The Fox Law Office

The Fox Law Office 1 JOHN C. FOX (State Bar No. 259886) 985 University Avenue, Suite 26 2 Los Gatos, CA 95032 3 Tel: (408) 402-5524/Fax: (408) 402-5525 E-mail: [email protected] 4 Attorney for Plaintiff 5 6 SUPERIOR COURT OF THE STATE OF CALIFORNIA 7 COUNTY OF SANTA CLARA 8 9 Zoey North, doing business as North Medical Billing Service, Case No. 1-09-CV-144375 10 Plaintiff, 11 NOTICE OF MOTION AND MOTION vs. FOR LEAVE TO FILE AMENDED 12 COMPLAINT; MEMORANDUM IN Douglas Phan, M.D., SUPPORT; AND DECLARATION OF 13 Defendant. JOHN C. FOX 14 Hearing Date: July 22, 2010 15 Hearing Time: 9:00 A.M.

16 Dept. No. 9 Judge: Hon. Mark Pierce 17 18 Filing Date: June 9, 2009 19 Trial Date: Not set 20 21 22 23 24 25 26 27 ______28 __ MOTION FOR LEAVE TO AMEND COMPLAINT 1 NOTICE OF MOTION FOR LEAVE TO FILE AMENDED COMPLAINT 2 TO EACH PARTY AND TO COUNSEL OF RECORD FOR EACH PARTY: 3 YOU ARE HEREBY NOTIFIED THAT on July 22, 2010 at 9:00 A.M. in Department 9 of this 4 Court, located at 191 North First Street, San Jose, California, plaintiff Zoey North will move the Court 5 for an order permitting the filing of an amended complaint. A copy of the proposed amended pleading 6 is attached as Exhibit A. 7 The proposed amendments will add: (1) allegation 20 starting at page 3, line 12; (2) allegations 8 24 through 56 starting at page 3, line 26 of the proposed First Amended Complaint. The proposed 9 amendments will also add paragraph 2 to the prayer for relief starting at page 9, line 13 of the 10 proposed First Amended Complaint. The motion will be made on the ground that it is in the interests 11 of justice and of judicial efficiency to allow the proposed amendment because the amendment is 12 related to the subject matter of the existing controversy between the parties and will not result in 13 prejudice to the defendant. Allowing the amendment would therefore promote the efficient resolution 14 of all claims between the parties. 15 Plaintiff also requests an order that the attached proposed amended complaint be deemed to be 16 the amended complaint and that it be deemed filed and served as of the date the motion is granted. 17 The motion will be based upon this notice, the attached memorandum in support and 18 declaration of John C. Fox, the files and records in this action and any further evidence and argument 19 that the Court may receive at or before the hearing. 20 21 Date: June 14, 2010 THE FOX LAW OFFICE 22 23 ______24 John C. Fox, Attorney for Plaintiff 25 26 27 ______28 __ NOTICE OF MOTION 1 MEMORANDUM OF POINTS AND AUTHORITIES 2 Plaintiff Zoey North submits this memorandum of points and authorities in support of her 3 motion for leave to file an amended complaint. Plaintiff proposes to add (1) allegation 20 starting at 4 page 3, line 12 and (2) allegations 24 through 56 starting at page 3, line 26 of the proposed First 5 Amended Complaint. The proposed amendments will also add paragraph 2 to the prayer for relief at 6 page 9, line 13 of the proposed First Amended Complaint. 7 I. STATEMENT OF FACTS 8 A. Allegations in the original complaint 9 The original complaint alleges that on November 24, 2004 Plaintiff Zoey North, d.b.a. North 10 Medical Billing Service (“NMBS”) and Defendant, Douglas Phan, M.D., entered into a written contract 11 titled “Medical Billing Services Agreement” (“MBSA”), a true copy of which is attached as Exhibit B. 12 (Declaration of John C. Fox (“Fox Decl.”) ¶ 1). Under the MBSA, Plaintiff would bill Defendant’s 13 patients and file claims with their insurance carriers. (Fox Decl. ¶ 2). In turn, Defendant was to pay 14 Plaintiff 7% of the amounts he received arising from her billings. (Fox Decl. ¶ 3). 15 The complaint also alleges that after Defendant’s repeated failures to report the extent of his 16 receipts accurately and to pay Plaintiff as agreed, she terminated the MBSA in approximately July of 17 2007. (Fox Decl. ¶ 4). On June 9, 2009 Plaintiff filed a complaint for breach of contract and for 18 reformation of the MBSA. (Fox Decl. ¶ 5). Plaintiff seeks approximately $53,000 in compensatory 19 damages. (Fox Decl. ¶ 6). There is no dispute that the parties entered into the MBSA; this dispute 20 revolves around breach and damages. (Fox Decl. ¶ 7). 