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1 DAVID H. SCHWARTZ (SBN 62693)
NANCY CHUNG (SBN 225584)
2 LAW OFFICES OF DAVID H. SCHWARTZ, INC.
423 Washington Street, Sixth Floor ELECTRONICALLY
3 San Francisco, CA 94111
Tel: (415) 399-9301; Fax: (415) 399-9878
F I L E D
Superior Court of California,
E-mail: dhs@lodhs.com, nchung@lodhs.com County of San Francisco
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12/31/2019
5 Attorneys for Plaintiff Clerk of the Court
BY: EDWARD SANTOS
JOHN LITZ Deputy Clerk
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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IN AND FOR THE CITY AND COUTY OF SAN FRANCISCO
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UNLIMITED JURISDICTION
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11
JOHN LITZ, ) CASE NO: CGC-19-580935
12 )
Plaintiff, )
13 ) AMENDED COMPLAINT
vs. )
14 ) (1) Anticipatory Breach of Written
SAYAT OZYILMAZ, LAURA GABRIELA ) Contract
15 OZYILMAZ, FFG Restaurant Group, Inc., a ) (2) Rescission of Contracts
California Corporation, and DOES 1-30, ) (3) Breach of Oral Contract
16 inclusive, ) (4) Breach of Covenant of Good Faith and
) Fair Dealing
17 ) (5) Promissory Fraud
Defendants. )
18 )
)
19 )
20
Plaintiff John Litz alleges the following:
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THE PARTIES
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1. Plaintiff John Litz is an individual residing in the City and County of San Francisco,
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State of California.
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2. Defendant Sayat Ozyilmaz (hereinafter “Sayat”) is an individual residing in the City
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and County of San Francisco.
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3. Defendant Laura Gabriela Millan Ozyilmaz (hereinafter “Laura”) is an individual
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residing in the City and County of San Francisco.
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1 4. Defendant FFG Restaurant Group, Inc. (“FFGRG” or the “Corporation”) is a
2 corporation, formed under California law, and has its principal place of business in San Francisco,
3 California. It is named in this Amended Complaint as a nominal defendant because it is a necessary
4 party, in that, this Amended Complaint seeks rescission of contracts to which FFGRG is a party.
5 5. At all relevant times, Defendants other than FFGRG were agents of each other and in
6 performing the actions alleged herein and were acting within the course and scope of such agency
7 and with the permission and consent of one another.
8 6. Plaintiff is ignorant of the true names of DOES 1 through 30, and therefore sues
9 Defendants under such fictitious names. Plaintiff is informed and believes and therefore alleges that
10 each of the Defendants designated herein as DOE is legally responsible in some manner for the
11 events and happenings herein referred to, and proximately caused injury and damages thereby to
12 Plaintiff as herein alleged. Plaintiff is informed and believes that DOES 1 through 30 are either
13 residents or citizens of the State of California and/or business entities doing business in the State of
14 California.
15 7. Plaintiff is informed and believes that at all times herein mentioned, Defendants
16 DOES 1 through 10, inclusive, the identity of whom are presently unknown to the Plaintiff, conspired
17 with each Defendant, and thereby assisted the named Defendants in the acts and omissions described
18 more fully herein.
19 8. The majority of the acts and/or omissions of the Defendants, as alleged herein, took
20 place and occurred within the City and County of San Francisco, in the State of California.
21 9. The amount of damages in controversy and demanded by Plaintiff is greater than
22 $25,000.00.
23 FACTUAL STATEMENT
24 10. Plaintiff John Litz is an entrepreneur and angel investor who has been involved in the
25 founding and operation of restaurants in Chicago and San Francisco.
26 11. In 2014, Plaintiff was a key person in the founding and establishment of Lazy Bear, a
27 restaurant in San Francisco. Lazy Bear has been given a number of world-recognized restaurant
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AMENDED COMPLAINT
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1 accolades, including a James Beard Nomination and a Two-star Michelin Guide Rating. Since 2014,
2 Lazy Bear has been successful not only with respect to reviews of its food, but financially.
3 12. In 2017, Plaintiff began working on a concept for a new restaurant that would feature
4 modern middle eastern food and offer a casual dining experience. He came up with a name for the
5 restaurant, “Noosh,” and began talking to various people in the San Francisco food and restaurant
6 business about possibly participating in the development and opening of a restaurant under the
7 “Noosh” name offering middle eastern fare in a casual dining experience.
8 13. In September of 2017, Plaintiff retained the law firm of Georgopoulos & Economidis,
9 LLP (“G&E”) to assist him in forming a corporation for the operation of the restaurant and a limited
10 liability company that would serve as a vehicle to attract investors and which would own a portion of
11 the restaurant property or properties to be developed under the “Noosh,” name.
12 14. On October 27, 2017, Roberta Economidis of G&E (“Economidis”) caused to have
13 Forward Food Group, LLC (the “(“LLC”) registered as a California limited liability company. The
14 registration form stated that the Forward Food Group, LLC would have one manager. On December
15 19, 2017, Roberta Economidis caused articles of incorporation for FFGRG to be filed with the
16 California Secretary of State. Roberta Economidis was listed as the incorporator.
17 15. In September of 2017, Plaintiff became aware of Laura and Sayat, who are a husband
18 and wife chef team. Laura and Sayat, had been doing “pop-up” food events using the name “Istanbul
19 Modern SF” through Feastly, an online pop-up dining platform. Their “pop-up” events had garnered
20 attention in the San Francisco food scene, and their middle eastern style cuisine fit in with Plaintiff’s
21 concept for his new restaurant. In his discussions with Laura and Sayat in 2017, they told Plaintiff
22 they had never opened a restaurant or had overall responsibility for managing a restaurant.
23 16. In discussions during the period from October – December 2017, Plaintiff offered to
24 have FFGRG employ them on an at-will basis as executive chefs for purposes of setting up the “back
25 of house,” (i.e., kitchen operations), in return for a monthly salary and the opportunity to purchase a
26 minority stock interest in the Corporation which was to vest over a four-year period, with the
27 understanding that if Defendants’ at will employment terminated, FFGRG would have the option to
28 repurchase all of Defendants’ unvested stock. Plaintiff informed Laura and Sayat that he was going to
AMENDED COMPLAINT
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1 be the Chief Executive Officer and the Chief Financial Officer, would set up and be responsible for
2 the “front of house” operations, as well as having ultimate authority over all aspects of the business.
3 Plaintiff informed Laura and Sayat that he would be receiving fully vested shares in the Corporation.
4 17. Initially, Plaintiff’s discussions with Defendants over their role in the prospective
5 business included a third potential principal. On or about December 19, 2017, Plaintiff, Laura, Sayat,
6 and the third potential principal met with Economides in her office, where Economides described
7 Laura and Sayat’s at-will employment by FFGRG, how shares in FFGRG would be issued to them,
8 the gradual vesting of their shares over a four-year period, (except for Plaintiff), and the right of
9 FFGRG to repurchase unvested shares if Laura or Sayat’s at-will employment ceased for any reason.
10 They also discussed that Plaintiff’s shares would vest immediately and not be subject to a vesting
11 schedule. Laura and Sayat stated they agreed with the terms laid out by Economidis.
