California Court of Appeal Limits Fee-Shifting When Employees Amend Employment Lawsuits
Late-stage amendments to an employment complaint can be costly, disruptive, and frustrating, particularly when they force a newly added defendant to respond to allegations that were not pleaded the first time around. But in Amezcua v. Superior Court, the California Court of Appeal drew a firm line: a court may not condition leave to amend a complaint on payment of the opposing party’s attorney fees unless a statute or contract specifically authorizes that fee award.
The case arose from a wage-and-hour and wrongful termination lawsuit brought by Karla Amezcua, a massage therapist who worked at a Massage Envy franchise location in Chula Vista. She sued her alleged employer, Securecare, Inc., and its owner, Robert Perez, alleging wrongful termination, unfair business practices, and several Labor Code violations, including claims involving wages, meal and rest periods, wage statements, and waiting time penalties.
The California Court of Appeal did not decide whether Amezcua’s claims against Massage Envy were legally sufficient. Instead, the published decision focused on the narrower procedural issue of whether the trial court had authority under Code of Civil Procedure section 473 to require Amezcua to pay $25,000 in Massage Envy’s attorney fees as a condition of amending her complaint.
The Late Discovery That Changed the Case
Amezcua’s original case did not name Massage Envy Franchising, LLC as a defendant. Massage Envy was the national franchisor. Securecare operated the Eastlake Chula Vista location as one of its franchisees.
According to the Court of Appeal’s summary, Securecare initially represented in discovery it was not covered by an insurance policy. Later, after mediation and after discovery had closed, Securecare produced an employment practices liability policy. Securecare also produced, for the first time, a Business Asset and Franchise Purchase Agreement concerning Securecare’s acquisition of the franchise location.
That purchase agreement complicated the factual picture. Amezcua had alleged the business formerly known as Eastlake Village ME changed its name to Securecare. But the purchase agreement indicated Securecare did not buy the entire business entity and assume all liabilities. Instead, the agreement required Eastlake Village ME to transfer employees to Securecare and stated Securecare would not assume, succeed to, or inherit Eastlake Village ME’s liabilities.
Based on those late-produced materials, Amezcua sought leave to add several Doe defendants, including Massage Envy. She alleged Massage Envy may have been involved in approving or structuring the transfer of franchise rights in a way affecting employee claims. She also relied on deposition testimony suggesting a “Massage Envy” franchise association had used an attorney to prepare a “productivity matrix” relating to wage-and-hour issues.
The trial court granted leave to add Massage Envy as a Doe defendant. But the complaint, as amended, did not add substantive factual allegations specifically explaining why Massage Envy itself was liable. Massage Envy then demurred.
Massage Envy’s Demurrer and the Proposed Amendment
Massage Envy argued the complaint failed to state facts supporting any claim against it. It also argued its role as franchisor of Amezcua’s alleged employer did not create liability as a matter of law.
Amezcua conceded the complaint did not contain enough factual allegations against Massage Envy as drafted. But she disputed Massage Envy’s broader legal position. She argued a franchisor is not automatically shielded from joint employer liability in every case and may be liable depending on the degree of control it retained or exercised over the franchisee.
Amezcua therefore asked for leave to amend and submitted a proposed second amended complaint. That proposed pleading alleged Massage Envy exercised joint employer-type control in two ways: by participating in structuring the purchase agreement in a way affecting potential Labor Code liabilities, and by developing the productivity matrix governing compensation.
Massage Envy continued to oppose amendment. It argued the proposed allegations were still legally insufficient, unsupported, and untimely.
The Trial Court Allowed Amendment, But Added a $25,000 Condition
The trial court sustained Massage Envy’s demurrer and granted Amezcua leave to amend. But the court also imposed a significant condition. Relying on Code of Civil Procedure section 473, subdivision (a), the court required Amezcua to pay Massage Envy’s reasonable attorney fees and costs incurred in meeting and conferring and preparing demurrer papers.
Massage Envy sought $78,668.90. The trial court found $25,000 reasonable.
The trial court reasoned Amezcua had prior opportunities to amend more fully and avoid the demurrer. In the trial court’s view, her failure to include substantive allegations against Massage Envy when she first added it as a Doe defendant, and her failure to amend in response to Massage Envy’s meet-and-confer efforts, caused unnecessary motion practice. But the Court of Appeal held the trial court lacked authority to shift attorney fees under section 473.
The Court of Appeal’s Core Holding
The Court of Appeal began with California’s version of the American rule. Under Code of Civil Procedure section 1021, attorney fees are left to the parties’ agreement unless fees are “specifically provided for by statute.”
