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OGDEN & FRICKS LLP
JOHN W. FRICKS, SBN 150539
ROY E. OGDEN, SBN 126961
656 Santa Rosa Street, Suite 2B
San Luis Obispo, CA 93401
(805) 544-5600
(805) 544-7700 (Fax)
Attorneys for Defendants Hamish Marshall,
Rodney Cegelski, Quiky Car Wash, LLC,
Marshall Property Holdings, LLC, and
Marshall Holdings, L.P.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SANTA BARBARA
ALEX PANANIDES, an individual and CASE NO. 23CV00961
trustee of the Alexander Nicholas (Hon. Donna Geck)
Pananides Trust dated October 31,
1979, et al. DEFENDANTS' NOTICE OF AUTOMATIC STAY
AND PRELIMINARY OPPOSITION TO
Plaintiffs, PLAINTIFFS' EX PARTE APPLICATION FOR A
TEMPORARY RESTRAINING ORDER AND ORDERS
v. TO SHOW CAUSE RE PRELIMINARY
HAMISH MARSHALL, an individual; RODNEY | MARSHALL IN SUPPORT THEREOF
CEGELSKI, an individual, QUIKY CAR
WASH, LLC, a limited liability Ex Parte Hearing:
company; MARSHALL PROPERTY HOLDINGS, DATE: March 15, 2023
LLC, a California limited liability TIME: 9:30 a.m
company; MARSHALL HOLDINGS, L.P., a DEPT: 4
California limited partnership; and
DOES 1 THROUGH 50, inclusive,
Defendants.
Defendants Hamish Marshall, Rodney Cegelski, Quiky Car Wash, LLC,
Marshall Property Holdings, LLC, and Marshall Holdings, L.P. (together,
"Defendants") hereby respectfully submit their Notice of Automatic Stay and
Preliminary Opposition to the Ex Parte Application filed by plaintiffs PFH
Holdings, LLC. ("PFH"), Alex Pananides, and Patrick Smith (together,
“Plaintiffs") .
DEFS' OPP TO EX PARTE APP RE TRO/OSC
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TI.
THIS APPLICATION IS STAYED UNTIL THE COURT
RULES ON DEFENDANTS' MOTION TO TRANSFER VENUE
The Court is advised that Defendants filed a motion to transfer venue of
this action to San Luis Obispo County Superior Court on Monday, March 14,
2023, which filing has been accepted by the Court's clerk as filed.
Defendants ask the Court to take judicial notice of its file in this case.
The timely filing of a motion to transfer venue operates as
a supersedeas or stay of proceedings and must be disposed of before any other
steps can be taken. Pickwick Stages Sys. v. Superior Court of L.A. Ct., 138
Cal. App. 448, 449 (1934); McCarthy v. Superior Court, 191 Cal. App. 3d 1023,
1034 (1987). In McCarthy, the lower court denied the defendants’ motion to
transfer and issued a temporary restraining order against defendant. On writ
of mandamus, the appellate court correctly noted that "since the timely filing
of a motion to transfer venue suspends the court's power to act regarding the
merits of the action, it follows that all injunctive orders of the court are
null and void." McCarthy v. Sup. Ct., supra, 191 Cal. App. 3d at 1034
{emphasis added); citing County of Riverside v. Superior Court, 69 Cal. 2d
828, 831 (1968).
This concept makes visceral sense as defendants are entitled to have all
decisions in the case to be made by the proper court. This action must be
stayed pending the Court's ruling on this motion as the filing of this Motion
by Defendants operates as a stay of all proceedings in this case, including
the application for temporary restraining order sought by Plaintiffs.
Defendants note that the provisional relief orders, one of which was a
temporary restraining order, that were entered by the courts in Pickwick and
McCarthy while motions to transfer venue were pending, were later nullified by
the appellate courts based upon the supersedeas stay initiated by the filing
of the motion to transfer venue.
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In a supplemental brief served just before 3:00 p.m. on March 14,
Plaintiff impliedly confirmed that the pending motion to transfer venue stops
this action by identifying a single exception to the general rule that matters
are stayed: where the activity to be enjoined is the continued harassment and
potential for physical injury to plaintiff. That single exception is clearly
inapplicable here.
In filing their Motion to Transfer Venue, Defendants set the hearing for
the earliest available date on the Court's law and motion calendar; however,
Defendants’ counsel will come to the ex parte hearing prepared to discuss a
sooner date and related briefing schedules.
II.
PRELIMINARY OPPOSITION
Though this action is stayed pursuant to the case law identified above,
Defendants provide their preliminary opposition to identify the fatal flaws in
Plaintiffs' application as (i) Plaintiffs are not reasonably likely to succeed
on the merits of their causes of action and (ii) Plaintiffs will not be
irreparably harmed if Defendants proceed with the proposed, highly-lucrative
transaction. This Preliminary Opposition focuses on Plaintiffs' inability to
prove that Defendants are proposing to take actions that exceed Defendants'
corporate authority.
A. The Proposed Transaction.
Plaintiffs come to this Court seeking extraordinary relief to block a
prospective, profitable sale of a car wash business (with 3 locations) owned
by Quiky Car Wash Associates, L.P. ("Quiky-LP"), an entity in which Plaintiff
PFH equitably owns a one-third voting interest (and a 25% profit interest).
(Declaration of Hamish Marshall attached hereto ("Marshall Decl."), 4 2.) The
Quiky-LP partnership agreement requires a simple majority of limited
partnership interests to consent to Quiky-LP's sale and Defendants, who
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equitably own a two-thirds voting interest in Quiky-LP (and 75% profit
interest), intend to move forward with the sale to Sun Day Carwash, Inc.
("Buyer"), an arms-length third party. (Id.)
Each of the car washes are operated on land leased to Quiky on long-term
leases and would call for new leases or management agreements to allow Buyer's
operation of the car wash business. (Id., I 3.) The leases proposed by Buyer
provide for terms that are equal to or better than the current leases between
Quiky-LP and the affiliated landowners. (Id.) Defendants Marshall and
Cegelski, who have been solely responsible for acquiring the land for the
affiliated landowners, developing the land, and building and operating the car
wash business, have obtained an opinion of value supporting the quality of the
purchase price and have exercised their considerable business judgment to
approve the proposed transaction. (Id., 9 4.) Plaintiff, who provided a
portion of the initial capital (which has been repaid by car wash business
profits) but has not been involved in building or operating the business,
evidently does not want the transaction to close. (Id.)
B. The Corporate Structure And Agreements.
Quiky-LP, whose assets are proposed for sale, is a limited partnership
agreement with a general partner, Quiky Car Wash, LLC ("Quiky-GP), that has 0%
voting interest but 25% interest in the profits of Quiky-LP. (Id., { 5.)
Quiky-GP is owned by Marshall Holdings, L.P. (principal: Hamish Marshall) and
Rodney Cegelski. (Id.) Marshall Holdings and Cegelski each directly own 16
2/3% limited partner voting interests (and 12.5% profit interests) in Quiky-
LP. (Id.) The remaining 66 2/3% limited partner voting interest in Quiky-LP
is owned by ARH Quiky Investments, LLC ("ARH") which in turn is owned by
Marshall Holdings (25%), Cegelski (25%), and plaintiff PFH (50%). (Id.)
Critically, the ARH operating agreement identifies Marshall, Cegelski, and
plaintiff Alex Pananides are the managers of ARH. (Id.)
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The above-describe corporate structure is depicted as follows:
Quiky Car Wash Associates,
L.P. (Quiky)
Quiky Car Wash, LLC, (GP)
General Partner of Quiky- 0%
voting; 25% profit
Marshall Holdings, L.P., |
Marshall Holdings, L.P.,
limited partner of Quiky-
16 2/3% voting; 12.5% profit
50% member of GP
Rodney Cegelski, limited
partner of Quiky- 16 2/3%
voting; 12.5% profit
Rodney Cegelski, 50% member of
GP
ARH Quiky Investments, (ARH)
limited partner of Quiky-
66 2/3% voting; 50% profit
ARH Managers: Marshall,
Cegelski, Pananides
PFH Holdings (Plaintiff)
50% member of ARH
Rodney Cegelski,
25% member of ARH
Marshall Holdings, LP
25% member of ARK
(Marshall Decl., 7 6.) The above corporate schematic is substantially similar
to the corporate tree identified on Plaintiff's FAC at page 8. (Id.) The
corporate structure in Plaintiff's complaint adds some extraneous detail about
the ownership of Marshall Holdings, L.P. and, importantly, also identifies the
three properties that are leased to Quiky-LP (i.e. the three car washes owned
and operated by Quiky-LP), two of which properties are owned by ARH, one of
Quiky-LP's limited partners. (Id.)
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Cc. A Majority Of ARH's Managers Can Vote Its Limited Partner Interest In
Favor Of Quiky-LP's sale.
While the parties disagree on some important issues, before getting to
the disagreements, it appears that the parties agree on the following:
1. The corporate structure and ownership percentages (as set forth
above) ;
2. The Quiky-LP limited partnership agreement requires a simple
majority of its limited partner interests to consent to the sale of
all, or substantially all, of its assets;
3) The ARH managers are Marshall, Cegelski, and Pananides;
4. The ARH operating agreement allows a majority of its managers to
take any action on behalf of ARH, except those that require a
unanimous vote of the ARH's members (Marshall Holdings, Cegelski
and PFH) as set forth in Section 4.5 of the ARH operating
agreement; and
aE Marshall and Cegelski wish to cause Quiky-LP to sell; Pananides
does not.
