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DAVID J. MICLEAN (SBN 115098)
dmiclean@micleangleason.com
DANIELLE M. MIHALKANIN (SBN 271442)
dmihalkanin@micleangleason.com
MICLEAN GLEASON LLP FILED
411 Borel Avenue, Suite 310
SAN MATEO COUNTY
San Mateo, CA 94402 JUL 0°8 2019
Telephone: (650) 684-1181
Facsimile: (650) 684-1182
Attorneys for Defendant and Cross-Complainant
Solomon Sha
~ ——— -
SUPERIOR COURT OF THE STATE OF CALIFORNIA! isv-oate
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Declaration in Support
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10 COUNTY OF SAN MATEO
1919111
11
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12 SWEET PRODUCTION, INC., a California Case No. 18-CIV-03110
Corporation,
13
Plaintiff, DECLARATION OF DAVID J. MICLEAN IN
14 SUPPORT OF SOLOMON SHA’S MOTION
FOR LEAVE OF COURT TO FILE AND
Vv.
15 HAVE HEARD SHA’S MOTION FOR
TERMINATING SANCTIONS OR
16 SOLOMON SHA, an individual; and DOES 1 to ALTERNATIVELY TO REOPEN AND
10, inclusive, COMPEL DISCOVE!
(C.C.P. §§ 2023.010, 2023.030, 2024.050)
17
Defendants.
18 AvVG/22/\P
19 Date: Aragust 629
Time: 9:00 a.m.
20 SOLOMON SHA, Department: Law & Motion
21 Cross-Complainant,
22 Vv.
23
SWEET PRODUCTION, INC., a California
24 corporation; SWEET EXPRESS; MING CHIN;
DOREEN CHIN; and ROES 1 through 10,
25 inclusive,
26 Cross-Defendants.
27
| MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE No. 18-CIV-03110
I, David J. Miclean, declare as follows:
1 lam an attorney at the law firm of Miclean Gleason LLP located at 411 Borel Avenue,
Suite 310, San Mateo, California 94402. I submit this Declaration in support of Defendant and Cross-
Complainant Solomon Sha’s (“Sha”) Motion to Reopen Discovery.
2 Iam a member in good standing of the State Bar of California.
3 I make this declaration based upon facts within my own personal knowledge, except as to
those matters stated upon information and belief, and as to those matters I believe them to be true. If
called upon to testify to the matters stated herein, I could testify competently and truthfully.
4 I was retained by Mr. Solomon Sha in July 2017 to obtain financial information from
10 Sweet Production, Inc. (“SPY”), a company he was an owner of and former employee. On August 10,
11 2017, I wrote to SPI’s counsel, Andrew Agtagma, to request an accounting of SPI’s books and records
12 to determine the distribution amounts owed to Sha. Sha requested inspection of SPI’s financial
13 documents pursuant to statutory authority to understand why he had not received distributions as an
14 officer and shareholder for the time Sweet Production, Inc. had been in business, and because of his
15 concern that substantial monies were taken out of the business by the Chins. A true and correct copy of
16 my August 10, 2017 correspondence is attached at Exhibit 2.
17 5 On August 25, 2017, SPI’s counsel responded to my August 10, 2017 letter and offered
18 to make a limited number of financial documents available but refused to produce tax returns and any
19 financial reports or income statements prior to the 2017 fiscal year. A true and correct copy of this
20 correspondence is attached as Exhibit 3. On September 12, 2017, my office emailed Mr. Agtagma and
21 challenged SPI’s refusal to produce accounting reports and tax records. A true and correct copy of this
22 correspondence is attached as Exhibit 4.
23 6 On November 15, 2017, I again reached out to opposing counsel, Andrew Agtagma,
24 regarding SPI’s continued refusal to produce tax records for the previous 7 years to Sha. A true and
25 correct copy of this correspondence is attached as Exhibit 5.
26 7. On December 1, 2017, counsel for SPI allowed the scheduling of a limited inspection of
27 documents on December 19, 2017 but continued to refuse Mr. Sha access to SPI corporate tax records
28 despite the fact Mr. Sha was an owner and officer of SPI. A true and correct copy of this
1
MIcT FAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE No. 18-CIV-03110
correspondence is attached as Exhibit 6. The inspection went forward in December 2017, but SPI
continued its refusal to produce documents that would show revenue expenditures, SPI tax returns, and
K-1s for the other owners.
8 In early 2018, my office continued to press SPI’s counsel Andrew Agtagma for financial
information from SPI. Since that time, SPI had been wholly noncompliant with Sha’s request to
produce records and financial data regarding the company. In May 2018 I advised Agtagma that if SPI
did not provide the financial information requested, litigation would likely ensue. But, rather than
meeting Sha’s requests for documentation, and in retaliation to avoid compliance, and as a preemptive
strike, SPI filed a Complaint against Mr. Sha on June 18, 2018 containing a litany of inaccuracies, false
10 statements, and frivolous claims against Mr. Sha.
lL 9 On July 19, 2018, my office filed and an answer to the SP] Complaint for Mr. Sha, as
12 well as a Cross-Complaint against SPI, Ming and Doreen Chin, and Sweet Express (collectively, the
13 “Cross-Defendants”). A true and correct copy of the original Cross-Complaint is attached as Exhibit 7.
14 The cross complaint included causes of action for breach of fiduciary duty, accounting, fraud,
15 conversion and unjust enrichment against SPL, Doreen and Ming Chin as owners of SPI, and against
16 Sweet Express, the company affiliated with SPI and the Chins that diverted revenue away from SPI. On
17 July 24, 2018, my office emailed Mr. Agtagma asking if he would accept service of the Cross-
18 Complaint for Sweet Express and the Chins, in addition to his client SPI. A true and correct copy of this
19 correspondence is attached as Exhibit 8. When Mr. Agtagma failed to respond to my email, we
20 personally served SPI, Sweet Express, Doreen Chin, and Ming Chin with the Cross-Complaint.
21 10. On July 27, 2018, our office personally served SPI with the First Set of Requests for
22 Production of Documents, Special Interrogatories, Form Interrogatories, and Inspection Demand to SPI
23 (true and correct copies of which are attached as Exhibit 9) to gather information for the purpose of
24 defending Sha against SPI’s allegations in the complaint, prepare Sha’s defenses, obtain discovery on
25 issues in the case, and to assess potential damages. On August 9, 2018, our office personally served
26 each of Cross-Defendants Ming Chin and Doreen Chin with a First Set of Requests for Production of
27 Documents, Special Interrogatories, and Form Interrogatories (true and correct copies of which are
28 attached as Exhibit 22), also to gather information for the purpose of defending Sha against SPI’s
2
MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE No. 18-CIV-03110
allegations in the complaint, prepare Sha’s defenses, obtain discovery on issues in the case, and to assess
potential damages. However, none of the Cross-Defendants responded to any of these discovery
requests.
il. On August 23, 2018, our office personally served deposition notices on Cross-Defendants
Ming Chin and Doreen Chin. However, these depositions were taken off calendar due to Cross-
Defendants’ refusal to comply with discovery and produce documents, and because default was entered
against the Chins (and the other Cross-Defendants) on the Cross-Complaint and, later, the First
Amended Cross-Complaint. (See paras. 12 and 21, below.)
12. Further, none of the Cross-Defendants responded to Mr. Sha’s cross-complaint. On
10 September 4, 2018, prior to entry of default, my office sent a courtesy notice to Mr. Agtagma advising
11 him that SPI and the other cross-defendants were in default, and if they did not respond to the cross-
12 complaint, we would file a default. A true and correct copy of this correspondence is attached as Exhibit
13 10. Mr. Agtagma and the Cross-Defendants ignored my courtesy notice and did not respond by the
14 deadline, and default was entered against Cross-Defendants Sweet Express, Doreen Chin, and Ming
15 Chin on September 14, 2018, and as to SPI on October 9, 2018. True and correct copies of these entries
16 of default are attached as Exhibits 11 and 12, respectively.
17 13. On October 15, 2018, opposing counsel, Andrew Agtagma, finally responded via email
18 regarding an interest in potential settlement negotiations. A true and correct copy of Mr. Agtagma’s
19 email is attached as Exhibit 13.
20 14. On November 19, 2018, in hopes of potential settlement negotiations, mediation was
21 confirmed and scheduled for February 28, 2019. A true and correct copy of a letter from mediator
22 Richard M. Williams, confirming the mediation, is attached as Exhibit 14.
23 1S. On November 29, 2018, to assist Sha in making an informed decision on any settlement
24 proposal, our office reached out to opposing counsel, Andrew Agtagma, seeking discovery responses
25 and an accounting of SPI financial records, assets and profits. A true and correct copy of this letter is
26 attached as Exhibit 15. However, again, opposing counsel refused to comply and did not respond in any
27 manner to our discovery request. Mr. Agtagma then went radio silent and refused to respond to
28 communications regarding financial information or the mediation for over two months.
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MICLEAN DECLARATION ISO MOTION FoR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE NO. 18-CIV-03110
16. On February 8, 2019, in response to the Cross-Defendants’ continued failure to provide
any responses to our discovery requests and financial information regarding SPI, the mediation was
taken off calendar by my office and a Motion to Compel filed and served on the Cross-Defendants (a
true and correct copy of which is attached as Exhibit 16). The Cross-Defendants failed to file or even
serve an opposition to the Motion to Compel. The Cross-Defendants’ failure to file an opposition is
consistent with their ongoing manner of repeatedly failing to communicate in any way and respond to
good faith attempts to conduct discovery.
17. On April 2, 2019, Mr. Sha’s February 8, 2019 Motion to Compel was denied (without
prejudice) by Judge Greenberg due to Cross-Defendants Sweet Express, Ming Chin, and Doreen Chin’s
10 defaults having already been entered as to the Cross-Complaint, and because the proof of service
1 prepared by the filing service apparently failed to identify Mr. Agtagma as SPI’s counsel — even though
12 that information would certainly be known to the court since he filed the original SPI compliant. A true
13 and correct copy of Judge Greenberg’s Order is attached as Exhibit 17.
