DIVERSE TECHNOLOGY INDUSTRIAL, INC. vs SCOTT, et al.

25CV001510: DIVERSE TECHNOLOGY INDUSTRIAL, INC. vs SCOTT, et al. 06/10/2026 Hearing on Motion for Leave to File First Amended Complaint in Department 8D

Tentative Ruling

NOTICE:

Consistent with Local Rule 1.06(B), any party requesting oral argument on any matter on this calendar must comply with the following procedure:

To request limited oral argument, on any matter on this calendar, you must call the Law and Motion Oral Argument Request Line at (916) 874-2615 by 4:00 p.m. the Court day before the hearing and advise opposing counsel. At the time of requesting oral argument, the requesting party shall leave a voice mail message: a) identifying themselves as the party requesting oral argument; b) indicating the specific matter/motion for which they are requesting oral argument; and c) confirming that it has notified the opposing party of its intention to appear and that opposing party may appear via Zoom using the Zoom link and Meeting ID indicated below. If no request for oral argument is made, the tentative ruling becomes the final order of the Court.

Unless ordered to appear in person by the Court, parties may appear remotely either telephonically or by video conference via the Zoom video/audio conference platform with notice to the Court and all other parties in accordance with Code of Civil Procedure §367.75. Although remote participation is not required, the Court will presume all parties are appearing remotely for non-evidentiary civil hearings.

The Department 8D Zoom Link is https://saccourt-ca-gov.zoomgov.com/j/16113421868 and the Zoom Meeting ID is 161 1342 1868. To appear on Zoom telephonically, call (833) 568-8864 and enter the Zoom Meeting ID referenced above. NO COURTCALL APPEARANCES WILL BE ACCEPTED.

Parties requesting services of a court reporter will need to arrange for private court reporter services at their own expense, pursuant to Government code §68086 and California Rules of Court, Rule 2.956. Requirements for requesting a court reporter are listed in the Policy for Official Reporter Pro Tempore available on the Sacramento Superior Court website at https://www.saccourt.ca.gov/court-reporters/docs/crtrp-6a.pdf. Parties may contact Court- Approved Official Reporters Pro Tempore by utilizing the list of Court Approved Official Reporters Pro Tempore available at https://www.saccourt.ca.gov/court-reporters/docs/crtrp- 13.pdf.

A Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) is required to be signed by each party, the private court reporter, and the Judge prior to the hearing, if not using a reporter from the Court’s Approved Official Reporter Pro Tempore list.

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver

25CV001510: DIVERSE TECHNOLOGY INDUSTRIAL, INC. vs SCOTT, et al. 06/10/2026 Hearing on Motion for Leave to File First Amended Complaint in Department 8D

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 forward the form to the Court Reporter’s Office and an official reporter will be provided.

***NOTICE: EFFECTIVE APRIL 13, 2026, THIS DEPARTMENT HAS MOVED TO THE TANI G. CANTIL-SAKAUYE COURTHOUSE LOCATED AT 500 G. ST. SACRAMENTO, CA. ALL MOTIONS NOTICED FOR DEPARTMENT 25 WILL BE HEARD IN DEPARTMENT 8D OF THE NEW COURTHOUSE. ALL PAPERS FOR THIS DEPARTMENT MUST BE FILED AT THIS NEW LOCATION AND WILL NOT BE ACCEPTED AT THE HALL OF JUSTICE. ALL HEARINGS WILL TAKE PLACE AT THIS NEW LOCATION***

Plaintiff Diverse Technology Industrial, Inc.’s (“Plaintiff”) motion to for leave to file a first amended complaint (“FAC”) is ruled on herein.

Factual Background

This action arises from an alleged breach of contract between Plaintiff, an industrial and commercial flooring contractor, and defendant Taylor Scott (“Scott”), the Chief Executive Office (“CEO”) of defendant Concrete Resurfacing Systems, Inc. (“CRS”). (Compl., ¶¶ 9-11.) As alleged in the Complaint, Plaintiff entered into a flooring contract for a project at Travis Air Force Base with general contractor Bristol Bay Construction Holdings LLC (the “Bristol Bay Project”). (Compl., ¶ 12.) Subsequently, Plaintiff entered into a subcontract with CRS in connection with the Bristol Bay Project to install a moisture vapor barrier and epoxy slurry system. (Id. at ¶ 13.)