(Marshall Decl., 7 7.)
The parties clearly disagree on whether the Managers of ARH can vote
ARH's limited partnership interest in Quiky-LP to sell Quiky-LP's assets.
(Id., § 8.) Plaintiffs point to four (4) subparagraphs in section 4.5 that
they claim trigger the need for unanimous consent of ARH's members.
Plaintiffs are wrong. (Id.)
1. Purported Sale of All or Virtually All of ARH's Assets.
Section 4.5(a) of the ARH operating agreement requires unanimous consent
of all members for "a sale, exchange or other disposition of all, or
substantially all, of the [ARH's] assets occurring as part of a single
transaction or plan, or in multiple transactions over a twelve (12) month
period. . .." (Id., FAC Ex. 1.)
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Plaintiff attempts to confuse this Court by claiming that Defendants are
attempting to sell all, or substantially all, of the assets of ARH and, thus,
a majority of the Managers of ARH (i.e. Defendants) cannot approve the pending
Quiky-LP transaction. (FAC at 8:7-19.) Plaintiffs are wrong on all counts.
ARH owns three assets: (i) fee title (subject to a lease in favor of Quiky-
LP) to the car wash property on Calle Joaquin in San Luis Obispo, (ii) fee
title (subject to the Quiky-LP lease) to the car wash property on Principle
Road in Atascadero (San Luis Obispo County), and (iii) ARH's limited
partnership in Quiky-LP. (Id., 7 10.) NONE of these assets are going to be
sold in the proposed transaction to Buyer. (Id.)
After the proposed transaction closes, ARH will continue to own the two
parcels of real property and it will continue to own its limited partnership
interest in Quiky-LP. (Id., 4 11.) Even if the Court somehow equates voting
ARH's limited partnership interest to sell the Quiky-LP assets to actually
selling a ARH asset, ARH is still not selling all or substantially all of its
assets as it retains two multi-million dollar properties. (Id.) ‘This
transaction does not fall within Section 4.5(a), therefore, unanimous consent
is not necessary on this alleged ground.
2. Purported Alteration Of The Company's Purpose.
Section 4.5(c) requires unanimous member consent to "alter the Company's
purpose set forth in Section 2.5 of the ARH operating agreement." (Id., 9 12;
FAC Ex. 1.)
Section 2.5 of the Second Amendment to the ARH operating agreement
divides the Company purpose into a general purpose and a "specific" purpose:
The Company's [general] purpose is to engage in any lawful
activity for which a limited liability company may be
organized under the Act, including, without limitation, the
ownership and operation of real property and the ownership of
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1 a membership interest in another limited liability company
(or an ownership interest in any other entity) and causing
2 that other limited liability company or other entity to
3 engage in such business activity as the Managers determine to
4 be appropriate.
5 (Marshall Decl., {1 13-14; Ex. A hereto; emphasis added.)
6 Accordingly, the general purpose of the Company is to own real property
7 and to cause Quiky-LP to engage in "such business activities as the Managers
8 determine to be appropriate. (Id., 9 15.) As set forth in ARH's current
9 statement of purpose, the Managers (or a majority of Managers) shall dictate
40 the business activity of that other entity (Quiky-LP), not the members. (Id.)
"1 Section 2.5 continues by identifying the "specific" purpose of the
42 Company as to "acquire and hold" the two parcels (Calle Joaquin and Principle)
13 and another stock holding in an unrelated affiliate (which ARH no longer
14 owns). (Id., { 16.) The proposed transaction does not require ARH to sell
15 either parcel and, indeed, does not prevent it from continuing to "hold" the
16 property "for investment." (Id.)
17 Neither ARH's general purpose nor specific purpose are altered by ARH's
18 voting of its limited partnership interest in Quiky-LP to sell Quiky-LP's
19 assets. (Id., 17.) The current Section 2.5 of the ARH operating agreement,
20 signed by plaintiff PFH, expressly confirms that the Managers (or a majority
2 of them) will decide how Quiky-LP will engage in business, which necessarily
22 includes the sale of that business. (Id.)
23 3. Purported Transactions between Company and a Manager or Where The
Manager Purportedly Has a Material Interest.
24 Section 4.5(d) prevents transactions benefiting certain of the Managers
251 from entering into transactions that benefit themselves without the unanimous
26 consent of the members. (Marshall Decl., 7118.) Here, PFH claims that,
27 because Rod & Hammer, LLC ("R&H") (an entity owned by Cegelski and Marshall
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only) is also looking to sell its business to Buyer and the R&H-Buyer LOI
conditioned its sale on the concurrent sale of the Quiky-LP business, Cegelski
and Marshall are personally benefiting from the Quiky-LP sale and, therefore,
they cannot act as Managers. (Id.)
Plaintiffs could have had a point; however, that condition was
unintentionally left in the R&H letter of intent (LOI)as the LOI contained a
remnant from a previous version of the LOI when Marshall and Cegelski believed
that there would be no objection to the concurrent sale of both R&H and Quiky-
LP businesses. (Id., 4 19.) Since PFH has objected, Buyer has confirmed in
writing that Buyer has expressly waived that condition and intends to proceed
to closing on the R&H car wash purchase (structured similarly to the Quiky-LP
LOI) as a stand-alone transaction whether or not the Quiky-LP sale goes
through. (Id.), 9 19; Ex. B.)
4. Any material act that would make it impossible to carry on the
Company's ordinary business.
Section 4.5(e) requires unanimous member approval to complete any
"material act that would make it impossible to carry on the Company's ordinary
business." (Id., {1 20.) Plaintiffs have put before the Court a number of
potential negative results: the purported need to refinance ARH loans, a
potential prepayment penalty should they do so, etc. ARH's managers have got
several plans in place to ensure that ARH will continue to "hold" the two
parcels of real property.! (Id.) None of these items will make it
"impossible" to continue to own the ARH properties (which Defendants equitably
own 50% of in any event). (Id.) ARH will continue its ordinary business,
rent its two properties to the Buyer at favorable rates (equal to or superior
to the current leases). . . nothing impossible about that. (Id.)
1 Defendants have offered to buy PFH out of the real property at fair market
value, but never received a response to their offer. (Marshall Decl., { 20.)
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5. If ARH distributed its Quiky-LP limited partnership interest to its
members, a majority of its limited partnership interests would vote to
approve the Quiky-LP sale.
Pursuant to the arguments above, a majority of ARH's managers are
entitled to vote ARH's two-thirds limited partnership voting interest in
Quiky-LP to consent to the proposed transaction. (Id., 9 21.) Defendants
could have proceeded, and still could proceed, in a similar fashion by having
a majority of ARH's Managers distribute the Quiky-LP interest to ARH's members
in their prorated interests. (Id.) (This would not violate Section 4.5(a) as
it would not constitute a distribution of all of ARH's assets.) If ARH did so
and the Quiky-LP vote was taken, the results would be:
Limited partner Aye (percentage) Nay (percentage)
Marshall Holdings (direct) 16 2/38
Rodney Cegelski (direct) 16 2/3%
Marshall Holdings (from ARH) 16 2/3%
Rodney Cegelski (from ARH) 16 2/3%
PFH 33 1/3%
Total Votes (100%) 66 2/3% 33 1/3%
(Id.)
The “aye” vote exceeds the simple majority requirement to sell all, or
virtually all, of the assets of Quiky-LP. (Id.) By trying to block the sale
while holding a one-third limited partnership interest in Quiky-LP, Plaintiff
PFH is trying to assert a right to veto that PFH does not own (and is trying
to assert that right in a Court where this action does not belong). (Id.)
III.
CONCLUSION
Defendants respectfully submit that Plaintiff's TRO application is
automatically stayed until Defendants' motion to transfer venue is ruled upon.
While this law is clear about the stay, should the Court consider the pending
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1 || ex parte application, Defendants have given the Court ample reasons not to
2} issue any injunctive relief in Plaintiffs' favor.
3]| DATED: March 14, 2023
OGDEN & FRICKS LLP
4 JOHN W. FRICKS
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6 DocuSigned by:
7 ne Leese Fricks
8 Attorneys for Defendants Hamish Marshall,
Rodney Cegelski, Quiky Car Wash, LLC,
9 Marshall Property Holdings, LLC, and
40 Marshall Holdings, L.P.
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DECLARATION OF HAMISH MARSHALL
I, Hamish Marshall, declare:
1. I am over the age of eighteen and am a named defendant in this
action. The following facts are true and correct and of my own personal
knowledge. If called, I could and would testify competently thereto.
2. Plaintiffs come to this Court seeking extraordinary relief to block
a prospective, profitable sale of a car wash business (with 3 locations) owned
by Quiky Car Wash Associates, L.P. ("Quiky-LP"), an entity in which Plaintiff
PFH equitably owns a one-third voting interest (and a 25% profit interest) .