14 18. On April 4, 2019, Sha filed his First Amended Cross-Complaint (a true and correct copy
15 of which is attached as Exhibit 18) to explicitly make a demand for $1.5 million in damages by reason of
16 Cross-Defendants’ failure to pay ownership distributions conversion of Mr. Sha’s ownership interest in
17 SPI. The First Amended Cross Complaint (“FAC”) (like the original cross-complaint) included causes
18 of action for breach of fiduciary duty, accounting, fraud, conversion and unjust enrichment against SPL,
19 Doreen and Ming Chin as owners of SPI, and against Sweet Express, the company affiliated with SPI
20 and the Chins that diverted revenue away from SPI. The FAC asserted that Sha was one of the original
21 founders of SPI who owned 30% of the Company, worked there for almost a decade (FAC | 12-13),
and that the Chins, despite their fiduciary duties to other owners of SPI, have systematically schemed to
23 siphon off revenue of SPI for their own benefit and to the detriment of Sha (FAC {ff 14-19). In
24 particular, Sha alleged that SPI and the Chins have made a least a million dollars in profit since 2011 but
25 have refused to pay him any distribution of such profit even though they have paid themselves. Sha has
26 also alleged that SPI and the Chins have engaged in fraudulent accounting to cook the books, set up
27 separate bank accounts, divert work to their separately affiliated company Sweet Express (without
28 reimbursement to SPI), and increase expenses on paper while lining their own pockets. (FAC ff 14, 16,
4
MiCT RAW DRCT.AR ATION TSO MOTION FOR LEAVE (CCP 2023.010. 2023.030, 2024.050) CASE No. 18-CIV-03110
18, 19, 26, 30-31.) Sha has also confirmed that SPI and the Chins have refused to produce SPI tax
returns or other financial documents to track where SPI revenue is going so the Chins could use SPI as
their own cash machine and convert same to their own use without paying other owners. (FAC ff 18,
29-31.) The Chins also reduced Sha’s ownership interest without his authorization. (FAC {ff 15, 33-
35.) As aresult of such conduct, SPI, Sweet Express, and the Chins have refused to pay profit
distributions to Sha, have refused to grant him access to the accounting and financial records and tax.
returns of SPI, and have essentially converted his ownership interest in SPI in the amount of $1.5
million. The $1.5 million demand is based on Sha’s knowledge of SPI and 20 years in the bakery
industry, and the over $1 million in annual profit made by SPI in the years before Sha was improperly
10 terminated. (FAC 4 18, 27, 31, 38, 41, and prayer.) Again, the amended cross-complaint was
11 personally served on all the Cross-Defendants on April 9, 2019 and provided to Mr. Agtagma’s office on
12 April 16, 2019. The Cross-Defendants’ responsive pleadings were due on May 16, 2019. No response
13 was filed by any of the Cross-Defendants.
14 19. On April 16, 2019, Plaintiff Sweet Production’s counsel, Andrew Agtagma, filed a
15 Notice of Change of Address for this matter with the Court. A true and correct copy of the Notice is
16 attached as Exhibit 19. This is the only contact Mr. Agtagma made with Miclean Gleason from October
17 15, 2018, until June 4, 2019, a day before the parties’ Mandatory Settlement Conference, a period of
18 over 7 months.
19 20. On May 17, 2019, Sha re-filed his Motion to Compel Discovery Responses from Plaintiff
20 Sweet Production, Inc., Deeming Objections Waived, Monetary Sanctions, and Terminating Sanctions,
21 which was originally scheduled for hearing on June 12, 2019, but then continued by the court for
22 hearing on July 2, 2019 (weeks after the trial date). A true and correct copy of the Motion is attached as
23 Exhibit 20.
24 21. On May 21, 2019, given the Cross-Defendants’ total lack of response of any kind to
25 Sha’s First Amended Cross-Complaint, Sha filed a Request for Entry of Default on Sweet Production,
26 Inc., Sweet Express, Ming Chin, and Doreen Chin as to the First Amended Cross-Complaint. The
27 Default was entered as to Sweet Production, Inc., Sweet Express, Ming Chin, and Doreen Chin on June
28 5, 2019. A true and correct copy of the second Default filed as to the First Amended Cross-Complaint,
5
MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010. 2023.030. 2024.050) CASE NO. 18-CIV-03110 '
as entered, is attached as Exhibit 21. Again, the default on the First Amended Cross-Complaint was
personally served on all Cross-Defendants and a copy provided to Mr. Agtagma at his new address.
22. On June 5, 2019 there was a court-scheduled mandatory settlement conference followed
by a trial date scheduled for June 17, 2019. Having heard nothing substantively on any matter from SPI,
Mr. Agtagma, or any cross defendant for over 9 months, I contacted the court to move the dates. The
court declined, and I prepared a timely MSC statement which was served on Mr. Agtagma on May 29,
2019. I did not receive any MSC statement from Mr. Agtagma on the due date. On June 4, 2019, the
night before the MSC, shortly before our office closed, someone dropped off what purported to be an
MSC statement from Mr. Agtagma. It was obvious to me that SPI and the other Cross-Defendants made
10 a deliberate decision to avoid any response to discovery or the cross-complaint, and planned to lie in
fl wait and attempt trial by ambush after SPI and the Cross-Defendants’ total non-compliance with
12 discovery and radio silence for 9 months. It was also apparent to me that SPI and the Chins’ strategy
13 was to try and wait Sha out knowing he was an individual without substantial means and that it would be
14 difficult for Sha to prosecute the Cross-Complaint or fund the litigation.
15 23. On June 5, 2019, at the MSC, the Parties stipulated to move the trial date to January 6,
16 2020.
17 24. Unfortunately, the Motion to Compel Discovery Responses from Plaintiff Sweet
18 Production, Inc., Deeming Objections Waived, Monetary Sanctions, and Terminating Sanctions
19 (referenced in paragraph 20, above) was denied on July 2, 2019 as untimely since it was inadvertently
20 set for hearing beyond the 15 day before trial discovery motion cutoff in CCP 2024.020, and was not
21 accompanied by the instant motion seeking leave under CCP 2024.050 to have a discovery motion heard
22 closer to the trial date.
23 25. On July 1, 2019, pursuant to CCP 2024.050(a) and 2016.040, I wrote SPI counsel to seek
24 a stipulation to reopen discovery and allow for the hearing of this motion. A true and correct copy of
25 my July 1, 2019 letter to Mr. Agtagma is attached as Exhibit 23. SPI’s counsel refused to stipulate.
26 26. The cost and fees to make this motion and appear at the hearing amount to approximately
27 $5,000.
28
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MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010. 2023.030. 2024.050) CASE No. 18-CIV-03110
27. In over 35 years of legal practice I have never had a plaintiff and cross-defendant
(actually their attorney) go radio silent and not communicate, not respond to cross-complaints, not
respond to discovery, not respond to meet and confer efforts on discovery, not respond to discovery
motions, not respond to courtesy notices of impending default, not respond to entries of default, not
respond to communications and emails, etc. — and despite personal service of all those pleadings,
motions, and documents, and service to SPI’s counsel of record — for almost 2 years. The behavior
which led to entry of two defaults on all Cross-Defendants was not the result of some inadvertence or
excusable neglect by Cross-Defendants or SPI’s attorney. It was a conscious and calculated decision to
get a trial by ambush and use that to leverage resolution. That is despicable, not ethical, and a total
10 abuse of discovery. And I do not say that lightly. This game that Cross-Defendants have been playing
ll has cost Mr. Sha (who is man of very limited means) extensive attorneys’ fees, costs, and the loss of
12 time from having not been compensated at all for many years despite his 30% interest in SPI, which was
13 making over $7.5 million dollars a year as of 2017 (and trending upward) per the limited SPI records I
14 was able to review.
is 28. I am informed and believe that none of the Cross-Defendants (Sweet Production, Inc.,
16 Doreen Chin, Ming Chin, or Sweet Express) are members of the military nor currently serving in the
17
18
19 I declare under the penalty of perjury of the laws of the United States of America and the State of-
20 California that the foregoing is true and correct, and that this declaration was executed this 5th day of
21 July, 2019, in San Mateo, California.
22
23
By:
24 David J. Miclean
25
26
27
28
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MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE No. 18-CIV-03110
EXHIBIT 2
(MICLEANGLE SONS
August 10, 2017
Via Email & U.S. Mail
Andrew M. Agtagma
Law Center. P.C.
1291 E. Hillsdale Boulevard
Suite 211B
Foster City, CA 94404
ama@lawcenter-esq.com
Re: Sweet Production, Inc.’s Accounting
Dear Mr. Agtagma:
I write on behalf of my client, Solomon Sha. As you know, Mr. Sha is a shareholder and officer of Sweet
Production, Inc. (“Sweet Production”). Throughout the years, Mr. Sha has worked for Sweet Production’s
success and assumed that, in due time, he would obtain some benefit from its success. Mr. Sha has received de
minimis distributions from his investment. Seven years later, your client has failed to return any investment
from Mr. Sha’s ownership of Sweet Production notwithstanding substantial monies being taken out of the
business by other owners. In response to Mr. Sha’s requests for information and accounting, your client hired
you to send Mr. Sha a letter suspending his duties with Sweet Production on the pretense that Mr. Sha failed to
ensure customer deliveries, mismanaged payment of employees, fired employees, and made disparaging
statements about the company. These statements are false.
By this letter, Mr. Sha formerly requests inspection of Sweet Production’s financial documents. Pursuant to
Cal. Corp. Code § 213, Mr. Sha requests inspection of Sweet Production’s Bylaws. Pursuant to Cal. Corp.
