Preview
Charles M. Clark, State Bar No. 244535 Electronically FILED by
cclark@jacksontidus.law Superior Court of California,
K M. Casey, State Bar No. 227844 County of Los Angeles
@jacksontidus.law 3/18/2024 3:24 PM
David W. Slayton,
JACKSON TIDUS Executive Officer/Clerk of Court,
2030 Main Street, Suite 1500 By D. Simon, Deputy Clerk
Irvine, Califomia 92614.
Tel me: (949) 752-8585
Facsimile: (949) 752-0597
Attomeys for Plaintiff
SI S.We
Trustee of the Shaughne S. Wamack Trust
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES
10
11
SHAUGHNE S. WARNACK, Trustee of CASENO. 244C¥00316
12 the Shaughne S. Wamack Trust,
Assigned for All Purposes:
13 Plaintiff, COMPLAINT FOR:
14 Vv.
1 Breach
of Contract
15 YELLA ENTERPRISES, LLC, a 2 Breach of Implied Covenantof
Califomia limited liability company; Good Faith and Fair Dealing
16 ROTHBART DEVELOPMENT
17
CORPORATION, a Califomia corporation;
DESTINATION O-8, LLC, alimited
Declaratory Relief
liability company; and DOES 1 through 50, For an Accounting
18 inclusive,
19 Defendants.
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“1 1626603.2
COMPLAINT
Plaintiff SHAUGHNE S. WARNACK, Trustee of the Shaughne S. Wamack Trust
(‘Plaintiff’), hereby alleges:
PARTIES
1 Plaintiff SHAUGHNE S. WARNACK is Trustee of the Shaughne S. Wamack
Trust.
2. Defendant YELLA ENTERPRISES, LLC, a Califomia limited liability company
(‘Yella’), upon information and belief, is a company doing business in the County of Los
Angeles, Califomia.
3. Defendant ROTHBART DEVELOPMENT CORPORATION, a Califomia
10 corporation (“Rothbart Development’), upon information and belief, is a corporation doing
11 business in the County of Los Angeles, Califomia.
12 4. Defendant DESTINATION O-8, LLC, a limited liability company (“O-8 LLC”),
13 upon information and belief, is a company doing business in the County of Los Angeles,
14 Califomia.
15 5. Plaintiff is unaware of the true names of Defendants sued herein as Does 1
16 through 50 inclusive, and therefore sues said Defendants by such fictitious names.
17 6. Plaintiff will amend this Complaintto allege the true names and capacities of such
18 fictitiously named Defendants when the same have been ascertained.
19 7. Plaintiff is informed and believes, and upon such information and belief, alleges
20 that each of these fictitiously named Defendants were and are responsible in some manner for
21 the occurrences herein alleged, and that Plaintiff’s damages as herein alleged were
22 proximately caused by such fictitiously named Defendants.
23 JURISDICTION & VENUE
24 8. The Court has jurisdiction over this matter. Venue in the County of Los Angeles
25 is appropriate because the property at issue in this litigation is located in the City of Palmdale,
26 County of Los Angeles.
27 //1
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-2- 1626603.2
COMPLAINT
FACTUAL ALLEGATIONS
AND SUMMARY OF CLAIMS
9. The Plaintiff owns a fifty percent (50%) member interest in the Company and has
requested basic transparency
from Yella, which owns a fifty percent (50%) member interest in
the company and is the sole manager of the Company. Rothbart Development is the property
manager retained by Y ella in its capacity as sole manager
of the Company. Plaintiff is informed
and believes and upon such information and belief alleges that Y ella and Rothbart Development
are both wholly owned and controlled by the same individual - Stanley Rothbart. The Company
owns real property located at 39838 10" Street W. Palmdale, Califomia (“Property”). The
Property is occupied by two tenants, namely, Wells Fargo Bank and FAIFO, Inc., dba
10 Bellissima’s (collectively, “Tenants’).
11 10. The most pressing and overarching issues are specifically: (1) how funds
are
12 maintained in various Company accounts; (2) how Company distribution amounts are calculated
13 and made; (3) how the amounts held in reserve accounts are determined, (4) verification
that the
14 financial information of the Company transmittedto Plaintiff is accurate in all material respects;
15 (5) verification that the information provided in the Company’ s income tax retums is accuratein
16 all material respects; and (6) allocation between income and expenses of the Company and
17 income
and expenses of other entities of unrelated
to the Company comingledin Company bank
18 accounts or bank accounts established by Rothbart Development. Stanley Rothbart (acting on
19 behalf of Yella and Rothbart Development) has taken an unnecessarily aggressive and
20 misinformed position that he will not provide requested information that simply seeks basic
21 transparency of the Company’ s records and business.
22 11. The first issue is tracking and accounting the Company’ s funds held by Y ella and
23 Rothbart Development. In prior correspondence, Defendants’ focus has been on Yella’s right to
24 comingle the Company’ s funds, citing Section 9.4 of the Operating Agreement, which is attached
25 hereto
as Exhibit 1 (“Operating Agreement’). The contractual rightto comingle
funds does not
26 telieve Yella of its contractual and legal obligations to account for the specific funds of the
27 Company. Y ella has exercised its contractual rightto comingle
the Company’ s funds with other
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“3 1626603.2
COMPLAINT
entities unrelated to the Company or its operations; and thus has imposed an obligation on itself,
at its own expense, to fully account for the Company’s funds and expenses separate and apart
from any other entity.
12. Section 9.1 of the Operating Agreement describes Yella’s contractual record
management obligations. The Plaintiff has a right at any time to review all financial documents
for the most recent six years and all books and records showing the intemal business of the
Company
for the last four years. These financial records must include accounting of all the
Company’ s funds that went into any account maintained by Y ella, how long the funds were held
in the specific accounts and ultimately whether the funds were transferred to any other accounts
10 or distributed to Plaintiff pursuant to the Operating Agreement for the Company, and the EIN
11 mumber that is being used for the account that is holding
the comingled funds. Defendants have
12 refused to provide this information, including the financial statements, books and any records
13 that contain the above information; and therefore, Plaintiff is entitled to a complete forensic
14 accounting of the books and records of the Company.
15 13. As briefly described above, in addition to Yella, Stanley Rothbart owns and
16 controls Rothbart Development, which is the Property Manager
that Y ella, as the sole manager
17 of the Company, contracted with in or around January 2003. Section 5 of the Property
18 Management Agreement, attached hereto as Exhibit 2 (“Property Management Agreement’),
19 discusses the account that Rothbart Development will establish and manage on behalf of the
20 Company. Section 5(B) discusses an “account maintained by Agent [Rothbart Development] on
21 behalf of Owner pursuant
to this Contract.” This section does not allow Rothbart Development to
22 comingle the Company’s funds with any other individual or entity. It clearly states that it will
23 Maintain an account on behalf of the Company alone. In fact, Rothbart Development comingling
24 the Company’s funds in said account would be a contractual breach. Further, the requested
25 financial records and accounting must include any and all accounts that Rothbart Development
26 established for the benefit of the Company pursuant to the Property Management Agreement,
27 and all activity relating
to the account(s).