As shown in Section 11.2(a) of the Quiky-LP limited partnership agreement
which is attached to the First Amended Complaint (FAC) as Exhibit 2, the
Quiky-LP partnership agreement requires a simple majority of limited
partnership interests to consent to Quiky-LP's sale. Between my own
affiliated entities and Rodney Cegelski, we equitably own a two-thirds voting
interest in Quiky-LP (and 75% profit interest) and we intend to move forward
with the sale to Sun Day Carwash, Inc. ("Buyer"), an arms-length third party.
Se, Each of the car washes are operated on land leased to Quiky-LP on
long-term leases and would call for new leases or management agreements to
allow Buyer's operation of the car wash business. The leases proposed by
Buyer provide for terms that are equal to or better than the current leases
between Quiky-LP and the affiliated landowners.
4. Rodney Cegelski and I have been solely responsible for acquiring
the land for the affiliated landowners, developing the land, and building and
operating the car wash business. We have obtained an opinion of value
supporting the quality of the purchase price and have exercised our
considerable business judgment to approve the proposed transaction.
Plaintiff, who provided a portion of the initial capital (which has been since
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repaid by car wash business profits) has not been involved in building or
operating the business, and evidently does not want the transaction to close.
Par Quiky-LP, whose assets are proposed for sale, is a limited
partnership agreement with a general partner, Quiky Car Wash, LLC
("Quiky-GP"), that has 0% voting interest but 25% interest in the profits of
Quiky-LP. Quiky-GP is owned equally by my entity, Marshall Holdings, L.P.
("Marshall Holdings") and Rodney Cegelski. Marshall Holdings and Cegelski
each directly own 16 2/3% limited partner voting interests (and 12.5% profit
interests) in Quiky-LP. The remaining 66 2/3% limited partner voting interest
in Quiky-LP is owned by ARH Quiky Investments, LLC ("ARH") which in turn is
owned by Marshall Holdings (25%), Cegelski (25%), and plaintiff PFH (50%).
Critically, the ARH operating agreement identifies Marshall, Cegelski, and
plaintiff Alex Pananides are the managers of ARH.
6. The corporate structure described above is accurately depicted in
the schematic in the attached opposition. This tree is substantially similar
to the corporate tree identified on Plaintiff's FAC at page 8. The corporate
structure in Plaintiff's complaint adds some extraneous detail about the
ownership of Marshall Holdings, L.P. and, somewhat importantly, also
identifies the three properties that are leased to Quiky-LP (i.e. the three
car washes owned and operated by Quiky-LP), two of which properties are owned
by ARH, one of Quiky-LP's limited partners.
7. While the parties disagree on some important issues, before getting
to the disagreements, it appears that the parties agree on the following:
a. The corporate structure and ownership percentages (as set forth
above) 7
be The Quiky-LP limited partnership agreement (at Section 11.2 (a)
requires a simple majority of its limited partner interests to
consent to the sale of all, or substantially all, of its assets;
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e. The ARH managers are Marshall, Cegelski, and Pananides;
d. The ARH operating agreement allows a majority of its managers to
take any action on behalf of ARH, except those that require a
unanimous vote of the ARH's members (Marshall Holdings, Cegelski
and PFH) as set forth in Section 4.5 of the ARH operating
agreement; and
e. Cegelski and I, as two-thirds of the Managers, wish to cause Quiky-
LP to sell; Pananides does not.
8. The parties clearly disagree on whether the Managers of ARH can
vote ARH's limited partnership interest in Quiky~LP to sell Quiky-LP's assets.
Plaintiffs point to four (4) subparagraphs in Section 4.5 that they claim
trigger the need for unanimous consent of ARH's members. Plaintiffs are
wrong.
9. Section 4.5(a) of the ARH operating agreement requires unanimous
consent of all members for "a sale, exchange or other disposition of all, or
substantially all, of the [ARH's] assets occurring as part of a single
transaction or plan, or in multiple transactions over a twelve (12) month
period. ..."
10. The proposed transaction does not call for ARH to sell any of its
assets, despite Plaintiff's claims, let alone "all or substantially all" of
them. ARH owns three assets: (i) fee title (subject to a lease in favor of
Quiky-LP) to the car wash property on Calle Joaquin in San Luis Obispo, (ii)
fee title (subject to the Quiky-LP lease) to the car wash property on
Principle Road in Atascadero (San Luis Obispo County), and (iii) ARH's limited
partnership in Quiky-LP. NONE of these assets are going to be sold in the
proposed transaction to Buyer.
11. After the proposed transaction closes, ARH will continue to own the
two parcels of real property and it will continue to own its limited
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partnership interest in Quiky-LP. Even if the Court somehow equates voting
ARH's limited partnership interest to sell the Quiky-LP assets to actually
selling a ARH asset (which would be incorrect), ARH is still not selling “all
or substantially all of its assets" as ARH retains two multi-million dollar
properties after closing.
12. Section 4.5(c) requires unanimous member consent to "alter the
Company's purpose set forth in Section 2.5 of the ARH operating agreement."
13. The original ARH operating agreement has been amended twice,
including an amendment of Section 2.5. A true and correct copy of the Second
Amendment to the ARH Operating Agreement is annexed hereto as Exhibit A.
14. Section 2.5 of the Second Amendment to the ARH operating agreement
divides the Company purpose into a general purpose and a "specific" purpose:
The Company's [general] purpose is to engage in any lawful
activity for which a limited liability company may be
organized under the Act, including, without limitation, the
ownership and operation of real property and the ownership of
a membership interest in another limited liability company
(or an ownership interest in any other entity) and causing
that other limited liability company or other entity to
engage in such business activity as the Managers determine to
be appropriate.
15. As I read the Second Amendment, the general purpose of the Company
is to own real property and to cause Quiky-LP to engage in "such business
activities as the Managers determine to be appropriate." Thus, as set forth
in ARH's current statement of purpose, the Managers (or a majority of
Managers, ie. Cegelski and I) shall dictate the business activity of that
other entity (Quiky-LP), not the members.
16. Section 2.5 continues by identifying the "specific" purpose of the
Company as to "acquire and hold" the two parcels (Calle Joaquin and Principle)
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and another stock holding in an unrelated affiliate (which ARH no longer
owns). The proposed transaction does not require ARH to sell either parcel
and, indeed, does not prevent it from continuing to "hold" the property "for
investment."
17. Neither ARH's general purpose nor specific purpose are altered by
ARH's voting of its limited partnership interest in Quiky-LP to sell Quiky-
LP's assets. The current Section 2.5 of the ARH operating agreement, signed
by plaintiff PFH, expressly confirms that the Managers (or a majority of them)
will decide how Quiky-LP will engage in business, which necessarily includes
the sale of that business.
18. Section 4.5(d) prevents transactions benefiting certain of the
Managers from entering into transactions that benefit themselves without the
unanimous consent of the members. Here, PFH claims that, because Rod &
Hammer, LLC ("R&H") (an entity owned by Cegelski and I only) is also looking
to sell its business to Buyer and the R&H-Buyer LOI conditioned its sale on
the concurrent sale of the Quiky-LP business, Cegelski and I are personally
benefiting from the Quiky-LP sale and, therefore, they cannot act as Managers.
19. Plaintiffs could have had a point; however, that condition was
unintentionally left in the R&H LOI as the LOI contained a remnant from a
previous version of the LOI when Cegelski and I believed that there would be
no objection to the concurrent sale of both R&H and Quiky-LP businesses.
Since PFH has objected, Buyer has confirmed in writing that Buyer has waived
that condition and intends to proceed to closing on the R&H car wash purchase
(structured similarly to the Quiky-LP LOI) as a stand-alone transaction
whether or not the Quiky-LP sale goes through. A true and correct copy of the
email from Buyer's principal confirmed waiver of any such condition is annexed
hereto as Exhibit B.
16 DEFS' NIC OF STAY/OPP TO APP RE TRO
‘Ogden & Fricks LLPDocuSign Envel
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lope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE
20. Section 4.5(e) requires unanimous member approval to complete any
"material act that would make it impossible to carry on the Company's ordinary
business." Plaintiffs have put before the Court a number of potential
negative results: the purported need to refinance ARH loans, a potential
prepayment penalty should they do so, etc. ARH's managers have got several
plans in place to ensure that ARH will continue to "hold" the two parcels of
real property. Indeed, I have offered to buy out PFH's interest in the real
properties at fair market value. Nevertheless, none of these items will make
it "impossible" to continue to own the ARH properties (which Defendants
equitably own 50% of in any event). ARH will continue its ordinary business,
rent its two properties to the Buyer at favorable rates (equal to or superior
to the current leases). . . nothing impossible about that.
