Judge Colin Leis, Case Number: 23STCV11988, Date: 2024-04-04 Tentative Ruling

On May 26, 2023, Plaintiff Hussein Sidky (Plaintiff) filed a complaint against Defendants Ramy Baramily (Defendant), Wrapedia, Inc., and RNB Signs MFG, Inc.

On May 30, 2023, Plaintiff filed a verified first amended complaint (FAC). In the FAC, Plaintiff alleges the following causes of action: (1) dissolution of corporation/partnership, (2) accounting, (3) breach of fiduciary duty, (4) fraud, (5) breach of contract, (6) intentional infliction of emotional distress, and (7) quiet title.

On March 5, 2024, Plaintiff filed an ex parte application for issuance of temporary restraining order.

On March 6, 2024, the court denied the ex parte application and scheduled this order to show cause whether the court should issue a preliminary injunction.

Plaintiff seeks a preliminary injunction that enjoins Defendant and those acting on his behalf from (a) operating the subject business, (b) accessing the subject business’s accounts and systems, (c) engaging in any conduct that impairs assets of the subject business, and (d) disposing of Plaintiff’s personal property. Additionally, Plaintiff’s proposed injunction would vest in Plaintiff (e) exclusive access and control of the subject business, (f) the return of Plaintiff’s personal property from Defendant, (g) exclusive access to the subject business’s accounts and systems, and (h) exclusive property rights of all assets and opportunities arising from the subject business.

“As its name suggests, a preliminary injunction is an order that is sought by a plaintiff prior to a full adjudication of the merits of its claim.” (White v. Davis (2003) 30 Cal.4th 528, 554.) “In determining whether to issue a preliminary injunction, the trial court considers: (1) the likelihood that the moving party will prevail on the merits and (2) the interim harm to the respective parties if an injunction is granted or denied. The moving party must prevail on both factors to obtain an injunction.” (Pittsburg Unified School Dist. v. S.J. Amoroso Construction Co., Inc. (2014) 232 Cal.App.4th 808, 813-814.) “The trial court's determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff's showing on one, the less must be shown on the other….” (Church of Christ in Hollywood v. Superior Court (2002) 99 Cal.App.4th 1244, 1251-1252.) The burden is on the party seeking injunctive relief to show all elements necessary to support issuance of a preliminary injunction. (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

A preliminary injunction must not issue unless it is “reasonably probable that the moving party will prevail on the merits.” (San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442.) The “likelihood of success on the merits and the balance-of-harms analysis are ordinarily ‘interrelated’ factors in the decision whether to issue a preliminary injunction.” (White v. Davis, supra, 30 Cal.4th at p. 561.) “The presence or absence of each factor is usually a matter of degree, and if the party seeking the injunction can make a sufficiently strong showing of likelihood of success on the merits, the trial court has discretion to issue the injunction notwithstanding that party's inability to show that the balance of harms tips in his favor.” (Ibid.)

In his verified first amended complaint, Plaintiff alleges in part that Defendant breached his fiduciary duty to Plaintiff. Corporate directors owe a fiduciary duty to the corporation and its shareholders. (Berg & Berg Enterprises, LLC v. Boyle (2009) 178 Cal.App.4th 1020, 1037.) This duty consists in acting with honesty, loyalty, and good faith. (Ibid.) In support, Plaintiff offers evidence that he was a twenty-five percent shareholder in the subject business. (Sidky Decl., ¶ 4. Ex. A.) Defendant, for his part, is the chief financial officer of the subject business. (Sidky Decl., ¶ 7; Ex. C.) According to Plaintiff, Defendant breached his fiduciary duty to Plaintiff by diverting funds from the subject business to an unrelated business. (Sidky Decl., ¶ 6.) Plaintiff also alleges Defendant used funds belonging to the subject business for his own benefit. (Sidky Decl., ¶ 5.) In support of his allegations, Plaintiff provides accounting records that suggest Defendant transferred funds from the subject business to his personal bank account on June 3, 2020, June 4, 2020, and September 15, 2020. (Sidky Decl., ¶¶ 5, 12; Ex. B.)

Defendant in turn has provided no evidence to the contrary in a timely response. Given the foregoing, there is a reasonable probability that Plaintiff will prevail on the merits.

“To obtain a preliminary injunction, a plaintiff ordinarily is required to present evidence of the irreparable injury or interim harm that it will suffer if an injunction is not issued pending an adjudication of the merits.”¿(White, supra, 30 Cal.4th at p. 554.) “In evaluating interim harm, the trial court compares the injury to the plaintiff in the absence of an injunction to the injury the defendant is likely to suffer if an injunction is issued.” (Shoemaker v. County of Los Angeles (1995) 37 Cal.App.4th 618, 633.)

As noted above, “[i]n determining whether to issue a preliminary injunction, the trial court considers: (1) the likelihood that the moving party will prevail on the merits and (2) the interim harm to the respective parties if an injunction is granted or denied. The moving party must prevail on both factors to obtain an injunction.” (Pittsburg Unified School Dist. v. S.J. Amoroso Construction Co., Inc, supra, 232 Cal.App.4th at pp. 813-814.)

Plaintiff argues that, absent a preliminary injunction, he will suffer irreparable harm. (Ex Parte Application, p. 12.) In support, Plaintiff offers evidence suggesting Defendant has repeatedly dissipated assets that once belonged to the subject business in which Plaintiff has a substantial interest. (Sidky Decl., ¶¶ 5, 6, 12; Ex. B.) Consequently, if the court does not issue an injunction, Defendant could continue to divert assets from the subject business. Defendant, for his part, has not demonstrated any harm he would suffer as a result of a preliminary injunction. The balance of harm therefore tips in Plaintiff’s favor.

Given the foregoing, the court will issue a preliminary injunction that enjoins Defendant and those acting on his behalf from engaging in any conduct that impairs the assets of the subject business.[1] But the court finds that Plaintiff’s proposed preliminary injunction is otherwise overly broad. (Ex Parte Application, pp. 2-4.) Accordingly, the court will not enjoin Defendant from operating the business or accessing its accounts and systems. Nor will the court vest in Plaintiff total control of Defendant’s business, exclusive access to its accounts and systems, and exclusive property rights of all assets and opportunities arising from Defendant’s business. Such measures are not necessary to preserve the status quo until the merits of the action can be determined. (Wind v. Herbert (1960) 186 Cal.App.2d 276, 283.)

Based on the foregoing, the court grants the preliminary injunction in part. