Filed 2/21/18 The Martha E. Sanfilippo Foundation v. Almaden Corner, LLC CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

SIXTH APPELLATE DISTRICT

THE MARTHA E. SANFILIPPO FOUNDATION,

Plaintiff and Respondent,

v.

ALMADEN CORNER, LLC,

Defendant and Appellant.
H042329
(Santa Clara County
Super. Ct. No. 1 13 CV258095)

Almaden Corner, LLC (Almaden) appeals the trial court’s judgment after the court denied its motion to file a cross complaint against the plaintiff and respondent in this case, The Martha E. Sanfilippo Foundation (Sanfilippo). Almaden contends that the court erred because the cross complaint was compulsory and Almaden did not act in bad faith.
STATEMENT OF THE FACTS AND CASE
In 2010, Sanfilippo loaned Almaden $500,000 secured by a promissory note and deed of trust on real property located in downtown San Jose. Sanfilippo sued Almaden in 2013 alleging breach of contract, common counts and seeking judicial foreclosure on the property because Almaden failed to re pay the loan on time. Almaden answered the complaint and denied the allegations.
On January 12, 2015, the date the court trial was to begin, Almaden brought a motion seeking to file a cross complaint against Sanfilippo. The proposed cross complaint alleged claims of breach of contract and common counts related to the loan transaction between Almaden and Sanfilippo. Specifically, Almaden alleged that it lent the funds it received through its loan from Sanfilippo to another entity, Almaden Tower Venture LLC (Tower) and that Tower’s repayment of its loan from Almaden was necessary for Almaden to repay Sanfilippo. It also alleged that Tower used the funds from the loan to meet other obligations to third party lenders associated with a real estate development plan in San Jose and did not re pay Almaden. Finally, the cross complaint alleged that Sanfilippo engineered Tower’s nonpayment of its loan from Almaden so that Almaden would be unable to re pay the original load from Sanfilippo and Sanfilippo could foreclose on Almaden’s property.
The trial court denied Almaden’s request to file the cross complaint, expressing its frustration with Almaden’s counsel’s timing on the morning of trial. The court stated, “What did I ever do to you to make you treat this department with such rudeness?” The court repeated the reprimand stating, “What did I ever do to you? It’s just really disappointing to get an attorney that would act this way. We’re on a tight schedule. We have to have this done because we have to move.” The court denied the motion, stating, “I don’t see it’s compulsory in any way, shape, or form.”
The matter proceeded to trial, and the trial court ordered foreclosure of the deed of trust on the property, and a judgment of $684,184.13 against Almaden. Almaden filed a timely notice of appeal.
DISCUSSION
Under California’s compulsory cross complaint statute, “if a party against whom a complaint has been filed and served 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, such party may not thereafter in any other action assert against the plaintiff the related cause of action not pleaded.” (Code Civ. Proc., § 426.30, subd. (a).) The phrase “related cause of action” is defined as “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.” (Id., § 426.10, subd. (c).) We review the question of whether a cross-complaint alleged a “related cause of action” de novo. (Ibid.; see also Align Technology, Inc. v. Tran (2009) 179 Cal.App.4th 949, 958 [court considered whether allegations challenged in demurrer constituted a compulsory cross complaint].)
In Align Technology, Inc. v. Tran, supra, 179 Cal.App.4th 949, this court considered “relatedness” for the purpose of a compulsory cross complaint. As we explained, relatedness “ ‘requires “not an absolute identity of factual backgrounds for the two claims, but only a logical relationship between them.” [Citation.] This logical relationship approach is the majority rule among the federal courts [citation].’ ” (Id. at p. 960.) A logical relationship is determined by whether the claims “involve common issues of law and fact,” an “overlap of issues,” and a common transaction. (Currie Medical Specialties, Inc. v. Bowen (1982) 136 Cal.App.3d 774, 777.)
Here, the claims in Almaden’s cross complaint are compulsory, because they are logically related to Sanfilippo’s complaint. The basis of Almaden’s cross complaint is that Sanfilippo engineered Almaden’s nonpayment of the loan through its connection to Tower’s use of funds for other real estate development projects. These claims arise out of the loan transaction that is the subject of Sanfilippo’s breach of contract and foreclosure causes of action alleged against Almaden in the original complaint. (Code Civ. Proc., § 426.10, subd. (c).) There is clearly an overlap of issues and a common transaction to support a finding that Almaden’s cross complaint is compulsory in this case.
In denying Almaden’s request, the trial court stated that it did not consider the cross complaint compulsory; however, it appeared the trial court denied the request in large part because Almaden made it on the morning of trial. The law is clear that a party may request to file a compulsory cross complaint “at any time during the course of the action.” (Code Civ. Proc., § 426.50, italics added.) Moreover, a court “shall grant, upon such terms as may be just to the parties, leave to . . . file the cross compliant, 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.” (Ibid., italics added.)
A trial court must allow a party to file a compulsory cross complaint unless that party has acted in bad faith. (Silver Organizations Ltd. v. Frank (1990) 217 Cal.App.3d 94, 98.) “Factors such as oversight, inadvertence, neglect, mistake or other cause, are insufficient grounds to deny the motion unless accompanied by bad faith.” (Id. at p. 99.) “ ‘Bad faith’ is defined as ‘[t]he opposite of “good faith,” generally implying or involving actual or constructive fraud, or a design to mislead or deceive another, or a neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an honest mistake . . . , but by some interested or sinister motive[,] . . . not simply bad judgment or negligence, but rather . . . the conscious doing of a wrong because of dishonest purpose or moral obliquity; . . . it contemplates a state of mind affirmatively operating with furtive design or ill will.’ ” (Pugh v. See’s Candies, Inc. (1988) 203 Cal.App.3d 743, 764.)
Here, there is nothing in the record showing that Almaden engaged in a “ ‘conscious doing of wrong because of a dishonest purpose.’ ” (Pugh v. See’s Candies, Inc., supra, 203 Cal.App.3d at p. 764.) While Almaden’s attempt to file the cross complaint was at the 11th hour, Almaden’s counsel represented to the trial court that the claims against Sanfilippo were discovered during settlement negotiations on the eve of trial. There is no evidence that Almaden acted in bad faith. The cross complaint was compulsory and the trial court erred in denying Almaden’s request to file it.
DISPOSITION
The judgment is reversed.






Premo, J.





WE CONCUR:






Elia, Acting P.J.








Mihara, J.












The Martha E. Sanfilippo Foundation v. Almaden Corner, LLC
H042329