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-4- 1626603.2
COMPLAINT
14. The second issue relates to quarterly distributions paid by the Company to
Plaintiff. These quarterly distributions have not been timely over the last several years; and have
instead required
a significant amount of effort from Plaintiff’ s representativesto obtain
the funds
due to Plaintiff. Recently, it has taken months for Plaintiff to receive current quarterly
distributions. Under no circumstances should any distribution ever be late or untimely paid to
Plaintiff. Currently, Plaintiff is waiting on the third and fourth quarter 2023 profit distribution.
The Company and Yella, as its manager, are required to make this profits distribution by
December 16, 2023.
15. In addition to payment of these contractual distributions, Yella failed to explain
10 the calculation it performs or the process it undertakes to determine how much in cash or profit
11 should be distributed and the funds needed to remain in reserve. Yella has obligations under
12 Section 6.2 of the Operating Agreement and must demonstrate its compliance.
13 16. Moreover, the authority granted
to Y ella in the Operating Agreement, as manager
14 of the Company, does not give it permission to act arbitrarily, in bad faith or negligent. Nothing
15 in the Operating Agreement relieves Y ella from its fiduciary duties to the Company and Plaintiff.
16 These duties include
a good faith analysis of the Company’s funds, determining
the amount
17 reasonably needed for reserves and the remainder being distributed to the members. This
is in
18 addition to Y ella’s contractual distribution instructions and obligations in Section 6.2.1 and 6.2.2
19 of the Operating Agreement. Yella is burdened with these obligations and requirements, yet
20 Yella has never provided any explanation or background information for a single distribution or
21 for the reserves.
22 17. Plaintiff has requested background information and documentation illustrating
23 how Yella complied with Section 6.2 and how Yella has made the determination of the amount
24 to distribute and the amounts to reserve. Yella has refused to provide this basic information.
25 Plaintiff demands information and documentation specifically identifying how the distributions
26 and reserves have been calculated over the last four years, including the now untimely
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COMPLAINT
distributions. A forensic accounting of the Company and Rothbart Development must be
immediately conducted
at Y ella’ s expense.
FIRST CAUSE OF ACTION
(Breach
of Contract - Defendants
and DOES 1-10)
18. Plaintiff realleges and incorporates by reference Paragraphs 1 through 17 above.
19. Section 9.1 of the Operating Agreement describes Yella’s contractual record
Management obligations. Yella also has contractual distribution instructions and obligations in
Section 6.2.1 and 6.2.2 of the Operating Agreement.
20. Plaintiff has a right at any time to review all financial documents
and records for
10 the most recent six years and all books and records showing the financial and intemal business of
11 the Company for the last four years. These financial records must include, without limitation,
12 accounting of all the Company’ s funds that went into any account maintained by Y ella, how long
13 the funds were held in the specific accounts and ultimately whether the funds were transferred to
14 any other accounts, or used to pay expenses and liabilities of the Company or distributed to
15 Plaintiff pursuant to the Operating Agreement, and the EIN number that is being used for the
16 account that is holding Company funds or comingled funds. Defendants have refused to provide
17 this information, including the financial statements, books and any records that contain the above
18 information, which constitutes a breach of contract.
19 21. Pursuant to Section 5(b) of the Property Management Agreement, Rothbart
20 Development has allowed the deposit of income due to other entities unrelated to the
21 Company and the payment of expenses due by other entities unrelated to the Company to be
22 comingled in the Company’ s account and paid out of the Company’ s account.
23 22. As adirect
and proximate result of the breach of the Operating Agreement and.
24 breach of the Property Management Agreement, Plaintiff sustained damages in a sum in excess
25 of $25,000, subjectto proof at the time of trial.
26 //1
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-6- 1626603.2
COMPLAINT
SECOND CAUSE OF ACTION
(Breach of Implied Covenant of Good Faith and Fair Dealing
Against Defendants and DOES 10-20)
23. Plaintiff realleges and incorporates by reference Paragraphs 1 through 22 above.
24. Section 9.1 of the Operating Agreement describes Yella’s contractual
Management obligations. Yella also has contractual distribution instructions and obligations in
Section 6.2.1 and 6.2.2 of the Operating Agreement.
25. The Agreement contained an implied covenant of good faith and fair dealing,
imposing
a duty on Defendants. Under Califomia law, this covenant requires each party to act
reasonably and to do everything which the contract presupposes the parties will do in order to
10
accomplish and satisfy the purposes of the contract. Thus, upon entering into the Operating
11
Agreement, Defendants
were bound to act reasonably and in good faith in performance of its
12
contractual duties under the Agreement.
13
26. Plaintiff has a right at any time to review all financial documents
and records for
14
the most recent six years and all books and records showing the financial and intemal business of
15
the Company for the last four years. These financial and business books and records must
16
include, without limitation, accounting of all the Company’s funds that went into any account
17
maintained
by Yella, how long the funds were held in the specific accounts and ultimately
18
whether the funds were transferredto any other accounts or used to pay expenses and liabilities
19
of the Company or distributed to the Plaintiff pursuant to the Operating Agreement, and the EIN
20
mumber that is being used for the account that is holding Company funds or comingled funds.
21
Defendants have refused to provide this information, including the financial statements, books
22
and any records that contain the above information, which constitutes a breach of the implied
23
covenant of good faith and fair dealing.
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27. As a result of the breach of implied covenant of good faith and fair dealing,
25
Plaintiff sustained damages in a sum in excess of $25,000, subject to proof at the time of trial.
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-7- 1626603.2
COMPLAINT
THIRD CAUSE OF ACTION
(Declaratory Relief)
28. Plaintiff realleges and incorporates by reference Paragraphs 1 through 27 above.
29. An actual controversy has arisen and now exists between Plaintiff and Defendants
telative to Defendants’ duties under the Agreement.
30. Plaintiff contends that Defendants are required to be provide under the Operating
Agreement and the Property Management Agreement: (1) the financial records
and accounting
described above from both Yella and Rothbart Development; (2) the information and
documentation over the last four years relating to the quarterly distributions; (3) information and
documentation identifying income received for the Company and income received for entities
10
unrelated to the Company and expenses paid for the Company and expenses paid for entities
11
unrelated to the Company; and (4) a forensic accounting must be immediately conducted of the
12
Company and Rothbart Development at Y ella’s expense.
13
31. Plaintiff is informed and believes that Defendants dispute these contentions.
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32. A judicial declaration is necessary and appropriate at this time.
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33. Plaintiff desires a declaration that Defendants are required to be provide under the
16
Agreement: (1) the financial records and accounting described above from both Yella and
17
Rothbart Development; (2) the information and documentation over the last four years relating to
18
the quarterly distributions; and (3) a forensic accounting of the Company and Rothbart
19
Development to be immediately conducted at Yella’s expense. Defendants’ refusal to do so
20
constitutes a breach of the Operating Agreement and the Property Management Agreement and
21
breach of the implied covenant of good faith and fair dealing, subjecting Plaintiff to damages in
22
excess of $25,000, to be proven at trial.
