Kidan vs. Chartwell Staffing Services Inc.

TENTATIVE RULINGS July 6, 2026

# Case Name Tentative

103 2021-01186369 Motion for Leave to File Amended Complaint

Kidan vs. Plaintiff Adam Kidan’s motion for leave to file his proposed third amended complaint is Chartwell Staffing granted. [ROA #930.] Plaintiff is to file his third amended complaint (“TAC”) no later than Services Inc. July 9, 2026.

The court will hear from counsel whether continuance of the trial to 11/30/36 is necessary or appropriate.

Facts This case involves the alleged hostile takeover of Chartwell Staffing Services, Inc. by Madison Resource Funding, LLC. Kidan brings this action directly to challenge Madison’s acquisition of Chartwell, and derivatively to remedy the harm to Chartwell caused by Madison in the process through its breaches of contract and self-dealing.

This action was begun on 2/26/21. [Complaint (ROA #2).] The currently operative complaint is the second amended complaint (“SAC”) against Defendants Chartwell Staffing Services (nominal Defendant), Madison Resource Funding, LLC, Coast to Coast Staffing, W. Holmes Lilley, Leonard Tierney, and Richard Chipman. [ROA #371.]

The parties stipulated to extend the five-year deadline to 12/31/2026. [1/21/26 Minute Order (ROA #910).] The current trial date is on 9/14/26, with pre-trial deadlines based on that trial date [Id.]

On 3/17/26, Plaintiff filed the pending motion for leave to amend his complaint. [ROA #930.] According to Plaintiff in his reply brief, he sought a stipulation prior to filing but Defendant Lilley refused. [Reply (ROA #1050) at 3:7-8.]

Plaintiff’s counsel declares that the motion “seeks leave to make two amendments to Plaintiff’s Complaint: (1) adding the legal theories of conversion and violation of Penal Code § 496 (civil theft) based on the same factual allegations asserted since the outset of this case; and (2) clarifying his prayer for damages to conform to the factual allegations already contained in the Second Amended Complaint.” [Allen Decl. (ROA #928), ¶ 5.] Counsel considers the proposed third amended complaint to be a “cleanup amendment” or one effecting “conforming amendments.” [Id., ¶ 6.]

Counsel started working on this case in earnest in late December 2025 or early January 2026. He reviewed the pleadings, discovery and evidence in the case in order to assist with trial preparation and strategy. He cannot pinpoint the exact date but at some point in January or February he started contemplating new legal theories that could be added to the complaint based on the existing facts and to confirm to evidence. [Allen Decl., ¶ 6.]

Defendants Madison Resource Funding, LLC, Coast to Coast Staffing, Leonard Tierney, and Richard Chipman have not opposed Plaintiff’s motion to amend. Defendant W. Holmes Lilley has. [Opposition (ROA #1040).]

On 4/28/26, Defendant Lilley filed his motion for summary judgment or adjudication that is set for hearing on 7/20/26. [ROA #982.] According to Plaintiff, he had no advance notice of the motion. [Reply at 3:10-11.]

Legal Standard

The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; and may, upon like terms, enlarge the time for answer or demurrer. Code Civ. Proc. § 473(a)(1). The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars; and may upon like terms allow an answer to be made after the time limited by this code. Code of Civ. Proc. § 473(a)(1). Additionally, any judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading or pretrial conference order. Code of Civ. Proc. § 576.

Ordinarily, the court does not consider the validity of the proposed amended pleading in deciding whether to grant leave to amend. Kittredge Sports Co. v. Superior Court (Marker, U.S.A.) (1989) 213 Cal.App.3d 1045, 1048; Cal. Prac. Guide, Civil Procedure before trial (Rutter) 6:644. Grounds for demurrer or motion to strike are premature. Id. After leave to amend is granted, the opposing party will have the opportunity to attack the validity of the amended pleading. Id. See Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 760 (“[W]e believe that the better course of action would have been to allow Atkinson to amend the complaint and then let the parties test its legal sufficiency in other appropriate proceedings”) (citing Kittredge).

