Case Number: BC671146 Hearing Date: November 18, 2019 Dept: 78

Superior Court of California
County of Los Angeles
Department 78

KAMRAN KHALI, et al.,

Plaintiffs,

v.

JAMES LEE REYNOLDS, et al.,

Defendants.

AND RELATED CROSS-ACTION

Case No.: BC671146

Hearing Date: November 18, 2019

[TENTATIVE] RULING RE:

Defendant and Cross-complainant James Lee Reynolds’s Motion for leave to amend the cross-complaint

Defendant/Cross-Complainant James Lee Reynolds’s Motion for Leave to Amend the Cross-Complaint is DENIED.

FACTUAL BACKGROUND

This is a legal malpractice case. The Complaint alleges as follows. Before August 30, 2016, Plaintiffs David Khalil, Kamran Khalil, and Brenden Real Estate, LLC, were clients of Defendant James Lee Reynolds (“Reynolds”), an attorney. (Complaint ¶¶ 1, 6.) They had entered into a retainer agreement on April 20, 2015, to represent Plaintiffs in an underlying action. (Complaint ¶ 7.) Owing to a series of disputes between Reynolds and the discovery referee appointed in the underlying action, Plaintiffs fired Reynolds on August 10, 2016. (Complaint ¶¶ 10–14.) Following the termination of the relation, Plaintiffs and Reynolds continued to have disputes about fees, client files, and ongoing discovery. (Complaint ¶ 14–16.) Plaintiffs claim that Reynolds revealed privileged communications to the discovery referee and opposing parties, and advocated that sanctions be imposed against Plaintiffs, falsely blaming them for his own conduct. (Complaint ¶ 16.) Plaintiffs now face sanctions in the underlying action. (Complaint ¶ 17.)

Reynolds’s Cross-Complaint (or “XC”) alleges that Cross-Defendants David Khalil, Kamran Khalil, and Brenden Real Estate, LLC (“Cross-Defendants”) represented to Reynolds that additional documents were available to be discovered in the underlying case and offered to pay for several business subpoenas to allow for such discovery and to avoid the entry of terminating sanctions against them. (XC ¶ 19.) However, Cross-Defendants had no intention of paying for said subpoenas, and are in breach of their contract for failing to do so. (XC ¶ 21.)

PROCEDURAL HISTORY

Plaintiffs filed the present Complaint on August 3, 2017, alleging two causes of action:

Negligence

Breach of Fiduciary Duty

Plaintiffs filed a Proof of Service of Summons and Complaint on November 30, 2017. The Proof of Service indicated that Reynolds had been served by substitute service on November 21, 2017. The Declaration of Diligence indicates that service was made at Reynolds’s place of business after three previous attempts.

On March 16, 2018, this court granted Reynolds’s Motion to Quash Service of Summons.

On October 31, 2018, this court overruled Defendant Reynolds’s Demurrer to the Complaint, and denied his motion to strike.

On November 30, 2018, Reynolds filed a Cross-Complaint alleging four causes of action:

Intentional Misrepresentation

Breach of Written Contract

Common Count — For Service Provided

Common Count — Quantum Meruit

This Court on March 19, 2019, sustained David Khalil, Kamran Khalil, and Brenden Real Estate, LLC’s Demurrer with leave to amend as to the First and Fourth Causes of Action in the Cross-Complaint, and overruled the demurrer as to the Second and Third Causes of Action in the Cross-Complaint. The Court granted Cross-Defendants’ Motion to Strike the prayer for punitive damages, with leave to amend.

Reynolds filed an Amended Cross-Complaint on April 17, 2019, and by stipulation filed a Second Amended Cross-Complaint on May 20, 2019, omitting the Fourth Cause of Action for Quantum Meruit.

On July 16, 2019, Reynolds filed a Motion for Leave to Amend the Cross-Complaint.

On November 6, 2019, Reynolds filed a Notice of No Opposition, or, in the Alternative, If Opposition Filed, Request to Strike Opposition for Failure to Comply with the Law.

