No Value: Jonas Svensson vs iO73 Investments Inc et al

On December 18, 2020 a No Value was filed involving a dispute between Svensson, Jonas, and Io73 Investments Inc, Strauss, Tristan, for Unlimited Writ of Mandate (02) in the District Court of Santa Barbara County.

Preview
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX

JONAS SVENSSON, Court of Appeal Case No.
B315801
Plaintiff And Respondent,

vs. Superior Court No. 20CV04285

iO73 INVESTMENTS, INC. and
TRISTAN STRAUSS,

Defendants and
Appellants.

Appeal from a Judgment
of the Superior Court, County of Santa Barbara,
Hon. Colleen Sterne, Judge
____________________________________________________________

APPELLANTS’ OPENING BRIEF
____________________________________________________________
TRUSTED LEGAL, PLC
NAOMI R. DEWEY (SBN 249874)
21 E. Carrillo Street, Suite 130
SANTA BARBARA, CA 93101
Attorney for Petitioner and Appellant
iO73 INVESTMENTS, INC., et al.

1
TO BE FILED IN THE COURT OF APPEAL APP-008
COURT OF APPEAL CASE NUMBER:
COURT OF APPEAL SECOND APPELLATE DISTRICT, DIVISION SIX B315801

ATTORNEY OR PARTY WITHOUT ATTORNEY: STATE BAR NU MBER:249874 SUPERIOR CO URT CASE NU MBER:
NAM E:Naomi R. Dewey 20CV04285
FIRM NAM E: Trusted Legal , A Professional Law Corporation
STREET ADDRESS:21 E. Carrillo Street, Suite 130
c ITY: Santa Barbara STATE: CA ZIP CODE: 93101
TELEPH ONE NO .. (805) 979-5160 FAX NO.:
E-MAIL ADD RE SS: naomi@trusted.legal
Appellants iO73 Investments, Inc. and Tristan Strauss
ATTORNEY FOR (name):

APPELLANT/ iO73 INVESTMENTS, INC. and TRISTAN STRAUSS
PETITIONER:
RESPONDENT/ JONAS SVENSSON
REAL PARTY IN INTEREST:

CERTIFICATE OF INTERESTED ENTITIES OR PERSONS

(Check one): [K] INITIAL CERTIFICATE D SUPPLEMENTAL CERTIFICATE

Notice: Please read rules 8.208 and 8.488 before completing this form. You may use this form for the initial
certificate in an appeal when you file your brief or a prebriefing motion, application, or opposition to such a
motion or application in the Court of Appeal, and when you file a petition for an extraordinary writ. You may
also use this form as a supplemental certificate when you learn of changed or additional information that must
be disclosed.

1. This form is being submitted on behalf of the following party (name) :
Appellants iO73 Investments, Inc. and Tristan Strauss

2. a. [K] There are no interested entities or persons that must be listed in this certificate under rule 8.208.
b. CJ Interested entities or persons required to be listed under rule 8.208 are as follows:

Full name of interested Nature of interest
entity or person (Explain):

(1)

(2)

(3)

(4)

(5)

CJ Continued on attachment 2.

The undersigned certifies that the above-listed persons or entities (corporations, partnerships, firms, or any other
association, but not including government entities or their agencies) have either (1) an ownership interest of 10 percent or
more in the party if it is an entity; or (2) a financial or other interest in the outcome of the proceeding that the justices
should consider in determining whether to disqualify themselves, as defined in rule 8.208(e)(2).

Date: February 22, 2022

Naomi Dewey
(TYPE OR PRINT NAM E) ►
Page 1 of 1
Cal. Ru les of Court, ru les 8.208, 8.488
Form Approved for Optional Use
Judicial Council of California
CERTIFICATE OF INTERESTED ENTITIES OR PER www.courts.ca.gov
AP P-008 [Rev. January 1, 2017]

