Defendant's Motion for Leave to File Cross-Complaint
Case No.: PCU317393 Date: July 21, 2026 Time: 8:30 A.M. Dept. 15-The Honorable Gary M. Johnson Motion: Defendant's Motion for Leave to File Cross-Complaint Tentative Ruling: To grant the motion and order the proposed cross-complaint filed no later than ten (10) days from the date of this hearing.
Facts In this matter, Plaintiff sues Defendant for a single cause of action for breach of contract arising out of the payment of a bonus of $90,000 and a subsequent alleged refusal to repay the bonus after Defendant resigned. Defendant answered the complaint May 6, 2025. Trial in this matter was initially set for January 29, 2026. Trial in this matter is now set for September 21, 2026.
On June 24, 2026, Defendant filed this motion for leave to file a compulsory cross-complaint against Plaintiff to assert causes of action for 1. Interference with Rights Under the California Family Rights Act; 2. Failure to Provide Notice of CFRA Rights; 3. Constructive Discharge in Violation of Public Policy 4. Failure to Prevent Violations of FEHA 5. Unlawful Collection or Clawback of Wages 6. Violation of California Wage Law 7. Unjust Enrichment 8. Declaratory Relief 9. Unfair Business Practices.
In support, counsel for Defendant states: 8. Through inadvertence, these claims were not initially pled. Governor Newsom signed into law, effective January 1, 2026, codified in Business and Professions Code Sec. 16608 and Labor Code Sec.926, which reevaluates "stay or pay" contracts that employers make with employees. A few of the guidelines provide that employees must be advised of their right to consult with an attorney, repayment must be prorated, and the retention period cannot be more than two years. Contracts that do not meet the requirement, such as the RBA, are void as contrary to public policy.
9. The statute is proactive and therefore is not the basis of the motion for leave, but rather, the statute language calls for a different analysis of COLLINS viable cross claims. Thus, in preparation of trial, it became evident that there was a need to protect COLLINS's own action to avoid forfeiture her claims." (Declaration of Hill P.P.8, 9.) Defendant has attached the proposed cross-complaint to the declaration and states further that the causes of action and allegations arise out of the bonus and repayment issues central to the complaint.
In opposition, Plaintiff notes the complaint was filed January 27, 2025 and that Defendant answered the complaint May 6, 2025 without filing a cross-complaint. Further, that during the litigation, Defendant has propounded no discovery, issued no subpoenas and taken no depositions. Plaintiff further notes discovery propounded on Defendant and the deposition testimony discussed the details of Plaintiff's employment and termination thereof.
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Further, Plaintiff notes that Defendant has failed to mediate this matter, including unilaterally cancelling the mediation and failing to attend, in person with Defendant, the mandatory settlement conference. Further that "Since the filing of the Complaint plaintiffs have spent time and money serving discovery upon defendant, filing motions to compel appropriate responses from defendant because she refused to provide basic new employment information, taking defendants deposition and interviewing potential witnesses. If the instant motion is granted plaintiff will be required to send new discovery responses, re-notice and take plaintiff's deposition a second time and conduct further investigations which will double the litigation costs and delay the matter from proceeding to trial." (Declaration of Pritchett P.15.)
Finally, that "Because of the significant delay since the filing of the Complaint, it is likely that key witnesses and information that would have existed in the defense of a Cross Complaint will be unavailable or lost. Plaintiff would suffer severe prejudice if the motion for Leave to File a Cross-Complaint is filed." (Declaration of Pritchett P.17.)
Authority and Analysis A cross-complaint against any of the parties who filed the initial complaint or cross-complaint against the cross-complainant must be filed before or at the same time as the answer to the initial complaint or cross-complaint, which answer must be filed within 30 days of service of the complaint or cross-complaint. (Code of Civ. Proc. Sec.Sec. 412.20(a)(3), 428.50(a), 432.10.) Any other cross-complaint may be filed at any time before the court has set a trial date. (Code of Civ. Proc. Sec. 428.50(b).) If a party fails to file a cross-complaint within the time limits described above, he or she must obtain permission from the court to file the cross-complaint. (Code of Civ. Proc.Sec.Sec. 426.50, 428.50(c).)
Here, trial has been set and therefore Defendant properly seeks leave to file the proposed cross-complaint. The Court's review of the proposed cross-complaint indicates it is compulsory. Code of Civil Procedure section 426.30(a) defines a compulsory cross-complaint as having any related cause of action which the plaintiff alleges in the complaint. Code of Civil Procedure section 426.10 (c) defines "related cause of action" means a cause of action which arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges in his complaint.
The courts use a logical relationship test, which requires "'not an absolute identity of factual backgrounds for the two claims, but only a logical relationship between them.'" (Currie Medical Specialties, Inc. v. Bowen (1982) 136 Cal.App.3d 774, 777.) "At the heart of the approach is the question of duplication of time and effort; i.e., are any factual or legal issues relevant to both claims?" (Id.) Here, the cross-complaint involves the same employment relationship at issue in the complaint, including the circumstances surrounding the bonus.
Where the proposed cross-complaint arises out of the same transaction as plaintiff's claim, the court must grant leave to file the cross-complaint so long as defendant is acting in good faith. (Code Civ. Proc., Sec. 426.50.) Section 426.50 further provides that: "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." (Emphasis added.)
Leave may be granted in the interest of justice at any time during the course of the action. (Id., Sec. 428.50(c).) Indeed, where a cause of action would otherwise be lost, leave to amend is appropriate even if the party was negligent in not moving for leave to amend earlier: "The legislative mandate is clear. A policy of liberal construction of section 426.50 to avoid forfeiture of causes of action is imposed on the trial court. A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result." (Silver Organizations, Ltd. v. Frank (1990) 217 Cal.App.3d 94, 98-99.)
"[W]hat constitutes "good faith" or lack of it under Code of Civil Procedure section 426.50 must be determined in light of and in conformity with the liberality conferred upon the trial courts by the section and by prior law. . . . [T]his principle of liberality requires that a strong showing of bad faith be made in order to support a denial of the right to file a cross-complaint under this section. (Foot's Transfer & Storage Co., supra, 114 Cal.App.3d at 902.) When ruling on whether a party has acted in bad faith, there must be substantial evidence to support a trial court's decision. (Silver Organizations, supra, 217 Cal.App.3d at 99.) Substantial evidence is "evidence of ponderable legal significance, reasonable in nature, credible, and of solid value." (Id.)
"'Bad faith,' is defined as '[t]he opposite of "good faith," generally implying or involving 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[,] ... not simply bad judgment or negligence, but rather ... the conscious doing of a wrong because of dishonest purpose or moral obliquity; ... it contemplates a state of mind affirmatively operating with furtive design or ill will." (Id. at 100.)
Here, while the explanation as to the timing of review of the law and facts of this case appear to be triggered by law that came into effect nearly seven months ago and is not retroactive, the Court cannot find substantial evidence of bad faith as to the timing of this motion. Further, while Plaintiff notes it will suffer prejudice if this cross-complaint is permitted, the standard appears to be whether Defendant acted in bad faith, not whether the other party will be prejudiced. Here, although there has been a delay between the answer and this motion for leave, and although the parties appear to have failed to otherwise mediate this case, the Court does not find sufficient substantial evidence of bad faith has been presented.
Therefore, the Court grants the motion and orders the cross-complaint filed no later than ten (10) days from the date of this hearing. If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary. The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order.
Court reporters are usually not available for law and motion matters in the civil division. The parties and counsel must provide their own reporter if they want a transcript of the proceedings. Re: CREDITORS ADJUSTMENT BUREAU, INC., vs. LANE, KELSEY E