21 B. Facts necessitating this motion 22 A trial date for this case has not yet been set. (Fox Decl. ¶ 8). A trial setting conference is 23 scheduled for August 3, 2010. (Fox Decl. ¶ 9). Barring further problems with Defendant’s discovery, 24 there is no reason why Plaintiff would be unable to conduct the trial 90-120 days after that date. (Fox 25 Decl. ¶ 10). 26 Plaintiff brought this motion as soon as she reasonably could once facts came to light 27 ______28 1 MEMORANDUM OF POINTS AND AUTHORITIES 1 supporting causes of action for fraudulent deceit. (Fox Decl. ¶ 11). When the original complaint was 2 filed, Plaintiff knew that Defendant had not reported all funds he had received as a result of her billings 3 and had not paid her accordingly. (Fox Decl. ¶ 12). However, she did not have sufficient or specific 4 facts to show that Defendant’s misrepresentations and concealment of payments were intentionally 5 done. (Fox Decl. ¶ 13). 6 In response to discovery Plaintiff propounded in November of 2009, Defendant produced no 7 billing records. (Fox Decl. ¶ 14). He claims that his now ex-wife stole them all around May of 2007. 8 (Fox Decl. ¶ 15). However, he has even refused to turn over records he obtained after that date. (Fox 9 Decl. ¶ 16). After many attempts to meet and confer, Plaintiff had no other choice but to file a motion 10 to compel further responses. (Fox Decl. ¶ 17). That motion will be heard on August 13, 2010. (Fox 11 Decl. ¶ 18). 12 At considerable expense, in May of 2010 Plaintiff investigated a small sample of claims for 13 which Defendant claimed he had not been paid. (Fox Decl. ¶ 19). She uncovered specific information 14 regarding dozens of concealed payments totaling thousands of dollars. (Fox Decl. ¶ 20). Once Plaintiff 15 realized that there are almost certainly hundreds of such concealed payments, she realized that 16 Defendant’s failure to disclose them was not the result of an innocent oversight or sloppy bookkeeping 17 practices. (Fox Decl. ¶ 21). Defendant’s concealment of those payments was a long-term fraud 18 whereby he made intentional misstatements and concealed payments in order to induce Plaintiff to keep 19 performing under the MBSA while he lined his pockets with money that should have paid to her. (Fox 20 Decl. ¶ 22). Once Plaintiff had sufficient information to plead fraud with the requisite particularity, she 21 filed this motion. (Fox Decl. ¶ 23). 22 II. DISCUSSION 23 A. Applicable Law 24 The court may, in furtherance of justice, and on any terms as may be proper, allow a party to 25 amend any pleading at any stage of the action. C.C.P. § 473(a)(1); and see C.C.P. § 576. Motions for 26 leave to amend a pleading are directed to the sound discretion of the court. Id. Courts are bound to 27 ______28 2 MEMORANDUM OF POINTS AND AUTHORITIES 1 apply a policy of great liberality in permitting amendments to the complaint at any stage of the 2 proceedings, up to and including trial, absent prejudice to the opposing party. Atkinson v. Elk Corp., 3 109 Cal.App.4th 739, 761 (2003); and see Arthur L. Sachs, Inc. v. City of Oceanside, 151 Cal.App.3d 4 315, 319 (1984) (holding it was error to deny an amendment on the eve of trial to add a fraud count, 5 where the delay was attributable to the opposing party’s failure to comply with discovery requests and 6 no prejudice to that party was shown). 7 If the motion to amend is timely made and the granting of the motion will not prejudice the 8 opposing party it is an abuse of discretion to deny leave to amend where refusal would result in the 9 moving party being deprived of the right to assert a meritorious cause of action. Morgan v. Sup. Ct., 10 172 Cal.App.2d 527, 530 (1959). The motion is timely if granting the motion does not result in delay 11 of the trial. See id. The motion is timely even if it delays trial if delays in bringing the motion are 12 caused by the opposing party’s failure to produce items in discovery to which the moving party is 13 clearly entitled. See Arthur L. Sachs, Inc. v. City of Oceanside, 151 Cal.App.3d at 319. No prejudice 14 to the opposing party exists if the amendment does not require delaying the trial, or result in added 15 costs of preparation for trial, or increased burden of discovery. See Hirsa v. Sup. Ct. (Vickers), 118 16 Cal.App.3d 486, 490 (1981). 