23
FOURTH CAUSE OF ACTION
24
(Request
for Accounting)
25
A. Plaintiffs incorporate by reference paragraphs 1 through 33 of this Complaint as
26
though fully set forth herein.
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COMPLAINT
35. “An action for an accounting has two elements: (1) ‘that a relationship exists
between the plaintiff and defendant that requires an accounting’ and (2) ‘that some balanceis
due the plaintiff that can only be ascertained by an accounting.’” (Sass v. Cohen (2020) 10
Cal.5th 861, 869, citing Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.)
36. As described herein, Defendants breached the Operating Agreement and the
Property Management Agreement and the implied covenant of good faith and fair dealing with
respect to Plaintiff.
37. Plaintiff contends that it has the right at any time to review all financial
documents and books and records for the most recent six years and all books and records
10 showing
the intemal business of the Company for the last four years. These financial documents
11 and books and records must include an accounting of all the Company’ s funds that went into any
12 account maintained by the Company or Yella on behalf of the Company and how said funds
13 were used and distributed by the Company and Yella and identifying how funds received by
14 Rothbart Development for the Company were used and distributed and how income and
15 expenses, were comingled with entities unrelated to the Company.
16 38. Plaintiff has made multiple demands for Defendants to provide the requested
17 accounting, which demands have been ignored. Plaintiff requests that the court order an
18 accounting of Defendants’ financial records.
19 PRAYER FOR RELIEF
20 WHEREFORE, Plaintiff prays for judgment as follows:
21 1 For damages according to proof at trial;
22 2 For declaratory relief;
23 3. For an accounting as requested;
24 4. For prejudgment interest at the legal rate;
25 For costs of suit;
26 For attomey’ s fees; and,
27 For such other and further relief as the Court deems just and proper.
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COMPLAINT
Respectfully submitted,
DATED: March 18, 2024 JACKSON TIDUS
By: /s/ CharlesM. Clark
Charles M. Clark
MC
Attomeys for Plaintiff, S. Wamack,
Trustee of the Shaughne S. Wamack Trust
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COMPLAINT
EXHIBIT 1
aay
OPERATING AGREEMENT
FOR
DESTINATION 0-8, LLC
A CALIFORNIA LIMITED LIA
BILITY COMPANY
99999552242
-12-
OPERATING AGREEMENT
FOR
DESTINATION 0-8,°LLC
A CALIFORNIA LIMITED LIABILITY
COMPANY
This Operating Agreement of Destinat tion
O-8, LLC, a limited liabil. ity company
organized under the laws of the State of
California (the “Company” *) is made as of
of Noy wv, 2002, by and between YELLA this 2.2 day
ENTERP: RISES, LLC (“Rothbart”), and
WARNACK, TRUSTEE OF THE A.C. WARNAC A.C.
K T) RUSTST (“Warnack”) with referenc
the following facts: e to
A On June 13, 2002 (the ‘Effective Date”), Articles
Company were filed with the Cal ifornia Secr of Organization for the
etary of State,
B The parties now desire to adopt and approve
an operating agreement for the
Company.
AGREEMENT
NOW, THEREFORE, the parties hereto
by this Agre ement set forth the operating
agreement for the Company under the law
s of the State of California upon the terms
to the conditions of this Agreement, and subject
ARTICLE I
DEFINITIONS
When usedin this Agreement, the followin
ig terms shall have the meanings set forth
below (all terms used in thi s Agreemen
t that are not de fined in this Article I shall
meanings set forth elsewhere in this Agreemen have the
t):
il “Act” shall mean the Beverly-Killea
Limited Liability Company Act, codified in
the Corporations Code, Section 1700 0,
et seq., as the same may be amended from time
to time.
12 “Agreement” shall mean this Operating Agre
amended from time to time. ement, as originally executed and as
13 “Articles” shall mean the Articles of Organiza
filed with the California S ecretary of tion for the Company originally
State, as the same may be amended from
time to time.
1.4 “AvailablCash’ e "shall mean Available Cash From Financing or Disposition
Available Cash From Operations and _
2
siSe « ble G hh From Financing or. mis
3p on shall mean respectively, the
net proceeds after rep ryment to f all Mem
ber Loan: 8 from i) any fin ancin: g or refinancin
Property or any portion thereof, (ii) any g of the
or taking (including, but not limited to, transfer, including, without tlimitation,
li ,sale, disposition
the proceeds of any eminent do:
conveyance in lieu thereof) of the Property or any portion main proceeding or
thereof, and (ili) insurance proceeds,
LLC Agreement ~ Destination 0-8
-13-
other than rental insurance proceeds and an 'y portion of the insura
nce proceeds applied to restore
any portion of the Property damaged as ar esul {t of a casualty
or condemnation, and proceeds
from any other event which under generally ac cepted accounting
principles, consistently applied,
the event giving rise to suchnetat'proceeds,(x at capital orby other(w) all costs and expenses related to _
expenditures for which such net
TOC’e eds are to be used, as determinby edth e | anager
anger,
refiefinanced or discharged and any other debts or liabilit
» (y) the amount of any indebtedness being
(y)
1€s 0 f the Company for which such net.
proceeds are to be used, as determined by the Manager, and (z) reasona
ble reserves, as__
- determined by the Manager.
(16 © ©6“Availa Gi erations” ' shall not include any cash constituti
“Available Cash From F inancing or Disposition”. » but shall ieee
mean any cash received by the
Company attributable to the operation of the Proj perty, less (i) the sum
of current debt service on
¢ Property (including debt service on Member Loans), (ii) current operati
reas sonable resery eS,
ae as
ie determined by the as
ng expenditures, and
reas aceratiy
Ma nager, for the operatio: n of the business o cH
f the
Company.
whiz Capital
“Capital Contri
Cont: butio’ mn” shall mean the total of cash and other assets contri
buted
to the Company by Members.
1.8 “Code” shall mean the Internal Revenue Code of 1986, as amende
d from time to
time, and the provisions of succeeding law.
Te! “Company” shall mean Destination 0-8, LLC, a California
limited liability
company.
1.10 “Corporations Code” shall mean the California Corporations
Code, as amended
from time to time, and the provisions of succeeding law.
Lit “Fiscal Year” shall mean the Company’s fiscal year, which
shall be the calendar
year.
1.12 _ “Management Fee” shall mean, for any mont!
gross
-Tevenue generated at the Property for that month (including all
rental income and incom ie in liew
of rental income, such as rental interru ption insurance procee
ds, but not including proceeds of
loans secured by or of sales of the Property).
1.13 “Manager” shall mean one or more managers. Specifically, “Manag
er” initially
shall mean Rothbart or any other person or entity that succeeds Rothbar
t in that capacity.
1.14 “ Member
(s)” shall mean Rothbart and Warnack, and any other person or entity
admitted to the Company as a Member pursuant to this Agreem
ent, collectively; the term
“Member” means any one (1) of the Members. .
115 “Member Loan” has the meaning given to that term in Section 3.3,
below.