2
TABLE OF CONTENTS

TABLE OF CONTENTS .................................................................. 3
TABLE OF AUTHORITIES ............................................................ 5
STATEMENT OF THE CASE ........................................................ 6
STATEMENT OF APPEALABILITY ............................................. 6
STANDARD OF REVIEW ............................................................... 7
STATEMENT OF FACTS ............................................................... 7
ARGUMENT .................................................................................. 11
A. UNDER CORPORATIONS CODE SECTION 1601 AND
1602, MR. SVENSSON IS NOT ENTITLED TO INSPECT
HEADWATERS’ DOCUMENTS BECAUSE HE IS NOT A
SHAREHOLDER OR A DIRECTOR OF THE HEADWATERS
GROUP AND ITS TOUCHING COMPANIES. ........................ 11
1. Corporate Code Sections 1601 and 1602 Only Entitles Mr.
Svensson to Inspect Corporate Documents to Which He Holds
Shares or Occupies a Seat as a Director. ............................... 11
2. Mr. Svensson Has the Right to Inspect the Corporate
Documents of iO73 Inc., Which is a Subsidiary of Headwaters
Group, but Has No Right to Inspect and Copy Corporate
Documents of Corporations to Which He is Not a Shareholder
or Director. ............................................................................... 12
3. The Court Erred in Reasoning that Because the Corporate
Subsidiary Relationships are Sufficiently Intertwined for the
Purposes of Discovery in a Motion to Compel, That Entitles

3
Respondents Rights to Inspect Corporate Records, Book and
Documents Under Corporations Code 1601 and 1602. ......... 15
CONCLUSION ............................................................................... 16
CERTIFICATE OF WORD COUNT ............................................. 17
PROOF OF SERVICE ................................................................... 18

4
TABLE OF AUTHORITIES

Cases
Aryeh v. Canon Business Solutions, Inc. (2013) 55 C4th 1185 ...... 7
Âustin v. Turentine, 30 Cal.App. 2d 750................................. 12, 14
Ghirardo v. Antonioli (1994) 8 C4th 791 ........................................ 7
Havlicek v. Coast-to-Coast Analytical Services, Inc.
(App. 2 Dist. 1995) 46 Cal.Rptr.2d 696 ......................................... 12
In re Facebook, Inc. S'holder Derivative Priv. Litig.,
411 F. Supp. 3d 649 ....................................................................... 13
Lisle v. Shipp (1929) 96 Cal.App. 264 ........................................... 13
Singhania v. Uttarwar, 136 Cal. App. 4th 416 ............................ 13
Topanga & Victory Partners, LLP v. Toghia (2002)
103 CA4th 775 .................................................................................. 7
Wolf v. CDS Devco (App. 4 Dist. 2010) 110 Cal.Rptr.3d 850 ....... 12

Statutes
Code of Civil Procedure, section 904.1 ............................................ 6
Corporate Code sections 1601 and 1602 ................................passim

Other Authorities
15 Cal. Jur. 3d Corporations § 345 ............................................... 13

5
STATEMENT OF THE CASE

On December 18, 2020, Respondent filed a Writ of

Mandamus to compel iO73 Investments, Inc. (“iO73”) and Tristan

Strauss (“Strauss) to permit Director and Shareholder Jonas

Svensson (“Svensson”) to inspect and copy its corporate books and

records under Corporate Code sections 1601 and 1602.

Appellants iO73 and Strauss opposed the Writ of Mandamus,

arguing that the Writ sought documents outside the scope of

those code sections, specifically from entities in which Svensson

was neither a shareholder nor a director. On September 03,

2021, the Writ of Mandamus was granted. Prior to the Writ

being granted, iO73 had provided all available responsive

documents in a related case, Svensson v. iO73 Investments, Inc.,

et al., Santa Barbara Superior Court Case No. 20CV01556.

STATEMENT OF APPEALABILITY

This appeal is from a judgment of the Santa Barbara

County Superior Court and is authorized by the Code of Civil

Procedure, section 904.1, subdivision (a)(1).

6
STANDARD OF REVIEW

The Court erred in interpreting Corporations Code sections

1601 and 1602 to allow a shareholders and directors of iO73 to

inspect the documents of corporations in which he is neither a

shareholder nor a director. Matters presenting pure questions of

law, not involving the resolution of disputed facts, are subject to

the appellate court's independent (“de novo”) review: i.e., the

appellate court gives no deference to the trial court's ruling or the

reasons for its ruling, but instead decides the matter anew.

