Preview
CHRISTOPHER D. SULLIVAN (148083)
csul1 i van@diamondmccarthy.corn
DIAMOND MCCARTHY LLP ELECTRONICALLY
150 California Street, Suite 2200 F I L E D
Superior Court of California,
San Francisco, California 94111 County of San Francisco
Telephone: (415) 692-5200
02/14/2020
Facsimile: (415) 263-9200 Clerk of the Court
BY: ERNALYN BURA
Deputy Clerk
Attorneys for Plaintiff, LEGALIST, INC., a
Delaware corporation
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
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LEGALIST, INC., a Delaware corporation, Case No. CGC-20-582932
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13 Plaintiff, Reservation No. 02140317-03
14 DECLARATION OF CURTIS SMOLAR
V. OF
IN SUPPORT OF APPLICATION
15 PLAINTIFF LEGALIST, INC. FOR A
RUSSEI. MYRICK, an individual; RDM RIGHT TO ATTACH ORDER,
16 LEGAL GROUP, a California sole TEMPORARY PROTECTIVE ORDER,
proprietorship, AND WRIT OF ATTACHMENT
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Defendants. Date: March 17, 2020
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Time: 9:30 a.m.
19 Dept.: 302
Judge: Hon. Ethan P. Schulman
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21 I, CURTIS SMOLAR, declare as follows:
22 1. I am an attorney at law licensed to practice law in the State of California.
23 2. I make this Declaration in support of the application of Plaintiff LEGAI.IST, INC., a
24 Delaware corporation (" Legalist" ) for a right to attach order, a temporary protective order, and a
25 writ of attachment.
26 3. I have personal knowledge of all facts set forth in this Declaration, and, if called as a
27 witness, could and would testify to the accuracy thereof.
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DECLARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTIFF'S APPI,ICATION FOR A RIGHT TO
ATTACH ORDFR, TEMPORARY PROTECTIVE ORDER, AND WRIT OF ATTACHMENT
4. I am the General Counsel of Legalist and make this Declaration in that capacity. I
am familiar with and have reviewed Legalist's books and records relating to its written agreement
with Defendants Russel Myrick ("Myrick") and RDM Legal Group, a California sole
proprietorship ("RDM") to provide litigation funding to Myrick and RDM (collectively,
"Defendants").
5. I searched on the website of The State Bar of California (www.calbar.org) and found
Myrick's record indicating that he is an attorney in good standing in the State of California.
Attached hereto as Exhibit I is a true and correct copy of the record I retrieved from the websitc of
The State Bar of California.
10 6. On February 12, 2020, Legalist filed a Complaint for Breach of Contract against
Defendants. A true and correct copy of Legalist's Complaint is attached hcrcto as Exhibit 2.
12 7. Legalist's Complaint concerns Defendants'reach of that certain Litigation Funding
13 Agreement made and entered into as of December 6, 2018 between Legalist, on the one hand, and
Defendants, on the other hand ("LFA"). See Exhibit 2 (Complaint), Attachment BC- I, f[f[1-2. The
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LFA is signed by Eva Shang, who is Legalist's co-founder and Chief Executive Officer, and who
was Legalist's President as of December 6, 2018. The LFA also is signed by Myrick, as thc
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Principal of RDM, which is identified in the LFA as a California sole proprietorship. Id.,
Attachment BC-l, $$ 3-4.
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8. The parties entered into thc LFA in connection with an action entitled Btanchetie v.
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Competitor Group, Inc., et al., Superior Court of California, County of San Diego, Case No. 37-
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2016-00018380-CU-PO-CTL (the "Blanchette Action" ). Id., Attachment BC-I, $ 5.
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9. Defendants represented the Plaintiff, Craig Blanchette ("Blanchette"), in the
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Blanchettc Action pursuant to a full contingency fee agreement providing that Defendants would
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receive a total of 40% of all amounts Blanchette recovered in thc Blanchette Action. Id.,
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Attachment BC-I, $$ 8, 14.
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10. On February 15, 2018, which was before the parties entered thc LFA, Blanchette
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was awarded a Judgment in the Blanchctte Action against defendant Competitor Group, Inc., a
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Delaware corporation (" Competitor Group") in thc amount of $ 3,200,000.00 (" Judgment" ). A true
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DECI.ARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTIFF'S APPLICATION FORA RIGHT TO
ATTACH ORDER, TEMPORARY PROTEC'ITVE ORDER, AND WRIT OF ATTACHMENT
and correct copy of thc Judgment is attached hereto as Exhibit 3. See Exhibit 2 (Complaint),
Attachment BC-I, $ 14.
11. Pursuant to Myrick and RDM's full contingency agreement with Blanchette, Myrick
and RDM were entitled to receive approximately $ 1,200,000.00 of the $ 3,200,000.00 Judgment.
See Exhibit 2 (Complaint), Attachment BC-I, $ 14.
12. Competitor Group filed a notice of appeal of the Judgment in the California Court of
Appeal on May 11, 2018, which was before the parties entered the LI'A.
13. Prior to entering the LFA, the parties negotiated the terms of the I.FA for several
weeks.
10 14. Thc parties entered the LFA on December 6, 2018, which was while Competitor
Group's appeal of the Judgment was pending. The LFA provides that Legalist, on the one hand,
12 and Defendants, on the other hand, have agreed that Legalist will provide certain funding to
facilitate the prosecution of Blanchette's claims in thc Blanchette Action. See Exhibit 2
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14 (Complaint), Attachment BC-I, $ 9.
15. Pursuant to the LFA, Legalist agreed to provide $ 250,000.000 to Defendants within
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10 days of December 6, 2018. See Exhibit 2 (Complaint), Attachment BC-I, $$ 2, 11, 13. In
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accordance with and pursuant to the LFA, Legalist timely provided the agreed upon $ 250,000.00 to
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Defendants.
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16. Pursuant to the LFA, Defendants agreed to pay Legalist $ 500,000.00 from the
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amount due to and received by Defendants on account of the Judgment if that amount is paid to
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Legalist within one year of December 6, 2018, or by December 5, 2019. See Exhibit 2
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(Complaint), Attachment BC-I, $$ 6, 7, 10, 12, 13, 15. Defendants also agreed to pay an additional
pro-rated $ 125,000.00 per year thereafter until their obligations to Legalist under the LFA were
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fully satisfied. IiI., $12. Defendants agreed to pay all amounts due to Legalist under the LFA
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"upon recovery" of any and all payments on thc Judgment. Id., $$ 10, 12, 15.
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17. Pursuant to the LFA, Defendants agreed to direct the defendants in the Blanchette
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Action to pay all amounts due to Legalist under thc LFA directly to Legalist. Defendants further
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agreed that, if the defendants in the Blanchette Action failed to pay Legalist directly, Defendants
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DFCLARATION OF CURTIS SMOL AR IN SUPPORT OF PLAINTIFF'S APPLICA11ON FOR A RIGHT TO
AlTACH ORDER, TEMPORARY PROTECTIVE ORDER, AND WRIT OF ATTACHMENT
I will hold any and all amounts they received in payment on the Judgment in trust for Legalist in a
2 jointly-controlled escrow account. Id., $ 16.
18. Pursuant to the LFA, Defendants agreed to pay Legalist interest at the rate of 4% per
4 annum if any payment due to Legalist is delayed due to the action or failure to act of Blanchette
and/or Defendants. /d., $ 17.