Section 473 allows courts, “in furtherance of justice,” to permit amendments to pleadings “on any terms as may be proper.” It also allows a court, when amendment requires postponement of trial, to condition amendment on payment of “costs as may be just.” But section 473 does not specifically authorize an award of attorney fees.
That statutory difference controlled the outcome. The Court of Appeal held section 473 does not authorize courts to shift attorney fees as a condition of granting leave to amend. The court directed the superior court to strike the payment condition to the extent it included attorney fees.
Why “Costs” Did Not Mean Attorney Fees
The appellate court addressed older cases and treatises suggesting courts may condition amendment on payment of expenses. The court concluded those authorities did not support a broad rule allowing attorney fee awards under section 473.
The court discussed Fuller v. Vista Del Arroyo Hotel, a 1941 case allowing a trial court to require payment of expenses caused by delay. But the Court of Appeal noted Fuller did not specifically mention attorney fees, so it could not fairly be read as authorizing attorney fee shifting.
The court also discussed Williams v. Myer, a 1907 California Supreme Court decision involving expenses incurred in connection with a trial amendment. The Court of Appeal acknowledged Williams contained language referring to expenses incurred in the employment of attorneys. But it declined to read that language as a modern authorization for attorney fee shifting under section 473. The court emphasized later statutory changes, including the 1933 amendment to section 473 allowing payment of “costs” when trial postponement is required, and the 1933 amendment to section 1021 limiting attorney fee awards to those specifically authorized by statute or agreement.
The court also relied on Bauguess v. Paine, in which the California Supreme Court held trial courts do not have inherent supervisory power to award attorney fees as sanctions absent statutory authority.
In plain English, the court held the word “costs” does not silently include attorney fees. If the Legislature wants courts to shift attorney fees, it must say so.
The Meet-and-Confer Issue Did Not Change the Result
The trial court also relied on Amezcua’s conduct during the demurrer meet-and-confer process. The Court of Appeal found this problematic for an additional reason. Code of Civil Procedure section 430.41 requires parties to meet and confer before a demurrer, but it also states a court’s determination the meet-and-confer process was insufficient is not grounds to overrule or sustain a demurrer.
By conditioning leave to amend on payment of $25,000 in attorney fees based partly on the meet-and-confer process, the trial court effectively imposed a consequence not authorized by section 430.41.
That does not mean litigants can ignore meet-and-confer obligations without consequence. It means the consequence must come from a valid statutory source. The Court of Appeal pointed to sections 128.5 and 128.7 as examples of statutes that may permit sanctions for improper litigation conduct, but only when their procedural protections and required findings are satisfied. Those protections were absent here.
What Employers Should Take From the Decision
For employers and franchisors, Amezcua is useful in two different ways.
First, it is a reminder late-discovered documents can materially change employment litigation. Insurance policies, asset purchase agreements, franchise transfer documents, compensation formulas, and related corporate records may affect who gets named, what theories are asserted, and whether a plaintiff seeks to expand the case. Here, the late production of the insurance policy and purchase agreement helped trigger an effort to add multiple defendants, including the national franchisor.
Second, the decision confirms trial courts must use the correct statutory tools when responding to inefficient or potentially improper litigation conduct. Courts have broad discretion to manage pleadings and amendments, but attorney fee shifting requires a statutory or contractual basis. A court may be frustrated by delay or unnecessary motion practice, but section 473 does not itself authorize an attorney fee award as the price of amendment.
For employers defending employment cases, this distinction is important. If a plaintiff’s amendment causes delay, additional discovery, or unnecessary expense, the defense may have tools available, including opposition to amendment, discovery sanctions, cost-shifting where authorized, or sanctions under statutes such as Code of Civil Procedure sections 128.5 or 128.7 when the statutory requirements are met. But Amezcua warns against assuming a court can shift attorney fees simply by labeling them a condition of leave to amend.
The Bottom Line
Amezcua v. Superior Court does not decide whether Massage Envy can ultimately be liable for Amezcua’s alleged wage-and-hour and wrongful termination claims. It decides a procedural issue about whether section 473 allows courts to grant leave to amend conditioned on payment of attorney’s fees to one’s adversary.
The Court of Appeal granted Amezcua’s petition for writ of mandate and directed the trial court to strike the payment condition to the extent it included attorney fees. Costs in the writ proceeding were awarded to Amezcua.
Amezcua v. Superior Court was filed on April 24, 2026, by the California Court of Appeal, Fourth Appellate District, Division One, Case No. D087216. The Court of Appeal granted writ relief and directed the superior court to strike the condition requiring payment of Massage Envy’s attorney fees as a condition of granting leave to amend.