City of American Canyon vs. City of Vallejo

If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will be forward the form to the Court Reporter’s Office and an official reporter will be provided. TENTATIVE RULING: Defendant City of Vallejo’s motion for leave to file cross-complaint against plaintiff City of American Canyon is ruled on as follows.

Factual Background

Plaintiff filed this action for declaratory relief and breach of contract on 7/11/2022 and shortly thereafter, plaintiff and defendant filed a stipulation for transfer venue. Trial of this action is now set for 5/5/2025.

34-2022-00327471-CU-CO-GDS: City of American Canyon vs. City of Vallejo 02/15/2024 Hearing on Motion for Leave to File a Cross-Complaint in Department 53

Moving Papers. Defendant now moves for leave to file a cross-complaint, claimed to be “compulsory,” against plaintiff on grounds that “certain facts and circumstances have come to [its] attention after filing its answer to the complaint” which warrant the filing of a cross-complaint. In brief, defendant desires to assert against plaintiff claims for breach of contract/specific performance, breach of covenant of good faith and declaratory relief based on “[d]ocuments produced by [plaintiff] American Canyon in discovery and not otherwise publicly available to [defendant] Vallejo - namely communications between American Canyon and the developer of the Canyon Estates Homes, LLC development (‘Canyon Estates’) - evidence that American Canyon delegated its obligation to construct certain water infrastructure as required by the 1996 agreement and its addenda to the Canyon Estates developer, but then subsequently absolved the developer from having to do so without undertaking to complete the required infrastructure itself.” According to the moving papers, the proposed “cross claims are such that denial of this motion would result in a forfeiture - a result disfavored by California courts” and since there has been no “bad faith” by defendant, this motion should be granted pursuant to Code of Civil Procedure §426.50.

Opposition. Plaintiff opposes, arguing that defendant’s “failure to timely file its proposed Cross-Complaint is not attributable to the discovery of new information.” Instead, defendant was aware of the necessary information to bring all three of the proposed causes of action at the time this action was commenced in 2022 and thus, “[i]t is not necessary to speculate [about] bad faith in failing to bring [the] proposed Cross- Complaint in a timely manner.” Defendant’s “contradictory actions and statements evince [its] intentional misrepresentations to conceal its prolonged delay in bringing compulsory counter-claims” and because of defendant’s “efforts to intentionally deceive [plaintiff] and this Court regarding the reasons for its delayed pleading,” this motion should be denied so plaintiff will not need “to wait even longer for the resolution of its meritorious claims ” Objections to Evidence Plaintiff’s two written objections to evidence are overruled since the entirety of the two excerpts at issue are not inadmissible for the reasons asserted by plaintiff.

However, the Court adds that a different ruling on these objections would not alter the outcome of this motion.

Discussion

Code of Civil Procedure §426.50 provides in its entirety: 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

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

34-2022-00327471-CU-CO-GDS: City of American Canyon vs. City of Vallejo 02/15/2024 Hearing on Motion for Leave to File a Cross-Complaint in Department 53

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. (Underline added for emphasis.) Based on the above-cited language, the present motion must be granted unless this Court finds that defendant failed to act in “good faith.” Although the opposition asserts that defendant engaged in “bad faith” conduct by virtue of failing to file the proposed cross-complaint at the inception of this suit and/or providing a false excuse “to conceal its prolonged delay” in bringing this compulsory cross-complaint, this Court is not persuaded that defendant’s conduct actually amounts to a failure to act in “good faith” so as to warrant denial of this motion.

Indeed, relief under §426.50 is available where a moving party fails to file a cross-complaint (or to amend an existing pleading) if the failure is due to “oversight, inadvertence, mistake, neglect, or other cause,” a term which must be construed broadly in order to fulfill the legislative intent expressed in the final sentence: “This subdivision shall be liberally construed to avoid forfeiture of causes of action.” Clearly, denial of the present motion to file a compulsory cross-complaint would necessarily result in a forfeiture of the proposed causes of action.

Additionally, to the extent the opposition suggests that the granting of this motion will prejudice plaintiff’s claims or will cause a delay in bringing these claims to trial, the Court notes that the existence of potential prejudice is not identified in Code of Civil Procedure §426.50 which mandates denial of this motion and regardless, the current trial date of 5/5/2025 is well over a year away. Therefore, even if defendant either knew or should have known of the need for the proposed cross-complaint in 2022 when this action was commenced, granting of this motion is supported by the plain language of §426.50.

Disposition

Defendant shall file and serve the proposed cross-complaint no later than 2/26/2024. Although not required by court rule or statute, defendant is directed to present a copy of this minute order when the cross-complaint is presented for filing. This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc. §1019.5; CRC Rule 3.1312.)