Judge: Yolanda Orozco, Case: 20STCV00961, Date: 2022-09-12 Tentative Ruling

Case Number: 20STCV00961    Hearing Date: September 12, 2022    Dept: 31

MOTION FOR LEAVE TO AMEND TO FILE A FIRST AMENDED COMPLAINT IS GRANTED

Background

Plaintiff Rosa Herrera (“Plaintiff”) filed this action against Defendants Jose Ontiveros, Jr., MOR Financial Services, Inc., Cynthia Ontiveros, and First American Title Company on January 8, 2020, alleging causes of action for:

1)     Constructive trust;

2)     To set aside fraudulent transfer of real property;

3)     To set aside fraudulent creation of first lien on real property;

4)     To set aside fraudulent creation of second lien on real property; and

5)     Quiet title.

The Complaint arises from the alleged fraudulent August 12, 2019, transfer of real property commonly known as 9926 Anzac Avenue & 1961 E. Century Blvd., Los Angeles, California (the “Property”). Plaintiff alleges that Defendant Francisco Vielma (“Vielma”) violated an agreement for Vielma to hold the Property in trust for the benefit of Plaintiff by transferring title to Cynthia Ontiveros. Plaintiff  alleges that subsequently Cynthia transferred the property to her brother, Jose Ontiveros (“Defendant”), while fraudulently creating two liens on the Property.

On March 2, 2016, Plaintiff filed an earlier action pertaining to the same property. In Los Angeles Superior Court Case No. BC612422, Plaintiff alleged the following: Plaintiff owned the Property and was facing foreclosure in early 2010, when she was approached by her niece to set up a meeting with her niece’s husband, Vielma, to help arrange a short sale of the Property. The arrangement consisted of Plaintiff providing funds to Vielma to obtain a loan to fund the short sale purchase of the Property. Vielma would hold the Property in trust for five years. Plaintiff would continue to live at the Property and would be responsible for making all mortgage payments. After five years, Vielma would transfer to the Property back to Plaintiff or her assignee in exchange for a $10,000 fee. Under the agreement, Plaintiff provided Vielma with approximately $60,000 for the down payment. On October 27, 2011, Plaintiff executed a grant deed conveying title to the Property to Vielma. Plaintiff made monthly payments to Vielma for the mortgage, and Vielma applied those payments to the Mortgage. Plaintiff and her family made numerous improvements to the Property to enhance its value. Subsequently, Vielma asserted that he never agreed to hold title to the Property for five years, and he demanded immediate payment of his fee. Vielma threatened to sell the Property if payment was not made. On February 19, 2016, Vielma executed a grant deed conveying title to the Property to Cynthia. On March 8, 2016, Cynthia purchased the Property for $375,000.

Defendant Cynthia Ontiveros was dismissed with prejudice from this action on January 28, 2022.

Plaintiff filed this Motion for Leave to Amend Complaint to file a First Amended Complaint on August 18, 2022.

Defendant Jose Ontiveros, Jr. filed an Opposition on August 29, 2022. No reply has been filed.

Legal Standard

Leave to amend is permitted under Code of Civil Procedure section 473, subdivision (a) and section 576. The policy favoring amendment and resolving all matters in the same dispute is “so strong that it is a rare case in which denial of leave to amend can be justified. . ..” “Although courts are bound to apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial [citations], this policy should be applied only ‘where no prejudice is shown to the adverse party . . .. [citation]. A different result is indicated ‘where inexcusable delay and probable prejudice to the opposing party’ is shown. [Citation].” (Magpali v. Farmers Group (1996) 48 Cal.App.4th 471, 487.)¿¿ 

¿¿ 

Under California Rules of Court, Rule 3.1324, a motion to amend a pleading before trial must (1) include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located. (Cal. Rules of Court, rule 3.1324(a).) A separate supporting declaration specifying (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 reason why the request for amendment was not made earlier must accompany the motion. (Id., rule 3.1324(b).)¿ 

Request for Judicial Notice

The Court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).)  However, the court may only judicially notice the existence of the record, not that its contents are the truth. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.) 