Code § 1501, Mr. Sha requests Sweet Production’s Annual Financial Report or its equivalent — a report that
contains a balance sheet as of the end of the fiscal year, an income statement, and a statement of cashflows for
the past seven years including the current fiscal year, as well as the last 7 years of corporate tax returns. In
addition, Mr. Sha requests quarterly reports and income statements pursuant to Cal. Corp. § 1501. Finally,
pursuant to Cal. Corp. Code § 1600, Mr. Sha requests a list of shareholders and the accounting books and
records and board minutes to understand why Mr. Sha has not received distributions as a shareholder for the
time Sweet Production has been in business.
Please provide copies of the requested documents to my attention by no later than August 20, 2017. Thank you
in advance for your prompt attention to this matter, and I look forward to receiving the requested documents.
Sincerely,
MICLEAN GLEASON LLP
avid J. Miclean
411 Borel Avenue, Suite 310 San Mateo, CA 94402
orcs 650 684 1181 wes www.micleangleason.com
EXHIBIT 3
LAW CENTER
A PROFESSIONAL CORPORATION
1291 E Hillsdale Blvd, Suite 211B * Foster City, California 94404
Phone: (650) 372-2600 * Facsimile: (650) 372-9318
August 25, 2017
BY E-MAIL dmiclean@micleangleason.com
David Miclean, Esq.
MICLEAN GLEASON LLP
411 Borel Ave., Suite 310
San Mateo, CA 94402
Re: Sweet Production, Inc.’s Accounting
Dear Mr. Miclean:
I’m writing in response to your August 10, 2017 letter. My client disputes the
allegation that “substantial monies [have been] taken out of the business by other
owners.” To its knowledge, the only person suspected of improperly taking money out
of the business is Solomon Sha himself. It is one of the reasons why he is currently
suspended and under investigation for breaching his fiduciary duty as Secretary of the
corporation.
Regarding your accounting requests, Sweet Production responds as follows:
1) Sweet Production will make its bylaws available for inspection at a reasonable
time during office hours. Please propose several times and dates when Mr. Sha
would like to do so, and I will present them to my client so that a mutually
convenient time and date can be arranged.
2) Sweet Production has not prepared an annual financial report. Article II, § 4{a)
of its bylaws waives this requirement. My client will prepare the financial
statements specified in Corporations Code § 1501(a) for the previous fiscal year,
and provide a copy to Mr. Sha within 30 days from the date of your letter, ie.,
September 9, 2017.
3) Pursuant to Corporations Code § 1501(c), Sweet Production will also provide a
copy of its income statement and balance sheet for the first two quarters of the
current fiscal year.
4) Regarding Sweet Production’s annual financial reports before the previous
fiscal year, Mr. Sha has cited no statutory authority entitling him to this
information.
David Miclean, Esq.
August 25, 2017
Page 2 of2
5) Regarding Sweet Production’s corporate tax returns for the past 7 years, Mr.
Sha has cited no statutory authority entitling him to this information.
6) Sweet Production is ready to make available a list of all voting shareholders and
their addresses, provided that Mr. Sha tenders $60 (the company’s usual charge
for compiling the list). Alternatively, Mr. Sha may arrange to inspect and copy
the list himself during usual business hours. If he chooses the latter option,
please propose several times and dates when he would like to do so. I will
present them to my client so that a mutually convenient time and date can be
arranged.
7) Sweet Production will makes its accounting books and records and board
minutes available for inspection at a reasonable time during office hours.
Please propose several times and dates when Mr. Sha would like to do so. I will
present them to my client so that a mutually convenient time and date can be
arranged.
Please contact me if you have any questions or require anything further.
Sincerely,
LAW CENTER
Andrew M. Agtagma
Attorney at Law
cc: Doreen Chin
EXHIBIT 4
David Miclean SE
From: Carmen Aviles
Sent: Tuesday, September 12, 2017 2:07 PM
To: Andrew M. Agtagma, Esq.
Cc: David Miclean
Subject: RE: Solomon Sha - Sweet Production, Inc.'s Accounting
Andrew,
We are conferring with our client with regards to providing you times and dates to review the production of financial
documents. As to your client’s refusal to produce an accounting for the past seven years of financial reports and tax
returns, can you please provide case law that states our client is not entitled to those records including those for the
years our client received no distribution? Mooney v. Bartenders Bartenders Union Local No. 284, (1957) 48 Cal. 2d 841
{allowing plaintiff to inspect records for eight years). Both the corporation code and case law does not exclude previous
years and tax records from production of financial documents when a shareholder makes a request for an
accounting. In fact, “[a]t common law a stockholder hals] a right to inspect the books and records of the corporation at
a proper time and place and for a proper purpose. . . It is provided by statute that all corporate records in this state shall
be open to inspection upon the written demand of any shareholder...” Id. (emphasis added.) Moreover, in a litigation
our client would be entitled to that discovery to prove causes of action for fraud, conversion, malfeasance, breach of
fiduciary duty, shareholder accounting, etc. Seven years is a reasonable request as that is the amount of years generally
that is recommended for maintaining financial records for tax purposes. Please advise whether your client is willing to
produce the documents without the need of litigation. Also, please confirm that a copy machine will be available for the
copying of the documents. We will provide you dates for inspection by early next week.
Best Regards,
Carmen M. Aviles
Attorney
MICLEANGLEASONS
411 Borel Avenue, Suite 310
San Mateo, CA 94402
MAIN 650 684 1181
WEB www.micleangleason.com
EXHIBIT 5
ICLEANGL
DAVID J. MICLEAN, PRINCIPAL
TEL: 650-684-1181
EMAIL: DMICLEAN@MICLEANGLEASON.COM,
November 15, 2017
Via Email & U.S. Mail
Andrew M. Agtagma
Law Center. P.C.
1291 E. Hillsdale Boulevard
Suite 211B
Foster City, CA 94404
ama@lawcenter-esq.com
Re: Sweet Production, Inc.’s Accounting
Dear Mr. Agtagma:
This correspondence is in response to your October 4, 2017 letter. In that correspondence you stated my client
is free to inspect:
q@) Sweet Production’s Bylaws;
2) Its annual financial report for the previous fiscal year;
(3) Its income statement and balance sheet for the first two quarters of 2017 (which you included with your
correspondence);
@) Its list of all voting shareholders and their addresses, upon tender of $60 (please advise to whom should
the check be made out); and
6) Its accounting books and records, and board minutes (you stated that the accounting books may include
assorted income states and balance sheets from previous years).
Your client refuses to produce tax records for the previous 7 years. As you know, Cal. Corp. Code § 1602
provides directors with an absolute right to inspect and copy all books, records and documents of every kind.
Solomon Sha is a director. The code places no time limitation or restriction on what type of financial records
are allowed to be inspected. Saline v. Superior Court (2002) 100 Cal. App. 4th 909. Thus, my client requests
that tax records from the past 7 years be made available, because these obviously would be part of the books
and records of the corporation.
Finally, we are available to conduct the inspection on November 29, 2017. Please advise the location of the
inspection and the availability of a copy machine and/or printer.
Sincerely,
MICLEAN GLEASON LLP
avid J. Miclean
411 Borel Avenue, Suite 310 San Mateo, CA 94402
ornce 650 684 1181 wea www.mnicleangleason.com
EXHIBIT 6
LAW CENTER
A PROFESSIONAL CORPORATION
1291 E Hillsdale Blvd, Suite 211B + Foster City, California 94404
Phone: (650) 372-2600 * Facsimile: (650) 372-9318
December 1, 2017
BY E-MAIL ONLY dmiclean@mi n. im.
David Miclean, Esq.
MICLEAN GLEASON LLP
411 Borel Ave., Suite 310
San Mateo, CA 94402
-Re: Sweet Production, Inc.’s Accounting
Dear Mr. Miclean:
I am writing in response to your November 15, 2017 letter, and the follow-up e-mail
from your associate, Carmen Aviles, on November 29.
Corp. Code § 1602 is inapposite. Solomon Sha was never a director for Sweet
Production, Inc., and is thus not entitled to inspect the requested tax records.
With the exception of the aforementioned tax records, Sweet Production will make
available for inspection the documents specified in your letter. The inspection will take
place on December 19, 2017, at 11:30 a.m., as requested by Ms. Aviles; it will take place
at the bakery, located at 915 Terminal Way, Suite B, in San Carlos. A copier and
printer will be available for your use.
Regarding the $60 check for the list of all voting shareholders and their addresses,
please make it payable to “Sweet Production, Inc.” and mail it directly to the bakery.
Sincerely,
LAW CENTER
Qe. ,
Andrew M. Agtagma
Attorney at Law
cc: Doreen Chin
EXHIBIT 7
DAVID J. MICLEAN (SBN 115098)
dmiclean@micleangleason.com
CARMEN M. AVILES (SBN 251993)
ENDORSED FILED
caviles@micleangleason.com
SAN MATEO COUNTY
MICLEAN GLEASON LLP JUL 19 2018
411 Borel Avenue, Suite 310 Court
San Mateo, CA 94402 Clerk of the Superior
By IRNA P. RIVERA:ERK
Telephone: (650) 684-1181 DEPUTY CL
Facsimile: (650) 684-1182
Attorneys for Defendant and Cross-Complainant
Solomon Sha
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN MATEO
10
ll
12 SWEET PRODUCTION, INC., a California Case No. 18-CIV-03110
Corporation,
13
soL 0)C IMON SHA’S CROSS-COMPLAINT
14 Plaintiff, FOR:
15 Vv Breach of Fiduciary Duty
Accounting
16 SOLOMON SHA, an individual; and DOES 1 Fraud.
to 10, inclusive, Conversion
17 Unjust Enrichment
18 Defendants,
JURY TRIAL DEMANDED
19
20 SOLOMON SHA, Complaint Filed: Tune 18, 2018
Trial Date: TBD
21 Cross-Complainant,
22 Vv.
23 SWEET PRODUCTION, INC., a California
corporation, SWEET EXPRESS; MING CHIN;
DOREEN CHIN; and ROES 1 through 20,
inclusive,
25
Cross-Defendants.
