Case Number: EC064738 Hearing Date: January 12, 2018 Dept: NCD

TENTATIVE RULING

MOTION FOR LEAVE TO AMEND

COMPLAINT

Calendar: 4

Date: 1/12/18

Case No: EC 064738 Trial Date: None Set

Case Name: 5500 S. Freeway, LLC v. MGN Five Star Cinema LLC

Moving Party: Plaintiff 5500 S. Freeway, LLC

Responding Party: Defendant MGN Five Star Cinemas, LLC

RULING:

Motion for leave to amend plaintiff’s Second Amended Complaint is GRANTED.

Plaintiff has failed to lodge the proposed pleading separately and therefore is ordered to provide a separate, signed, copy of the proposed pleading by 4:00 p.m. this date, at which time the Second Amended Complaint will be deemed filed and served on the current defendant.

RELIEF REQUESTED: File a Second Amended Complaint

CONTENTS OF MOTION: (CRC 3.1324(a))

Copy of the proposed amendment served on all parties? (CCP §471.5): Yes

Proposed amendment signed? Yes

States the effect of the pleading? Generally

Serially numbered to differentiate the sequential order of the amendments? Yes

States what allegations are proposed to be deleted or added? Generally

Date Original Complaint filed: February 10, 2016

Effect of Amendment

Addresses that possession no longer at issue, and reclassification, adds new Doe defendants due to alleged breach of guaranty, adds new causes of action based on facts already pleaded.

RELEVANT FACTS:

Plaintiff 5500 S. Freeway, LLC brought an action for unlawful detainer arising from an alleged written commercial lease, and based on a three day notice to pay rent or quit.

On March 17, 2016, the court deemed the case related to case EC 064739, which alleges a similar unlawful detainer cause of action against the same tenant for the movie theater premises owned by plaintiff. Case EC 064738 has been deemed the lead case and was for the restaurant premises. The tenant had vacated the restaurant premises pretrial so possession was not an issue in that case.

The court conducted a bench trial on February 27, 2017 for the related case for the movie theater premises on the issue of possession and damages. Pursuant to trial in the movie theater premises case, plaintiff was awarded holdover damages, recovery of unpaid base rent, CAM charges, interest and late fees for each day that possession is not surrendered, and the lease agreement was forfeited. The judgment also ordered that plaintiff was to recover reasonable attorneys’ fees to be determined by noticed motion. On August 11, 2017, pursuant to motion, the court ordered costs and reasonable attorneys’ fees to be paid in the sum of $34,850.

Defendant has filed an appeal from the U.D. trial in the movie theater premises case, and the appeal is still pending.

On April 18, 2017, plaintiff filed with the court Doe Amendments, as well as a Second Amended Complaint in this matter, i.e., the restaurant premises case.

On September 22, 2017, the court heard a motion to strike the Second Amended Complaint brought by defendant MGN Five Star Cinema, LLC.

The motion was granted in part, the court ruling:

“Motion to Strike Plaintiff’s Amended Complaint is GRANTED in part and DENIED in part. The Second Amended Complaint filed on April 18, 2017 is stricken, on the ground it was filed without an order permitting its filing. Pleading is stricken without prejudice to plaintiff filing an appropriate motion for leave to amend, but DOE defendants can be added to existing complaint with Doe Amendment Forms, or be added to new complaint if the court grants leave to file Second Amended Complaint upon noticed motion.”

Plaintiff now seeks an order permitting it to file a Second Amended Complaint.

GROUNDS FOR RELIEF:

Declaration by moving party (CCP §2015.5; CRC 3.1115; 3.1324(b)):

Includes proposed additions: generally

Explains why the amendment is necessary and proper: possession is no longer at issue, and complaint must now seek relief for default for breach of contract and the breach of guaranty

Specifies when facts giving rise to amendment discovered: No

Reason why request not made earlier: No

ANALYSIS: (Court’s discretion will usually be exercised liberally to permit amendment of the pleadings; Nestle v. Santa Monica, 6 Cal.3d 920, 929).

Procedural

No specification of additions

The motion is a bit difficult to evaluate, as it is not clear exactly what allegations are being added.

Rule 3.1324(a) of the CRC provides that a motion to amend a pleading before trial

“must:..

(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 allocations 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.”

Subdivision (b) requires that a separate declaration accompany the motion which

“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.”

Although the motion alleges generally that the issue of possession is dropped and the matter reclassified, adding a claim for breach of contract and breach of guaranty, there is no designation paragraph by paragraph of what is new. (The previous complaint was evidently a form Unlawful Detainer complaint). In addition, the declaration fails to clarify when facts giving rise to the amended allegations were discovered, and the reason why the request was not made earlier. The motion could be denied for failure to follow the mandatory procedures, but the court elects not to do so.

