This case was last updated from Los Angeles County Superior Courts on 06/18/2019 at 22:25:58 (UTC).

KAMRAN KHALIL ET AL VS JAMES LEE REYNOLDS

Case Summary

On 08/03/2017 KAMRAN KHALIL filed a Contract - Professional Negligence lawsuit against JAMES LEE REYNOLDS. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is GAIL FEUER. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****1146

  • Filing Date:

    08/03/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Professional Negligence

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

GAIL FEUER

 

Party Details

Plaintiffs, Petitioners and Cross Defendants

BRENDEN REAL ESTATE LLC

KHALIL DAVID

KHALIL KAMRAN

BRENDEN REAL ESTATE LLC.

Defendants, Respondents and Cross Plaintiffs

DOES 1 - 50

REYNOLDS JAMES LEE

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

HACKER JEFFREY A. ESQ.

HACKER JEFFREY ALAN ESQ.

Cross Plaintiff Attorney

REYNOLDS JAMES LEE

 

Court Documents

PLAINTIFFS' OPPOSITION TO DEFENDANT'S MOTION TO QUASH SERVICE OF SUMMONS AND COMPLAINT; DECLARATION OF JORGE RIVERA IN SUPPORT THEREOF

3/2/2018: PLAINTIFFS' OPPOSITION TO DEFENDANT'S MOTION TO QUASH SERVICE OF SUMMONS AND COMPLAINT; DECLARATION OF JORGE RIVERA IN SUPPORT THEREOF

Unknown

5/31/2018: Unknown

Case Management Statement

10/11/2018: Case Management Statement

Minute Order

10/15/2018: Minute Order

Notice of Ruling

11/7/2018: Notice of Ruling

Demurrer - with Motion to Strike

12/31/2018: Demurrer - with Motion to Strike

Request for Judicial Notice

3/6/2019: Request for Judicial Notice

Unknown

3/6/2019: Unknown

Unknown

3/7/2019: Unknown

Unknown

3/7/2019: Unknown

Minute Order

3/21/2019: Minute Order

Notice

4/15/2019: Notice

Unknown

4/22/2019: Unknown

Notice

5/2/2019: Notice

Unknown

1/26/2018: Unknown

DEFENDANT'S MOTION TO QUASH SERVICE OF SUMMONS AND COMPLAINT FILED SEPARATELY, AND IN SUPPORT: I. [PROPOSEDI ORDER

12/21/2017: DEFENDANT'S MOTION TO QUASH SERVICE OF SUMMONS AND COMPLAINT FILED SEPARATELY, AND IN SUPPORT: I. [PROPOSEDI ORDER

Minute Order

12/4/2017: Minute Order

NOTICE OF CASE MANAGEMENT CONFERENCE

8/15/2017: NOTICE OF CASE MANAGEMENT CONFERENCE

71 More Documents Available

 

Docket Entries

  • 05/20/2019
  • Amended Cross-Complaint 2nd; Filed by James Lee Reynolds (Cross-Complainant)

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  • 05/20/2019
  • Summons (on Amended Cross Complaint (1st)); Filed by James Lee Reynolds (Cross-Complainant)

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  • 05/20/2019
  • Amended Complaint (Amended Cross-Complaint 2nd); Filed by James Lee Reynolds (Cross-Complainant); James Lee Reynolds (Cross-Complainant)

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  • 05/09/2019
  • Notice (- of court's setting hearing for informal discovery conferences); Filed by James Lee Reynolds (Cross-Complainant)

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  • 05/08/2019
  • Stipulation and Order (Leave Allowing Def Reynolds File 2nd Amend Cross-Complaint); Filed by James Lee Reynolds (Cross-Complainant)

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  • 05/02/2019
  • Notice (of Results of IDC Hearing); Filed by James Lee Reynolds (Cross-Complainant)

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  • 04/24/2019
  • at 3:30 PM in Department 78; Informal Discovery Conference (IDC) - Held

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  • 04/24/2019
  • Minute Order ( (Informal Discovery Conference (IDC))); Filed by Clerk

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  • 04/22/2019
  • Informal Discovery Conference; Filed by James Lee Reynolds (Cross-Complainant)

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  • 04/22/2019
  • Informal Discovery Conference; Filed by James Lee Reynolds (Cross-Complainant)

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101 More Docket Entries
  • 12/04/2017
  • Minute Order