1.16 “Membership Interest” shall mean with respect to any Member, all
of such
Member’s right, title and interest in, to and against the Company with
respect to the Net Profits,
LLC Agreement — Destination 0-8
-14-
Net Losses, and Available Cash of the Company, and all other rights
of a Member to participate
in the business, affairs and management of the Co: mpany, includi
ng without limitation, the right
to vote on or grant consent or approval with Tespect to matters coming
before the Company.
5
1.17 “Qutparcels” or ‘ ‘Proper ty” collectively shall mean those four certain outparcels,
of real property located on the East sideof 10 Street int the Cityof P; , California, as
outlined on the site plan attached as Exhibit *B” and described in “Exh “B-1” hereto, as well
as any other outparcel or other parcel of real property that the Compa
ny s hould in the future
acquire with the consent of all Members. Each of the Outparcels someti
mes is referred to
individually as an “Qutparcel”,
1.18 “Percentage Interest” shall mean the percentage of a Member set
forth opposite
the name of such Member under the column “Member’s Percentage
Interest” in Exhibit “A”
hereto, as such percentage may be adjusted from time to time pursuant
to the terms of this
Agreement.
1.19 “Square Feet” shall mean, with respect to an Outparcel, the number of square
feet of usable area of the real p roperty contained within
the perimeter boundary of that
Outparcel, net of rights of way , Streets and other matters rendering portions
of that real property
unusable.
1,20 “Tax Appendix” has the meaning given to that term in Section 6.1, below.
ARTICLE I
ORGANIZATIONAL MATTERS
21 Formation. Pursuant to the Act, the Members have formed a California
limited
liability company under the laws of the State of California by filing
the Articles with the
California Secretary of State and entering into this Agreement. The
rights and liabilities of the
Members shall be determined pursuant to the Act and this Agreem
ent. To the extent that the
rights or obligations of an ly Member are different by reason of
any provision of this Agreement
than they would be in the absence of such provision, this
Agreement shall, to the extent
permitted by the Act, control.
22 Name. The name of the Company shall be “Destination O-8,
LLC”. The
business of the Company may be conducted under that name
or, upon compliance with
applicable laws, any other name that Members deem
appropriate or advisable. The Manager
shall file any fictitious name certificates and similar filing s, and
any amendments thereto, that are
required by applicable laws.
2.3 Term. The Company shall commence on the Effective Date
until December 31, 2052, unless extended by unanim and shall continue
ous agreement of the Members, or sooner
terminated as hereinafter provided.
2.4 Office and Agent. The Company shall continuously mainta
in an office and
registered agent in the State of California as required by
the Act. The principal office of the
Company shall be as the Members may determine. The
Company also may have such offices,
LLC Agreement ~ Destination 0-8
-15-
anywhere within and outside the State of California, as the busin
ess of the Company may
require. The registered agent shall be as stated in the Articles.
25 Addresses of the Members. The res spective addresses of the Members are set
forth on Exhibit “A”.
2.6Purpose of Company. The purpose of the Company is to engage in
any lawful
activity for which a limited liability co mpany may be organi
zed under the Act. Notwithstanding
the foregoing, the Company has been specifically organized to
engage in the acquisition and
disposi tion of, and the development, i improvement, construction, operati
on, subleasing and
sale
of, the Outparcels, with a view to maximizing the value of and
selling or leasing each of the
Outparcels as quickly as reaso nably practicable, consistent
with such value maximization, The
Company wili not, without the consent of all Me! ‘mbers, purcha
se any real property other than the
Outparcels.
24 Competition. Nothing herein contained shall preclude any Membe
r from
owning, purchasing, selling, or otherwise dealing in any manne
r with any property or engaging
in any related or competitive business activities whatsoever without
notice to any other Member
or the Company, without participation of any other Member or the
Company, and without
liability to it or any of them. It is understood that an: yy Member can now or hereafter engage
in
any business or possess any property of any type, whether or not such
business or such property
compet es with the business or property of the Company. Without limitin
g the generality of the
foregoing, any Member may, without notice to any other Member or
the Company, and without
obligation to present to the other Member or the Company
an opportunity of any kind
whatsoever, acquire, develop, improve, construct, sell, finance,
| case, operate, manage, or
syndicate any real property including, without limitation, any
real property which is adjacent to,
in the same general area as, or in direc t competition with real propert
y in which the Company or
a Member has an interest, free of any claim whatsoever of any
Member or the Company. The
terms of this Section 2.7 shall apply even thou, igh the opportunity
in question might come to the
attention ofor become available to such Mem iber through its
participation in the Company. Each
Member hereby waiv es any right which it may have against others who may capitali
ze on or take
advantage of information learned as a consequence ofits association
with the Company.
ARTICLE IIT
CAPITAL CONTRIBUTIONS
Init 1{Fip tio As of the formation of the Company, the
Members ‘have ee the = Capi tal Coniri buti ions set forth in Exhibit
“A”, Inaddition, ©
Wam: ack shall contribute the Property to the C
cd a at the time format
of ion of the Company, 2
ms
othbart and Warnack shall cancel that certain co: ntract between them pursuant
to which
hbart now has a right to purchase portions of the Pi roperty from Wamack.
3.2 Third Party Financing. In connection wit will h the Company’s acquisition,
devel lopment and sale of the Property, the Company anticipates
that it may require funds in
excess of the initial Capital Contributions to be made by the
Members pursuant to Section 3.1,
above. The Company expects to obtain third party finan cing
and Member Loans in an amount
LLC Agreement ~ Destination 0-8
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sufficient to pay such costs at such times as the Manager shall
reasonably determine. No
Member shall have any obligation to contribute additional capital
to the Company.
33 Me. mber Loans. If the Manager determines that the Compa
ny requires additional
capital to carry out its approved purposes, within thirty days after a written
request therefor is
made by the Manager, each of the Members shall make a loan to
th Company in an amount
equal to fifty percent (50%) of such required additional capital on s uch terms
and conditions as
the Manager shall approve (each such loan is referred to as a “Membe!
r Loan”). Each Member
Loan shall bear interest from the date such loan is made, at the lesser
of (a) the greater of (i)
seven percent (7%) per annum above the rate publicly published or announ
ced from time to time
by Wells Fargo Bank (or any bank into which Wells Fargo Bank may be merged
or with which it
may be consolidated) at its principal place of business as its base, prime
or reference rate, which
tate the parties acknowledge may not be the lowest rate at which
said bank lends money on an
unsecured basis to its most creditworthy customers, or (ii) twelve
percent (12 %) per annum, or
(b) the maximum rate permitted by law. EachEach }M: Ai ember Loan shall be repaid out of any
subsequent payments or distributions of any kind to which the Members
would otherwise be
entitled under this Agreement, which amount shall be applied
first to accrued interest (and, if
there is more than one Member Loan, pro rata in proportion to the aggregate
amount of such
interest then unpaid) and then to principal (and, if there is more than
one Member Loan
outstanding, pro rata in proportion to the aggregate amount of such princip
al then outstanding)
until all Member Loans are paid in full. If any Member shall fail to make
a Member Loan as
required hereby, the other Members may, but shall not be require
d to, make that Member Loan
on behaoflfthe failing Member (and if there is more than one such
other Member desiring to
make such Member Loan, each of those other Members that desires
to make such Member Loan
may make a portion of such Member Loan in the proportion that its Membership
Interest bears to
the Membership Interests of all of the other Members that desire to make
such Member Loan, or
in any other ratio to which such Members shall agree).
