On February 08, 2021 a
Order
was filed
involving a dispute between
Arditi Scott Albert,
Expert Car Washes Inc.,
National Car Washes Inc.,
Shouhed Shahriar,
and
Arditi Scott Albert,
Auto Care California Inc. A California Corporation As A Nominal Defendant As To Derivative Claims,
Expert Car Washes Inc.,
for Other Commercial/Business Tort (not fraud/ breach of contract) (General Jurisdiction)
in the District Court of Los Angeles County.
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Sy
lor
Uny, Co,
OF ED
S Ap Vito,
Sher B Cay OV 9 "Se; “n)
*
027
Coy tie oy
Expert Car Washes. Inc. etal. v. Scott * Fentative decision on renewed applitatian,
Lung "eorcy
A Ibert Arditi, et al., 21STCV05032 for right to attach order: denied "et oy Cy
ey
Plaintiff Shahriar Shouhed (“Shouhed”) renews his application for a right to attach order
against Defendant Scott Albert Arditi (“Arditi”).
The court has read and considered the moving papers, opposition, and renders the following
tentative decision.
A. Statement of the Case
1. First Amended Complaint
Plaintiff National Car Washes, Inc. (“National”), Plaintiff Shouhend, and Cross-Defendant
Expert Car Washes, Inc. (“Expert”) commenced this proceeding on February 9, 2021. The
operative pleading is the first amended complaint (“FAC”), which removed Expert as a Plaintiff
and name Expert as a nominal Defendant for Plaintiff Shouhed’s Cerivative claims asserted on its
behalf.
The FAC alleges causes of action for (1) breach of fiduciary duty by National against
Arditi, (2) conversion by National against Arditi, (3) removal of o:ficer/director for cause against
Arditi, (4) breach of fiduciary duty derivatively on behalf of Expert against Arditi, and (5)
conversion derivatively on behalfof Expert against Arditi. The FAC alleges in pertinent part as
follows.
Expert and National are corporations owning car washes in Los Angeles County. Arditi is
a 30% shareholder in and a Director and Vice-President of Expert with an asserted 50% voting
right in Expert, and a 32.5% shareholder in and a director and Vic2-President of National. As an
officer and director, Arditi owes fiduciary duties to each corporetion and to each corporation's
other shareholders, including the duties of loyalty and care. Amorg the fiduciary duties owed by
Arditi are the duties to faithfully account to Plaintiffs, avoid self-dealing to the detriment of
Plaintiffs, and avoid misusing and/or converting the assets of either corporation for his personal
benefit.
On May 5, 2020, Arditi, purportedly acting in his capacity as an officer and director of
Expert and National, caused Plaintiffs to obtain SBA Economic Injury Disaster Loans ("EID")
loans in the sum of $493,300 and $283,000, respectively. At or about the same time, Arditi
converted $100,000 of funds out of a company account. Inasmuct. as the loans were taken in the
name of Expert and National for the stated purpose of addressing economic injuries, the loan sums
ler belonged to Expert and National. Arditi owed both corporaticns a duty to account for the
bed whereabouts and use of the loan proceeds, as well as the $100,00C he withdrew from a company
a account. Plaintiffs are informed and believe and based thereon allege that the terms of both loans
ne
hee made clear that the funds could only be used for certain company purposes, and not as distributions
2 to any owner of either corporation.
bd
toe After taking out the loans, Arditi wrote to the other shareholders and claimed the loans
were supported by his personal guaranty, which entitled him to use the loan proceeds as he saw
fit. Arditi also claimed he was entitled to use the loan funds and the $100,000 he withdrew to pay
debts allegedly owed to him. Arditi has failed and refused to use the loan proceeds for the benefit
1
Document Filed Date
November 30, 2021
Case Filing Date
February 08, 2021
Category
Other Commercial/Business Tort (not fraud/ breach of contract) (General Jurisdiction)
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Sy lor Uny, Co, OF ED S Ap Vito, Sher B Cay OV 9 "Se; “n) * 027 Coy tie oy Expert Car Washes. Inc. etal. v. Scott * Fentative decision on renewed applitatian, Lung "eorcy A Ibert Arditi, et al., 21STCV05032 for right to attach order: denied "et oy Cy ey Plaintiff Shahriar Shouhed (“Shouhed”) renews his application for a right to attach order against Defendant Scott Albert Arditi (“Arditi”). The court has read and considered the moving papers, opposition, and renders the following tentative decision. A. Statement of the Case 1. First Amended Complaint Plaintiff National Car Washes, Inc. (“National”), Plaintiff Shouhend, and Cross-Defendant Expert Car Washes, Inc. (“Expert”) commenced this proceeding on February 9, 2021. The operative pleading is the first amended complaint (“FAC”), which removed Expert as a Plaintiff and name Expert as a nominal Defendant for Plaintiff Shouhed’s Cerivative claims asserted on its behalf. The FAC alleges causes of action for (1) breach of fiduciary duty by National against Arditi, (2) conversion by National against Arditi, (3) removal of o:ficer/director for cause against Arditi, (4) breach of fiduciary duty derivatively on behalf of Expert against Arditi, and (5) conversion derivatively on behalfof Expert against Arditi. The FAC alleges in pertinent part as follows. Expert and National are corporations owning car washes in Los Angeles County. Arditi is a 30% shareholder in and a Director and Vice-President of Expert with an asserted 50% voting right in Expert, and a 32.5% shareholder in and a director and Vic2-President of National. As an officer and director, Arditi owes fiduciary duties to each corporetion and to each corporation's other shareholders, including the duties of loyalty and care. Amorg the fiduciary duties owed by Arditi are the duties to faithfully account to Plaintiffs, avoid self-dealing to the detriment of Plaintiffs, and avoid misusing and/or converting the assets of either corporation for his personal benefit. On May 5, 2020, Arditi, purportedly acting in his capacity as an officer and director of Expert and National, caused Plaintiffs to obtain SBA Economic Injury Disaster Loans ("EID") loans in the sum of $493,300 and $283,000, respectively. At or about the same time, Arditi converted $100,000 of funds out of a company account. Inasmuct. as the loans were taken in the name of Expert and National for the stated purpose of addressing economic injuries, the loan sums ler belonged to Expert and National. Arditi owed both corporaticns a duty to account for the bed whereabouts and use of the loan proceeds, as well as the $100,00C he withdrew from a company a account. Plaintiffs are informed and believe and based thereon allege that the terms of both loans ne hee made clear that the funds could only be used for certain company purposes, and not as distributions 2 to any owner of either corporation. bd toe After taking out the loans, Arditi wrote to the other shareholders and claimed the loans were supported by his personal guaranty, which entitled him to use the loan proceeds as he saw fit. Arditi also claimed he was entitled to use the loan funds and the $100,000 he withdrew to pay debts allegedly owed to him. Arditi has failed and refused to use the loan proceeds for the benefit 1