HEARING ON MOTION FOR LEAVE TO AMEND ANSWER TO 1ST AMENDED COMPLAINT
FILED BY SHAH & ASSOCIATES INC.
* TENTATIVE RULING: *
The motion for leave to amend answer, filed by defendant Shah & Associates, Inc., dba PDC Corporation (“Shah”) is granted. Courts are bound to a policy of liberality in permitting parties to amendment their pleadings.
Plaintiffs filed their complaint for the wrongful death of Stephen Allen, in Sacramento County Superior Court, on November 15, 2011. Plaintiffs served Shah on November 29, 2011. Shah moved to demur and strike portions of the complaint, partially based on the theory that it was not liable because the project was complete and accepted by the owner. The hearing was set for March 23, 2012. However, on March 13, 2012 , defendants Renewable Resources Group Holding Company, Inc. and Western Development and Storage, LLC successfully moved the court to change venue to Contra Costa County. On November 20, 2012, with new counsel, Shah elected to answer the complaint rather than renew the demurrer or motion to strike. On June 18, 2013, Plaintiffs filed their first amended complaint, naming two additional defendants. Shah filed an answer to plaintiffs’ first amended complaint on July 29, 2013. Of note, the first amended complaint contains the exact same allegations against Shah as in the original complaint, and PDC’s answer to the first amended complaint is identical to its original answer. A trial date is set for July 21, 2014.
Over the course of litigation, plaintiffs and defendants have conducted extensive discovery, including written discovery, depositions and physical inspections. Through the discovery process, Shah alleges it became aware of three new defenses: 1) Accepted and Completed Work Doctrine, 2) Open and Obvious Condition, 3) Lack of Dangerous and Defective Condition. On January 28, 2013, Shah served all parties with a stipulation seeking leave to amend its answer to include the new defenses. All parties except Plaintiffs and defendant Robert Fates signed the stipulation. On February 14, 2014, Shah brought the present motion.
In their motion, Shah asserts it should be given leave to amend the complaint with the three additional defenses because courts traditionally exercise a policy of great liberality in allowing parties to amend pleading. Scott v. City of Indian Wells, (1972) 6 Cal. 3d 541, 549. The court may allow a party to amend its pleading when, “after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars…” Code of Civil Procedure §§ 473(a)(1). In fact, “[i]f the 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 and where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense it is not only error but an abuse of discretion.” Morgan v. Sup. Ct. (1959) 172 Cal. App. 2d 527, 530, citing Nelson v. Sup. Ct., 97 Cal.App.2d 78; Estate of Herbst, 26 Cal.App.2d 249; Norton v. Bassett, 158 Cal. 425, 427.
In the cases relied on by PDC, the courts allowed parties to amend their pleading during trial and even when filing a motion for summary judgment. See Morgan v. Sup. Ct. (1959) 172 Cal. App. 2d 527, 530 (the trial court abused its discretion to deny motion to amend when no trial date was set and the denial severely prejudiced plaintiff’s potential recovery rights); Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1159 (motion to amend properly denied when no when the party lacked diligence and brought the motion during trial); Nieto v. Blue Shield of California Life & Health Ins. (2010) 181 Cal.App.4th 60, 75 (a new affirmative defense may be raised at the time of a motion for summary judgment, absent a showing of prejudice); and Atkinson v. Elk Corp. (2003) 109 Cal.3d 51, 62 (courts usually allow parties to amend pleading up to and including trial, absent a showing of prejudice.) PDC’s motion is brought before bringing a motion for summary judgment and while discovery is open, thereby circumventing the central concern in the cited case law, prejudice. While plaintiffs may have to engage in additional discovery to contend with the new amendments, so too would the plaintiffs or defendants in any of the referenced cases, indicating the lack of prejudice to plaintiffs by allowing the amendments.
Plaintiffs’ reliance on Hulsey v. Koehler , supra, and California Concrete Co. v. Beverly Hills Savings & Loan Assn. (1989) 215 Cal.App.3d 260 is misplaced. In Hulsey, The Court of Appeal affirmed a defendant’s motion to amend which was brought during trial, three years after the complaint was filed and with the weak reasoning that defendant realized the defense was viable after reading the plaintiff’s deposition transcript two days prior to the commencement of trial. Hulsey, 218 Cal. App.3d at 1156. In California Concrete Co., the Court of Appeal reversed a grant of summary judgment when defendant first raised defense offensively in its motion for summary judgment, prejudicing the plaintiff’s ability to investigate the facts and law relevant to the defense. California Concrete Co., 215 Cal.App.3d at 273. Shah claims it discovered the new defenses after information was gathered from depositions, extensive discovery and subsequent research conducted from August 2013 to the present. (Declaration of Andrea Seminer in support of PDC’s motion for leave to amend answer to plaintiffs first amended complaint, “Seminer dec.”, at ¶ 3). Shah made Plaintiffs aware of its intent to amend its answer on January 28, 2014, when counsel for Shah requested parties stipulate for leave to amend its first amended answer. (Exhibit B to Seminer dec.) Despite the case law establishing the a policy of allowing amendments to answer, Plaintiffs made the tactical decision to refuse PDC’s stipulation, thereby forcing Shah to use judicial resources. Plaintiffs could have used the time needed to bring the motion to conduct further discovery.
Shah complied with California Rules of Court 3.1323, et seq. Plaintiffs specifically allege Shah failed to comply with CRC 3.1324(b)(3) and CRC 3.1324(b)(4). CRC 3.1324(b)(3) requires parties to state, “[w]hen the facts giving rise to the amended allegations were discovered,” while CRC 3.1324(b)(4) mandates parties provide, “[t]he reasons why the request for amendment was not made earlier.” Shah vaguely described when and how the information was discovered as occurring “between August 13, 2013 and present” as “discovery was being conducted.” (Seminar dec. ¶ 3). While this explanation is vague, counsel for Shah provides a detailed description of what information it is basing the amendments on and when the information was discovery. Specifically, the information was gathered during the depositions of codefendant NRG employees, taken from late November 2013 through December 2013. (Declaration of Andrea Seminer in support of PDC’s reply to plaintiffs’ opposition to defendant’s motion for leave to amend answer to plaintiffs first amended complaint, “Seminer reply dec.,” at ¶¶ 3,4). At the deposition, Shah first became aware of plaintiffs’ new argument, that the Meteorological Tower was over the 200 feet maximum because of a lightning rod appurtenance, an factual allegation plaintiffs did not include in their first amended compliant. (Seminer reply dec.,” at ¶¶ 4, 5). Based on that explanation, Shah has met the requirements of CRC 3.1323, et seq.