Case Number: BC485406    Hearing Date: July 30, 2014    Dept: 32

CASE NAME: U.S. Bank National Association v. David Behrend, et al.
CASE NO.: BC485406
HEARING DATE: 07/30/14
DEPARTMENT: 32
CALENDAR NO.: 4
SUBJECT: (1) Motion for Leave to File Second Amended Cross-Complaint
(2) Motion to Separate the Trial of Adeli’s Cross-Complaint from Trial of Plaintiff’s Third Amended Complaint, and to Continue the Trial of Adeli’s Cross-Complaint

MOVING PARTY: Defendants/cross-complainants, Pirouz M. Adeli and Paulina Valderas Adeli as Trustees of the Adeli Trust dated February 24, 2011 and Rafael Iryami (“Defendants” or “Adeli”)
RESP. PARTY: None

COURT’S TENTATIVE RULING

Motion for Leave to File Second Amended Cross-Complaint GRANTED.

Motion to Separate the Trial of Adeli’s Cross-Complaint from Trial of Plaintiff’s Third Amended Complaint, and to Continue the Trial of Adeli’s Cross-Complaint DENIED.

ANALYSIS

Adeli’s Motion for Leave to File Second Amended Cross-Complaint

This judicial foreclosure action arises from an underlying note in the amount of $817,500 and deed of trust dated December 23, 2005 relating to real property located at 606 West Vernon Avenue, Los Angeles, California. After a number of conveyances and a bankruptcy, the subject property was ultimately sold to Defendants Adeli as trustees of their trust in May 2012. In connection with that sale a payoff demand was sent to the escrow company in the amount of $ 480,200 and that same amount was wired to Ocwen Loan Servicing purportedly as the payoff for the entire loan. The Plaintiff contends that the payoff demand was unauthorized and was a fraudulent act. The Defendants contend that if in fact the payoff demand was not authentic, they were fraudulently induced to purchase the subject property and the proposed second amended cross complaint is directed at those claims.
The Code of Civil Procedure (CCP) allows the filing of cross complaints so that all claims between the parties may be resolved in a single action. To that end, “[a] party against whom a cause of action has been asserted in a complaint or cross-complaint may file a cross-complaint setting forth … (b) Any cause of action he has against a person alleged to be liable thereon, whether or not such person is already a party to the action, if the cause of action asserted in his cross-complaint (1) arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause brought against him.” (CCP § 428.10(b).)

Trial courts are directed that “discretion should be exercised liberally in favor of amendments, for judicial policy favors resolution of all disputed matters in the same lawsuit.” (Kittredge Sports Co. v. Sup. Ct. (1989) 213 Cal.App.3d 1045, 1047.) It is generally abuse of discretion to deny leave to amend if the opposing party does not show prejudice. (Ibid.)

A motion to amend a pleading before trial must be accompanied by a separate declaration that must specify (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(b).)

In the motion, Adeli contends that as a result of events during discovery, Adeli now has a basis to allege fraud and related claims against Cross-Defendants Mena and Four Doves. For instance, Mena and Four Doves failed to respond to requests for admissions (RFAs); the court granted Adeli’s motion to deem the RFAs admitted; and the RFAs now deemed admitted include admissions of fraud in creating and submitting the Payoff Statement at issue in this lawsuit. (McKay Decl. ¶ 5.) The motion complies with CRC Rule 3.124 as Adeli explains the effect of the amendments; the reasons the request was not made earlier; and why the amendments are necessary and proper. (See Id. ¶¶ 4-10.) The trial date is set for September 9, 2014, slightly more than a month from the hearing on the instant motion. However, there has been no opposition to this motion and it would be in the interest of justice to resolve these proposed claims in this lawsuit.

The motion is GRANTED.

Adeli’s Motion to Separate Trials of Cross-Complaint and Third Amended Complaint, and to Continue Trial of Adeli’s Cross-Complaint

In the motion, Adeli contends that there is good cause to conduct separate trials because the proposed second amended cross-complaint includes causes of action for fraud unrelated to the third amended complaint. Also, Adeli contends that cross-defendants Mena and Four Doves are likely to default on the proposed cross-complaint.

Separate Trials

“The court may, when the convenience of witnesses, the ends of justice, or the economy and efficiency of handling the litigation would be promoted thereby, on motion of a party, after notice and hearing, make an order…that the trial of any issue or any part thereof shall precede the trial of any other issue or any part thereof in the case.” (CCP § 598.) “The court, in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy, may order a separate trial of any…separate issue.” (CCP § 1048(b).)

Here, Adeli has not made a sufficient showing of good cause to order separate trials of the third amended complaint and the proposed second amended cross-complaint. As summarized in the moving papers at pages 3 to 4, both pleadings involve Adeli’s alleged purchase of real property known as 606 West Vernon Ave., Los Angeles, CA 90037. The third amended complaint alleges that in May of 2012, Ocwen received a wire transfer in the amount of $480,200.00 serving as a payoff for the loan. Plaintiff alleges that this payoff amount was not authorized by U.S. Bank National Association as Trustee or Ocwen and was $400,000 less than the total amount of indebtedness owed on the loan. In the proposed second amended cross-complaint, Adeli alleges that Cross-Defendants Mena and Four Doves fraudulently created the payoff demand and thereby obtained $300,000 from the proceeds of the sale. (Proposed SACC ¶¶ 79-82.) Therefore, both pleadings center on the legitimacy of the payoff demand, and based on the current record it would be in the interest of justice and judicial economy to resolve that issue in one trial.

The motion for separate trials is DENIED.

Continue Trial

Although continuances of trials are disfavored, each request for a continuance must be considered on its own merits. (CRC Rule 3.1332(c).) The court may grant a continuance only on an affirmative showing of good cause requiring the continuance. (CRC Rule 3.1332(c).) The court may look to the following factors in determining whether a trial continuance is warranted: (1) proximity of the trial date; (2) whether there was any previous continuance of trial due to any party; (3) the length of the continuance requested; (4) the availability of alternative means to address the problem that gave rise to the motion; (5) the prejudice that parties or witnesses will suffer as a result of the continuance; and (6) whether a significant, unanticipated change in the status of the case occurred as a result of which the case is not ready for trial. (See generally, CRC Rule 3.1332, subd. (d)(1)-(11).)

Because the court has denied the motion to order separate trials, the motion to continue only the trial as to the cross-complaint must also be denied at this time. If Cross-Defendants Mena and Four Doves default on the second amended cross-complaint, as Adeli predicts, then it appears unlikely a trial continuance, or at least a significant trial continuance, would be required. In addition, Plaintiff’s motion for summary adjudication had also been scheduled for a hearing on July 30, 2014 but has been continued by stipulation of the parties, with the court’s approval, to August 12, 2014. If either the order permitting the second amended cross-complaint or other case developments warrants a brief trial continuance, the parties may address that situation by presenting a stipulation for continuance of the entire action to the court for approval or by a renewed ex parte application or motion to continue the trial.

The motion to continue trial of the cross-complaint is DENIED.