2016-00194586-CU-BC

Jimboy’s Marketing, Inc. vs. Jimboy’s North America, LLC

Nature of Proceeding: Motion to File Amended Answer and File Cross Complaint

Filed By: Schneiderman, Daniel G.

Defendant Jimboy’s North America, LLC’s (JNA) motion for leave to file an amended answer and a cross-complaint is GRANTED in part and DENIED in part as follows:

Overview

In another context, the court summarized this case as follows:

This case presents a commercial dispute. The plaintiffs are Jimboy’s Marketing, Inc. (JMI) and Bellagrace, Inc. dba Jimboy’s Tacos No. 115 (Bellagrace) (collectively “Plaintiffs”). Plaintiffs allege the following:

For many years, JMI acted as an area franchisor for Jimboy’s Tacos restaurants under a Master Franchise Agreement with non-party Jimboy’s Tacos, Inc. JNA is the successor to Jimboy’s Tacos, Inc.

In 2012, JMI and JNA entered into a Transition Agreement … Under the Transition Agreement, JMI assigned to JNA 38 franchised restaurants and other assets collectively valued at $3 million. When the Transition Agreement was executed, however, JNA paid JMI less than $100,000 in the form of cash and an assumption of certain JMI obligations. JNA was to pay JMI the balance of the consideration in the form of “concessions to

JMI-related franchisees and payments to be made under a Management and Administrative Services Agreement (hereinafter MASA).”[…] As its title suggests, the MASA required JMI to provide JNA with management and administrative services in exchange for compensation. The MASA is attached to the Transition Agreement.

Beginning in 2015, JNA indicated it wanted to renegotiate the MASA.

JMI declined.

In February and April 2016, JNA gave JMI notice that it intended to terminate the MASA. JNA directed JMI employees not to appear at the former’s place of business or contact its employees. When J[NA] gave its first notice of termination, it also gave notice that it intended to terminate Bellagrace’s franchise and purchase the franchise for itself. Plaintiffs contend that JNA’s purported terminations of the MASA and Bellagrace’s franchise were unlawful.

(See Order of 11/15/16.) At this point in the case, Plaintiffs’ remaining causes of action in their second amended complaint (SAC) against JNA are for Violation of B&P Code § 20025, “Breach of Contract: MASA,” Reformation [MASA] and Declaratory Relief. JNA filed its answer to the SAC on 3/3/17 and raised several affirmative defenses.

JNA now moves to file an amended answer in which its first and third affirmative defenses for “Breach of Contract by Plaintiff” and Quantum Meruit are deleted. In addition, JNA moves to add affirmative defenses entitled “No Breach of Contract by JNA,” Substantial Compliance, Ambiguity of Contract–MASA, “Plaintiffs Are Not Entitled to Recovery Under the Terms of the MASA,” Parol Evidence Rule, Failure to Mitigate, “JMI’s Request for Reformation is Not Proper” and “Declaratory Relief is Not Necessary or Proper.”

Further, JNA moves for leave to file a cross-complaint containing causes of action against Plaintiffs for Reformation of the MASA and “Declaratory Relief Regarding the Franchise Agreement.” Plaintiffs oppose the motion in in its entirety.

Trial is set to commence on 9/11/18. On 5/31/18, the court granted Plaintiffs’ motion for leave to add a cause of action to the SAC.

Discussion

The Proposed Amended Answer

Preliminarily, the court notes JNA’s reference to a “new” affirmative defense entitled “Unjust Enrichment.” That defense already appears in JNA’s current answer. As a result, there is no need to add such an affirmative defense, and the court disregards the parties’ arguments about such an amendment.

The court also notes Plaintiffs’ objections to a defense of quantum meruit. Because JNA is moving to delete that defense, rather than add it, the court disregards Plaintiffs’ objection.

