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Tentative Ruling
Judge Colleen Sterne
Department 5 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107


Pico Rivera First Mortgage Investors LP v. Henry Aguila

Case No: 18CV04958
Hearing Date: Mon Mar 16, 2020 9:30

Nature of Proceedings: Motion Leave to File Second Amended Cross-Complaint

Aguila’s motion for leave to file second amended cross-complaint


Eric A. Woosley for Pico Rivera First Mortgage Investors LP and Mortgage Co. of Santa Barbara, Inc.

Henry Aguila, in pro per

Rinat Klier-Erlich/Brian Smith of Manning & Kass Elrod, Ramirez,

Trester LLP specially appearing for Wolf Baschung, Guru Thapar, and Forward Beverly Hills, Inc. dba Keller Williams

RULING: The motion is granted. Mr. Aguila is directed to separately file his Second Amended Cross-Complaint by April 26. Because PRFM and Mortgage Co. of Santa Barbara, Inc. have settled the action with Aguila, subject to the court’s determination that the settlement was entered into in good faith, they need not respond to the complaint at this time. Should the motion be granted, the case will end as to them. If it is not, they will be allowed to respond at that time. The Court will need to address the continued viability of the July 2020 trial date with the parties so the Court sets another CMC for June 1, 2020 at 8:30am.


On October 10, 2018, plaintiff Pico Rivera First Mortgage Investors LP (PRFM) filed its original complaint in this action asserting one cause of action for breach of guaranty against defendant Henry Aguila. It alleged that the borrower, Thee Aguila Inc. (TAI) had borrowed $5,700,000 from PRFM, and secured the loan with property located at 8825 Washington Blvd., in Pico Rivera, CA. In connection with the loan, Aguila entered into a written Guarantee for plaintiff’s benefit. After TAI’s default on the loan, Aguila became obligated to pay pursuant to the Guarantee, but failed to do so.

On January 7, 2019, Aguila took the deposition of Carl Lindros, who was the President of Mortgage Co. of Santa Barbara, Inc., which in turn is the general partner of Pico Rivera First Mortgage Investors, LP.

On January 14, 2019, Aguila filed his answer to the complaint, generally denying the allegations of the complaint and asserting 32 affirmative defenses. Aguila concurrently filed his original cross-complaint against cross-defendants Blackwood, LLC, Keller Williams Realty, Keller Williams Commercial, Wolf Baschung, Guru Thapar, PRFM, Mortgage Co. of Santa Barbara, Inc., and Carl Lindros, asserting seven causes of action: (1) breach of oral contract (specific performance requested); (2) breach of fiduciary duty; (3) fraud and deceit; (4) negligent misrepresentation; (5) unfair business practices; (6) interference with prospective advantage; and, (7) constructive trust. Aguila filed his First Amended Cross-Complaint on February 4, 2019, asserting the same causes of action.

The FACC was based upon allegations related to the 8825 Washington Blvd property. While the circumstances alleged were fairly involved, they related to events which had happened with respect to the property owned by Aguila’s company, TAI, which been operated as a restaurant/nightclub since 1994. Because of conduct by the then-tenants, the DEA seized the liquor license, shutting the business down, and the City of Pico Rivera required Aguila to obtain a new CUP. The process required 2.5 years of effort by Aguila. TAI had negotiated the subject $5,700,000 loan from PRFM, secured by the Deed of Trust with a power of sale, and Aguila was guarantor of the note. Aguila executed a Listing Agreement with Baschung, Thapar, and Keller Williams on TAI’s behalf in May 2017 to list the property for $10,500,000. They brought in Blackwood, which ultimately submitted a Letter of Intent to purchase the property on November 12, 2017.

Because of the length of time it took Aguila to secure the CUP and liquor license, he failed to make some payments on the loan, sending it into default. He sought to negotiate an arrangement with PRFM, since PRFM did not actually want to assume the burdens of ownership of a foreclosed property, and Aguila still wanted to facilitate the sale of the property and secure the benefits of his years of work to remedy its problems. They agreed to allow the Trustee’s Sale to take place on December 6, 2017, but also entered into an oral Option Agreement under which PRFM and Lindros agreed to allow Aguila sufficient time—at least 12 months—to close a sale transaction with a buyer, during which time he would continue to perform tasks and pay all amounts necessary to investigate the pending MTA right-of-way, comply with city-imposed signage requirements, pay for a night watchman for the property, pay for and maintain the perimeter fencing, pay all costs associated with monthly property maintenance, pay for insurance on the property, and pay all water and utility bills. These efforts and expenditures were to continue until he was able to obtain sufficient funds or find a suitable alternate buyer to pay the sums due to PRFM, including interest and expenses. He also paid an additional $100,000 to PRFM and Lindros, as separate consideration for granting the Option Contract. In exchange, he or his assignees, partners, or replacement purchasers would obtain clear title to the property. He alleges that his success in obtaining the CUP and liquor license increased the property’s fair market value by at least $5 million.