12 18. Shortly after Christmas 2017, the third prospective principal dropped out. Plaintiff met
13 and discussed with Laura and Sayat that Plaintiff was prepared to offer Laura and Sayat an ownership
14 interest in FFGRG in return for their agreement to be employed at-will as executive chefs for the new
15 restaurant. Plaintiff offered to have the Corporation hire Defendants as executive chefs and give
16 them a right to purchase 40% of the Corporation’s stock with ownership vesting over four years, with
17 an option to the Corporation to repurchase non-vested stock of either Defendant if the Defendants’
18 employment terminated for any reason. Defendants responded by stating they wanted ultimately to
19 own a 50% interest in the new Corporation. Plaintiff acceded to their request for 50% of the stock
20 subject to the vesting and repurchase agreement that had been repeatedly discussed. Defendants
21 immediately agreed to those terms, i.e., that they would enter into at-will employment with the
22 Corporation as executive chefs, participate in the setting up of the back of house operations under the
23 overall authority of Plaintiff as CEO and, CFO, be compensated with monthly salaries of $5,000 per
24 month each as well as the right to each purchase 25,000 shares of common stock at $0.001 per share,
25 of which 5,000 shares would vest immediately, and the remaining 20,000 shares of unvested stock
26 would vest in equal monthly installments over four years so long as they remained in the
27 Corporation’s employ, and that should they be terminated for any reason, the FFGRG would have the
28 option to purchase all unvested shares for the amount paid for such shares and that upon exercise of
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1 its option the terminated Defendant would have no voting rights in the unvested shares. Again, it was
2 discussed and agreed that Plaintiff’s shares would not be subject to a vesting schedule, but rather,
3 would vest immediately.
4 19. Relying on Defendants’ stated agreement with the basic terms. Plaintiff instructed
5 Economidis, along with independent Liquor License Expeditor Carrie Peters, to apply to the
6 Alcoholic Beverage Commission for a license for FFGRG and prepare organizational papers for
7 FFGRG.
8 20. Economidis, as the incorporator of FFGRG, on January 2, 2018 signed a document
9 entitled Action of Sole Incorporator of FFG Restaurant Group, Inc. electing Plaintiff, Laura, and
10 Sayat, as the three directors of FFGRG. A copy of the Action of Sole Incorporator of FFG Restaurant
11 Group, Inc. is attached to this Amended Complaint as Exhibit A.
12 21. Economidis also drafted a “Written Consent In Lieu of Initial Meeting of Directors of
13 FFG Restaurant Group, Inc.” (“Written Consent”) which was dated January 2, 2018 and signed by
14 Plaintiff, Laura, and Sayat. (A true and correct copy of the signed Written Consent is attached to this
15 Amended Complaint as Exhibit B.) The Written Consent set forth the following, inter alia:
16 a. That the Board of Directors had elected Plaintiff to be Chief Executive Officer and
17 Chief Financial Officer of the Corporation, and that Laura was elected Secretary of the
18 Corporation.
19 b. That the Board of Directors had adopted Bylaws of the Corporation in a form as
20 attached to the Written Consent. (A true and correct copy of the Bylaws adopted
21 pursuant to the Written Consent is attached to this Amended Complaint as Exhibit C.)
22 c. Among other things, the Bylaws described the responsibilities of the President/CEO as
23 follows:
24 Section 7. President. Except to the extent that the bylaws or the Board of Directors
assign specific powers and duties to the chairman of the Board of Directors (if
25 any), the president shall be the Corporation's general manager and chief executive
officer and, subject to the control of the Board of Directors, shall have general
26 supervision, direction, and control over the Corporation's business and its officers.
The managerial powers and duties of the president shall include, but are not
27 limited to, all the general powers and duties of management usually vested in the
office of president of a corporation, and the president shall have other powers and
28 duties as prescribed by the Board of Directors or the bylaws. The president shall
AMENDED COMPLAINT
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preside at all meetings of the shareholders and, in the absence of the chairman of
1 the Board of Directors or if there is no chairman of the Board of Directors, shall
also preside at meetings of the Board of Directors
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d. That a form of specimen stock certificate for the Corporation’s common stock had
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been adopted by the Board of Directors to be used to evidence the issuance of the
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Common Stock, and that such certificate was to bear a legend prior to its issuance to
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any of the Corporation’s shareholders which read, in part as follows:
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THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
7 CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, AS SET
FORTH IN A COMMON STOCK PURCHASE AGREEMENT BETWEEN
8 THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY
OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
9 ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS ARE
BINDING ON TRANSFEREES OF THESE SHARES.
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11 e. That stock was to be issued and sold to the three Directors in the following amounts:
12 Plaintiff: 50,000; Sayat: 25,000; Laura: 25,000. It further provided that “such shares
13 shall be issued pursuant to a Common Stock Purchase Agreement, a form of which is
14 attached hereto as-Exhibit C, and which be, and it hereby is, approved.”
15 22. Stock certificates dated January 2, 2018, were issued by the Corporation, signed by
16 Plaintiff as President and Laura as Secretary to:
17 a. Sayat in the amount of 25,000 shares;
18 b. Laura in the amount of 25,000 shares;
19 c. Plaintiff in the amount of $50,000 shares.
20 Each signed certificate bore a legend stating:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
21 CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, AS SET
FORTH IN A COMMON STOCK PURCHASE AGREEMENT BETWEEN
22 THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY
OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
23 ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS ARE
BINDING ON TRANSFEREES OF THESE SHARES.
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25 23. Plaintiff is presently informed and believes that the “Common Stock Purchase
26 Agreement” referenced in the Written Consent signed by all parties and also referenced on the issued
27 share certificates signed by Plaintiff and Laura was not attached to the Written Consent as of January
28 2, 2018, but it was understood by all three parties at the time of signing the Written Consent that the
AMENDED COMPLAINT
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1 Common Stock Purchase Agreement would contain terms consistent with the oral agreement that
2 Plaintiff, Laura, and Sayat had reached in December 2017, including that:
3 a. Laura and Sayat were providing services to the Corporation as Executive Co-Chefs;
4 b. That as partial compensation for their services each of them would be sold 25,000
5 shares of the Corporation’s common stock at a price of $0.001 per share for a total
6 price of $25.00;
7 c. That for Laura and for Sayat, immediately upon sale of the stock, 5,000 of the 25,000
8 shares was to be fully vested and not subject to any repurchase option, and that the
9 remaining 20,000 shares for each would vest in equal amounts over the next 48
10 months;
11 d. That the Corporation would have a right to repurchase all unvested shares from Laura
12 and from Sayat if they ceased to provide services to the Corporation for any reason
13 whatsoever;
14 e. That upon exercise of the Corporation’s repurchase option, the shareholder would
15 have no further rights as a holder of the unvested shares to which the repurchase
16 option was exercised.
17 24. On the same day in December 2017 that Plaintiff, Laura, and Sayat agreed to the terms
18 of Laura and Sayat’s employment and right to purchase stock, as previously alleged, Plaintiff
19 identified a space at 2001 Fillmore Street, San Francisco, which he deemed perfect for his restaurant
20 concept. Starting in early January 2018, Plaintiff engaged in negotiations with the landlord for a lease
21 for that space. On February 16, 2018, Plaintiff, on behalf of Forward Food Group, LLC, signed a 10-
22 year lease for the space at a base minimum rent of $19,000 for an initial term of 10 years, and also
23 signed a personal guaranty of the lease. In signing the lease on behalf of Forward Food Group, LLC,
24 and in giving his personal guaranty for the lease, Plaintiff was relying on the promises and agreement
25 of Sayat and Laura with respect to the terms of their employment, right to purchase stock, and agreed
26 responsibilities. Laura and Sayat were aware that Plaintiff was undertaking a significant personal
27 liability in reliance on the promises they had made and agreements they had reached with him.
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AMENDED COMPLAINT
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1 25. In April 2018, Economides prepared a Shareholders’ Agreement (“2018 Shareholders’
2 Agreement”) and Stock Purchase Agreements for Plaintiff, Laura, and Sayat (“2018 Stock Purchase
3 Agreements”) and provided these agreements to Laura and Sayat. Together, the 2018 Shareholders’
4 Agreement and the 2018 Stock Purchase Agreements memorialized the terms of the December 2017
5 oral agreement between Plaintiff and Defendants, providing that they could purchase 25,000 shares of
6 stock for $0.001 per share, with 5,000 shares vesting immediately and the remaining 20,000 shares
7 vesting in equal amounts over 48 months. The 2018 Stock Purchase Agreements together with the
8 2018 Shareholders’ Agreement gave the Corporation a right to repurchase their unvested stock at the
9 same price they paid for it in the event their employment terminated. The 2018 Shareholder’s
10 Agreement stated that Laura and Sayat would be employed by the Corporation but set forth no
11 limitation on the Corporation’s right to terminate them, making their employment at will. The 2018
12 Stock Purchase Agreements provided that if the Corporation exercised its option to repurchase
13 unvested shares upon termination, they would lose the right to vote their unvested shares. True and
14 correct copies of the 2018 Stock Purchase Agreements for Laura and for Sayat are attached to this
15 Amended Complaint collectively as Exhibit D.
16 26. A true and correct copy of the 2018 Shareholders’ Agreement is attached to this
17 Amended Complaint as Exhibit E.
18 27. Relying on the promises and agreements of Laura and Sayat as memorialized in the
19 2018 Shareholders’ Agreement and the 2018 Stock Purchase Agreements, Plaintiff began seeking out
20 investors to purchase membership interests in Forward Food Group, LLC, which was to be the owner
21 of the business. FFGRG initially held 100% of the membership interests in the LLC. Under a private
22 offering, investors were offered preferred membership interests in the LLC aggregating 30% of the
23 membership interests held by the Corporation. Due to Plaintiff’s efforts, the offering of preferred
24 units in the LLC was oversubscribed, and ultimately 35% of the Corporation’s membership interests
25 were sold to investors and converted to preferred membership interests, raising $1,750,000 in funds
26 for use in renovating the leased space, purchase of liquor license, key money for previous restaurant
27 assets, setting up the front and back house operations, carrying costs until opening, and operating
28 capital for the restaurant once it opened.
AMENDED COMPLAINT
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1 28. In the offering circular for Forward Food Group, LLC, it was represented to investors
2 that FFGRG would be the manager of the LLC and would have full responsibility for managing the
3 Restaurant. It was also represented to investors that Plaintiff would be the President/CEO/CFO of the
4 LLC and the Corporate Manager. In pursing and agreeing to the investment offering and taking
5 responsibility for using the money raised in the offering for developing and operating the restaurant,
6 Plaintiff was relying upon the December 2017 promises and agreements of Sayat and Laura with
7 respect to the terms of their employment, right to purchase stock, and agreed responsibilities, as
8 memorialized in the 2018 Shareholders’ Agreement and Stock Purchase Agreements.
9 29. From April to at least October 2018, Plaintiff worked to bring the restaurant to
10 fruition, managing the design and construction of the interior of the restaurant space, overseeing
11 Laura and Sayat’s development of the back of house, and interacting with Wagstaff, a public relations
12 firm, to coordinate pre-opening and opening publicity for Noosh.
13 30. On various occasions between April and October 2018, Plaintiff asked Sayat if there
14 was any problem with the 2018 Stock Purchase Agreements and/or the 2018 Shareholders’
15 Agreement they had been provided, and was assured by Sayat on each occasion there was no
16 problem, that Laura and Sayat had been very busy, but that they would get him the signed documents.
17 However, at no time did Laura or Sayat ever sign either the 2018 Shareholders’ Agreement or their
18 respective 2018 Stock Purchase Agreements.
19 31. At the end of October 2018, Laura and Sayat told Plaintiff that they wanted to change
20 some of the terms in the unsigned 2018 Shareholders’ Agreement they had been given in April of
21 2018, and additionally that, in light of the work they had done, they wanted to revisit the vesting
22 schedules in the written 2018 Stock Purchase Agreements under which they had been issued their
23 stock but which they had never formally signed. This was the first time that Defendants informed
24 Plaintiff they were not in agreement with the terms of their employment and stock issuance that had
25 been discussed and Defendants had said were agreeable in late December of 2017 and upon which
26 Plaintiff had moved forward in reliance and to his detriment.
27 32. Defendants did not inform Plaintiff that the changes Defendants wanted were
28 materially different than, and incompatible with, the terms set forth in their December 2017
AMENDED COMPLAINT
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1 agreement. Instead, Defendants indicated they were committed to going forward with the restaurant
2 project under the basic structure that had been agreed to in December 2017. In November 2018, due
3 to the strong investor interest and the number of persons who expressed interest in investing after the
4 first $1,500,000 of membership interests were committed, Plaintiff arranged for the sale of additional
5 interests, raising an additional $250,000 in the fall of 2018. Laura and Sayat indicated to Plaintiff that
6 they agreed to adding an additional $250,000 from new investors and closing on the LLC Investment
7 round what the additional interests had been subscribed. They participated in marketing of the
8 additional sale interests without informing either Plaintiff or prospective investors that they were not
9 willing to participate in the restaurant venture on the basic terms they had agreed to in December
10 2017.
11 33. By late 2018, having committed to the lease with its personal guarantee, having spent
12 substantial money on the renovation of the lease space, and having taken the investors’ money,
13 Plaintiff felt he had no choice but to agree to negotiate with Laura and Sayat over their requested
14 changes so that a final agreement could be reached with them allowing the restaurant to open on
15 schedule. Plaintiff still believed Defendants were acting in good faith and that their changes from the
16 December 2017 agreement could be satisfactorily negotiated.
17 34. Plaintiff requested that both parties obtain legal counsel to negotiate changes to the
18 2018 Stock Purchase Agreements and the 2018 Shareholders’ Agreement. Plaintiff, and Laura and
19 Sayat, each obtained counsel, and the respective counsel negotiated language for revised Common
20 Stock Purchase Agreements (“2019 Stock Purchase Agreements”) and a revised Shareholders’
21 Agreement (“2019 Shareholders’ Agreement”). The new terms negotiated included that Laura and
22 Sayat’s employment would be terminable “for cause,” with cause defined as including “breach of
23 fiduciary duty involving personal profit, personal dishonesty, recklessness or willful misconduct with
24 respect to its obligations or otherwise relating to the business of the Corporation and the Restaurant;”
25 that the price for the shares would be $0.03 per share instead of $0.001 per share; that the
26 Corporation would be converted to a statutory close corporation which would be run by a
27 “Management Committee” consisting of Laura, Sayat, and Plaintiff, with any action by the
28 Management Committee requiring approval by Plaintiff; that an Employee Handbook and Code of
AMENDED COMPLAINT
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1 Conduct was to be developed by Plaintiff to which the shareholders would agree to be bound, and
2 each of the Shareholders would work collaboratively to support the other Shareholders’ Services.
3 The revised Shareholders’ Agreement negotiated by Plaintiff’s counsel and Defendants’ counsel
4 provided that “Shareholders shall create the environment and allow the opportunity for each
5 Shareholder to perform its Services and succeed, subject to input from the other Shareholders as
6 described in Exhibit A. Shareholders shall foster and shall in their own actions be responsible for a
7 respectful, professional, unified work culture.”
8 35. As of February 12, 2019, the terms of the Stock Purchase Agreements and the
9 Shareholder Agreement were agreed to, but still needed to be reviewed by G&E. In order to avoid
10 further delay in opening the restaurant and further draining of financial resources, respective counsel
11 for the parties agreed that the parties would sign a “Memorandum of Understanding” (“MOU”) in
12 which the parties agreed, inter alia:
13 a. The parties will enter into the Shareholders' Agreement in substantially the form
14 attached hereto as Exhibit A.
