Preview
1 Trevor B. McCann (State Bar No. 243724)
Ryan P. Harley (State Bar No. 245059)
2 COLLINS + COLLINS LLP
2175 N California Boulevard, Suite 835 ELECTRONICALLY
3
Walnut Creek, CA 94596 FILED
4 (510) 844-5100 – FAX (510) 844-5101 Superior Court of California,
County of San Francisco
Email: tmccann@ccllp.law
5 Email: rharley@ccllp.law 07/31/2023
Clerk of the Court
BY: SANDRA SCHIRO
6 Attorneys for DEFENDANTS/CROSS-COMPLAINANTS Deputy Clerk
7 TRAD’R SAM, a California Partnership and JOHN MUNGUIA
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF SAN FRANCISCO
10 MILON, CASE NO. CGC-23-607068
11 Plaintiff,
MEMORANDUM OF PPOINTS AND
12 vs. AUTHORITIES IN SUPPORT OF
13 DEFENDANTS/CROSS-COMPLAINANTS
MUNGUIA, et al. TRAD’R SAM AND JOHN MUNGUIA’S
14 MOTION FOR PRELIMINARY INJUNCTION
Defendants,
15 Date: August 23, 2023
Time: 9:30 a.m.
16
Dept.: 302
17
Complaint filed: June 16, 2023
18 Cross-complaint filed: June 26, 2023
AND RELATED ACTION. Trial Date: Not Set
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Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY
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Fax (510) 844-5101 INJUNCTION
1 TABLE OF CONTENTS
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4 I. INTRODUCTION ........................................................................................................................ 1
5 II. FACTS .......................................................................................................................................... 1
6 III. ARGUMENT ............................................................................................................................ 6
7 A. Injunctive Relief Is Proper Under Code of Civil Procedure Section 526. ................................ 6
8 B. Analysis of Relevant Factors Supports Imposition of a Preliminary Injunction. ..................... 7
9 1. Trad’r Sam and Munguia are Likely to Prevail on the Merits. ............................................. 8
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2. Breach of Fiduciary Duty ...................................................................................................... 8
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C. Blatant Conflicts of Interest Now Exist Between Riedel, Milon, and Trad’r Sam................. 16
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D. The Balance of Harms Tips Very Heavily In Trad’r Sam And Munguia’s Favor. ............... 17
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E. An Injunction Under C.C.P. § 526 May Issue On Several Grounds ...................................... 18
14
1. Section 526(a)(1) – Restraining the Commission of Continuance of the Act Complained
15 of. 18
16 2. Section 526(a)(2) – Prevent waste, or great or irreparable injury. ...................................... 19
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3. Section 526(a)(3) – Ineffectual Judgments. ........................................................................ 19
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4. Sections 526(a)(4), 526(a)(5) – Inadequacy or Difficulty Ascertaining Pecuniary Relief. 20
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5. Section 526(a)(6) – Multiplicity of Proceedings ................................................................. 20
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F. A Preliminary Injunction May Issue Even If It Changes The Status Quo .............................. 21
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IV. CONCLUSION .......................................................................................................................... 22
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1 TABLE OF AUTHORITIES
2 Page(s)
3 Cases
4
Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc.,
5 supra, 131 Cal.App.4th at p. 823, fn. 10....................................................................................9
6 Berg v. King-Cola, Inc.
(1964) 227 Cal.App.2d 338 ............................................................................................... 13, 14
7
Butt v. State of California (1992)
8 668, 678 .....................................................................................................................................8
9 Casey v. U.S. Bank Nat. Assn.
10 (2005) 127 Cal.App.4th 1138 ....................................................................................................9
11 Central Bank v. First Inter. Bank
(1994) 511 U.S. 164 ...................................................................................................................9
12
City of Corona v. AMG Outdoor Advertising, Inc. (2016) 244 Cal.App.4th 291......................... 21
13
Fretz, 247 Cal.App.2d 746.............................................................................................................19
14
People ex rel. Gallo v. Acuna
15 (1997) 14 Cal.4th 1090 ........................................................................................................7, 17
16
Gutierrez v. Girardi
17 (2011) 194 Cal.App.4th 925 ......................................................................................................8
18 Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc.
(2016) 6 Cal.App.5th 1178 ........................................................................................................8
19
Law School Admission Council, Inc. v. State of California
20 (2014) 222 Cal.App.4th 1265 ..................................................................................................21
21 Lofton v. Wells Fargo Home Mortgage
22 (2014) 230 Cal.App.4th 1050 ..................................................................................................20
23 Oasis West Realty, LLC v. Goldman
(2011) 51 Cal.4th 811 ..............................................................................................................13
24
Oiye v. Fox
25 (2012) 211 Cal.App.4th 1036 ..................................................................................................21
26 San Francisco Newspaper Printing Co. v. Superior Court
(1985) 170 Cal.App.3d 438 .......................................................................................................8
27
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1 Smith v. Smith
(1942) 49 Cal.App.2d 716 .......................................................................................................19
2
Stockton P. & S. Co. v. Wheeler
3
(1924) 68 Cal.App. 592 ...........................................................................................................16
4
Take Me Home Rescue v. Luri
5 (2012) 208 Cal.App.4th 1342 ..................................................................................................21
6 Thompson v. Call
(1985) Cal.3d 633 ....................................................................................................................16
7
Union Oil Co. v. Domengeaux
8 (1939) 30 Cal.App.2d 266 .......................................................................................................20
9
Volpicelli v. Jared Sydney Torrance Memorial Hosp.
10 (1980) 109 Cal.App.3d 242 .....................................................................................................19
11 West v. Lind
(1960) 186 Cal.App.2d 563 .......................................................................................................8
12
Wind v. Herbert
13 (1960) 186 Cal. App. 2d 276 ...................................................................................................19
14 Statutes
15
Business & Professions Code § 25658 .......................................................................................... 11
16
Cal. Code Civ. Proc. § 526 .....................................................................................................passim
17
Cal. Code Civ. Proc. § 527(c)(1) .....................................................................................................7
18
Cal. Code Civ. Proc. § 2015.5 .......................................................................................................19
19
Corp. Code § 16403(c)(1) ........................................................................................................13, 14
20
Corp. Code § 16404 .......................................................................................................................13
21
Corp. Code § 16601(7)(C) .......................................................................................................15, 18
22
23 Internal Revenue Code § 7201.........................................................................................................9
24 Internal Revenue Code § 7203.........................................................................................................9
25 Prob. Code § 4300 ........................................................................................................................... 9
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1 I. INTRODUCTION
2 Since August 2020, Riedel and her daughter, Plaintiff Angie Milon (“Milon”) have engaged
3 in a freeze out scheme designed to take Munguia’s property rights from and force a buy out at a
4 rock-bottom price. To accomplish their scheme, Riedel and Milon done their best to devalue Trad’r
5 Sam. They have refused to recognize Munguia’s rights under the Riedel and Munguia’s written
6 partnership agreement. They have used Trad’r Sam as their own personal piggy bank. And they
7 fabricated several stories, all of which were rejected by this Court, to deny Munguia his property
8 interests altogether Though Riedel was already found liable for breach of fiduciary duties, elder
9 abuse, and conversion, she has continued the very same misconduct that gave rise to Munguia’s
10 previously successful causes of action.
11 If not enjoined, Riedel and Milon’s misconduct will continue.
12 II. FACTS
13 On August 28, 2020, Riedel initiated filed a Complaint in the matter styled Dorothy Riedel
14 and Trad’r Sam v. Munguia, et al., S.F.S.C. Case No. CGC-20-586308 case as an individual and as
15 de facto managing partner, for Trad’r Sam (the “Partnership Matter”). (McCann Decl., ¶ 4.) Munguia
16 cross-complained based on the parties’ Agreement of General Partnership Trad’r Sam a California
17 General Partnership (the “Agreement”). (Munguia Decl., ¶ 3; Ex. 1 – Partnership Agreement.)
18 After she filed the Complaint, Riedel signed a power of attorney granting Milon the powers
19 the operate Trad’r Sam as well as conduct the Partnership Matter for Riedel and Trad’r Sam.
