MD Hydration Inc. vs. Fusion Hydration, LLC

“If the motion to amend is timely made and the granting of the motion will not prejudice the opposing party, it is error to refuse permission to amend; and, where the refusal also results in a party being deprived of the right to assert a meritorious cause of action or a meritorious defense, it is not only error but an abuse of discretion.” (Morgan v. Super. Ct. (1959) 172 Cal.App.2d 527, 530.) Indeed, “judicial policy favors resolution of all disputed matters in the same lawsuit,” and “it is irrelevant that new legal theories are introduced as long as the proposed amendments ‘relate to the same general set of facts.’” (Kittredge Sports Co. v. Super. Ct. (1989) 213 Cal.App.3d 1045, 1047-1048, quoting Hirsa v. Super. Ct. (1981) 118 Cal.App.3d 486, 489.)

Leave to amend may be denied if the party seeking the amendment has been dilatory and the delay has prejudiced the opposing party. (See Hirsa, supra, 118 Cal.App.3d at p. 490.) Delay is most likely to result in prejudice warranting a denial of leave to amend “[w]here the trial date is set, the jury is about to be impaneled, counsel, the parties, the trial court, and the witnesses have blocked the time, and the only way to avoid prejudice to the opposing party is to continue the trial date to allow further discovery.” (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 488.)

But “it is an abuse of discretion to deny leave to amend where the opposing party was not misled or prejudiced by the amendment.” (Kittredge, supra, 213 Cal.App.3d at p. 1048.) “[W]here no prejudice is shown to the adverse party, the liberal rule of allowance prevails.” (Atkinson, supra, 109 Cal.App.4th at p. 761.)

Finally, although “the failure of a proposed amendment to state facts sufficient to constitute a cause or defense may support an order denying a motion to amend,” this rule is most appropriately applied “where the insufficiency could not be cured by further appropriate amendment.” (Cal. Casualty Gen. Insurance Co. v. Super. Ct. (1985) 173 Cal.App.3d 274, 280- 281, disapproved of on other grounds by Kransco v. Am. Empire Surplus Lines Ins. Co. (2000) 23 Cal.4th 390.) Thus, “the better course of action” is to grant leave to amend the complaint “and then let the parties test its legal sufficiency in other appropriate proceedings” like a demurrer. (Atkinson, 109 Cal.App.4th at p. 760, citing Kittredge, 123 Cal.App.3d at p. 1048].)

Application

Here, Plaintiffs seek to add Brad Hunt and Sean Lucero as individual defendants; add a cause of action for aiding and abetting breach of duty of loyalty against Hunt; and add allegations that the entity Defendants Fusion Hydration, LLC and Fusion Management Group, LLC are the alter egos, agents, and/or mere instrumentalities of Messrs. Noggle, Hunt, and Lucero. (ROA #256, Mot., p. 2; see also Poorman Decl., ¶ 3.)

Plaintiffs contend that amendment is necessary and proper because “discovery produced new, material evidence establishing Mr. Hunt’s direct participation in the early formation and launch of Fusion Hydration.” (Poorman Decl., ¶ 5.) Plaintiffs contend that they “first discovered the[se] facts giving rise to the proposed amended allegations at Mr. Hunt’s deposition on February 28, 2023.” (Id. at ¶¶ 6, 9.) Plaintiffs contend that “[t]he deposition transcript and related documents were reviewed as soon as they became available,” but “[s]ubsequent to Mr. Hunt’s deposition, MD Hydration changed counsel, which caused some delay in the analysis of his deposition testimony.” (Id. at ¶ 11.) (The Court notes that Plaintiffs filed a substitution of counsel on 10/10/2024 at ROA #156.)

Plaintiffs further contend that “on or about December 12, 2025, Defendants supplemented financial information for 2023-2025 related to their operations, which Plaintiffs had been requesting for months.” (Poorman Decl., ¶ 12.) Plaintiffs contend that Defendants’ 2023 and 2025 financial statements “reflect that Defendants made substantial distributions to individual members during 2025 relative to Defendants’ reported revenues and the size of their business” and “reflect notable increase in salary related expenses in December 2023 compared to prior months.” (Id. at ¶ 13.)

Plaintiffs contend that this evidence suggests “Noggle, Hunt and Lucero have intermingled the entity Defendants’ assets with their own, and have used the entity Defendants’ assets for other than a legitimate corporate purpose (namely to enrich themselves,” and that this evidence provides the factual basis for Plaintiffs’ alter ego allegations. (ROA #260, Mot. P&A, at pp. 6-8.)