26
27
28
Cross-COMPLAINT CASE NO. 18-CTV-03110
Pursuant to the California Code of Civil Procedure § 428.10, Cross-Complainant
SOLOMON SHA (“Sha” or “‘Cross-Complainant”) cross-complains and alleges the following:
PARTIES
1 Cross-Complainant Sha is an individual residing in San Mateo County,
California.
2. Cross-Defendant SWEET PRODUCTION, INC. (“SPI” or “Cross-Defendant”)
is a California Corporation doing business in San Mateo County, California.
3 Cross-Defendant SWEET EXPRESS (“Sweet Express” or “Cross-Defendant”) is
believed to be a business entity operating in San Mateo County, California.
10 4 Cross-Defendant Ming Chin (a.k.a. “Terry” Chin) is an individual residing in
ll San Mateo County, California.
12 5, Cross-Defendant Doreen Chin is an individual residing in San Mateo County,
13 California.
14 6 The true names and capacities of Cross-Defendants Roes 1-20, whether
15 individual, corporate, or otherwise, are unknown to Cross-Complainant at this time, and Cross-
16 Complainant therefore sues these Cross-Defendants by such fictitious names. When the true
17 names and capacities of the fictitiously named Cross-Defendants are ascertained, Cross-
18 Complainant will amend the complaint to reflect their true names. Cross-Complainant is
19 informed and believes and thereon alleges that each of the fictitiously named Cross-Defendants
20 is indebted to Cross-Complainant as hereinafter alleged, as agents of or alter-egos of the other
21 Cross-Defendants, and that Cross~-Complainant’s rights against such fictitiously named
22 defendants arise from such indebtedness.
23 7 All Cross-Defendants including ROES 1-20 are referred to herein as “Cross-
24 Defendants.”
25 JURISDICTION AND VENUE
26 8 Sha is a resident of San Mateo County, California.
27 9, Cross-Defendant SPI has filed a Complaint against Sha in San Mateo County.
28 10. Cross-Complainant is informed and believes and, on that basis, alleges that at all
1
CROSS- COMPLAINT CASE NO. 18-CIV-03110
times referenced in this Cross-Complaint, Cross-Defendants entered into agreements and
conducted business in the County of San Mateo, California.
11. As a result, this Court has jurisdiction over the parties and venue is proper in San
Mateo County pursuant to California Code of Civil Procedure Section 395(a).
FACTUAL ALLEGATIONS
A Sha and the Chins Form a Long-Term Close Relationship
12. Sha met Ming (a.k.a. “Terry”) Chin and Doreen Chin (collectively, the “Chins”)
in 1987 while working at their restaurant in San Francisco. Sha became very close to, and
trusting of, the Chins. Sha eventually left the Chins’ restaurant business to begin his career in
10 the bakery industry in 1998 at San Francisco Fine Bakery (“SFFB”). In 2006, the Chins lost
11 their lease in their restaurant and started working at SFFB, but the business relationship between
12 them and SFFB’s owner quickly soured. In late 2007, the Chins left SFFB. In 2008, the Chins
13 and Sha started SPI. SPI was initially based in South San Francisco, but eventually the bakery
14 business moved to its current location of San Carlos.
15 B The Establishment of Sweet Production, Inc. and the Start of the Chins’
Fraudulent Scheme to Gain Control and Divert Revenues and Profits
16
17 13. Sha’s wife, Kitty Sha, began working at SPI in 2009 as an accountant. The
18 initial ownership shares for SPI were the Chins (40%), Jenny Chea (30%), and Kitty/Solomon
19 Sha (30%). Kitty Sha worked as an accountant for SPI until she was asked to leave by the
20 Chins. The Chins did not want Kitty Sha to see their financial and accounting records and
21 accordingly asked her to leave. The Chins have improperly tried to take over the SPI business
22 and freeze out and not pay the other owners of the business.
23 In furtherance of their scheme to misappropriate company assets and funds, and gain
24 control over SPI, the Chins opened a bank account at East West Bank where, on information
25 and belief, certain SPI cash funds were continuously deposited but not accounted for on SPI’s
26 accounting books and records. On information and belief, the Chins falsified the accounting
27 records of SPI to avoid paying co-owners, while improperly diverting SPI funds to themselves
28 for personal use.
CROSS-COMPLAINT CASE NO. 18-CTV-03110
As part of their fraudulent scheme to take full control of SPI for their own personal
benefit, the Chins unilaterally and fraudulently reduced Sha’s share ownership and increased
their own, in attempt to oust Jenny Chea, a 30% shareholder in SPI. The Chins reduced Sha’s
share ownership from 30% to 24.5% in 2011 to 14.5% in 2012. Sha did not uncover the Chins’
scheme to falsify books and misappropriate assets until much later. Sha eventually noticed that
his ownership share was decreasing significantly; when he approached the Chins about this
impropriety, they promised to eventually return his shares, which they have not. The Chins
were also not paying company profit distributions to their partners, while taking them for
themselves.
10 More recently, Sha began noticing that certain invoices for a company called Sweet
ll Express, with the same address as SPI, and ostensibly run by a relative of the Chins, were issued
12 with unusual orders and payments. By this time, Sha was very familiar with SPI’s customers,
13 their orders, the pricing of items, and the general revenue for SPI. On information and belief,
14 the Chins were diverting certain SPI business to Sweet Express, and allowing Sweet Express to
15 use SPI assets (without recompense), so they could divert revenues to themselves and bypass
16 the other owners of SPI. Due to the unusual Sweet Express invoices, coupled with the East
17 West Bank account set-up and controlled by the Chins, Sha began to piece together the financial
18 irregularities and misappropriation of company funds by the Chins to the detriment of SPI’s
19 other shareholders. By this time, Sha had received little to no ownership profit distributions
20 despite SPI’s financial success.
21 Sha then began requesting the return of his ownership shares and profit distributions.
22 The Chins would respond with excuses as to why they could not return the shares or pay profit
23 distributions or ignored Sha’s requests altogether. In the last year, Sha sent several emails
24 requesting the return of his shares. Again, the Chins ignored his written requests. Realizing
25 that Sha was not going to back down from requesting the return of his shares and payment of his
26 distributions, and after Sha requested an accounting, the Chins began to plot against Sha to
27 remove him as an employee from SPI. While Sha was on vacation with his family, SPI’s
28 attorney on April 13, 2017, sent a letter correspondence to Sha stating that he was suspended
3
Cross-COMPLAINT CASE No. 18-CIV-03110
and could not return to SPI’s premises due to alleged improprieties. Sha knew that the
suspension was a pretense and being used to keep him away from SPI so that the Chins could
continue using SPI’s resources for their own personal benefit and avoid the accounting.
Sha retained current counsel to request an accounting of SPI’s books and records to
determine the distribution amounts owed to Sha. SPI produced a handful of documents that in
no way provided Sha an accurate financial accounting of SPI. In retaliation for Sha’s request
for his unpaid ownership share distributions, the Chins, using SPI as their alter ego, filed a
Complaint against Sha.
ALTER EGO ALLEGATIONS
10 14. Sha is informed and believes and thereon alleges that the entities named as
il Cross-Defendants herein, including but not limited to SPI and Sweet Express, and Roes 1-20
12 (hereinafter collectively referred to as the “Alter Ego Entities”), and each of them, were at all
13 times relevant the alter ego entities of individual Cross-Defendants Terry and Doreen Chin by
14 reason of the following:
15 (a) Sha is informed and believes and thereon alleges that the individual Cross-
16 Defendants, at all time herein mentioned, dominated, influenced, and controlled each
17 of the Alter Ego Entities and the officers thereof, as well as the business, property,
18 and affairs of each of said entities.
19 (b) Sha is informed and believes and thereon alleges that, at all times herein mentioned,
20 there existed and now exists a unity of interest and ownership between said
21 individual Cross-Defendants and each of the Alter Ego Entities; the individuality and
22 separateness of said individual Cross-Defendants and each of the Alter Ego Entities
23 have ceased.
24 (c) Sha is informed and believes and thereon alleges that, at all times since the
25 incorporation of each, each Alter Ego Entity has been and now is a mere shell for
26 each individual Cross-Defendant and used as a conduit for the conduct of their
27 personal business, property, and affairs.
28 (d) Sha is informed and believes and thereon alleges that, at all times herein mentioned,
4
Cross-COMPLAINT CASE No, 18-CIV-03110
each of the Alter Ego Entities was created and continued pursuant to a fraudulent
plan, scheme, and device conceived and operated by the individual Cross-
Defendants, Terry and Doreen Chin, whereby the income, revenue, and profits of
each of the Alter Ego Entities were diverted by said individuals to themselves.
(e) Sha is informed and believes and thereon alleges that, at all times herein mentioned,
each of the Alter Ego Entities was organized by said individual Cross-Defendants as
a device to avoid individual liability and for the purpose of substituting financially
irresponsible corporations in the place and stead of said individual Cross-
Defendants, and each of them, and accordingly, each Alter Ego Entity was formed
10 with capitalization totally inadequate for the business in which said corporation was
11 engaged.
12 @ Sha is informed and believes and thereon alleges that each Alter Ego Entity is
13 insolvent because of Cross-Defendants’ fraudulent handling of the Alter Ego
14 Entities’ finances for each Cross-Defendant’s personal benefit.
15 (g) By virtue of the foregoing, adherence to the fiction of the separate corporate
16 existence of each of the Alter Ego Entities would, under the circumstances, sanction
17 a fraud and promote injustice in that Defendants would be unable to realize upon any
18 judgment in their favor.
19 15. Sha is informed and believes and thereon alleges that, at all times relevant
20 hereto, the individual Cross-Defendants Ming and Doreen Chin and the Alter Ego Entities acted
21 for each other in connection with the conduct hereinafter alleged, and that each of them
22 performed the acts complained of herein or breached the duties herein complained of as agents
23 of each other and each is therefore fully liable for the acts of the other.