19. Pursuant to the LFA, Defendants agreed to indemnify, defend, and hold I,egalist
7 harmless from any and all losses or damages, including attorneys'ees and other costs of recovery,
g relating to or arising from the LFA. /d., $ 19.
20. Pursuant to the LFA, Defendants also agreed to pay Legalist liquidated damages of
10 $ 50,000.00 for any loss that Legalist may sustain internally attempting to collect the amounts due
to Legalist under the LFA, which $ 50,000.00 is in addition to any other external costs and/or
attorneys'ees, if Defendants failed to deposit any amounts they received in payment on the
13 Judgment into the jointly-controlled escrow account. Defendants further agreed that the
$ 50,000.00 payment is not intended to be a penalty in any manner whatsoever. /d., $ 20. The
purpose of this clause was based on the internal costs to recover the money from Defendants.
21. Pursuant to thc I.FA, at the same time as they executed the LFA, Defendants
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assigned their interest in the Judgment to Legalist in the amount of $ 500,000.00, plus an additional
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pro-rated amount of $ 125,000.00 per year, plus such other amounts as may be due to Legalist under
the LFA. A true and correct copy ol'he Ass ignmcnt of Judgment (Partial)/Acknowledge [ment] of
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Assignment dated December 6, 2018 is attached hereto as Exhibit 4.
22. The California Court of Appeal issued an unpublished opinion affirming the
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Judgment on November 20, 2019. On that day, Legalist's Chief Executive Officer Eva Shang sent
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Myrick an email congratulating Myrick on his success in the California Court of Appeal and asking
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Myrick whether he thought Competitor Group would appeal the Court of Appeal's affirmance of
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the Judgment to thc California Supreme Court. A true and correct copy of Ms. Shang's November
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20, 2019 email to Myrick, which I received, is attached hereto as Exhibit 5. Myrick never
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responded to Ms. Shang's November 20, 2019 email.
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23. Instead, on December 5, 2019, Myrick prepared an Acknowledgement of
DECLARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTII'F'S APPLICATION FOR A RIGHT TO
ATTACH ORDER, TEMPORARY PROTECTIVE ORDER, AND WRIT OF ATTACHMFNT
Satisfaction of Judgment (" Satisfaction" ), which was filed in the Blanchette Action on December
16, 2019. A true and correct copy ol the Satisfaction, which states that the Judgment is fully
satisfied, is attached hereto as Fxhibit 6.
24. After I.egalist learned that Myrick had filed the Satisfaction on December 16, 2019,
Ms. Shang sent Myrick an email on January 3, 2020 reminding Myrick that he should have wired
transferred the amounts due to Legalist under thc LFA to Legalist immediately upon his receipt of
any payments on the Judgment, or held those payments in the jointly-controlled escrow account. A
true and correct copy of Ms. Shang's January 3, 2020 email to Myrick, which I received, is
attached hereto as Exhibit 7. Myrick did not respond to Ms. Shang's January 3, 2020 or otherwise
10 contact Legalist.
25. Later in the day on January 3, 2020,1 sent Myrick an email reminding him that
12 Legalist, through Ms. Shang and mc, had called and emailed him but he had not responded to our
13 calls or email. On January 7, 2020, I sent Myrick an email reminding him that I have called him
numerous times and that my calls are being sent directly to voicemail. True and correct copies of
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my January 3, 2020 and January 7, 2020 emails are attached hereto as Exhibit 8. Myrick did not
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respond to either of my January 3, 2020 or January 7, 2020 cmails or otherwise contact Legalist.
26. I sent Myrick another email on January 9, 2020 asking Myrick to contact me to
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arrange payment to Legalist of the amounts duc to Legalist under the LFA. A true and correct copy
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of my January 9, 2020 email is attached hereto as Exhibit 9. Myrick did not respond to my January
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9, 2020 email or otherwise contact Legalist.
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27. I sent Myrick another email on January 13, 2020 reminding Myrick that I have
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called him and sent him emails but he has refused to respond to any of Legalist's attempts to
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contact him. A true and correct copy of my January 13, 2020 email is attached hereto as Exhibit
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10. Myrick did not respond to my January 13, 2020 email or otherwise contact Legalist.
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28. Defendants breached the LFA by failing to (a) direct Competitor Group to pay
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Legalist directly all amounts due to Legalist pursuant to the I,FA; (b) hold all payments Defendants
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received from Competitor Group in a jointly-controlled escrow account pursuant to the Ll'A; and
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(c) timely pay Legalist all amounts due under thc LFA.
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DECLARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTIFF'S APPLICATION FOR A RIGHT TO
ATTACH ORDER, TEMPORARY PROTECTIVE ORDER, AND WRIT OF ATTACIIMFNT
of attachment, Legalist is filing a motion for an order staying all other proceedings in this action
pending arbitration.
35. By filing this application for a right to attach order, a temporary protective order,
and a writ of attachment, and/or the motion to stay all other proceeding in this action, Legalist is
not waiving and does not waive its right to arbitration under the LFA.
36. Accordingly, I respectfully request that the Court issue a right to attach order, a
temporary protective order, and a writ of attachment against Myrick and in favor of Legalist.
Ideclare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
10 Executed this 12 day of February 2020, at San I'rancisco, California.
12 CURTIS SMOLAR
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DECLARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTIFF'S APPLICATION I'OR A ltIGHT TO
ATTACH ORDER, TEMPORARY PROTECTIVE ORDER, AND WIIIT OF ATTACHMENT
xiit
,z4iv The State Bar Of CalifOrnia
Russel David Myrick ¹270803
License Status: Active
Address: The RDM Legal Group, 7979 Ivanhoe Ave, Ste 200, La Jolla, CA 92037-4505
County: San Diego County
Phone Number: (888) 482-8266
Fax Number: (858) 244-7930
Email: russel@rdmlg.corn
Law School: UC Hastings COL; San Francisco CA
Below you will find all changes of license status due to both non-disciplinary administrative matters and disciplinary
actions.
Date License Status Discipline Administrative Action
Present Active
7/14/2010 Admitted to The State Bar of California
Additional Information:
~ Explanation of licensee status
~ Explanation of disciplinary system
~ Explanation of disciplinary actions
~ Copies of official licensee discipline records are available upon request
CLA Sections: None
California Lawyers Association (CLA) is an independent organization and is not part of The State Bar of California.
2020 The State Bar of California
x i it
cp PLD.C4101
'TTORNEY
OR PfcRTY WITHOUT ATTORNEY Nona, Slain Sa nnmaaf, and ndanssu
Chrislophor D. Sullivan, SBN 148083
Pofi Col/Sf USE
ONLY
DIAMOND MCCARTHY LLP
150 Csiifomis Street, Suite 2200
San Francisco, CA 94111
TEISPHONE No 415.692.5200 Pnxuofopronapi
415.262-9200
EMAILAOCRE55fopamnsf
CSUIsvan(4dismondmccsrthy corn
STREETAOORESSf
PlsistilrLBGALIST INCn n Ddswars corPorstioo
Arronupv Pcnfeamu.
SUPERIOR COURT OF CALIFORNIA, COUNTY OF
400 McAllistnrSuoci
LiAILINO ACORESR
SAN FRANCISCO
PIL,
Supdnor coitrt ofa I orn s
county Of Ofm frmciSLYI
Ssn Frmcisco„CA 94102
COYANozecooa
SRANOHNAM Civic Center Courthouse
FEB 13 2020
PLAINTIFF:LEGALIST, INCn a Delawnrs corporation CLFFI p
" .