21. Defendants could have proceeded, and still could proceed, by having
a majority of ARH's Managers distribute the Quiky-LP interest to ARH's members
in their prorated interests. (This would not violate Section 4.5(a) as it
would not constitute a distribution of all of ARH's assets.) If ARH did so
and the Quiky-LP vote was taken, the results would be:
Limited partner Aye (percentage) § Nay (percentage)
Marshall Holdings (direct) 16 2/3%
Rodney Cegelski (direct) 16 2/3%
Marshall Holdings (from ARH) 16 2/38
Rodney Cegelski (from ARH) 16 2/3%
PEFH 33 1/3%
Total Votes (100%) 66 2/3% 33 1/38
The vote exceeds the simple majority requirement to sell all, or virtually
all, of the assets of Quiky-LP. By trying to block the sale while holding a
one-third limited partnership interest in Quiky-LP, Plaintiff PFH is trying to
17 DEFS' NIC OF STAY/OPP TO APP RE TRO
(Ogden & Fricks LLPDocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE
assert a right to veto that PFH does not own (and is trying to assert that
=
right in a Court where this action does not belong) .
I swear under penalty of perjury that the foregoing is true and correct
. 7 3/14/2023 .
and that this Declaration was executed on in San Luis Obispo,
CA “ae
7eBBISDE2SAAF Hamish Marshall
California.
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18 DEFS' NIC OF STAY/OPP TO APP RE TRO
Ogden & Fricks LLPJohn Fricks
————
From: Jake Greenberg
Sent: Friday, March 10, 2023 11:28 AM
To: Hamish Marshall
Cc: Justin Holland; John Fricks; Portnoff, Matthew A.; Barket Kremser, Elizabeth M.; Ivanova,
Daria
Subject: R&H LO!
Dear Hamish,
Further to the LOI dated February 28, 2023 with Rod & Hammer, LLC (the “R&H LOI”) signed by the parties on February
28, 2023, Sun Day Carwash Inc. hereby waives the condition to close on the proposed transaction between Sun Day and
Quiky Car Wash Associates in Paragraph 9(vii) of the LOI. The condition to closing was inadvertently left in prior drafts
when both transactions were being processed simultaneously. Sun Day Carwash Inc. intends to move forward on the
R&H LOI as a stand-alone transaction.
Regards,
Jake Greenberg
Sun Day Carwash | Head of Business Operations
+1 215 380 0816
x]
EXHIBIT A Page | of |SECOND AMENDMENT TO OPERATING AGREEMENT
of
ARH QuiIky INVESTMENTS, LLC
a California limited liability company
THIS SECOND AMENDMENT TO OPERATING AGREEMENT (the "Amendment" is
made and executed, effective as of December 8, 2015 (the "Effective Date"), by and among the members
identified in the attached EXHIBIT A (collectively, the "Members"), with reference to the following facts:
RECITALS:
A ARH QUIKY INVESTMENTS, LLC, a California limited liability company (the
"Company"), was formed pursuant to (i) those certain Articles of Organization with the Seerctary of State
of the State of California on June 17, 2013, and (ii) that certain Operating Agreement dated effective June
17, 2013, as amended by that certain First Amendment thereto dated effective January 2, 2014 (the
"Operating Agreement"), Capitalized terms used in this Amendment but not defined herein shall have the
respective meanings given to them in the Operating Agrecmont.
B, The Company has acquired title to the real property and improvements situated at 1460
Calle Joaquin, San Luis Obispo, California (which is commonly identified as Assessor's Parcel No. 053-
151-036 (the "Calle Joaquin Property").
C. The Members have agreed to execute this Amendment in order to memorialize their
agreement to amend Section 2.5 of the Operating Agreement to reflect that (i) the Company's business
specifically includes holding title to the Calle Joaquin Property and (ii) the specific purposes of the
Company listed therein are not intended to limit the power or authority of the Company to engage in other
business activities.
AGREEMENTS:
Now, THEREFORE, the parties hereto, intending to be legally bound, do hereby agree as follows:
L AMENDMENT OF SECTION 2.5 OF OPERATING AGREEMENT, Section 2.5 is hereby amended in
its entirety to read as follows:
"SECTION 2.5 PURPOSE OF COMPANY. The Company's purpose is to engage in any
lawful activity for which a limited liability company may be organized under the Act,
including, without limitation, the ownership and operation of real property and the
ownership of a membership interest in another limited liability company (or an ownership
interest in any other entity) and causing that other limited liability company or other
entity to engage in such business activity as the Managers determine to be appropriate.
Without limiting the generality of the foregoing, the specific purposes for which the
Company has been formed are (a) to acquire and hold an undivided interest as a tenant in
common in the real property and improvements situated at 2959 and 2989 Broad Street,
San Luis Obispo, California, and to obtain entitlements for the development thereon of
such improvements as the Members determine to be appropriate, to construct such
improvements as are permitted under such entitlements and to hold such improvement
real property for investment, (b) to acquire and hold title to the real property and
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EXHIBIT B Page | of 3improvements situated at 1460 Calle Joaquin, San Luis Obispo, California (which is
commonly identified as Assessor's Parcel No. 053-151-036, and (c) to hold for
investment a Series A-3 Limited Partner Interest (the "SLO-MLP Jnterest") in SLO-MLP,
LP., a California limited partnership ("SLO-MLP"), that represents a 45% Capital and a
41.25% Profits interest in Depot Square, L.P., a California limited partnership. For the
avoidance of doubt, the specific purposes listed in the foregoing "
2 MISCELLANEOUS. Except as expressly modified by Sections | and 2, above, the Operating
Agreement is hereby ratified and confirmed and remains in full force and effect. This Amendment may
be executed in counterparts, each of which shall be deemed to be an original, and all of which together
shalt constitute one and the same instrument binding upon each of the signatories.
[Signatures appear on the following page.)
EXHIBIT B Page 2 of 3IN WITNESS WHERBOP, alii of de Massbers of ARH QLiniy Unvesraucs, (Lt ©
Califierma Vientient Keability company. hive evecated this Second Améndinens tn Lpemabiog: danse.
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EXHIBIT B Page 3 of 3=
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PROOF OF SERVICE
(C.C.P. §§ 1013, 1013a, 2015.5)
I, the undersigned, am employed in the County of San Luis Obispo, State of
California; I am over the age of eighteen years and not a party to the within entitled action;
my business address is 656 Santa Rosa Street, Suite 2B, San Luis Obispo, California, 93401.
On the date set forth below, I served the within document entitled on the interested
party by the method of service indicated below, and addressed as follows:
DEFENDANTS! NOTICE OF AUTOMATIC STAY AND PRELIMINARY OPPOSITION TO
PLAINTIFFS' EX PARTEAPPLICATION FOR A TEMPORARY RESTRAINING ORDER
AND ORDERS TO SHOW CAUSE RE PRELIMINARY INJUNCTION; DECLARATION OF
HAMISH MARSHALL IN SUPPORT THEREOF
Thomas G. Foley, Jr.
Robert A. Curtis
FOLEY BEZEK BEBLE & CURTIS, LLP
15 West Carrillo Street
Santa Barbara, CA 93101
Email: tfoley@foleybezek.com
reurtis@foleybezek.com
Attorneys for Plaintiffs
BY MAIL. I am readily familiar with the business practice at my place of
business for collection and processing of correspondence for mailing with the United
States Postal Service. Correspondence so collected and processed is deposited with
the United States Postal Service that same day in the ordinary course of business. I
deposited such envelope in the mail at San Luis Obispo, California. The envelope was
mailed with postage thereon fully prepaid.
_ xX BY ELECTRONIC MAIL. Based upon CRC Rule 2.251 or an agreement of
the parties to accept electronic service, I served the foregoing document(s) by
electronically transmitting a copy of the document(s) to the electronic service address
shown above or on the attached list.
BY OVERNIGHT MAIL. I served the foregoing document(s) on the
interested parties in this action by placing true copies thereof enclosed in a sealed
envelope. I sent such envelope by overnight delivery and placed such envelopes in the
designated pick-up box for such overnight delivery service.
BY PERSONAL SERVICE. I served the foregoing document(s) on the
interested parties in this action by personally delivering true copies of said document
to the persons identified as follows (or by leaving same with the person in charge of
such person's office).