Plaintiff alleges CRS failed to properly install the flooring, among other shortfalls in CRS’s performance on the contract. (Id. at ¶¶ 14-15.) Before the completion of the Bristol Bay Project, Scott contacted Plaintiff regarding payment for CRS’s work, even though the parties’ agreement stated that CRS would be paid after Plaintiff received payment from the general contractor. (Id. at ¶ 17.) Plaintiff alleges Scott contacted multiple people in the flooring industry and falsely claimed that Plaintiff does not pay its subcontractors. (Id. at ¶ 21.)

One of the people Scott allegedly contacted was defendant Tim Kennady (“Defendant” or “Kennady”), the CEO of XrQ Corp. (“XrQ), a company specializing in decorative and restorative concrete. (Id. at 22.) Plaintiff alleges that Kennady, motivated by Scott’s false claims, began an online social media campaign to defame Plaintiff. (Id. at ¶ 23.) On January 17, 2025, Plaintiff filed its verified Complaint alleging seven causes of action: (1) breach of contract; (2) trade libel; (3) defamation (libel); (4) defamation (slander); (5) interference with contractual relations; (6) interference with prospective economic advantage; and (7) unfair competition.

On December 18, 2025, Plaintiff took Kennady’s deposition, during which Kennady admitted

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV001510: DIVERSE TECHNOLOGY INDUSTRIAL, INC. vs SCOTT, et al. 06/10/2026 Hearing on Motion for Leave to File First Amended Complaint in Department 8D

that he owns XrQ and serves as its CEO and Chief Technology Officer. (Cheruvu Decl., Exhibit C, 184:2-185:12.) When questioned about the alleged defamatory statements about Plaintiff, Kennady responded “[t]hat I’d love for my competitor to not be my competitor.” (Id., Exhibit C at 184:2-185:13.) Kennady refused to answer certain questions about XrQ because XrQ is not a party to this action. (Id., Exhibit C at 24:23-28:16.)

On January 14, 2026, Plaintiff’s counsel requested that Defendants stipulate to Plaintiff filing an amended complaint to add XrQ as a defendant. (Id., ¶ 12.) By letter dated January 31, 2026, Defendants refused to stipulate to an amended Complaint. (Id., ¶ 13, Exhibit E.)

By this motion, filed on February 6, 2026, Plaintiff now seeks to amend its Complaint to name XrQ as a defendant, which includes providing background information about XrQ, information regarding Kennady’s deposition, and other related changes.

Defendant Kennady opposes “on a single, narrow procedural ground.” (Opp’n at p. 4.) Defendant asserts that amendment should be denied because Plaintiff was aware of the fact supporting the amendment before the deposition occurred. (Id.)

Legal Standard

Section 473 of the Code of Civil Procedure authorizes the trial court, in its discretion, to allow amendments in furtherance of justice, and it is well established that California courts have a policy of great liberality in allowing amendments at any stage of the proceeding so as to dispose of cases upon their substantial merits where the authorization does not prejudice the substantial rights of others. (Board of Trustees v. Superior Court (2007) 149 Cal.App.4th 1154, 1163 [absent a showing of prejudice to the adverse party, the rule of great liberality in allowing amendment of pleadings to prevail]; Klopstock v.

Superior Court (1941) 17 Cal.2d 13, 19-20.) “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. Superior Court (1959) 172 Cal.App.2d 527, 530.)

