Judge: William D. Claster, Case: 20-01161160, Date: 2023-06-16 Tentative Ruling
1. Defendant and Cross-Complainant Labarre/Osknee Insurance
Agency, LLC's Notice of Motion and Motion for Leave to File Third Amended
Cross-Complaint or, Alternatively, Motion to Sever ROA 397
2. Status Conference
LaBarre/Oksnee Insurance Agency, LLC moves for leave to file a Third Amended Cross-Complaint (3AXC), or in the alternative to sever the trial of its 2AXC from the trial of Sirco/Irvine Business Park II Association’s underlying claims. This motion is DENIED. However, in the event that Travelers’ pending motion for summary judgment against LaBarre is denied, then, for the reasons set forth below, the Court will reconsider this motion. At the hearing, the parties should be prepared to discuss a new hearing date for Travelers Casualty Insurance Company of America’s motion for summary judgment on the operative 2AXC, as well as a new trial date.
I. Leave to Amend
While courts generally apply a policy of great liberality in permitting amendment, this policy applies only where no prejudice is shown to the adverse party. Moreover, in some cases, unwarranted delay in seeking amendment “may—of itself—be a valid reason for denial.” (Huff v. Wilkins (2006) 138 Cal.App.4th 732, 746.) Relevant here, “[i]t would be patently unfair to allow [a] plaintiff[] to defeat [a defendant’s] summary judgment motion by allowing [the plaintiff] to present a ‘moving target’ unbounded by the pleadings.” (Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 176.)
LaBarre seeks to file a 3AXC that adds a claim for express indemnity against Travelers. The claim is based on LaBarre’s agency contract with Travelers, which contains a clause requiring Travelers to indemnify LaBarre and hold it harmless from certain claims arising from Travelers’ errors and omissions. (1st Deihl Decl., Ex. 3, at § VII.)
LaBarre contends that in February 2022, discovery revealed conduct by Travelers that arguably triggers the express indemnity provision. (Id., at ¶¶ 4-5.) But LaBarre filed this motion in April 2023, over a year later, and two months after Travelers moved for summary judgment on the operative 2AXC in February 2022. Absent an explanation, this is the sort of undue delay that justifies denial. It would be patently unfair for LaBarre to defeat Travelers’ summary judgment motion by seeking leave to add a cause of action it knew of long before Travelers filed its motion.
LaBarre argues its motion was not delayed. It contends its files did not have a copy of the full agency contract with the indemnity clause. As a result, in September 2022, it propounded discovery seeking all copies of contracts it had with Travelers. Travelers responded in early November 2022, producing a copy of the agency contract. LaBarre tendered its indemnity claim to Travelers in December 2022, and Travelers never responded. Because the parties had a mediation on calendar for March 2023, LaBarre chose not to seek amendment at that time. It filed its motion about a month after the failed mediation, only five months after Travelers produced a copy of the contract.
LaBarre, through the supplemental declaration of its counsel, provides evidence of the September 2022 discovery requests, the November 2022 responses, the December 2022 tender and lack of response, and the March 2023 mediation. (2nd Deihl Decl., ¶¶ 2-9.) But it puts on no evidence that its files lacked a full copy of the agency contract, such as a declaration from LaBarre’s custodian of records. It simply asserts this in its reply memorandum. The argument of counsel is no substitute for evidence, and without evidence that it had no copy of the full contract, LaBarre’s argument against undue delay fails. After all, the agency contract is the foundational document for LaBarre’s entire relationship with Travelers. Absent evidence to the contrary, one would expect LaBarre to have a full copy of the contract in its files.
More to the point, even taking LaBarre’s version of events at face value, its motion is unduly delayed in the context of this case. LaBarre’s December 2022 tender letter to Travelers asked for a “prompt response.” (2nd Deihl Decl., Ex. E.) Once a short time passed with no response, LaBarre had all the facts necessary to plead a claim for express indemnity. Instead of moving for leave to amend immediately, it waited. It waited through Travelers moving for summary judgment on Sirco’s claims, Travelers moving for summary judgment on LaBarre’s cross-claims, the Court granting summary judgment against Sirco (leaving LaBarre the only party potentially liable Sirco’s underlying claims), and even through LaBarre filing its own opposition to Travelers’ MSJ, which mentions a “recently filed” motion for leave to amend that had not actually been filed. (ROA 385 at p. 11, filed four days before this motion.)
Because LaBarre unduly delayed in filing this motion, and because it would be patently unfair to allow LaBarre to avoid Travelers’ potentially meritorious motion for summary judgment in these circumstances, leave to amend is denied.
As noted above, the Court is willing to reconsider this motion if it denies Travelers’ pending motion for summary judgment against LaBarre. The reasoning is as follows: Travelers seeks summary judgment on LaBarre’s claim for equitable indemnification. To defeat that claim, LaBarre will need to show that there is a triable issue of material fact as to whether Travelers acted in a negligent manner in connection with the issuance of the insurance policy to Sirco. Presumably, the same showing would also be necessary to support a claim for express indemnity. If such a showing is made and the motion for summary judgment is denied, then there would be no prejudice to Travelers in allowing the amended cross-complaint. On the other hand, the inability of LaBarre to raise a triable issue of fact on the equitable indemnification claim would mean that adding the express indemnification claim is futile since the ruling granting Travelers’ summary judgment motion would effectively preclude this new claim.
II. Severance
LaBarre alternatively asks that the Court sever the trial of its cross-claims from the trial of Sirco’s underlying claims, which the Court has the power to do if prejudice would result from conducting a single trial. (CCP § 1048(b).) LaBarre suggests that because Travelers does not contest severance in its opposition, it has conceded the point. But LaBarre is the party seeking relief, and it bears the burden of showing severance would be proper regardless of whether Travelers discusses severance in opposition.
As to the claimed prejudice, LaBarre’s entire argument is as follows: “[I]n this case, a separate trial is appropriate if the Court is concerned about prejudice to Plaintiff should the trial date be moved. It is clear that LaBarre will suffer extreme prejudice if it is not allowed to amend its cross-complaint to assert a viable cause of action against Travelers.” (Mot. at p. 9.) That is, the prejudice that would result to LaBarre flows from denial of leave to amend, not from conducting a single trial. And the Court has denied leave to amend for the reasons discussed above.
Moreover, it appears severance would cause prejudice to Travelers. As set forth in LaBarre’s new trial papers, it intends to present an “empty chair” defense to Sirco’s claims. That is, it intends to argue that Travelers is at least partially at fault for Sirco’s losses, and that the jury should apportion fault to Travelers (and discount any damages awarded against LaBarre) accordingly.
LaBarre proposes the trials be severed so that Sirco’s claims against LaBarre are tried first, followed by LaBarre’s cross-claims against Travelers. Because Sirco no longer has any claims against Travelers, Travelers would not participate in the first trial. But if the first jury apportions fault to Travelers, then LaBarre would argue in the second trial that Travelers’ fault—and thus Travelers’ liability for express indemnity—was established in a trial Travelers did not participate in. This would prejudice Travelers’ ability to mount a defense in the second trial.
Because LaBarre does not claim any prejudice that would result from a single trial (as opposed to the denial of leave to amend), and because severance would likely prejudice Travelers, the alternative request for severance is denied.