April 24, 2026|Franchise Frontlines
April 24, 2026 | California Court of Appeal, Fourth District, Division One | Published Opinion
Executive Summary
In a published writ decision, Justice Truc T. Do of the California Court of Appeal, Fourth District, Division One, granted employee Karla Amezcua’s petition for writ of mandate and directed the trial court to strike a payment condition from an order allowing her to amend her complaint to add Massage Envy Franchising, LLC as a DOE defendant. Amezcua originally sued Securecare, Inc., a Massage Envy franchisee, and its principal for wrongful termination, unfair business practices, and Labor Code violations. After late-produced documents and deposition testimony allegedly suggested a possible basis to add Massage Envy, she sought leave to amend. Massage Envy demurred, arguing the complaint did not state facts supporting franchisor liability and that a franchisor is not liable merely because of its franchise relationship with the plaintiff’s employer. The trial court sustained the demurrer but granted leave to amend only if Amezcua paid $25,000 toward Massage Envy’s attorney fees and costs. The Court of Appeal held that Code of Civil Procedure section 473 did not authorize the trial court to shift attorney fees as a condition of amendment and directed the trial court to strike the fee condition to the extent it included attorney fees. The court did not decide whether Massage Envy was a joint employer, whether it controlled the franchisee’s wage practices, or whether the proposed amended complaint stated viable claims against the franchisor.
Relevant Background
Amezcua sued Securecare, Inc., its principal, and DOE defendants in January 2022. She alleged wrongful termination, unfair business practices, and several Labor Code violations. According to the complaint, Securecare operated a massage business in Chula Vista and did business as a Massage Envy franchisee. Massage Envy was not named as a defendant in the operative complaint at that stage.
During discovery, Securecare produced information that later became important to the amendment dispute. Securecare initially represented that it was not covered by an insurance policy. In May 2023, Securecare’s principal, Perez, testified that Securecare acquired the Massage Envy franchise location from a prior owner under a written contract, but Securecare later represented that documents relating to the sale had been lost or misplaced. In June 2024, Amezcua subpoenaed Massage Envy for documents relating to the sale. Massage Envy responded that it was the manager of an Arizona-based franchisor, did not own or operate any locations, and directed communications to the independent franchisee.
In December 2024, after the close of discovery, Securecare produced an employment practices liability insurance policy and the Business Asset and Franchise Purchase Agreement. The Purchase Agreement allegedly showed that Securecare did not purchase the entire prior business entity and that the seller would transfer its W-2 employees to Securecare while Securecare would not assume the seller’s liabilities. Amezcua contended those late-produced materials disclosed facts supporting the addition of four DOE defendants, including Massage Envy.
Amezcua moved to amend the complaint to add Massage Envy, among others. As to Massage Envy, she argued that the Purchase Agreement suggested the franchisor may have approved the franchise-rights transfer on terms that could affect employee recovery for wage-and-hour and employment claims. She also relied on deposition testimony regarding a “Massage Envy” franchise association and a “productivity matrix” allegedly used to address wage-and-hour lawsuits. The record was unclear whether that matrix came from Massage Envy, franchisees, or both. The trial court allowed the DOE amendment.
Amezcua then amended the complaint to add Massage Envy by DOE substitution, but she did not add substantive allegations specifically directed to Massage Envy. Massage Envy demurred, arguing that the complaint failed to allege facts supporting claims against it and that its status as franchisor of the alleged employer did not create liability as a matter of law. Massage Envy asked the court to deny leave to amend. Amezcua conceded that the complaint lacked sufficient allegations against Massage Envy but argued she could amend to allege facts supporting a theory of joint-employer or agency liability based on the specific relationship between franchisor and franchisee.
The proposed amended complaint alleged that Massage Envy exercised oversight amounting to joint-employer control in two ways. First, it alleged that Massage Envy participated in structuring the Purchase Agreement so that potential Labor Code liabilities would remain with an entity that would later be insolvent. Second, it alleged that Massage Envy developed the productivity matrix that governed Amezcua’s compensation while she worked at the Massage Envy location. Massage Envy continued to argue that the proposed amendment was legally insufficient and contrary to California precedent limiting franchisor liability based on ordinary brand oversight.
The trial court sustained Massage Envy’s demurrer and granted leave to amend, but sua sponte conditioned leave on Amezcua paying Massage Envy’s attorney fees and costs incurred in meeting and conferring and preparing the demurrer papers. Massage Envy requested more than $78,000. The trial court ultimately found $25,000 reasonable and imposed that amount as a condition of amendment under section 473.
Decision
The Court of Appeal held that the trial court lacked authority to condition leave to amend on payment of Massage Envy’s attorney fees under section 473. The court began with California’s default rule: unless attorney fees are specifically provided for by statute, the measure and mode of attorney compensation is left to the agreement of the parties. That rule, codified in section 1021, reflects California’s version of the American Rule.
The court then examined section 473. Section 473 allows courts, in furtherance of justice and on proper terms, to permit amendments to pleadings. It also allows a court to require payment of “costs” when an amendment makes postponement of trial necessary. But the statute does not specifically authorize an award of attorney fees as a condition of leave to amend. That omission controlled the result.
The Court of Appeal acknowledged that some California practice treatises have read older case law to suggest that trial courts may condition leave to amend on payment of an opposing party’s attorney fees. The court rejected that broad reading. It distinguished older cases involving trial delays and litigation expenses, explaining that those decisions either did not clearly involve attorney fees or had been superseded by later statutory developments.