20 (McCann Decl., ¶ 5; Ex. 2 – Power of Attorney.)
21 The Partnership Matter was very contentious with a host of law & motion practice capped
22 by Munguia’s six separate motions to compel Riedel (and Milon) to cooperate in discovery. McCann
23 Decl., ¶ 6; Ex. 3 – Register of Actions.) The Court granted three of those motions to compel and
24 sanction totaling $11,000. (McCann Decl., ¶ 6.) Munguia was forced to file his Sixth Motion to
25 Compel when Riedel (and Milon) violated two previous Court Orders. (Id.; Ex. 4 – October 25 Order
26 re Riedel; Ex. 5 – October 25 Order re Trad’r Sam, Ex. 6 – Order re Sixth Motion to Compel; Ex. 7
27 – Order re Sanctions.)
28 ///
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1 More than two years into the Partnership Matter, Riedel (and Milon) produced documents
2 showing that paid Riedel’s attorneys with Trad’r Sam’s income. (McCann Decl., ¶ 7; Ex. 8 – Milon
3 Spreadsheet 1.) Meanwhile, Riedel and Milon failed and refused to file state and federal tax returns
4 since April 2020 or distribute profits to Munguia. (McCann Decl., ¶ 7; Ex. 9 Milon Depo Transcript;
5 Ex. 10 – Trial Transcript Day 1.).
6 On July 14, 2021, Chee Mee Chin Wong (landlord of the premises occupied by the Bar)
7 (“Wong”) sued Riedel and Munguia as individually named tenants (Trad’r Sam is not a named
8 tenant) for breach of contract because Milon and Riedel failed to properly pay rent; the matter is
9 styled Wong v. Munguia, et al.; S.F.S.C. Case No. CGC-21-593826 (the “Wong Matter”). McCann
10 Decl., ¶ 8; Ex. 11 – Wong Complaint.) Munguia cross-complained against Milon for, among other
11 things, elder abuse, conversion, and misappropriated of Trad’r Sam money. McCann Decl., ¶ 33;
12 Ex. 3 – Wong Matter Cross-complaint.) As of June 23, 2023, back rent amounts to about $84,000.
13 (McCann Decl., ¶ 9; Ex. 12 – Declaration of Angie Milon in Opposition to Defendant Munguia’s
14 Ex Parte Application for TRO and OSC.) Munguia has discussed the matter with Wong, and she
15 has represented that she would accept repayment of back due rent according to a long-term payment
16 plan. (McCann Decl., ¶ 9.)
17 The Court conducted a bench trial in the Partnership Matter on April 10, 11, 12, 13, and 17,
18 2023. (McCann Decl., ¶ 10.) Following the trial, on May 5, 2023, the Court issued a Tentative
19 Decision After Trial (the “Tentative”) and the parties filed their objections. (Id.; Ex. 13 - Tentative
20 Decision After Trial.)
21 On May 25, 2023, the Court issued its Final Statement of Decision and Order After Trial in
22 the Partnership Matter (the “Decision and Order”). (McCann Decl., ¶ 11; Ex. 14 - Final Statement
23 of Decision and Order After Trial.) Multiple objections to the Tentative argued by Riedel and Milon
24 were in furtherance of Riedel’s (allocation of attorneys’ fees) and Milon’s (purported non-payment
25 of salary) personal interests and against Trad’r Sam’s interests. (Ex. 14 - Final Statement of Decision
26 and Order After Trial.) In its Decision and Order, the Court found in Munguia’s favor on his breach
27 of fiduciary duties, elder abuse, and conversion claims and against Riedel and ordered that she pay
28 Munguia a net award of $172,007. (Ex. 14 - Final Statement of Decision and Order After Trial.) In
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1 reaching its conclusion, the Court considered and rejected, inter alia, “Riedel’s contention that all
2 attorneys’ fees incurred in this action should be considered legitimate expenses of the Trad’r Sam
3 Partnership” because “the lion’s share” of fees incurred in the action were attributable to Riedel
4 vindicating her personal interests and defending against her individual liability. (Ex. 14 - Final
5 Statement of Decision and Order After Trial.)
6 On or about May 29, 2023, Riedel paid her attorney George Benetatos (“Benetatos”) $5,000
7 for “Landlord Case” which referred to Riedel’s personal legal expenses having been sued as an
8 individually named tenants in the Wong Matter, and Benetatos accepted the money. (McCann Decl.,
9 ¶¶ 8, 12; Ex. 11 – Wong Complaint; Ex. 15 – Milon Spreadsheet 2.) And since January 2023, Riedel
10 has paid her attorneys at least $28,000. (McCann Decl., ¶¶ 7, 12; Ex. 8 – Milon Spreadsheet 1; Ex.
11 15 – Milon Spreadsheet 2.)
12 Riedel filed objections to Munguia’s [Proposed] Judgment in which she argued that the Court
13 should award Milon her purported salary and informed that Court that Milon would be filing a
14 Complaint for breach of contract arising from purported underpayment of salary. (McCann Decl.,
15 ¶ 13; Ex. 16 – Objections to Munguia’s [Proposed] Judgment by Dorothy Riedel and Trad’r Sam.)
16 It was not until December 14, 2023 when Riedel finally produced Trad’r Sam’s financial
17 documents that Munguia learned of Milon’s purported $6,000 per month salary. (McCann Decl.,
18 14.) While three months earlier Milon testified that that she “worked for free” and didn’t know if
19 she would make a claim against Trad’r Sam, she paid herself $6,600 just 24 hours before her
20 deposition. (McCann Decl., 7, 14, 15; Ex. 9 Milon Depo Transcript; Ex. 15 – Milon Spreadsheet 2;
21 Ex. 17 – Salary Documents.)
22 Riedel was entirely absent from the Partnership Matter; she refused to sit for a deposition,
23 and she refused to take part in the trial which prevented Munguia from examining her on topics
24 including Milon’s purported salary. (McCann Decl., ¶ 16.) Milon appeared for Riedel at trial. Id.
25 On June 16, 2023, Milon initiated this lawsuit styled Angie Milon v. John Munguia, Dorothy
26 Riedel, Trad’r Sam, a California Partnership, and Does 1–20; S.F.S.C. Case No. CGC-23-607068
27 (the “Milon Matter”). (See Complaint, on filed herein.) On June 20, 2023, Munguia filed an Answer
28 and Demand for Jury Trial for himself and for Trad’r Sam in the Milon Matter. (See Answer, on file
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1 herein.)
2 On June 20, 2023, the Court entered its Judgment in this matter and Munguia filed and served
3 a Notice of Entry of Judgment Order that same day. (McCann Decl., ¶ 17; Ex. 18 – Notice of Entry
4 of Judgment.)
5 On June 25, 2023, in response to a deposition notice for Riedel in the Wong Matter, Riedel’s
6 attorney George Benetatos wrote, “Ms. Riedel is in no condition physically or mentally to be
7 deposed” and offered to produce her for examination by a physician to support his assertions.
8 McCann Decl., ¶ 18; Ex. 19 – June 25, 2023 email.) This was the first time that Riedel claimed
9 mental incapacity to sit for a deposition, though she had claimed physical inability several times,
10 including in her application to continue the trial in January 2023. (McCann Decl., ¶ 19; Ex. 20 –
11 Plaintiff’s Ex Parte Application to Vacate Trial Date; Ex. 21 – August 29, 2021 email.)
12 On June 26, 2023, Munguia filed his Cross-complaint for equitable and legal relief for
13 alleged breach of fiduciary duties by Riedel and Milon during the period January 1, 2023 through
14 the present. (McCann Decl., ¶ 20.)
