed the complaint before or at the same time as the answer to the
complaint. (Code Civ. Proc., § 428.50(a).) Parties seeking to file untimely compulsory
cross-complaints may file with the Court for leave to do so, even though the
failure to timely file resulted from oversight, inadvertence, mistake, neglect,
or other cause. (Code Civ. Proc. § 426.50.) In such a case, after notice to the
adverse party, the Court must grant leave to file the cross-complaint if the
party acted in good faith. This section is liberally construed to avoid
forfeiture of causes of action. (Id.)
The purpose of the compulsory cross-complaint statute is to
prevent piecemeal litigation. (Align Technology, Inc. v. Tran (2009) 179
Cal.App.4th 949, 959.) Compulsory cross-complaints consist of those causes of
action existing at the time of service of the answer that the defendant must
bring against the plaintiff, or else forfeit the right to bring them in any
other action. (Code Civ. Proc., § 426.30(a).) Specifically, compulsory
cross-complaints consist of the causes of action that “arise out of the same transaction,
occurrence, or series of transactions or occurrences as the cause of action
which the plaintiff alleges in his complaint.” (Code Civ. Proc. § 426.10(c).)
To avoid piecemeal litigation, courts liberally construe the term
“transaction”—it is “‘not confined to a single, isolated act or occurrence . .
. but may embrace a series of acts or occurrences logically interrelated.’” (Align
Technology, supra, 179 Cal.App.4th at 960.)
Thus, a
motion to file a compulsory cross-complaint at any time during the course of
the action must be granted where forfeiture would otherwise result, unless the
moving party engaged in bad faith conduct. (Silver Organizations Ltd. v.
Frank (1990) 217 Cal.App.3d 94, 99.) The determination that the moving
party acted in bad faith must be supported by substantial evidence. (Ibid.;
Foot’s Transfer & Storage Co. v. Superior Court (1980) 114 Cal.App.3d
897, 902 [“We conclude that this principle of liberality requires that a strong
showing of bad faith be made in order to support a denial of the right to file
a cross-complaint under this section”].) “Factors such as oversight, inadvertence, neglect,
mistake or other cause, are insufficient grounds to deny the motion unless
accompanied by bad faith.” (Silver Organizations Ltd, supra,
217 Cal.App.3d at 99)
Rather, bad faith is “defined as ‘[t]he opposite of “good faith,” generally
implying or involving actual or constructive fraud, or a design to mislead or
deceive another, or a neglect or refusal to fulfill some duty or some
contractual obligation, not prompted by an honest mistake . . . , but by some
interested or sinister motive[,] . . . not simply bad judgment or negligence,
but rather . . . the conscious doing of a wrong because of dishonest purpose or
moral obliquity; . . . it contemplates a state of mind affirmatively operating
with furtive design or ill will.’” (Id. at 100.)
Whether
Claims are Compulsory
Defendants seek leave to file a
Cross-Complaint against Plaintiff alleging that Plaintiff breached the contract
at issue in this case by overcharging Defendants for the work done.
(Declaration of Timothy J. Broussard ISO Mot. Exh. K.) Defendants concede that
their answer to the First Amended Complaint was filed on September 21, 2023. (Broussard
Decl. ¶ 8 Exh. J.) Defendants state that they first became aware that
Defendants had overpaid Plaintiff after Plaintiff provided responses to
Defendants’ initial discovery requests on September 21, 2023. (Id. ¶ 9.)
In opposition, Plaintiff appears to
neglect Defendants’ contention that this is a compulsory cross-claim, arguing
that the cross-complaint is untimely and that the Court should not exercise
discretion to permit its filing under Code of Civil Procedure section 428.50(c).
This section governs filing of permissive cross-complaints. In contrast,
Defendants’ claims arise on their face out of the same transaction as Plaintiff’s
claims and, thus, must be considered to be compulsory cross-claims. As a result, leave to amend must be granted
unless Plaintiff can demonstrate by substantial evidence that Defendants are
acting in bad faith.
Bad Faith
Plaintiff
contends that Defendants’ cross-complaint is brought in bad faith and should
not be permitted. Plaintiff contends that, according to Defendants’ own
proposed cross-complaint, the evidence indicating that Plaintiff overcharged
Defendants consisted of Inspector of Record reports showing the true extent of
completion of the project. (See Broussard Decl. Exh. K ¶¶ 29, 31.) Even if the
Court accepts Plaintiff’s contention that this evidence was known to Defendants
at the time, Plaintiff offers no evidence demonstrating that Defendants acted
in bad faith in failing to bring these claims sooner. It is not sufficient to
demonstrate that Defendants failed to act with diligence. Plaintiff must show that there was some
improper motive for Defendants’ conduct. (Silver
Organizations Ltd, supra, 217 Cal.App.3d
at 100.) Plaintiff has failed to do so.
As
a final matter, Plaintiff also argues that it will be prejudiced by permitting
filing of the proposed cross-complaint, and, further, that the issues raised in
the proposed cross-complaint can be addressed through the affirmative defense
of offset. These contentions are irrelevant in the context of a compulsory
cross-complaint. Where the claims are compulsory and Plaintiff has not shown
any bad-faith conduct, the Court has no discretion to deny leave to file the
proposed cross-complaint.
CONCLUSION:
Accordingly,
Defendants Alta Los Angeles Hospitals, Inc. and Prospect Medical
Holdings, Inc.’s Motion for Leave to File a Cross-Complaint is GRANTED.
Defendants are ordered to file a
clean stand-alone copy of the proposed Cross-Complaint within 10 days of this
order.
Moving
Parties to give notice.
//
IT IS SO ORDERED.
Dated: January 31,
2024 ___________________________________
Theresa
M. Traber
Judge
of the Superior Court
Any party may submit on the
tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day
before the hearing. All interested parties must be copied on the email. It
should be noted that if you submit on a tentative ruling the court will still
conduct a hearing if any party appears. By submitting on the tentative you
have, in essence, waived your right to be present at the hearing, and you
should be aware that the court may not adopt the tentative, and may issue an
order which modifies the tentative ruling in whole or in part.