In opposition, Defendants raise the following three types of arguments. None is meritorious.

First, Defendants essentially contend that the motion should be denied because Plaintiffs admit to first learning the relevant facts in discovery through Hunt’s February 2023 deposition, yet did not file the instant motion until March 2026, which shows undue delay. (ROA #286, Opp., pp. 3-4, 7- 8.) However, as explained above, leave to amend may be denied only if the party seeking the amendment has been dilatory and the delay has prejudiced the opposing party. Therefore, the burden is on Defendants to demonstrate prejudice.

Defendants did not file any declarations in support of their opposition. And their opposition brief addresses prejudice in just 9 short lines. (Opp. at p. 7.) Defendants contend that the prejudice would be “severe” because neither Hunt nor Lucero “has been a party to this litigation, and given the court’s present backlog there likely is sufficient time to have necessary demurrers and motions for summary judgment/adjudication heard before the January 2027 trial date. The Court would almost certainly need to continue the trial—itself a form of prejudice to defendants who have been litigating for over four years and are entitled to a timely resolution.” (Id.)

In reply, Plaintiffs point out that “[t]he proposed pleading arises from the same Fusion-related facts that have been at issue since the beginning of this case. It adds individuals whose conduct and financial relationship to the Fusion entities have been explored in discovery.” (ROA #292, Reply, p. 7.) Indeed, “Hunt and Lucero have already been deposed. The financial allegations are based on Defendants’ own records.” (Id. at p. 12.) Moreover, Plaintiffs contend that “Defendants’ claimed prejudice is that Hunt and Lucero would need to defend themselves, respond to the amended pleading, and potentially participate in additional motion practice or discovery.

That is ordinary litigation burden, not legal prejudice. Prejudice sufficient to deny leave means unfair prejudice: lost evidence, unavailable witnesses, inability to prepare, unfair surprise, or some comparable impairment.” (Id., citing Magpali, supra, 48 Cal.App.4th at p. 487.) Plaintiffs further describe Defendants’ trial-date argument as overstated because “[t]rial is approximately seven months away and there is ample time for targeted discovery or pleading motion practice.” (Id.)

Plaintiffs have the better argument here. Particularly given that Hunt and Lucero have already been deposed, Defendants are hard-pressed to argue that they are being misled or prejudiced by Plaintiffs’ proposed amendments. Moreover, Defendants’ complaints about prejudice from further delay of trial also ring hollow in light of the parties’ recent joint stipulation, filed on 5/8/2026, in which the parties contended they both intend to take additional discovery and sought a 5-month continuance of trial to January 18, 2027. (ROA #275; see also ROA #283 [signed order granting continuance].)

Defendants’ opposition fails to address the evidence that Defendants did not produce to Plaintiffs until December 2025, which Plaintiffs also rely on to support their good-faith basis for adding alter ego allegations and asserting individual claims of liability against Hunt and Lucero in the proposed TAC. (See Reply, pp. 9-10.) To the extent Plaintiffs’ allegations are based on evidence recently procured, Plaintiffs acted diligently in filing the instant motion in March 2026.

Second, Defendants make various merits-based arguments about the legal sufficiency of the allegations Plaintiffs seek to add by way of the TAC. (Opp. at pp. 4, 8.) However, as noted above, challenges as to the legal sufficiency of a complaint are more appropriately addressed in an appropriate motion or demurrer following the filing of the complaint.

Third, Defendants make a related argument that the instant motion should be denied because the claims against Hunt and Lucero are barred by the applicable statutes of limitations, relying solely on Foxborough v. Van Atta (1994) 26 Cal.App.4th 217. (Opp. at pp. 5-7.) However, in Foxborough, the appellate court affirmed the trial court’s denial of a motion for leave to amend the complaint on the ground that “the proposed amendment fails to state a cause of action” due to the running of the applicable statute of limitations only because “the proposed amended complaint would not have related back to the filing of the original complaint.” (Foxborough, supra, 26 Cal.App.4th at pp. 230-231 [original complaint alleged injury from malpractice occurring in 1981, while proposed new complaint alleged injury from malpractice occurring in 1985, which was a “different[] incident”].)

