Scott Capital v. Digital Media Chain, LLC, et al.

CASE NO.: 25SMCV04852 MOTION: Motion for Leave to Amend to File Second Amended Complaint HEARING DATE: 8/27/2026

Legal Standard

If a party wishes to amend a pleading after an answer has been filed, or after a demurrer has been filed and after the hearing on the demurrer, or if he or she has already amended the pleading as a matter of course, the party must obtain permission from the court before amendment. (CCP Sec.Sec. 473(a)(1), 576.)

Motions for leave to amend the pleadings are directed to the sound discretion of the court. "The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading . . .." (CCP Sec. 473(a)(1); see CCP Sec. 576.)

Policy favors liberally granting leave to amend so that all disputed matters between the parties may be resolved. (See Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428.)

Absent prejudice to the adverse party, the court may permit amendments to the complaint "at any stage of the proceedings, up to and including trial." (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761 [internal quotes omitted].)

Where leave is sought to add entirely new claims, the court may grant leave to amend if the new claims are based on the same general set of facts, and the amendment will not prejudice the opposing party. (Austin v. Massachusetts Bonding & Ins. Co. (1961) 56 Cal.2d 596, 600-602; Glaser v. Meyers (1982) 137 Cal.App.3d 770, 777 [holding trial court did not abuse its discretion in permitting amendment of complaint, which originally alleged constructive eviction, to allege retaliatory eviction where the new claim was based on the same general set of facts].)

Although denial is rarely justified, a judge has discretion to deny leave to amend if the party seeking the amendment has been dilatory, and the delay has prejudiced the opposing party. (Morgan v. Superior Court (1959) 172 Cal.App.2d 527, 530; Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490).

An opposing party is prejudiced where the amendment would necessitate a trial delay along with a loss of critical evidence, added preparation expense, increased burden of discovery, etc. (Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 486-488 [leave properly denied where plaintiff sought leave on the eve of trial, nearly two years after the complaint was originally filed and gave no explanation for the delay which prejudiced defendant who did not discover or depose many of the witnesses who would support the new allegations and had not marshaled evidence in opposition of the new allegations].)

Procedurally, a motion for leave to amend must state with particularity what allegations are to be amended. Namely, it must state what allegations in the previous pleading are proposed to be deleted and/or added, if any, and where, by page, paragraph, and line number. (CRC, Rule 3.1324(a)(2)-(3).)

The motion must be accompanied by a declaration specifying: (1) the effect of the amendment; (2) why the amendment is necessary and proper; (3) when the facts giving rise to the amended allegations were discovered; and (4) the reasons why the request for amendment was not made earlier. (CRC, Rule 3.1324(b).)

The motion must also be accompanied by the proposed amended pleading, numbered to differentiate it from the prior pleadings or amendments. (CRC, Rule 3.1324(a)(1).)

It is within the court's discretion to require compliance with Rule 3.1324 before granting leave to amend. (Hataishi v. First American Home Buyers Protection Corp. (2014) 223 Cal.App.4th 1454, 1469.)

Analysis

Plaintiff Scott Capital Management Fund I, LLC moves for leave to amend and file a proposed Second Amended Complaint ("SAC") in this action. Plaintiff attaches the proposed pleading. (Labarre Decl., Ex. 1.)

Plaintiff states with specificity the allegations to be supplemented or added by paragraph number. Plaintiff seeks to remove certain parties from the lawsuit and add new parties to the action, based on additional facts in connection with the same nucleus of facts alleged in the underlying complaints.

Counsel shows why the amendment is necessary and proper; when the facts giving rise to the amended allegations were discovered; and the reasons why the request for amendment was not made earlier. (Labarre Decl., P.P. 5, 10-11.)

This lawsuit concerns real property commonly known as 2688 Rambla Pacifico, Malibu, California 90265 (the "Property"), and a mortgage loan originated by Agoura Hills Financial in February of 2021 and since sold and assigned to Plaintiff.

Plaintiff's original complaint was filed on September 18, 2025 against the borrower under Plaintiff's loan, Digital Media Chain, LLC ("DMC"), Timothy Marlowe (DMC's sole member and owner), and Agoura Hills Financial, Inc. (the broker, solicitor, and originator of the loan Plaintiff funded).

The complaint asserted six (6) causes of action, including judicial foreclosure, breach of contract, breach of fiduciary duty, and fraud, in connection with the loan Plaintiff purchased, the borrower's default thereunder, and damages for woefully inadequate insurance coverage after the collateral property was destroyed by the Palisades wildfire in 2025.

Plaintiff filed a first amended complaint on October 10, 2025, adding the property appraiser, Bert Camp, along with additional negligence and fraud-based claims stemming from an appraisal which grossly overvalued the collateral property by approximately $5,000,000.00.

Since filing the FAC, Plaintiff's counsel has discovered additional evidence and facts regarding the unlawful and fraudulent means by which Defendants conspired to lure Plaintiff into purchasing a loan whose collateral was grossly inflated, yet severely underinsured.

Plaintiff discovered prior litigation involving DMC and Marlowe, wherein numerous documents and pleadings reflected additional factual grounds supporting the existing theories and claims, and new theories and claims against other individuals.

The SAC is needed to remove causes of action no longer practical, remove a party who is now deceased, and remove a party who is currently in bankruptcy and for which any further prosecution would require relief from the bankruptcy court, thus causing unnecessary delay.

Amendment is appropriate to ensure that Plaintiff's pleading accurately names all appropriate parties and reflects all allegations of wrongdoing in the proper form.

Plaintiff also demonstrates that Defendants will not be prejudiced by any potential delay in amendment. The case is still in its early stages. Only one defendant has answered and trial is not set.

Accordingly, the motion is GRANTED. Plaintiff to file the SAC by August 28, 2026.

Case Number: 26SMCV00367 Hearing Date: August 27, 2026 Dept: M CASE NAME: J. Smith Corp., et al., v. SAI Business Solutions, LLC, et al.