A motion to amend a pleading before trial must: (1) include a copy of the proposed amendment or amended pleading; (2) state what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph, and line number, the deleted allegations are located; and (3) state what allegations are proposed to be added to the previous pleading, if any, by page, paragraph, and line number, the additional allegations are located. CRC 3.1324(a). A separate declaration must accompany the motion and must specify: (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 3.1324(b).

California courts generally allow great liberality, at all stages of the proceeding, in permitting the amendment of pleadings in order to resolve cases on their merits. IMO Development Corp. v. Dow Corning (1982) 135 Cal.App.3d 451, 461. This liberality only applies so long as there is no prejudice to the opposing party. Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564. Denial of leave to amend is appropriate where inexcusable delay and probable prejudice to the opposing party is shown. This may happen where a proposed amendment opens up an entirely new field of inquiry without any satisfactory explanation as to why the major change in point of attack had not been made long before trial. Estate of Murphy v. Gulf Ins. Co. (1978) 82 Cal.App.3d 304, 311.

If the party seeking the amendment has been dilatory, and the delay has prejudiced the opposing party, the judge has discretion to deny leave to amend. Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490; Melican v. Regents of Univ. of Calif. (2007) 151 Cal.App.4th 168, 176; Fisher v. Larsen (1982) 138 Cal.App.3d 627, 649.

A particular species of delay and prejudice is waiting until the defendant has filed a motion for summary judgment and then seeking amendment. Courts have found that this situation, which inherently creates prejudice to the defendant, justifies denial of motion to amend where the plaintiff’s delay was unwarranted. Falcon v. Long Beach Genetics, Inc. (2014) 224 Cal.App.4th 1263, 1280 (affirming denial of leave to amend in face of MSJ); Melican v. Regents of Univ. of Calif. (4/3 2007) 151 Cal.App.4th 168, 176 (same). See also Fisher v. Larsen (1982) 138 Cal.App 3d 627, 649 (finding where plaintiff knew for over five months that certain claims had not been properly pleaded, and took no action to amend until after a summary judgment had been granted against it, it was not an abuse of discretion to deny leave to amend the complaint); Hulsey v. Koehler (1990) 218 Cal.App.3d 1150.

Deprivation of the right to bring a motion for summary judgment (or having to incur the costs to bring two different motions because of an amendment) is not de minimus. See Polibrid Coatings, Inc. v. Superior Court (2003) 112 Cal.App.4th 920 (finding, in the context of fast track rules, that party’s statutory right to bring a motion for summary judgment is paramount).

As a general rule, the additional time and money of conducting non-duplicative discovery is not considered prejudice unless discovery had already closed and/or trial is set to begin. Magpali v. Farmers Group, Inc. (1996) 47 Cal.App.4th 1024, 488.

Normally, if the plaintiff is willing to delay trial of his complaint, that is sufficient to make acceptable permission to amend along with the trial continuance. Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 297. But increased costs and delay of trial have been found to be the kind of prejudice that supports denial of a motion to amend. Estate of Murphy v. Gulf Ins. Co. (1978) 82 Cal.App.3d 304, 311 (affirming denial of leave to amend where jury was empaneled when plaintiff sought to amend to add issue not covered in discovery).

The court has the discretion to continue the trial and condition amendment on the payment of costs. Code Civ. Proc. § 473(a)(2). The court may impose conditions “which are just, i.e., intended to compensate the defendants for any inconvenience belated amendment may cause.” Armenta ex rel. City of Burbank v. Mueller Co. (2006) 142 Cal.App.4th 636, 642 (conditions must be designed to compensate defendant for inconvenience caused by belated amendment).