RUSSEL MYRlCK, sn individual; RDM LEGAL GROUP, s California sale Deputy Clerk
~ DOFS 1
pmpristorahip
TO
CONTRACT
COISPLAINT E3 AMENDED COMPLAINT (Number)I
H CROSSCOMPLAINT Cl AMENDED CROSSCOMPLAINT(Number):
~Jurisdiction(checsell thstepplyjr
~
ACTION IS A LINIITED CIVIL CASE
CASE NUMSER
Amount demanded
~ does not exceed 810,000
exceeds 010,000 but does not exceed 820,000
~
H3 ACTION IS AN UNLIMITED CIVIL CASE (exceeds 825,000)
ACTION IS RECLASSIFIED by this amended complaint or cross-complaint CBC -20-5829&
1.
~ from limited lo unlimited
from unlimited to limited
Plaintiff'nsrue or names):
LEGALIST, INCH a Delaware corporation
allegss causes of a@ion against defendant'nsms or names)i
RUSSEL MYRICK, an individual; RDM LEGAL GROUP, a California sole proprietorship
2. This pleading, indudlng attachments snd exhibits, consists of the following number of pages:
6
3. a. Each plaintiff named above is a competent adult
except ptsintitf (name)i LEGALIST, INC., a Delaware corporation
(1)
12)
~a
~sn
corporaiion qualified to do business in California
unincorporated entity (dsscdbsj:
(3)~other (specify)I
b.~Plaintiff (name):
a.~has complied with the actoious business name laws and Is doing business under ihe ffcutious name (specify):
4.
c,
s.
~C3
0 hss complied with all licensing requirements ss a licensed (specify):
Intormstion about additional plaintiffs who srs not competent adults is ehowrr In Attachment 3c.
Each defendant named above is s natural pemon
11) ~
except defendant (name)I
~s
RDIVI Legal Group
a business organization, form unknown 11)~
~exceptdefendant(nsmsjf
~ a business organization, form unknown
(2)
(3) ~ corpdration
an unincorporated entity (describej:
(2)
(3)~ s corporation
Sn unincorpOraled entity (descrfbejf
(4)~ a public entity (desaibejf (4)~ a public entity
(dssafbs).'5)
(0) ~Pother (specify)ICA sole proprietorship
R Isis inllll Is Il col
Pano Appfovm! air Opfolml Um
m oscms.
iamefm
aini, I
~ other (specii'yj
Imamscmsads
mnntolddsfsnd nL a 'I nip
Ivdnm c mvs nf caslmfnn COMPLAINT— Contract Onlo oi Ofo P~mfn I
Pcoccni Siav. Jan nr I, Snarl
FAXB
0;:,',C)NSI.
PL(LCHI01
SHORT TITLE
LEGALIST, INC. v. MVRICK, et El..
4, (Continued)
b, The true names of defendants sued as Does are unknown lo plaintiff.
(1)[Z Dos defendants (specify Doe numbers): ware the agents or employees of the named
defendants snd acted within the scope of that agency or employment.
(2) C3 Doe defendants (specify Dos numbers)i are persons whose capacities ani uriknown to
plaintiff.
c.
d,
~
~
Information about additional defendants who ere not natdral persons is contained in Atlachment 4c.
Defendants who ara joined under code of civil procedure section 382 are (names)I
5.~ Plaintiff is required to comply with e claims statute, and
a. ~ hes complied with appgcable claims statutes, or
b, C3 is excused from complying because (specify)i
8. E3 C3 CivllCode section1812.10
This action is subject la C3 Clvil Code sectlon 2984.4.
7.
~'
The court is the pmper court because
defendant entered Into the contract here.
a.
b.
c,
~
~ a defendant lived here wherl the contract was entered inta.
a defendant lives here naw.
d, CJ3 the contract was tobe performed here.
e,' a defendant is a corporabon or unincorporated assodatian and its principal place of business is here.
f.
g,
~ real property that is the subject o'f this action is located here.
~'ther (specify):
8.The followingcauses of action are attached snd tile statements above apply to each (sech complaint must have one or
mme causes of eclion sltsche'd);
Breach af Contract,
C3 Common Counts
C3 Other (specify)i
9. ~ Other allegations'.
10. plaintiff prays for judgment for costs of suit; for such relief as is fair, ju'st, arid equitable; snd for
a.~v'amages of: $ 573,287.96
b. ~YF intereSt On tha damages
(1)~
(2),~v
according to proof
4
at the rate of (spec'ify): December 5, 2019
percent per year from (dale):
c. ~F attorney's fees
(1}~ at $
(2) / according to proof.
d. 4 other (specify)i
Additional damages of $ 342.47 per day after dale o'f filing (2/)2)20).
11. ~ The paragraphs of this pleading alleged on information and belial am as follows (specify paragraph numbers)i
Date:February l2, 2020
Christo her D. Sullivan
~E)
ITYPE OR I'RINi TIIRE OFINTIFE OR ATTORNEYI
(if yau wish lo ven'fy Ibis pleading, abfx s vs frication )
PLOccet IRe I, Eeeil
. IPPYNT CONIPLAINT—Contract PFEEE12
PLD-C-001(1)
BHCRT Tirtm CASE NUMBER:
LEGALIST, INC. v. MYRICK, et al.
FIRST CAUSE OF ACTION — Breach of Contract
(pvmdvc
ATTACHMENT TO K Complaint C3 Cross - Complain't
(Uss a sspsrefe cause of scilon form for ooch cause of eclion.)
BC-1. LEGALIST, INC., a Delaware corporation
Plaintiff (name):
December 6, 2018
alleges lhat ox or about (date);
s ~, written ~ oral ~ othe'r(specdffv)I
agreement was made between (neme paAiss lo sgrssmsnl)J
LEGALIST, INC. and (a) RUSSEL MYRICK and (b) RDM LEGAL GROUP
~
as Exhibit A, or
A copy of the agreement is attached
Ths essential terms ol the sgrsemsnl ~
are stated in Atlachment BC-1 ere ss follows
(specify).'C-2.
December 5, 2019
Cn or about (dares)r
defendant breeched the agreemerlt by
(sperdry)f
~ Attachment Bc-s
the acts specified
in M the following acts
Failiug to (a) direct defendant in the matter entitled Blanchette v. Competitor Group, Inc., et al.
(PCompctitor Croup" ) to pay Legalist, Inc. directly all amounts due to Legalist, Inc. pursuant to
the pfufies'greement; (b) hold all payments Defendants received from Competitor Group in a
jointly-controlled escrow account pursuant to the parties'greement; and (c) timely pay Legalist,
Inc. all amounts due uuder the parties'greement.
BCQ, Plaintiff has performed allobligations to defendant except those obligations plaintiff was prevented or
excused from pedorming.
Bc-d. Plalnfiff suffered damages legally (proximatelyl caused by defendant's breach of the agreement
H3
as stated in A'tlachment Bc-x as follows (spool(fr):
$ 573,287.96 as of February 12, 2020, plus additional damhges of $ 342.47 per day thereafter,
plus prejudgment interest of 4E% per aunum frOm December 5, 2019 until paid, plus attorney's
fees and costs.
BC 6. ~v'laintiffis entitled to'attorney fees by an agreement ore statute
~
B3
ofs
BC.6. ~ Other.
according to proof.
Page
PIQAI AII
VNN Appm 1 IVI Oplupvl Uv
J vd ddt C VMMI dl C All ldmld
CAUSE OF ACTION-Breach of Contract Cvdv Pf clvt PIP vdddd, 2 Add.id
IVIRV RWIAVIPIAPVV
PLCCJOI(lf [RVA JVVIMlr 1. Jppn
SHORT TITLE: CASE
NiuSEIE'C-026
LEGALIS'f, INC. v. MYRICK, et al.
