Judge Upinder S. Kalra, Case Number: 23STCV23124, Date: 2025-01-17 Tentative Ruling

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1. An Order Granting Plaintiff Leave to file the Proposed First Amended Complaint;

2. An Order Granting Summary Judgment in Defendant’s Favor as to the Complaint.

2. Plaintiff is ordered to file the First Amended Complaint within seven (7) days of this ruling;

On September 21, 2023, Plaintiff Young Kook Choi (Plaintiff) filed a Complaint against Defendant Pennymac (Defendant) with two causes of action for: (1) Declaratory Relief and (2) Preliminary and Permanent injunction.

According to the Complaint, Defendant financed $980,000 at 5.125% interest for Plaintiff’s real property. Plaintiff alleges that due to COVID-19, he became delinquent and applied for a Loan Modification which reduced the interest rate to 4.375%. Plaintiff further alleges that he applied to the State of California Mortgage Relief fund which funds were sent to Pennymac directly and Pennymac, for unknown reason, increased the interest rate. Plaintiff now contends that Pennymac should have applied the $80,000 of Mortgage Relief funds to the original delinquent amount and the interest rate should remain at 4.375%.

On December 23, 2024, Plaintiff filed an opposition to the MSJ and moved ex parte for an Order Granting Leave to Amend the Complaint, Shortening Time on a Hearing to Amend the Complaint, and Continuing the Hearing Date on the MSJ.

On December 24, 2024, the court GRANTED the ex parte application in part, setting a hearing on Plaintiff’s Motion for Leave to Amend the Complaint for January 17, 2025.

On January 9, 2025, Defendant filed an opposition to the Motion for Leave to Amend.

Code of Civil Procedure section 473, subdivision (a)(1) provides, in relevant part: “[t]he court may . . . in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading . . . .” The court may, in furtherance of justice, allow the amendment of any pleading at any time before or after commencement of trial. (Code Civ. Proc., (CCP) § 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. Sup. Ct. (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.)

California Rules of Court, rule 3.1321(a) requires that a motion to amend must: “[i]nclude a copy of the proposed. . . amended pleading. . . [and] state what allegations in the previous pleading are proposed to be [deleted and/or added], if any, and where, by page, paragraph, and line number, the [deleted and/or additional] allegations are located . . . .”

In addition, rule 3.1324(b) states: “[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.”

Plaintiff contends that Defendant’s indication that they returned the $80,000 to the State of California requires Plaintiff to amend the Complaint concerning the first cause of action.[1] Plaintiff additionally contends that the new fact that Defendant returned the funds to the State of California possibly warrants adding three new claims for fraud, breach of contract, and breach of implied covenant of good faith and fair dealing. Defendant argues that leave to amend should not be granted because Plaintiff did not comply with the applicable CRC, Defendant would be prejudiced by an amendment, and the proposed amendment would be futile.[2]

Here, leave to amend is proper. First, Plaintiff has substantially complied with CRC Rule 3.1324. Plaintiff included a separate declaration that included the effect of the amendment (adding one new fact and resulting causes of action), stating why the amendment is necessary and proper, that the facts were discovered on October 21, 2024, and that as a result the amendment was not made sooner. (Kim Decl. ¶¶ 3-4.) Second, the court may impose conditions to limit any prejudice to Defendant.[3] (CCP §§ 473(a)(1), 576.) The condition here is simple: Plaintiff may file the proposed First Amended Complaint but the court will not grant leave to amend again should Defendant succeed on a subsequent demurrer or motion to strike.

Accordingly, the court GRANTS Plaintiff’s motion for leave to file the proposed First Amended Complaint.

In light of the foregoing ruling, the Motion for Summary Judgment, is continued.

2. Plaintiff is ordered to file the First Amended Complaint within seven (7) days of this ruling;

[1] Plaintiff did not submit further briefing. The court relies on the ex parte application.

[2] At the January 2, 2025 ex parte hearing, the court requested authority from both parties concerning how the court should consider the evidence about the telephone calls. Neither did so. As such, the court declines to further expand on that argument here.

[3] Defendant’s argument on prejudice is well taken.