Tentative Rulings

Case Number: *******0794 Hearing Date: March 25, 2022 Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A. Allegations

Plaintiff Sunswept LLC, Allen Ravert, Bernadette M. O’Rourke, and Glen Dobbs (“Plaintiffs”) allege that they have been tenants of the premises owned by Defendant/landlord Edward J. Hanessian as Trustee of The Anne Hanessian Living Trust (“Defendant”) for more than 26 years. The property at issue is located at 12159-12163 Ventura Blvd., Studio City. Plaintiffs allege that Ravert went above and beyond the requirements of the lease and essentially acted as the de facto unpaid manager of the premises by making various accommodations and providing numerous services to Defendant beyond the lease terms.

Pursuant to the lease’s terms, Plaintiffs have an option to purchase the lot either at a set minimum price of $2.3 million for 2021 or for a “fair market appraisal” amount, whichever is greater. Ravert exercised the option and offered an amount exceeding the minimum purchase price by over $1 million. However, Plaintiffs allege that Defendant solicited a deeply flawed appraisal of the lot worth significantly more than Ravert’s offer. The parties attempted to negotiate the purchase price of the lot, but Plaintiffs allege that Defendant deployed improper and unethical tactics, including refusal to honor his prior agreements and executing a purchase agreement with a third party.

The First Amended Complaint (“FAC”), filed October 15, 2021, alleges causes of action for: (1) breach of contract; (2) breach of covenant of good faith and fair dealing; and (3) declaratory relief.

On December 15, 2021, Defendant filed an answer to the FAC. At that time, Defendant did not concurrently file a cross-complaint.

B. Motion on Calendar

On February 25, 2022, Defendant filed a motion for leave to file a cross-complaint.

On March 14, 2022, Plaintiffs filed an opposition brief.

On March 18, 2022, Defendant filed a reply brief.

A jury trial is set for June 20, 2022.

LEGAL STANDARD

“A party who fails to plead a cause of action subject to the requirements of this article, whether through oversight, inadvertence, mistake, neglect, or other cause, may apply to the court for leave to amend his pleading, or to file a cross-complaint, to assert such cause at any time during the course of the action. The court, after notice to the adverse party, shall grant, upon such terms as may be just to the parties, leave to amend the pleading, or to file the cross-complaint, to assert such cause if the party who failed to plead the cause acted in good faith. This subdivision shall be liberally construed to avoid forfeiture of causes of action.” (CCP 426.50.)

CCP 389(a) states:

(a) A person who is subject to service of process and whose joinder will not deprive the court of jurisdiction over the subject matter of the action shall be joined as a party in the action if (1) in his absence complete relief cannot be accorded among those already parties or (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party.

(CCP 389(a).)

DISCUSSION

Defendant moves for leave to file a cross-complaint of compulsory claims against Plaintiffs pursuant to CCP 426.50 because he claims he did not or could not previously file a cross-complaint at the time he filed his answer. He also seeks a joinder of non-party Jeffrey Fischer pursuant to CCP 389, arguing Mr. Fischer is a necessary party to this action. A copy of the proposed cross-complaint for a single cause of action for declaratory relief is attached as Exhibit 1 to the declaration of Marcia Z. Gordon.