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  • 11/30/2017
  • Proof-Service/Summons

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  • 11/30/2017
  • PROOF OF SERVICE SUMMONS & COMPLAINT

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  • 11/30/2017
  • DUE DILIGENCE

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  • 11/20/2017
  • CASE MANAGEMENT STATEMENT

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  • 08/15/2017
  • Notice of Case Management Conference; Filed by Clerk

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  • 08/15/2017
  • NOTICE OF CASE MANAGEMENT CONFERENCE

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  • 08/03/2017
  • SUMMONS

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  • 08/03/2017
  • Complaint; Filed by Kamran Khalil (Plaintiff); David Khalil (Plaintiff); Brenden Real Estate, LLC (Plaintiff)

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  • 08/03/2017
  • COMPLAINT FOR: 1) NEGLIGENCE; ETC

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Tentative Rulings

Case Number: BC671146    Hearing Date: December 03, 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-ACTIONS

Case No.: BC671146

Hearing Date: December 3, 2019

[TENTATIVE] RULING RE:

Cross-Defendants Kamran Khalil, David KHalil, and Brenden Real Estate, LLC’s Demurrer and motion to strike the first cause of action in the second amended Cross-Complaint.

CROSS-COMPLAINANT JAMES LEE REYNOLDS’ MOTION FOR LEAVE TO AMEND THE CROSS-COMPLAINT

Cross-Defendants Kamran Khalil, David Khalil, and Brenden Real Estate, LLC’s Demurrer to the Cross-Complaint is OVERRULED as to the First Cause of Action.

Cross-Defendants’ Motion to Strike Portions of the Cross-Complaint is DENIED.

Cross-Complainant James Lee Reynolds’ 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:

  1. Negligence

  2. 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:

  1. Intentional Misrepresentation

  2. Breach of Written Contract

  3. Common Count — For Service Provided

  4. Common Count — Quantum Meruit

Cross-Defendants filed a Demurrer and Motion to Strike on December 31, 2018, which this Court sustained with leave to amend as to the First and Fourth Causes of Action, and overruled as to the Second and Third Causes of Action.

On April 17, 2019, Reynolds filed a First Amended Cross-Complaint alleging three causes of action:

  1. Intentional misrepresentation

  2. Breach of written contract

  3. Common count – for services provided

On May 9, 2019, after receiving leave to amend, Reynolds filed a Second Amended Cross-Complaint, alleging the same three causes of action.

On June 21, 2019, Cross-Defendants filed a Demurrer and Motion to Strike.

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

On November 8, 2019, Cross-Defendants filed an Opposition to the Motion for Leave to Amend.

At the November 18, 2019, the Court continued the hearing on the Motion for Leave to Amend to allow Reynolds to file a Reply.

On November 18, 2019, Reynolds filed an Opposition to the Demurrer and the Motion to Strike.

On November 20, 2019, Cross-Defendants filed a Reply to Reynold’s Opposition to the Demurrer and Motion to Strike.

On November 25, 2019, Reynolds filed a Reply to the Motion for Leave to Amend.

DISCUSSION

  1. JUDICIAL NOTICE

Where the motion is based on a matter of which the court may take judicial notice pursuant to Section 452 or 453 of the Evidence Code, the matter shall be specified in the notice of motion, or in the supporting points and authorities, except as the court may otherwise permit. (California Code of Civil Procedure §438(d)). Any request for judicial notice must be made in a separate document listing the items for which notice is requested. (CRC 3.1113(l)). Judicial notice may be taken of (d) “Records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States.” (Evid. Code § 452.)

Reynolds requests that this Court take judicial notice of his Second Amended Cross-Complaint in this action.

The Court GRANTS the request for judicial notice.

  1. MOTION FOR LEAVE TO AMEND

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 cross-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 Plaintiffs allege in their Complaint and claims that he has a legitimate claim against Hacker for implied equitable indemnification. (Motion at ¶¶ 19-21.)

In their Opposition, Cross-Defendants, through their attorney, Hacker, argue that Reynolds has known of Hacker’s existence and role since 2016, and adding Hacker will significantly prejudice Cross-Defendants because they will need to obtain new counsel due to conflict of interest issues involving Hacker, because it will delay trial, and because Cross-Defendants’ counsel would possibly need to testify in trial. (Opposition at pp. 2-3.) Cross-Defendants 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.) 