Here, Defendants have not addressed much less shown why Plaintiff’s proposed TAC would not relate back to Plaintiffs’ proposed complaint. In contrast to the allegations in the proposed new complaint in Foxborough, Plaintiffs’ new allegations in the proposed TAC do not clearly demonstrate, on their face, that the applicable statute of limitations have run. Thus, again, any merits-based challenges Defendants may have, including based on statutes of limitations, are more appropriately addressed in an appropriate motion or demurrer following the filing of the complaint.

Plaintiffs are ORDERED to separately file the TAC with the Court within 3 court days and serve all defendants within 30 days. The TAC must be filed as a separate document to ensure it is properly indexed in the record.

(2) Motion to Seal Plaintiffs (1) MD Hydration Inc. dba The Hydration Room and (2) Hydration Holding Company’s motion to seal Exhibits D and E to the Declaration of Jacob K. Poorman, filed in support of Plaintiffs’ abovediscussed motion for leave to amend, is GRANTED.

The Court finds that Plaintiffs have proved facts that establish: (1) there exists an overriding interest that overcomes the right of public access to the record; (2) the overriding interest supports sealing the record; (3) a substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) the proposed sealing is narrowly tailored; and (5) no less restrictive means exist to achieve the overriding interest. (Cal. Rules of Court [CRC], rule 2.550(d).)

The Court finds that Exhibit D contains balance sheets and Exhibit E contains a profits and loss chart, which were produced in discovery by Defendants Fusion Management Group, LLC, formerly known as Fusion Hydration, LLC and designated as “Confidential.” (ROA #258, passim.) Such designation constitutes a representation by Defendant that the documents contain non-public financial information. (Id.) Since the information includes Defendants’ revenues, assets, liabilities, and internal financial data, it is subject to a right of privacy. (See, e.g., Overstock.com, Inc. v.

Goldman Sachs Group, Inc. (2014) 231 Cal.App.4th 471, 503, internal quotes & citations omitted [right to privacy “extends to one’s confidential financial affairs” and “embraces confidential financial information in whatever form it takes, whether that form be tax returns, checks, statements, or other account information”]; see also Nixon v. Warner Communications, Inc. (1978) 435 U.S. 589, 598 [recognizing sealing appropriate for “sources of business information that might harm a litigant’s competitive standing”]; Hecht, Solberg, Robinson, Goldberg & Bagley LLP v.

Super. Ct. (2006) 137 Cal.App.4th 579, 594 [“Although corporations have a lesser right to privacy than human beings and are not entitled to claim a right to privacy in terms of a fundamental right, some right to privacy exists”]; Universal City Studios, Inc. v. Super. Ct. (2003) 110 Cal.App.4th 1273, 1286 [denying motion to seal due to public disclosure, but finding that normally, sealing is appropriate where “information involves confidential matters relating to the business operations of defendant” and “public revelation of these matters would interfere with its ability to effectively compete in the marketplace”].)

Accordingly, the Court ORDERS that Exhibits D and E of the Declaration of Jacob K. Poorman in Support of Motion for Leave to File Amended and Supplemental Complaint, lodged conditionally under seal at ROA #270, be placed under permanent seal.

Plaintiffs shall give notice of all of the above. 107 Carrasco vs. Del Taco LLC

2025-01479192 1. Motion to Compel Arbitration 2. Case Management Conference

Motion to Compel Arbitration Defendant Del Taco, LLC’s motion to compel plaintiff Kristine L. Carrasco’s individual claims to arbitration is GRANTED. Plaintiff’s individual claims are ordered to arbitration. Plaintiff’s class claims are dismissed without prejudice. The case is stayed pending completion of the arbitration. An ADR Review Hearing is scheduled for May 6, 2027 at 9:30AM in C102. The parties must file a Joint Status Report at least 16 days before the hearing and should request a continuance if arbitration is not yet complete.

Existence of Arbitration Agreement The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract. Little v. Pullman (2013) 219 Cal.App.4th 558, 565. The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.

Id.; Perry v. Thomas (1987) 482 U.S. 483, 492 n.9 (State law applicable to contracts generally governs whether a valid arbitration agreement exists.)

While the burden of persuasion is always on the moving party, the burden of production may shift in a three-step process. First, the moving party must present “prima facie evidence of a written agreement to arbitrate the controversy”, which is satisfied by attaching a copy of the arbitration agreement purporting to bear the opposing party’s signature. Gamboa v. Ne. Cmty. Clinic (2021) 72 Cal.App.5th 158, 164–67. At this step, a movant need not follow the normal procedures of document authentication. Condee v. Longwood Management Corp. (2001) 88 Cal.App.4 th 215, 218-219.