~~~
PROOF OF SERVICE
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I declare under penalty of perjury that the foregoing is true and correct. Executed on March
14, 2023, at San Luis Obispo, California. aleve
Rebecca Ellen Hobson
2: PROOF OF SERVICE
Ogden & Fricks LLP
Preview
I DocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oOo ON OHO FF WO DY OGDEN & FRICKS LLP JOHN W. FRICKS, SBN 150539 ROY E. OGDEN, SBN 126961 656 Santa Rosa Street, Suite 2B San Luis Obispo, CA 93401 (805) 544-5600 (805) 544-7700 (Fax) Attorneys for Defendants Hamish Marshall, Rodney Cegelski, Quiky Car Wash, LLC, Marshall Property Holdings, LLC, and Marshall Holdings, L.P. SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SANTA BARBARA ALEX PANANIDES, an individual and CASE NO. 23CV00961 trustee of the Alexander Nicholas (Hon. Donna Geck) Pananides Trust dated October 31, 1979, et al. DEFENDANTS' NOTICE OF AUTOMATIC STAY AND PRELIMINARY OPPOSITION TO Plaintiffs, PLAINTIFFS' EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER AND ORDERS v. TO SHOW CAUSE RE PRELIMINARY HAMISH MARSHALL, an individual; RODNEY | MARSHALL IN SUPPORT THEREOF CEGELSKI, an individual, QUIKY CAR WASH, LLC, a limited liability Ex Parte Hearing: company; MARSHALL PROPERTY HOLDINGS, DATE: March 15, 2023 LLC, a California limited liability TIME: 9:30 a.m company; MARSHALL HOLDINGS, L.P., a DEPT: 4 California limited partnership; and DOES 1 THROUGH 50, inclusive, Defendants. Defendants Hamish Marshall, Rodney Cegelski, Quiky Car Wash, LLC, Marshall Property Holdings, LLC, and Marshall Holdings, L.P. (together, "Defendants") hereby respectfully submit their Notice of Automatic Stay and Preliminary Opposition to the Ex Parte Application filed by plaintiffs PFH Holdings, LLC. ("PFH"), Alex Pananides, and Patrick Smith (together, “Plaintiffs") . DEFS' OPP TO EX PARTE APP RE TRO/OSC ‘Ogden & Fricks LLP| DocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oOo ON OD HO FF WwW DY TI. THIS APPLICATION IS STAYED UNTIL THE COURT RULES ON DEFENDANTS' MOTION TO TRANSFER VENUE The Court is advised that Defendants filed a motion to transfer venue of this action to San Luis Obispo County Superior Court on Monday, March 14, 2023, which filing has been accepted by the Court's clerk as filed. Defendants ask the Court to take judicial notice of its file in this case. The timely filing of a motion to transfer venue operates as a supersedeas or stay of proceedings and must be disposed of before any other steps can be taken. Pickwick Stages Sys. v. Superior Court of L.A. Ct., 138 Cal. App. 448, 449 (1934); McCarthy v. Superior Court, 191 Cal. App. 3d 1023, 1034 (1987). In McCarthy, the lower court denied the defendants’ motion to transfer and issued a temporary restraining order against defendant. On writ of mandamus, the appellate court correctly noted that "since the timely filing of a motion to transfer venue suspends the court's power to act regarding the merits of the action, it follows that all injunctive orders of the court are null and void." McCarthy v. Sup. Ct., supra, 191 Cal. App. 3d at 1034 {emphasis added); citing County of Riverside v. Superior Court, 69 Cal. 2d 828, 831 (1968). This concept makes visceral sense as defendants are entitled to have all decisions in the case to be made by the proper court. This action must be stayed pending the Court's ruling on this motion as the filing of this Motion by Defendants operates as a stay of all proceedings in this case, including the application for temporary restraining order sought by Plaintiffs. Defendants note that the provisional relief orders, one of which was a temporary restraining order, that were entered by the courts in Pickwick and McCarthy while motions to transfer venue were pending, were later nullified by the appellate courts based upon the supersedeas stay initiated by the filing of the motion to transfer venue. 2 DEFS' NIC OF STAY/OPP TO APP RE TRO (Ogden & Fricks LLPDocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oOo ON OO RF WwW DN In a supplemental brief served just before 3:00 p.m. on March 14, Plaintiff impliedly confirmed that the pending motion to transfer venue stops this action by identifying a single exception to the general rule that matters are stayed: where the activity to be enjoined is the continued harassment and potential for physical injury to plaintiff. That single exception is clearly inapplicable here. In filing their Motion to Transfer Venue, Defendants set the hearing for the earliest available date on the Court's law and motion calendar; however, Defendants’ counsel will come to the ex parte hearing prepared to discuss a sooner date and related briefing schedules. II. PRELIMINARY OPPOSITION Though this action is stayed pursuant to the case law identified above, Defendants provide their preliminary opposition to identify the fatal flaws in Plaintiffs' application as (i) Plaintiffs are not reasonably likely to succeed on the merits of their causes of action and (ii) Plaintiffs will not be irreparably harmed if Defendants proceed with the proposed, highly-lucrative transaction. This Preliminary Opposition focuses on Plaintiffs' inability to prove that Defendants are proposing to take actions that exceed Defendants' corporate authority. A. The Proposed Transaction. Plaintiffs come to this Court seeking extraordinary relief to block a prospective, profitable sale of a car wash business (with 3 locations) owned by Quiky Car Wash Associates, L.P. ("Quiky-LP"), an entity in which Plaintiff PFH equitably owns a one-third voting interest (and a 25% profit interest). (Declaration of Hamish Marshall attached hereto ("Marshall Decl."), 4 2.) The Quiky-LP partnership agreement requires a simple majority of limited partnership interests to consent to Quiky-LP's sale and Defendants, who 3 DEFS' NIC OF STAY/OPP TO APP RE TRO Ogden & Fricks LLPDocuSign Envel = oOo ODN OO FF WY DY lope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE equitably own a two-thirds voting interest in Quiky-LP (and 75% profit interest), intend to move forward with the sale to Sun Day Carwash, Inc. ("Buyer"), an arms-length third party. (Id.) Each of the car washes are operated on land leased to Quiky on long-term leases and would call for new leases or management agreements to allow Buyer's operation of the car wash business. (Id., I 3.) The leases proposed by Buyer provide for terms that are equal to or better than the current leases between Quiky-LP and the affiliated landowners. (Id.) Defendants Marshall and Cegelski, who have been solely responsible for acquiring the land for the affiliated landowners, developing the land, and building and operating the car wash business, have obtained an opinion of value supporting the quality of the purchase price and have exercised their considerable business judgment to approve the proposed transaction. (Id., 9 4.) Plaintiff, who provided a portion of the initial capital (which has been repaid by car wash business profits) but has not been involved in building or operating the business, evidently does not want the transaction to close. (Id.) B. The Corporate Structure And Agreements. Quiky-LP, whose assets are proposed for sale, is a limited partnership agreement with a general partner, Quiky Car Wash, LLC ("Quiky-GP), that has 0% voting interest but 25% interest in the profits of Quiky-LP. (Id., { 5.) Quiky-GP is owned by Marshall Holdings, L.P. (principal: Hamish Marshall) and Rodney Cegelski. (Id.) Marshall Holdings and Cegelski each directly own 16 2/3% limited partner voting interests (and 12.5% profit interests) in Quiky- LP. (Id.) The remaining 66 2/3% limited partner voting interest in Quiky-LP is owned by ARH Quiky Investments, LLC ("ARH") which in turn is owned by Marshall Holdings (25%), Cegelski (25%), and plaintiff PFH (50%). (Id.) Critically, the ARH operating agreement identifies Marshall, Cegelski, and plaintiff Alex Pananides are the managers of ARH. (Id.) 4 DEFS' NIC OF STAY/OPP TO APP RE TRO (Ogden & Fricks LLPDocuSign Envel = o Oo ON OH FF WwW DY lope ID: B380C87B-4863-4D4B-SBAB-34D8618324EE The above-describe corporate structure is depicted as follows: Quiky Car Wash Associates, L.P. (Quiky) Quiky Car Wash, LLC, (GP) General Partner of Quiky- 0% voting; 25% profit Marshall Holdings, L.P., | Marshall Holdings, L.P., limited partner of Quiky- 16 2/3% voting; 12.5% profit 50% member of GP Rodney Cegelski, limited partner of Quiky- 16 2/3% voting; 12.5% profit Rodney Cegelski, 50% member of GP ARH Quiky Investments, (ARH) limited partner of Quiky- 66 2/3% voting; 50% profit ARH Managers: Marshall, Cegelski, Pananides PFH Holdings (Plaintiff) 50% member of ARH Rodney Cegelski, 25% member of ARH Marshall Holdings, LP 25% member of ARK (Marshall Decl., 7 6.) The above corporate schematic is substantially similar to the corporate tree identified on Plaintiff's FAC at page 8. (Id.) The corporate structure in Plaintiff's complaint adds some extraneous detail about the ownership of Marshall Holdings, L.P. and, importantly, also identifies the three properties that are leased to Quiky-LP (i.e. the three car washes owned and operated by Quiky-LP), two of which properties are owned by ARH, one of Quiky-LP's limited partners. (Id.) 5 DEFS' NIC OF STAY/OPP TO APP RE TRO ‘Ogden & Fricks LLPDocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oo ON DOD HO FF WwW DY Cc. A Majority Of ARH's Managers Can Vote Its Limited Partner Interest In Favor Of Quiky-LP's sale. While the parties disagree on some important issues, before getting to the disagreements, it appears that the parties agree on the following: 1. The corporate structure and ownership percentages (as set forth above) ; 2. The Quiky-LP limited partnership agreement requires a simple majority of its limited partner interests to consent to the sale of all, or substantially all, of its assets; 3) The ARH managers are Marshall, Cegelski, and Pananides; 4. The ARH operating agreement allows a majority of its managers to take any action on behalf of ARH, except those that require a unanimous vote of the ARH's members (Marshall Holdings, Cegelski and PFH) as set forth in Section 4.5 of the ARH operating agreement; and aE Marshall and Cegelski wish to cause Quiky-LP to sell; Pananides does not. (Marshall Decl., 7 7.) The parties clearly disagree on whether the Managers of ARH can vote ARH's limited partnership interest in Quiky-LP to sell Quiky-LP's assets. (Id., § 8.) Plaintiffs point to four (4) subparagraphs in section 4.5 that they claim trigger the need for unanimous consent of ARH's members. Plaintiffs are wrong. (Id.) 1. Purported Sale of All or Virtually All of ARH's Assets. Section 4.5(a) of the ARH operating agreement requires unanimous consent of all members for "a sale, exchange or other disposition of all, or substantially all, of the [ARH's] assets occurring as part of a single transaction or plan, or in multiple transactions over a twelve (12) month period. . .." (Id., FAC Ex. 1.) 