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 cross-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 would 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. 

In his Reply, Reynolds addresses the Court’s previous tentative decision from November 18, 2019 on this Motion. Reynolds alleges various facts regarding his claims against Hacker. (Reply at ¶¶ 3-11.) Reynolds alleges that he had no probable cause to bring a claim for indemnification against Hacker at the time that he brought his Cross-Complaint on November 30, 2018. (Reply at ¶ 10.) Reynolds argues that Plaintiffs’ responses to his Special Interrogatories, Set 2, dated on or about June 23, 2019, indicate that Plaintiffs now contend that the process of Reynolds’ unilateral cancelling of the business subpoenas in the underlying case was improper, specifically stating that Reynolds “[failed] to notify the Khalils’ counsel of the status of the subpoenas, the lack of payment, or that counsel should make final arrangements with any third party regarding the subpoenas[.]” (Motion, Exh. 22; Reply at p. 4.) Reynolds states that “Once aware of the change in position, Reynolds immediately filed this Motion in July, 2019.” (Reply at p. 4.) Reynolds has taken the position that Plaintiffs’ response to his interrogatory entirely changes their claim and thus that “Hacker’s involvement in the processing of the canceling of the business subpoenas is equally subject to scrutiny at trial […] [because] Hacker was directly involved with the business subpoenas before and immediately after he was substituted into this action[.] (Reply at p. 4.)

The Complaint in this case alleges that “Defendant owed Plaintiffs a duty of care which he breached by his negligent conduct, conduct which fell below the applicable standard of care, by such acts which include, but are not limited to: failing to timely provide or organize discovery; failing to property advise Plaintiffs; disclosing confidential communications between Reynolds and his former client; taking positions adverse to his clients; willfully disobeying court orders; canceling Subpoena Duces Tecums ordered by the Discovery Referee; and other conduct according to proof.” (Compl. ¶ 18.)

The Court does not agree with Reynolds that Plaintiffs’ response to his Special Interrogatory Request substantively changes their allegations under the Complaint. Reynolds was aware in August 2016, at the time of the events that Hacker was representing Plaintiffs and would have been connected to any issues with the Plaintiffs, including the subpoenas, after August 10, 2016 when Hacker informed Reynolds that he was representing Plaintiffs. (Motion, Exh. 4.)

Additionally, the same issues of prejudice raised by plaintiffs here have been held, on the basis of public policy, to preclude a successor attorney being sued for malpractice by former client from cross-complaining for equitable indemnity against the successor attorney hired to extricate client from the condition created by the predecessor attorney. (Holland v. Thacher (1988) 199 Cal.App.3d 924, 930.)

Accordingly, the Motion for Leave to Amend is DENIED. 

  1. DEMURRER TO THE CROSS-COMPLAINT

A demurrer should be sustained only where the defects appear on the face of the pleading or are judicially noticed. (Code Civ. Pro., §§ 430.30, et seq.) A court should sustain a demurrer if a complaint does not allege facts that are legally sufficient to constitute a cause of action. (See id. § 430.10, subd. (e).) As the Supreme Court held in Blank v. Kirwan (1985) Cal.3d 311: “We treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . . Further, we give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Id. at p. 318; see also Hahn. v. Mirda (2007) 147 Cal.App.4th 740, 747 (“A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”))

“In determining whether the complaint is sufficient as against the demurrer … if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain, because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616.) Such demurrers “are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Insurance Agency, Inc. (2017) 14 Cal.App.5th 841, 848.)

A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment. (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081.) The demurrer also may be sustained without leave to amend where the nature of the defects and previous unsuccessful attempts to plead render it probable plaintiff cannot state a cause of action. (Krawitz v. Rusch (1989) 209 Cal.App.3d 957, 967.)

  1. INTENTIONAL MISREPRESENTATION/FRAUD — FIRST CAUSE OF ACTION

Cross-Defendants demur to the First Cause of Action in the Second Amended Cross-Complaint (“SACC”) for intentional misrepresentation/fraud because they argue it fails to allege the elements of the tort with the required specificity. (Demurrer at pp. 5–6.)