3.4 N 0 Interest. Except as spe
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Charles M. Clark, State Bar No. 244535 Electronically FILED by cclark@jacksontidus.law Superior Court of California, K M. Casey, State Bar No. 227844 County of Los Angeles @jacksontidus.law 3/18/2024 3:24 PM David W. Slayton, JACKSON TIDUS Executive Officer/Clerk of Court, 2030 Main Street, Suite 1500 By D. Simon, Deputy Clerk Irvine, Califomia 92614. Tel me: (949) 752-8585 Facsimile: (949) 752-0597 Attomeys for Plaintiff SI S.We Trustee of the Shaughne S. Wamack Trust SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF LOS ANGELES 10 11 SHAUGHNE S. WARNACK, Trustee of CASENO. 244C¥00316 12 the Shaughne S. Wamack Trust, Assigned for All Purposes: 13 Plaintiff, COMPLAINT FOR: 14 Vv. 1 Breach of Contract 15 YELLA ENTERPRISES, LLC, a 2 Breach of Implied Covenantof Califomia limited liability company; Good Faith and Fair Dealing 16 ROTHBART DEVELOPMENT 17 CORPORATION, a Califomia corporation; DESTINATION O-8, LLC, alimited Declaratory Relief liability company; and DOES 1 through 50, For an Accounting 18 inclusive, 19 Defendants. 20 21 22 23 24 25 26 27 28 “1 1626603.2 COMPLAINT Plaintiff SHAUGHNE S. WARNACK, Trustee of the Shaughne S. Wamack Trust (‘Plaintiff’), hereby alleges: PARTIES 1 Plaintiff SHAUGHNE S. WARNACK is Trustee of the Shaughne S. Wamack Trust. 2. Defendant YELLA ENTERPRISES, LLC, a Califomia limited liability company (‘Yella’), upon information and belief, is a company doing business in the County of Los Angeles, Califomia. 3. Defendant ROTHBART DEVELOPMENT CORPORATION, a Califomia 10 corporation (“Rothbart Development’), upon information and belief, is a corporation doing 11 business in the County of Los Angeles, Califomia. 12 4. Defendant DESTINATION O-8, LLC, a limited liability company (“O-8 LLC”), 13 upon information and belief, is a company doing business in the County of Los Angeles, 14 Califomia. 15 5. Plaintiff is unaware of the true names of Defendants sued herein as Does 1 16 through 50 inclusive, and therefore sues said Defendants by such fictitious names. 17 6. Plaintiff will amend this Complaintto allege the true names and capacities of such 18 fictitiously named Defendants when the same have been ascertained. 19 7. Plaintiff is informed and believes, and upon such information and belief, alleges 20 that each of these fictitiously named Defendants were and are responsible in some manner for 21 the occurrences herein alleged, and that Plaintiff’s damages as herein alleged were 22 proximately caused by such fictitiously named Defendants. 23 JURISDICTION & VENUE 24 8. The Court has jurisdiction over this matter. Venue in the County of Los Angeles 25 is appropriate because the property at issue in this litigation is located in the City of Palmdale, 26 County of Los Angeles. 27 //1 28 -2- 1626603.2 COMPLAINT FACTUAL ALLEGATIONS AND SUMMARY OF CLAIMS 9. The Plaintiff owns a fifty percent (50%) member interest in the Company and has requested basic transparency from Yella, which owns a fifty percent (50%) member interest in the company and is the sole manager of the Company. Rothbart Development is the property manager retained by Y ella in its capacity as sole manager of the Company. Plaintiff is informed and believes and upon such information and belief alleges that Y ella and Rothbart Development are both wholly owned and controlled by the same individual - Stanley Rothbart. The Company owns real property located at 39838 10" Street W. Palmdale, Califomia (“Property”). The Property is occupied by two tenants, namely, Wells Fargo Bank and FAIFO, Inc., dba 10 Bellissima’s (collectively, “Tenants’). 11 10. The most pressing and overarching issues are specifically: (1) how funds are 12 maintained in various Company accounts; (2) how Company distribution amounts are calculated 13 and made; (3) how the amounts held in reserve accounts are determined, (4) verification that the 14 financial information of the Company transmittedto Plaintiff is accurate in all material respects; 15 (5) verification that the information provided in the Company’ s income tax retums is accuratein 16 all material respects; and (6) allocation between income and expenses of the Company and 17 income and expenses of other entities of unrelated to the Company comingledin Company bank 18 accounts or bank accounts established by Rothbart Development. Stanley Rothbart (acting on 19 behalf of Yella and Rothbart Development) has taken an unnecessarily aggressive and 20 misinformed position that he will not provide requested information that simply seeks basic 21 transparency of the Company’ s records and business. 22 11. The first issue is tracking and accounting the Company’ s funds held by Y ella and 23 Rothbart Development. In prior correspondence, Defendants’ focus has been on Yella’s right to 24 comingle the Company’ s funds, citing Section 9.4 of the Operating Agreement, which is attached 25 hereto as Exhibit 1 (“Operating Agreement’). The contractual rightto comingle funds does not 26 telieve Yella of its contractual and legal obligations to account for the specific funds of the 27 Company. Y ella has exercised its contractual rightto comingle the Company’ s funds with other 28 “3 1626603.2 COMPLAINT entities unrelated to the Company or its operations; and thus has imposed an obligation on itself, at its own expense, to fully account for the Company’s funds and expenses separate and apart from any other entity. 12. Section 9.1 of the Operating Agreement describes Yella’s contractual record management obligations. The Plaintiff has a right at any time to review all financial documents for the most recent six years and all books and records showing the intemal business of the Company for the last four years. These financial records must include accounting of all the Company’ s funds that went into any account maintained by Y ella, how long the funds were held in the specific accounts and ultimately whether the funds were transferred to any other accounts 10 or distributed to Plaintiff pursuant to the Operating Agreement for the Company, and the EIN 11 mumber that is being used for the account that is holding the comingled funds. Defendants have 12 refused to provide this information, including the financial statements, books and any records 13 that contain the above information; and therefore, Plaintiff is entitled to a complete forensic 14 accounting of the books and records of the Company. 15 13. As briefly described above, in addition to Yella, Stanley Rothbart owns and 16 controls Rothbart Development, which is the Property Manager that Y ella, as the sole manager 17 of the Company, contracted with in or around January 2003. Section 5 of the Property 18 Management Agreement, attached hereto as Exhibit 2 (“Property Management Agreement’), 19 discusses the account that Rothbart Development will establish and manage on behalf of the 20 Company. Section 5(B) discusses an “account maintained by Agent [Rothbart Development] on 21 behalf of Owner pursuant to this Contract.” This section does not allow Rothbart Development to 22 comingle the Company’s funds with any other individual or entity. It clearly states that it will 23 Maintain an account on behalf of the Company alone. In fact, Rothbart Development comingling 24 the Company’s funds in said account would be a contractual breach. Further, the requested 25 financial records and accounting must include any and all accounts that Rothbart Development 26 established for the benefit of the Company pursuant to the Property Management Agreement, 27 and all activity relating to the account(s). 