2014-00167677-CU-BC

Maleehai Rodriguez vs. Confie Seguros Insurance Services

Nature of Proceeding: Motion to File 2nd Amended Complaint

Filed By: Parker, Jr., John R.

Plaintiff Maleehai Rodriguez’ (“Plaintiff”) motion for leave to filed a Second Amended Complaint (“SAC”) is GRANTED.

Factual and Procedural Background

This putative class action arises from defendant Confie Seguros Insurance Services (“CSIS”) alleged fraudulent business practices regarding broker fees. CSIS, through its subsidiary Sacramento Auto Insurance Center dba Cost-U-Less Insurance Center (“Cost-U-Less”), as a broker of insurance policies, allegedly engaged in the practice of issuing entirely new and superfluous policies when Plaintiffs only required a simple amendment to a previously issued policy in order to inflate broker fees.

Plaintiff filed her initial complaint on August 14, 2014, on behalf of herself and a class of similarly situated California residents who used Cost-U-Less’ brokerages services to obtain or modify their automobile insurance policies. Thereafter, on December 22, 2014, Plaintiff filed a First Amended Complaint (“FAC”) alleging causes of action for declaratory relief, breach of contract, breach of oral contract, promissory estoppel, unjust enrichment, breach of implied covenant, unfair business practices, and Consumer Legal Remedies Act.

Defendants demurred to the FAC. On March 23, 2015, the Court sustained in part and overruled in part the demurrer. Defendants also brought a motion to strike specific portions of the FAC, which the Court denied in its entirety.

Plaintiff now moves for leave to file a SAC. The proposed SAC adds Bertha Rodriguez as a named plaintiff and removes five of the FAC’s causes of action: (1) breach of contract; (2) breach of oral contract; (3) promissory estoppel; (4) breach of implied covenant; and (5) Consumer Legal Remedies Act (Civil Code § 1770). The remaining causes of action would be for declaratory relief, unjust enrichment, and unfair business practices.

The proposed SAC also removes all allegations regarding “deposits,” clarifies the nature of the alleged wrongful conduct, and adjusts the proposed class definition.

Trial is currently set to begin on July 8, 2019.

Discussion

Preliminarily, while Plaintiff included an “Appendix of Proposed Changes” with her moving papers, she failed to include a copy of the proposed SAC. CRC 3.1324 (a) (1) provides the motion must include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments. Defendants contend the motion should be denied due to this procedural error. The Court declines to deny the motion on this ground. The Court recognizes Plaintiff’s error, but Plaintiff did provide a copy of the proposed SAC with her ex parte papers, which were served on Defendants, and the Appendix and moving papers sufficiently describe the proposed amendments.

Turning to the merits of the motion, Plaintiff contends leave to amend is necessary to add Bertha Rodriguez as a named plaintiff. Plaintiff’s counsel explains that the current named plaintiff, Maleehai Rodriguez, has been difficult to contact. Specifically, Plaintiff’s counsel declares “Maleehai fell out of contact with counsel for Plaintiffs and remained out of contact for most of 2016 and all of 2017 with minimal, sporadic communication.” (Parker Decl. ¶ 3.) Plaintiff’s counsel contends that “although contact has recently been re-established with Maleehai, it is necessary and proper that class members be represented by a plaintiff that remains accessible and communicates effectively with counsel for Plaintiffs.” (Ibid.)

Plaintiff’s counsel explains leave to amend was not sought earlier because Bertha contacted them in May of 2018 regarding her possible claims. (Parker Decl. ¶¶ 3, 5.) Plaintiff’s counsel then investigated Bertha’s claims and moved for leave to file a SAC after the investigation was completed and they determined she would be a suitable class representative. (Parker Decl. ¶ 5.) Plaintiff’s counsel also indicates that during the period of time when they had sporadic contact with Maleehai, numerous customers of Defendants contacted them with potential claims, but after investigation, those customers were found to be not suitable class representatives for various reasons. (Parker Decl. ¶ 4.) Accordingly, it appears Bertha was the first suitable and alternative class representative to Maleehai that Plaintiff’s counsel found.

Plaintiff’s counsel also contends it is necessary to remove certain causes of action in light of the Court’s ruling on Defendants’ demurrer, and prior to discovering Bertha, Maleehai had no reason to amend the FAC because Defendants were instructed only to answer claims to which Defendants’ demurrer was unsuccessful. (Parker Decl. ¶ 6.)

Plaintiff’s counsel continues that it is prudent to remove certain allegations regarding “deposits” and causes of action based thereon (breach of oral contract and promissory estoppel) to streamline discovery, expedite trial, and limit the issues a jury must consider. (Parker Decl. ¶ 7.) Further, the amendments will provide greater specificity in allegations relating to charging unnecessary broker fees and will clarify the class definition to those from whom Defendants solicited broker fees for (1) adding/removing a driver; (2) adding/removing a vehicle; and (3) renewing an insurance policy in conformity with Maleehai and Bertha’s harm. (Parker Decl. ¶ 9.)

In opposition, Defendants contend if the amendments are permitted, they will be prejudiced for two reasons: (1) because they would be unable to file a motion for summary judgment; and (2) because they will incur substantial expense to litigate a whole new theory of liability.