Substantive

Under CCP § 473(a)(1):

“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.”

The court’s discretion should usually be exercised liberally to permit amendment of pleadings, based on the fundamental policy that cases should be decided on their merits. Nestle v. Santa Monica (1971) 6 Cal.3d 920, 929. This is especially true where the motion to amend is timely made and the granting of the motion will not prejudice the opposing party. Morgan v. Superior Court (1959) 172 Cal.App.2d 527, 530.

In this case, defendant indicates that the unlawful detainer action originally filed in this case is no longer valid in that possession is not an issue since defendant abandoned the premises, to that this matter is now sought to be converted to a standard civil action for breach of contract in connection with the commercial lease dispute, and for breach of guarantees of that contract.

The opposition argues that plaintiff knew about the newly named Doe defendants, Mkrtchian and Nersisyan, and the basis for liability against them, when the original complaints were filed, so that naming them as Does is improper, as they should have been named in the UD complaints as guarantors. It is also argued that since a judgment has been entered in the related case, i.e., the theater premises case, and is currently still on appeal, such that this matter, i.e., the restaurant premises case, should be stayed. The opposition further argues that defendant will be prejudiced by defendants proceeding beyond judgment in the theater premises case, and by allowing the addition of Doe defendants in the restaurant premises case (the lead case). The argument seems to be that the proper procedure would be to bring a new action against the guarantors on the guarantees.

The reply argues that the court has already concluded that on the lead case, the restaurant premises case, plaintiff would be permitted to amend the proceeding from a UD action to an ordinary civil case and take out the UD allegations. Plaintiff submits a transcript of a hearing on March 1, 2017, at which it was asked of the court, “Procedurally, what would you like to occur?” There was some discussion about trying only the theater premises action that day, and counsel for plaintiff eventually asked, “Now, can I amend my unlawful detainer complaint for the restaurant premises, turn it into an ordinary civil case, take out the unlawful detainer?”

The court responded, “Yes. Those are types of issues we can all discuss on April 11th at the status conference at 8:30 a.m.” [Ex. A].

It does appear that at least as to the lead action, the restaurant premises case, which is clearly not on appeal, the most expedient way to proceed would be to permit amendment, rather than require the filing of a new action for contractual damages not at issue under any UD theory, including those allegedly owed both by the tenant and the guarantors, which case would then likely be consolidated with these actions, which in turn would result in a waste of time and resources.

With respect to the argument that the lead action should be stayed pending appeal of the related action, the theater premises case, the opposition does not bother to submit to the court any evidence, let alone evidence that the related action has been appealed and that appeal is still pending, or subject to stay.

CCP § 916 provides:

“(a) Except as provided in Sections 917.1 to 917.9, inclusive, and in Section 116.810, the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.”

It appears that any court of appeal treatment of the court’s judgment on the UD theories in the theater premises case would not be affected by the parties pursuing remedies which are legally not available in a UD action and which are pending in the restaurant premises case (the lead action). (The court of appeal website indicates that the case is scheduled for appellant’s opening brief to be filed on January 22, 2018, with no other scheduled actions). The opposition does not offer any legal argument on this issue beyond a conclusory statement that the lead action is subject to stay merely because there is an appeal pending in the related action.

To the extent the argument is that the Does are improperly named, it is not clear that defendant would have standing to make such an argument, as it is not a Doe, and it is recognized that a court is permitted to deny leave to amend only if it is clear as a matter of law that there is no liability. Pomona College v. Superior Court (1996) 45 Cal.App.4th 1716, 1721. Even where the proposed legal theory is a novel one, “the preferable practice would be to permit the amendment and allow the parties to test its legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings.” Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048, quoting California Casualty Gen. Ins. Co. v. Superior Court (1985) 173 Cal.App.3d 274, 281.

The court will not make a case management decision with respect to any appeal of the UD judgment in the related case, and stay the lead case, i.e., the restaurant premises case, pending resolution of the appeal in the theater premises case (the related case) without a noticed motion as to whether court should enter such a stay. Defendant’s request for a stay of the lead case (the restaurant premises case) is denied without prejudice. Were the court to enter a stay, such a stay would not eliminate the option of plaintiff filing an entirely new action against defendant and the guarantors for relief not available in the UD cases.

The opposition also requests that, if the motion were granted, that the court consolidate this matter with another pending action, MGN Five-Star Cinema v. Allied Development Corp. et.al. EC065061 brought against 550 S. Freeway LLC for fraud by MGN Five Star Cinema and to stay all matters pending appeal. This is not appropriate relief sought in an opposition to the current motion, and the request is denied without prejudice.