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MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT |
BACKGROUND
A. Allegations
Plaintiff 1450 North Fair Oaks, LLC alleges that on June 23, 2016, Marlene Z. Robertson, Plaintiff, and Defendants Mount of Olives, LLC, and Emmanuel B. David and Ofelia T. David (husband and wife) entered into a Settlement Agreement, which required escrow to be opened with Defendant Fidelity National Title Company (“Fidelity”) to facilitate transactions set forth in the Settlement Agreement regarding the transfer of property at 1450 N. Fair Oaks in Pasadena to Mount of Olives. Plaintiff alleges that Defendants were negligent in performing their escrow obligations and with the purchase and sale of the subject property, which was supposed to close on October 13, 2016.
The complaint, filed September 27, 2018, was alleged against Defendants Fidelity National Title Company, Fidelity National Title Company of California, and Fidelity National Title Insurance Company only. The first amended complaint, filed October 18, 2019, alleges causes of action against Defendants Fidelity National Title Company (“Fidelity”) and Mount of Olives, LLC, Emmanuel B. David, and Ofelia T. David (collectively, “David Defendants”) for: (1) negligence as to Fidelity; (2) breach of contract as to the David Defendants; and (3) constructive fraudulent transfer as to the David Defendants.
On October 23, 2019, Plaintiff dismissed without prejudice Defendants Fidelity National Title Company of California and Fidelity National Title Insurance Company from the complaint.
B. Motion on Calendar
On November 17, 2020, Plaintiff filed a motion for leave to file the proposed Second Amended Complaint.
On December 1, 2020, Defendants Mount of Olives, Emmanuel David, and Ofelia David (“David Defendants”) filed an opposition brief.
On December 4, 2020, Plaintiff filed a reply brief.
LEGAL STANDARD
CCP § 473(a)(1) states: “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer. The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code.”
CRC rule 3.1324 requires a motion seeking leave to amend to include a copy of the proposed pleadings, to identify the amendments, and to be accompanied by a declaration including the following facts:
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.
The Court’s discretion regarding granting leave to amend is usually exercised liberally to permit amendment of pleadings. ( Nestle v. Santa Monica (1972) 6 Cal.3d 920, 939.) If a 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. Superior Court of Los Angeles County (1959) 172 Cal.App.2d 527, 530.)
DISCUSSION
Plaintiff moves for leave to file the proposed SAC. A copy of a clean version of the SAC is attached as Exhibit D and a red-lined version is attached as Exhibit E to the declaration of Jordan M. Freeman.
The notice of the motion includes the proposed changes to the operative pleading. (See Notice at pp.1-4; Freeman Decl., ¶¶12-13.) In support of the motion, Plaintiff provides the declaration of its counsel, Mr. Freeman. Mr. Freeman states that by granting leave to amend, the SAC will allow the substitution of the real party in interest, Sadvipra, LLC, into the action in place of Plaintiff 1450 North Fair Oaks, LLC. (Freeman Decl., ¶1.) In the proposed SAC, Sadvipra would allege facts and attach exhibits, documenting its standing to pursue the claims, which include Plaintiff’s rights, title, and interest in the claims of David v. Robertson et al. (Case No. GC050829), the Final Settlement Agreement (effective September 30, 2015), and the Motion for Order Enforcing Terms of the Settlement Agreement (July 29, 2019). ( Id., ¶¶4-5, Exs. A-B.) In connection with this action against Fidelity, Plaintiff also assigned its rights to Sadvipra on October 1, 2019, which also includes claims against Mount of Olives and the Davids. ( Id., ¶6, Ex. C.)
Thus, Mr. Freeman states that the effect of the amendment is to bring the proper parties before the Court. (Id., ¶7(a).) He states that the amendment is necessary and proper due to Plaintiff’s assignment of the claims against Defendants to Sadvipra, such that Plaintiff no longer has standing to pursue these claims. (Id., ¶7(b).) He states that the facts giving rise to amendment occurred on October 1, 2019 when the Fidelity case assignment took place, but states that there are no new facts that Sadvipra seeks to allege. (Id., ¶7(c).) Mr. Freeman states that an amendment was not sought sooner because Sadvipra elected to continue the matter in Plaintiff’s name pursuant to CCP § 368.5, such that Plaintiff had no surreptitious motive in seeking substation until now (as opposed to a year later). (Id., ¶¶7(d), 10.) He also states that there would be no prejudice to any of the parties since Mount of Olives and the Davids have not conducted discovery in this action, trial is set for September 28, 2021, and there are no new factual allegations or theories of liability asserted in the SAC. (Id., ¶¶7(d), 15, 16.)
In opposition, David Defendants argue that Plaintiff admits that it never had standing to sue because it assigned its claims against them before they were named as defendants, citing to CCP § 368.5. David Defendants argue that the assignment took place on October 1, 2019, and the FAC was filed against them on October 28, 2019. (See Searles Valley Minerals Operations, Inc. v. Ralph M. Parsons Service Co. (2011) 191 Cal.App.4th 1394, 1403 [“[O]nce the transfer has been made, the assignor lacks standing to sue on the claim.”].) Thus, they argue that Sadvipra’s claims against them do not relate back to the date when the FAC was filed (when these defendants were named).
Section 368.5 states: “An action or proceeding does not abate by the transfer of an interest in the action or proceeding or by any other transfer of an interest. The action or proceeding may be continued in the name of the original party, or the court may allow the person to whom the transfer is made to be substituted in the action or proceeding.”
This section allows for the action to have been continued in the name of the 1450 North Fair Oaks. Alternatively, even if Defendants argue that this was improper, the Court has discretion to allow Sadvipra to be substituted into the action. Further, section 473(a) “giving the courts the power to permit amendments in furtherance of justice has received a very liberal interpretation by the courts of this state.” ( Klopstock v. Superior Court in and for City and County of San Francisco (1941) 17 Cal.2d 13, 19.) [1] The Court also does not find that permitting amendment would prejudice defendants as they have been fully apprised of the causes of action stated against them and new or wholly different causes of action are not being alleged against defendants, such that Defendants are still given a full opportunity to make a defense on the same claims. (See id. at 20-21.)
Based on the declaration of Mr. Freeman, which adequately addresses the factors in CRC Rule 3.1324, and the liberal policy in favor of allowing amendments to the pleading, the Court grants the motion for leave to file the proposed SAC.
CONCLUSION AND ORDER
Plaintiff’s motion for leave to file the proposed second amended complaint is granted. Plaintiff is ordered to electronically file a separate version of the second amended complaint with the Court by this date following the hearing on the matter.
Plaintiff shall provide notice of this order.