OPTRICS INC ET AL VS. GRACE R. NEIBARON, ESQ ET AL

Matter on the Law & Motion and Discovery Calendar for Tuesday, December 30, 2025, Line 1, DEFENDANT CLOUD9 DISCOVERY LLC Notice Of Motion For Leave To File Cross-Complaint. (Part 1 of 2 for purposes of entry of Tentative Ruling.)

Cloud9 Discovery LLC's ("Cloud 9") motion for leave to file cross-complaint is DENIED. (Crocker Nat. Bank v. Emerald (1990) 221 Cal.App.3d 852, 864 [no abuse of discretion denying leave to file untimely permissive cross-complaint].)

Permitting the filing of the proposed cross-complaint at this stage of the litigation will prejudice the proposed cross-defendants. Given the current trial date (4/27/26), neither proposed cross-defendant will have sufficient time to conduct adequate discovery and file a dispositive motion for summary judgment/adjudication attacking the proposed claims. The proposed claims are not garden-variety indemnity claims but also involve whether Texas law applies and third-party beneficiary issues.

Cloud9 was served on 5/10/24 and does not sufficiently explain the delay in bringing this motion. (Harlan Decl., par. 8.) The proposed claims are based on its End User License Agreement ("EULA") and could have been alleged earlier. (Jhaver Decl., Ex. 1.) The 5-year period to bring an action to trial is also fast approaching.

Denial of this motion does not prejudice Cloud9. As it recognizes, its indemnity claims have yet to accrue. (Reply to Terreri Opposition, 11:6-7 ["No such loss has yet occurred; the limitations period for an indemnity claim has not begun to run as Cloud9 has not been held liable."].) Cloud9 can bring a subsequent action for indemnity and denial of the motion will not lead to a forfeiture. (See Crouse v. Brobeck, Phleger & Harrison (1998) 67 Cal.App.4th 1509, 1541 ["a tort defendant's equitable indemnity action is separate and distinct from the plaintiff's tort action against the defendant and does not arise for statute of limitations purposes until the defendant pays a judgment or settlement for which he is entitled to indemnity"]; Greystone Homes, Inc. v.

Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1209 ["a defendant may pursue a comparative equitable indemnity claim against other tortfeasors either (1) by filing a cross-complaint in the original tort action or (2) by filing a separate indemnity action after paying more than its proportionate share of the damages through the satisfaction of a judgment or through a payment in settlement."].) "To be considered a compulsory cross-complaint, a related cause of action must have existed at the time of the service of [the] answer." (Crocker, 221 Cal.App.3d at 864.)

Cloud9 also seeks to allege a claim for declaratory relief based on the waiver/limitation of liability provision in the EULA. Cloud9 can raise that issue as part of its defense, and its seventh affirmative defense in its 2/6/25 answer already pleads waiver. (Tentative Ruling continues in Part 2 of 2) =(301/CVA) | |