24 FIRST CAUSE OF ACTION
25 (Against Cross-Defendants Sweet Production, Inc., Ming Chin, and Doreen Chin for
26 Breach of Fiduciary Duty)
27 16. Sha realleges and incorporates by ref
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yn DAVID J. MICLEAN (SBN 115098) dmiclean@micleangleason.com DANIELLE M. MIHALKANIN (SBN 271442) dmihalkanin@micleangleason.com MICLEAN GLEASON LLP FILED 411 Borel Avenue, Suite 310 SAN MATEO COUNTY San Mateo, CA 94402 JUL 0°8 2019 Telephone: (650) 684-1181 Facsimile: (650) 684-1182 Attorneys for Defendant and Cross-Complainant Solomon Sha ~ ——— - SUPERIOR COURT OF THE STATE OF CALIFORNIA! isv-oate wl Declaration in Support | | il | 10 COUNTY OF SAN MATEO 1919111 11 L . - 12 SWEET PRODUCTION, INC., a California Case No. 18-CIV-03110 Corporation, 13 Plaintiff, DECLARATION OF DAVID J. MICLEAN IN 14 SUPPORT OF SOLOMON SHA’S MOTION FOR LEAVE OF COURT TO FILE AND Vv. 15 HAVE HEARD SHA’S MOTION FOR TERMINATING SANCTIONS OR 16 SOLOMON SHA, an individual; and DOES 1 to ALTERNATIVELY TO REOPEN AND 10, inclusive, COMPEL DISCOVE! (C.C.P. §§ 2023.010, 2023.030, 2024.050) 17 Defendants. 18 AvVG/22/\P 19 Date: Aragust 629 Time: 9:00 a.m. 20 SOLOMON SHA, Department: Law & Motion 21 Cross-Complainant, 22 Vv. 23 SWEET PRODUCTION, INC., a California 24 corporation; SWEET EXPRESS; MING CHIN; DOREEN CHIN; and ROES 1 through 10, 25 inclusive, 26 Cross-Defendants. 27 | MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE No. 18-CIV-03110 I, David J. Miclean, declare as follows: 1 lam an attorney at the law firm of Miclean Gleason LLP located at 411 Borel Avenue, Suite 310, San Mateo, California 94402. I submit this Declaration in support of Defendant and Cross- Complainant Solomon Sha’s (“Sha”) Motion to Reopen Discovery. 2 Iam a member in good standing of the State Bar of California. 3 I make this declaration based upon facts within my own personal knowledge, except as to those matters stated upon information and belief, and as to those matters I believe them to be true. If called upon to testify to the matters stated herein, I could testify competently and truthfully. 4 I was retained by Mr. Solomon Sha in July 2017 to obtain financial information from 10 Sweet Production, Inc. (“SPY”), a company he was an owner of and former employee. On August 10, 11 2017, I wrote to SPI’s counsel, Andrew Agtagma, to request an accounting of SPI’s books and records 12 to determine the distribution amounts owed to Sha. Sha requested inspection of SPI’s financial 13 documents pursuant to statutory authority to understand why he had not received distributions as an 14 officer and shareholder for the time Sweet Production, Inc. had been in business, and because of his 15 concern that substantial monies were taken out of the business by the Chins. A true and correct copy of 16 my August 10, 2017 correspondence is attached at Exhibit 2. 17 5 On August 25, 2017, SPI’s counsel responded to my August 10, 2017 letter and offered 18 to make a limited number of financial documents available but refused to produce tax returns and any 19 financial reports or income statements prior to the 2017 fiscal year. A true and correct copy of this 20 correspondence is attached as Exhibit 3. On September 12, 2017, my office emailed Mr. Agtagma and 21 challenged SPI’s refusal to produce accounting reports and tax records. A true and correct copy of this 22 correspondence is attached as Exhibit 4. 23 6 On November 15, 2017, I again reached out to opposing counsel, Andrew Agtagma, 24 regarding SPI’s continued refusal to produce tax records for the previous 7 years to Sha. A true and 25 correct copy of this correspondence is attached as Exhibit 5. 26 7. On December 1, 2017, counsel for SPI allowed the scheduling of a limited inspection of 27 documents on December 19, 2017 but continued to refuse Mr. Sha access to SPI corporate tax records 28 despite the fact Mr. Sha was an owner and officer of SPI. A true and correct copy of this 1 MIcT FAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE No. 18-CIV-03110 correspondence is attached as Exhibit 6. The inspection went forward in December 2017, but SPI continued its refusal to produce documents that would show revenue expenditures, SPI tax returns, and K-1s for the other owners. 8 In early 2018, my office continued to press SPI’s counsel Andrew Agtagma for financial information from SPI. Since that time, SPI had been wholly noncompliant with Sha’s request to produce records and financial data regarding the company. In May 2018 I advised Agtagma that if SPI did not provide the financial information requested, litigation would likely ensue. But, rather than meeting Sha’s requests for documentation, and in retaliation to avoid compliance, and as a preemptive strike, SPI filed a Complaint against Mr. Sha on June 18, 2018 containing a litany of inaccuracies, false 10 statements, and frivolous claims against Mr. Sha. lL 9 On July 19, 2018, my office filed and an answer to the SP] Complaint for Mr. Sha, as 12 well as a Cross-Complaint against SPI, Ming and Doreen Chin, and Sweet Express (collectively, the 13 “Cross-Defendants”). A true and correct copy of the original Cross-Complaint is attached as Exhibit 7. 14 The cross complaint included causes of action for breach of fiduciary duty, accounting, fraud, 15 conversion and unjust enrichment against SPL, Doreen and Ming Chin as owners of SPI, and against 16 Sweet Express, the company affiliated with SPI and the Chins that diverted revenue away from SPI. On 17 July 24, 2018, my office emailed Mr. Agtagma asking if he would accept service of the Cross- 18 Complaint for Sweet Express and the Chins, in addition to his client SPI. A true and correct copy of this 19 correspondence is attached as Exhibit 8. When Mr. Agtagma failed to respond to my email, we 20 personally served SPI, Sweet Express, Doreen Chin, and Ming Chin with the Cross-Complaint. 21 10. On July 27, 2018, our office personally served SPI with the First Set of Requests for 22 Production of Documents, Special Interrogatories, Form Interrogatories, and Inspection Demand to SPI 23 (true and correct copies of which are attached as Exhibit 9) to gather information for the purpose of 24 defending Sha against SPI’s allegations in the complaint, prepare Sha’s defenses, obtain discovery on 25 issues in the case, and to assess potential damages. On August 9, 2018, our office personally served 26 each of Cross-Defendants Ming Chin and Doreen Chin with a First Set of Requests for Production of 27 Documents, Special Interrogatories, and Form Interrogatories (true and correct copies of which are 28 attached as Exhibit 22), also to gather information for the purpose of defending Sha against SPI’s 2 MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE No. 18-CIV-03110 allegations in the complaint, prepare Sha’s defenses, obtain discovery on issues in the case, and to assess potential damages. However, none of the Cross-Defendants responded to any of these discovery requests. il. On August 23, 2018, our office personally served deposition notices on Cross-Defendants Ming Chin and Doreen Chin. However, these depositions were taken off calendar due to Cross- Defendants’ refusal to comply with discovery and produce documents, and because default was entered against the Chins (and the other Cross-Defendants) on the Cross-Complaint and, later, the First Amended Cross-Complaint. (See paras. 12 and 21, below.) 12. Further, none of the Cross-Defendants responded to Mr. Sha’s cross-complaint. On 10 September 4, 2018, prior to entry of default, my office sent a courtesy notice to Mr. Agtagma advising 11 him that SPI and the other cross-defendants were in default, and if they did not respond to the cross- 12 complaint, we would file a default. A true and correct copy of this correspondence is attached as Exhibit 13 10. Mr. Agtagma and the Cross-Defendants ignored my courtesy notice and did not respond by the 14 deadline, and default was entered against Cross-Defendants Sweet Express, Doreen Chin, and Ming 15 Chin on September 14, 2018, and as to SPI on October 9, 2018. True and correct copies of these entries 16 of default are attached as Exhibits 11 and 12, respectively. 17 13. On October 15, 2018, opposing counsel, Andrew Agtagma, finally responded via email 18 regarding an interest in potential settlement negotiations. A true and correct copy of Mr. Agtagma’s 19 email is attached as Exhibit 13. 20 14. On November 19, 2018, in hopes of potential settlement negotiations, mediation was 21 confirmed and scheduled for February 28, 2019. A true and correct copy of a letter from mediator 22 Richard M. Williams, confirming the mediation, is attached as Exhibit 14. 23 1S. On November 29, 2018, to assist Sha in making an informed decision on any settlement 24 proposal, our office reached out to opposing counsel, Andrew Agtagma, seeking discovery responses 25 and an accounting of SPI financial records, assets and profits. A true and correct copy of this letter is 26 attached as Exhibit 15. However, again, opposing counsel refused to comply and did not respond in any 27 manner to our discovery request. Mr. Agtagma then went radio silent and refused to respond to 28 communications regarding financial information or the mediation for over two months. 3 MICLEAN DECLARATION ISO MOTION FoR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE NO. 18-CIV-03110 16. On February 8, 2019, in response to the Cross-Defendants’ continued failure to provide any responses to our discovery requests and financial information regarding SPI, the mediation was taken off calendar by my office and a Motion to Compel filed and served on the Cross-Defendants (a true and correct copy of which is attached as Exhibit 16). The Cross-Defendants failed to file or even serve an opposition to the Motion to Compel. The Cross-Defendants’ failure to file an opposition is consistent with their ongoing manner of repeatedly failing to communicate in any way and respond to good faith attempts to conduct discovery. 17. On April 2, 2019, Mr. Sha’s February 8, 2019 Motion to Compel was denied (without prejudice) by Judge Greenberg due to Cross-Defendants Sweet Express, Ming Chin, and Doreen Chin’s 10 defaults having already been entered as to the Cross-Complaint, and because the proof of service 1 prepared by the filing service apparently failed to identify Mr. Agtagma as SPI’s counsel — even though 12 that information would certainly be known to the court since he filed the original SPI compliant. A true 13 and correct copy of Judge Greenberg’s Order is attached as Exhibit 17. 