PATTON vs ARVO SOLAR FRANCHISING, LLC

24CV017897: PATTON vs ARVO SOLAR FRANCHISING, LLC 03/16/2026 Hearing on Motion - Other to Amend Cross Complaint and add Jon Phillip Horton as a Cross Complainant in Department 25

Tentative Ruling

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24CV017897: PATTON vs ARVO SOLAR FRANCHISING, LLC 03/16/2026 Hearing on Motion - Other to Amend Cross Complaint and add Jon Phillip Horton as a Cross Complainant in Department 25

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TENTATIVE RULING:

The motion of Defendant/Cross-Complainant Arvo Solar Franchising, LLC (“Arvo” or “ASF”) and Defendant Jon Phillip Horton (“Horton” or “JPH”) (collectively “Moving Defendants”) for an order granting them leave to file an Amended Cross-Complaint is ruled upon as follows.

Background

Plaintiff Bryan Patton (“Plaintiff” or “Patton”) commenced this action by filing his Complaint on September 9, 2024. The Complaint asserts causes of action for unfair competition, false advertising, and rescission. Named as defendants are Arvo, Horton, Andrew Dean (“Dean”), Hearthstone Brokerage, Inc. dba Transworld Business Advisors Tri-Valley aka Tri-Valley Business Advisors (“Hearthstone”) (collectively, “Defendants”).

The Complaint alleges that Defendants induced Plaintiff into signing a written franchise agreement with them to operate an Arvo Solar franchise in Sacramento. (Compl., ¶ 10.) As part of the agreement, Plaintiff agreed to pay Defendant the sum of $2,100,000 as ab initial franchise fee, as well as a continuing monthly royalty in the amount of 4% net gross generated by the franchise. (Compl., ¶¶ 12, 13.) Plaintiff alleges that despite the representations of Defendants, “defendants sold to plaintiff an unregistered, unlicensed franchise that was not subject to any state or federal exemptions and, moreover, was accompanied by materially false and misleading representations, including those concerning the nature and extent of the risks associated with investing in an Arvo Solar franchise and the resources/support plaintiff would have access to.” (Compl., ¶ 14.)

On October 14, 2024, Arvo and Horton filed their Answer to the Complaint.

On December 6, 2024, Dean and Hearthstone filed their Answer to the Complaint. On the same date, Dean and Hearthstone filed their Cross-Complaint, alleging causes of action for express indemnity, equitable indemnity, contribution, and declaratory relief, against Arvo and Horton, named as Cross-Defendants.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV017897: PATTON vs ARVO SOLAR FRANCHISING, LLC 03/16/2026 Hearing on Motion - Other to Amend Cross Complaint and add Jon Phillip Horton as a Cross Complainant in Department 25

On March 13, 2025, Arvo and Horton, pursuant to stipulation, filed their amended answer to Plaintiff’s Complaint. On March 26, 2025, Arvo, pursuant to stipulation, filed its Cross-Complaint “for money on note” against Patton, named as a Cross-Defendant.

On April 7, 2025, Arvo and Horton filed their Answer to Dean and Hearthstone’s Cross- Complaint.

On June 10, 2025, Patton filed his answer to Arvo’s Cross-Complaint.

There is a trial date presently set in this matter for December 21, 2026.

Discussion

Through this motion, Moving Defendants seek “an order granting them leave to file an amended cross-complaint wherein JPH is added as a cross-complainant and the cause of action for Money on Note is deleted and replaced with a cause of action for damages resulting from devaluation attributed to negligence.” (Ntc. Mot.) Moving Defendants specify that, as to Arvo, the herein motion is for leave to file an Amended Cross- Complaint, and as to Horton, since he did not join with Arvo in its original crosscomplaint, he is now seeking to be added to the proposed amended cross-complainant.

Moving Defendants contend that an amended pleading is allowable under Code of Civil Procedures section 473(a)(1), in the furtherance of justice. Specifically, Moving Defendants contend that the “general facts laid out in Arvo’s original cross complaint have not changed in the proposed amended cross complaint except that in September 2025 plaintiff and Arvo formerly in writing consented to cancel (thus rescind) the franchise purchase agreement (which consequently rescinded the franchise operating agreement).” (Mov. MPA, p. 3:14-19.) Thus, as Moving Defendants contend, restitution is the main basis of Plaintiff’s claim in his complaint (the third cause of action) which should, according to Moving Defendants, take into account any devaluation of the franchise at least on negligence grounds.