ATTACHMENT (Numbdr)l BC- I
(This A llochnoenl may be used with any Judicial Council form )
Legalist"'r
The essential terms of the agreement between Plaintiff, LEGALIST, INC., a Delaware corporation ("
"Funder"), on the one hand, and Defendants RUSSEL MYRICK, an individual ("Myrick"), and RDM
LEGAL CIROUP, a California sole proprietorship ("RDM") (Myrick and RDM are collectively refened to
herein as "Counsell*), on the other hand, are as foilows:
1. The agreement between Funder and Counsel is entitled "Litigation Funding Agreement" (thc "LFAo) and is
referred'o in the I.FA as the "Agreement."
2. The LFA is made and entered into as of December 6, 2018, which the LFA defines as the "Effective Date."
3. The LFA is signed by Eva Shang, who is Legalist's co-founder and Chief Executive Officer, and who was
Legalist's Presiderit as of December 6, 2018.
4. The LFA is signed by Myrick, as the Principal of RDM, which is identified in the LFA as "a California sole
proprietorship."
5. The LFA was entered into in connection with a lawsuit that Craig Blanchette (" Plaintiff') filed in the
Superior Court of the State of California, County of San Diego, Case No. 37-2016-000183380-CU-PO-CTL
{the NBlanchette Action").
6. The LFA defines the term "Defendants" to mean the defendants in the Blanchette Action, namely,
"Competitor Group, Inc., Suja Life, LLC, Race Central LLC and Does 1-20...,"
7. The LFA dbfines the term "Claims" to mean "the claims and causes of action asserted by Plaintiff in (the
Blanchette Action] ... as may be amended from time to time; arising out of or in connection with such claims
and causes o f action."
8. The LPA states that "Plaintiff is being advised on and/or represented in connection with thc Claim(s) by"
Myrick and RDM and other counsel.
9. The LFA states that "Counsel and the Funder have agreed that the Funder will provide certain funding to
facilitate the prosecution of the Claim(s) in exchange for cenain payments if any recovery is awarded to the
Counsel in connection with the Claim(s)."
10, The LFA defines the term "Claim Proceeds" to mean "any and all value due to and/or received by, on
behalf of, or in lieu of payment to, the Counsel arising out of or in connection with the Claim(s) as a result of
any judgment, award, order, settlement arrangement and/or compromise (including payment of any damages
(whether treble, compensatory, punitive, or special), compensation, interest, restitution, recovery, judgment
sum, arbitral award, settlement sum, compensation payment, costs and interest on cost(s)), whether in
monetary'r non-monetary form, whether actual or contingent, and before deduction of any taxes which the
Counsel may bc liable to pay in connection with such value due to and/or, received by Counsel."
(lf theitem lbd I this Allachmenl conmms ld made under penalty of perjury,
S ll sldlemenlsin this pdos 1 of 3
Allachmenl are made under pdneilyof perjury)
(Add pages Es roquired)
form Aoonwsd lot,colonsl un ATTACHMENT
Iduslco~olcdIIonls
Jdr I, 2000I
NC 020 lns
.
to Judicial Council Form
MC425
CASE NUMBER
SHORT TITLE:
LEGALIST, INC. v. MYRICK, et SL
ATTACHMENT (Numbur)I BC-I
(This Aiiachmeni mny, be used wlfh any Judloinl Council form.)
11. The LFA defines the term "Committed Funds" to mean "$ 2S0,0000,
N
12. The LFA defines the tenn "Funder Recovery Amountm to mean N(i) S00,000 if paid within I year of the
Effective Date; plus (ii) an additional pro-rated $ 125,000 per year thereafier ttntil the satisfaction in full of all
payment obligations by Counsel to the Funder arising from this Agreement."
13. The LFA states that, "[ijn return for the Counsel's agreement to pay from any Claim Proceeds recovered
the Funder Recovery Amount to the Funder in accordance with the terms of this Agreement, the Funder agrees
to pay the Committed Funds to the Counsel within 10 days of tbe Effective Date."
14. The LFA sta'tes: "The Counsel verifies that the Counsel and the Plaintiff have a fee agreement for advice
and/or representation in connection with the Claim(s) that is on a full contingency basis in exchange for 40
percent of the Plaintiff s recovery fbr the case.
The Counsel further verifies that he expects to receive roughly
$ 1.2 million in Claim Proceeds, or 40 percent of Plaintiff's total judgment of $ 3.2 million.m
IS. The LFA states: "The Funder R'ecovery Amount shall become payable only in the event that the Counsel
recovers Claim Proceeds. In return for the Funder's agreement to pay thc Counsel the Committed Funds in
accordance with the terms of this Agreement, the Counsel agrees to pay the Funder, upon recovery of the
Claim Proceeds, the Funder Recovery Amount,"
16.The LFA states: "The Counsel shall direct thc Defendants to pay the Funder Recovery Amount directly to
thc Funder, as secured by a lien against the Counsel filed in the Claim and served on the Defendants, Should
the Defendants fail to pay the Funder Recovery Amount directly to the Funder, Counsel will hold any and all
Claim proceeds it receives in trust for the Funder iu a jointly-controlled escrow account, o'n terms that shall
entitle the Funder to receive such part of the Claim Proceeds as shall be equal to the Funder Recovery Amount.
The Counsel shall use its good faith best efforts to release Claim Proceeds to the Funder to pay the Funder
Recovery Amount pursuant to this Agreement immediately upon receipt of funds."
17. The LFA states: "If any payment due to the Funder fiom the Claims Proceeds is delayed due to the action
or failure to act on the part of the Plaintiff or the Counsel, the Counsel shall compensate the Funder for the
delay by paying interest on such delayed amount at the rate of 4% per annuin, compounded annually, from the
date on which the payment was due to the date payment is received."
18. The LFA states: "Counsel also waives any claim that Funder's interest is unenforccable against Counsel
for any reason, including without limitation that it violates ethics rules."
19. The LFA states: "Counsel agrees to inrlemn(fy, defend, and/or hold harmless Funder with respect to any
and all losses or damages (including at(olney's fees and any other costs of recovering the same) suffered by the
Funder for any reason, relating to and/or arising from this Agreement and/or the Claim(s) ...."
20. The LFA states: "Because it'would be impracticable or e'xtremely difficult to fix the actual value of
damages to Funder if Coun'sel fails to deposit'the Claim proceeds in the agreed upon jointly-controlled escrow
(If lhe llom Ihal ihip Aliechmanl concumS is made under punully of pur/ury, ail slpiomonisin this
ppgp 2 oi 3
AIIBChmoni nru mudo undor psnnlly of perjury )
(Add pages as requimd)
pppp Appmwpl Ip opmmp UIM ATTACHMENT
Jmlpplim pmpfcplppmlp
MOIUB fppv. Jpy I, Mmf to Judicial Council Form
MC-025
COPE MEM PER
SHORT T(TLE:
LEGALIST, INC. v. M YRICK, et al..
ATTACHMENT (Number)t 13C- I
(rafa Attachment.may be used Frith any Judicial Council form.)
21. 'I'he LFA states:"Any dispute, claim or controversy arising out of or relating to this Agreemen't or the
breach, termination, en fore'ament, interpretation or validity thereof, including the determination of the scope or
applicability of this agreement to arbitrate, shaB be determined by arbitration 'in San Francisco, CA before one
arbitrator(s)."