28 -4- 1626603.2 COMPLAINT 14. The second issue relates to quarterly distributions paid by the Company to Plaintiff. These quarterly distributions have not been timely over the last several years; and have instead required a significant amount of effort from Plaintiff’ s representativesto obtain the funds due to Plaintiff. Recently, it has taken months for Plaintiff to receive current quarterly distributions. Under no circumstances should any distribution ever be late or untimely paid to Plaintiff. Currently, Plaintiff is waiting on the third and fourth quarter 2023 profit distribution. The Company and Yella, as its manager, are required to make this profits distribution by December 16, 2023. 15. In addition to payment of these contractual distributions, Yella failed to explain 10 the calculation it performs or the process it undertakes to determine how much in cash or profit 11 should be distributed and the funds needed to remain in reserve. Yella has obligations under 12 Section 6.2 of the Operating Agreement and must demonstrate its compliance. 13 16. Moreover, the authority granted to Y ella in the Operating Agreement, as manager 14 of the Company, does not give it permission to act arbitrarily, in bad faith or negligent. Nothing 15 in the Operating Agreement relieves Y ella from its fiduciary duties to the Company and Plaintiff. 16 These duties include a good faith analysis of the Company’s funds, determining the amount 17 reasonably needed for reserves and the remainder being distributed to the members. This is in 18 addition to Y ella’s contractual distribution instructions and obligations in Section 6.2.1 and 6.2.2 19 of the Operating Agreement. Yella is burdened with these obligations and requirements, yet 20 Yella has never provided any explanation or background information for a single distribution or 21 for the reserves. 22 17. Plaintiff has requested background information and documentation illustrating 23 how Yella complied with Section 6.2 and how Yella has made the determination of the amount 24 to distribute and the amounts to reserve. Yella has refused to provide this basic information. 25 Plaintiff demands information and documentation specifically identifying how the distributions 26 and reserves have been calculated over the last four years, including the now untimely 27 28 -5- 1626603.2 COMPLAINT distributions. A forensic accounting of the Company and Rothbart Development must be immediately conducted at Y ella’ s expense. FIRST CAUSE OF ACTION (Breach of Contract - Defendants and DOES 1-10) 18. Plaintiff realleges and incorporates by reference Paragraphs 1 through 17 above. 19. Section 9.1 of the Operating Agreement describes Yella’s contractual record Management obligations. Yella also has contractual distribution instructions and obligations in Section 6.2.1 and 6.2.2 of the Operating Agreement. 20. Plaintiff has a right at any time to review all financial documents and records for 10 the most recent six years and all books and records showing the financial and intemal business of 11 the Company for the last four years. These financial records must include, without limitation, 12 accounting of all the Company’ s funds that went into any account maintained by Y ella, how long 13 the funds were held in the specific accounts and ultimately whether the funds were transferred to 14 any other accounts, or used to pay expenses and liabilities of the Company or distributed to 15 Plaintiff pursuant to the Operating Agreement, and the EIN number that is being used for the 16 account that is holding Company funds or comingled funds. Defendants have refused to provide 17 this information, including the financial statements, books and any records that contain the above 18 information, which constitutes a breach of contract. 19 21. Pursuant to Section 5(b) of the Property Management Agreement, Rothbart 20 Development has allowed the deposit of income due to other entities unrelated to the 21 Company and the payment of expenses due by other entities unrelated to the Company to be 22 comingled in the Company’ s account and paid out of the Company’ s account. 23 22. As adirect and proximate result of the breach of the Operating Agreement and. 24 breach of the Property Management Agreement, Plaintiff sustained damages in a sum in excess 25 of $25,000, subjectto proof at the time of trial. 26 //1 27 //1 28 -6- 1626603.2 COMPLAINT SECOND CAUSE OF ACTION (Breach of Implied Covenant of Good Faith and Fair Dealing Against Defendants and DOES 10-20) 23. Plaintiff realleges and incorporates by reference Paragraphs 1 through 22 above. 24. Section 9.1 of the Operating Agreement describes Yella’s contractual Management obligations. Yella also has contractual distribution instructions and obligations in Section 6.2.1 and 6.2.2 of the Operating Agreement. 25. The Agreement contained an implied covenant of good faith and fair dealing, imposing a duty on Defendants. Under Califomia law, this covenant requires each party to act reasonably and to do everything which the contract presupposes the parties will do in order to 10 accomplish and satisfy the purposes of the contract. Thus, upon entering into the Operating 11 Agreement, Defendants were bound to act reasonably and in good faith in performance of its 12 contractual duties under the Agreement. 13 26. Plaintiff has a right at any time to review all financial documents and records for 14 the most recent six years and all books and records showing the financial and intemal business of 15 the Company for the last four years. These financial and business books and records must 16 include, without limitation, accounting of all the Company’s funds that went into any account 17 maintained by Yella, how long the funds were held in the specific accounts and ultimately 18 whether the funds were transferredto any other accounts or used to pay expenses and liabilities 19 of the Company or distributed to the Plaintiff pursuant to the Operating Agreement, and the EIN 20 mumber that is being used for the account that is holding Company funds or comingled funds. 21 Defendants have refused to provide this information, including the financial statements, books 22 and any records that contain the above information, which constitutes a breach of the implied 23 covenant of good faith and fair dealing. 24 27. As a result of the breach of implied covenant of good faith and fair dealing, 25 Plaintiff sustained damages in a sum in excess of $25,000, subject to proof at the time of trial. 26 //1 27 //1 28 -7- 1626603.2 COMPLAINT THIRD CAUSE OF ACTION (Declaratory Relief) 28. Plaintiff realleges and incorporates by reference Paragraphs 1 through 27 above. 29. An actual controversy has arisen and now exists between Plaintiff and Defendants telative to Defendants’ duties under the Agreement. 30. Plaintiff contends that Defendants are required to be provide under the Operating Agreement and the Property Management Agreement: (1) the financial records and accounting described above from both Yella and Rothbart Development; (2) the information and documentation over the last four years relating to the quarterly distributions; (3) information and documentation identifying income received for the Company and income received for entities 10 unrelated to the Company and expenses paid for the Company and expenses paid for entities 11 unrelated to the Company; and (4) a forensic accounting must be immediately conducted of the 12 Company and Rothbart Development at Y ella’s expense. 13 31. Plaintiff is informed and believes that Defendants dispute these contentions. 14 32. A judicial declaration is necessary and appropriate at this time. 15 33. Plaintiff desires a declaration that Defendants are required to be provide under the 16 Agreement: (1) the financial records and accounting described above from both Yella and 17 Rothbart Development; (2) the information and documentation over the last four years relating to 18 the quarterly distributions; and (3) a forensic accounting of the Company and Rothbart 19 Development to be immediately conducted at Yella’s expense. Defendants’ refusal to do so 20 constitutes a breach of the Operating Agreement and the Property Management Agreement and 21 breach of the implied covenant of good faith and fair dealing, subjecting Plaintiff to damages in 22 excess of $25,000, to be proven at trial. 