6 DEFS' NTC OF STAY/OPP TO APP RE TRO Ogden & Fricks LLPDocuSign Envel = oOo ON DO HO FF WwW DN lope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE Plaintiff attempts to confuse this Court by claiming that Defendants are attempting to sell all, or substantially all, of the assets of ARH and, thus, a majority of the Managers of ARH (i.e. Defendants) cannot approve the pending Quiky-LP transaction. (FAC at 8:7-19.) Plaintiffs are wrong on all counts. ARH owns three assets: (i) fee title (subject to a lease in favor of Quiky- LP) to the car wash property on Calle Joaquin in San Luis Obispo, (ii) fee title (subject to the Quiky-LP lease) to the car wash property on Principle Road in Atascadero (San Luis Obispo County), and (iii) ARH's limited partnership in Quiky-LP. (Id., 7 10.) NONE of these assets are going to be sold in the proposed transaction to Buyer. (Id.) After the proposed transaction closes, ARH will continue to own the two parcels of real property and it will continue to own its limited partnership interest in Quiky-LP. (Id., 4 11.) Even if the Court somehow equates voting ARH's limited partnership interest to sell the Quiky-LP assets to actually selling a ARH asset, ARH is still not selling all or substantially all of its assets as it retains two multi-million dollar properties. (Id.) ‘This transaction does not fall within Section 4.5(a), therefore, unanimous consent is not necessary on this alleged ground. 2. Purported Alteration Of The Company's Purpose. Section 4.5(c) requires unanimous member consent to "alter the Company's purpose set forth in Section 2.5 of the ARH operating agreement." (Id., 9 12; FAC Ex. 1.) Section 2.5 of the Second Amendment to the ARH operating agreement divides the Company purpose into a general purpose and a "specific" purpose: The Company's [general] purpose is to engage in any lawful activity for which a limited liability company may be organized under the Act, including, without limitation, the ownership and operation of real property and the ownership of 7 DEFS' NIC OF STAY/OPP TO APP RE TRO Ogden & Fricks LLPDocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE 1 a membership interest in another limited liability company (or an ownership interest in any other entity) and causing 2 that other limited liability company or other entity to 3 engage in such business activity as the Managers determine to 4 be appropriate. 5 (Marshall Decl., {1 13-14; Ex. A hereto; emphasis added.) 6 Accordingly, the general purpose of the Company is to own real property 7 and to cause Quiky-LP to engage in "such business activities as the Managers 8 determine to be appropriate. (Id., 9 15.) As set forth in ARH's current 9 statement of purpose, the Managers (or a majority of Managers) shall dictate 40 the business activity of that other entity (Quiky-LP), not the members. (Id.) "1 Section 2.5 continues by identifying the "specific" purpose of the 42 Company as to "acquire and hold" the two parcels (Calle Joaquin and Principle) 13 and another stock holding in an unrelated affiliate (which ARH no longer 14 owns). (Id., { 16.) The proposed transaction does not require ARH to sell 15 either parcel and, indeed, does not prevent it from continuing to "hold" the 16 property "for investment." (Id.) 17 Neither ARH's general purpose nor specific purpose are altered by ARH's 18 voting of its limited partnership interest in Quiky-LP to sell Quiky-LP's 19 assets. (Id., 17.) The current Section 2.5 of the ARH operating agreement, 20 signed by plaintiff PFH, expressly confirms that the Managers (or a majority 2 of them) will decide how Quiky-LP will engage in business, which necessarily 22 includes the sale of that business. (Id.) 23 3. Purported Transactions between Company and a Manager or Where The Manager Purportedly Has a Material Interest. 24 Section 4.5(d) prevents transactions benefiting certain of the Managers 251 from entering into transactions that benefit themselves without the unanimous 26 consent of the members. (Marshall Decl., 7118.) Here, PFH claims that, 27 because Rod & Hammer, LLC ("R&H") (an entity owned by Cegelski and Marshall 28 8 DEFS' NIC OF STAY/OPP TO APP RE TRO ‘Ogden & Fricks LLPDocuSign Envel = oOo ODN OOH FR WYO ON lope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE only) is also looking to sell its business to Buyer and the R&H-Buyer LOI conditioned its sale on the concurrent sale of the Quiky-LP business, Cegelski and Marshall are personally benefiting from the Quiky-LP sale and, therefore, they cannot act as Managers. (Id.) Plaintiffs could have had a point; however, that condition was unintentionally left in the R&H letter of intent (LOI)as the LOI contained a remnant from a previous version of the LOI when Marshall and Cegelski believed that there would be no objection to the concurrent sale of both R&H and Quiky- LP businesses. (Id., 4 19.) Since PFH has objected, Buyer has confirmed in writing that Buyer has expressly waived that condition and intends to proceed to closing on the R&H car wash purchase (structured similarly to the Quiky-LP LOI) as a stand-alone transaction whether or not the Quiky-LP sale goes through. (Id.), 9 19; Ex. B.) 4. Any material act that would make it impossible to carry on the Company's ordinary business. Section 4.5(e) requires unanimous member approval to complete any "material act that would make it impossible to carry on the Company's ordinary business." (Id., {1 20.) Plaintiffs have put before the Court a number of potential negative results: the purported need to refinance ARH loans, a potential prepayment penalty should they do so, etc. ARH's managers have got several plans in place to ensure that ARH will continue to "hold" the two parcels of real property.! (Id.) None of these items will make it "impossible" to continue to own the ARH properties (which Defendants equitably own 50% of in any event). (Id.) ARH will continue its ordinary business, rent its two properties to the Buyer at favorable rates (equal to or superior to the current leases). . . nothing impossible about that. (Id.) 1 Defendants have offered to buy PFH out of the real property at fair market value, but never received a response to their offer. (Marshall Decl., { 20.) 9 DEFS' NIC OF STAY/OPP TO APP RE TRO (Ogden & Fricks LLPDocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oo ON DO OHO FF WY ND 5. If ARH distributed its Quiky-LP limited partnership interest to its members, a majority of its limited partnership interests would vote to approve the Quiky-LP sale. Pursuant to the arguments above, a majority of ARH's managers are entitled to vote ARH's two-thirds limited partnership voting interest in Quiky-LP to consent to the proposed transaction. (Id., 9 21.) Defendants could have proceeded, and still could proceed, in a similar fashion by having a majority of ARH's Managers distribute the Quiky-LP interest to ARH's members in their prorated interests. (Id.) (This would not violate Section 4.5(a) as it would not constitute a distribution of all of ARH's assets.) If ARH did so and the Quiky-LP vote was taken, the results would be: Limited partner Aye (percentage) Nay (percentage) Marshall Holdings (direct) 16 2/38 Rodney Cegelski (direct) 16 2/3% Marshall Holdings (from ARH) 16 2/3% Rodney Cegelski (from ARH) 16 2/3% PFH 33 1/3% Total Votes (100%) 66 2/3% 33 1/3% (Id.) The “aye” vote exceeds the simple majority requirement to sell all, or virtually all, of the assets of Quiky-LP. (Id.) By trying to block the sale while holding a one-third limited partnership interest in Quiky-LP, Plaintiff PFH is trying to assert a right to veto that PFH does not own (and is trying to assert that right in a Court where this action does not belong). (Id.) III. CONCLUSION Defendants respectfully submit that Plaintiff's TRO application is automatically stayed until Defendants' motion to transfer venue is ruled upon. While this law is clear about the stay, should the Court consider the pending 10 DEFS' NIC OF STAY/OPP TO APP RE TRO Ogden & Fricks LLPDocusign ae ID: B380C87B-4863-4D4B-9BAB-34D8618324EE 1 || ex parte application, Defendants have given the Court ample reasons not to 2} issue any injunctive relief in Plaintiffs' favor. 3]| DATED: March 14, 2023 OGDEN & FRICKS LLP 4 JOHN W. FRICKS 5 6 DocuSigned by: 7 ne Leese Fricks 8 Attorneys for Defendants Hamish Marshall, Rodney Cegelski, Quiky Car Wash, LLC, 9 Marshall Property Holdings, LLC, and 40 Marshall Holdings, L.P. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 DEFS' NIC OF STAY/OPP TO APP RE TRO Ogden & Fricks LLP| DocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oOo OWN OH RF WH ND DECLARATION OF HAMISH MARSHALL I, Hamish Marshall, declare: 1. I am over the age of eighteen and am a named defendant in this action. The following facts are true and correct and of my own personal knowledge. If called, I could and would testify competently thereto. 