15 b. The parties will enter into the Common Stock Purchase Agreements in substantially
16 the form attached hereto as Exhibits B-1, B-2 and B-3.
17 c. The parties acknowledge that the Effective Date of the Shareholders' Agreement and
18 Common Stock Purchase Agreements (as defined therein) will be subject to change
19 based on the advice of the parties' tax advisors. and each party will reasonably
20 cooperate with such changes as long as such party is not economically adversely
21 affected thereby.
22 d. The parties will enter into Employment Agreements consistent with the terms of the
23 Shareholders’ Agreement.
24 e. The parties will enter into Confidentiality and Invention Assignment Agreements
25 consistent with the terms of the Shareholders' Agreement.
26 f. The Shareholders will enter into Intellectual Property Assignment Agreements
27 consistent with the terms of the Shareholders' Agreement.
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AMENDED COMPLAINT
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1 g. The parties will act in good faith to negotiate, finalize and execute the foregoing
2 Agreements.
3 h. The parties understand that time is of the essence.
4 36. Copies of the 2019 Stock Purchase Agreements and the 2019 Shareholders’
5 Agreement respectively referenced as Exhibit A and Exhibits B-1, B-2, and B-3 were attached to the
6 MOU. On February 18, 2019 Plaintiff signed the MOU. On February 19, 2019, Laura and Sayat
7 signed the MOU. A true and correct copy of the signed MOU with attachments is attached to this
8 Amended Complaint as Exhibit F.
9 37. Following the signing of the MOU, counsel for the parties approved language
10 modifying the Stock Purchase Agreements for Laura and Sayat, changing the date of the stock
11 issuance to February 1, 2019, and providing that an initial 10,000 of issued shares each to Laura and
12 Sayat would vest, with the remaining 15,000 shares for each to vest in equal monthly installments
13 over 36 months. G&E reviewed and passed on the provisions of the 2019 Shareholders’ Agreement
14 and the 2019 Stock Purchase Agreements and so notified Defendants.
15 38. Plaintiff signed his 2019 Stock Purchase Agreement. Previously, On December 18,
16 2018, Plaintiff had paid into the LLC $50.00 for his purchase of 50,000 shares of the corporation’s
17 stock at $0.001/share pursuant to his 2019 Stock Purchase Agreement. On August 26, 2019 this
18 $50.00 was transferred from the LLC to FFGRG along with an additional payment to FFGRG in the
19 amount of $1,450 for purchase of Plaintiff’s 50,000 shares at the price of $0.03/share, as set forth in
20 Plaintiff’s 2019 Stock Purchase Agreement.
21 39. Despite their promise to sign the 2019 Shareholders’ Agreement and the 2019 Stock
22 Purchase Agreements “in substantially the form” in which they were attached to the MOU, and
23 despite the Defendants having agreed that “time was of the essence” in completing and executing the
24 referenced agreements, as of the date of the filing of this Amended Complaint, Defendants have
25 never signed the 2019 Shareholders’ Agreement or the 2019 Stock Purchase Agreements, and have
26 never paid for their stock.
27 40. In addition to their failure to comply with their promises made in the MOU in a timely
28 manner, since the signing of the MOU, Defendants have repeatedly and consistently acted in a
AMENDED COMPLAINT
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1 manner contrary to and/or inconsistent with, the obligations set forth in the agreements they promised
2 to sign but did not. For example, under Section 6 of the 2019 Shareholder’s Agreement, Defendants
3 were to agree that Plaintiff was to serve as the Chief Executive Officer and the Chief Financial
4 Officer of the Corporation, and in such capacity, “will supervise, direct, and control the general
5 business and financial operations of the Corporation, although Sayat and Laura shall have the right to
6 provide advice and input with respect to such matters, and will perform such specific duties as the
7 Management Committee of the Corporation may from time to time request. Among the actions that
8 Defendants have taken since signing the MOU on February 19, 2019 in direct and flagrant violation
9 of the promise they were to make under Section 6 of the Shareholder’s Agreement are the following:
10 a. Demanded that Plaintiff give over control of payroll activities to Laura. Laura
11 substituted her email address for Plaintiff’s on the payroll service website in an
12 attempt to exercise control over the issuance of payroll and receipt of payroll
13 information to the Corporation;
14 b. Unilaterally made changes to the employee handbook;
15 c. Without authorization and/or signing authority, transferred money from an account
16 belonging to the LLC to their personal bank account;
17 d. Communicated with the Corporation’s insurance broker directly and without
18 informing Plaintiff in an attempt to control the Corporation’s insurance coverage;
19 e. Attempted to hire an employment lawyer for the Corporation when Plaintiff had
20 already hired an employment lawyer for the Corporation;
21 f. Bypassed the Corporation’s publicist, Wagstaff, and unilaterally developed and
22 executed public relations and press contacts where they misrepresented material facts
23 regarding the restaurant and its founders;
24 g. Misappropriated corporate funds to pay for their personal attorney;
25 h. Misappropriated corporate funds to make unauthorized loans and payments to
26 employees, potentially putting Plaintiff at risk for unpaid payroll tax liabilities;
27 i. Without authority, challenged the billings of the Corporation’s counsel (G&E) and
28 threatened to take G&E to bar association arbitration over the same;
AMENDED COMPLAINT
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1 j. Without authority, falsely representing to national media the volume of business being
2 conducted by the Corporation.
3 FIRST CAUSE OF ACTION
4 (Declaratory Relief to Determine Anticipatory Breach of 2019 Shareholders’ Agreement and 2019
5 Stock Purchase Agreements)
6 41. Plaintiff incorporates Paragraphs 1 through 40 of this Amended Complaint into this
7 First Cause of Action.
8 42. On or about February 19, 2019, Plaintiff and each of the Defendants signed a
9 Memorandum of Understanding (“MOU”) which they agreed would be “intended to create legally
10 binding obligations by the Parties to negotiate and finalize the 2019 Shareholders’ Agreement and the
11 2019 Stock Purchase Agreements “in good faith.” The MOU also provided that “The parties will
12 enter into the Shareholders' Agreement in substantially the form attached hereto as Exhibit A. [to the
13 MOU]”, and “The parties will enter into the Common Stock Purchase Agreements in substantially the
14 form attached hereto as Exhibits 8- 1, B-2 and B-3[to the MOU].
15 43. As of Plaintiff’s signing of the MOU on February 19, 2019, Plaintiff was ready,
16 willing, and able to perform his obligations under the MOU. Plaintiff signed his Stock Purchase
17 Agreement and paid for his 50,000 shares of vested stock in full. Plaintiff was ready, willing, and
18 able to perform his obligations under the Shareholder’s Agreement as attached as Exhibit to the
19 MOU, and, to the best of his ability, except as prevented by actions of Defendants, Plaintiff has
20 performed his obligations as set forth in the unsigned Shareholder’s Agreement attached to the MOU.
21 44. Since February 19, 2019, Defendants, and each of them, have acted in a manner
22 inconsistent with their obligations, both under their respective Stock Purchase Agreements, and under
23 the Shareholder’s Agreement. Defendants actions with respect to both the Shareholder’s Agreement
24 and the Stock Purchase Agreements are evidence of a repudiation of their promise to abide by the
25 terms of each agreement.
26 45. With respect to Laura’s Stock Purchase Agreement, Laura has neither signed the
27 agreement nor paid for her stock. With respect to Sayat’s Stock Purchase Agreement, Sayat has
28 neither signed the agreement nor paid for his stock.