23 FOURTH CAUSE OF ACTION 24 (Request for Accounting) 25 A. Plaintiffs incorporate by reference paragraphs 1 through 33 of this Complaint as 26 though fully set forth herein. 27 28 -8 1626603.2 COMPLAINT 35. “An action for an accounting has two elements: (1) ‘that a relationship exists between the plaintiff and defendant that requires an accounting’ and (2) ‘that some balanceis due the plaintiff that can only be ascertained by an accounting.’” (Sass v. Cohen (2020) 10 Cal.5th 861, 869, citing Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179.) 36. As described herein, Defendants breached the Operating Agreement and the Property Management Agreement and the implied covenant of good faith and fair dealing with respect to Plaintiff. 37. Plaintiff contends that it has the right at any time to review all financial documents and books and records for the most recent six years and all books and records 10 showing the intemal business of the Company for the last four years. These financial documents 11 and books and records must include an accounting of all the Company’ s funds that went into any 12 account maintained by the Company or Yella on behalf of the Company and how said funds 13 were used and distributed by the Company and Yella and identifying how funds received by 14 Rothbart Development for the Company were used and distributed and how income and 15 expenses, were comingled with entities unrelated to the Company. 16 38. Plaintiff has made multiple demands for Defendants to provide the requested 17 accounting, which demands have been ignored. Plaintiff requests that the court order an 18 accounting of Defendants’ financial records. 19 PRAYER FOR RELIEF 20 WHEREFORE, Plaintiff prays for judgment as follows: 21 1 For damages according to proof at trial; 22 2 For declaratory relief; 23 3. For an accounting as requested; 24 4. For prejudgment interest at the legal rate; 25 For costs of suit; 26 For attomey’ s fees; and, 27 For such other and further relief as the Court deems just and proper. 28 -9- 1626603.2 COMPLAINT Respectfully submitted, DATED: March 18, 2024 JACKSON TIDUS By: /s/ CharlesM. Clark Charles M. Clark MC Attomeys for Plaintiff, S. Wamack, Trustee of the Shaughne S. Wamack Trust 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -10- 1626603.2 COMPLAINT EXHIBIT 1 aay OPERATING AGREEMENT FOR DESTINATION 0-8, LLC A CALIFORNIA LIMITED LIA BILITY COMPANY 99999552242 -12- OPERATING AGREEMENT FOR DESTINATION 0-8,°LLC A CALIFORNIA LIMITED LIABILITY COMPANY This Operating Agreement of Destinat tion O-8, LLC, a limited liabil. ity company organized under the laws of the State of California (the “Company” *) is made as of of Noy wv, 2002, by and between YELLA this 2.2 day ENTERP: RISES, LLC (“Rothbart”), and WARNACK, TRUSTEE OF THE A.C. WARNAC A.C. K T) RUSTST (“Warnack”) with referenc the following facts: e to A On June 13, 2002 (the ‘Effective Date”), Articles Company were filed with the Cal ifornia Secr of Organization for the etary of State, B The parties now desire to adopt and approve an operating agreement for the Company. AGREEMENT NOW, THEREFORE, the parties hereto by this Agre ement set forth the operating agreement for the Company under the law s of the State of California upon the terms to the conditions of this Agreement, and subject ARTICLE I DEFINITIONS When usedin this Agreement, the followin ig terms shall have the meanings set forth below (all terms used in thi s Agreemen t that are not de fined in this Article I shall meanings set forth elsewhere in this Agreemen have the t): il “Act” shall mean the Beverly-Killea Limited Liability Company Act, codified in the Corporations Code, Section 1700 0, et seq., as the same may be amended from time to time. 12 “Agreement” shall mean this Operating Agre amended from time to time. ement, as originally executed and as 13 “Articles” shall mean the Articles of Organiza filed with the California S ecretary of tion for the Company originally State, as the same may be amended from time to time. 1.4 “AvailablCash’ e "shall mean Available Cash From Financing or Disposition Available Cash From Operations and _ 2 siSe « ble G hh From Financing or. mis 3p on shall mean respectively, the net proceeds after rep ryment to f all Mem ber Loan: 8 from i) any fin ancin: g or refinancin Property or any portion thereof, (ii) any g of the or taking (including, but not limited to, transfer, including, without tlimitation, li ,sale, disposition the proceeds of any eminent do: conveyance in lieu thereof) of the Property or any portion main proceeding or thereof, and (ili) insurance proceeds, LLC Agreement ~ Destination 0-8 -13- other than rental insurance proceeds and an 'y portion of the insura nce proceeds applied to restore any portion of the Property damaged as ar esul {t of a casualty or condemnation, and proceeds from any other event which under generally ac cepted accounting principles, consistently applied, the event giving rise to suchnetat'proceeds,(x at capital orby other(w) all costs and expenses related to _ expenditures for which such net TOC’e eds are to be used, as determinby edth e | anager anger, refiefinanced or discharged and any other debts or liabilit » (y) the amount of any indebtedness being (y) 1€s 0 f the Company for which such net. proceeds are to be used, as determined by the Manager, and (z) reasona ble reserves, as__ - determined by the Manager. (16 © ©6“Availa Gi erations” ' shall not include any cash constituti “Available Cash From F inancing or Disposition”. » but shall ieee mean any cash received by the Company attributable to the operation of the Proj perty, less (i) the sum of current debt service on ¢ Property (including debt service on Member Loans), (ii) current operati reas sonable resery eS, ae as ie determined by the as ng expenditures, and reas aceratiy Ma nager, for the operatio: n of the business o cH f the Company. whiz Capital “Capital Contri Cont: butio’ mn” shall mean the total of cash and other assets contri buted to the Company by Members. 1.8 “Code” shall mean the Internal Revenue Code of 1986, as amende d from time to time, and the provisions of succeeding law. Te! “Company” shall mean Destination 0-8, LLC, a California limited liability company. 1.10 “Corporations Code” shall mean the California Corporations Code, as amended from time to time, and the provisions of succeeding law. Lit “Fiscal Year” shall mean the Company’s fiscal year, which shall be the calendar year. 1.12 _ “Management Fee” shall mean, for any mont! gross -Tevenue generated at the Property for that month (including all rental income and incom ie in liew of rental income, such as rental interru ption insurance procee ds, but not including proceeds of loans secured by or of sales of the Property). 1.13 “Manager” shall mean one or more managers. Specifically, “Manag er” initially shall mean Rothbart or any other person or entity that succeeds Rothbar t in that capacity. 1.14 “ Member (s)” shall mean Rothbart and Warnack, and any other person or entity admitted to the Company as a Member pursuant to this Agreem ent, collectively; the term “Member” means any one (1) of the Members. . 115 “Member Loan” has the meaning given to that term in Section 3.3, below. 1.16 “Membership Interest” shall mean with respect to any Member, all of such Member’s right, title and interest in, to and against the Company with respect to the Net Profits, LLC Agreement — Destination 0-8 -14- Net Losses, and Available Cash of the Company, and all other rights of a Member to participate in the business, affairs and management of the Co: mpany, includi ng without limitation, the right to vote on or grant consent or approval with Tespect to matters coming before the Company. 