(i(the item that this Attachment concerns is
made under penalty of per)trry, ell stslementsin this saba 3 at 3
Atlebhmenl ele made under penalty ol por)tsy)
Preview
CHRISTOPHER D. SULLIVAN (148083) csul1 i van@diamondmccarthy.corn DIAMOND MCCARTHY LLP ELECTRONICALLY 150 California Street, Suite 2200 F I L E D Superior Court of California, San Francisco, California 94111 County of San Francisco Telephone: (415) 692-5200 02/14/2020 Facsimile: (415) 263-9200 Clerk of the Court BY: ERNALYN BURA Deputy Clerk Attorneys for Plaintiff, LEGALIST, INC., a Delaware corporation SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO 10 LEGALIST, INC., a Delaware corporation, Case No. CGC-20-582932 12 13 Plaintiff, Reservation No. 02140317-03 14 DECLARATION OF CURTIS SMOLAR V. OF IN SUPPORT OF APPLICATION 15 PLAINTIFF LEGALIST, INC. FOR A RUSSEI. MYRICK, an individual; RDM RIGHT TO ATTACH ORDER, 16 LEGAL GROUP, a California sole TEMPORARY PROTECTIVE ORDER, proprietorship, AND WRIT OF ATTACHMENT 17 Defendants. Date: March 17, 2020 18 Time: 9:30 a.m. 19 Dept.: 302 Judge: Hon. Ethan P. Schulman 20 21 I, CURTIS SMOLAR, declare as follows: 22 1. I am an attorney at law licensed to practice law in the State of California. 23 2. I make this Declaration in support of the application of Plaintiff LEGAI.IST, INC., a 24 Delaware corporation (" Legalist" ) for a right to attach order, a temporary protective order, and a 25 writ of attachment. 26 3. I have personal knowledge of all facts set forth in this Declaration, and, if called as a 27 witness, could and would testify to the accuracy thereof. 28 DECLARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTIFF'S APPI,ICATION FOR A RIGHT TO ATTACH ORDFR, TEMPORARY PROTECTIVE ORDER, AND WRIT OF ATTACHMENT 4. I am the General Counsel of Legalist and make this Declaration in that capacity. I am familiar with and have reviewed Legalist's books and records relating to its written agreement with Defendants Russel Myrick ("Myrick") and RDM Legal Group, a California sole proprietorship ("RDM") to provide litigation funding to Myrick and RDM (collectively, "Defendants"). 5. I searched on the website of The State Bar of California (www.calbar.org) and found Myrick's record indicating that he is an attorney in good standing in the State of California. Attached hereto as Exhibit I is a true and correct copy of the record I retrieved from the websitc of The State Bar of California. 10 6. On February 12, 2020, Legalist filed a Complaint for Breach of Contract against Defendants. A true and correct copy of Legalist's Complaint is attached hcrcto as Exhibit 2. 12 7. Legalist's Complaint concerns Defendants'reach of that certain Litigation Funding 13 Agreement made and entered into as of December 6, 2018 between Legalist, on the one hand, and Defendants, on the other hand ("LFA"). See Exhibit 2 (Complaint), Attachment BC- I, f[f[1-2. The 14 15 LFA is signed by Eva Shang, who is Legalist's co-founder and Chief Executive Officer, and who was Legalist's President as of December 6, 2018. The LFA also is signed by Myrick, as thc 16 Principal of RDM, which is identified in the LFA as a California sole proprietorship. Id., Attachment BC-l, $$ 3-4. 18 8. The parties entered into thc LFA in connection with an action entitled Btanchetie v. 19 Competitor Group, Inc., et al., Superior Court of California, County of San Diego, Case No. 37- 20 2016-00018380-CU-PO-CTL (the "Blanchette Action" ). Id., Attachment BC-I, $ 5. 21 9. Defendants represented the Plaintiff, Craig Blanchette ("Blanchette"), in the 22 Blanchettc Action pursuant to a full contingency fee agreement providing that Defendants would 23 receive a total of 40% of all amounts Blanchette recovered in thc Blanchette Action. Id., 24 Attachment BC-I, $$ 8, 14. 25 10. On February 15, 2018, which was before the parties entered thc LFA, Blanchette 26 was awarded a Judgment in the Blanchctte Action against defendant Competitor Group, Inc., a 27 Delaware corporation (" Competitor Group") in thc amount of $ 3,200,000.00 (" Judgment" ). A true 28 DECI.ARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTIFF'S APPLICATION FORA RIGHT TO ATTACH ORDER, TEMPORARY PROTEC'ITVE ORDER, AND WRIT OF ATTACHMENT and correct copy of thc Judgment is attached hereto as Exhibit 3. See Exhibit 2 (Complaint), Attachment BC-I, $ 14. 11. Pursuant to Myrick and RDM's full contingency agreement with Blanchette, Myrick and RDM were entitled to receive approximately $ 1,200,000.00 of the $ 3,200,000.00 Judgment. See Exhibit 2 (Complaint), Attachment BC-I, $ 14. 12. Competitor Group filed a notice of appeal of the Judgment in the California Court of Appeal on May 11, 2018, which was before the parties entered the LI'A. 13. Prior to entering the LFA, the parties negotiated the terms of the I.FA for several weeks. 10 14. Thc parties entered the LFA on December 6, 2018, which was while Competitor Group's appeal of the Judgment was pending. The LFA provides that Legalist, on the one hand, 12 and Defendants, on the other hand, have agreed that Legalist will provide certain funding to facilitate the prosecution of Blanchette's claims in thc Blanchette Action. See Exhibit 2 13 14 (Complaint), Attachment BC-I, $ 9. 15. Pursuant to the LFA, Legalist agreed to provide $ 250,000.000 to Defendants within 15 10 days of December 6, 2018. See Exhibit 2 (Complaint), Attachment BC-I, $$ 2, 11, 13. In 16 accordance with and pursuant to the LFA, Legalist timely provided the agreed upon $ 250,000.00 to 17 Defendants. 18 16. Pursuant to the LFA, Defendants agreed to pay Legalist $ 500,000.00 from the 19 amount due to and received by Defendants on account of the Judgment if that amount is paid to 20 Legalist within one year of December 6, 2018, or by December 5, 2019. See Exhibit 2 21 (Complaint), Attachment BC-I, $$ 6, 7, 10, 12, 13, 15. Defendants also agreed to pay an additional pro-rated $ 125,000.00 per year thereafter until their obligations to Legalist under the LFA were 23 fully satisfied. IiI., $12. Defendants agreed to pay all amounts due to Legalist under the LFA 24 "upon recovery" of any and all payments on thc Judgment. Id., $$ 10, 12, 15. 25 17. Pursuant to the LFA, Defendants agreed to direct the defendants in the Blanchette 26 Action to pay all amounts due to Legalist under thc LFA directly to Legalist. Defendants further 27 agreed that, if the defendants in the Blanchette Action failed to pay Legalist directly, Defendants -3- DFCLARATION OF CURTIS SMOL AR IN SUPPORT OF PLAINTIFF'S APPLICA11ON FOR A RIGHT TO AlTACH ORDER, TEMPORARY PROTECTIVE ORDER, AND WRIT OF ATTACHMENT I will hold any and all amounts they received in payment on the Judgment in trust for Legalist in a 2 jointly-controlled escrow account. Id., $ 16. 18. Pursuant to the LFA, Defendants agreed to pay Legalist interest at the rate of 4% per 4 annum if any payment due to Legalist is delayed due to the action or failure to act of Blanchette and/or Defendants. /d., $ 17. 