AMENDED COMPLAINT
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1 46. With respect to the
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1 DAVID H. SCHWARTZ (SBN 62693) NANCY CHUNG (SBN 225584) 2 LAW OFFICES OF DAVID H. SCHWARTZ, INC. 423 Washington Street, Sixth Floor ELECTRONICALLY 3 San Francisco, CA 94111 Tel: (415) 399-9301; Fax: (415) 399-9878 F I L E D Superior Court of California, E-mail: dhs@lodhs.com, nchung@lodhs.com County of San Francisco 4 12/31/2019 5 Attorneys for Plaintiff Clerk of the Court BY: EDWARD SANTOS JOHN LITZ Deputy Clerk 6 7 SUPERIOR COURT OF THE STATE OF CALIFORNIA 8 IN AND FOR THE CITY AND COUTY OF SAN FRANCISCO 9 UNLIMITED JURISDICTION 10 11 JOHN LITZ, ) CASE NO: CGC-19-580935 12 ) Plaintiff, ) 13 ) AMENDED COMPLAINT vs. ) 14 ) (1) Anticipatory Breach of Written SAYAT OZYILMAZ, LAURA GABRIELA ) Contract 15 OZYILMAZ, FFG Restaurant Group, Inc., a ) (2) Rescission of Contracts California Corporation, and DOES 1-30, ) (3) Breach of Oral Contract 16 inclusive, ) (4) Breach of Covenant of Good Faith and ) Fair Dealing 17 ) (5) Promissory Fraud Defendants. ) 18 ) ) 19 ) 20 Plaintiff John Litz alleges the following: 21 THE PARTIES 22 1. Plaintiff John Litz is an individual residing in the City and County of San Francisco, 23 State of California. 24 2. Defendant Sayat Ozyilmaz (hereinafter “Sayat”) is an individual residing in the City 25 and County of San Francisco. 26 3. Defendant Laura Gabriela Millan Ozyilmaz (hereinafter “Laura”) is an individual 27 residing in the City and County of San Francisco. 28 1 4. Defendant FFG Restaurant Group, Inc. (“FFGRG” or the “Corporation”) is a 2 corporation, formed under California law, and has its principal place of business in San Francisco, 3 California. It is named in this Amended Complaint as a nominal defendant because it is a necessary 4 party, in that, this Amended Complaint seeks rescission of contracts to which FFGRG is a party. 5 5. At all relevant times, Defendants other than FFGRG were agents of each other and in 6 performing the actions alleged herein and were acting within the course and scope of such agency 7 and with the permission and consent of one another. 8 6. Plaintiff is ignorant of the true names of DOES 1 through 30, and therefore sues 9 Defendants under such fictitious names. Plaintiff is informed and believes and therefore alleges that 10 each of the Defendants designated herein as DOE is legally responsible in some manner for the 11 events and happenings herein referred to, and proximately caused injury and damages thereby to 12 Plaintiff as herein alleged. Plaintiff is informed and believes that DOES 1 through 30 are either 13 residents or citizens of the State of California and/or business entities doing business in the State of 14 California. 15 7. Plaintiff is informed and believes that at all times herein mentioned, Defendants 16 DOES 1 through 10, inclusive, the identity of whom are presently unknown to the Plaintiff, conspired 17 with each Defendant, and thereby assisted the named Defendants in the acts and omissions described 18 more fully herein. 19 8. The majority of the acts and/or omissions of the Defendants, as alleged herein, took 20 place and occurred within the City and County of San Francisco, in the State of California. 21 9. The amount of damages in controversy and demanded by Plaintiff is greater than 22 $25,000.00. 23 FACTUAL STATEMENT 24 10. Plaintiff John Litz is an entrepreneur and angel investor who has been involved in the 25 founding and operation of restaurants in Chicago and San Francisco. 26 11. In 2014, Plaintiff was a key person in the founding and establishment of Lazy Bear, a 27 restaurant in San Francisco. Lazy Bear has been given a number of world-recognized restaurant 28 AMENDED COMPLAINT 1 1 accolades, including a James Beard Nomination and a Two-star Michelin Guide Rating. Since 2014, 2 Lazy Bear has been successful not only with respect to reviews of its food, but financially. 3 12. In 2017, Plaintiff began working on a concept for a new restaurant that would feature 4 modern middle eastern food and offer a casual dining experience. He came up with a name for the 5 restaurant, “Noosh,” and began talking to various people in the San Francisco food and restaurant 6 business about possibly participating in the development and opening of a restaurant under the 7 “Noosh” name offering middle eastern fare in a casual dining experience. 8 13. In September of 2017, Plaintiff retained the law firm of Georgopoulos & Economidis, 9 LLP (“G&E”) to assist him in forming a corporation for the operation of the restaurant and a limited 10 liability company that would serve as a vehicle to attract investors and which would own a portion of 11 the restaurant property or properties to be developed under the “Noosh,” name. 12 14. On October 27, 2017, Roberta Economidis of G&E (“Economidis”) caused to have 13 Forward Food Group, LLC (the “(“LLC”) registered as a California limited liability company. The 14 registration form stated that the Forward Food Group, LLC would have one manager. On December 15 19, 2017, Roberta Economidis caused articles of incorporation for FFGRG to be filed with the 16 California Secretary of State. Roberta Economidis was listed as the incorporator. 17 15. In September of 2017, Plaintiff became aware of Laura and Sayat, who are a husband 18 and wife chef team. Laura and Sayat, had been doing “pop-up” food events using the name “Istanbul 19 Modern SF” through Feastly, an online pop-up dining platform. Their “pop-up” events had garnered 20 attention in the San Francisco food scene, and their middle eastern style cuisine fit in with Plaintiff’s 21 concept for his new restaurant. In his discussions with Laura and Sayat in 2017, they told Plaintiff 22 they had never opened a restaurant or had overall responsibility for managing a restaurant. 23 16. In discussions during the period from October – December 2017, Plaintiff offered to 24 have FFGRG employ them on an at-will basis as executive chefs for purposes of setting up the “back 25 of house,” (i.e., kitchen operations), in return for a monthly salary and the opportunity to purchase a 26 minority stock interest in the Corporation which was to vest over a four-year period, with the 27 understanding that if Defendants’ at will employment terminated, FFGRG would have the option to 28 repurchase all of Defendants’ unvested stock. Plaintiff informed Laura and Sayat that he was going to AMENDED COMPLAINT 2 1 be the Chief Executive Officer and the Chief Financial Officer, would set up and be responsible for 2 the “front of house” operations, as well as having ultimate authority over all aspects of the business. 3 Plaintiff informed Laura and Sayat that he would be receiving fully vested shares in the Corporation. 4 17. Initially, Plaintiff’s discussions with Defendants over their role in the prospective 5 business included a third potential principal. On or about December 19, 2017, Plaintiff, Laura, Sayat, 6 and the third potential principal met with Economides in her office, where Economides described 7 Laura and Sayat’s at-will employment by FFGRG, how shares in FFGRG would be issued to them, 8 the gradual vesting of their shares over a four-year period, (except for Plaintiff), and the right of 9 FFGRG to repurchase unvested shares if Laura or Sayat’s at-will employment ceased for any reason. 10 They also discussed that Plaintiff’s shares would vest immediately and not be subject to a vesting 11 schedule. Laura and Sayat stated they agreed with the terms laid out by Economidis. 