Case Number: KC069769 Hearing Date: February 06, 2019 Dept: J

Defendant Michelle Nguyen’s MOTION FOR LEAVE TO FILE COMPULSORY CROSS-

COMPLAINT

Responding Party: Plaintiffs, My Le Mai and Cammie Myhieu Phan[1]

Tentative Ruling

Defendant Michelle Nguyen’s Motion for Leave to File Compulsory Cross-Complaint is GRANTED.

Background

Plaintiffs My Le Mai and Cammie Myhieu Phan (“Plaintiffs”) allege that Defendant Michelle Nguyen (“Nguyen”) refuses to pay back monies Plaintiffs loaned to her. On November 3, 2017, Plaintiffs filed a complaint against Nguyen and Does 1-10 for:

Fraud

Conversion

Unjust Enrichment

Money Had and Received

Trial is set for March 25, 2019.

Legal Standard

If a party wishes to file a cross-complaint against a party after the time to file an answer, or against a non-party after a trial date has been set, it may only do so with the court’s leave. (CCP § 428.50(c).)

If defendant’s cause of action against plaintiff is related to the subject matter of the complaint, it must be raised by cross-complaint; failure to plead it will bar defendant form asserting it in any later lawsuit. (CCP § 426.30(a).) A “[r]elated cause of action’ means a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.” (CCP § 426.10(c).) Defendant’s cross-complaint is compulsory if the cause of action “arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.” (CCP § 426.10(c).) The related cause of action must have existed at the time defendant served its answer to the complaint. (CCP § 426.30(a).)

The court retains power at any time during the course of the lawsuit to permit defendant to file or amend a cross-complaint to avoid forfeiture of defendant’s “related” claim. (CCP § 426.50.)

In fact, “[a] policy of liberal construction of section 426.50 to avoid forfeiture of causes of action is imposed on the trial court. A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.” (Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 98-99.)

Discussion

Nguyen requests leave to file a cross-complaint against Plaintiffs for (1) Violation of Finance Code § 17200, § 17500 et seq., (2) Usury and/or Unconscionable Lending, (3) Unjust Enrichment and (4) Violation of California Finance Lenders Law.

The proposed cross-complaint arises from the same transaction or occurrence as alleged in the underlying complaint and is a related cause of action. Every cause of action raised in the proposed cross-complaint arises out of the same loan transaction made to Nguyen. It is unclear to the court what relevance facts that Plaintiffs allegedly gave usurious loans to individuals other than Nguyen would have in this action. Nevertheless, the court determines that Nguyen has sufficiently demonstrated that Nguyen failed to file a cross-complaint concurrently with her answer as a result of oversight, inadvertence, or mistake. The court notes that Nguyen asserted usury as a ninth affirmative defense in her answer filed December 19, 2017; as such, Plaintiffs’ contention that they would be prejudiced by the late filing of Nyugen’s cross-complaint is unfounded.

The court finds that Nguyen has adequately acted in good faith in seeking leave to file her proposed cross-complaint as to Plaintiffs; accordingly, the motion is granted. The proposed cross-complaint is deemed filed as of the hearing date.

[1] Note: Opposition was served by regular mail contrary to CCP § 1005(c).