The court emphasized that, after legislative amendments to sections 473 and 1021, fee shifting must be grounded in express statutory authority or party agreement. Section 473 does not supply that authority. The court therefore held that section 473 does not authorize fee-shifting orders as a means to address improper litigation tactics in the context of amendments and pleading challenges.
The Court of Appeal also explained why the trial court’s reasons were problematic. First, the trial court had relied in part on Amezcua’s alleged failure to satisfy the meet-and-confer process required before demurrer practice under section 430.41. But section 430.41 contains no fee-shifting provision and expressly provides that an insufficient meet-and-confer process is not grounds to overrule or sustain a demurrer. The Court of Appeal reasoned that imposing a $25,000 attorney-fee condition indirectly violated that limitation.
Second, the Court of Appeal noted that California has specific statutes governing sanctions for frivolous filings, bad-faith tactics, and improper litigation conduct, including sections 128.5 and 128.7. Those statutes include procedural safeguards, including safe-harbor requirements and specific factual findings. The trial court did not proceed under those statutes, and the required safeguards were absent.
The court granted writ relief and directed the trial court to strike the payment condition to the extent it included attorney fees. The Court of Appeal did not decide whether Massage Envy could ultimately be liable. It did not decide whether the proposed amended complaint stated a valid joint-employer, agency, conspiracy, or vicarious-liability theory. It decided only that section 473 did not authorize the attorney-fee condition imposed as part of the leave-to-amend order.
Looking Forward
This decision matters to franchisors because it shows how a franchisee employment case can evolve procedurally. Massage Envy was not named at the outset. The plaintiff first sued the franchisee/operator and its principal. Only later, after discovery disputes and late-produced documents, did the plaintiff seek to add the franchisor as a DOE defendant. That sequence is familiar in California litigation, where DOE pleading practice can give plaintiffs a procedural path to add new defendants after the case has developed.
The decision does not expand franchisor liability. It should not be read as a holding that Massage Envy employed the plaintiff, controlled Securecare’s wage practices, approved an unlawful transaction, or participated in any Labor Code violation. The franchisor-liability allegations remained contested, and the Court of Appeal did not reach them. That limitation is important for franchisors defending employee claims brought by franchisee employees.
The practical lesson is procedural. Franchisors added late to California employment cases may have strong demurrer arguments when the complaint contains only conclusory allegations of franchisor involvement. But if the court allows amendment, this decision confirms that section 473 does not authorize a fee-shifting condition merely because the amendment could have been handled more efficiently. Franchisors should preserve arguments under the correct procedural tools, including demurrer, motions to strike, discovery management, and, where appropriate, sanctions statutes that contain the required safeguards.
The case also highlights the importance of franchise transaction documentation. The plaintiff’s attempt to add Massage Envy was tied in part to the franchise sale and transfer documents. Franchisors should assume that franchise transfers, purchase agreements, approval communications, insurance materials, and operational documents may become relevant in later employee litigation involving the franchisee. Clear drafting and careful preservation of the franchisor’s role in approving a transfer may help avoid later arguments that ordinary franchise approval amounted to control over employment liabilities or wage practices.
The “productivity matrix” allegation also deserves attention. The opinion does not establish who created the matrix, whether Massage Envy had any role in it, or whether it governed compensation. But the allegation illustrates a recurring risk: plaintiffs may try to characterize compensation tools, operational templates, franchisee association materials, or brand-system guidance as evidence that the franchisor controlled employment practices. Franchisors should be careful when distributing materials that touch scheduling, productivity, wages, commissions, breaks, or labor management. If materials are intended as optional business guidance rather than mandatory employment policy, that distinction should be clear.
For franchise systems, the safest framing remains the familiar one: brand standards and operational support should protect the brand without assuming control over franchisee employment decisions. California courts have repeatedly scrutinized whether a franchisor actually controls wages, hours, working conditions, hiring, firing, supervision, or day-to-day employment policies. This decision does not change that substantive analysis, but it shows that procedural skirmishes over amendment and DOE practice can force franchisors into litigation before those merits issues are resolved.
The case also reinforces the need for early litigation strategy when a franchisor receives a subpoena in a franchisee employment case. Massage Envy responded to a subpoena by stating that it did not own or operate locations and directed communications to the franchisee. That may be accurate and appropriate, but franchisors should evaluate subpoena responses with an eye toward later amendment attempts. A clean record explaining the franchisor’s limited role may become important if the plaintiff later seeks to add the franchisor.
Finally, the decision is useful for civil procedure beyond franchising. Courts have tools to address dilatory tactics, inefficient amendment practice, and misuse of pleading procedures. But those tools must come from statute, rule, or agreement. Section 473 allows amendments on proper terms, but it does not allow trial courts to shift attorney fees as an improvised sanction. If a party seeks attorney fees as a sanction, the request should be made under the statutes that actually authorize that remedy and with the procedural protections those statutes require.
Taken together, Amezcua v. Superior Court is a narrow but useful California franchise-litigation decision. It does not decide whether the franchisor belongs in the case. It does not decide whether a franchisor can be liable for a franchisee’s wage-and-hour practices. It holds that a trial court cannot condition leave to amend on payment of the franchisor’s attorney fees under section 473. For franchisors, the decision is a reminder to defend late-added employment claims on the merits while using the correct procedural and sanctions mechanisms when amendment practice becomes inefficient or unfair.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