12 18. Shortly after Christmas 2017, the third prospective principal dropped out. Plaintiff met 13 and discussed with Laura and Sayat that Plaintiff was prepared to offer Laura and Sayat an ownership 14 interest in FFGRG in return for their agreement to be employed at-will as executive chefs for the new 15 restaurant. Plaintiff offered to have the Corporation hire Defendants as executive chefs and give 16 them a right to purchase 40% of the Corporation’s stock with ownership vesting over four years, with 17 an option to the Corporation to repurchase non-vested stock of either Defendant if the Defendants’ 18 employment terminated for any reason. Defendants responded by stating they wanted ultimately to 19 own a 50% interest in the new Corporation. Plaintiff acceded to their request for 50% of the stock 20 subject to the vesting and repurchase agreement that had been repeatedly discussed. Defendants 21 immediately agreed to those terms, i.e., that they would enter into at-will employment with the 22 Corporation as executive chefs, participate in the setting up of the back of house operations under the 23 overall authority of Plaintiff as CEO and, CFO, be compensated with monthly salaries of $5,000 per 24 month each as well as the right to each purchase 25,000 shares of common stock at $0.001 per share, 25 of which 5,000 shares would vest immediately, and the remaining 20,000 shares of unvested stock 26 would vest in equal monthly installments over four years so long as they remained in the 27 Corporation’s employ, and that should they be terminated for any reason, the FFGRG would have the 28 option to purchase all unvested shares for the amount paid for such shares and that upon exercise of AMENDED COMPLAINT 3 1 its option the terminated Defendant would have no voting rights in the unvested shares. Again, it was 2 discussed and agreed that Plaintiff’s shares would not be subject to a vesting schedule, but rather, 3 would vest immediately. 4 19. Relying on Defendants’ stated agreement with the basic terms. Plaintiff instructed 5 Economidis, along with independent Liquor License Expeditor Carrie Peters, to apply to the 6 Alcoholic Beverage Commission for a license for FFGRG and prepare organizational papers for 7 FFGRG. 8 20. Economidis, as the incorporator of FFGRG, on January 2, 2018 signed a document 9 entitled Action of Sole Incorporator of FFG Restaurant Group, Inc. electing Plaintiff, Laura, and 10 Sayat, as the three directors of FFGRG. A copy of the Action of Sole Incorporator of FFG Restaurant 11 Group, Inc. is attached to this Amended Complaint as Exhibit A. 12 21. Economidis also drafted a “Written Consent In Lieu of Initial Meeting of Directors of 13 FFG Restaurant Group, Inc.” (“Written Consent”) which was dated January 2, 2018 and signed by 14 Plaintiff, Laura, and Sayat. (A true and correct copy of the signed Written Consent is attached to this 15 Amended Complaint as Exhibit B.) The Written Consent set forth the following, inter alia: 16 a. That the Board of Directors had elected Plaintiff to be Chief Executive Officer and 17 Chief Financial Officer of the Corporation, and that Laura was elected Secretary of the 18 Corporation. 19 b. That the Board of Directors had adopted Bylaws of the Corporation in a form as 20 attached to the Written Consent. (A true and correct copy of the Bylaws adopted 21 pursuant to the Written Consent is attached to this Amended Complaint as Exhibit C.) 22 c. Among other things, the Bylaws described the responsibilities of the President/CEO as 23 follows: 24 Section 7. President. Except to the extent that the bylaws or the Board of Directors assign specific powers and duties to the chairman of the Board of Directors (if 25 any), the president shall be the Corporation's general manager and chief executive officer and, subject to the control of the Board of Directors, shall have general 26 supervision, direction, and control over the Corporation's business and its officers. The managerial powers and duties of the president shall include, but are not 27 limited to, all the general powers and duties of management usually vested in the office of president of a corporation, and the president shall have other powers and 28 duties as prescribed by the Board of Directors or the bylaws. The president shall AMENDED COMPLAINT 4 preside at all meetings of the shareholders and, in the absence of the chairman of 1 the Board of Directors or if there is no chairman of the Board of Directors, shall also preside at meetings of the Board of Directors 2 d. That a form of specimen stock certificate for the Corporation’s common stock had 3 been adopted by the Board of Directors to be used to evidence the issuance of the 4 Common Stock, and that such certificate was to bear a legend prior to its issuance to 5 any of the Corporation’s shareholders which read, in part as follows: 6 THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO 7 CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, AS SET FORTH IN A COMMON STOCK PURCHASE AGREEMENT BETWEEN 8 THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE 9 ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES. 10 11 e. That stock was to be issued and sold to the three Directors in the following amounts: 12 Plaintiff: 50,000; Sayat: 25,000; Laura: 25,000. It further provided that “such shares 13 shall be issued pursuant to a Common Stock Purchase Agreement, a form of which is 14 attached hereto as-Exhibit C, and which be, and it hereby is, approved.” 15 22. Stock certificates dated January 2, 2018, were issued by the Corporation, signed by 16 Plaintiff as President and Laura as Secretary to: 17 a. Sayat in the amount of 25,000 shares; 18 b. Laura in the amount of 25,000 shares; 19 c. Plaintiff in the amount of $50,000 shares. 20 Each signed certificate bore a legend stating: THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO 21 CERTAIN RESTRICTIONS ON PUBLIC RESALE AND TRANSFER, AS SET FORTH IN A COMMON STOCK PURCHASE AGREEMENT BETWEEN 22 THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE 23 ISSUER. SUCH PUBLIC SALE AND TRANSFER RESTRICTIONS ARE BINDING ON TRANSFEREES OF THESE SHARES. 24 25 23. Plaintiff is presently informed and believes that the “Common Stock Purchase 26 Agreement” referenced in the Written Consent signed by all parties and also referenced on the issued 27 share certificates signed by Plaintiff and Laura was not attached to the Written Consent as of January 28 2, 2018, but it was understood by all three parties at the time of signing the Written Consent that the AMENDED COMPLAINT 5 1 Common Stock Purchase Agreement would contain terms consistent with the oral agreement that 2 Plaintiff, Laura, and Sayat had reached in December 2017, including that: 3 a. Laura and Sayat were providing services to the Corporation as Executive Co-Chefs; 4 b. That as partial compensation for their services each of them would be sold 25,000 5 shares of the Corporation’s common stock at a price of $0.001 per share for a total 6 price of $25.00; 7 c. That for Laura and for Sayat, immediately upon sale of the stock, 5,000 of the 25,000 8 shares was to be fully vested and not subject to any repurchase option, and that the 9 remaining 20,000 shares for each would vest in equal amounts over the next 48 10 months; 11 d. That the Corporation would have a right to repurchase all unvested shares from Laura 12 and from Sayat if they ceased to provide services to the Corporation for any reason 13 whatsoever; 14 e. That upon exercise of the Corporation’s repurchase option, the shareholder would 15 have no further rights as a holder of the unvested shares to which the repurchase 16 option was exercised. 17 24. On the same day in December 2017 that Plaintiff, Laura, and Sayat agreed to the terms 18 of Laura and Sayat’s employment and right to purchase stock, as previously alleged, Plaintiff 19 identified a space at 2001 Fillmore Street, San Francisco, which he deemed perfect for his restaurant 20 concept. Starting in early January 2018, Plaintiff engaged in negotiations with the landlord for a lease 21 for that space. On February 16, 2018, Plaintiff, on behalf of Forward Food Group, LLC, signed a 10- 22 year lease for the space at a base minimum rent of $19,000 for an initial term of 10 years, and also 23 signed a personal guaranty of the lease. In signing the lease on behalf of Forward Food Group, LLC, 24 and in giving his personal guaranty for the lease, Plaintiff was relying on the promises and agreement 25 of Sayat and Laura with respect to the terms of their employment, right to purchase stock, and agreed 26 responsibilities. Laura and Sayat were aware that Plaintiff was undertaking a significant personal 27 liability in reliance on the promises they had made and agreements they had reached with him. 28 AMENDED COMPLAINT 6 1 25. In April 2018, Economides prepared a Shareholders’ Agreement (“2018 Shareholders’ 2 Agreement”) and Stock Purchase Agreements for Plaintiff, Laura, and Sayat (“2018 Stock Purchase 3 Agreements”) and provided these agreements to Laura and Sayat. Together, the 2018 Shareholders’ 4 Agreement and the 2018 