Nopuente v. Choy CA1/5 ( 2014 )

Filed 1/31/14 Nopuente v. Choy CA1/5
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
ISABELITA NOPUENTE,
Cross-complainant and Appellant, A135162
v.
(Alameda County
NANCY CHOY et al.,
Super. Ct. No. RG04180582)
Cross-defendants and Respondents.
Isabelita Nopuente (Nopuente) appeals from the judgment entered in favor of
respondents1 on her cross-complaint following the trial court’s grant of respondents’
summary judgment motion and its denial of Nopuente’s motion for leave to amend her
cross-complaint. We affirm, concluding that Nopuente’s claims against respondents are
barred by the res judicata doctrine and the trial court did not err in denying Nopuente’s
motion for leave to amend.
1 Respondents are cross-defendants Nancy Choy; Matthew Choy; the Nancy Wu Living
Trust; the Tony Choy Living Trust; the Matthew Choy Living Trust; the Choy Family
Trust; Nish, a limited partnership; OB1 Ltd.; OB1 Trust I; OB1 Trust II; Choy &
Associates; Excel Financial; and Interstate Financial Corporation (collectively,
respondents).
1
BACKGROUND2
In November 2003, Nopuente initiated an arbitration proceeding before the
National Association of Securities Dealers, Inc. (the NASD proceeding), against Tony
Choy (Choy), H.D. Vest, and others. Nopuente’s “Statement of Claim” alleged that
Choy, as her securities broker, improperly managed Nopuente’s investments and
converted them to his own use. She alleged that Choy was an agent of H.D. Vest and that
H.D. Vest failed to supervise Choy properly. Nopuente filed a “Preliminary
Memorandum of Law in Support of Statement of Claim” that described her various
theories of liability, including negligence, breach of contract, fraud, breach of fiduciary
duty, unfair business practices, and violation of the Consumers Legal Remedies Act
(CLRA; Civ. Code, § 1750 et seq.). A number of those causes of action are also listed in
a March 2004 claim submission agreement. In October 2004 and August 2005, Nopuente
filed amended claims that included allegations similar to those in the original statement
of claim. Choy’s answers in the NASD proceeding alleged that Nopuente authorized and
actively pursued speculative and high risk investments, which was the cause of her
investment losses.
In October 2004, Choy filed a complaint against Nopuente in the Superior Court
for the County of Alameda. Choy alleged he provided Nopuente accounting services and
opened an investment account in her name. As part of the investment strategy, Choy and
Nopuente were appointed directors of OB1, Ltd. Choy alleged that Nopuente wrongfully
depleted funds from OB1, Ltd., from another company (Interstate Financial Corp.), and
from an account with Wallstreet Electronica, Inc. Choy’s complaint alleged causes of
action against Nopuente for intentional misrepresentation, negligent misrepresentation,
“actual” fraud, “constructive” fraud, misappropriation, conversion of partnership assets,
2 This background is largely taken from this court’s unpublished decision in Choy v.
Nopuente (Jan. 28, 2011, A126779) (Choy I). We grant respondents’ March 18, 2013
request that we take judicial notice of this unpublished decision (Fink v. Shemtov (2010)
180 Cal. App. 4th 1160, 1171), and we deny the remainder of respondents’ request
because the other materials are unnecessary to our analysis.
2
conversion, breach of partnership agreement, breach of fiduciary duty, and damage to
reputation.
In December 2004, Nopuente filed a cross-complaint against Choy and others
alleging that Choy induced her to invest over $1 million from an inheritance, and most of
those funds were lost due to investments made by Choy or other wrongdoing by Choy.
In November 2005, Nopuente filed a motion to stay the trial court action pending
resolution of the NASD proceeding. Over Choy’s opposition, the court stayed the action
until April 2006 “in light of the fact that resolution of the issues to be arbitrated may
likely affect the issues to be determined in the instant action.”
In March 2007, Nopuente filed her first amended and operative cross-complaint
(FACC) against Choy and other cross-defendants, including the cross-defendants that are
the respondents in the present case, as well as Wallstreet Electronica, Inc., and H.D. Vest.