15 On June 27, 2023, Benetatos again opined that Riedel lacks mental capacity to sit for a
16 deposition and invited Munguia to have a physician conduct an examination to support his opinion.
17 (McCann Decl., ¶ 21; Ex. 21 - June 27, 2023 email.)
18 On July 6, 2023 Trad’r Sam and Munguia filed and served their First Amended Cross-
19 complaint. (McCann Decl., ¶ 20; Ex. 22 – First Amended Cross-complaint; Ex. 23 – July 6, 2023
20 email.) Later that day, Benetatos claimed that Riedel did have mental capacity to testify. (McCann
21 Decl., ¶21; Ex. 24 – July 6, 2023 email from Benetatos.)
22 Munguia is ready, willing, and able to manage Trad’r Sam and the Bar–his business for the
23 past thirty-five years–He will be assisted by his grandson (JJ) and granddaughter (Alyssa), both of
24 whom have bartended at the Bar, as well as his daughters. Munguia Decl., ¶ 4.
25 As a direct result of Riedel and Milon’s failure and refusal to pay rent, the Landlord
26 demanded that Riedel and Munguia offer security in the form of real property liens on their houses,
27 which had never previously been required. (McCann Decl., ¶ 22; Munguia Decl., ¶ 5.) On July 8,
28 2023, Benetatos represented that Riedel is not going to co-sign a lease as the sole partner who
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1 secured the lease by pledging her real property. (McCann Decl., ¶ 22; Ex. 25 – July 8, 2023 email.)
2 On July 12, 2023, the Landlord presented Riedel and Munguia with the prospect of eviction
3 and opined the value of Trad’r Sam will be highly compromised if the Landlord were forced to file
4 an unlawful detainer action. (McCann Decl., ¶ 23; Ex 26 – July 12, 2023 email.)
5 When he discovered that Milon was taking $6,000 per month from Trad’r Sam as a “salary”
6 Munguia objected because he never gave consent as required under the Agreement. (McCann Decl.,
7 ¶ 24; Munguia Decl., ¶ 3, 7.; Ex. 1 – Partnership Agreement.)
8 Munguia currently has several legal matters pending including, the Partnership Matter, the
9 Wong Matter, the Milon Matter, a marital dissolution matter, and a tax matter. (Munguia Decl., ¶
10 8.) For the tax matter, Munguia applied to and was accepted to take part in the Internal Revenue
11 Service’s Voluntary Disclosure Program (“VDP”). (Munguia Decl., ¶ 9; Ex. 27 – I.R.S. Voluntary
12 Disclosure Program Circular.) Munguia also applied on behalf of Trad’r Sam, and the partnership
13 was also accepted. (Munguia Decl., ¶ 9.) Munguia informed Riedel of the applications within days
14 of filing. (McCann Decl., ¶ 25; Ex. 28 – March 19, 2021 email.)
15 To date, Riedel has paid her attorneys about $240,000 from Trad’r Sam’s profits. (McCann
16 Decl., ¶ 12, 26; Ex. 15. Milon Spreadsheet 2; Ex. 29 –Kinsel Report.) Munguia did not consent to
17 Riedel’s use of Trad’r Sam profits to per her attorneys. (Munguia Decl., ¶ 10.)
18 To date, neither Riedel nor Milon had produced–or even alleged the existence of–a document
19 that supports their purported agreement to pay Milon a salary. (McCann Decl., ¶ 27.) To date, Riedel
20 and Milon have refused Munguia’s demands to disclose the amount of Trad’r Sam cash they are
21 holding, where it is being held, and who was access to it. (McCann Decl., ¶ 28.)
22 During the course of all the disputes between the parties, Munguia has consistently worked
23 toward Trad’r Sam’s benefits by allowing it to continue to use the premises and liquor licenses to
24 make money. (Munguia Decl., ¶ 11.)
25 To assure Trad’r Sam did not lose the Premises, Munguia was forced to sign a lease on his
26 own because Riedel refused to sign with him. (McCann Decl., ¶ 23; Ex. 25 – July 8, 2023 email;
27 Munguia Decl., ¶ 6; Ex. 27 – 2023 Lease.)
28 While Milon purports to appear in Pro Per, Benetatos is clearly providing legal services to
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1 her. (McCann Decl. ¶ 9, 32; Ex. 12 – Milon Decl.; Ex. 33 – July 26, 2023 Email.)
2 III. ARGUMENT
3 A. INJUNCTIVE RELIEF IS PROPER UNDER CODE OF CIVIL PROCEDURE SECTION 526.
4 Subdivision (a) of section 526 of the Code of Civil Procedure authorizes a court to grant
5 injunctive relief in several circumstances relevant here. For example, such relief is available “[w]hen
6 it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any
7 part thereof, consists in restraining the commission or continuance of the act complained of, either
8 for a limited period or perpetually.” (Id. at subd. (a)(1).) As Trad’r Sam and Munguia discuss in
9 Section B of this Memorandum, they are entitled to the injunctive relief based on their cause of action
10 for injunctive relief to restrain Riedel and Milon from managing Trad’r Sam because they continue
11 to violate the Agreement and their fiduciary duties.
12 Injunctive relief is also available “[w]hen it appears, during the litigation, that a party to the
13 action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in
14 violation of the rights of another party to the action respecting the subject of the action, and tending
15 to render the judgment ineffectual.” (Code Civ. Proc., § 526, subd. (a)(3).) The trial Court already
16 found by a preponderance of the evidence that Riedel–and by extension her attorney in fact Milon–
17 breached their fiduciary duties and committed elder abuse. Despite those finding, Riedel and Milon
18 have continued to violate Munguia’s property and partnership rights. Judgment in the Partnership
19 Matter has not stopped Riedel and Milon’s misconduct, and a judgment here won’t either.
20 In addition, injunctive relief is also authorized “[w]hen pecuniary compensation would not
21 afford adequate relief” (Code Civ. Proc., § 526, subd. (a)(4)) or “[w]here it would be extremely
22 difficult to ascertain the amount of compensation which would afford adequate relief.” (Code Civ.
23 Proc., § 526, subd. (a)(5).) As Munguia discusses in Section C of this Memorandum, the Landlord
24 served a 30-Day Notice to vacate the Premises which has been the Bar’s home for decades. Loss of
25 its location will cause substantial loss to Trad’r Sam’s value which will be extremely difficult to
26 calculate, which will in turn, render pecuniary compensation for the loss impossible to quantify and
27 thus inadequate. Riedel and Milon’s failure and refusal to file Trad’r Sam’s federal tax returns
28 threatens Trad’r Sam’s status within the I.R.S.’s Voluntary Disclosure Program as well as Munguia’s
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1 status because without Schedule K-1s for 2020, 2021, and 2022 he can’t file amended tax returns.
2 Injunctive relief is also proper “[w]here the restraint is necessary to prevent a multiplicity of
3 judicial proceedings.” (Code Civ. Proc., § 526, subd. (a)(6).) Riedel and Milon’s misconduct have
4 given rise the Trad’r Sam and/or Munguia cross-complaints for breach of fiduciary duties, elder
5 abuse, and other related causes of action in the (1) the Partnership Matter, (2) the Wong Matter, and
6 (3) the Milon Matter. Munguia prevailed on his causes of action in the Partnership Matter. Here,
7 nearly identical misconduct is at issue (it’s the same misconduct except that it occurred and continues
8 to occur after the period covered in Partnership Matter). As for the Wong Matter, the landlord will
9 prevail there if it is not resolved short of trial, and Munguia will be forced to seek indemnity from
10 Riedel because she and Milon failed and refused to pay rent. Because Riedel and Milon’s fiduciary
11 duties arise the partnership relationship, each day that passes is another in which they violate those
12 duties thereby making it likely additional litigation will occur absent injunctive relief.