19. Pursuant to the LFA, Defendants agreed to indemnify, defend, and hold I,egalist 7 harmless from any and all losses or damages, including attorneys'ees and other costs of recovery, g relating to or arising from the LFA. /d., $ 19. 20. Pursuant to the LFA, Defendants also agreed to pay Legalist liquidated damages of 10 $ 50,000.00 for any loss that Legalist may sustain internally attempting to collect the amounts due to Legalist under the LFA, which $ 50,000.00 is in addition to any other external costs and/or attorneys'ees, if Defendants failed to deposit any amounts they received in payment on the 13 Judgment into the jointly-controlled escrow account. Defendants further agreed that the $ 50,000.00 payment is not intended to be a penalty in any manner whatsoever. /d., $ 20. The purpose of this clause was based on the internal costs to recover the money from Defendants. 21. Pursuant to thc I.FA, at the same time as they executed the LFA, Defendants 16 assigned their interest in the Judgment to Legalist in the amount of $ 500,000.00, plus an additional I7 pro-rated amount of $ 125,000.00 per year, plus such other amounts as may be due to Legalist under the LFA. A true and correct copy ol'he Ass ignmcnt of Judgment (Partial)/Acknowledge [ment] of 9 Assignment dated December 6, 2018 is attached hereto as Exhibit 4. 22. The California Court of Appeal issued an unpublished opinion affirming the 21 Judgment on November 20, 2019. On that day, Legalist's Chief Executive Officer Eva Shang sent 22 Myrick an email congratulating Myrick on his success in the California Court of Appeal and asking 23 Myrick whether he thought Competitor Group would appeal the Court of Appeal's affirmance of 24 the Judgment to thc California Supreme Court. A true and correct copy of Ms. Shang's November 25 20, 2019 email to Myrick, which I received, is attached hereto as Exhibit 5. Myrick never 26 responded to Ms. Shang's November 20, 2019 email. 27 23. Instead, on December 5, 2019, Myrick prepared an Acknowledgement of DECLARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTII'F'S APPLICATION FOR A RIGHT TO ATTACH ORDER, TEMPORARY PROTECTIVE ORDER, AND WRIT OF ATTACHMFNT Satisfaction of Judgment (" Satisfaction" ), which was filed in the Blanchette Action on December 16, 2019. A true and correct copy ol the Satisfaction, which states that the Judgment is fully satisfied, is attached hereto as Fxhibit 6. 24. After I.egalist learned that Myrick had filed the Satisfaction on December 16, 2019, Ms. Shang sent Myrick an email on January 3, 2020 reminding Myrick that he should have wired transferred the amounts due to Legalist under thc LFA to Legalist immediately upon his receipt of any payments on the Judgment, or held those payments in the jointly-controlled escrow account. A true and correct copy of Ms. Shang's January 3, 2020 email to Myrick, which I received, is attached hereto as Exhibit 7. Myrick did not respond to Ms. Shang's January 3, 2020 or otherwise 10 contact Legalist. 25. Later in the day on January 3, 2020,1 sent Myrick an email reminding him that 12 Legalist, through Ms. Shang and mc, had called and emailed him but he had not responded to our 13 calls or email. On January 7, 2020, I sent Myrick an email reminding him that I have called him numerous times and that my calls are being sent directly to voicemail. True and correct copies of 14 my January 3, 2020 and January 7, 2020 emails are attached hereto as Exhibit 8. Myrick did not 15 16 respond to either of my January 3, 2020 or January 7, 2020 cmails or otherwise contact Legalist. 26. I sent Myrick another email on January 9, 2020 asking Myrick to contact me to 17 arrange payment to Legalist of the amounts duc to Legalist under the LFA. A true and correct copy 18 of my January 9, 2020 email is attached hereto as Exhibit 9. Myrick did not respond to my January 19 9, 2020 email or otherwise contact Legalist. 20 27. I sent Myrick another email on January 13, 2020 reminding Myrick that I have 21 called him and sent him emails but he has refused to respond to any of Legalist's attempts to 22 contact him. A true and correct copy of my January 13, 2020 email is attached hereto as Exhibit 23 10. Myrick did not respond to my January 13, 2020 email or otherwise contact Legalist. 24 28. Defendants breached the LFA by failing to (a) direct Competitor Group to pay 25 Legalist directly all amounts due to Legalist pursuant to the I,FA; (b) hold all payments Defendants 26 received from Competitor Group in a jointly-controlled escrow account pursuant to the Ll'A; and 27 (c) timely pay Legalist all amounts due under thc LFA. 28 -5- DECLARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTIFF'S APPLICATION FOR A RIGHT TO ATTACH ORDER, TEMPORARY PROTECTIVE ORDER, AND WRIT OF ATTACIIMFNT of attachment, Legalist is filing a motion for an order staying all other proceedings in this action pending arbitration. 35. By filing this application for a right to attach order, a temporary protective order, and a writ of attachment, and/or the motion to stay all other proceeding in this action, Legalist is not waiving and does not waive its right to arbitration under the LFA. 36. Accordingly, I respectfully request that the Court issue a right to attach order, a temporary protective order, and a writ of attachment against Myrick and in favor of Legalist. Ideclare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. 10 Executed this 12 day of February 2020, at San I'rancisco, California. 12 CURTIS SMOLAR 13 15 16 17 19 20 21 22 23 24 25 26 27 28 -7- DECLARATION OF CURTIS SMOLAR IN SUPPORT OF PLAINTIFF'S APPLICATION I'OR A ltIGHT TO ATTACH ORDER, TEMPORARY PROTECTIVE ORDER, AND WIIIT OF ATTACHMENT xiit ,z4iv The State Bar Of CalifOrnia Russel David Myrick ¹270803 License Status: Active Address: The RDM Legal Group, 7979 Ivanhoe Ave, Ste 200, La Jolla, CA 92037-4505 County: San Diego County Phone Number: (888) 482-8266 Fax Number: (858) 244-7930 Email: russel@rdmlg.corn Law School: UC Hastings COL; San Francisco CA Below you will find all changes of license status due to both non-disciplinary administrative matters and disciplinary actions. Date License Status Discipline Administrative Action Present Active 7/14/2010 Admitted to The State Bar of California Additional Information: ~ Explanation of licensee status ~ Explanation of disciplinary system ~ Explanation of disciplinary actions ~ Copies of official licensee discipline records are available upon request CLA Sections: None California Lawyers Association (CLA) is an independent organization and is not part of The State Bar of California. 