Defendant requests Judicial Notice of the following:

1.     Exhibit 1: Herrera’s Request for Dismissal, With Prejudice, of Cynthia Ontiveros in the First Action (Case No. BC 612422), dated January 28, 2020.

2.     Exhibit 2: Herrera’s Request for Dismissal, With Prejudice, of Cynthia Ontiveros in the Instant Action (Case No. 20STCV00961), dated January 28, 2020.

3.     Exhibit 3: Minute Order Entered November 19, 2020.

4.     Exhibit 4: Tentative Statement of Decision entered and filed March 2, 2022 in the matter of Herrera v. Vielma, et al. Case No. BC612422.

5.     Exhibit 5: Statement of Decision entered and filed July 27, 2022 in the matter of Herrera v. Vielma, et al. Case No. BC612422.

6.     Exhibit 6: Jacob Mojarro’s declaration, dated April 23, 2020, in support of motion to exonerate undertaking which includes as Exhibit 4 a copy of Herrera’s settlement with Cynthia, 2020, dated January 27, 2020.

The Court grants Defendant’s request for Judicial Notice.

Discussion

            Timeliness of Motion

Under the Court Order issued on August 4, 2022, the hearing for Leave to File a First Amended Complaint (FAC) was set for September 12, 2022. Under California Code of Civil Procedure (CCP) section 1005 subdivision (b), Plaintiff was required to serve the Motion on Defendants 16 court days before the hearing on September 18, 2022. CCP section 1005 extends the notice period by two calendar days if notice was served by email (“or another method of delivery providing for overnight delivery, the required 16-day period of notice before the hearing shall be increased by two calendar days.” (Code Civ. Proc., § 1005 subd. (b).)

Accordingly, Plaintiff was required to serve the motion papers on August 16, 2022. Defense counsel states that the Motion was served on Defendant on August 18, 2022, at 11:09 a.m. Thus, Defendant asks the Court to not consider the motion.

Defendant has not alleged he was prejudiced by having the motion served late, accordingly, the Court has the discretion to hear the Motion on the merits. (Reedy v. Bussell (2007) 148 Cal.App.4th 1272, 1288 [Court had the discretion to hear the motion if no prejudice to opposing party and an opposition was filed on the merits.].)

Motion for Leave to Amend to File First Amended Complaint

Plaintiff makes this motion seeking to allege new causes of action and add new defendants to the action. Plaintiff asserts that this motion was timely made and not made at an earlier date because Plaintiff was awaiting the outcome of Herrera v. Francisco Vielma, et. al. LASC Case No. BC612422. A Statement of Decision on Trial was issued on July 26, 2022. Judgment was entered on August 17, 2022. This Motion was filed on August 18, 2022, pursuant to the Court’s August 4, 2022 Order. (See Min. Or. 08/04/22.)

Plaintiff attaches a copy of the proposed FAC as Exhibit A to the Motion. Plaintiff seeks to amend the Complaint as follows:

1)     Add Commercial Funding, LLC as Doe Defendant 2

2)     Add a cause of action to Set Aside Fraudulent Fourth Lien on Real Property as to Commercial Funding, LLC.

3)     The FAC proposes to add causes of action to seek a Constructive Trust as to Vielma on all proceeds and assets received by Vielma as result of the sale of the Property and conversion of funds from Herrera.

4)     The FAC proposes to amend the second cause of action to Set Aside Fraudulent Transfer of Real Property in the original complaint (starting at para. 34 at 7:4 and ending at para. 42 at 7:27) to remove any reference to Cynthia Ontiveros (“Cynthia”) as a debtor to Herrera, and to allege Jose, Jr. is the actual beneficial owner who purchased the Property from Vielma on March 8, 2016, with Cynthia as a straw buyer. Jose, Jr. (with Cynthia on title) is now alleged to have transferred title to the Property to himself in hindrance of Herrera’s claims against Vielma.