13 The doctrine against conflicts of interest in litigation also weighs heavily in Trad’r Sam and
14 Munguia’s favor and supports granting a preliminary injunction. As Riedel’s attorney in fact, Milon
15 directs litigation on Riedel’s behalf in the Partnership Matter, Wong Matter, and Milon Matter. In the
16 Partnership Matter, Milon also directs litigation for Trad’r Sam solely under authority of Riedel. In
17 the Milon Matter, however, Milon directly sued Trad’r Sam and Riedel. Her personal interests are
18 adverse from Trad’r Sam’s.
19 A preliminary injunction may rest of either a verified pleading or “facts shown by affidavit.”
20 (Code Civ. Proc., § 527, subd. (c)(1).)
21 B. ANALYSIS OF RELEVANT FACTORS SUPPORTS IMPOSITION OF A PRELIMINARY
22 INJUNCTION.
23 In considering a request for preliminary junction courts weigh two factors: (1) the likelihood
24 that plaintiffs will ultimately prevail and (2) the interim harm plaintiffs will sustain if the preliminary
25 injunction is denied compared to the interim harm defendant will suffer if the injunction is granted
26 pending a final determination of the merits. (People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090,
27 1136.) “These two showings operate on a sliding scale: ‘[T]he more likely it is that [the party seeking
28 the injunction] will ultimately prevail, the less severe must be the harm that they allege will occur if
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1 the injunction does not issue.’” (Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6
2 Cal.App.5th 1178, 1183.) Here, both factors weigh very heavily in Trad’r Sam and Munguia’s favor.
3 1. Trad’r Sam and Munguia are Likely to Prevail on the Merits.
4 “A trial court may not grant a preliminary injunction, regardless of the balance of interim harm,
5 unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim,”
6 (Butt v. State of California (1992) 668, 678.) When read in context, the Supreme Court's statement
7 acknowledges that both sliding-scale factors (i.e., likelihood of prevailing on the merits and the
8 parties’ relative harm) are necessary to the issuance of a preliminary injunction. Generally speaking,
9 a plaintiff must show a reasonable probability of prevailing on the merits. (West v. Lind (1960) 186
10 Cal.App.2d 563, 565; San Francisco Newspaper Printing Co. v. Superior Court (1985) 170
11 Cal.App.3d 438, 442.)
12 2. Breach of Fiduciary Duty
13 ‘The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary
14 duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Gutierrez
15 v. Girardi (2011) 194 Cal.App.4th 925, 932.)
16 a. Trad’r Sam
17 In the Partnership Matter, the Court found that withdrawal of money from Trad’r Sam without
18 proper authorization constitutes a breach of fiduciary duty. (Ex. 14 - Decision and Order at 9-10.) The
19 Court also found meritless Riedel’s contention that all attorneys’ fees incurred in the Partnership
20 Matter were legitimate expenses of Trad’r Sam because “the lion’s share of the attorneys’ fees in
21 incurred in this action are attributable to counsel vindicating Riedel’s personal interest[s].” (Id., at 20.)
22 Those findings notwithstanding, Riedel has continued to use Trad’r Sam’s money to pay her personal
23 legal bills;1 Riedel used Trad’r Sam’s money to pay the Angell Law Firm $8,000 in January 2023 and
24 $5,000 in February 2023, $5,000 to George Benetatos in March 2023, $150 for court records in March
25 2023, and $10,000 to George Benetatos in May 2023. (Ex. 8 – Milon Spreadsheet 1 at 130 (Bates
26
27
1
The Court’s findings apply to conduct that occurred on or before December 31, 2022. (Id. at 6.)
Riedel’s conduct that occurred on or after January 1, 2023–including using Trad’s Sam’s money to
28 pay personal expenses–falls under Trad’r Sam and Munguia’s causes of action in the Milon Matter.
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1 TRADR6715); Ex. 15 – Milon Spreadsheet 2.) While records for April and June 2023 were not
2 produced on July 4, 2023, Trad’r Sam is informed and believes that similar payments were made in
3 those months too.
4 Particularly galling is Riedel’s $5,000 payment to Benetatos on May 29, 2023, four days after
5 the Court filed the Decision and Order in which it found Riedel’s payments to her attorneys with Trad’r
6 Sam’s money violated the Agreement! (Ex. 14 – Decision and Order at 1.) Equally concerning is
7 Riedel’s $5,000 payment to Benetatos in May 2023 for “Landlord Case.” (Ex. 15 – Milon Spreadsheet
8 2, at 11.) Riedel, not Trad’r Sam, is a defendant in the Wong Matter. (Ex. 11 – Wong Complaint.) And
9 while Trad’r Sam is traditionally responsible for paying rent, Riedel’s use of partnership money
10 without Munguia’s consent to defend her individual legal interests violates the Agreement, especially
11 because it was her failure and refusal to pay rent that gave rise to the Wong Matter. (Ex. 14 – Decision
12 and Order, at 20; Ex. 27 – Partnership Agreement; Munguia Decl., ¶ 12.)
13 Riedel and Milon have also failed and refused to file Trad’r Sam’s state and federal tax returns
14 as required by law (Ex. 28 – Milon Deposition Transcript 127:22 – 130:1; Ex. 29 – Trial Transcript –
15 115:1-6, 119:6–120:5) and thereby willfully exposed Trad’r Sam to criminal liability. (Internal
16 Revenue Code, § 7201, 7203.) All the while, Milon knew of Trad’r Sam’s participation in VDP. (Ex.
17 29 – Trial Transcript – 115:1-6; Ex. 28 – March 29, 2023 email.)
18 Trad’r Sam’s causes of action for civil conspiracy to breach fiduciary duties and aiding and
19 abetting breach of fiduciary duties arise from the same nexus of facts. While conspiracy requires the
20 person who commits the tort to owe fiduciary duty to victim (Casey v. U.S. Bank Nat. Assn. (2005)
21 127 Cal.App.4th 1138, 1144), an aider and abettor need only “‘a conscious decision to participate in
22 tortious activity for the purpose of assisting another in performing a wrongful act.’” (Berg & Berg
23 Enterprises, LLC v. Sherwood Partners, Inc., supra, 131 Cal.App.4th at p. 823, fn. 10; accord, Central
24 Bank v. First Inter. Bank (1994) 511 U.S. 164, 181.) Though Milon actually paid Riedel’s legal bills,
25 Milon testified that she conferred with Riedel about such actions which shows an agreement between
26 the two. (Exhibit 10 – Trial Transcript Day 1, 160:24 – 161:16.) As Riedel’s power of attorney, Milon
27 owes the same fiduciary duties to Trad’r Sam as she does Riedel. (Prob. Code § 4300.)
28 Riedel and Milon have intentionally put Trad’r Sam in harm’s way and misappropriated the
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1 partnership’s profits for Riedel’s personal gain, all without proper authority. That conduct amounts to
2 breach of fiduciary duties. Their decision and agreement to use also Trad’r Sam’s money for Riedel’s
3 personal purposes constitutes either civil conspiracy or aiding and abetting breach of fiduciary duties.