She alleged causes of action for money had and received, breach of fiduciary duty,
conversion, fraud, negligent misrepresentation, negligence, breach of oral and written
contracts, breach of the implied covenant of good faith and fair dealing, unjust
enrichment, conspiracy, imposition of a constructive trust, declaratory relief, and an
accounting. Generally speaking, Nopuente alleged that Choy represented and advised her
in various financial transactions that resulted in substantial losses, and the other cross-
defendants were involved with Choy in the transactions.
In May and June 2007, respectively, Wallstreet Electronica, Inc., and H.D. Vest
filed petitions to compel arbitration of the FACC. Over Nopuente’s objections, the trial
court granted the petitions. The court ordered Nopuente to submit to the ongoing NASD
proceeding “all of her claims and causes of action” against Wallstreet Electronica, Inc.,
and H.D. Vest, and the court stayed the civil action as to them. Subsequently, the court
stayed the action “in its entirety pending completion of the arbitration.”3
In April 2009, the NASD arbitration panel (the Panel) issued its decision in the
NASD proceeding. The Panel stated that during the arbitration Nopuente specified her
3 In December 2008, Nopuente dismissed her claims against Wallstreet Electronica,
Inc.
3
claims were based on the following causes of action: money had and received, breach of
fiduciary duty, conversion, fraud, negligent misrepresentation, negligence, breach of oral
contract, breach of written contract, breach of the implied covenant of good faith and fair
dealing, unjust enrichment, conspiracy, and violation of the CLRA. The Panel ruled
against Nopuente, finding that she “did not prove any of the claims and/or causes of
action asserted against” H.D. Vest and Choy. The Panel also found “that the material
portions of . . . Nopuente’s testimony regarding her claims . . . were not creditable.” The
Panel ruled “that neither of the Claimants[, Nopuente and OB1, Ltd.,] shall receive any
relief, and all claims by Claimants are denied in their entirety.”
In July 2009, Nopuente filed a petition to vacate the arbitration award. H.D. Vest
opposed the petition and requested confirmation of the arbitration award. In August
2009, the court denied the petition, granted the request to confirm the award, and entered
judgment denying recovery from H.D. Vest and Choy (Choy Judgment). Nopuente
appealed and in January 2011 this court affirmed in Choy I. This court held that the
Panel’s exclusion of evidence related to two real estate transactions that funded
Nopuente’s investments did not substantially prejudice her rights; the Panel did not err in
failing to grant her an accounting; and the Panel did not refuse to exercise jurisdiction
over the claims in the FACC.
In October 2009, after entry of the Choy Judgment but before this court’s decision
in Choy I, respondents moved for summary judgment on the FACC. Respondents relied
on the doctrine of res judicata, arguing that, because their only alleged liability in the
FACC was derivative of Choy’s liability, they too were entitled to judgment in their
favor. In February 2012, after this court’s decision in Choy I was final, the trial court
granted respondents’ motion for summary judgment. The court reasoned that the
confirmed arbitration award in favor of Choy was entitled to res judicata effect, barring
relitigation of the causes of action in the FACC. Because respondents’ liability was
derivative of Choy’s liability, respondents were entitled to a judgment of dismissal. The
trial court also denied Nopuente’s September 2011 motion to amend the FACC. The
court entered judgment in favor of respondents and this appeal followed.
4
DISCUSSION
I. The Res Judicata Doctrine Bars Nopuente’s Claims Against Respondents
Nopuente argues the trial court erred in concluding the doctrine of res judicata
bars her claims against respondents in the FACC. We review de novo to determine
whether the party moving for summary judgment has met its burden of proving that there
is no triable issue as to any material fact and that the moving party is entitled to judgment
as a matter of law. (Merrill v. Navegar, Inc. (2001) 26 Cal. 4th 465, 476.)
“Res judicata prohibits the relitigation of claims and issues which have already
been adjudicated in an earlier proceeding. The doctrine has two components. ‘ “In its
primary aspect the doctrine of res judicata [or ‘claim preclusion’] operates as a bar to the
maintenance of a second suit between the same parties on the same cause of action.” . . .