(Aryeh v. Canon Business Solutions, Inc. (2013) 55 C4th 1185,

1191, 151 CR3d 827, 831; Ghirardo v. Antonioli (1994) 8 C4th

791, 799, 35 CR2d 418, 423; Topanga & Victory Partners, LLP v.

Toghia (2002) 103 CA4th 775, 780-781, 127 CR2d 104, 106 (citing

text).)

STATEMENT OF FACTS

This action stems from a related case initiated by Svensson

in March 2020 against Strauss, another shareholder, Brian

Casey, and iO73 alleging several breaches of contract as well as a

7
shareholder derivative claim for breach of fiduciary duty.

Appellant Strauss is the Chief Executive Officer, Secretary, and a

member of the Board of Directors of iO73. (Clerk’s Transcript

[“CT”] 6:6-7) Respondent Svensson is a shareholder and director

of iO73. (CT 6: 10-14). After filing a motion to compel discovery in

the related case, Mr. Svensson filed the current action under

Corporations Code section 1601 and 1602 to compel Appellant to

permit him to inspect and copy the books, documents and records

of not only iO73 and its subsidiaries but an expanded group of

companies known as Headwaters Group. (CT 6:20-28). Svensson

owns no shares and plays no role as a director of Headwaters

Group. (CT 93: 3-14).

Appellant contends the Respondent is not entitled to the

inspection of documents, records and books of Headwaters Group.

The “Headwaters Group is not a legal entity. Respondent iO73 is

one of a group of corporations that do business under the name of

Headwaters.” (CT 93: 3-14).

7. These corporations are divided into two general
groups- the so-called “touching” companies, and

8
the “non-touching” companies. The former group
engages in the cultivation, harvesting and
distribution of cannabis and its byproducts. The
later group provides management services to the
touching companies and other companies engaged
in the cannabis industry, but they do not engage
in the handling or “touching” of cannabis.

8. Respondent iO73 is the parent company of four
subsidiaries that together compromise the non-
touching companies. The touching companies
consist of three corporations, which are separate
legal entities. Petitioner has no shareholder
interest in, and does not serve as a director of, the
touching companies.

(CT 93: 3-14)

At the time of the hearing on the Writ of Mandate, which

took place on June 21, 2021, both parties agreed that all

documents responsive to the Writ had been produced in the

related action, other than documents related to a capital raise

that Svensson contends occurred in 2022. (Reporter’s Transcript

[“RT”] 18:1-2) Appellant contends that these documents are

outside the scope of Corporations Code sections 1601 and 1602,

because to the extent that any such documents exist (and it is

unclear that they do), they would be from Headwaters Group or

9
the separate “touching” companies in which Svensson holds no

interest.1 “[T]he documents that I believe that have not been

produced relating to the capital raise do not relate to iO73 and

its subsidiary [sic].” (RT 19:3-6.).

The Court granted the Writ of Mandamus on September 9,

2021, “requiring Respondents to provide documents for inspection

and copying from the books, records and documents of the

Headwaters Group.” (CT 174:16-18) The Court’s reasoning

included that “[the] subsidiary relationships are sufficiently

intertwined to permit discovery relating to the entire Headwaters

Group. The court previously reached this conclusion in the

Related Case, and the court refers parties to that ruling.” (CT

174: 8-10)

///

1 It should be noted that the separation between “touching”
entities (meaning entities engaged in business that require
licensing for activities involving cannabis) and “non-touching”
entities (meaning those entities that do not require licensing) is
deliberate and designed to comply with California regulations
governing cannabis cultivation and distribution.

10
ARGUMENT

A. UNDER CORPORATIONS CODE SECTION 1601 AND
1602, MR. SVENSSON IS NOT ENTITLED TO INSPECT
HEADWATERS’ DOCUMENTS BECAUSE HE IS NOT A
SHAREHOLDER OR A DIRECTOR OF THE
HEADWATERS GROUP AND ITS TOUCHING
COMPANIES.

1. Corporate Code Sections 1601 and 1602 Only Entitles
Mr. Svensson to Inspect Corporate Documents to
Which He Holds Shares or Occupies a Seat as a
Director.