4 b. Munguia
5 In the Partnership Matter, the Court found Riedel liable for breach of fiduciary duty when she
6 misappropriated operating revenue from Trad’r Sam for her personal use and “knowingly acted against
Preview
1 Trevor B. McCann (State Bar No. 243724) Ryan P. Harley (State Bar No. 245059) 2 COLLINS + COLLINS LLP 2175 N California Boulevard, Suite 835 ELECTRONICALLY 3 Walnut Creek, CA 94596 FILED 4 (510) 844-5100 – FAX (510) 844-5101 Superior Court of California, County of San Francisco Email: tmccann@ccllp.law 5 Email: rharley@ccllp.law 07/31/2023 Clerk of the Court BY: SANDRA SCHIRO 6 Attorneys for DEFENDANTS/CROSS-COMPLAINANTS Deputy Clerk 7 TRAD’R SAM, a California Partnership and JOHN MUNGUIA 8 SUPERIOR COURT OF THE STATE OF CALIFORNIA 9 COUNTY OF SAN FRANCISCO 10 MILON, CASE NO. CGC-23-607068 11 Plaintiff, MEMORANDUM OF PPOINTS AND 12 vs. AUTHORITIES IN SUPPORT OF 13 DEFENDANTS/CROSS-COMPLAINANTS MUNGUIA, et al. TRAD’R SAM AND JOHN MUNGUIA’S 14 MOTION FOR PRELIMINARY INJUNCTION Defendants, 15 Date: August 23, 2023 Time: 9:30 a.m. 16 Dept.: 302 17 Complaint filed: June 16, 2023 18 Cross-complaint filed: June 26, 2023 AND RELATED ACTION. Trial Date: Not Set 19 20 21 22 23 24 25 26 27 28 23433 2175 N California Boulevard Suite 835 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 TABLE OF CONTENTS 2 3 4 I. INTRODUCTION ........................................................................................................................ 1 5 II. FACTS .......................................................................................................................................... 1 6 III. ARGUMENT ............................................................................................................................ 6 7 A. Injunctive Relief Is Proper Under Code of Civil Procedure Section 526. ................................ 6 8 B. Analysis of Relevant Factors Supports Imposition of a Preliminary Injunction. ..................... 7 9 1. Trad’r Sam and Munguia are Likely to Prevail on the Merits. ............................................. 8 10 2. Breach of Fiduciary Duty ...................................................................................................... 8 11 C. Blatant Conflicts of Interest Now Exist Between Riedel, Milon, and Trad’r Sam................. 16 12 D. The Balance of Harms Tips Very Heavily In Trad’r Sam And Munguia’s Favor. ............... 17 13 E. An Injunction Under C.C.P. § 526 May Issue On Several Grounds ...................................... 18 14 1. Section 526(a)(1) – Restraining the Commission of Continuance of the Act Complained 15 of. 18 16 2. Section 526(a)(2) – Prevent waste, or great or irreparable injury. ...................................... 19 17 3. Section 526(a)(3) – Ineffectual Judgments. ........................................................................ 19 18 4. Sections 526(a)(4), 526(a)(5) – Inadequacy or Difficulty Ascertaining Pecuniary Relief. 20 19 5. Section 526(a)(6) – Multiplicity of Proceedings ................................................................. 20 20 F. A Preliminary Injunction May Issue Even If It Changes The Status Quo .............................. 21 21 IV. CONCLUSION .......................................................................................................................... 22 22 23 24 25 26 27 28 23433 2175 N California Boulevard Suite 835 i Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 TABLE OF AUTHORITIES 2 Page(s) 3 Cases 4 Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc., 5 supra, 131 Cal.App.4th at p. 823, fn. 10....................................................................................9 6 Berg v. King-Cola, Inc. (1964) 227 Cal.App.2d 338 ............................................................................................... 13, 14 7 Butt v. State of California (1992) 8 668, 678 .....................................................................................................................................8 9 Casey v. U.S. Bank Nat. Assn. 10 (2005) 127 Cal.App.4th 1138 ....................................................................................................9 11 Central Bank v. First Inter. Bank (1994) 511 U.S. 164 ...................................................................................................................9 12 City of Corona v. AMG Outdoor Advertising, Inc. (2016) 244 Cal.App.4th 291......................... 21 13 Fretz, 247 Cal.App.2d 746.............................................................................................................19 14 People ex rel. Gallo v. Acuna 15 (1997) 14 Cal.4th 1090 ........................................................................................................7, 17 16 Gutierrez v. Girardi 17 (2011) 194 Cal.App.4th 925 ......................................................................................................8 18 Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6 Cal.App.5th 1178 ........................................................................................................8 19 Law School Admission Council, Inc. v. State of California 20 (2014) 222 Cal.App.4th 1265 ..................................................................................................21 21 Lofton v. Wells Fargo Home Mortgage 22 (2014) 230 Cal.App.4th 1050 ..................................................................................................20 23 Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811 ..............................................................................................................13 24 Oiye v. Fox 25 (2012) 211 Cal.App.4th 1036 ..................................................................................................21 26 San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438 .......................................................................................................8 27 28 23433 2175 N California Boulevard Suite 835 ii Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 Smith v. Smith (1942) 49 Cal.App.2d 716 .......................................................................................................19 2 Stockton P. & S. Co. v. Wheeler 3 (1924) 68 Cal.App. 592 ...........................................................................................................16 4 Take Me Home Rescue v. Luri 5 (2012) 208 Cal.App.4th 1342 ..................................................................................................21 6 Thompson v. Call (1985) Cal.3d 633 ....................................................................................................................16 7 Union Oil Co. v. Domengeaux 8 (1939) 30 Cal.App.2d 266 .......................................................................................................20 9 Volpicelli v. Jared Sydney Torrance Memorial Hosp. 10 (1980) 109 Cal.App.3d 242 .....................................................................................................19 11 West v. Lind (1960) 186 Cal.App.2d 563 .......................................................................................................8 12 Wind v. Herbert 13 (1960) 186 Cal. App. 2d 276 ...................................................................................................19 14 Statutes 15 Business & Professions Code § 25658 .......................................................................................... 11 16 Cal. Code Civ. Proc. § 526 .....................................................................................................passim 17 Cal. Code Civ. Proc. § 527(c)(1) .....................................................................................................7 18 Cal. Code Civ. Proc. § 2015.5 .......................................................................................................19 19 Corp. Code § 16403(c)(1) ........................................................................................................13, 14 20 Corp. Code § 16404 .......................................................................................................................13 21 Corp. Code § 16601(7)(C) .......................................................................................................15, 18 22 23 Internal Revenue Code § 7201.........................................................................................................9 24 Internal Revenue Code § 7203.........................................................................................................9 25 Prob. Code § 4300 ........................................................................................................................... 