The elements of fraud are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance; (4) justifiable reliance; and (5) damages. (See Lazar v. Superior Court (1996) 12 Cal.4th 631, 638.) It is well-established that “[t]o withstand a demurrer, the facts constituting every element of fraud must be alleged with particularity, and the claim cannot be salvaged by references to the general policy favoring the liberal construction of pleadings.” (Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.) “This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar, supra, 12 Cal.4th at p. 645 (internal quotation marks omitted).)

The alleged misrepresentation here is: During a private meeting on June 23, 2016, “Cross-Defendants K. Khalil, for himself, and Cross-Defendants D. Khalil and Brenden [], orally represented to Reynolds [and the discovery referee in the underlying action] that Reynolds’ proposal was acceptable and they (all the Cross-Defendants) would pay the costs associated with the various business subpoenas and share in the costs of a mutually agreeable forensic accountant.” (SACC ¶ 19.)

The Cross-Complaint alleges the “how, when, where, to whom, and by what means” the representations were made because Reynolds has added that the representations were made orally at the private meeting.

Further, as the Court addressed with respect to the Demurrer to the original Cross-Complaint, the SACC also alleges that Cross-Defendants “knew the representation to be false and made this representation with the intention to deceive and defraud Reynolds.” (SACC ¶¶ 25-26.) Although Cross-Defendants challenge the adequacy of this allegation, the Court considers it sufficiently specific, given that the internal mental state of Cross-Defendants is more particularly in their knowledge than Reynolds’s. (See Tenet Healthsystem. v. Blue Cross of California (2016) 245 Cal.App.4th 821, 837–38.) It is also alleged that Reynolds issued 42 business subpoenas in reliance on the representations, and that Cross-Defendants failed to pay him for the costs. (SACC ¶¶ 20, 28.)

Accordingly, the Demurrer is OVERRULED as to the First Cause of Action. The Court does not address Reynolds’ request to strike evidence as asserted in his Opposition, because it was not made in a proper motion.

  1. MOTION TO STRIKE PORTIONS OF THE CROSS-COMPLAINT

Any party, within the time allowed to respond to a pleading, may serve and file a notice of motion to strike the whole or any part thereof. (Code Civ. Proc., § 435(b)(1)). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. (California Rules of Court, Rule 3.1322).

The grounds for a motion to strike shall appear on the face of the challenged pleading or form any matter of which the court is required to take judicial notice. (Code Civ. Proc., § 437(a)). The court then may strike out any irrelevant, false, or improper matter inserted in any pleading and strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436.) When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend. (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)

Cross-Defendants ask this Court to strike paragraph 29, lines 24-2, and paragraph 38, lines 17-19, regarding punitive damages. (Motion at p. 2.)

Punitive damages are allowed in non-contract cases when a defendant is guilty of “oppression, fraud, or malice . . . .” (Civ. Code § 3294.) The terms are defined as:

  1. “Malice” means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.

  2. “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person's rights.

  3. “Fraud” means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.

Something more than the mere commission of a tort is always required for punitive damages. (Taylor v. Superior Court (1979) 24 Cal.3d 890, 894.) Proof of negligence, gross negligence, or recklessness is insufficient to warrant an award of punitive damages. (Dawes v. Sup.Ct. (Mardian) (1980) 111 Cal.App.3d 82, 88–89.) Punitive damages may be recovered in a personal injury action if the plaintiff pleads and proves that the defendant acted with the state of mind described as “conscious disregard” of the potential dangers to others. (Pfeifer v. John Crane, Inc. (2013) 220 Cal.App.4th 1270, 1299.) When malice is based on a defendant’s conscious disregard of Plaintiff’s rights, the conduct must be both despicable and willful. (College Hospital v. Superior Court (1994) 8 Cal.4th 794, 713.)

The allegations in the SACC regarding Cross-Defendants’ alleged misrepresentations are described above. The allegations support an inference for a fraud claim that Cross-Defendants misrepresented that they would pay for the costs of the subpoenas with knowledge of the falsity of such statement and intent to defraud or induce reliance by Reynolds. These allegations adequately describe fraud, supporting an award of punitive damages.

The Motion to Strike is therefore DENIED.

Plaintiff to give notice.

Dated: December 3, 2019

_____________________________________

Hon. Robert S. Draper

Judge of the Superior Court

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:

  1. Negligence

  2. 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:

  1. Intentional Misrepresentation

  2. Breach of Written Contract

  3. Common Count — For Service Provided

  4. 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

  1. 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 (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