Discussion

Plaintiff has essentially complied with the procedural requirements of California Rule of Court 3.1324. He has submitted the proposed third amended complaint. [Allen Decl., Ex. A.] Plaintiff’s counsel explains the proposed amendments and attaches to his declaration a red-lined version showing all of the changed from the SAC. [Id., ¶¶ 8-10 and Ex B.] Defendant Lilly objects that Plaintiff’s counsel has not really explained the timing and/or has delayed since the discovery giving rise to counsel’s re-assessment took place over years. But counsel explains in his declaration that it was not the discovery itself, but counsel’s contemplation over time that gave rise to his belief there are further theories of liability, based on essentially the same facts, to be asserted.

Defendant Lilly also claims prejudice because the addition of a claim under Penal Code section 496(c) would increase his exposure by adding treble damages and attorneys’ fees to Plaintiff’s recovery But this is not the kind of prejudice that militates against amendment. Had Plaintiff begun with a section 496(c) claim, Defendant Lilly would have

the same exposure.

Defendant Lilly additionally argues that the addition of the claim would expand the issues because the claim requires a showing of criminal intent. Siry Investment, L.P. v. Farkhondehpour (2022) 13 Cal.5th 333, 361–362 (“[W]e observe that not all commercial or consumer disputes alleging that a defendant obtained money or property through fraud, misrepresentation, or breach of a contractual promise will amount to a theft. To prove theft, a plaintiff must establish criminal intent on the part of the defendant beyond “mere proof of nonperformance or actual falsity.”). Further to this, Defendant Lilly contends that “targeted depositions on Lilley’s knowledge and intent, document discovery directed to state of mind, and potentially expert analysis” will be required.

Why Defendant Lilly would need to conduct discovery as to his own intent, and what information he would seek to discover, is unclear. Defendant Lilly does not identify the specific discovery he thinks he needs to conduct. He does not explain what information or evidence he would be seeking to discover.

Defendant Lilly also points to his motion for summary judgment and the law regarding amendment in the face of an MSJ to assert prejudice because Plaintiff is trying to create a “moving target.” Melican v. Regents of University of California (2007) 151 Cal.App.4th 168, 176 “It would be patently unfair to allow plaintiffs to defeat UCI's summary judgment motion by allowing them to present a ‘moving target’ unbounded by the pleadings.”).

But the case law cited by Defendant Lilly is not applicable here. Those cases involve motions to amend filed after the motion for summary judgment. Here, the motion to amend was filed first. Knowing that it was on file and would be heard first, Defendant Lilly chose to file his motion for summary judgment or adjudication. The results of that choice do not amount to Plaintiff “moving the target” to avoid summary judgment.

Finally, Defendant Lilly argues the proposed additional claims cannot be sustained. Again, this is not normally considered in deciding whether leave to amend should be granted. Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048. Denial of leave to amend has been upheld where the proposed amendment was clearly futile. Foxborough v Van Atta (1994) 26 Cal.App.4th 217, 230 (affirming denial of leave to amend where statute of limitations barred claim); Yee v. Mobilehome Park Rental Review Bd. (1998) 62 Cal.App.4th 1409, 1429 (affirming denial of leave to amend, among other grounds, because claim barred by res judicata or statute of limitations). But on the current record it is not clear that the proposed amendments are futile.

Accordingly, the motion to amend is granted. The trial in this matter is continued from September 14, 2026 to November 30, 2026 at 9:00 a.m. in Department C27. Defendant Lilley’s motion for summary judgment/adjudication set for July 20, 2026 is vacated. Should Defendant Lilley wish to file a MSJ/MSA based on the Third Amended Complaint, the Court will reserve the date of October 26, 2026 for the MSJ/MSA to be heard by the Court. However, Defendant Lilley must make it known to this Court at the hearing on this matter that Defendant Lilley intends of filing a timely MSJ/MSA to the Third Amended Complaint.

Moving party is ordered to give notice of this ruling.

104 2024-01385241 Motion to Seal The unopposed motion by Defendant American Honda Motor Company, Inc. (“Defendant”)