9 26 27 28 23433 2175 N California Boulevard Suite 835 iii Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 I. INTRODUCTION 2 Since August 2020, Riedel and her daughter, Plaintiff Angie Milon (“Milon”) have engaged 3 in a freeze out scheme designed to take Munguia’s property rights from and force a buy out at a 4 rock-bottom price. To accomplish their scheme, Riedel and Milon done their best to devalue Trad’r 5 Sam. They have refused to recognize Munguia’s rights under the Riedel and Munguia’s written 6 partnership agreement. They have used Trad’r Sam as their own personal piggy bank. And they 7 fabricated several stories, all of which were rejected by this Court, to deny Munguia his property 8 interests altogether Though Riedel was already found liable for breach of fiduciary duties, elder 9 abuse, and conversion, she has continued the very same misconduct that gave rise to Munguia’s 10 previously successful causes of action. 11 If not enjoined, Riedel and Milon’s misconduct will continue. 12 II. FACTS 13 On August 28, 2020, Riedel initiated filed a Complaint in the matter styled Dorothy Riedel 14 and Trad’r Sam v. Munguia, et al., S.F.S.C. Case No. CGC-20-586308 case as an individual and as 15 de facto managing partner, for Trad’r Sam (the “Partnership Matter”). (McCann Decl., ¶ 4.) Munguia 16 cross-complained based on the parties’ Agreement of General Partnership Trad’r Sam a California 17 General Partnership (the “Agreement”). (Munguia Decl., ¶ 3; Ex. 1 – Partnership Agreement.) 18 After she filed the Complaint, Riedel signed a power of attorney granting Milon the powers 19 the operate Trad’r Sam as well as conduct the Partnership Matter for Riedel and Trad’r Sam. 20 (McCann Decl., ¶ 5; Ex. 2 – Power of Attorney.) 21 The Partnership Matter was very contentious with a host of law & motion practice capped 22 by Munguia’s six separate motions to compel Riedel (and Milon) to cooperate in discovery. McCann 23 Decl., ¶ 6; Ex. 3 – Register of Actions.) The Court granted three of those motions to compel and 24 sanction totaling $11,000. (McCann Decl., ¶ 6.) Munguia was forced to file his Sixth Motion to 25 Compel when Riedel (and Milon) violated two previous Court Orders. (Id.; Ex. 4 – October 25 Order 26 re Riedel; Ex. 5 – October 25 Order re Trad’r Sam, Ex. 6 – Order re Sixth Motion to Compel; Ex. 7 27 – Order re Sanctions.) 28 /// 23433 2175 N California Boulevard Suite 835 1 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 More than two years into the Partnership Matter, Riedel (and Milon) produced documents 2 showing that paid Riedel’s attorneys with Trad’r Sam’s income. (McCann Decl., ¶ 7; Ex. 8 – Milon 3 Spreadsheet 1.) Meanwhile, Riedel and Milon failed and refused to file state and federal tax returns 4 since April 2020 or distribute profits to Munguia. (McCann Decl., ¶ 7; Ex. 9 Milon Depo Transcript; 5 Ex. 10 – Trial Transcript Day 1.). 6 On July 14, 2021, Chee Mee Chin Wong (landlord of the premises occupied by the Bar) 7 (“Wong”) sued Riedel and Munguia as individually named tenants (Trad’r Sam is not a named 8 tenant) for breach of contract because Milon and Riedel failed to properly pay rent; the matter is 9 styled Wong v. Munguia, et al.; S.F.S.C. Case No. CGC-21-593826 (the “Wong Matter”). McCann 10 Decl., ¶ 8; Ex. 11 – Wong Complaint.) Munguia cross-complained against Milon for, among other 11 things, elder abuse, conversion, and misappropriated of Trad’r Sam money. McCann Decl., ¶ 33; 12 Ex. 3 – Wong Matter Cross-complaint.) As of June 23, 2023, back rent amounts to about $84,000. 13 (McCann Decl., ¶ 9; Ex. 12 – Declaration of Angie Milon in Opposition to Defendant Munguia’s 14 Ex Parte Application for TRO and OSC.) Munguia has discussed the matter with Wong, and she 15 has represented that she would accept repayment of back due rent according to a long-term payment 16 plan. (McCann Decl., ¶ 9.) 17 The Court conducted a bench trial in the Partnership Matter on April 10, 11, 12, 13, and 17, 18 2023. (McCann Decl., ¶ 10.) Following the trial, on May 5, 2023, the Court issued a Tentative 19 Decision After Trial (the “Tentative”) and the parties filed their objections. (Id.; Ex. 13 - Tentative 20 Decision After Trial.) 21 On May 25, 2023, the Court issued its Final Statement of Decision and Order After Trial in 22 the Partnership Matter (the “Decision and Order”). (McCann Decl., ¶ 11; Ex. 14 - Final Statement 23 of Decision and Order After Trial.) Multiple objections to the Tentative argued by Riedel and Milon 24 were in furtherance of Riedel’s (allocation of attorneys’ fees) and Milon’s (purported non-payment 25 of salary) personal interests and against Trad’r Sam’s interests. (Ex. 14 - Final Statement of Decision 26 and Order After Trial.) In its Decision and Order, the Court found in Munguia’s favor on his breach 27 of fiduciary duties, elder abuse, and conversion claims and against Riedel and ordered that she pay 28 Munguia a net award of $172,007. (Ex. 14 - Final Statement of Decision and Order After Trial.) In 23433 2175 N California Boulevard Suite 835 2 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 reaching its conclusion, the Court considered and rejected, inter alia, “Riedel’s contention that all 2 attorneys’ fees incurred in this action should be considered legitimate expenses of the Trad’r Sam 3 Partnership” because “the lion’s share” of fees incurred in the action were attributable to Riedel 4 vindicating her personal interests and defending against her individual liability. (Ex. 14 - Final 5 Statement of Decision and Order After Trial.) 6 On or about May 29, 2023, Riedel paid her attorney George Benetatos (“Benetatos”) $5,000 7 for “Landlord Case” which referred to Riedel’s personal legal expenses having been sued as an 8 individually named tenants in the Wong Matter, and Benetatos accepted the money. (McCann Decl., 9 ¶¶ 8, 12; Ex. 11 – Wong Complaint; Ex. 15 – Milon Spreadsheet 2.) And since January 2023, Riedel 10 has paid her attorneys at least $28,000. (McCann Decl., ¶¶ 7, 12; Ex. 8 – Milon Spreadsheet 1; Ex. 11 15 – Milon Spreadsheet 2.) 12 Riedel filed objections to Munguia’s [Proposed] Judgment in which she argued that the Court 13 should award Milon her purported salary and informed that Court that Milon would be filing a 14 Complaint for breach of contract arising from purported underpayment of salary. (McCann Decl., 15 ¶ 13; Ex. 16 – Objections to Munguia’s [Proposed] Judgment by Dorothy Riedel and Trad’r Sam.) 16 It was not until December 14, 2023 when Riedel finally produced Trad’r Sam’s financial 17 documents that Munguia learned of Milon’s purported $6,000 per month salary. (McCann Decl., 18 14.) While three months earlier Milon testified that that she “worked for free” and didn’t know if 19 she would make a claim against Trad’r Sam, she paid herself $6,600 just 24 hours before her 20 deposition. (McCann Decl., 7, 14, 15; Ex. 9 Milon Depo Transcript; Ex. 15 – Milon Spreadsheet 2; 21 Ex. 17 – Salary Documents.) 22 Riedel was entirely absent from the Partnership Matter; she refused to sit for a deposition, 23 and she refused to take part in the trial which prevented Munguia from examining her on topics 24 including Milon’s purported salary. (McCann Decl., ¶ 16.) Milon appeared for Riedel at trial. Id. 25 On June 16, 2023, Milon initiated this lawsuit styled Angie Milon v. John Munguia, Dorothy 26 Riedel, Trad’r Sam, a California Partnership, and Does 1–20; S.F.S.C. Case No. CGC-23-607068 27 (the “Milon Matter”). (See Complaint, on filed herein.) On June 20, 2023, Munguia filed an Answer 28 and Demand for Jury Trial for himself and for Trad’r Sam in the Milon Matter. (See Answer, on file 23433 2175 N California Boulevard Suite 835 3 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 herein.) 