(a)(1) “The accounting books and records and
minutes of proceedings of the shareholders and
the board and committees of the board of any
domestic corporation ... shall be open to
inspection upon the written demand on the
corporation of any shareholder ... at any
reasonable time during usual business hours, for
a purpose reasonably related to such holder's
interests as a shareholder.... The right of
inspection created by this subdivision shall
extend to the records of each subsidiary of a
corporation subject to this
subdivision.” (Emphasis added)

(Cal. Corp. Code § 1601.)

Every director shall have the absolute right at
any reasonable time to inspect and copy all books,
records and documents of every kind and to
inspect the physical properties of the corporation
of which such person is a director and also
of its subsidiary corporations, domestic or

11
foreign. Such inspection by a director may be
made in person or by agent or attorney and the
right of inspection includes the right to copy and
make extracts. This section applies to a director
of any foreign corporation having its principal
executive office in this state or customarily
holding meetings of its board in this state.
(Emphasis added)

(Cal. Corp. Code § 1602.)

The statute authorizing corporate directors to inspect and

copy corporate records and documents are [to be] liberally

construed. (Âustin v. Turentine, 30 Cal.App. 2d 750; Wolf v. CDS

Devco (App. 4 Dist. 2010) 110 Cal.Rptr.3d 850). However, [the]

trial court may impose just and proper conditions upon director's

otherwise absolute right to inspect corporation's books and

records. (Havlicek v. Coast-to-Coast Analytical Services, Inc. (App.

2 Dist. 1995) 46 Cal.Rptr.2d 696.)

2. Mr. Svensson Has the Right to Inspect the Corporate
Documents of iO73 Inc., Which is a Subsidiary of
Headwaters Group, but Has No Right to Inspect and
Copy Corporate Documents of Corporations to Which
He is Not a Shareholder or Director.

12
“Section 1601 affords ‘no more than a right to inspect and

copy records at the company office’ and does not ‘impose on the

corporation an affirmative duty to respond to written requests for

modes of disclosure falling outside the scope of the statute.’”

(Singhania v. Uttarwar, 136 Cal. App. 4th 416, 431, 38

Cal.Rptr.3d 861 (2006) (citation omitted). (In re Facebook, Inc.

S'holder Derivative Priv. Litig., 411 F. Supp. 3d 649.)

As stated above, Headwaters Group is an informal group of

corporations, the majority of which Svensson has no ownership

interest in. Respondent is a shareholder and a director of iO73,

and his rights to inspect books and records is limited to iO73 and

its subsidiaries. Even that right is limited: “[T]he mere fact that

a corporation invests its money in the stock of another

corporation does not give a shareholder of the first corporation a

right to inspect the books and records of the second corporation.”

(15 Cal. Jur. 3d Corporations § 345.)

In an analogous case to the instant litigation, Lisle v. Shipp

(1929) 96 Cal.App. 264, a petitioner who held shares in one entity

13
demanded that he be permitted to inspect the books, files, and

properties of a second entity that the controlling shareholder of

the first company had purchased. The Court ruled that the

stockholder of corporation, purchasing stock of another

corporation, was not entitled to mandamus to inspect books of

other corporation. (Ibid, 96 Cal.App. 264, 273 P. 1103.) Similar to

the situation in Lisle, Strauss holds shares in iO73 and also owns

shares in other Headwaters’ entities – Svensson, however, has no

shares in any of the touching entities.

In Âustin v. Turentine, 30 Cal.App. 2d 750, the Court found

that when defendants created a second corporation issuing stock

of the second corporations to the stockholders of the first

corporation, the plaintiffs of the first corporation who were not

issued stock had the right to inspection. This is distinguishable

from the instant case. Respondent does not have the right to

inspect Headwaters’ records because the touching corporations

were not created before the creation of iO73, Inc. and Strauss

remains the sole shareholder of the touching entities. The

14
touching entities were created before or at the same time as

separate corporations, with separate mandates and shareholder

stocks.

3. The Court Erred in Reasoning that Because the
Corporate Subsidiary Relationships are Sufficiently
Intertwined for the Purposes of Discovery in a Motion
to Compel, That Entitles Respondents Rights to
Inspect Corporate Records, Book and Documents
Under Corporations Code 1601 and 1602.

As stated above, Respondent Svensson is not a shareholder

or a director of “Headwaters Group” or the “touching” companies.