In support of the motion, Defendant provides the declaration of his counsel, Ms. Gordon. Ms. Gordon provides background information on the case. She states that she was retained on September 2, 2021 by Defendant and, starting September 3, 2021 when Plaintiffs filed the lawsuit, she immediately began trying to negotiate a settlement with Plaintiffs’ counsel from September 3 to December 16, 2021. (Gordon Decl., 4-6.) During the settlement negotiations, she states that Plaintiffs and their counsel (Mr. Mosley) knew of the August 28, 2021 Fischer Agreement and that she had made it clear to Mr. Mosley that she would not recommend to Defendant that he enter into a purchase agreement with Plaintiffs unless Mr. Fischer signed appropriate documents canceling the conditional Fischer Agreement and generally releasing any claims he had against Defendant. (Id., 6.) She states that she met and conferred with Plaintiffs’ counsel about the complaint and that it was subject to demurrer, so Plaintiffs filed the FAC on October 15, 2021. (Id., 7.) In order to allow negotiations, the parties’ counsel agreed that Defendant would have an extension of time to respond to the FAC. (Id., 8.) During negotiations, the extension period expired and on December 14, 2021, Ms. Gordon asked her litigation partner to request a further extension. (Id., 9.) However, Plaintiffs’ counsel responded at 5:07 p.m. on December 14, 2021 that he would be taking Defendant’s default unless the settlement quickly concluded with an actual sale; hence, Ms. Gordon had her litigation partner immediately prepare and file an answer on December 15, 2021. (Id., 9-10.) Ms. Gordon states that she did not have adequate time after the receipt of Plaintiffs’ counsel’s email to prepare and file both an answer and a cross-complaint against Plaintiffs by the next morning. (Id., 10.) She states that though she filed the answer on December 15, 2021, she still believed the case would settle and thus she spoke with the attorney of Jeffrey Fischer (who had a purchase agreement with Defendant dated August 28, 2021) to determine if Mr. Fischer would cancel the agreement and sign a general release. (Id., 11.) She states that Mr. Fischer’s counsel represented that Mr. Fischer would not be canceling the agreement. (Id., 12.) Ms. Gordon relayed to Plaintiffs’ counsel that it appeared settlement negotiations would be fruitless and that the matter would need to be resolved by litigation. (Id., 13.) On December 21, 2021, her firm sent an email to Plaintiffs’ counsel, requesting that they stipulate to Defendant filing a cross-complaint, but Plaintiff’s counsel sent an email on December 28, 2021 refusing to stipulate. (Id., 14.) She states that no party has yet been served with written discovery and no depositions have been noticed or taken. (Id., 15.) She also states that Defendant acted in good faith when he filed his answer and it was not until shortly after the answer was filed that she acquired knowledge that it was necessary to join Mr. Fischer to the action. (Id., 16.)

In opposition, Plaintiffs argue that Mr. Fischer is a stranger to Plaintiffs and Defendant’s landlord-tenant commercial lease dispute and Mr. Fischer’s involvement is not required as he is not a party to the lease. They argue that Defendant executed a purchase agreement with Mr. Fischer to buy the lot at a premium in excess of the fair market appraisal value for the lot. They argue this case is regarding a landlord’s disregard of his obligations under the lease and tenants’ enforcement of their exclusive option to purchase. They argue that the Court should deny Defendant’s request to join Mr. Fischer as a party.

Plaintiffs argue that the motion should be denied to the extent that Mr. Fischer should not be joined in this action. (In footnote 2 on page 9 of the opposition, Plaintiffs state they “do not oppose that portion of the Motion in which Landlord seeks leave to file his ‘compulsory claims against plaintiffs.’”) While the underlying FAC involves a landlord-tenant dispute, the allegations allude to Defendant entered into a purchase agreement with a third party, which Plaintiffs allege “directly contravene the requirement in the Lease….” (FAC, 6.) Plaintiffs allege that Defendant’s bad faith actions undermined the lease agreement and constituted breaches of the lease. Thus, assuming there is a claim with merit, joining Mr. Fischer as a cross-defendant in this action would be logical as his rights to potentially purchase the property at issue would be affected by this litigation. The proposed cross-complaint seeks a declaration of the parties’ rights regarding Plaintiff and Defendants’ rights and duties under the lease and the parties’ respective rights under the Fischer Purchase Agreement because Plaintiffs contend they have a right to purchase the property under the lease while Mr. Fischer contends he has the right to purchase the property under the Fischer Purchase Agreement. (Proposed Cross-Complaint, 23-24.)

For these reasons, the Court grants Defendant’s motion for leave to file the proposed cross-complaint.

CONCLUSION AND ORDER

Defendant’s motion for leave to file the proposed cross-complaint is granted. Defendant is ordered to electronically file a separate version of the cross-complaint with the Court by this date following the hearing on the matter.

Defendant shall provide notice of this order.