2012-00128969-CU-BT

Altergy Systems vs. Terry Carlone

Nature of Proceeding: Motion to File Amended Complaint

Filed By: Sims, Brian E.

Cross-Complainant Terry Carlone’s (“Carlone”) motion for leave to file a second
amended cross-complaint (“SACC”) is granted.

The Court declines to consider the untimely joinders of Cross-Defendants Eric Mettler
and Jerrold Franklin in Cross-Defendant’s Altergy Systems’ opposition filed and served
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only seven court days prior to the hearing (November 27 and 28 were Court
holidays) rather than the required nine court days for an opposition. Though even if
considered, they simply argue that each would be prejudiced by having to conduct
additional discovery if the motion is granted and because their ability to bring a

dispositive motion will be hindered which, as seen below, is an argument rejected by
the Court in considering Altergy’s identical arguments.

Carlone seeks leave to file a SACC to allege eleven additional causes of action
against cross-defendants Eric Mettler, Jerrold Franklin and Altergy based, in part on
what he claims are admissions from Altergy’s employees at their February 2013
depositions regarding acts amounting to intentional torts. Specifically he claims,
among other things, that his computer was secretly accessed and copied.

Atlergy opposes the motion on numerous grounds. It argues that Carlone has been
dilatory in seeking leave, that the primary purpose is only to counter allegations in
Altergy’s complaint which is not the purpose of a cross-complaint and many of the
proposed allegations are irrelevant. As explained below, none of these reasons merit
deviating from the judicial policy liberally allowing amendments to pleadings.

“Trial courts are vested with the discretion to allow amendments in the furtherance of
justice… That Trial courts are to liberally permit such amendments, at any stage of the
proceeding, has been established policy in this state…resting on the fundamental
policy that cases should be decided on the merits.” (Hirsa v Superior Court (1981) 118
Cal.App.3d 486, 488-489.)

Judicial policy favors resolution of all disputed matters between the parties in the same
lawsuit. Thus, the court’s discretion will usually be exercised liberally to permit
amendment of the pleadings. (See Nestle v. Santa Monica (1972) 6 Cal.3d 920,939;
Mabie V. Hyatt (1998) 61 Cal. App.4th 581, 596 (citing text). Howard v. County of San
Diego (2010)184 Cal.App.4th 1422, 1428.” California Civil Procedure Before Trial
(2012, Rutter) § 6:638 – 6:339.)

The Court first rejects Altergy’s argument that it will be unfairly prejudiced by what it
classifies as an inexcusable delay by Carlone in seeking amendment. First, while true
that the proposed SACC seeks to add eleven additional causes of action (reflected in
160 new paragraphs), which will likely entail additional discovery and motion practice,
this is not the type of prejudice that merits denial. Indeed, while Altergy is concerned
with respect to its ability to conduct discovery in time to prepare a motion for summary
judgment given a June, 2014 trial date, there are numerous options available to
address this situation which alleviate or negate any prejudice. For example, to the
extent needed, Altergy could seek a trial continuance, or an order allowing a motion for
summary judgment to be heard closer to trial. The Court does note, however, that it
fully expects Carlone to cooperate with such efforts. However, at this point, the fact
that it may need to conduct additional discovery is not a basis upon which to deny the
motion.

Further, while Altergy also complains that Carlone has inexcusably delayed in seeking
amendment the Court will not delay the motion on this ground. A trial court has
discretion to deny a motion for leave to amend where both “inexcusable delay and
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probable prejudice” is shown. (Magpali v. Farmers Group (1998) 48 Cal.App.4 471,
487-488.) Here, as seen above, the Court has found that Altergy’s need to conduct
discovery to address the new allegations and conduct motion practice is not sufficiently
prejudicial given the numerous options available to address those concerns. Thus,
given the lack of prejudice, even were the delay inexcusable, it would not provide a
basis to deny the motion. In any event, the Court finds that while Altergy is correct that
the instant motion could very likely have been filed much sooner, such delay is not

inexcusable. As seen from Carlone’s counsel’s declaration, Carlone’s counsel
declares that he has been involved with significant discovery in this matter since April
2013 and has not had adequate time to prepare an amended cross-complaint. (Sims
Decl. ¶ 10.) The Court declines to exercise its discretion to deny leave under these
circumstances.

Altergy next argues that the motion should be denied because Carlone is seeking to
amend the cross-complaint for an improper purpose, specifically to essentially counter
allegations in Altergy’s complaint, and that the purpose of a cross-complaint is to seek
affirmative relief. Here, while Carlone does make such contentions in his motion, he
also makes clear that the SACC is adding numerous causes of action which seek
affirmative relief against Altergy and others. The Court therefore rejects this argument.

Finally, Altergy argues that the proposed amendments are futile because many of
them involve attorney-client privileged communications that will likely be stricken on a
motion to strike. However, the validity of a proposed amendment is generally not
considered in deciding whether to grant leave to amend and the Court declines to do
so at this point. (California Casualty General Ins. Co. v. Superior Court (1985) 173
Cal.App.3d 274, 280-281 [disapproved on other grounds in Kransco v. American
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Empire Surplus Lines Ins. Co. (2000) 23 Cal.4 390, 407.] Altergy is free to bring an
appropriate challenge to the SACC once it is filed and served.

Carlone shall file and serve the proposed SACC, no later than December 13, 2013.

The notice of motion does not provide notice of the Court’s tentative ruling system as
required by CRC Rule 3.1308 and Local Rule 1.06(D). Moving counsel is ordered to
notify opposing counsel immediately of the tentative ruling system and of the correct
department and time of the hearing and to be available at the hearing, in person, or by
telephone, in the event Opposing counsel appears without following the procedures
set forth in Local Rule 1.06(B). Given the number of times the parties have appeared
before this Court, it becomes tedious to encounter the same defect in the notice of
motion.

This minute order is effective immediately. No formal order pursuant to CRC rule
3.1312 or other notice is required.