UNITED FINANCIAL CASUALTY COMPANY VS ELI'S AUTO CENTER

Tentative Rulings

Case Number: 17STLC03423    Hearing Date: December 16, 2019    Dept: 94

United Financial Casualty Co. v. Eli’s Auto Center, et al.

MOTION FOR LEAVE TO AMEND COMPLAINT AND TO RECLASSIFY ACTION

(CCP §§ 473(a); 403.040)

TENTATIVE RULING:

Plaintiff United Financial Casualty Company’s Motion for Leave to File First Amended Complaint and to Reclassify Action to Unlimited Jurisdiction GRANTED. PLAINTIFF IS TO FILE THE FIRST AMENDED COMPLAINT AND PAY THE RECLASSIFICATION FEE WITHIN TEN (10) DAYS. UPON FILING OF THE FIRST AMENDED COMPLAINT, THIS CASE IS RECLASSIFIED AS AN UNLIMITED CIVIL CASE AND TRANSFERRED TO THE TRANSFER/RECLASSIFICATION DESK FOR REASSIGNMENT TO AN INDEPENDENT CALENDAR COURT.

ANALYSIS:

On August 21, 2017, Plaintiff United Financial Casualty Company (“Plaintiff”) filed the instant action for common counts against Defendant Eli’s Auto Center (“Defendants”). Defendant filed a Cross-Complaint for breach of written contract and common counts on December 11, 2017. Plaintiff filed the instant Motion to Amend Complaint and Reclassify Action on November 22, 2019. To date, no opposition has been filed.

Motion for Leave to Amend

Plaintiff alleges that it paid Defendant money to repair the motor vehicle of Plaintiff’s insured, but the work was never performed. Defendant cross-claims on the grounds that Plaintiff failed to pay in full for work performed on their insureds’ vehicles.

Plaintiff moves for leave to add allegations to the Complaint regarding overpayments made to Defendant for a total of eight vehicles. (Motion, Kang Decl., ¶7.) These alleged overpayments were discovered during the parties’ extended settlement discussions, which concluded in November, 2019. (Id. at ¶¶4-6.) Additionally, Plaintiff seeks to add two co-Plaintiffs and another Defendant as it is learning of the exact relationship between Defendant and Eli’s Auto Center II, Inc. (Id. at ¶¶7-8.)

The policy favoring amendment and resolving all matters in the same dispute is “so strong that it is a rare case in which denial of leave to amend can be justified. . . .” “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 ‘where no prejudice is shown to the adverse party . . . . [citation].  A different result is indicated ‘where inexcusable delay and probable prejudice to the opposing party’ is shown. [Citation].” (Magpali v. Farmers Group (1996) 48 Cal.App.4th 471, 487 (emphasis added).) Where a proposed amendment opening an entirely new substantive area of injury on the eve of trial without any explanation for why the major change had not been made long before, denial of leave is appropriate ordered in the court’s discretion.  (Id.)

Also, a motion for leave to file an amended pleading must comply with CRC Rule 3.1342, which requires a supporting declaration setting forth explicitly what allegations are to be added and where, and explicitly stating what new evidence was discovered warranting the amendment and why the amendment was not made earlier.  The motion must also include (1) a copy of the proposed and numbered amendment, (2) specifications by reference to pages and lines the allegations that would be deleted and added, and (3) a declaration specifying the effect, necessity and propriety of the amendments, date of discovery and reasons for delay. (CRC Rule 3.1324(a)-(b).)

Plaintiff has demonstrated that leave to amend is appropriate based on its discovery of additional facts and parties relating to the claims raised in both the Complaint and Cross-Complaint. The Notice of Motion sets forth the proposed changes to the Complaint, and attaches a copy of the proposed First Amended Complaint.

Motion to Reclassify

Plaintiff also moves for reclassification of this action to a court of unlimited jurisdiction based on the facts discussed above. Code of Civil Procedure section 403.040 allows a plaintiff to file a motion for reclassification of an action within the time allowed for that party to amend the initial pleading. (Code Civ. Proc., § 403.040, subd. (a).) If the motion is made after the time for the plaintiff to amend the pleading, the motion may only be granted if (1) the case is incorrectly classified; and (2) the plaintiff shows good cause for not seeking reclassification earlier. (Code Civ. Proc., § 403.040, subd. (b).) In Walker v. Superior Court (1991) 53 Cal.3d 257, 262, the California Supreme Court held that a matter may be reclassified from unlimited to limited only if it appears to a legal certainty that the plaintiff's damages will necessarily be less than $25,000. (Walker v. Superior Court (1991) 53 Cal.3d 257.) If there is a possibility that the damages will exceed $25,000.00, the case cannot be transferred to limited. (Ibid.) This high standard is appropriate in light of “the circumscribed procedures and recovery available in the limited civil courts.” (Ytuarte v. Superior Court (2005) 129 Cal.App.4th 266, 278.)

In Ytuarte, the Court of Appeals examined the principles it set forth in Walker and held that “the court should reject the plaintiff's effort to reclassify the action as unlimited only when the lack of jurisdiction as an “unlimited” case is certain and clear.” (Id. at 279.) The plaintiff must present evidence to demonstrate a possibility that the damages will exceed $25,000.00, then the trial court must review the record to determine “whether a judgment in excess of $25,000.00 is obtainable.” (Ibid.)

Plaintiff has explained the chronology of its discovery of the facts that make it appropriate to expand the scope of the Complaint. Given that there are now eight alleged instances of over payment to Defendant, there is a strong possibility the amount in controversy will exceed $25,000.00.

Conclusion

Based on the foregoing, Plaintiff’s Motion to Amend Complaint and to Reclassify Action is GRANTED.

Moving party to give notice.