Furthermore, the court also notes that the following proposed affirmative defenses do

to appear to be defenses at all: “No Breach of Contract by JNA,” Substantial Compliance, “Ambiguity of Contract–MASA,” “Plaintiffs Are Not Entitled to Recovery Under the Terms of the MASA,” Parol Evidence Rule, “JMI’s Request for Reformation is Not Proper” and “Declaratory Relief is Not Necessary or Proper.” Absent an authority establishing that such legal concepts or arguments involve matter that JNA must affirmatively prove at trial, the court will not grant leave to add them to JNA’s answer. (See CCP § 431.30(b)(2); see also Walsh v. West Valley Mission Community College Dist. (1998) 66 Cal.App.4th 1532, 1546 [“’Where…the answer sets forth facts showing some essential allegation of the complaint is not true, such facts are not “new matter,” but only a traverse.’”])

The only true defense that JNA tenders as an amendment is Failure to Mitigate. Because Plaintiffs have not shown that an order allowing JNA to raise this defense in an amended answer will cause unfair prejudice, the court will allow the amendment.

The Proposed Cross-Complaint

JNA moves to add a cross-complaint for reformation and declaratory relief. Plaintiffs are advancing the same equitable causes of action in the main action. The court discerns no potential prejudice in allowing JNA to seek such equitable relief in a cross-action, and JNA should be entitled to pursue such relief even if Plaintiffs dismiss their equitable causes of action before trial.

Disposition

Leave to add a failure-to-mitigate defense in an amended answer, and to file a cross-complaint for reformation and declaratory relief, is granted.

The balance of the motion is denied.

JNA shall file and serve its amended answer and its cross-complaint no later than 6/11/18; response(s) to the cross-complaint due within 30 days thereafter, 35 days if the cross-complaint is served by mail.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 or further notice is required.

Item 3 2016-00194586-CU-BC

Jimboy’s Marketing, Inc. vs. Jimboy’s North America, LLC

Nature of Proceeding: Motion for Judgment on the Pleadings

Filed By: Schneiderman, Daniel G.

The motion of Defendants Jimboy’s North America, LLC (JNA), Karen Freeman, James Freeman and Robert Anderson for judgment on the pleadings is DENIED as untimely.

The parties’ requests for judicial notice are DENIED as irrelevant.

Unless the court “otherwise permits,” CCP § 438(e) bars motions for judgment on the pleadings brought (1) after the pretrial conference order (i.e., the case management

conference order) or (2) within 30 days of the initial trial date. The case management conference took place on 11/17/16. The initial trial date was 8/29/17. Granted, when the Presiding Judge vacated the initial trial date, motion deadlines were re-set against the new trial date, which became 3/27/18. However, that trial date was continued as well, and the second continuance did not include a further continuance of motion deadlines. (See Order of 3/06/18.)

The case has proceeded past the case management conference, the initial trial date and the second trial date. Furthermore, JNA has withdrawn a portion of the motion and concedes that at least a motion for summary adjudication is required for the case to reach disposition. Under these circumstances, the court will not entertain the untimely motion on a discretionary basis.

On its own motion, the court STRIKES from the operative second amended complaint all allegations and prayers for relief against the three individual defendants, and these defendants shall be dismissed from the action. (See CCP § 436.) Although the individual defendants’ motion for judgment on the pleadings is untimely, Plaintiffs concede that the individual defendants should be dismissed.

The minute order is effective immediately. No formal order pursuant to CRC 3.1312 is required.

Pursuant to CRC 3.1312, Defendants shall lodge for the court’s signature a judgment of dismissal as to the three individual defendants.

Item 4 2016-00194586-CU-BC

Jimboy’s Marketing, Inc. vs. Jimboy’s North America, LLC

Nature of Proceeding: Motion for Attorney Fees

Filed By: Schneiderman, Daniel G.

The motion of Defendants Jimboy’s North America, LLC, Karen Freeman, James Freeman and Robert Anderson (collectively “Defendants”) for attorney’s fees and costs is DENIED as premature.

Defendants move for fees and costs pursuant to CC § 1717 and CCP §§ 1021, 1032, 1033.5. The motion is premature because no judgments or dismissals have been entered and, therefore, no Defendant may be considered a “prevailing party.” (See also CRC 3.1700, 3.1702.)