Judge: Theresa M. Traber, Case: 23STCV07227, Date: 2024-07-31 Tentative Ruling

Case Number: 23STCV07227    Hearing Date: July 31, 2024    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     July 31, 2024              TRIAL DATE: October 29, 2024

CASE:                         Prime Electric Wholesale Corp. v. LA Solar Group, Inc., et al.

CASE NO.:                 23STCV07444           

MOTION FOR LEAVE TO FILE CROSS-COMPLAINT

MOVING PARTY:               Defendant LA Solar Group, Inc.

RESPONDING PARTY(S): Plaintiff Prime Electric Wholesale Corp., et al.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for breach of contract that was filed on April 3, 2023. Plaintiff alleges that Defendants failed to pay for building materials which they ordered from Plaintiff.  

Defendant LA Solar Group, Inc. moves for leave to file a compulsory cross-complaint.

TENTATIVE RULING:

            Defendant’s Motion for Leave to File a Cross-Complaint is GRANTED.

            Defendant is to file a clean, standalone copy of the proposed cross-complaint within 10 days of this order.

DISCUSSION:

Defendant LA Solar Group, Inc. moves 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).) However, parties seeking to file untimely compulsory cross-complaints may ask 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.)

A motion to file a compulsory cross-complaint at any time during 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

Defendant seeks leave to file a Cross-Complaint against Plaintiff alleging fraudulent inducement, breach of contract, and related claims arising from the same purchase agreement that is the basis of the original Complaint in this action. (Declaration of Shannon Duane ISO Mot. Exh. 1.) Plaintiff, in opposition, argues that the motion is procedurally deficient because it does not comply with Rule of Court 3.1324, and should be denied because Defendant has been dilatory. Neither contention is persuasive. First, Rule of Court 3.1324 concerns amendments to pleadings, not the filing of cross-pleadings. Second, the Court lacks discretion to deny a motion for leave to file a compulsory cross-complaint, even where the cross-complaint is late, absent an affirmative showing of bad faith with substantial evidence. (Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 99; Foot’s Transfer & Storage Co. v. Superior Court (1980) 114 Cal.App.3d 897, 902.)

Plaintiff also asserts that the Cross-Complaint is brought for an improper purpose because it is (1) an improper motion for reconsideration related to the Court’s prior rulings on writs of attachment; (2) intended to delay the trial date, and (3) intended to obtain leverage in conjunction with a new ex parte application. None of these assertions are supported by substantial evidence. Plaintiff does not explain how the proposed pleading is relitigating those rulings, and the conclusions of Plaintiff’s counsel regarding Defendant’s intentions are not evidence.

Finally, Plaintiff argues that the Cross-Complaint should not be permitted because it contradicts prior admissions in interrogatories and its own exhibits and is therefore fatally defective. Once again, the Court lacks discretion to deny leave to file a compulsory cross-complaint absent a showing of bad faith, which Plaintiff has not made. Plaintiff’s contention that it will be prejudiced by the late filing of the cross-complaint is likewise an insufficient basis to deny leave to file a compulsory crossclaim. Defendant’s motion must therefore be granted.

CONCLUSION:

            Accordingly, Defendant’s Motion for Leave to File a Cross-Complaint is GRANTED.

            Defendant is to file a clean, standalone copy of the proposed cross-complaint within 10 days of this order.

            Moving Party to give notice.

IT IS SO ORDERED.

Dated:  July 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.