The secondary aspect is “collateral estoppel” or “issue preclusion,” which does not bar a
second action but “precludes a party to an action from relitigating in a second proceeding
matters litigated and determined in a prior proceeding.” ’ [Citations.]” (Kelly v. Vons
Companies, Inc. (1998) 67 Cal. App. 4th 1329, 1335; see also Vandenberg v. Superior
Court (1999) 21 Cal. 4th 815, 828 (Vandenberg).)
The elements of res judicata in its claim preclusion form are (1) the claim in the
present action must be identical to a claim litigated or that could have been litigated in a
prior proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and
(3) the party against whom the doctrine is being asserted was a party or in privy with a
party to the prior proceeding. (Bernhard v. Bank of America (1942) 19 Cal. 2d 807, 813;
see also Brinton v. Bankers Pension Services, Inc. (1999) 76 Cal. App. 4th 550, 556
(Brinton).) Although res judicata is usually applied based on a prior judicial decision, a
prior judgment confirming an arbitration award may also bar a subsequent claim based on
the same cause of action. (See Code Civ. Proc., § 1287.4; Richard B. LeVine, Inc. v.
Higashi (2005) 131 Cal. App. 4th 566, 576-579 (LeVine); Brinton, supra, 76 Cal.App.4th
at pp. 556-558; Thibodeau v. Crum (1992) 4 Cal. App. 4th 749, 755; Sartor v. Superior
5
Court (1982) 136 Cal. App. 3d 322, 328 (Sartor).)4 “A predictable doctrine of res judicata
benefits both the parties and the courts because it ‘seeks to curtail multiple litigation
causing vexation and expense to the parties and wasted effort and expense in judicial
administration.’ [Citation.]” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal. 4th 888,
897; see also Vandenberg, supra, 21 Cal.4th at p. 829 [the purpose of the res judicata
doctrine is “to preserve the integrity of the judicial system, promote judicial economy,
and protect litigants from harassment by vexatious litigation”].)
In the present case, Nopuente does not dispute the third element required for
application of res judicata—that she was a party to the NASD proceeding. As to the first
element, Nopuente disputes that the claims in the FACC are identical to those addressed
in the NASD proceeding. It is undisputed the claims resolved in the Choy Judgment,
which confirmed the arbitration award, are the same claims on which respondents sought
summary judgment—that is, respondents sought summary judgment on the same FACC
on which Choy obtained judgment. (Burdette v. Carrier Corp. (2008) 158 Cal. App. 4th
1668, 1674 (Burdette) [“Claim preclusion bars a second action upon the same claim
against the same parties litigated to a final judgment in a prior action. . . . The test of the
claim is the cause tendered by the pleadings and resolved on the merits.”].) Moreover,
Nopuente does not dispute that the allegations against respondents in the FACC involve
the same invasions of primary rights as the allegations against Choy. (LeVine, supra, 131
Cal.App.4th at pp. 575-576, 579; Brinton, supra, 76 Cal.App.4th at p. 557.)
Nevertheless, Nopuente argues her claims against respondents are not barred by
res judicata because the Panel did not have jurisdiction over all the claims in the FACC
4 A prior judgment confirming an arbitration award has limited applicability to bar
subsequent litigation under the issue preclusion doctrine of collateral estoppel because it
may not be invoked by a stranger to the arbitration unless the parties to the arbitration
intended or agreed the arbitrator’s decision could be raised by strangers to the arbitration.
(Vandenberg, supra, 21 Cal.4th at pp. 834, 837-838; see also Brinton, supra, 76
Cal.App.4th at pp. 556-557.) However, no such limitation applies to the claim preclusion
aspect of the res judicata doctrine. (Benasra v. Mitchell Silberberg & Knupp (2002) 96
Cal. App. 4th 96, 107-108; LeVine, supra, 131 Cal.App.4th at pp. 577-578; Brinton, at pp.
556-557.)
6
and the claims actually considered by the Panel did not encompass all the primary rights
implicated by the causes of action in the FACC. However, it is too late for Nopuente to
challenge the scope of the Choy Judgment, which confirmed the Panel award, resolving
in Choy’s favor on the merits all of the claims against him in the FACC. Nopuente’s
challenge to the Choy Judgment was heard and rejected by this court in Choy I. Among
other things, in Choy I we concluded the Panel took jurisdiction over the claims in the
FACC. As we explained in Choy I, the Panel listed causes of action identified by
Nopuente, which were largely the same as those in the FACC and in her memorandum of
law in support of her arbitration claims; the Panel concluded she “did not prove” those
claims. (See Burdette, supra, 158 Cal.App.4th at pp. 1674-1675 [“A trial on the merits
includes a trial in which the plaintiff fails to provide evidence in support of the claim.