“Sufficiently intertwined,” the phrase used by the trial court

judge, is not a standard contemplated in the statutes under

which Respondent brought his Writ. Svensson does not have the

legal authority to access documents belonging to other

corporations of which he is not a shareholder or a director. While

he may be entitled to this discovery in a related case, subject to

the limitations set forth in the Rules of Civil Procedure, he is not

entitled to it here.

///

15
CONCLUSION

For the foregoing reasons, the Superior Court erred when it

granted Svensson’s Writ of Mandamus for the production of

documents from entities outside the scope of Corporations Code 1601

and 1602. Appellant respectfully requests that the Court reverse the

Court’s granting of the Writ of Mandamus.

DATED: February 22, 2022 Respectfully submitted,
TRUSTED LEGAL, PLC

By:________________________
NAOMI R. DEWEY, ESQ.
Attorneys for Appellant
iO73 INVESTMENTS, INC.,
et al.

16
CERTIFICATE OF COMPLIANCE
(California Rules of Court, Rule 8.883(b)(1))

The text in this brief consists of 1784 words as counted by
the Microsoft Word version Word Processing program used to
generate this brief.

Dated: February 22, 2022 By: _____________________
Naomi R. Dewey, Esq.

17
PROOF OF SERVICE

I am a resident of the State of California, over the age of eighteen, and
not a party to the within action. My business address is 21 E. Carrillo Street,
Ste., 130 Santa Barbara, CA 93101. On February 22, 2022, I served the within
document:
APPELLANTS’ OPENING BRIEF

By Mail: By placing the document(s) listed above in a sealed envelope
with postage thereon fully prepaid, in the United States mail at Santa Barbara,
addressed as set forth below.

By Overnight Delivery: I enclosed the document(s) in an envelope or
package provided by an overnight delivery carrier and addressed to the persons
at the address(es) set forth below. I placed the envelope or package for
collection and overnight delivery at an office or a regularly utilized drop box of
the overnight delivery carrier.

X By Electronic Mail: I caused the above-described document to be
served by electronic mail pursuant to CCP section 1010.6 and California Rule of
Court 2.251, to the e-mail address provided by the addressee(s) as indicated
below. Said electronic service was reported as received without error.

Stephen L. Ram, Esq. Santa Barbara County Superior Court
Stradling Yocca Carlson & Routh Attn: Clerk of the Court
660 Newport Center Drive, Ste 1600 1100 Anacapa Street
Newport Beach, CA 92660 Santa Barbara, CA 93101
Tele: (949) 725-4102
Email: sram@stradlinglaw.com E-filed per Local Rule 1012(a)(1)

Attorneys for Plaintiffs JONAS Supreme Court of the State of
SVENNSON California via Truefiling

I am readily familiar with the firm’s practice of collection and processing
correspondence for mailing. Under that practice it would be deposited with the
U.S. Postal Service on that same day with postage thereon fully prepaid in the
ordinary course of business. I am aware that on motion of the party served,
service is presumed invalid if postage cancellation date or postage meter date is
more than one day after the date of deposit for mailing in affidavit.

18
I declare under penalty of perjury under the laws of the State of
California, that the above is true and correct.

Executed on February 22, 2022, at Santa Barbara, California.

________________________________
Erin Landriz

Case Info

Judge

Sterne, Colleen K Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

February 22, 2022

Case Filing Date

December 18, 2020

County

Parties

Condren, Alan D Attorney
Condren, Alan D Attorney
Dewey, Naomi R Attorney
iO73 Investments Inc Respondent
iO73 Investments Inc Respondent
Ram, Stephen L Attorney
Selna, Steven M Attorneys for Defendants
Selna, Steven M Attorney
Strauss, Tristan Respondent
Strauss, Tristan Respondent
Svensson, Jonas Petitioner
Svensson, Jonas Petitioner
Nicole Hornick Attorneys for Defendants
Colleen Sterne Attorney
Nicole Carbonel Attorneys for Plaintiffs
Thomas Anderle Attorney
Colleen Keeley Attorney
Robert Selna Attorneys for Defendants
David Allard Attorney

For full print and download access, please subscribe at https://www.trellis.law/.

No Value: Jonas Svensson vs iO73 Investments Inc et al

Preview

Related Topics

Case Info

Parties