Stock Purchase Agreements memorialized the terms of the December 2017 5 oral agreement between Plaintiff and Defendants, providing that they could purchase 25,000 shares of 6 stock for $0.001 per share, with 5,000 shares vesting immediately and the remaining 20,000 shares 7 vesting in equal amounts over 48 months. The 2018 Stock Purchase Agreements together with the 8 2018 Shareholders’ Agreement gave the Corporation a right to repurchase their unvested stock at the 9 same price they paid for it in the event their employment terminated. The 2018 Shareholder’s 10 Agreement stated that Laura and Sayat would be employed by the Corporation but set forth no 11 limitation on the Corporation’s right to terminate them, making their employment at will. The 2018 12 Stock Purchase Agreements provided that if the Corporation exercised its option to repurchase 13 unvested shares upon termination, they would lose the right to vote their unvested shares. True and 14 correct copies of the 2018 Stock Purchase Agreements for Laura and for Sayat are attached to this 15 Amended Complaint collectively as Exhibit D. 16 26. A true and correct copy of the 2018 Shareholders’ Agreement is attached to this 17 Amended Complaint as Exhibit E. 18 27. Relying on the promises and agreements of Laura and Sayat as memorialized in the 19 2018 Shareholders’ Agreement and the 2018 Stock Purchase Agreements, Plaintiff began seeking out 20 investors to purchase membership interests in Forward Food Group, LLC, which was to be the owner 21 of the business. FFGRG initially held 100% of the membership interests in the LLC. Under a private 22 offering, investors were offered preferred membership interests in the LLC aggregating 30% of the 23 membership interests held by the Corporation. Due to Plaintiff’s efforts, the offering of preferred 24 units in the LLC was oversubscribed, and ultimately 35% of the Corporation’s membership interests 25 were sold to investors and converted to preferred membership interests, raising $1,750,000 in funds 26 for use in renovating the leased space, purchase of liquor license, key money for previous restaurant 27 assets, setting up the front and back house operations, carrying costs until opening, and operating 28 capital for the restaurant once it opened. AMENDED COMPLAINT 7 1 28. In the offering circular for Forward Food Group, LLC, it was represented to investors 2 that FFGRG would be the manager of the LLC and would have full responsibility for managing the 3 Restaurant. It was also represented to investors that Plaintiff would be the President/CEO/CFO of the 4 LLC and the Corporate Manager. In pursing and agreeing to the investment offering and taking 5 responsibility for using the money raised in the offering for developing and operating the restaurant, 6 Plaintiff was relying upon the December 2017 promises and agreements of Sayat and Laura with 7 respect to the terms of their employment, right to purchase stock, and agreed responsibilities, as 8 memorialized in the 2018 Shareholders’ Agreement and Stock Purchase Agreements. 9 29. From April to at least October 2018, Plaintiff worked to bring the restaurant to 10 fruition, managing the design and construction of the interior of the restaurant space, overseeing 11 Laura and Sayat’s development of the back of house, and interacting with Wagstaff, a public relations 12 firm, to coordinate pre-opening and opening publicity for Noosh. 13 30. On various occasions between April and October 2018, Plaintiff asked Sayat if there 14 was any problem with the 2018 Stock Purchase Agreements and/or the 2018 Shareholders’ 15 Agreement they had been provided, and was assured by Sayat on each occasion there was no 16 problem, that Laura and Sayat had been very busy, but that they would get him the signed documents. 17 However, at no time did Laura or Sayat ever sign either the 2018 Shareholders’ Agreement or their 18 respective 2018 Stock Purchase Agreements. 19 31. At the end of October 2018, Laura and Sayat told Plaintiff that they wanted to change 20 some of the terms in the unsigned 2018 Shareholders’ Agreement they had been given in April of 21 2018, and additionally that, in light of the work they had done, they wanted to revisit the vesting 22 schedules in the written 2018 Stock Purchase Agreements under which they had been issued their 23 stock but which they had never formally signed. This was the first time that Defendants informed 24 Plaintiff they were not in agreement with the terms of their employment and stock issuance that had 25 been discussed and Defendants had said were agreeable in late December of 2017 and upon which 26 Plaintiff had moved forward in reliance and to his detriment. 27 32. Defendants did not inform Plaintiff that the changes Defendants wanted were 28 materially different than, and incompatible with, the terms set forth in their December 2017 AMENDED COMPLAINT 8 1 agreement. Instead, Defendants indicated they were committed to going forward with the restaurant 2 project under the basic structure that had been agreed to in December 2017. In November 2018, due 3 to the strong investor interest and the number of persons who expressed interest in investing after the 4 first $1,500,000 of membership interests were committed, Plaintiff arranged for the sale of additional 5 interests, raising an additional $250,000 in the fall of 2018. Laura and Sayat indicated to Plaintiff that 6 they agreed to adding an additional $250,000 from new investors and closing on the LLC Investment 7 round what the additional interests had been subscribed. They participated in marketing of the 8 additional sale interests without informing either Plaintiff or prospective investors that they were not 9 willing to participate in the restaurant venture on the basic terms they had agreed to in December 10 2017. 11 33. By late 2018, having committed to the lease with its personal guarantee, having spent 12 substantial money on the renovation of the lease space, and having taken the investors’ money, 13 Plaintiff felt he had no choice but to agree to negotiate with Laura and Sayat over their requested 14 changes so that a final agreement could be reached with them allowing the restaurant to open on 15 schedule. Plaintiff still believed Defendants were acting in good faith and that their changes from the 16 December 2017 agreement could be satisfactorily negotiated. 17 34. Plaintiff requested that both parties obtain legal counsel to negotiate changes to the 18 2018 Stock Purchase Agreements and the 2018 Shareholders’ Agreement. Plaintiff, and Laura and 19 Sayat, each obtained counsel, and the respective counsel negotiated language for revised Common 20 Stock Purchase Agreements (“2019 Stock Purchase Agreements”) and a revised Shareholders’ 21 Agreement (“2019 Shareholders’ Agreement”). The new terms negotiated included that Laura and 22 Sayat’s employment would be terminable “for cause,” with cause defined as including “breach of 23 fiduciary duty involving personal profit, personal dishonesty, recklessness or willful misconduct with 24 respect to its obligations or otherwise relating to the business of the Corporation and the Restaurant;” 25 that the price for the shares would be $0.03 per share instead of $0.001 per share; that the 26 Corporation would be converted to a statutory close corporation which would be run by a 27 “Management Committee” consisting of Laura, Sayat, and Plaintiff, with any action by the 28 Management Committee requiring approval by Plaintiff; that an Employee Handbook and Code of AMENDED COMPLAINT 9 1 Conduct was to be developed by Plaintiff to which the shareholders would agree to be bound, and 2 each of the Shareholders would work collaboratively to support the other Shareholders’ Services. 3 The revised Shareholders’ Agreement negotiated by Plaintiff’s counsel and Defendants’ counsel 4 provided that “Shareholders shall create the environment and allow the opportunity for each 5 Shareholder to perform its Services and succeed, subject to input from the other Shareholders as 6 described in Exhibit A. Shareholders shall foster and shall in their own actions be responsible for a 7 respectful, professional, unified work culture.” 