2 On June 20, 2023, the Court entered its Judgment in this matter and Munguia filed and served 3 a Notice of Entry of Judgment Order that same day. (McCann Decl., ¶ 17; Ex. 18 – Notice of Entry 4 of Judgment.) 5 On June 25, 2023, in response to a deposition notice for Riedel in the Wong Matter, Riedel’s 6 attorney George Benetatos wrote, “Ms. Riedel is in no condition physically or mentally to be 7 deposed” and offered to produce her for examination by a physician to support his assertions. 8 McCann Decl., ¶ 18; Ex. 19 – June 25, 2023 email.) This was the first time that Riedel claimed 9 mental incapacity to sit for a deposition, though she had claimed physical inability several times, 10 including in her application to continue the trial in January 2023. (McCann Decl., ¶ 19; Ex. 20 – 11 Plaintiff’s Ex Parte Application to Vacate Trial Date; Ex. 21 – August 29, 2021 email.) 12 On June 26, 2023, Munguia filed his Cross-complaint for equitable and legal relief for 13 alleged breach of fiduciary duties by Riedel and Milon during the period January 1, 2023 through 14 the present. (McCann Decl., ¶ 20.) 15 On June 27, 2023, Benetatos again opined that Riedel lacks mental capacity to sit for a 16 deposition and invited Munguia to have a physician conduct an examination to support his opinion. 17 (McCann Decl., ¶ 21; Ex. 21 - June 27, 2023 email.) 18 On July 6, 2023 Trad’r Sam and Munguia filed and served their First Amended Cross- 19 complaint. (McCann Decl., ¶ 20; Ex. 22 – First Amended Cross-complaint; Ex. 23 – July 6, 2023 20 email.) Later that day, Benetatos claimed that Riedel did have mental capacity to testify. (McCann 21 Decl., ¶21; Ex. 24 – July 6, 2023 email from Benetatos.) 22 Munguia is ready, willing, and able to manage Trad’r Sam and the Bar–his business for the 23 past thirty-five years–He will be assisted by his grandson (JJ) and granddaughter (Alyssa), both of 24 whom have bartended at the Bar, as well as his daughters. Munguia Decl., ¶ 4. 25 As a direct result of Riedel and Milon’s failure and refusal to pay rent, the Landlord 26 demanded that Riedel and Munguia offer security in the form of real property liens on their houses, 27 which had never previously been required. (McCann Decl., ¶ 22; Munguia Decl., ¶ 5.) On July 8, 28 2023, Benetatos represented that Riedel is not going to co-sign a lease as the sole partner who 23433 2175 N California Boulevard Suite 835 4 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 secured the lease by pledging her real property. (McCann Decl., ¶ 22; Ex. 25 – July 8, 2023 email.) 2 On July 12, 2023, the Landlord presented Riedel and Munguia with the prospect of eviction 3 and opined the value of Trad’r Sam will be highly compromised if the Landlord were forced to file 4 an unlawful detainer action. (McCann Decl., ¶ 23; Ex 26 – July 12, 2023 email.) 5 When he discovered that Milon was taking $6,000 per month from Trad’r Sam as a “salary” 6 Munguia objected because he never gave consent as required under the Agreement. (McCann Decl., 7 ¶ 24; Munguia Decl., ¶ 3, 7.; Ex. 1 – Partnership Agreement.) 8 Munguia currently has several legal matters pending including, the Partnership Matter, the 9 Wong Matter, the Milon Matter, a marital dissolution matter, and a tax matter. (Munguia Decl., ¶ 10 8.) For the tax matter, Munguia applied to and was accepted to take part in the Internal Revenue 11 Service’s Voluntary Disclosure Program (“VDP”). (Munguia Decl., ¶ 9; Ex. 27 – I.R.S. Voluntary 12 Disclosure Program Circular.) Munguia also applied on behalf of Trad’r Sam, and the partnership 13 was also accepted. (Munguia Decl., ¶ 9.) Munguia informed Riedel of the applications within days 14 of filing. (McCann Decl., ¶ 25; Ex. 28 – March 19, 2021 email.) 15 To date, Riedel has paid her attorneys about $240,000 from Trad’r Sam’s profits. (McCann 16 Decl., ¶ 12, 26; Ex. 15. Milon Spreadsheet 2; Ex. 29 –Kinsel Report.) Munguia did not consent to 17 Riedel’s use of Trad’r Sam profits to per her attorneys. (Munguia Decl., ¶ 10.) 18 To date, neither Riedel nor Milon had produced–or even alleged the existence of–a document 19 that supports their purported agreement to pay Milon a salary. (McCann Decl., ¶ 27.) To date, Riedel 20 and Milon have refused Munguia’s demands to disclose the amount of Trad’r Sam cash they are 21 holding, where it is being held, and who was access to it. (McCann Decl., ¶ 28.) 22 During the course of all the disputes between the parties, Munguia has consistently worked 23 toward Trad’r Sam’s benefits by allowing it to continue to use the premises and liquor licenses to 24 make money. (Munguia Decl., ¶ 11.) 25 To assure Trad’r Sam did not lose the Premises, Munguia was forced to sign a lease on his 26 own because Riedel refused to sign with him. (McCann Decl., ¶ 23; Ex. 25 – July 8, 2023 email; 27 Munguia Decl., ¶ 6; Ex. 27 – 2023 Lease.) 28 While Milon purports to appear in Pro Per, Benetatos is clearly providing legal services to 23433 2175 N California Boulevard Suite 835 5 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 her. (McCann Decl. ¶ 9, 32; Ex. 12 – Milon Decl.; Ex. 33 – July 26, 2023 Email.) 2 III. ARGUMENT 3 A. INJUNCTIVE RELIEF IS PROPER UNDER CODE OF CIVIL PROCEDURE SECTION 526. 4 Subdivision (a) of section 526 of the Code of Civil Procedure authorizes a court to grant 5 injunctive relief in several circumstances relevant here. For example, such relief is available “[w]hen 6 it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any 7 part thereof, consists in restraining the commission or continuance of the act complained of, either 8 for a limited period or perpetually.” (Id. at subd. (a)(1).) As Trad’r Sam and Munguia discuss in 9 Section B of this Memorandum, they are entitled to the injunctive relief based on their cause of action 10 for injunctive relief to restrain Riedel and Milon from managing Trad’r Sam because they continue 11 to violate the Agreement and their fiduciary duties. 12 Injunctive relief is also available “[w]hen it appears, during the litigation, that a party to the 13 action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in 14 violation of the rights of another party to the action respecting the subject of the action, and tending 15 to render the judgment ineffectual.” (Code Civ. Proc., § 526, subd. (a)(3).) The trial Court already 16 found by a preponderance of the evidence that Riedel–and by extension her attorney in fact Milon– 17 breached their fiduciary duties and committed elder abuse. Despite those finding, Riedel and Milon 18 have continued to violate Munguia’s property and partnership rights. Judgment in the Partnership 19 Matter has not stopped Riedel and Milon’s misconduct, and a judgment here won’t either. 20 In addition, injunctive relief is also authorized “[w]hen pecuniary compensation would not 21 afford adequate relief” (Code Civ. Proc., § 526, subd. (a)(4)) or “[w]here it would be extremely 22 difficult to ascertain the amount of compensation which would afford adequate relief.” (Code Civ. 23 Proc., § 526, subd. (a)(5).) As Munguia discusses in Section C of this Memorandum, the Landlord 24 served a 30-Day Notice to vacate the Premises which has been the Bar’s home for decades. Loss of 25 its location will cause substantial loss to Trad’r Sam’s value which will be extremely difficult to 26 calculate, which will in turn, render pecuniary compensation for the loss impossible to quantify and 27 thus inadequate. Riedel and Milon’s failure and refusal to file Trad’r Sam’s federal tax returns 28 threatens Trad’r Sam’s status within the I.R.S.’s Voluntary Disclosure Program as well as Munguia’s 23433 2175 N California Boulevard Suite 835 6 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 status because without Schedule K-1s for 2020, 2021, and 2022 he can’t file amended tax returns. 