On December 8, 2017, two days after the foreclosure, Lindros and PRFM accepted the $100,000 payment. On December 19, 2017, Baschung, Thapar and Keller Williams notified PRFM and Lindros of the Blackwood offer, and Lindros and PRFM requested that they submit it to Aguila. Aguila advised them that because he had secured the liquor license rights for the property on 12/4/17, which enhanced the value of the property by over $5 million, the Blackwood offer terms were not acceptable.

The FACC alleges that, in spite of this, Blackwood, PRFM, and Lindros conspired with Baschung, Thapar, and Keller Williams, to interfere with Aguila’s Option Contract, and denied that a Letter of Intent had been signed, in order to induce Aguila to keep paying the costs of maintenance of the property during Blackwood’s due diligence period, and to eliminate Aguila from any potential sale of the property. A new Letter of Intent was entered into between Blackwood and PRFM and Lindros, which disregarded Aguila’s rights under the Option Contract, causing Aguila to suffer irreparable loss and millions of dollars in damages. PRFM and Lindros on 2/21/18 unexpectedly attempted to return the $100,000, while still allowing Aguila to incur post-foreclosure expenses related to the property.

The FACC sought specific performance of the Option Contract, damages, punitive damages, and attorneys’ fees.

On April 22, 2019, Aguila dismissed, without prejudice, cross-defendants Keller Williams Realty and Commercial, Baschung, and Thapar, purportedly pursuant to representations of their counsel that they had done nothing wrong, and that counsel would accept service on Baschung’s behalf for a deposition after all three cross-defendants had been dismissed. Aguila contends that agreement was breached.

The sale of the property to Blackwood ultimately did not go through, and the escrow was canceled.

On August 11, 2019, cross-defendant Carl Lindros was killed in an airplane crash. On August 27, 2019, Aguila filed Doe amendments bringing Baschung and Thapar back into the action, and contends that Baschung has, since that time, evaded service. On October 30, 2019, Aguila took the deposition of Gilad Ganish, the owner of Blackwood LLC.

On January 13, 2020, Aguila filed his original motion for leave to file a Second Amended Cross-Complaint (SACC), which was denied by the Court on February 10, 2020, based upon its procedural infirmities.

On February 18, 2020, Aguila filed the current motion for leave to file a SACC. His proposed SACC seeks to re-insert cross defendants Keller Williams Realty and Commercial, Baschung, and Thapar, into the cross-complaint, and further expressly names as cross-defendants former tenants ERDM, Inc., Edgar Fragoso, Santiago Acuna, and Eva Meneses (who had been added as Doe defendants to the FACC). It eliminates the constructive trust cause of action, and adds causes of action for aiding and abetting a breach of fiduciary duty, breach of oral dismissal contract, breach of covenant of good faith and fair dealing with respect to oral dismissal contract, fraud and deceit as to oral dismissal contract, and express contractual indemnity. The final cause of action is alleged only against the new cross-defendants (ERDM, Inc., Edgar Fragoso, Santiago Acuna, and Eva Meneses), who had been the tenants of the property. It also seeks to add allegations to clarify the relief sought and support a claim for damages for a lost entertainment business, which he contends was made viable by his efforts to obtain the CUP and liquor license.

On February 21, 2020, Aguila settled his claims against PRFM, Mortgage Co. of Santa Barbara, Inc., and Carl Lindros, subject to the court’s determination that the settlement was entered into in good faith. While those parties sought to have Aguila continue the hearing on this motion in light of the settlement, he declined to do so.

The trial is currently scheduled for July 20, 2020. 

PRFM and Mortgage Co. of Santa Barbara have opposed the motion, apparently to protect their interests should the good faith settlement motion not be granted. They object that the language they challenge would change the entire focus of the litigation, after substantial discovery has been undertaken, and the trial date has already been continued once. They object further that while Aguila contends he engaged in written discovery requests as a result of which additional facts came to light, he in fact has not propounded any written discovery in this action. Rather than identifying what discovery occurred and how it necessitated the amendments, as directed by the Court, he merely states that discovery has shown there is confusion as to the relief being sought, and the amendment is sought to clarify that he is seeking damages for the lost economic business opportunity of the entertainment venue on the property, whereas his company, TAI is seeking damages in the separate lawsuit pending in the Los Angeles Superior Court (Norwalk) for the loss of the property and its entitlements. PRFM and Mortgage Co. assert that the motion is not timely, in that there is unexplained delay and a lack of diligence. They contend he is attempting to add a time-barred claim for loss of a business opportunity that he was aware of on the date of foreclosure, more than 2 years ago, and there is no explanation why it could not have been brought earlier. Finally, PRFM and Mortgage Co. assert that they have been substantially prejudiced by the delay, in that years have passed since significant discovery and law and motion have occurred, and Carl Lindros has died and cannot directly address the new claims.