Res judicata bars the relitigation not only of claims that were conclusively determined in
the first action, but also matter that was within the scope of the action, related to the
subject matter, and relevant to the issues so that it could have been raised.”].) Nopuente
presents no authority supporting the proposition that, in applying the res judicata
doctrine, this court can disregard the claims actually resolved in the Choy Judgment and
reconsider the validity of the judgment, despite the fact that Nopuente already had a full
opportunity to challenge the judgment in her previous appeal.5
As to the second element, Nopuente contends the Choy Judgment is not a final
judgment that can be given res judicata effect because “ ‘ “There can be but one final
judgment in an action . . . .” ’ ” (Bank of America v. Superior Court (1942) 20 Cal. 2d
697, 701-702.) However, the Choy Judgment did “ ‘ “finally determine[] the rights” ’ ”
of Choy and H.D. Vest in relation to the FACC (id. at p. 701); Nopuente appealed and
this court affirmed the judgment. Although claims in the FACC remained unresolved as
to other cross-defendants, that did not undermine the finality of the Choy Judgment. (See
5 Nopuente contends that giving res judicata effect to the Choy Judgment deprives her
of her right to procedural due process because it denies her a jury trial on the FACC and,
effectively, the claims in Choy’s complaint. However, Nopuente already had an
opportunity to challenge the validity of the Choy Judgment; any consequences that flow
from that final judgment do not constitute a deprivation of procedural due process.
7
Morehart v. County of Santa Barbara (1994) 7 Cal. 4th 725, 740 [referring to rule that
“[j]udgment in a multiparty case determining all issues as to one or more parties may be
treated as final even though issues remain to be resolved between other parties”]; see also
Millsap v. Federal Express Corp. (1991) 227 Cal. App. 3d 425, 430.) Nopuente cites no
authority supporting the proposition that the judgment could only be treated as final for
res judicata purposes following resolution of the claims against the other cross-
defendants. Because Nopuente has failed to support her contention with reasoned
argument and relevant citations to authority, the issue requires no further consideration.
(Badie v. Bank of America (1998) 67 Cal. App. 4th 779, 784-785 (Badie).)
Nopuente also asserts the res judicata doctrine is inapplicable because “there is no
‘second action,’ ” but her argument on the point relates to the purported absence of a final
judgment. Any argument that the NASD proceeding is not sufficiently separate for
purposes of the res judicata doctrine has been forfeited. (Badie, supra, 67 Cal.App.4th at
pp. 784-785.) In any event, the procedural posture in the present case is nearly identical
to that in Sartor, where homeowners sued an architectural firm and its employees.
(Sartor, supra, 136 Cal.App.3d at p. 324.) The claims against the firm were sent to
arbitration and the action was stayed. (Id. at p. 325.) The result of the arbitration was
favorable to the firm and subsequently the individual employees moved for summary
judgment on res judicata grounds. (Id. at p. 325.)6 The Court of Appeal held the trial
court should have granted the motion because the employees could not be liable if the
firm was not liable. (Id. at p. 328; see also Vandenberg, supra, 21 Cal.4th at p. 824, fn. 2
[citing Sartor with approval].)
Nopuente argues respondents waived the defense of res judicata because they did
not assert it in their answers. Code of Civil Procedure section 1908.5 provides that,
“When a judgment or order of a court is conclusive, the judgment or order must be
6 Although Sartor elsewhere suggested the employees’ defense was based on
“collateral estoppel” (Sartor, supra, 136 Cal.App.3d at pp. 327-328), Vandenberg
characterized Sartor as a case involving the claim preclusion aspect of the res judicata
doctrine. (Vandenberg, supra, 21 Cal.4th at p. 824, fn. 2; see also LeVine, supra, 131
Cal.App.4th at pp. 577-578.)