5)     The FAC proposes to amend the cause of action for Quiet Title in the original complaint (starting at para. 60 at 10:4 and ending at para. 69 at 11:6) by deleting the original paragraphs and adding allegations to claim quiet title based solely on Cynthia’s obligation under the Settlement Agreement to transfer her interest to Herrera upon the successful set aside of the transfer of title to Jose, Jr.

6)     The FAC proposes to amend the “Nature of the Action” section in the original complaint (starting at para. 1 at 1:19 and ending at para. 2 at 2:8) by deleting the original two paragraphs and adding paragraphs 1 – 5 in the FAC. The section summarizes the nature of the case as a fraudulent transfer case with quiet title only based on Herrera’s rights under the Settlement Agreement with Cynthia.

7)     The FAC proposes to amend the “Parties” section in the original complaint (starting at para. 3 at 2:10 and ending at para. 9 at 3:9) by adding a brief description of each party’s role or relationship to other parties in this action.

8)     The FAC proposes to amend the “Factual Allegations” in the original complaint (starting at para. 10 at 3:11 and ending at para. 26 at 5:28) to be consistent with the factual findings in the ‘Statement of Decision of Trial' issued on July 26, 2022, and Judgment entered in the prior case by removing any reference to Herrera’s right to rescind the grant deed transferring the Property from Herrera to Vielma, as well as removing any allegations which rely upon the rescission of the grant deed to state facts for the original Quiet Title cause of action.

9)     The FAC proposes to further amend the “Factual Allegations” section in the original complaint to be consistent with the Statement of Decision of Trial in the prior case by removing allegations which state facts to support the imposition of a Constructive Trust against Cynthia and Jose, Jr.

10) The FAC proposes to delete from the original complaint the cause of action of Constructive Trust alleged against Jose Ontiveros, Jr (starting at para. 27 at 6:4 and ending at para. 33 at 6:26).

Defendant Jose Ontiveros, Jr. raises several objections to Plaintiff’s Motion. This includes allegations that Plaintiff’s fraudulent transfer claim against Defendant is barred by res judicata due to the judgment issued in Herrera v. Francisco Vielma, et. al. LASC Case No. BC612422. Defendant argues that Plaintiff’s real property claims are barred by the statute of limitations and the doctrine of retraxit. Furthermore, Defendant alleges Plaintiff’s proposed FAC is a supplemental pleading and required the issuance of an amended or supplemental summons under CCP Section 464,

Defendant also alleges Plaintiff’s FAC is a sham pleading and leave to amend should be denied. citing Hendy v. Losse (1991) 54 Cal.3d 723 in support of the proposition. The Court notes that Hendy pertained to denial of leave to amend a complaint after a demurrer had been sustained and the complaint could not be amended. (Id. At 742.) Here, the Motion is for Leave to File a FAC not leave to file an amended complaint following a ruling on a demurrer. Defendant’s arguments about the merits of an amended complaint are better made in demurrer to the amended pleading.

A Motion for leave to Amend is liberally granted in the interest of justice absent a showing of unwarranted delay or undue prejudice to the opposing party. Defendant alleges it would be prejudiced because Leave to Amend is being sought so close to the trial, which is scheduled for October 17, 2023. A trial continuance can easily mitigate any prejudice Defendant might suffer in comparison to any prejudice Plaintiff may suffer if leave to amend is not granted. Moreover, Defendant can still file a demurrer to FAC so that the Court can properly rule on any alleged deficiencies in the pleading.  

Accordingly, leave to file a FAC is GRANTED.

Conclusion

Plaintiff’s Motion for Leave to Amend Complaint to File First Amended Complaint is GRANTED. Defendant must file an answer within 5 court days. The Court sets an OSC re: service of new party defendants on October 6, 2022, at 9 a.m. 

Plaintiff to give notice.