Leave to File Cross-Complaint
Zhang v. Qu, et al Motion: Leave to File Cross-Complaint Movant: Huiming Ding (Ding/Defendant) Respondent: Kefeng Zhang (Zhang/Plaintiff)
RELEVANT FACTUAL AND PROCEDURAL BACKGROUND
On April 20, 2022, Plaintiff initiated the instant action against Hengcheng Qu (Qu) and Ding. Plaintiff subsequently added Roqui Du (Du). The operative Second Amended Complaint (SAC) alleges causes of action for: (1) breach of contract (against Qu and Ding); (2) fraud (against Qu and Ding); (3) negligent misrepresentation (against Qu and Ding); (4) equitable lien (against Qu and Ding); (5) quiet title (against Qu and Ding); and (6) fraudulent conveyance (against all defendants).
On May 20, 2026, Ding filed the instant Motion for Leave to File Cross-Complaint (Moton). Plaintiff opposes.
ANALYSIS
Code of Civil Procedure section 428.50, subdivision (a), provides “[a] party shall file a cross-complaint against any of the parties who filed the complaint or cross-complaint against him or her before or at the same time as the answer to the complaint or cross-complaint.” Section 428.50 subdivision (c) permits a party, one who has not filed a cross-complaint with the answer, to move for leave to file the cross-complaint. “Leave may be granted in the interest of justice at any time during the course of the action.” (Code Civ. Proc., § 428.50, subd. (c).)
Cross-complaints are categorized as either compulsory or permissive. Compulsory crosscomplaints are governed by Code of Civil Procedure section 426.10, et. seq. Compulsory crosscomplaints arise when a named defendant has a related cause of action against the plaintiff. (Code Civ. Proc., §§ 426.10, subd. (c), 426.30, subd. (a).) A related cause of action means a cause of action that “arises out of the same transaction, occurrence, or series of transactions or occurrence” as the complaint. (Code Civ. Proc., § 426.10
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A cause of action arises out of the “same transaction or occurrence” if the factual or legal issues are logically related. (Currie Medical Specialties, Inc. v. Bowen (1982) 136 Cal.App.3d 774, 776-77; see also Align Technology, Inc. v.
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Bao Tran (2009) 179 Cal.App.4th 949, 965 (“[T]he ‘logical relationship’ inquiry is the preferred approach in ascertaining whether a claim arises out of the same transaction or occurrence so that it constitutes a compulsory counterclaim...”)
When the claims are compulsory, but not pled, “whether through oversight, inadvertence, mistake, neglect, or other cause,” the party seeking to file the cross-complaint “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.” (Code Civ. Proc., §426.50.)
Delay may only suffice to constitute bad faith “when it appears that a delayed cross-complaint, if allowed, would work a substantial injustice to the opposing party and would prejudice the party’s position in some way.” (Foot’s Transfer & Storage Co. Ltd. V. Superior Court (1980) 114 Cal.App.3d 897, 903.)
There is no dispute that the proposed Cross-Complaint contains compulsory claims arising from the same transactions and occurrences at-issue in the Complaint and as such section 426.50 of the Code of Civil Procedure applies and the instant motion should be granted absent bad faith. (Silver, supra, 217 Cal.App.3d at pp. 98-99). The late filing of the motion to file a compulsory cross-complaint absent some evidence of bad faith is insufficient evidence to support denial of the motion. (Id. at 101.)
While an admittedly vague concept, bad faith implies or involves actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake, but by some interested or sinister motive. (Id. at 100.) In the case at hand, there is no evidence before this court that supports a finding that the delay in filing the instant motion was due to bad faith. (Id. at 97).
RULING
1. Defendant’s Motion for Leave to File Cross-Complaint is GRANTED. Defendant is ordered to file and serve Cross-Complaint within 5 days.
2. Movant to give Notice.
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