The policy of great liberality in permitting amendments to the complaint applies “at any stage of the proceedings, up to and including trial.” (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761; see also Magpali v. Farmers Group, Inc. (1996) 48 Cal.App.4th 471, 487 (no abuse of discretion in denying motion for leave to amend on eve of trial.) Generally, if delay in seeking the amendment has not misled or prejudiced the other side, the liberal policy of allowing amendments prevails. (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564-565; see also Kittredge Sports Co. v. Sup Ct. (1989) 213 Cal.App.3d 1045, 1048 [citing Higgins v. Del Faro, supra, 123 Cal.App.3d at pp. 564-565].) Only very rarely will “a court will be justified in

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV001510: DIVERSE TECHNOLOGY INDUSTRIAL, INC. vs SCOTT, et al. 06/10/2026 Hearing on Motion for Leave to File First Amended Complaint in Department 8D

refusing a party leave to amend his or her pleading so that he or she may properly present his or her case.” (Board of Trustees, supra, 149 Cal.App.4th at p. 1163.)

Generally, courts allow the amendment and then let the parties test the legal sufficiency in other appropriate proceedings. (See Atkinson v. Elk Corp (2003) 109 Cal.App.4th 739, 760, citing Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048.) 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. supra, 213 Cal.App.3d at p. 1048.)

Discussion

Plaintiff argues that it should be granted leave to amend because it has not delayed in seeking the amendment, since it filed the present motion within one week of Defendants’ refusal to stipulate to the amended Complaint. Plaintiff also argues that granting leave to amend will not prejudice any defendant, as there has been no case management conferences and no trial or discovery deadlines have been set.

Defendant opposes, arguing that the liberal standard for amending pleadings does not apply here, as Plaintiff’s verified Complaint indicates that Plaintiff was aware of the fact that Kennady was the owner and CEO of XrQ as well as XrQ’s status as a competitor within the same industry. As a result, Defendant argues Plaintiff could have reasonably inferred Kennady’s financial interests align with XrQ’s business performance at the time the verified Complaint was filed.

Here, Plaintiff presents evidence that he learned of actual facts, not allegations supported on information and belief, through the deposition of Kennady in mid-December 2025; Plaintiff contends that these facts supported the joining of XrQ to the action. After failing to reach agreement regarding an amended complaint at the end of January 2026, Plaintiff’s counsel promptly filed the motion. The Court does not find that unreasonable delay occurred here. Further, the Court finds that Defendant has not demonstrated any prejudice by the timing of the amendment. Indeed, the court notes that this matter was filed in 2025, and no trial date has been set in this matter.

Defendant’s opposition asserts that leave to amend should not be granted because Plaintiff was aware of the factual basis for the amendment at the time Plaintiff filed the original complaint. In support of this position, Defendant cites to Mabie v. Hyatt (1998) 61 Cal.App.4th 581, 596 for the proposition that “discovery and investigation” must “develop factual grounds justifying a timely amendment.” Further, citing Hulsey v. Koehler (1990) 218 Cal.App.3d 1150, 1158-1159, Kennady argues that the development of factual grounds not previously available through discovery/investigation constitute a condition predicate in order for the liberal pleading standard to apply. The Court does not find that there was unreasonable delay, where many of the allegations in the initial pleading were made on information and belief and Plaintiff seeks to

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

25CV001510: DIVERSE TECHNOLOGY INDUSTRIAL, INC. vs SCOTT, et al. 06/10/2026 Hearing on Motion for Leave to File First Amended Complaint in Department 8D

amend the Complaint to add a party after obtaining sworn testimony of the entity’s officer. Defendant’s reliance on Hulsey v. Koehler, supra, 218 Cal.App.3d is unpersuasive, as in that case, the Court of Appeal found that the trial court did not abuse its discretion in denying the defendant’s leave to amend her answer at the time of trial where the trial court found both an unreasonable lack of diligence and prejudice to the plaintiffs. Defendant has not made such a showing of either in this case.

Disposition

Given that the Court has concluded this matter lacks both probable prejudice and inexcusable delay, Plaintiff’s motion for leave to file a FAC is GRANTED. Plaintiff shall file and serve the proposed FAC not later than June 20, 2026.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc., § 1019.5; Cal. Rules of Court, rule 3.1312.)