8
alleged in the pleadings if there be an opportunity to do so; if there be no such
opportunity, the judgment or order may be used as evidence.” That language has been
interpreted as requiring a defendant to plead the defense of res judicata, “if there be an
opportunity to do so.” (Solari v. Atlas-Universal Service, Inc. (1963) 215 Cal. App. 2d
587, 592 [discussing Code Civ. Proc., former § 1962, subd. 6, now Code Civ. Proc.,
§ 1908.5]; see also Hulsey v. Koehler (1990) 218 Cal. App. 3d 1150, 1158.) In the present
case, respondents’ answers were filed before entry of the Choy Judgment and, indeed,
respondents’ motion for summary judgment asserting the res judicata defense was filed
before the Choy Judgment became final on appeal. Nopuente fails to explain how
respondents had an opportunity to plead the defense. Under these circumstances, it was
proper to use the Choy Judgment as evidence to support respondents’ motion for
summary judgment. (Code Civ. Proc., § 1908.5.)
Nopuente contends the trial court erred in granting respondents’ motion for
summary judgment because several of the cross-defendants, the three OB1 entities, and
Interstate Financial Corporation, were not properly represented by respondents’ counsel.
In particular, she argues that control over the OB1 entities and Interstate Financial
Corporation is disputed and respondents’ counsel is disqualified from representing those
entities because of a conflict of interest. She also argues that Interstate Financial
Corporation is an unregistered corporation lacking capacity to sue.7 However, Nopuente
cites to nothing in the record showing that she moved to disqualify respondents’ counsel
from representing either of the entities. (See People ex rel. Dept. of Corporations v.
SpeeDee Oil Change Systems, Inc. (1999) 20 Cal. 4th 1135, 1144-1145.) Absent such a
motion, respondents’ counsel had authority to file the motion for summary judgment on
7 Nopuente cites to Choy’s complaint, which alleges that Interstate Financial
Corporation is “a Nevada corporation not authorized to do business in California.”
Nopuente cites no authority that such a corporation lacks capacity to defend an action.
Instead, she cites authority regarding “suspended” corporations (Traub Co. v. Coffee
Break Service, Inc. (1967) 66 Cal. 2d 368, 371) and dissolved corporations (Macmillan
Petroleum Corp. v. Griffin (1950) 99 Cal. App. 2d 523, 528), as well as Corporations Code
sections 2105 and 2203, which sections do not directly address the situation in the present
case. Accordingly, she has not shown the trial court erred.
9
behalf of the OB1 entities and Interstate Financial Corporation, and Nopuente fails to cite
any authority that her assertions about the scope of respondents’ counsel’s representation
demonstrate the trial court erred in granting the motion for summary judgment.
Nopuente’s remaining contentions may be addressed briefly. Respondents did not
bear the burden of presenting additional evidence demonstrating that all the claims
covered by the judgment were actually litigated in the NASD proceeding, because the
trial court could properly rely on the Choy Judgment in determining the scope of the
claims resolved therein. The fact that the trial court had previously overruled demurrers
to the FACC did not preclude the grant of summary judgment because Nopuente has
failed to show those prior rulings necessarily reflected a conclusion respondents’ liability
in the FACC was not merely derivative.8 Finally, Nopuente’s reliance on the proposition
from criminal law that the acquittal of an accomplice does not bar the conviction of
another is unavailing. In the present case, Choy is the principal alleged actor; if his
conduct was not actionable, there is no basis to hold respondents liable. (LeVine, supra,
131 Cal.App.4th at p. 573 [“summary judgment was properly granted because [the
defendant’s] liability is dependent upon the commission of an underlying tort by [a
medical partnership] and its partners, a claim decided adversely to [the] plaintiff in the
prior arbitration”]; Brinton, supra, 76 Cal.App.4th at pp. 557-558 [“since defendant’s
liability is merely derivative . . . , it is unnecessary for [the] defendant to have been a
party to the prior action to assert a claim preclusion defense in this case”]; see also
LeVine, at pp. 574-576; Sartor, supra, 136 Cal.App.3d at p. 328.)
8 Nopuente argues for the first time in her reply brief that the allegations in the FACC
provide a nonderivative basis for the liability of the respondents. We do not consider
arguments presented for the first time on reply. (Loranger v. Jones (2010) 184
Cal. App. 4th 847, 858, fn. 9.) In any event, Nopuente’s list of allegations, lacking any
analysis of how the allegations support her causes of action, is insufficient to demonstrate
the trial court erred.