On November 8, 2019, Plaintiffs/Cross-Defendants Filed an Opposition to Reynolds’ Motion to Leave to Amend. While this opposition was filed late, the Court accepts counsel’s representation that this was the result of an inadvertent scheduling error and, finding no prejudice, has considered the opposition.

DISCUSSION

MOTION FOR LEAVE TO AMEND CROSS-COMPLAINT

Code Civ. Proc. section 473 subd. (a)(1) states that:

The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer. The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code.

“The trial court has discretion to permit or deny the amendment of the complaint, but instances justifying the court’s denial of leave to amend are rare.” (Armenta ex rel. City of Burbank v. Mueller Co. (2006) 142 Cal.App.4th 636, 642.)

“Although courts are bound to apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial [Citations], this policy should be applied only ‘[w]here no prejudice is shown to the adverse party . . .’ [Citation.] A different result is indicated ‘[w]here inexcusable delay and probable prejudice to the opposing party’ is shown. [Citation.]” (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 487.)

Pursuant to California Rule of Court Rule 3.1324, “[a] motion to amend a pleading before trial must: (1)Include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) State what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph, and line number, the deleted allegations are located; and (3)State what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located.”

Such a motion must include a supporting declaration stating, “(1) The effect of the amendment; (2) Why the amendment is necessary and proper; (3) When the facts giving rise to the amended allegations were discovered; and (4) The reasons why the request for amendment was not made earlier.” (CRC Rule 3.1324, subd. (b).)

Reynolds asks for leave to amend to add a new named defendant, Jeffrey A. Hacker (“Hacker”), and a new cause of action for declaratory relief alleged exclusively against Hacker. (Motion at pp. v, 1.) Reynolds argues that Hacker may be liable for the harm that Plaintiff’s allege in their Complaint and claims that he has a legitimate claim against Hacker for implied equitable indemnification. (Motion at ¶¶ 19-21.)

In Opposition, Plaintiffs, through their attorney, Hacker, argue that Reynolds has known of Hacker’s existence and role since 2016, and adding Hacker will significantly prejudice Plaintiffs because they will need to obtain new counsel due to conflict of interest issues involving Hacker, because it will delay trial, and because Plaintiff’s counsel would possibly need to testify in trial. (Opposition at pp. 2-3.) Plaintiffs further argue that there is no need to include counsel as a party because any purported indemnity claims can be presented in a separate action post-trial. (Opposition at p. 3.) The Court agrees although it may well be the case that such claims are barred as a matter of law.

Although liberality is generally used in permitting amendments, an unwarranted delay in presenting an amendment is a reason for denial. (Record v. Reason (1999) 73 Cal.App.4th 472, 486.) In Record v. Reason, the appellant had knowledge of the circumstances on which he based on the complaint three years before he sought leave to amend. (Id.) Accordingly, the appellate court found that the trial court did not abuse its discretion is denying leave to amend. (Id.)

The same is true in this case as in Record v. Reason. Reynolds’ Motion contains extensive facts regarding the involvement of Hacker to indicate why he should be joined as a defendant. However, all of the offered facts date to 2016, and Reynolds has not explained why he has waited three years from the initiation of the action and one year from the filing of the Cross-Complaint to choose to add Hacker as a Defendant at this point in time. Reynolds has not offered new circumstances or evidence to support the delay.

Plaintiffs have argued that they will suffer prejudice, in their Opposition, because Hacker is their representing counsel-of-record in this instant case. (Opposition at p 3.) Plaintiffs’ prejudice argument is compelling because they will need to obtain new counsel, due to conflicts of interest, with less than a year to trial after the case has been pending for three years.

Accordingly, because Reynolds has not explained why he seeking to add a new party three years after learning about Hacker’s role, and because such addition will cause prejudice to the Plaintiffs/Cross-Defendants, the Motion for Leave to Amend is DENIED.

Defendant/Cross-Complainant to give notice.

Dated: November 18, 2019

_____________________________________

Hon. Robert S. Draper

Judge of the Superior Court