14 18. On April 4, 2019, Sha filed his First Amended Cross-Complaint (a true and correct copy 15 of which is attached as Exhibit 18) to explicitly make a demand for $1.5 million in damages by reason of 16 Cross-Defendants’ failure to pay ownership distributions conversion of Mr. Sha’s ownership interest in 17 SPI. The First Amended Cross Complaint (“FAC”) (like the original cross-complaint) included causes 18 of action for breach of fiduciary duty, accounting, fraud, conversion and unjust enrichment against SPL, 19 Doreen and Ming Chin as owners of SPI, and against Sweet Express, the company affiliated with SPI 20 and the Chins that diverted revenue away from SPI. The FAC asserted that Sha was one of the original 21 founders of SPI who owned 30% of the Company, worked there for almost a decade (FAC | 12-13), and that the Chins, despite their fiduciary duties to other owners of SPI, have systematically schemed to 23 siphon off revenue of SPI for their own benefit and to the detriment of Sha (FAC {ff 14-19). In 24 particular, Sha alleged that SPI and the Chins have made a least a million dollars in profit since 2011 but 25 have refused to pay him any distribution of such profit even though they have paid themselves. Sha has 26 also alleged that SPI and the Chins have engaged in fraudulent accounting to cook the books, set up 27 separate bank accounts, divert work to their separately affiliated company Sweet Express (without 28 reimbursement to SPI), and increase expenses on paper while lining their own pockets. (FAC ff 14, 16, 4 MiCT RAW DRCT.AR ATION TSO MOTION FOR LEAVE (CCP 2023.010. 2023.030, 2024.050) CASE No. 18-CIV-03110 18, 19, 26, 30-31.) Sha has also confirmed that SPI and the Chins have refused to produce SPI tax returns or other financial documents to track where SPI revenue is going so the Chins could use SPI as their own cash machine and convert same to their own use without paying other owners. (FAC ff 18, 29-31.) The Chins also reduced Sha’s ownership interest without his authorization. (FAC {ff 15, 33- 35.) As aresult of such conduct, SPI, Sweet Express, and the Chins have refused to pay profit distributions to Sha, have refused to grant him access to the accounting and financial records and tax. returns of SPI, and have essentially converted his ownership interest in SPI in the amount of $1.5 million. The $1.5 million demand is based on Sha’s knowledge of SPI and 20 years in the bakery industry, and the over $1 million in annual profit made by SPI in the years before Sha was improperly 10 terminated. (FAC 4 18, 27, 31, 38, 41, and prayer.) Again, the amended cross-complaint was 11 personally served on all the Cross-Defendants on April 9, 2019 and provided to Mr. Agtagma’s office on 12 April 16, 2019. The Cross-Defendants’ responsive pleadings were due on May 16, 2019. No response 13 was filed by any of the Cross-Defendants. 14 19. On April 16, 2019, Plaintiff Sweet Production’s counsel, Andrew Agtagma, filed a 15 Notice of Change of Address for this matter with the Court. A true and correct copy of the Notice is 16 attached as Exhibit 19. This is the only contact Mr. Agtagma made with Miclean Gleason from October 17 15, 2018, until June 4, 2019, a day before the parties’ Mandatory Settlement Conference, a period of 18 over 7 months. 19 20. On May 17, 2019, Sha re-filed his Motion to Compel Discovery Responses from Plaintiff 20 Sweet Production, Inc., Deeming Objections Waived, Monetary Sanctions, and Terminating Sanctions, 21 which was originally scheduled for hearing on June 12, 2019, but then continued by the court for 22 hearing on July 2, 2019 (weeks after the trial date). A true and correct copy of the Motion is attached as 23 Exhibit 20. 24 21. On May 21, 2019, given the Cross-Defendants’ total lack of response of any kind to 25 Sha’s First Amended Cross-Complaint, Sha filed a Request for Entry of Default on Sweet Production, 26 Inc., Sweet Express, Ming Chin, and Doreen Chin as to the First Amended Cross-Complaint. The 27 Default was entered as to Sweet Production, Inc., Sweet Express, Ming Chin, and Doreen Chin on June 28 5, 2019. A true and correct copy of the second Default filed as to the First Amended Cross-Complaint, 5 MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010. 2023.030. 2024.050) CASE NO. 18-CIV-03110 ' as entered, is attached as Exhibit 21. Again, the default on the First Amended Cross-Complaint was personally served on all Cross-Defendants and a copy provided to Mr. Agtagma at his new address. 22. On June 5, 2019 there was a court-scheduled mandatory settlement conference followed by a trial date scheduled for June 17, 2019. Having heard nothing substantively on any matter from SPI, Mr. Agtagma, or any cross defendant for over 9 months, I contacted the court to move the dates. The court declined, and I prepared a timely MSC statement which was served on Mr. Agtagma on May 29, 2019. I did not receive any MSC statement from Mr. Agtagma on the due date. On June 4, 2019, the night before the MSC, shortly before our office closed, someone dropped off what purported to be an MSC statement from Mr. Agtagma. It was obvious to me that SPI and the other Cross-Defendants made 10 a deliberate decision to avoid any response to discovery or the cross-complaint, and planned to lie in fl wait and attempt trial by ambush after SPI and the Cross-Defendants’ total non-compliance with 12 discovery and radio silence for 9 months. It was also apparent to me that SPI and the Chins’ strategy 13 was to try and wait Sha out knowing he was an individual without substantial means and that it would be 14 difficult for Sha to prosecute the Cross-Complaint or fund the litigation. 15 23. On June 5, 2019, at the MSC, the Parties stipulated to move the trial date to January 6, 16 2020. 17 24. Unfortunately, the Motion to Compel Discovery Responses from Plaintiff Sweet 18 Production, Inc., Deeming Objections Waived, Monetary Sanctions, and Terminating Sanctions 19 (referenced in paragraph 20, above) was denied on July 2, 2019 as untimely since it was inadvertently 20 set for hearing beyond the 15 day before trial discovery motion cutoff in CCP 2024.020, and was not 21 accompanied by the instant motion seeking leave under CCP 2024.050 to have a discovery motion heard 22 closer to the trial date. 23 25. On July 1, 2019, pursuant to CCP 2024.050(a) and 2016.040, I wrote SPI counsel to seek 24 a stipulation to reopen discovery and allow for the hearing of this motion. A true and correct copy of 25 my July 1, 2019 letter to Mr. Agtagma is attached as Exhibit 23. SPI’s counsel refused to stipulate. 26 26. The cost and fees to make this motion and appear at the hearing amount to approximately 27 $5,000. 28 6 MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010. 2023.030. 2024.050) CASE No. 18-CIV-03110 27. In over 35 years of legal practice I have never had a plaintiff and cross-defendant (actually their attorney) go radio silent and not communicate, not respond to cross-complaints, not respond to discovery, not respond to meet and confer efforts on discovery, not respond to discovery motions, not respond to courtesy notices of impending default, not respond to entries of default, not respond to communications and emails, etc. — and despite personal service of all those pleadings, motions, and documents, and service to SPI’s counsel of record — for almost 2 years. The behavior which led to entry of two defaults on all Cross-Defendants was not the result of some inadvertence or excusable neglect by Cross-Defendants or SPI’s attorney. It was a conscious and calculated decision to get a trial by ambush and use that to leverage resolution. That is despicable, not ethical, and a total 10 abuse of discovery. And I do not say that lightly. This game that Cross-Defendants have been playing ll has cost Mr. Sha (who is man of very limited means) extensive attorneys’ fees, costs, and the loss of 12 time from having not been compensated at all for many years despite his 30% interest in SPI, which was 13 making over $7.5 million dollars a year as of 2017 (and trending upward) per the limited SPI records I 14 was able to review. is 28. I am informed and believe that none of the Cross-Defendants (Sweet Production, Inc., 16 Doreen Chin, Ming Chin, or Sweet Express) are members of the military nor currently serving in the 17 18 19 I declare under the penalty of perjury of the laws of the United States of America and the State of- 20 California that the foregoing is true and correct, and that this declaration was executed this 5th day of 21 July, 2019, in San Mateo, California. 22 23 By: 24 David J. Miclean 25 26 27 28 7 MICLEAN DECLARATION ISO MOTION FOR LEAVE (CCP 2023.010, 2023.030, 2024.050) CASE No. 18-CIV-03110 EXHIBIT 2 (MICLEANGLE SONS August 10, 2017 Via Email & U.S. Mail Andrew M. Agtagma Law Center. P.C. 1291 E. Hillsdale Boulevard Suite 211B Foster City, CA 94404 ama@lawcenter-esq.com Re: Sweet Production, Inc.’s Accounting Dear Mr. Agtagma: I write on behalf of my client, Solomon Sha. As you know, Mr. Sha is a shareholder and officer of Sweet Production, Inc. (“Sweet Production”). Throughout the years, Mr. Sha has worked for Sweet Production’s success and assumed that, in due time, he would obtain some benefit from its success. Mr. Sha has received de minimis distributions from his investment. Seven years later, your client has failed to return any investment from Mr. Sha’s ownership of Sweet Production notwithstanding substantial monies being taken out of the business by other owners. In response to Mr. Sha’s requests for information and accounting, your client hired you to send Mr. Sha a letter suspending his duties with Sweet Production on the pretense that Mr. Sha failed to ensure customer deliveries, mismanaged payment of employees, fired employees, and made disparaging statements about the company. These statements are false. By this letter, Mr. Sha formerly requests inspection of Sweet Production’s financial documents. Pursuant to Cal. Corp. Code § 213, Mr. Sha requests inspection of Sweet Production’s Bylaws. Pursuant to Cal. Corp. Code § 1501, Mr. Sha requests Sweet Production’s Annual Financial Report or its equivalent — a report that contains a balance sheet as of the end of the fiscal year, an income statement, and a statement