Case Number: MC023901 Hearing Date: June 03, 2014 Dept: A11

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTH DISTRICT

CENTRE FOR NEURO SKILLS, )
) Case Number MC 023901
Plaintiff, )
) ORDER AFTER HEARING
V )
) Date of Hearing:
RAYMOND CARRILLO, IRENE ) June 3, 2014
CARRILLO, and does1 through 5, inclusive, ) Dept. A-11
) Judge Randolph A. Rogers
Defendants )
___________________________________)

The motion of Defendants Raymond and Irene Carrillo for leave to file a first amended answer and cross-complaint came on for hearing on June 3, 2014. Plaintiff Centre for Neuro Skills appeared through its counsel of record, _______________. Defendants Raymond and Irene Carrillo appeared through their counsel of record, ________________. The Court, having received and reviewed the pleadings of record and evidence submitted and having considered argument of counsel, it is hereby ORDERED:

The motion of Defendants Raymond and Irene Carrillo for leave to file a first amended answer and cross-complaint is GRANTED.

SO ORDERED this the _____ day of June, 2014.

______________________
RANDOLPH A. ROGERS,
JUDGE

SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTH DISTRICT

CENTRE FOR NEURO SKILLS, )
) Case Number MC 023901
Plaintiff, )
) ORDER AFTER HEARING
V )
) Date of Hearing:
RAYMOND CARRILLO, IRENE ) June 3, 2014
CARRILLO, and does1 through 5, inclusive, ) Dept. A-11
) Judge Randolph A. Rogers
Defendants )
___________________________________)

The Court bases the Order After Hearing of this date upon the following Statement of Decision:

1. On September 20, 2011, Aaron Carrillo (“Aaron”), the son of Defendants Raymond and Irene Carrillo (“Defendants”), was admitted to the facilities of Plaintiff Centre for Neuro Skills (“Plaintiff”) for treatment of injuries. Defendants signed the admissions papers on behalf of Aaron, representing themselves as guarantors.

2. Treatment was given, but disagreement between Plaintiff and Aaron’s insurance carrier apparently arose, and full payment was not made to Plaintiff. On November 20, 2012, the Plaintiff filed its Complaint against Defendants alleging breach of contract and claiming $387,256.53 in damages. A demurrer was filed on January 22, 2013, but was mooted by the filing of a First Amended Complaint (“FAC”) on January 16, 2013. Defendants filed their Answer on March 14, 2013.

3. Trial date was originally set for May 23, 2014.

4. On representation by Defendant that the case was on the verge of settlement, the Court on March 11, 2014 mooted Plaintiff’s pending discovery motions. The Court also advanced and vacated the May 14 and May 23, 2014 dates.

5. On March 14, 2014, Defendants filed a substitution of attorneys, replacing former counsel Pacione with current counsel Usher. The present motion was thereafter filed on May 2, 2014. Plaintiff filed its opposition on May 20, 2014.

6. Motion for leave to file an amended complaint – Code of Civil Procedure §473(a)(1) provides that the trial court may, “in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading . . . .” In exercising this discretion, trial courts are bound to apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings. Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761. Courts may grant a motion to amend as late as the time of trial and even postpone the trial if necessary to the furtherance of justice. Honig v. Financial Corp. of America (1992) 6 Cal.App.4th 960, 965. But despite the general policy of liberality in allowing amendments, it is proper and within the discretion of the trial court to deny leave to file a proposed amendment unless the proponent of the amendment can show the amendment will not be prejudicial to other parties in the action and the delay in bringing the amendment was excusable. Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 175.

7. In deciding whether to grant a delayed motion to amend, the trial court must consider a number of factors, including (1) whether there was a lack of diligence in discovering the facts or in offering the amendment after knowledge of them; and (2) the effect of the delay on the adverse party. If the party seeking the amendment has been dilatory, and the delay has prejudiced the opposing party, the judge has discretion to deny leave to amend. Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490. Prejudice exists where the amendment would require delaying the trial, resulting in loss of critical evidence, or added costs of preparation such as an increased burden of discovery. Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 487-88. While a trial court may deny a proposed amendment for failure to state a cause of action, it is still proper for a trial court to deny an amendment if there is an unexplained delay in moving to amend, even if the complaint states a cause of action. Huff v. Wilkins (2006) 138 Cal.App.4th 732, 746.

8. Where a compulsory cross-complaint is involved, a showing of substantial evidence of bad faith is required before a motion for leave to amend or file a cross-complaint under CCP §426.50 may be denied. See Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 97 (“We conclude the trial court committed error in denying appellants’ motion . . .because there was no substantial evidence to support a finding that appellants were acting in bad faith”). A compulsory cross-complaint is “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 complain,” CCP §426.10(c), that a party has against the plaintiff at the time of serving his answer to the complaint, Id. §426.30(a). Bad faith “generally impl[ies] or involv[es] actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake . . . , but by some interested or sinister motive.” Silver Organizations, supra, 217 Cal.App.3d at 99.

9. Lack of diligence – The present action was filed on November 20, 2012. Trial was originally set for May 23, 2014. Defendants’ answer was first filed on March 14, 2013. At that time, Defendants were fully aware of the problems Plaintiff was having with Aaron’s insurance carrier. It appears that Defendants were also aware of the potential Worker’s Compensation claims that were outstanding. As to each of these parties, Defendants had knowledge of their involvement at the inception of the current lawsuit; they were not some later discovered party to the action. Nevertheless, it does appear that Defendants’ delay stemmed from complications from ancillary actions and legal representation, rather than ill-will or a plain failure to diligently pursue their rights.

10. Prejudice – Despite the lack of diligence on the part of the Defendants, it does not appear that substantial prejudice will result from permitting the amendment. The trial date was vacated in March, and no new trial date has been scheduled. The parties being brought in to the case all appear to be parties that Plaintiff has already dealt with, and apparently had some knowledge as to their involvement with the operative facts of the case. Opposition, Declaration of Craig D. Braun at ¶5-6. Nor is there any claim as to loss or degradation of evidence. In addition, Defendants’ new affirmative defenses primarily arise out of the contract cause of action laid out in the FAC. They deal with the same core nucleus of operative facts based on the same transaction or occurrences. The prejudice to the Plaintiff, therefore, is not so great that it would be just to deny Defendants’ amendments to provide them the opportunity to present fully their case.

11. Bad faith – With regard to the compulsory cross-complaints Defendants allege, there is scant evidence of bad faith. Plaintiff relies on the time delays incurred throughout the process, the lack of settlement talks since this Court vacated the trial date, and the delay in bringing the additional parties to the suit into the proceedings as evidence of bad faith. None of this sufficiently demonstrates bad faith, as opposed to “an honest mistake, . . . bad judgment or negligence.” Silver Organizations, supra, 217 Cal.App.3d at 100. Defendants’ declarations demonstrate that the lack of settlement talks and delay in joining the additional parties can properly be attributed to the substitution of counsel. Motion, Declaration of Gordon C. Mears, at ¶9. The timing of the substitution and bringing of the motion, in particular, suggests the opposite inference of “dishonest purpose or moral obliquity.”

12. Accordingly, the motion for leave to file a first amended answer and cross-complaint is GRANTED.

SO ORDERED AND ADJUDGED this the ______ day of June, 2014.

_____________________________
RANDOLPH A. ROGERS, JUDGE