First, Defendants contend they have already prepared [but not filed] a motion for summary judgment based on the operative FAC, which will have to be “scrapped” if amendment is permitted. (Farrow Decl. ¶ 15.) Even if Defendants have prepared a draft motion for summary judgment, as noted, nothing has been filed with the Court, and having to prepare a revised or new motion for summary judgment is not a sufficient basis upon which to deny leave to amend. If a motion for summary judgment was pending, this may have been a basis for denial. The Court recognizes it is inappropriate to allow a plaintiff facing a motion for summary judgment/adjudication to amend and thereby render the allegations subject to the motion for summary judgment/adjudication a moving target. (See Falcon v. Long Beach Genetics, Inc. (2014) 224 Cal.App.4th 1263, 1280; Melican v. Regents of University of California

(2007) 151 Cal.App.4th 168, 175-176.) However, as noted above, there is no pending motion for summary judgment.

Defendants have also failed to present any evidence or argument indicating they would be prohibited from preparing and filing a motion for summary judgment if a SAC is filed. Indeed, the trial date is still almost nine months away (July 8, 2019), which should allow Defendants ample filing time. As Defendants note, they have until May 2019 to file a dispositive motion. While Defendants note the deadlines in this case may be difficult to meet, the only prejudice they declare is that they will have to expend substantial efforts and expense to comply with the current schedule. The Court finds having to incur time and expense to litigate the case does not warrant denial of the motion.

Second, Defendants contend they have already expended “hundreds of thousands of dollars” to litigate this case based on the operative FAC and it would be unfair to permit a new complaint to be filed at this late stage. The Court recognizes Defendants frustration as they view Plaintiff as having unnecessarily delayed in seeking amendment, which caused them to incur costs litigating based on the FAC. However, the mere fact that time and money has been expended litigating the case does not justify denial of leave to amend.

Defendants also contend Plaintiff’s counsel has not been forthcoming with the Court because representations were made that Maleehai was actively involved in the action, when it appears Maleehai was actually not in contact with counsel for approximately three years. However, Plaintiff’s counsel does not specifically state that he had absolutely no contact with Maleehai for three years. Rather, counsel states communication with Maleehai was sporadic and minimal. (Parker Decl. ¶ 3.) Therefore, it does not necessarily follow that the communications that were made to the Court in 2016 and 2017 were false representations.

Defendants finally contend the amendment raises a whole new theory of liability – that charging broker fees is in-and-of-itself a violation of law. However, as noted by Plaintiff, the FAC contains allegations regarding Defendants’ practices of charging inflated and unnecessary broker fees. (See FAC ¶¶ 41, 42, 44, 49, 65, 66, 89, and 90.) No new causes of action are being added. Accordingly, the Court is not persuaded that a new theory of liability is being alleged.

Generally the Court should allow amendments to operative pleadings. (Mesler v. Bragg Mgmt. Co. (1985) 39 Cal.3d 290, 296.) Even in cases of delay in moving to amend, it is “an abuse of discretion to deny leave to amend where the opposing party

was not misled or prejudiced by the amendment.” (Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048.) In fact, it is “a rare case in which denial of leave to amend can be justified.” (Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428.)

It is well established that California courts have a policy of great liberality in allowing amendments at any stage of the proceeding so as to dispose of cases upon their substantial merits where the authorization does not prejudice the substantial rights of others. (Board of Trustees v. Super. Court (2007) 149 Cal.App.4th 1154, 1163.) Moreover, Section 473 of the Code of Civil Procedure authorizes the trial court, in its discretion, to allow amendments in furtherance of justice. The policy of great liberality in permitting amendments at any stage of the proceeding has been declared by our courts. (Klopstock v. Superior Court (1941) 17 Cal.2d 13, 19-20.) Judicial policy favors resolution of all disputed matters between the parties in the same lawsuit. Thus, the court’s discretion will usually be exercised liberally to permit amendment of the pleadings. (See Nestle v. Santa Monica (1972) 6 Cal.3d 920,939; Mabie v. Hyatt (1998) 61 Cal. App.4th 581, 596.)

Although it is true that amendments to pleadings are to be granted with great liberality, it is equally well established that an unwarranted delay in seeking to amend is one valid ground on which to deny a motion to amend. (See, e.g., Huff v. Wilkins (2006) 138 Cal.App.4th 732, 736[“‘[E]ven if a good amendment is proposed in proper form, unwarranted delay in presenting it may-of itself-be a valid reason for
denial.’ [Citation.]”]; Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1159 [stating appellate courts are less likely to find an abuse of discretion where the proposed amendment was “offered after long unexplained delay” or “where there is a lack of diligence”]; Leader v. Health Industries of America, Inc. (2001) 89 Cal.App.4th 603,

613 [“The law is well settled that a long deferred presentation of the proposed amendment without a showing of excuse for the delay is itself a significant factor to uphold the trial court’s denial of the amendment.”].)

A trial court has discretion to deny a motion for leave to amend where both “inexcusable delay and probable prejudice” is shown. (Magpali v. Farmers Group (1998) 48 Cal.App.4th 471, 487-488 [leave to amend made on the eve of trial properly denied in the trial court’s discretion where the new cause of action would have greatly expanded the case after the “trial date was set, the jury [was] about to be impaneled, counsel, the parties, the trial court, and the witnesses [had] blocked the time, and the only way to avoid prejudice to the opposing party is to continue the trial date to allow further discovery…”].)

Plaintiff has sufficiently explained the delay in seeking leave to amend and why the amendments are just now being sought and are warranted. In addition, Defendants have failed to establish sufficient prejudice warranting denial of the motion.

The Court declines Defendants’ request to order Plaintiff to pay Defendants’ attorneys’ fees and costs incurred related to Plaintiff’s “deposit” allegations.

Based on the foregoing, Plaintiff’s motion for leave to file a SAC is GRANTED.

No later than October 26, 2018, Plaintiff may file and serve the SAC. (Although not required by statute or court rule, Plaintiff is directed to present the clerk a copy of this ruling at the time of filing the SAC.)

This minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or other notice is required.