In opposition, Plaintiff contends that the proposed amendment is “futile” because the negligence claim fails as a matter of law. With this, Plaintiff raises arguments that rescission nullifies all obligations and duties arising from the franchise agreement; Moving Defendants’ negligence claim cannot establish the essential element of duty; the economic loss rule bars the proposed negligence claim; and the proposed Amended Cross-Complaint is barred by the sham pleading doctrine. For these reasons, Plaintiff argues that the proposed negligence claim is legally untenable following the rescission

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV017897: PATTON vs ARVO SOLAR FRANCHISING, LLC 03/16/2026 Hearing on Motion - Other to Amend Cross Complaint and add Jon Phillip Horton as a Cross Complainant in Department 25

of the franchise agreement and is an improper attempt to shift liability for Moving Defendants’ “illegal conduct onto Plaintiff.” (Opp’n, p. 10:11-13.)

On reply, Moving Defendants maintain that the Amended Cross-Complaint is “not a sham pleading, it was put together after discussing the facts with Jon Horton and also counsel for co-defendants and reviewing relevant income numbers.” (Reply, p. 6:6-9.)

Code of Civil Procedure section 473 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. Super. 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.) 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. v.

Superior Court, (1989) 213 Cal.App.3d 1045, 1048.)

Indeed, it is a rare case in which 'a court will be justified in refusing a party leave to amend his or her pleading so that he or she may properly present his or her case. Thus, absent a showing of prejudice to the adverse party, the rule of great liberality in allowing amendment of pleadings will prevail. (Board of Trustees v. Superior Court (2007) 149 Cal.App.4th 1154, 1163.)

The Court also has discretion to deny leave where the proposed amendment omits or contradicts harmful facts pleaded in the original pleading, absent a showing of mistake or other sufficient excuse for changing the facts. Without such a showing, the amended pleading may be treated as a sham. (Vallejo Develop. Co. v. Beck Develop. Co. (1994) 24 Cal.App.4th 929, 946.)

As a procedural matter, a motion to amend a pleading must include a copy of the proposed amendment and must state what allegations will be deleted or added and where they are located by page, paragraph and line number. (Cal. Rules of Court, rule 3.1324(a).) Further, the motion must be supported by a separate declaration that

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

24CV017897: PATTON vs ARVO SOLAR FRANCHISING, LLC 03/16/2026 Hearing on Motion - Other to Amend Cross Complaint and add Jon Phillip Horton as a Cross Complainant in Department 25

specifies the effect of the amendment, why the amendment is necessary and proper, when the allegations were discovered, and the reason the request for amendment was not made earlier. (Id., rule 3.1324(b).)

With respect to the procedural requirements, the Court finds the motion adheres to the requirements of California Rule of Court 3.1324. (See Weiner Decl.; see also Mov. MPA, Exh. A.)

With respect to the arguments advanced in Opposition, the Court finds that the crux of the Parties’ arguments is a dispute regarding the validity of the proposed amended and the sufficiency of the claims raised therein. However, the validity of a proposed amendment is generally not considered in deciding whether to grant leave to amend. (Armenta ex rel. City of Burbank v. Mueller Co. (2006) 142 Cal.App.4th 636, 643 [holding the trial court erred in denying leave to amend and noting that where the adequacy of the pleading is unclear, “the proper course of action would have been to permit amendment, after which the defendants could have tested the complaint’s sufficiency via demurrer or motion for judgment on the pleadings”].)

To the extent that the Parties continue to dispute the validity of the factual allegations in the proposed Amended-Cross Complaint, they may bring the appropriate motion, consistent with the notice requirements set forth in Code of Civil Procedure section 1005. Further, based on the information provided in support of this motion, the Court does not find (for purposes of this motion only) that the proposed complaint is a sham pleading such that amendment should not be allowed. Rather, it appears that the factual changes in the proposed amendment respond to additional conduct relating to the contracts at issue that occurred in July-September of 2025.

Disposition

For the reasons stated above, Moving Defendants’ motion is GRANTED.

Moving Defendants may file and serve their Amended Cross-Complaint on or before March 26, 2026. Cross-Defendants may file and serve a response within 30 days of service, or 35 days if served by mail.

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