2020 The State Bar of California x i it cp PLD.C4101 'TTORNEY OR PfcRTY WITHOUT ATTORNEY Nona, Slain Sa nnmaaf, and ndanssu Chrislophor D. Sullivan, SBN 148083 Pofi Col/Sf USE ONLY DIAMOND MCCARTHY LLP 150 Csiifomis Street, Suite 2200 San Francisco, CA 94111 TEISPHONE No 415.692.5200 Pnxuofopronapi 415.262-9200 EMAILAOCRE55fopamnsf CSUIsvan(4dismondmccsrthy corn STREETAOORESSf PlsistilrLBGALIST INCn n Ddswars corPorstioo Arronupv Pcnfeamu. SUPERIOR COURT OF CALIFORNIA, COUNTY OF 400 McAllistnrSuoci LiAILINO ACORESR SAN FRANCISCO PIL, Supdnor coitrt ofa I orn s county Of Ofm frmciSLYI Ssn Frmcisco„CA 94102 COYANozecooa SRANOHNAM Civic Center Courthouse FEB 13 2020 PLAINTIFF:LEGALIST, INCn a Delawnrs corporation CLFFI p " . RUSSEL MYRlCK, sn individual; RDM LEGAL GROUP, s California sale Deputy Clerk ~ DOFS 1 pmpristorahip TO CONTRACT COISPLAINT E3 AMENDED COMPLAINT (Number)I H CROSSCOMPLAINT Cl AMENDED CROSSCOMPLAINT(Number): ~Jurisdiction(checsell thstepplyjr ~ ACTION IS A LINIITED CIVIL CASE CASE NUMSER Amount demanded ~ does not exceed 810,000 exceeds 010,000 but does not exceed 820,000 ~ H3 ACTION IS AN UNLIMITED CIVIL CASE (exceeds 825,000) ACTION IS RECLASSIFIED by this amended complaint or cross-complaint CBC -20-5829& 1. ~ from limited lo unlimited from unlimited to limited Plaintiff'nsrue or names): LEGALIST, INCH a Delaware corporation allegss causes of a@ion against defendant'nsms or names)i RUSSEL MYRICK, an individual; RDM LEGAL GROUP, a California sole proprietorship 2. This pleading, indudlng attachments snd exhibits, consists of the following number of pages: 6 3. a. Each plaintiff named above is a competent adult except ptsintitf (name)i LEGALIST, INC., a Delaware corporation (1) 12) ~a ~sn corporaiion qualified to do business in California unincorporated entity (dsscdbsj: (3)~other (specify)I b.~Plaintiff (name): a.~has complied with the actoious business name laws and Is doing business under ihe ffcutious name (specify): 4. c, s. ~C3 0 hss complied with all licensing requirements ss a licensed (specify): Intormstion about additional plaintiffs who srs not competent adults is ehowrr In Attachment 3c. Each defendant named above is s natural pemon 11) ~ except defendant (name)I ~s RDIVI Legal Group a business organization, form unknown 11)~ ~exceptdefendant(nsmsjf ~ a business organization, form unknown (2) (3) ~ corpdration an unincorporated entity (describej: (2) (3)~ s corporation Sn unincorpOraled entity (descrfbejf (4)~ a public entity (desaibejf (4)~ a public entity (dssafbs).'5) (0) ~Pother (specify)ICA sole proprietorship R Isis inllll Is Il col Pano Appfovm! air Opfolml Um m oscms. iamefm aini, I ~ other (specii'yj Imamscmsads mnntolddsfsnd nL a 'I nip Ivdnm c mvs nf caslmfnn COMPLAINT— Contract Onlo oi Ofo P~mfn I Pcoccni Siav. Jan nr I, Snarl FAXB 0;:,',C)NSI. PL(LCHI01 SHORT TITLE LEGALIST, INC. v. MVRICK, et El.. 4, (Continued) b, The true names of defendants sued as Does are unknown lo plaintiff. (1)[Z Dos defendants (specify Doe numbers): ware the agents or employees of the named defendants snd acted within the scope of that agency or employment. (2) C3 Doe defendants (specify Dos numbers)i are persons whose capacities ani uriknown to plaintiff. c. d, ~ ~ Information about additional defendants who ere not natdral persons is contained in Atlachment 4c. Defendants who ara joined under code of civil procedure section 382 are (names)I 5.~ Plaintiff is required to comply with e claims statute, and a. ~ hes complied with appgcable claims statutes, or b, C3 is excused from complying because (specify)i 8. E3 C3 CivllCode section1812.10 This action is subject la C3 Clvil Code sectlon 2984.4. 7. ~' The court is the pmper court because defendant entered Into the contract here. a. b. c, ~ ~ a defendant lived here wherl the contract was entered inta. a defendant lives here naw. d, CJ3 the contract was tobe performed here. e,' a defendant is a corporabon or unincorporated assodatian and its principal place of business is here. f. g, ~ real property that is the subject o'f this action is located here. ~'ther (specify): 8.The followingcauses of action are attached snd tile statements above apply to each (sech complaint must have one or mme causes of eclion sltsche'd); Breach af Contract, C3 Common Counts C3 Other (specify)i 9. ~ Other allegations'. 10. plaintiff prays for judgment for costs of suit; for such relief as is fair, ju'st, arid equitable; snd for a.~v'amages of: $ 573,287.96 b. ~YF intereSt On tha damages (1)~ (2),~v according to proof 4 at the rate of (spec'ify): December 5, 2019 percent per year from (dale): c. ~F attorney's fees (1}~ at $ (2) / according to proof. d. 4 other (specify)i Additional damages of $ 342.47 per day after dale o'f filing (2/)2)20). 11. ~ The paragraphs of this pleading alleged on information and belial am as follows (specify paragraph numbers)i Date:February l2, 2020 Christo her D. Sullivan ~E) ITYPE OR I'RINi TIIRE OFINTIFE OR ATTORNEYI (if yau wish lo ven'fy Ibis pleading, abfx s vs frication ) PLOccet IRe I, Eeeil . IPPYNT CONIPLAINT—Contract PFEEE12 PLD-C-001(1) BHCRT Tirtm CASE NUMBER: LEGALIST, INC. v. MYRICK, et al. FIRST CAUSE OF ACTION — Breach of Contract (pvmdvc ATTACHMENT TO K Complaint C3 Cross - Complain't (Uss a sspsrefe cause of scilon form for ooch cause of eclion.) BC-1. LEGALIST, INC., a Delaware corporation Plaintiff (name): December 6, 2018 alleges lhat ox or about (date); s ~, written ~ oral ~ othe'r(specdffv)I agreement was made between (neme paAiss lo sgrssmsnl)J LEGALIST, INC. and (a) RUSSEL MYRICK and (b) RDM LEGAL GROUP ~ as Exhibit A, or A copy of the agreement is attached Ths essential terms ol the sgrsemsnl ~ are stated in Atlachment BC-1 ere ss follows (specify).'C-2. December 5, 2019 Cn or about (dares)r defendant breeched the agreemerlt by (sperdry)f ~ Attachment Bc-s the acts specified in M the following acts Failiug to (a) direct defendant in the matter entitled Blanchette v. Competitor Group, Inc., et al. (PCompctitor Croup" ) to pay Legalist, Inc. directly all amounts due to Legalist, Inc. pursuant to the pfufies'greement; (b) hold all payments Defendants received from Competitor Group in a jointly-controlled escrow account pursuant to the parties'greement; and (c) timely pay Legalist, Inc. all amounts due uuder the parties'greement. BCQ, Plaintiff has performed allobligations to defendant except those obligations plaintiff was prevented or excused from pedorming. Bc-d. Plalnfiff suffered damages legally (proximatelyl caused by defendant's breach of the agreement H3 as stated in A'tlachment Bc-x as follows (spool(fr): $ 573,287.96 as of February 12, 2020, plus additional damhges of $ 342.47 per day thereafter, plus prejudgment interest of 4E% per aunum frOm December 5, 2019 until paid, plus attorney's fees and costs. BC 6. ~v'laintiffis entitled to'attorney fees by an agreement ore statute ~ B3 ofs BC.6. ~ Other. according to proof. Page PIQAI AII VNN Appm 1 IVI Oplupvl Uv J vd ddt C VMMI dl C All ldmld CAUSE OF ACTION-Breach of Contract Cvdv Pf clvt PIP vdddd, 2 Add.id IVIRV RWIAVIPIAPVV PLCCJOI(lf [RVA JVVIMlr 1. Jppn SHORT TITLE: CASE NiuSEIE'C-026 LEGALIS'f, INC. v. MYRICK, et al. ATTACHMENT (Numbdr)l BC- I (This A llochnoenl may be used with any Judicial Council form ) Legalist"'r The essential terms of the agreement between Plaintiff, LEGALIST, INC., a Delaware corporation (" "Funder"), on the one hand, and Defendants RUSSEL MYRICK, an individual ("Myrick"), and RDM LEGAL CIROUP, a California sole proprietorship ("RDM") (Myrick and RDM are collectively refened to herein as "Counsell*), on the other hand, are as foilows: 1. The agreement between Funder and Counsel is entitled "Litigation Funding Agreement" (thc "LFAo) and is referred'o in the I.FA as the "Agreement." 