Case Number: BC617750 Hearing Date: January 17, 2018 Dept: 53

bonnie duboff , et al. vs. linda schermer , et al., BC617750, JANUARY 17, 2018

[Tentative] Order RE: DEFENDANTS’ MOTION FOR LEAVE TO FILE AMENDED ANSWER

Defendants’ LINDA SCHERMER, AS TRUSTEE OF THE SURVIVING TRUSTOR’S TRUST UNDER THE SCHERMER FAMILY TRUST, LINDA SCHERMER AS TRUSTEE OF THE DECEASED TRUSTOR’S TRUST UNDER THE SCHERMER FAMILY TRUST, AND LINDA SCHERMER, AS TRUSTEE OF THE MARITAL TRUST UNDER THE SCHERMER FAMILY TRUST’S motion for leave to file amended answer is GRANTED.

BACKGROUND

Plaintiff Bonnie Duboff (“Plaintiff”), on behalf herself and all other limited partners of 245 Spalding Partners, L.P., filed this action against Defendants Linda Schermer (“Schermer”), as Trustee of The Surviving Trustor’s Trust Under The Schermer Family Trust, Linda Schermer as Trustee of The Deceased Trustor’s Trust Under The Schermer Family Trust, and Linda Schermer, as Trustee of The Marital Trust Under The Schermer Family Trust’s (collectively, “Defendants”). Defendants move for leave to file an amended answer (“Proposed Answer”).

Defendants seek leave to correct certain admissions regarding the general and limited partners of 245 Spalding Partners L.P. In particular, the Proposed Answer seeks to clarify that the general partner of 245 Spalding Partners L.P is the Surviving Trustor’s Trust under the Schermer Family Trust, not Linda Schermer individually, and to clarify that the three trusts named above are the limited partners of 245 Spalding Partners, L.P., not the individuals Bonnie Duboff, Deborah Scott, and Linda Schermer. Plaintiff opposes the motion, arguing that Defendants unreasonably delayed in bringing the motion and that granting the motion will cause her prejudice.

JUDICIAL NOTICE

The Court grants Defendants’ request for judicial notice.

DISCUSSION

Pursuant to CCP §473(a)(1), “[t]he court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading.” Amendment may be allowed at any time before or after commencement of trial. (CCP §576.) “[T]he court’s discretion will usually be exercised liberally to permit amendment of the pleadings. The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified.” (Howard v. Cty. of San Diego (2010) 184 Cal.App.4th 1422, 1428 (internal citations omitted).) “In particular, liberality should be displayed in allowing amendments to answers, for a defendant denied leave to amend is permanently deprived of a defense.” (Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1159 (internal citations omitted).)

Defendants cite Hyman v. Tarplee (1944) 64 Cal.App.2d 805, 813-814 in support of their motion for leave. In that case, the Court of Appeal affirmed the trial court’s grant of leave to amend only a few weeks before trial in the matter. (Id.) In the proposed answer, respondents alleged a completed absolute gift prior to the death of a decedent, rather than a deposit of the money for the use and benefit of the decedent during his lifetime which was to become the property of respondents only upon the decedent’s death. (Id.) There, new attorneys had been retained who, upon reviewing the pleadings, decided that the facts had been set forth incorrectly. (Id.) Here, Defendants argue, the facts are similar: Defendants retained new counsel, who learned that certain admissions regarding the general and limited partners of 245 Spalding Partners L.P. were incorrect. In particular, Defendants learned that Plaintiff, Schermer, and Deborah Scott are not limited partners and that Schermer as an individual is not general partner. Defendants seek to correct these admissions and also to assert the affirmative defense of lack of standing.

Defendants also argue that there will be no prejudice to Plaintiff in granting the motion because they merely seek to bring into question the validity and efficacy of the documents on which Plaintiff relies to assert that she is a partner. They argue that there is no change in issues in the matter. Defendants also argue that they brought up this change in position to Plaintiff. (Fedalen Decl. ¶ 8.) They also argue that they did not delay in bringing this motion, as they did so upon receipt of the information. Defendants also argue that discovery is ongoing and Plaintiff can conduct discovery on these issues in particular.

Plaintiff, in opposition, argues that Defendants were fully aware of all the facts and documents underlying who is a limited and general partner, and in fact Schermer’s conduct for years has been consistent with the position that Plaintiff is a limited partner in the partnership, and that Schermer is the general partner individually. Plaintiff cites to a number of exhibits as evidence. (See Exhs. Cited by Opp’n, 2:21-3:13.) Plaintiff argues that there are no new facts discovered by Defendants, but instead a new, eleventh-hour change in legal strategy attempted by new counsel. However, although Plaintiff presents a number of cases wherein denial of leave to amend was found to be appropriately within the discretion of the court, none of the cases disallow the amendment sought here. Defendants don’t seek to amend their answer at the hearing on the summary judgment, or during trial, and have presented a valid reason for their delay. Here, Defendants, after retaining new counsel in July, 2017, served the proposed amendment on Plaintiff in mid-November, 2017, and filed this motion on December 4, 2017, nearly three months before trial. Moreover, even if the facts underlying the proposed changes existed previously, none of the cases Plaintiff cites prohibit the amendment of an answer in response to evidence submitted with a plaintiff’s motion for summary judgment, filed well before the date for that summary judgment motion. Accordingly, the Court does not find Defendants to have unreasonably delayed in bringing this motion.

Plaintiff further argues that she will be prejudiced by the Court’s allowing this amendment because she and counsel have expended significant time and expense to litigating this case in a particular way based on Defendants’ admissions in the verified answer. Plaintiff also argues that when she attempted to learn of the facts underlying Defendants’ change in position at Schermer’s recent deposition, Schermer refused to answer, claiming the attorney-client privilege. However, the Court finds that Plaintiff fails to show prejudice. As pointed out by Defendants, “it must be deemed an elementary principle that the facts, and not the verified answer, constitute the final test of jurisdiction upon any cause of action inaugurated in a justice’s court.” (King v. Kutner-Goldstein Co. (1901) 135 Cal. 65, 67.) All that has changed is whether Defendants are admitting to Plaintiff’s standing and Schermer’s position as general partner and affirmatively asserting a defense based on those admissions; the facts and evidence thsemselves beyond these admissions have not changed, and the motion for summary judgment and/or trial can proceed based on the remaining evidence and undisputed facts that exist in the case. Moreover, it appears that even though Schermer refused to answer Plaintiff’s inquiry during Schermer’s deposition regarding her positions in the Proposed Answer based on attorney-client privilege, Schermer has agreed to serve a response to Plaintiff’s contention interrogatory regarding the same.

CONCLUSION

Based on the foregoing, the Court finds there was no unreasonable delay in the bringing of this motion and no prejudice will result to Plaintiff in the Court’s granting it. Given the liberality that courts should exercise in regard to allowing amendments to answers, the Court GRANTS Defendants’ motion to amend their answer. The Court orders Defendants to file the Proposed Answer which was attached as an Exhibit to their motion within one day of this Order.

Defendants are ordered to give notice of this ruling.

DATED: January 17, 2018

_____________________________

Hon. Howard L. Halm

Judge of the Superior Court