5 1.17 “Qutparcels” or ‘ ‘Proper ty” collectively shall mean those four certain outparcels, of real property located on the East sideof 10 Street int the Cityof P; , California, as outlined on the site plan attached as Exhibit *B” and described in “Exh “B-1” hereto, as well as any other outparcel or other parcel of real property that the Compa ny s hould in the future acquire with the consent of all Members. Each of the Outparcels someti mes is referred to individually as an “Qutparcel”, 1.18 “Percentage Interest” shall mean the percentage of a Member set forth opposite the name of such Member under the column “Member’s Percentage Interest” in Exhibit “A” hereto, as such percentage may be adjusted from time to time pursuant to the terms of this Agreement. 1.19 “Square Feet” shall mean, with respect to an Outparcel, the number of square feet of usable area of the real p roperty contained within the perimeter boundary of that Outparcel, net of rights of way , Streets and other matters rendering portions of that real property unusable. 1,20 “Tax Appendix” has the meaning given to that term in Section 6.1, below. ARTICLE I ORGANIZATIONAL MATTERS 21 Formation. Pursuant to the Act, the Members have formed a California limited liability company under the laws of the State of California by filing the Articles with the California Secretary of State and entering into this Agreement. The rights and liabilities of the Members shall be determined pursuant to the Act and this Agreem ent. To the extent that the rights or obligations of an ly Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control. 22 Name. The name of the Company shall be “Destination O-8, LLC”. The business of the Company may be conducted under that name or, upon compliance with applicable laws, any other name that Members deem appropriate or advisable. The Manager shall file any fictitious name certificates and similar filing s, and any amendments thereto, that are required by applicable laws. 2.3 Term. The Company shall commence on the Effective Date until December 31, 2052, unless extended by unanim and shall continue ous agreement of the Members, or sooner terminated as hereinafter provided. 2.4 Office and Agent. The Company shall continuously mainta in an office and registered agent in the State of California as required by the Act. The principal office of the Company shall be as the Members may determine. The Company also may have such offices, LLC Agreement ~ Destination 0-8 -15- anywhere within and outside the State of California, as the busin ess of the Company may require. The registered agent shall be as stated in the Articles. 25 Addresses of the Members. The res spective addresses of the Members are set forth on Exhibit “A”. 2.6Purpose of Company. The purpose of the Company is to engage in any lawful activity for which a limited liability co mpany may be organi zed under the Act. Notwithstanding the foregoing, the Company has been specifically organized to engage in the acquisition and disposi tion of, and the development, i improvement, construction, operati on, subleasing and sale of, the Outparcels, with a view to maximizing the value of and selling or leasing each of the Outparcels as quickly as reaso nably practicable, consistent with such value maximization, The Company wili not, without the consent of all Me! ‘mbers, purcha se any real property other than the Outparcels. 24 Competition. Nothing herein contained shall preclude any Membe r from owning, purchasing, selling, or otherwise dealing in any manne r with any property or engaging in any related or competitive business activities whatsoever without notice to any other Member or the Company, without participation of any other Member or the Company, and without liability to it or any of them. It is understood that an: yy Member can now or hereafter engage in any business or possess any property of any type, whether or not such business or such property compet es with the business or property of the Company. Without limitin g the generality of the foregoing, any Member may, without notice to any other Member or the Company, and without obligation to present to the other Member or the Company an opportunity of any kind whatsoever, acquire, develop, improve, construct, sell, finance, | case, operate, manage, or syndicate any real property including, without limitation, any real property which is adjacent to, in the same general area as, or in direc t competition with real propert y in which the Company or a Member has an interest, free of any claim whatsoever of any Member or the Company. The terms of this Section 2.7 shall apply even thou, igh the opportunity in question might come to the attention ofor become available to such Mem iber through its participation in the Company. Each Member hereby waiv es any right which it may have against others who may capitali ze on or take advantage of information learned as a consequence ofits association with the Company. ARTICLE IIT CAPITAL CONTRIBUTIONS Init 1{Fip tio As of the formation of the Company, the Members ‘have ee the = Capi tal Coniri buti ions set forth in Exhibit “A”, Inaddition, © Wam: ack shall contribute the Property to the C cd a at the time format of ion of the Company, 2 ms othbart and Warnack shall cancel that certain co: ntract between them pursuant to which hbart now has a right to purchase portions of the Pi roperty from Wamack. 3.2 Third Party Financing. In connection wit will h the Company’s acquisition, devel lopment and sale of the Property, the Company anticipates that it may require funds in excess of the initial Capital Contributions to be made by the Members pursuant to Section 3.1, above. The Company expects to obtain third party finan cing and Member Loans in an amount LLC Agreement ~ Destination 0-8 -16- sufficient to pay such costs at such times as the Manager shall reasonably determine. No Member shall have any obligation to contribute additional capital to the Company. 33 Me. mber Loans. If the Manager determines that the Compa ny requires additional capital to carry out its approved purposes, within thirty days after a written request therefor is made by the Manager, each of the Members shall make a loan to th Company in an amount equal to fifty percent (50%) of such required additional capital on s uch terms and conditions as the Manager shall approve (each such loan is referred to as a “Membe! r Loan”). Each Member Loan shall bear interest from the date such loan is made, at the lesser of (a) the greater of (i) seven percent (7%) per annum above the rate publicly published or announ ced from time to time by Wells Fargo Bank (or any bank into which Wells Fargo Bank may be merged or with which it may be consolidated) at its principal place of business as its base, prime or reference rate, which tate the parties acknowledge may not be the lowest rate at which said bank lends money on an unsecured basis to its most creditworthy customers, or (ii) twelve percent (12 %) per annum, or (b) the maximum rate permitted by law. EachEach }M: Ai ember Loan shall be repaid out of any subsequent payments or distributions of any kind to which the Members would otherwise be entitled under this Agreement, which amount shall be applied first to accrued interest (and, if there is more than one Member Loan, pro rata in proportion to the aggregate amount of such interest then unpaid) and then to principal (and, if there is more than one Member Loan outstanding, pro rata in proportion to the aggregate amount of such princip al then outstanding) until all Member Loans are paid in full. If any Member shall fail to make a Member Loan as required hereby, the other Members may, but shall not be require d to, make that Member Loan on behaoflfthe failing Member (and if there is more than one such other Member desiring to make such Member Loan, each of those other Members that desires to make such Member Loan may make a portion of such Member Loan in the proportion that its Membership Interest bears to the Membership Interests of all of the other Members that desire to make such Member Loan, or in any other ratio to which such Members shall agree). 3.4 N 0 Interest. Except as spe