10
II. The Trial Court Did Not Abuse Its Discretion in Denying Leave to Amend
Nopuente contends the trial court abused its discretion (Melican v. Regents of
University of California (2007) 151 Cal. App. 4th 168 (Melican)) in denying her request
for leave to amend the FACC to include new causes of action.
“ ‘ “[T]he trial court has wide discretion in allowing the amendment of any
pleading [citations], [and] as a matter of policy the ruling of the trial court in such matters
will be upheld unless a manifest or gross abuse of discretion is shown. [Citations.]” ’
[Citation.] Nevertheless, it is also true that courts generally should permit amendment to
the complaint at any stage of the proceedings, up to and including trial. [Citations.] But
this policy applies ‘ “only ‘[w]here no prejudice is shown to the adverse party.’ ” ’
[Citation.] Moreover, ‘ “ ‘even if a good amendment is proposed in proper form,
unwarranted delay in presenting it may—of itself—be a valid reason for denial.’ ” ’
[Citations.] Thus, appellate courts are less likely to find an abuse of discretion where, for
example, the proposed amendment is ‘ “offered after long unexplained delay . . . or where
there is a lack of diligence . . . .” ’ [Citation.]” (Melican, supra, 151 Cal.App.4th at p.
175.)
Here, nearly seven years passed between the filing of Nopuente’s original cross-
complaint in December 2004 and the September 2011 request to file a second amended
cross-complaint. Nopuente explains that her proposed new causes of action for violations
under the Racketeer Influenced and Corrupt Organizations Act (RICO; 18 U.S.C. § 1961
et seq.) and the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.) are
based on misconduct occurring after the filing of the FACC. But the FACC was filed in
March 2007; Nopuente does not explain why she could not have sought to amend the
pleading at some point in the four and one-half years between then and September 2011.
As in Melican, “[I]t would be patently unfair to allow [Nopuente] to defeat [respondents’]
summary judgment motion by allowing [her] to present a ‘moving target’ unbounded by
the pleadings.” (Melican, supra, 151 Cal.App.4th at p. 176; see also Huff v. Wilkins
(2006) 138 Cal. App. 4th 732, 746.) The trial court did not abuse its discretion in denying
Nopuente’s request for leave to amend.
11
Nopuente also argues the trial court was required under Code of Civil Procedure
section 426.50 to permit her to amend the FACC. That section provides that, absent bad
faith, a court “shall” allow a party to amend a compulsory cross-complaint to assert a
cause of action related to the causes of action in the complaint.9 (See Silver
Organizations Ltd. v. Frank (1990) 217 Cal. App. 3d 94, 98-102.) A “ ‘[r]elated cause of
action’ means a cause of action which arises out of the same transaction, occurrence, or
series of transactions or occurrences as the cause of action which the plaintiff alleges in
his complaint.” (Code Civ. Proc., § 426.10, subd. (c).) Nopuente fails to explain how the
section applies to her proposed new causes of action for RICO and UCL violations. She
asserts that those proposed causes of action are based on misconduct occurring after the
filing of the FACC, so it appears they do not arise out of the same transactions at issue in
the complaint. (See Al Holding Co. v. O’Brien & Hicks, Inc. (1999) 75 Cal. App. 4th
1310, 1313-1314 [“The critical time period to which [Code of Civil Procedure] section
426.30 looks is that point in time when the complaint has been filed and served against a
defendant and the defendant ‘fails to allege in a cross-complaint any related cause of
action which (at the time of serving his answer to the complaint) he has against the
plaintiff.’ ”], italics omitted.) Nopuente fails to cite to any authority that her new claims
are within the scope of Code of Civil Procedure section 426.50; thus, she fails to show
the trial court erred in denying her request for leave to amend under that statutory
provision.
9 Code of Civil Procedure section 426.50 provides: “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.”
12
DISPOSITION
The trial court’s judgment is affirmed. Costs on appeal are awarded to
respondents.
SIMONS, J.
We concur.
JONES, P.J.
BRUINIERS, J.
13