Baschung, Thapar, and Keller Williams have also opposed the motion. They first assert that Aguila is judicially estopped from bringing them back into this action, after having earlier dismissed them, given that they have not been able to conduct discovery or otherwise defend the cross-complaint. They argue further that the claims against them fail as a matter of law, based on lack of standing and the statute of limitations.

In his reply, Aguila asserts that he only received what he described as a “Smoking Gun Letter” from the Woosley firm at the recent MSC, although it should have been produced at the Lindros deposition in January 2019, at a time when he would have been able to examine Lindros about it. Had he then received the letter, also would not have dismissed Baschung and Thapar. He has lost the opportunity to question Lindros about it. While Lindros represented that he had not previously known that Baschung and Thapar had represented Aguila, the letter clearly set forth his knowledge of that fact, and his handwritten entries confirm Aguila’s continued post-foreclosure maintenance of the property. The letter was produced by attorney Woosley at the MSC when confronted by the mediator with Lindros’ admission to Gilad Ganish of Blackwood that he had, in fact, made a deal with Aguila. He questions whether Woosley would have produced the letter at the deposition, had he known of the December 19, 2017 Lindros voicemail.


For the reasons articulated below, the motion will be granted. Mr. Aguila is directed to separately file the SACC forthwith. Because PRFM and Mortgage Co. of Santa Barbara, Inc. have settled the action with Aguila, subject to the court’s determination that the settlement was entered into in good faith, they need not respond to the complaint at this time. Should the motion be granted, the case will end as to them. If it is not, they will be allowed to respond at that time. The Court will need to address the continued viability of the July 2020 trial date with the parties.

Pursuant to Code of Civil procedure section 473(a)(1), the court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading. The court’s discretion will usually be exercised liberally to permit amendment of the pleadings. (Howard v. County of San Diego (2010) 184 Cal.App.4th 1422, 1428.) The policy favoring amendment is so strong that it is a rare case in which denial of leave to amend can be justified. (Douglas v. Superior Court (1989) 215 Cal.App.3d 155, 158.) This liberality permits amendments to the complaint at any stage of the proceedings, up to and including trial, absent prejudice to the adverse party. (Atkinson v. Elk Corp. (2003) 109 Cal.App.4th 739, 761.) Absent prejudice, delay alone is not a ground for denial of leave to amend. (Higgins v. Del Faro (1981) 123 Cal.App.3d 558, 564-565.) The court has discretion to deny leave to amend when the party seeking the amendment has been dilatory and the delay has prejudiced the opposing party. (Hirsa v. Superior Court (1981) 118 Cal.App.3d 486, 490.)

Ordinarily, a judge will not consider the validity of the proposed amended pleading in deciding whether to grant leave to amend, since the opposing party will have the opportunity to attack the validity of the amended pleading after leave to amend is granted. (Kittredge Sports Co. v. Superior Court (1989) 213 Cal.App.3d 1045, 1048.) Indeed, leave to amend should be denied only where the facts are not in dispute, and the nature of the plaintiff’s [cross-complainant’s] claim is clear, but under substantive law, no liability exists and no amendment would change the result. (Edwards v. Superior Court (2001) 93 Cal.App.4th 172, 180.)

PRFM and Mortgage Co. vehemently oppose, contending that the proposed SACC changes the nature of the action, after Lindros’ death and the completion of substantial discovery, in now seeking the loss of a business opportunity rather than mere loss of the property and its entitlements. However, an analysis of the FACC reveals that, while the loss of a business opportunity was not clearly and explicitly articulated, that loss is fairly inferable from the allegations which were made therein. Aguila expressly articulated that the Option Agreement required PRFM and Lindros to allow him at least 12 months, during which he would continue the make the necessary efforts and pay the costs to maintain the property, in order to either obtain sufficient funds himself to pay off the PRFM loan, or to find a suitable buyer which would allow him to do so, and that in exchange he or his assignees, partners, or replacement purchasers would obtain clear title to the property. In articulating, as part of the agreement, that he wished to separately obtain sufficient funds to pay off the loan and obtain clear title in the property for himself (or, presumably, TAI), he has alleged an intent—if possible—to retain the property and operate a business on the premises pursuant to the CUP and liquor license he had worked to obtain. The Court has no information on whether cross-defendants’ discovery led to any articulation of the loss of the business opportunity as an item of damages and, of course, whether Aguila is able to prove the allegations at trial is an entirely different question, not currently before the Court.