8 35. As of February 12, 2019, the terms of the Stock Purchase Agreements and the 9 Shareholder Agreement were agreed to, but still needed to be reviewed by G&E. In order to avoid 10 further delay in opening the restaurant and further draining of financial resources, respective counsel 11 for the parties agreed that the parties would sign a “Memorandum of Understanding” (“MOU”) in 12 which the parties agreed, inter alia: 13 a. The parties will enter into the Shareholders' Agreement in substantially the form 14 attached hereto as Exhibit A. 15 b. The parties will enter into the Common Stock Purchase Agreements in substantially 16 the form attached hereto as Exhibits B-1, B-2 and B-3. 17 c. The parties acknowledge that the Effective Date of the Shareholders' Agreement and 18 Common Stock Purchase Agreements (as defined therein) will be subject to change 19 based on the advice of the parties' tax advisors. and each party will reasonably 20 cooperate with such changes as long as such party is not economically adversely 21 affected thereby. 22 d. The parties will enter into Employment Agreements consistent with the terms of the 23 Shareholders’ Agreement. 24 e. The parties will enter into Confidentiality and Invention Assignment Agreements 25 consistent with the terms of the Shareholders' Agreement. 26 f. The Shareholders will enter into Intellectual Property Assignment Agreements 27 consistent with the terms of the Shareholders' Agreement. 28 AMENDED COMPLAINT 10 1 g. The parties will act in good faith to negotiate, finalize and execute the foregoing 2 Agreements. 3 h. The parties understand that time is of the essence. 4 36. Copies of the 2019 Stock Purchase Agreements and the 2019 Shareholders’ 5 Agreement respectively referenced as Exhibit A and Exhibits B-1, B-2, and B-3 were attached to the 6 MOU. On February 18, 2019 Plaintiff signed the MOU. On February 19, 2019, Laura and Sayat 7 signed the MOU. A true and correct copy of the signed MOU with attachments is attached to this 8 Amended Complaint as Exhibit F. 9 37. Following the signing of the MOU, counsel for the parties approved language 10 modifying the Stock Purchase Agreements for Laura and Sayat, changing the date of the stock 11 issuance to February 1, 2019, and providing that an initial 10,000 of issued shares each to Laura and 12 Sayat would vest, with the remaining 15,000 shares for each to vest in equal monthly installments 13 over 36 months. G&E reviewed and passed on the provisions of the 2019 Shareholders’ Agreement 14 and the 2019 Stock Purchase Agreements and so notified Defendants. 15 38. Plaintiff signed his 2019 Stock Purchase Agreement. Previously, On December 18, 16 2018, Plaintiff had paid into the LLC $50.00 for his purchase of 50,000 shares of the corporation’s 17 stock at $0.001/share pursuant to his 2019 Stock Purchase Agreement. On August 26, 2019 this 18 $50.00 was transferred from the LLC to FFGRG along with an additional payment to FFGRG in the 19 amount of $1,450 for purchase of Plaintiff’s 50,000 shares at the price of $0.03/share, as set forth in 20 Plaintiff’s 2019 Stock Purchase Agreement. 21 39. Despite their promise to sign the 2019 Shareholders’ Agreement and the 2019 Stock 22 Purchase Agreements “in substantially the form” in which they were attached to the MOU, and 23 despite the Defendants having agreed that “time was of the essence” in completing and executing the 24 referenced agreements, as of the date of the filing of this Amended Complaint, Defendants have 25 never signed the 2019 Shareholders’ Agreement or the 2019 Stock Purchase Agreements, and have 26 never paid for their stock. 27 40. In addition to their failure to comply with their promises made in the MOU in a timely 28 manner, since the signing of the MOU, Defendants have repeatedly and consistently acted in a AMENDED COMPLAINT 11 1 manner contrary to and/or inconsistent with, the obligations set forth in the agreements they promised 2 to sign but did not. For example, under Section 6 of the 2019 Shareholder’s Agreement, Defendants 3 were to agree that Plaintiff was to serve as the Chief Executive Officer and the Chief Financial 4 Officer of the Corporation, and in such capacity, “will supervise, direct, and control the general 5 business and financial operations of the Corporation, although Sayat and Laura shall have the right to 6 provide advice and input with respect to such matters, and will perform such specific duties as the 7 Management Committee of the Corporation may from time to time request. Among the actions that 8 Defendants have taken since signing the MOU on February 19, 2019 in direct and flagrant violation 9 of the promise they were to make under Section 6 of the Shareholder’s Agreement are the following: 10 a. Demanded that Plaintiff give over control of payroll activities to Laura. Laura 11 substituted her email address for Plaintiff’s on the payroll service website in an 12 attempt to exercise control over the issuance of payroll and receipt of payroll 13 information to the Corporation; 14 b. Unilaterally made changes to the employee handbook; 15 c. Without authorization and/or signing authority, transferred money from an account 16 belonging to the LLC to their personal bank account; 17 d. Communicated with the Corporation’s insurance broker directly and without 18 informing Plaintiff in an attempt to control the Corporation’s insurance coverage; 19 e. Attempted to hire an employment lawyer for the Corporation when Plaintiff had 20 already hired an employment lawyer for the Corporation; 21 f. Bypassed the Corporation’s publicist, Wagstaff, and unilaterally developed and 22 executed public relations and press contacts where they misrepresented material facts 23 regarding the restaurant and its founders; 24 g. Misappropriated corporate funds to pay for their personal attorney; 25 h. Misappropriated corporate funds to make unauthorized loans and payments to 26 employees, potentially putting Plaintiff at risk for unpaid payroll tax liabilities; 27 i. Without authority, challenged the billings of the Corporation’s counsel (G&E) and 28 threatened to take G&E to bar association arbitration over the same; AMENDED COMPLAINT 12 1 j. Without authority, falsely representing to national media the volume of business being 2 conducted by the Corporation. 3 FIRST CAUSE OF ACTION 4 (Declaratory Relief to Determine Anticipatory Breach of 2019 Shareholders’ Agreement and 2019 5 Stock Purchase Agreements) 6 41. Plaintiff incorporates Paragraphs 1 through 40 of this Amended Complaint into this 7 First Cause of Action. 8 42. On or about February 19, 2019, Plaintiff and each of the Defendants signed a 9 Memorandum of Understanding (“MOU”) which they agreed would be “intended to create legally 10 binding obligations by the Parties to negotiate and finalize the 2019 Shareholders’ Agreement and the 11 2019 Stock Purchase Agreements “in good faith.” The MOU also provided that “The parties will 12 enter into the Shareholders' Agreement in substantially the form attached hereto as Exhibit A. [to the 13 MOU]”, and “The parties will enter into the Common Stock Purchase Agreements in substantially the 14 form attached hereto as Exhibits 8- 1, B-2 and B-3[to the MOU]. 15 43. As of Plaintiff’s signing of the MOU on February 19, 2019, Plaintiff was ready, 16 willing, and able to perform his obligations under the MOU. Plaintiff signed his Stock Purchase 17 Agreement and paid for his 50,000 shares of vested stock in full. Plaintiff was ready, willing, and 18 able to perform his obligations under the Shareholder’s Agreement as attached as Exhibit to the 19 MOU, and, to the best of his ability, except as prevented by actions of Defendants, Plaintiff has 20 performed his obligations as set forth in the unsigned Shareholder’s Agreement attached to the MOU. 21 44. Since February 19, 2019, Defendants, and each of them, have acted in a manner 22 inconsistent with their obligations, both under their respective Stock Purchase Agreements, and under 23 the Shareholder’s Agreement. Defendants actions with respect to both the Shareholder’s Agreement 24 and the Stock Purchase Agreements are evidence of a repudiation of their promise to abide by the 25 terms of each agreement. 26 45. With respect to Laura’s Stock Purchase Agreement, Laura has neither signed the 27 agreement nor paid for her stock. With respect to Sayat’s Stock Purchase Agreement, Sayat has 28 neither signed the agreement nor paid for his stock. AMENDED COMPLAINT 13 1 46. With respect to the