of cashflows for the past seven years including the current fiscal year, as well as the last 7 years of corporate tax returns. In addition, Mr. Sha requests quarterly reports and income statements pursuant to Cal. Corp. § 1501. Finally, pursuant to Cal. Corp. Code § 1600, Mr. Sha requests a list of shareholders and the accounting books and records and board minutes to understand why Mr. Sha has not received distributions as a shareholder for the time Sweet Production has been in business. Please provide copies of the requested documents to my attention by no later than August 20, 2017. Thank you in advance for your prompt attention to this matter, and I look forward to receiving the requested documents. Sincerely, MICLEAN GLEASON LLP avid J. Miclean 411 Borel Avenue, Suite 310 San Mateo, CA 94402 orcs 650 684 1181 wes www.micleangleason.com EXHIBIT 3 LAW CENTER A PROFESSIONAL CORPORATION 1291 E Hillsdale Blvd, Suite 211B * Foster City, California 94404 Phone: (650) 372-2600 * Facsimile: (650) 372-9318 August 25, 2017 BY E-MAIL dmiclean@micleangleason.com David Miclean, Esq. MICLEAN GLEASON LLP 411 Borel Ave., Suite 310 San Mateo, CA 94402 Re: Sweet Production, Inc.’s Accounting Dear Mr. Miclean: I’m writing in response to your August 10, 2017 letter. My client disputes the allegation that “substantial monies [have been] taken out of the business by other owners.” To its knowledge, the only person suspected of improperly taking money out of the business is Solomon Sha himself. It is one of the reasons why he is currently suspended and under investigation for breaching his fiduciary duty as Secretary of the corporation. Regarding your accounting requests, Sweet Production responds as follows: 1) Sweet Production will make its bylaws available for inspection at a reasonable time during office hours. Please propose several times and dates when Mr. Sha would like to do so, and I will present them to my client so that a mutually convenient time and date can be arranged. 2) Sweet Production has not prepared an annual financial report. Article II, § 4{a) of its bylaws waives this requirement. My client will prepare the financial statements specified in Corporations Code § 1501(a) for the previous fiscal year, and provide a copy to Mr. Sha within 30 days from the date of your letter, ie., September 9, 2017. 3) Pursuant to Corporations Code § 1501(c), Sweet Production will also provide a copy of its income statement and balance sheet for the first two quarters of the current fiscal year. 4) Regarding Sweet Production’s annual financial reports before the previous fiscal year, Mr. Sha has cited no statutory authority entitling him to this information. David Miclean, Esq. August 25, 2017 Page 2 of2 5) Regarding Sweet Production’s corporate tax returns for the past 7 years, Mr. Sha has cited no statutory authority entitling him to this information. 6) Sweet Production is ready to make available a list of all voting shareholders and their addresses, provided that Mr. Sha tenders $60 (the company’s usual charge for compiling the list). Alternatively, Mr. Sha may arrange to inspect and copy the list himself during usual business hours. If he chooses the latter option, please propose several times and dates when he would like to do so. I will present them to my client so that a mutually convenient time and date can be arranged. 7) Sweet Production will makes its accounting books and records and board minutes available for inspection at a reasonable time during office hours. Please propose several times and dates when Mr. Sha would like to do so. I will present them to my client so that a mutually convenient time and date can be arranged. Please contact me if you have any questions or require anything further. Sincerely, LAW CENTER Andrew M. Agtagma Attorney at Law cc: Doreen Chin EXHIBIT 4 David Miclean SE From: Carmen Aviles Sent: Tuesday, September 12, 2017 2:07 PM To: Andrew M. Agtagma, Esq. Cc: David Miclean Subject: RE: Solomon Sha - Sweet Production, Inc.'s Accounting Andrew, We are conferring with our client with regards to providing you times and dates to review the production of financial documents. As to your client’s refusal to produce an accounting for the past seven years of financial reports and tax returns, can you please provide case law that states our client is not entitled to those records including those for the years our client received no distribution? Mooney v. Bartenders Bartenders Union Local No. 284, (1957) 48 Cal. 2d 841 {allowing plaintiff to inspect records for eight years). Both the corporation code and case law does not exclude previous years and tax records from production of financial documents when a shareholder makes a request for an accounting. In fact, “[a]t common law a stockholder hals] a right to inspect the books and records of the corporation at a proper time and place and for a proper purpose. . . It is provided by statute that all corporate records in this state shall be open to inspection upon the written demand of any shareholder...” Id. (emphasis added.) Moreover, in a litigation our client would be entitled to that discovery to prove causes of action for fraud, conversion, malfeasance, breach of fiduciary duty, shareholder accounting, etc. Seven years is a reasonable request as that is the amount of years generally that is recommended for maintaining financial records for tax purposes. Please advise whether your client is willing to produce the documents without the need of litigation. Also, please confirm that a copy machine will be available for the copying of the documents. We will provide you dates for inspection by early next week. Best Regards, Carmen M. Aviles Attorney MICLEANGLEASONS 411 Borel Avenue, Suite 310 San Mateo, CA 94402 MAIN 650 684 1181 WEB www.micleangleason.com EXHIBIT 5 ICLEANGL DAVID J. MICLEAN, PRINCIPAL TEL: 650-684-1181 EMAIL: DMICLEAN@MICLEANGLEASON.COM, November 15, 2017 Via Email & U.S. Mail Andrew M. Agtagma Law Center. P.C. 1291 E. Hillsdale Boulevard Suite 211B Foster City, CA 94404 ama@lawcenter-esq.com Re: Sweet Production, Inc.’s Accounting Dear Mr. Agtagma: This correspondence is in response to your October 4, 2017 letter. In that correspondence you stated my client is free to inspect: q@) Sweet Production’s Bylaws; 2) Its annual financial report for the previous fiscal year; (3) Its income statement and balance sheet for the first two quarters of 2017 (which you included with your correspondence); @) Its list of all voting shareholders and their addresses, upon tender of $60 (please advise to whom should the check be made out); and 6) Its accounting books and records, and board minutes (you stated that the accounting books may include assorted income states and balance sheets from previous years). Your client refuses to produce tax records for the previous 7 years. As you know, Cal. Corp. Code § 1602 provides directors with an absolute right to inspect and copy all books, records and documents of every kind. Solomon Sha is a director. The code places no time limitation or restriction on what type of financial records are allowed to be inspected. Saline v. Superior Court (2002) 100 Cal. App. 4th 909. Thus, my client requests that tax records from the past 7 years be made available, because these obviously would be part of the books and records of the corporation. Finally, we are available to conduct the inspection on November 29, 2017. Please advise the location of the inspection and the availability of a copy machine and/or printer. Sincerely, MICLEAN GLEASON LLP avid J. Miclean 411 Borel Avenue, Suite 310 San Mateo, CA 94402 ornce 650 684 1181 wea www.mnicleangleason.com EXHIBIT 6 LAW CENTER A PROFESSIONAL CORPORATION 1291 E Hillsdale Blvd, Suite 211B + Foster City, California 94404 Phone: (650) 372-2600 * Facsimile: (650) 372-9318 December 1, 2017 BY E-MAIL ONLY dmiclean@mi n. im. David Miclean, Esq. MICLEAN GLEASON LLP 411 Borel Ave., Suite 310 San Mateo, CA 94402 -Re: Sweet Production, Inc.’s Accounting Dear Mr. Miclean: I am writing in response to your November 15, 2017 letter, and the follow-up e-mail from your associate, Carmen Aviles, on November 29. Corp. Code § 1602 is inapposite. Solomon Sha was never a director for Sweet Production, Inc., and is thus not entitled to inspect the requested tax records. With the exception of the aforementioned tax records, Sweet Production will make available for inspection the documents specified in your letter. The inspection will take place on December 19, 2017, at 11:30 a.m., as requested by Ms. Aviles; it will take place at the bakery, located at 915 Terminal Way, Suite B, in San Carlos. A copier and printer will be available for your use. Regarding the $60 check for the list of all voting shareholders and their addresses, please make it payable to “Sweet Production, Inc.” and mail it directly to the bakery. Sincerely, LAW CENTER Qe. , Andrew M. Agtagma Attorney at Law cc: Doreen Chin EXHIBIT 7 DAVID J. MICLEAN (SBN 115098) dmiclean@micleangleason.com CARMEN M. AVILES (SBN 251993) ENDORSED FILED caviles@micleangleason.com SAN MATEO COUNTY MICLEAN GLEASON LLP JUL 19 2018 411 Borel Avenue, Suite 310 Court San Mateo, CA 94402 Clerk of the Superior By IRNA P. RIVERA:ERK Telephone: (650) 684-1181 DEPUTY CL Facsimile: (650) 684-1182 Attorneys for Defendant and Cross-Complainant Solomon Sha SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN MATEO 10 ll 12 SWEET PRODUCTION, INC., a California Case No. 18-CIV-03110 Corporation, 13 soL 0)C IMON SHA’S CROSS-COMPLAINT 14 Plaintiff, FOR: 15 Vv Breach of Fiduciary Duty Accounting 16 SOLOMON SHA, an individual; and DOES 1 Fraud. to 10, inclusive, Conversion 17 Unjust Enrichment 18 Defendants, JURY TRIAL DEMANDED 19 20 SOLOMON SHA, Complaint Filed: Tune 18, 2018 Trial Date: TBD 21 Cross-Complainant, 22 Vv. 23 SWEET PRODUCTION, INC., a California corporation, SWEET EXPRESS; MING CHIN; DOREEN CHIN; and ROES 1 through 20, inclusive, 25 Cross-Defendants. 26 27 28 Cross-COMPLAINT CASE NO. 18-CTV-03110 Pursuant to the California Code of Civil Procedure § 428.10, Cross-Complainant SOLOMON SHA (“Sha” or “‘Cross-Complainant”) cross-complains and alleges the following: PARTIES 1 Cross-Complainant Sha is an individual residing in San Mateo County, California. 2. Cross-Defendant SWEET PRODUCTION, INC. (“SPI” or “Cross-Defendant”) is a California Corporation doing business in San Mateo County, California. 