2. The LFA is made and entered into as of December 6, 2018, which the LFA defines as the "Effective Date." 3. The LFA is signed by Eva Shang, who is Legalist's co-founder and Chief Executive Officer, and who was Legalist's Presiderit as of December 6, 2018. 4. The LFA is signed by Myrick, as the Principal of RDM, which is identified in the LFA as "a California sole proprietorship." 5. The LFA was entered into in connection with a lawsuit that Craig Blanchette (" Plaintiff') filed in the Superior Court of the State of California, County of San Diego, Case No. 37-2016-000183380-CU-PO-CTL {the NBlanchette Action"). 6. The LFA defines the term "Defendants" to mean the defendants in the Blanchette Action, namely, "Competitor Group, Inc., Suja Life, LLC, Race Central LLC and Does 1-20...," 7. The LFA dbfines the term "Claims" to mean "the claims and causes of action asserted by Plaintiff in (the Blanchette Action] ... as may be amended from time to time; arising out of or in connection with such claims and causes o f action." 8. The LPA states that "Plaintiff is being advised on and/or represented in connection with thc Claim(s) by" Myrick and RDM and other counsel. 9. The LFA states that "Counsel and the Funder have agreed that the Funder will provide certain funding to facilitate the prosecution of the Claim(s) in exchange for cenain payments if any recovery is awarded to the Counsel in connection with the Claim(s)." 10, The LFA defines the term "Claim Proceeds" to mean "any and all value due to and/or received by, on behalf of, or in lieu of payment to, the Counsel arising out of or in connection with the Claim(s) as a result of any judgment, award, order, settlement arrangement and/or compromise (including payment of any damages (whether treble, compensatory, punitive, or special), compensation, interest, restitution, recovery, judgment sum, arbitral award, settlement sum, compensation payment, costs and interest on cost(s)), whether in monetary'r non-monetary form, whether actual or contingent, and before deduction of any taxes which the Counsel may bc liable to pay in connection with such value due to and/or, received by Counsel." (lf theitem lbd I this Allachmenl conmms ld made under penalty of perjury, S ll sldlemenlsin this pdos 1 of 3 Allachmenl are made under pdneilyof perjury) (Add pages Es roquired) form Aoonwsd lot,colonsl un ATTACHMENT Iduslco~olcdIIonls Jdr I, 2000I NC 020 lns . to Judicial Council Form MC425 CASE NUMBER SHORT TITLE: LEGALIST, INC. v. MYRICK, et SL ATTACHMENT (Numbur)I BC-I (This Aiiachmeni mny, be used wlfh any Judloinl Council form.) 11. The LFA defines the term "Committed Funds" to mean "$ 2S0,0000, N 12. The LFA defines the tenn "Funder Recovery Amountm to mean N(i) S00,000 if paid within I year of the Effective Date; plus (ii) an additional pro-rated $ 125,000 per year thereafier ttntil the satisfaction in full of all payment obligations by Counsel to the Funder arising from this Agreement." 13. The LFA states that, "[ijn return for the Counsel's agreement to pay from any Claim Proceeds recovered the Funder Recovery Amount to the Funder in accordance with the terms of this Agreement, the Funder agrees to pay the Committed Funds to the Counsel within 10 days of tbe Effective Date." 14. The LFA sta'tes: "The Counsel verifies that the Counsel and the Plaintiff have a fee agreement for advice and/or representation in connection with the Claim(s) that is on a full contingency basis in exchange for 40 percent of the Plaintiff s recovery fbr the case. The Counsel further verifies that he expects to receive roughly $ 1.2 million in Claim Proceeds, or 40 percent of Plaintiff's total judgment of $ 3.2 million.m IS. The LFA states: "The Funder R'ecovery Amount shall become payable only in the event that the Counsel recovers Claim Proceeds. In return for the Funder's agreement to pay thc Counsel the Committed Funds in accordance with the terms of this Agreement, the Counsel agrees to pay the Funder, upon recovery of the Claim Proceeds, the Funder Recovery Amount," 16.The LFA states: "The Counsel shall direct thc Defendants to pay the Funder Recovery Amount directly to thc Funder, as secured by a lien against the Counsel filed in the Claim and served on the Defendants, Should the Defendants fail to pay the Funder Recovery Amount directly to the Funder, Counsel will hold any and all Claim proceeds it receives in trust for the Funder iu a jointly-controlled escrow account, o'n terms that shall entitle the Funder to receive such part of the Claim Proceeds as shall be equal to the Funder Recovery Amount. The Counsel shall use its good faith best efforts to release Claim Proceeds to the Funder to pay the Funder Recovery Amount pursuant to this Agreement immediately upon receipt of funds." 17. The LFA states: "If any payment due to the Funder fiom the Claims Proceeds is delayed due to the action or failure to act on the part of the Plaintiff or the Counsel, the Counsel shall compensate the Funder for the delay by paying interest on such delayed amount at the rate of 4% per annuin, compounded annually, from the date on which the payment was due to the date payment is received." 18. The LFA states: "Counsel also waives any claim that Funder's interest is unenforccable against Counsel for any reason, including without limitation that it violates ethics rules." 19. The LFA states: "Counsel agrees to inrlemn(fy, defend, and/or hold harmless Funder with respect to any and all losses or damages (including at(olney's fees and any other costs of recovering the same) suffered by the Funder for any reason, relating to and/or arising from this Agreement and/or the Claim(s) ...." 20. The LFA states: "Because it'would be impracticable or e'xtremely difficult to fix the actual value of damages to Funder if Coun'sel fails to deposit'the Claim proceeds in the agreed upon jointly-controlled escrow (If lhe llom Ihal ihip Aliechmanl concumS is made under punully of pur/ury, ail slpiomonisin this ppgp 2 oi 3 AIIBChmoni nru mudo undor psnnlly of perjury ) (Add pages as requimd) pppp Appmwpl Ip opmmp UIM ATTACHMENT Jmlpplim pmpfcplppmlp MOIUB fppv. Jpy I, Mmf to Judicial Council Form MC-025 COPE MEM PER SHORT T(TLE: LEGALIST, INC. v. M YRICK, et al.. ATTACHMENT (Number)t 13C- I (rafa Attachment.may be used Frith any Judicial Council form.) 21. 'I'he LFA states:"Any dispute, claim or controversy arising out of or relating to this Agreemen't or the breach, termination, en fore'ament, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shaB be determined by arbitration 'in San Francisco, CA before one arbitrator(s)." (i(the item that this Attachment concerns is made under penalty of per)trry, ell stslementsin this saba 3 at 3 Atlebhmenl ele made under penalty ol por)tsy)