2 Injunctive relief is also proper “[w]here the restraint is necessary to prevent a multiplicity of 3 judicial proceedings.” (Code Civ. Proc., § 526, subd. (a)(6).) Riedel and Milon’s misconduct have 4 given rise the Trad’r Sam and/or Munguia cross-complaints for breach of fiduciary duties, elder 5 abuse, and other related causes of action in the (1) the Partnership Matter, (2) the Wong Matter, and 6 (3) the Milon Matter. Munguia prevailed on his causes of action in the Partnership Matter. Here, 7 nearly identical misconduct is at issue (it’s the same misconduct except that it occurred and continues 8 to occur after the period covered in Partnership Matter). As for the Wong Matter, the landlord will 9 prevail there if it is not resolved short of trial, and Munguia will be forced to seek indemnity from 10 Riedel because she and Milon failed and refused to pay rent. Because Riedel and Milon’s fiduciary 11 duties arise the partnership relationship, each day that passes is another in which they violate those 12 duties thereby making it likely additional litigation will occur absent injunctive relief. 13 The doctrine against conflicts of interest in litigation also weighs heavily in Trad’r Sam and 14 Munguia’s favor and supports granting a preliminary injunction. As Riedel’s attorney in fact, Milon 15 directs litigation on Riedel’s behalf in the Partnership Matter, Wong Matter, and Milon Matter. In the 16 Partnership Matter, Milon also directs litigation for Trad’r Sam solely under authority of Riedel. In 17 the Milon Matter, however, Milon directly sued Trad’r Sam and Riedel. Her personal interests are 18 adverse from Trad’r Sam’s. 19 A preliminary injunction may rest of either a verified pleading or “facts shown by affidavit.” 20 (Code Civ. Proc., § 527, subd. (c)(1).) 21 B. ANALYSIS OF RELEVANT FACTORS SUPPORTS IMPOSITION OF A PRELIMINARY 22 INJUNCTION. 23 In considering a request for preliminary junction courts weigh two factors: (1) the likelihood 24 that plaintiffs will ultimately prevail and (2) the interim harm plaintiffs will sustain if the preliminary 25 injunction is denied compared to the interim harm defendant will suffer if the injunction is granted 26 pending a final determination of the merits. (People ex rel. Gallo v. Acuna (1997) 14 Cal.4th 1090, 27 1136.) “These two showings operate on a sliding scale: ‘[T]he more likely it is that [the party seeking 28 the injunction] will ultimately prevail, the less severe must be the harm that they allege will occur if 23433 2175 N California Boulevard Suite 835 7 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 the injunction does not issue.’” (Integrated Dynamic Solutions, Inc. v. VitaVet Labs, Inc. (2016) 6 2 Cal.App.5th 1178, 1183.) Here, both factors weigh very heavily in Trad’r Sam and Munguia’s favor. 3 1. Trad’r Sam and Munguia are Likely to Prevail on the Merits. 4 “A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, 5 unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim,” 6 (Butt v. State of California (1992) 668, 678.) When read in context, the Supreme Court's statement 7 acknowledges that both sliding-scale factors (i.e., likelihood of prevailing on the merits and the 8 parties’ relative harm) are necessary to the issuance of a preliminary injunction. Generally speaking, 9 a plaintiff must show a reasonable probability of prevailing on the merits. (West v. Lind (1960) 186 10 Cal.App.2d 563, 565; San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 11 Cal.App.3d 438, 442.) 12 2. Breach of Fiduciary Duty 13 ‘The elements of a cause of action for breach of fiduciary duty are: (1) existence of a fiduciary 14 duty; (2) breach of the fiduciary duty; and (3) damage proximately caused by the breach.” (Gutierrez 15 v. Girardi (2011) 194 Cal.App.4th 925, 932.) 16 a. Trad’r Sam 17 In the Partnership Matter, the Court found that withdrawal of money from Trad’r Sam without 18 proper authorization constitutes a breach of fiduciary duty. (Ex. 14 - Decision and Order at 9-10.) The 19 Court also found meritless Riedel’s contention that all attorneys’ fees incurred in the Partnership 20 Matter were legitimate expenses of Trad’r Sam because “the lion’s share of the attorneys’ fees in 21 incurred in this action are attributable to counsel vindicating Riedel’s personal interest[s].” (Id., at 20.) 22 Those findings notwithstanding, Riedel has continued to use Trad’r Sam’s money to pay her personal 23 legal bills;1 Riedel used Trad’r Sam’s money to pay the Angell Law Firm $8,000 in January 2023 and 24 $5,000 in February 2023, $5,000 to George Benetatos in March 2023, $150 for court records in March 25 2023, and $10,000 to George Benetatos in May 2023. (Ex. 8 – Milon Spreadsheet 1 at 130 (Bates 26 27 1 The Court’s findings apply to conduct that occurred on or before December 31, 2022. (Id. at 6.) Riedel’s conduct that occurred on or after January 1, 2023–including using Trad’s Sam’s money to 28 pay personal expenses–falls under Trad’r Sam and Munguia’s causes of action in the Milon Matter. 23433 2175 N California Boulevard Suite 835 8 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 TRADR6715); Ex. 15 – Milon Spreadsheet 2.) While records for April and June 2023 were not 2 produced on July 4, 2023, Trad’r Sam is informed and believes that similar payments were made in 3 those months too. 4 Particularly galling is Riedel’s $5,000 payment to Benetatos on May 29, 2023, four days after 5 the Court filed the Decision and Order in which it found Riedel’s payments to her attorneys with Trad’r 6 Sam’s money violated the Agreement! (Ex. 14 – Decision and Order at 1.) Equally concerning is 7 Riedel’s $5,000 payment to Benetatos in May 2023 for “Landlord Case.” (Ex. 15 – Milon Spreadsheet 8 2, at 11.) Riedel, not Trad’r Sam, is a defendant in the Wong Matter. (Ex. 11 – Wong Complaint.) And 9 while Trad’r Sam is traditionally responsible for paying rent, Riedel’s use of partnership money 10 without Munguia’s consent to defend her individual legal interests violates the Agreement, especially 11 because it was her failure and refusal to pay rent that gave rise to the Wong Matter. (Ex. 14 – Decision 12 and Order, at 20; Ex. 27 – Partnership Agreement; Munguia Decl., ¶ 12.) 13 Riedel and Milon have also failed and refused to file Trad’r Sam’s state and federal tax returns 14 as required by law (Ex. 28 – Milon Deposition Transcript 127:22 – 130:1; Ex. 29 – Trial Transcript – 15 115:1-6, 119:6–120:5) and thereby willfully exposed Trad’r Sam to criminal liability. (Internal 16 Revenue Code, § 7201, 7203.) All the while, Milon knew of Trad’r Sam’s participation in VDP. (Ex. 17 29 – Trial Transcript – 115:1-6; Ex. 28 – March 29, 2023 email.) 18 Trad’r Sam’s causes of action for civil conspiracy to breach fiduciary duties and aiding and 19 abetting breach of fiduciary duties arise from the same nexus of facts. While conspiracy requires the 20 person who commits the tort to owe fiduciary duty to victim (Casey v. U.S. Bank Nat. Assn. (2005) 21 127 Cal.App.4th 1138, 1144), an aider and abettor need only “‘a conscious decision to participate in 22 tortious activity for the purpose of assisting another in performing a wrongful act.’” (Berg & Berg 23 Enterprises, LLC v. Sherwood Partners, Inc., supra, 131 Cal.App.4th at p. 823, fn. 10; accord, Central 24 Bank v. First Inter. Bank (1994) 511 U.S. 164, 181.) Though Milon actually paid Riedel’s legal bills, 25 Milon testified that she conferred with Riedel about such actions which shows an agreement between 26 the two. (Exhibit 10 – Trial Transcript Day 1, 160:24 – 161:16.) As Riedel’s power of attorney, Milon 27 owes the same fiduciary duties to Trad’r Sam as she does Riedel. (Prob. Code § 4300.) 28 Riedel and Milon have intentionally put Trad’r Sam in harm’s way and misappropriated the 23433 2175 N California Boulevard Suite 835 9 Walnut Creek, CA 94596 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR PRELIMINARY Phone (510) 844-5100 Fax (510) 844-5101 INJUNCTION 1 partnership’s profits for Riedel’s personal gain, all without proper authority. That conduct amounts to 2 breach of fiduciary duties. Their decision and agreement to use also Trad’r Sam’s money for Riedel’s 3 personal purposes constitutes either civil conspiracy or aiding and abetting breach of fiduciary duties. 4 b. Munguia 5 In the Partnership Matter, the Court found Riedel liable for breach of fiduciary duty when she 6 misappropriated operating revenue from Trad’r Sam for her personal use and “knowingly acted against