17 As set forth below, Plaintiff will demonstrate that her motion for leave to file an amended 18 complaint should be granted because (1) it is timely made and (2) granting of the motion will not 19 prejudice Defendant. 20 B. Plaintiff’s motion to amend is timely because it most likely will not delay the trial of this 21 case. If there is any delay, it will be because of Defendant’s failure and refusal to produce 22 information in discovery to which Plaintiff is clearly entitled. 23 Plaintiff’s motion to amend is timely because granting the motion most likely will not delay 24 trial of this case. A trial date for this case has not yet been set. A trial setting conference is scheduled 25 for August 3, 2010. Barring further problems with Defendant’s discovery, there is no reason why 26 Plaintiff would be unable to conduct the trial 90-120 days after that date. Since the allegations 27 ______28 3 MEMORANDUM OF POINTS AND AUTHORITIES 1 underlying the fraud causes of action to be added are almost identical to the existing breach of contract 2 cause of action, discovery and preparation for trial should not take significantly longer for either 3 Plaintiff or Defendant. 4 If there are any delays bringing this case to trial, they will be attributable to Defendant’s failure 5 and refusal to produce information in discovery to which Plaintiff is clearly entitled. Plaintiff brought 6 this motion as soon as she reasonably could once facts supporting the fraudulent deceit causes of action 7 came to light. At the time Plaintiff filed the original complaint, she did not have facts sufficient to 8 plead fraud with the requisite particularity. Plaintiff was informed and believed that Defendant had not 9 reported all funds he had received as a result of her billings and had not paid her accordingly. 10 However, she did not have specific facts regarding undisclosed payments and she did not know the 11 extent of the undisclosed payments. 12 In response to Plaintiff’s discovery propounded in November of 2009, Defendant produced no 13 billing records. He implausibly claims that his now ex-wife stole them all around May of 2007. 14 However, he has refused even to turn over records that were created after that date. After many 15 attempts to meet and confer regarding production of these records, Plaintiff had no choice but to file a 16 motion to compel further responses. That motion is scheduled for hearing on August 13, 2010. 17 By May of 2010, Plaintiff had tired of waiting for Defendant to produce billing records in 18 discovery. At considerable expense, she conducted an investigation into a small sample of claims for 19 which Defendant claimed he had never been paid. She obtained specific information regarding dozens 20 of claims totaling thousands of dollars which Defendant had concealed from her. Once she realized 21 that there are almost certainly hundreds of other such undisclosed payments, she realized that 22 Defendant’s failure to disclose was not the result of an innocent oversight or sloppy bookkeeping 23 practices. Defendant’s failure to disclose those receipts was the result of a deliberate and long-term 24 fraud whereby he made intentional misstatements and concealed his receipts in order to induce Plaintiff 25 to keep performing under the MBSA while he lined his pockets with money that he owed to Plaintiff. 26 With sufficient information in hand to plead fraud with the requisite particularity, Plaintiff filed this 27 ______28 4 MEMORANDUM OF POINTS AND AUTHORITIES 1 motion as soon as she was able. 2 For the reasons discussed above, Plaintiff’s motion to amend is timely. 3 C. Granting this motion will not prejudice Defendant because amendment will not require 4 delaying the trial, increase Defendant’s cost of trial preparation, or increase his burden of 5 discovery. 6 Granting this motion will not prejudice Defendant because amendment will not require delaying 7 the trial, increase Defendant’s cost of trial preparation, or increase his burden of discovery. The trial 8 date most likely will not be delayed because it has not been set yet. A trial setting conference is 9 scheduled for August 3, 2010. Barring further problems with Defendant’s discovery, there is no reason 10 why Plaintiff would be unable to conduct the trial 90-120 days after that date. Since the allegations 11 underlying the fraud causes of action to be added are almost identical to the existing breach of contract 12 cause of action, discovery and preparation for trial should not take significantly longer for either 13 Plaintiff or Defendant. 