3 Cross-Defendant SWEET EXPRESS (“Sweet Express” or “Cross-Defendant”) is believed to be a business entity operating in San Mateo County, California. 10 4 Cross-Defendant Ming Chin (a.k.a. “Terry” Chin) is an individual residing in ll San Mateo County, California. 12 5, Cross-Defendant Doreen Chin is an individual residing in San Mateo County, 13 California. 14 6 The true names and capacities of Cross-Defendants Roes 1-20, whether 15 individual, corporate, or otherwise, are unknown to Cross-Complainant at this time, and Cross- 16 Complainant therefore sues these Cross-Defendants by such fictitious names. When the true 17 names and capacities of the fictitiously named Cross-Defendants are ascertained, Cross- 18 Complainant will amend the complaint to reflect their true names. Cross-Complainant is 19 informed and believes and thereon alleges that each of the fictitiously named Cross-Defendants 20 is indebted to Cross-Complainant as hereinafter alleged, as agents of or alter-egos of the other 21 Cross-Defendants, and that Cross~-Complainant’s rights against such fictitiously named 22 defendants arise from such indebtedness. 23 7 All Cross-Defendants including ROES 1-20 are referred to herein as “Cross- 24 Defendants.” 25 JURISDICTION AND VENUE 26 8 Sha is a resident of San Mateo County, California. 27 9, Cross-Defendant SPI has filed a Complaint against Sha in San Mateo County. 28 10. Cross-Complainant is informed and believes and, on that basis, alleges that at all 1 CROSS- COMPLAINT CASE NO. 18-CIV-03110 times referenced in this Cross-Complaint, Cross-Defendants entered into agreements and conducted business in the County of San Mateo, California. 11. As a result, this Court has jurisdiction over the parties and venue is proper in San Mateo County pursuant to California Code of Civil Procedure Section 395(a). FACTUAL ALLEGATIONS A Sha and the Chins Form a Long-Term Close Relationship 12. Sha met Ming (a.k.a. “Terry”) Chin and Doreen Chin (collectively, the “Chins”) in 1987 while working at their restaurant in San Francisco. Sha became very close to, and trusting of, the Chins. Sha eventually left the Chins’ restaurant business to begin his career in 10 the bakery industry in 1998 at San Francisco Fine Bakery (“SFFB”). In 2006, the Chins lost 11 their lease in their restaurant and started working at SFFB, but the business relationship between 12 them and SFFB’s owner quickly soured. In late 2007, the Chins left SFFB. In 2008, the Chins 13 and Sha started SPI. SPI was initially based in South San Francisco, but eventually the bakery 14 business moved to its current location of San Carlos. 15 B The Establishment of Sweet Production, Inc. and the Start of the Chins’ Fraudulent Scheme to Gain Control and Divert Revenues and Profits 16 17 13. Sha’s wife, Kitty Sha, began working at SPI in 2009 as an accountant. The 18 initial ownership shares for SPI were the Chins (40%), Jenny Chea (30%), and Kitty/Solomon 19 Sha (30%). Kitty Sha worked as an accountant for SPI until she was asked to leave by the 20 Chins. The Chins did not want Kitty Sha to see their financial and accounting records and 21 accordingly asked her to leave. The Chins have improperly tried to take over the SPI business 22 and freeze out and not pay the other owners of the business. 23 In furtherance of their scheme to misappropriate company assets and funds, and gain 24 control over SPI, the Chins opened a bank account at East West Bank where, on information 25 and belief, certain SPI cash funds were continuously deposited but not accounted for on SPI’s 26 accounting books and records. On information and belief, the Chins falsified the accounting 27 records of SPI to avoid paying co-owners, while improperly diverting SPI funds to themselves 28 for personal use. CROSS-COMPLAINT CASE NO. 18-CTV-03110 As part of their fraudulent scheme to take full control of SPI for their own personal benefit, the Chins unilaterally and fraudulently reduced Sha’s share ownership and increased their own, in attempt to oust Jenny Chea, a 30% shareholder in SPI. The Chins reduced Sha’s share ownership from 30% to 24.5% in 2011 to 14.5% in 2012. Sha did not uncover the Chins’ scheme to falsify books and misappropriate assets until much later. Sha eventually noticed that his ownership share was decreasing significantly; when he approached the Chins about this impropriety, they promised to eventually return his shares, which they have not. The Chins were also not paying company profit distributions to their partners, while taking them for themselves. 10 More recently, Sha began noticing that certain invoices for a company called Sweet ll Express, with the same address as SPI, and ostensibly run by a relative of the Chins, were issued 12 with unusual orders and payments. By this time, Sha was very familiar with SPI’s customers, 13 their orders, the pricing of items, and the general revenue for SPI. On information and belief, 14 the Chins were diverting certain SPI business to Sweet Express, and allowing Sweet Express to 15 use SPI assets (without recompense), so they could divert revenues to themselves and bypass 16 the other owners of SPI. Due to the unusual Sweet Express invoices, coupled with the East 17 West Bank account set-up and controlled by the Chins, Sha began to piece together the financial 18 irregularities and misappropriation of company funds by the Chins to the detriment of SPI’s 19 other shareholders. By this time, Sha had received little to no ownership profit distributions 20 despite SPI’s financial success. 21 Sha then began requesting the return of his ownership shares and profit distributions. 22 The Chins would respond with excuses as to why they could not return the shares or pay profit 23 distributions or ignored Sha’s requests altogether. In the last year, Sha sent several emails 24 requesting the return of his shares. Again, the Chins ignored his written requests. Realizing 25 that Sha was not going to back down from requesting the return of his shares and payment of his 26 distributions, and after Sha requested an accounting, the Chins began to plot against Sha to 27 remove him as an employee from SPI. While Sha was on vacation with his family, SPI’s 28 attorney on April 13, 2017, sent a letter correspondence to Sha stating that he was suspended 3 Cross-COMPLAINT CASE No. 18-CIV-03110 and could not return to SPI’s premises due to alleged improprieties. Sha knew that the suspension was a pretense and being used to keep him away from SPI so that the Chins could continue using SPI’s resources for their own personal benefit and avoid the accounting. Sha retained current counsel to request an accounting of SPI’s books and records to determine the distribution amounts owed to Sha. SPI produced a handful of documents that in no way provided Sha an accurate financial accounting of SPI. In retaliation for Sha’s request for his unpaid ownership share distributions, the Chins, using SPI as their alter ego, filed a Complaint against Sha. ALTER EGO ALLEGATIONS 10 14. Sha is informed and believes and thereon alleges that the entities named as il Cross-Defendants herein, including but not limited to SPI and Sweet Express, and Roes 1-20 12 (hereinafter collectively referred to as the “Alter Ego Entities”), and each of them, were at all 13 times relevant the alter ego entities of individual Cross-Defendants Terry and Doreen Chin by 14 reason of the following: 15 (a) Sha is informed and believes and thereon alleges that the individual Cross- 16 Defendants, at all time herein mentioned, dominated, influenced, and controlled each 17 of the Alter Ego Entities and the officers thereof, as well as the business, property, 18 and affairs of each of said entities. 19 (b) Sha is informed and believes and thereon alleges that, at all times herein mentioned, 20 there existed and now exists a unity of interest and ownership between said 21 individual Cross-Defendants and each of the Alter Ego Entities; the individuality and 22 separateness of said individual Cross-Defendants and each of the Alter Ego Entities 23 have ceased. 24 (c) Sha is informed and believes and thereon alleges that, at all times since the 25 incorporation of each, each Alter Ego Entity has been and now is a mere shell for 26 each individual Cross-Defendant and used as a conduit for the conduct of their 27 personal business, property, and affairs. 28 (d) Sha is informed and believes and thereon alleges that, at all times herein mentioned, 4 Cross-COMPLAINT CASE No, 18-CIV-03110 each of the Alter Ego Entities was created and continued pursuant to a fraudulent plan, scheme, and device conceived and operated by the individual Cross- Defendants, Terry and Doreen Chin, whereby the income, revenue, and profits of each of the Alter Ego Entities were diverted by said individuals to themselves. (e) Sha is informed and believes and thereon alleges that, at all times herein mentioned, each of the Alter Ego Entities was organized by said individual Cross-Defendants as a device to avoid individual liability and for the purpose of substituting financially irresponsible corporations in the place and stead of said individual Cross- Defendants, and each of them, and accordingly, each Alter Ego Entity was formed 10 with capitalization totally inadequate for the business in which said corporation was 11 engaged. 12 @ Sha is informed and believes and thereon alleges that each Alter Ego Entity is 13 insolvent because of Cross-Defendants’ fraudulent handling of the Alter Ego 14 Entities’ finances for each Cross-Defendant’s personal benefit. 15 (g) By virtue of the foregoing, adherence to the fiction of the separate corporate 16 existence of each of the Alter Ego Entities would, under the circumstances, sanction 17 a fraud and promote injustice in that Defendants would be unable to realize upon any 18 judgment in their favor. 19 15. Sha is informed and believes and thereon alleges that, at all times relevant 20 hereto, the individual Cross-Defendants Ming and Doreen Chin and the Alter Ego Entities acted 21 for each other in connection with the conduct hereinafter alleged, and that each of them 22 performed the acts complained of herein or breached the duties herein complained of as agents 23 of each other and each is therefore fully liable for the acts of the other. 24 FIRST CAUSE OF ACTION 25 (Against Cross-Defendants Sweet Production, Inc., Ming Chin, and Doreen Chin for 26 Breach of Fiduciary Duty) 27 16. Sha realleges and incorporates by ref