BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al.

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 01/16/2025 Hearing on Motion for Leave to File a Cross-Complaint in Department 54

Tentative Ruling

Defendant US Bank Trust National Association as Trustee of the Bungalow Series IV Trust’s (“Defendant”) motion for leave to file a cross-complaint is ruled upon as follows.

The notice of motion does not provide notice of the Court’s tentative ruling system, as required by Local Rule 1.06. Moving counsel is directed to contact opposing counsel and advise of Local Rule 1.06 and the Court’s tentative ruling procedure and the manner to request a hearing. If moving counsel is unable to contact opposing counsel prior to hearing, moving counsel is ordered to appear at the hearing by Zoom or in person.

Plaintiff Omar Bermudez (“Plaintiff”) filed this action on April 21, 2023. Prior to that, Defendant had filed an unlawful detainer action against Plaintiff. The two actions were consolidated on November 3, 2023. Following Defendant’s partially successful demurrer to Plaintiff’s First Amended Complaint, Plaintiff’s remaining causes of action are (1) violation of Civil Code section 2923.7; (2) violation of Business & Professions Code section 17200 et seq.; and (3) wrongful foreclosure. Plaintiff’s claims arise out of non-judicial foreclosure proceedings related to real property located at 864 Oak Lane, Rio Linda, California 95673.

Plaintiff obtained a mortgage loan on the property in the amount of $360,000 in or around 2007. Plaintiff defaulted on the loan in or around 2009. Plaintiff has since avoided foreclosure through the use of partial conveyances of title and third-party bankruptcy filings since that time. Plaintiff remains in possession of the property.

Defendant filed its Answer on February 29, 2024. On May 8, Defendant served written discovery. On July 8, 2024, Defendant’s counsel contacted Plaintiff’s counsel to schedule an inspection of the property pursuant to Code of Civil Procedure section 2031.010(d). The property was inspected on July 29, 2024. According to Defendant’s inspection report, there are several issues with the physical condition of the property that will require repair.

Based on Defendant’s findings from the inspection, Defendant prepared a proposed crosscomplaint with causes of action for (1) declaratory relief; (2) waste; and (3) ejectment. On September 10, 2024, Defendant’s counsel sent Plaintiff’s counsel a copy of the proposed crosscomplaint and asked if Plaintiff would stipulate to its filing. On September 11, 2024, Plaintiff’s counsel declined to stipulate and advised Defendant to proceed with a motion. Defendant filed the present motion on September 23, 2024.

“A party shall file a cross-complaint against any of the parties who filed the complaint or crosscomplaint against him or her before or at the same time as the answer to the complaint or crosscomplaint.” (Code Civ. Proc. § 428.50(a).) “Any other cross-complaint may be filed at any time before the court has set a date for trial.” (Code Civ. Proc. § 428.50(b).)

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 01/16/2025 Hearing on Motion for Leave to File a Cross-Complaint in Department 54

Generally, a defendant must assert any related cause of action (i.e., one arising out of the same transaction or occurrence as the plaintiff’s claim) he has against the plaintiff in a cross-complaint at the time the defendant files his answer. (Code Civ. Proc. § 426.30(a).) However, the defendant may apply for leave of court under Code of Civil Procedure section 426.50, which states:

“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 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.”

The Court’s discretion to deny a motion for leave to file a compulsory cross-complaint is extremely limited:

“A policy of liberal construction of section 426.50 to avoid forfeiture of causes of action is imposed on the trial court. A motion to file a cross-complaint at any time during the course of the action must be granted unless bad faith of the moving party is demonstrated where forfeiture would otherwise result. Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.”

(Silver Orgs. v. Frank (1990) 217 Cal.App.3d 94, 98-99.)

Further, “this principle of liberality requires a strong showing of bad faith be made in order to support a denial of the right to file a cross-complaint under this section.” (Foot’s Transfer & Storage Co. v. Superior Court (1980) 114 Cal.App.3d 897, 902.)

Here, the proposed cross-complaint is compulsory, as it relates to the ownership and condition of subject property that is at the center of Plaintiff’s allegations. Plaintiff’s argument that the proposed cross-complaint is not compulsory is rejected, as Plaintiff later cites Code of Civil Procedure sections 426.30 and 426.50, the statutes governing compulsory cross-complaints. As Plaintiff recognizes, if Defendant did not plead its causes of action via cross-complaint, it would be precluded from pursuing them in a subsequent action.

Thus, Defendant’s motion must be granted unless there is a showing that it acted in bad faith in failing to file its cross-complaint with its Answer. There is no such showing here. Defendant began conducting discovery shortly after filing its Answer and discovered facts to support a claim for waste. Defendant then promptly drafted the proposed cross-complaint and filed this motion within a little over a month after the inspection. Plaintiff contends that this constitutes delay that supports a finding of bad faith, but the Court is not persuaded in this regard.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 01/16/2025 Hearing on Motion for Leave to File a Cross-Complaint in Department 54

Accordingly, Defendant’s motion is GRANTED.

Defendant shall file and serve its cross-complaint by no later than January 23, 2025. Plaintiff shall file a responsive pleading within 30 days of service, 32 days if the cross-complaint is served electronically, 35 days if the cross-complaint is served via mail.

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.)

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 53/54 Zoom Link is https://saccourt-cagov.zoomgov.com/my/sscdept53.54 and the Zoom Meeting ID is 161 4650 6749. 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.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

23CV000213: BERMUDEZ vs SN SERVICING CORPORATION, A BUSINESS ENTITY, et al. 01/16/2025 Hearing on Motion for Leave to File a Cross-Complaint in Department 54

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 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.