PRFM and Mortgage Co., as well as Baschung, Thapar, and Keller Williams, all contend they have been prejudiced by the delay in seeking to amend the cross-complaint, pointing—among other things—to the intervening death of Carl Lindros. Of course, the loss of Mr. Lindros’ testimony cuts both ways, impacting proof by both Aguila and the cross-defendants. Further, the assertion of a claim for loss of the business opportunity is a question of the damages sustained by Aguila that resulted from the conduct that was already the subject of his cross-complaint. As such, there is little that Mr. Lindros could add to the issue of the liability of any of these cross-defendants for that damage; the burden is squarely on Aguila’s shoulders in proving entitlement to such damages, assuming he is able to establish cross-defendants’ liability. 

Baschung, Thapar, and Keller Williams also contend that Aguila is judicially estopped from reinserting them into the action, after they had been dismissed. The argument is a complete misinterpretation and misconstrual of the judicial estoppel doctrine, which is patently inapplicable under the circumstances. Even under the case authority cited by cross-defendants, the doctrine is inapplicable. As set forth in that authority, Jackson v. County of Los Angeles (1997) 60 Cal.App.4th 171, 183, judicial estoppel applies when the same party has taken two positions in judicial or quasi-judicial administrative proceedings, the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true), the two positions are totally inconsistent, and the first position was not taken as a result of ignorance, fraud or mistake.

All that Aguila did was to dismiss cross-defendants, without prejudice, in response to assurances and representations made by their counsel. He was not “successful in asserting the first position,” i.e. dismissing cross-defendants, because this Court took no action and made no finding that adopted any position by Aguila, or accepted anything represented by Aguila as true. Further, simply dismissing parties without prejudice is in no way inconsistent with amending to bring them back into the action when a party concludes that it is appropriate to do so. Judicial estoppel has no application.

All parties assert substantive challenges to the proposed SACC. As this Court already noted in denying Aguila’s original motion for leave, the better practice is to permit the amendment and then address the legal issues by demurrer or other appropriate motion. The Court will therefore not now address the challenges to SACC, including issues of standing, statute of limitations, or sufficiency of the allegations.

The Court therefore finds that the objections asserted by the cross-defendants in opposition to the motion for leave to file the SACC are insufficient to overcome the liberality with which courts must allow amendments. The motion for leave will therefore be granted. Mr. Aguila is directed to separately file his SACC forthwith.

The Court notes that Baschung, Thapar, and Keller Williams purported to “specially appear,” in order to oppose the motion. However, the nature of the opposition papers appears to this Court to have constituted a general appearance in the action, regardless of whether these parties have or have not been served with summons or appeared in the action subsequent to their dismissal without prejudice. 

A general appearance by a party is equivalent to personal service of summons upon the party. (Code Civ. Proc., § 410.50, subd. (a).) A general appearance is made by any participation in an action in a manner that recognizes the court’s jurisdiction, prior to filing a motion to quash. If the defendant raises an issue for resolution or seeks relief available only if the court has jurisdiction over the defendant, then the appearance is a general one. (Factor Health Management v. Superior Court (2005) 132 Cal.App.4th 246, 250.) Once acquired, jurisdiction of the court over the parties and the subject matter of an action continues throughout subsequent proceedings in the action. (Code Civ. Proc., § 410.50, subd. (b).)

A party can preserve objections to personal jurisdiction only by making a special appearance for the sole purpose of objecting to the court’s jurisdiction. (In re Marriage of Obrecht (2016) 245 Cal.App.4th 1, 8.) However, simply designating an appearance as being a special appearance is not controlling. Rather, if a party purporting to make only a “special appearance” seeks relief on any basis other than lack of personal jurisdiction, the appearance is a general appearance. (See Szynalski v. Superior Court (2009) 172 Cal.App.4th 1, 10.)

Here, Baschung, Thapar, and Keller Williams sought to have the court deny Aguila’s motion for leave to file his SACC, on grounds of judicial estoppel, timeliness, prejudice, and lack of sufficiency of the pleading. In doing so, they sought relief which recognized the court’s jurisdiction over them, thereby making a general appearance in the action. As a result, all further documents may be served upon their counsel, and personal service of the SACC upon them is not required.

The Court is aware of the errata re request for judicial notice filed on 3/11/20 but will not address the request or its implications, if any, at this hearing.

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