14 Defendant’s burden of discovery most likely will not be affected either. Assuming Defendant 15 eventually produces the billing records to which Plaintiff is entitled, Plaintiff will use those same 16 records to prove both her fraud and contract causes of action. For the reasons stated above, Defendant 17 will not be prejudiced by granting this motion. 18 III. CONCLUSION 19 Plaintiff respectfully asks that this Court grant her motion for leave to file an amended 20 complaint for the reasons discussed above. 21 22 Date: June 14, 2010 THE FOX LAW OFFICE 23 24 ______25 John C. Fox, Attorney for Plaintiff 26 27 ______28 5 MEMORANDUM OF POINTS AND AUTHORITIES 1 DECLARATION IN SUPPORT OF JOHN C. FOX 2 1. The original complaint alleges that on November 24, 2004 Plaintiff Zoey North, d.b.a. 3 North Medical Billing Service (“NMBS”) and Defendant, Douglas Phan, M.D., entered into a written 4 contract titled “Medical Billing Services Agreement” (“MBSA”). 5 2. Under the MBSA, Plaintiff would bill Defendant’s patients and file claims with their 6 insurance carriers. 7 3. In turn, Defendant was to pay Plaintiff 7% of the amounts he received arising from her 8 billings. 9 4. The complaint also alleges that after Defendant’s repeated failures to report the extent 10 of his receipts accurately and to pay Plaintiff as agreed under the MBSA, she terminated the contract 11 in approximately July of 2007. 12 5. On June 9, 2009 Plaintiff filed a complaint for breach of contract and for reformation of 13 the MBSA. 14 6. Plaintiff seeks approximately $53,000 in compensatory damages. 15 7. There is no dispute that the parties entered into the MBSA; this dispute revolves around 16 breach and damages. 17 8. A trial date for this case has not yet been set. 18 9. A trial setting conference is scheduled for August 3, 2010. 19 10. Barring further problems with Defendant’s discovery, there is no reason why Plaintiff 20 would be unable to conduct the trial 90-120 days after that date. 21 11. Plaintiff brought this motion as soon as she reasonably could once facts came to light 22 supporting causes of action for fraudulent deceit. 23 12. At the time the original complaint was filed, Plaintiff knew that Defendant had not 24 reported all funds he had received as a result of her billings and had not paid her accordingly. 25 13. However, she did not have sufficient or specific facts to show that Defendant’s 26 misrepresentations and concealment of payments were intentionally done. 27 ______28 1 DECLARATION IN SUPPORT OF JOHN C. FOX 1 14. In response to discovery Plaintiff propounded in November of 2009, Defendant 2 produced no billing records at all. 3 15. He claims that his now ex-wife stole them all around May of 2007. 4 16. However, he has even refused to turn over records he obtained after that date. 5 17. After many attempts to meet and confer, Plaintiff had no other choice but to file a 6 motion to compel further responses. 7 18. That motion will be heard on August 13, 2010. 8 19. At considerable expense, in May of 2010 Plaintiff investigated a small sample of claims 9 for which Defendant claimed he had not been paid. 10 20. Plaintiff uncovered specific information regarding dozens of concealed payments 11 totaling thousands of dollars. 12 21. Once Plaintiff realized that there are almost certainly hundreds of other such concealed 13 payments, she realized that Defendant’s failure to disclose the payments was not the result of an 14 innocent oversight or sloppy bookkeeping practices. 15 22. Defendant’s concealment of those payments was a long-term fraud whereby he made 16 intentional misstatements and concealed payments in order to induce Plaintiff to keep performing 17 under the contract while he lined his pockets with money that should have been paid to her. 18 23. Once Plaintiff had sufficient information to plead fraud with the requisite particularity, 19 she filed this motion. 20 I declare under penalty of perjury under the laws of the State of California that the foregoing is 21 true and correct. 22 23 24 Date: June 14, 2010 ______

25 John C. Fox, Attorney for Plaintiff 26 27 ______28 2 DECLARATION IN SUPPORT OF JOHN C. FOX