2. Plaintiffs come to this Court seeking extraordinary relief to block a prospective, profitable sale of a car wash business (with 3 locations) owned by Quiky Car Wash Associates, L.P. ("Quiky-LP"), an entity in which Plaintiff PFH equitably owns a one-third voting interest (and a 25% profit interest) . As shown in Section 11.2(a) of the Quiky-LP limited partnership agreement which is attached to the First Amended Complaint (FAC) as Exhibit 2, the Quiky-LP partnership agreement requires a simple majority of limited partnership interests to consent to Quiky-LP's sale. Between my own affiliated entities and Rodney Cegelski, we equitably own a two-thirds voting interest in Quiky-LP (and 75% profit interest) and we intend to move forward with the sale to Sun Day Carwash, Inc. ("Buyer"), an arms-length third party. Se, Each of the car washes are operated on land leased to Quiky-LP on long-term leases and would call for new leases or management agreements to allow Buyer's operation of the car wash business. The leases proposed by Buyer provide for terms that are equal to or better than the current leases between Quiky-LP and the affiliated landowners. 4. Rodney Cegelski and I have been solely responsible for acquiring the land for the affiliated landowners, developing the land, and building and operating the car wash business. We have obtained an opinion of value supporting the quality of the purchase price and have exercised our considerable business judgment to approve the proposed transaction. Plaintiff, who provided a portion of the initial capital (which has been since 12 DEFS' NIC OF STAY/OPP TO APP RE TRO ‘Ogden & Fricks LLPDocuSign Envel oOo ODN OO FW DY = DM NY NY NY NY NN DYN @ Ba saa a a a a an a oN OD oO F WH = OD H&G ON DOD oH FF WHY = lope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE repaid by car wash business profits) has not been involved in building or operating the business, and evidently does not want the transaction to close. Par Quiky-LP, whose assets are proposed for sale, is a limited partnership agreement with a general partner, Quiky Car Wash, LLC ("Quiky-GP"), that has 0% voting interest but 25% interest in the profits of Quiky-LP. Quiky-GP is owned equally by my entity, Marshall Holdings, L.P. ("Marshall Holdings") and Rodney Cegelski. Marshall Holdings and Cegelski each directly own 16 2/3% limited partner voting interests (and 12.5% profit interests) in Quiky-LP. The remaining 66 2/3% limited partner voting interest in Quiky-LP is owned by ARH Quiky Investments, LLC ("ARH") which in turn is owned by Marshall Holdings (25%), Cegelski (25%), and plaintiff PFH (50%). Critically, the ARH operating agreement identifies Marshall, Cegelski, and plaintiff Alex Pananides are the managers of ARH. 6. The corporate structure described above is accurately depicted in the schematic in the attached opposition. This tree is substantially similar to the corporate tree identified on Plaintiff's FAC at page 8. The corporate structure in Plaintiff's complaint adds some extraneous detail about the ownership of Marshall Holdings, L.P. and, somewhat importantly, also identifies the three properties that are leased to Quiky-LP (i.e. the three car washes owned and operated by Quiky-LP), two of which properties are owned by ARH, one of Quiky-LP's limited partners. 7. While the parties disagree on some important issues, before getting to the disagreements, it appears that the parties agree on the following: a. The corporate structure and ownership percentages (as set forth above) 7 be The Quiky-LP limited partnership agreement (at Section 11.2 (a) requires a simple majority of its limited partner interests to consent to the sale of all, or substantially all, of its assets; 13 DEFS' NIC OF STAY/OPP TO APP RE TRO ‘Ogden & Fricks LLP| DocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oo DOWN OH FF WD e. The ARH managers are Marshall, Cegelski, and Pananides; d. The ARH operating agreement allows a majority of its managers to take any action on behalf of ARH, except those that require a unanimous vote of the ARH's members (Marshall Holdings, Cegelski and PFH) as set forth in Section 4.5 of the ARH operating agreement; and e. Cegelski and I, as two-thirds of the Managers, wish to cause Quiky- LP to sell; Pananides does not. 8. The parties clearly disagree on whether the Managers of ARH can vote ARH's limited partnership interest in Quiky~LP to sell Quiky-LP's assets. Plaintiffs point to four (4) subparagraphs in Section 4.5 that they claim trigger the need for unanimous consent of ARH's members. Plaintiffs are wrong. 9. Section 4.5(a) of the ARH operating agreement requires unanimous consent of all members for "a sale, exchange or other disposition of all, or substantially all, of the [ARH's] assets occurring as part of a single transaction or plan, or in multiple transactions over a twelve (12) month period. ..." 10. The proposed transaction does not call for ARH to sell any of its assets, despite Plaintiff's claims, let alone "all or substantially all" of them. ARH owns three assets: (i) fee title (subject to a lease in favor of Quiky-LP) to the car wash property on Calle Joaquin in San Luis Obispo, (ii) fee title (subject to the Quiky-LP lease) to the car wash property on Principle Road in Atascadero (San Luis Obispo County), and (iii) ARH's limited partnership in Quiky-LP. NONE of these assets are going to be sold in the proposed transaction to Buyer. 11. After the proposed transaction closes, ARH will continue to own the two parcels of real property and it will continue to own its limited 14 DEFS' NIC OF STAY/OPP TO APP RE TRO Ogden & Fricks LLPDocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oOo ON OO FF WwW DN partnership interest in Quiky-LP. Even if the Court somehow equates voting ARH's limited partnership interest to sell the Quiky-LP assets to actually selling a ARH asset (which would be incorrect), ARH is still not selling “all or substantially all of its assets" as ARH retains two multi-million dollar properties after closing. 12. Section 4.5(c) requires unanimous member consent to "alter the Company's purpose set forth in Section 2.5 of the ARH operating agreement." 13. The original ARH operating agreement has been amended twice, including an amendment of Section 2.5. A true and correct copy of the Second Amendment to the ARH Operating Agreement is annexed hereto as Exhibit A. 14. Section 2.5 of the Second Amendment to the ARH operating agreement divides the Company purpose into a general purpose and a "specific" purpose: The Company's [general] purpose is to engage in any lawful activity for which a limited liability company may be organized under the Act, including, without limitation, the ownership and operation of real property and the ownership of a membership interest in another limited liability company (or an ownership interest in any other entity) and causing that other limited liability company or other entity to engage in such business activity as the Managers determine to be appropriate. 15. As I read the Second Amendment, the general purpose of the Company is to own real property and to cause Quiky-LP to engage in "such business activities as the Managers determine to be appropriate." Thus, as set forth in ARH's current statement of purpose, the Managers (or a majority of Managers, ie. Cegelski and I) shall dictate the business activity of that other entity (Quiky-LP), not the members. 16. Section 2.5 continues by identifying the "specific" purpose of the Company as to "acquire and hold" the two parcels (Calle Joaquin and Principle) 15 DEFS' NIC OF STAY/OPP TO APP RE TRO ‘Ogden & Fricks LLP| DocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE = oOo ON OO FF WHY ND and another stock holding in an unrelated affiliate (which ARH no longer owns). The proposed transaction does not require ARH to sell either parcel and, indeed, does not prevent it from continuing to "hold" the property "for investment." 17. Neither ARH's general purpose nor specific purpose are altered by ARH's voting of its limited partnership interest in Quiky-LP to sell Quiky- LP's assets. The current Section 2.5 of the ARH operating agreement, signed by plaintiff PFH, expressly confirms that the Managers (or a majority of them) will decide how Quiky-LP will engage in business, which necessarily includes the sale of that business. 18. Section 4.5(d) prevents transactions benefiting certain of the Managers from entering into transactions that benefit themselves without the unanimous consent of the members. Here, PFH claims that, because Rod & Hammer, LLC ("R&H") (an entity owned by Cegelski and I only) is also looking to sell its business to Buyer and the R&H-Buyer LOI conditioned its sale on the concurrent sale of the Quiky-LP business, Cegelski and I are personally benefiting from the Quiky-LP sale and, therefore, they cannot act as Managers. 19. Plaintiffs could have had a point; however, that condition was unintentionally left in the R&H LOI as the LOI contained a remnant from a previous version of the LOI when Cegelski and I believed that there would be no objection to the concurrent sale of both R&H and Quiky-LP businesses. Since PFH has objected, Buyer has confirmed in writing that Buyer has waived that condition and intends to proceed to closing on the R&H car wash purchase (structured similarly to the Quiky-LP LOI) as a stand-alone transaction whether or not the Quiky-LP sale goes through. A true and correct copy of the email from Buyer's principal confirmed waiver of any such condition is annexed hereto as Exhibit B. 16 DEFS' NIC OF STAY/OPP TO APP RE TRO ‘Ogden & Fricks LLPDocuSign Envel = oo ON DO OHO FR WOW DY lope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE 20. Section 4.5(e) requires unanimous member approval to complete any "material act that would make it impossible to carry on the Company's ordinary business." Plaintiffs have put before the Court a number of potential negative results: the purported need to refinance ARH loans, a potential prepayment penalty should they do so, etc. ARH's managers have got several plans in place to ensure that ARH will continue to "hold" the two parcels of real property. Indeed, I have offered to buy out PFH's interest in the real properties at fair market value. Nevertheless, none of these items will make it "impossible" to continue to own the ARH properties (which Defendants equitably own 50% of in any event). ARH will continue its ordinary business, rent its two properties to the Buyer at favorable rates (equal to or superior to the current leases). . . nothing impossible about that. 21. Defendants could have proceeded, and still could proceed, by having a majority of ARH's Managers distribute the Quiky-LP interest to ARH's members in their prorated interests. (This would not violate Section 4.5(a) as it would not constitute a distribution of all of ARH's assets.) If ARH did so and the Quiky-LP vote was taken, the results would be: Limited partner Aye (percentage) § Nay (percentage) Marshall Holdings (direct) 16 2/3% Rodney Cegelski (direct) 16 2/3% Marshall Holdings (from ARH) 16 2/38 Rodney Cegelski (from ARH) 16 2/3% PEFH 33 1/3% Total Votes (100%) 66 2/3% 33 1/38 The vote exceeds the simple majority requirement to sell all, or virtually all, of the assets of Quiky-LP. By trying to block the sale while holding a one-third limited partnership interest in Quiky-LP, Plaintiff PFH is trying to 17 DEFS' NIC OF STAY/OPP TO APP RE TRO (Ogden & Fricks LLPDocuSign Envelope ID: B380C87B-4863-4D4B-9BAB-34D8618324EE assert a right to veto that PFH does not own (and is trying to assert that = right in a Court where this action does not belong) . I swear under penalty of perjury that the foregoing is true and correct . 7 3/14/2023 . and that this Declaration was executed on in San Luis Obispo, CA “ae 7eBBISDE2SAAF Hamish Marshall California. oOo ON OHO BF WwW DY DN NMN NY NY NY NN NY @ Ba Be Ba ea a a an 4 on oO aA F Ww NH |= OGD G&G DAN DH F&F WHNY 18 DEFS' NIC OF STAY/OPP TO APP RE TRO Ogden & Fricks LLPJohn Fricks ———— From: Jake Greenberg Sent: Friday, March 10, 2023 11:28 AM To: Hamish Marshall Cc: Justin Holland; John Fricks; Portnoff, Matthew A.; Barket Kremser, Elizabeth M.; Ivanova, Daria Subject: R&H LO! Dear Hamish, Further to the LOI dated February 28, 2023 with Rod & Hammer, LLC (the “R&H LOI”) signed by the parties on February 28, 2023, Sun Day Carwash Inc. hereby waives the condition to close on the proposed transaction between Sun Day and Quiky Car Wash Associates in Paragraph 9(vii) of the LOI. The condition to closing was inadvertently left in prior drafts when both transactions were being processed simultaneously. Sun Day Carwash Inc. intends to move forward on the R&H LOI as a stand-alone transaction. Regards, Jake Greenberg Sun Day Carwash | Head of Business Operations +1 215 380 0816 x] EXHIBIT A Page | of |SECOND AMENDMENT TO OPERATING AGREEMENT of ARH QuiIky INVESTMENTS, LLC a California limited liability company THIS SECOND AMENDMENT TO OPERATING AGREEMENT (the "Amendment" is made and executed, effective as of December 8, 2015 (the "Effective Date"), by and among the members identified in the attached EXHIBIT A (collectively, the "Members"), with reference to the following facts: RECITALS: A ARH QUIKY INVESTMENTS, LLC, a California limited liability company (the "Company"), was formed pursuant to (i) those certain Articles of Organization with the Seerctary of State of the State of California on June 17, 2013, and (ii) that certain Operating Agreement dated effective June 17, 2013, as amended by that certain First Amendment thereto dated effective January 2, 2014 (the "Operating Agreement"), Capitalized terms used in this Amendment but not defined herein shall have the respective meanings given to them in the Operating Agrecmont. B, The Company has acquired title to the real property and improvements situated at 1460 Calle Joaquin, San Luis Obispo, California (which is commonly identified as Assessor's Parcel No. 053- 151-036 (the "Calle Joaquin Property"). C. The Members have agreed to execute this Amendment in order to memorialize their agreement to amend Section 2.5 of the Operating Agreement to reflect that (i) the Company's business specifically includes holding title to the Calle Joaquin Property and (ii) the specific purposes of the Company listed therein are not intended to limit the power or authority of the Company to engage in other business activities. AGREEMENTS: Now, THEREFORE, the parties hereto, intending to be legally bound, do hereby agree as follows: L AMENDMENT OF SECTION 2.5 OF OPERATING AGREEMENT, Section 2.5 is hereby amended in its entirety to read as follows: "SECTION 2.5 PURPOSE OF COMPANY. The Company's purpose is to engage in any lawful activity for which a limited liability company may be organized under the Act, including, without limitation, the ownership and operation of real property and the ownership of a membership interest in another limited liability company (or an ownership interest in any other entity) and causing that other limited liability company or other entity to engage in such business activity as the Managers determine to be appropriate. Without limiting the generality of the foregoing, the specific purposes for which the Company has been formed are (a) to acquire and hold an undivided interest as a tenant in common in the real property and improvements situated at 2959 and 2989 Broad Street, San Luis Obispo, California, and to obtain entitlements for the development thereon of such improvements as the Members determine to be appropriate, to construct such improvements as are permitted under such entitlements and to hold such improvement real property for investment, (b) to acquire and hold title to the real property and (CAUreratlamish\A ppDara\Looal\MicrosoM\Winkowes\Tamporary Internet Files'Contont. Outlook\GJUZZMTR2nd-Ameml-Cpage-ARH doc EXHIBIT B Page | of 3improvements situated at 1460 Calle Joaquin, San Luis Obispo, California (which is commonly identified as Assessor's Parcel No. 053-151-036, and (c) to hold for investment a Series A-3 Limited Partner Interest (the "SLO-MLP Jnterest") in SLO-MLP, LP., a California limited partnership ("SLO-MLP"), that represents a 45% Capital and a 41.25% Profits interest in Depot Square, L.P., a California limited partnership. For the avoidance of doubt, the specific purposes listed in the foregoing " 2 MISCELLANEOUS. Except as expressly modified by Sections | and 2, above, the Operating Agreement is hereby ratified and confirmed and remains in full force and effect. This Amendment may be executed in counterparts, each of which shall be deemed to be an original, and all of which together shalt constitute one and the same instrument binding upon each of the signatories. [Signatures appear on the following page.) EXHIBIT B Page 2 of 3IN WITNESS WHERBOP, alii of de Massbers of ARH QLiniy Unvesraucs, (Lt © Califierma Vientient Keability company. hive evecated this Second Améndinens tn Lpemabiog: danse. effects anal the dete Feel a¢0 Fath above “WG pees" EAM RHOULL DDO twice, B..P. et atifornie Tien reel sarrneea yy To: Miva. Monee Poem LLC, ‘Rodaey ki a Citi tverti Vimo ahiteny company. PO HeMen, TRT, Lhetiy csaye Lfreiibet Tipkailing oommpary, o tercenam AFUE parents, LC EXHIBIT B Page 3 of 3= oo Oo ON ODO oO Fk WOW NY PROOF OF SERVICE (C.C.P. §§ 1013, 1013a, 2015.5) I, the undersigned, am employed in the County of San Luis Obispo, State of California; I am over the age of eighteen years and not a party to the within entitled action; my business address is 656 Santa Rosa Street, Suite 2B, San Luis Obispo, California, 93401. On the date set forth below, I served the within document entitled on the interested party by the method of service indicated below, and addressed as follows: DEFENDANTS! NOTICE OF AUTOMATIC STAY AND PRELIMINARY OPPOSITION TO PLAINTIFFS' EX PARTEAPPLICATION FOR A TEMPORARY RESTRAINING ORDER AND ORDERS TO SHOW CAUSE RE PRELIMINARY INJUNCTION; DECLARATION OF HAMISH MARSHALL IN SUPPORT THEREOF Thomas G. Foley, Jr. Robert A. Curtis FOLEY BEZEK BEBLE & CURTIS, LLP 15 West Carrillo Street Santa Barbara, CA 93101 Email: tfoley@foleybezek.com reurtis@foleybezek.com Attorneys for Plaintiffs BY MAIL. I am readily familiar with the business practice at my place of business for collection and processing of correspondence for mailing with the United States Postal Service. Correspondence so collected and processed is deposited with the United States Postal Service that same day in the ordinary course of business. I deposited such envelope in the mail at San Luis Obispo, California. The envelope was mailed with postage thereon fully prepaid. _ xX BY ELECTRONIC MAIL. Based upon CRC Rule 2.251 or an agreement of the parties to accept electronic service, I served the foregoing document(s) by electronically transmitting a copy of the document(s) to the electronic service address shown above or on the attached list. BY OVERNIGHT MAIL. I served the foregoing document(s) on the interested parties in this action by placing true copies thereof enclosed in a sealed envelope. I sent such envelope by overnight delivery and placed such envelopes in the designated pick-up box for such overnight delivery service. BY PERSONAL SERVICE. I served the foregoing document(s) on the interested parties in this action by personally delivering true copies of said document to the persons identified as follows (or by leaving same with the person in charge of such person's office). ~~~ PROOF OF SERVICE Ogden & Fricks LLPoon DOD oO FF WOW DY = NM N NY NY NY NYY NY BB Ba se oa oa a aw a a a oN DOD aA F OW He = DG BN DT BW DH BAG I declare under penalty of perjury that the foregoing is true and correct. Executed on March 14, 2023, at San Luis Obispo, California. aleve Rebecca Ellen Hobson 2: PROOF OF SERVICE Ogden & Fricks LLP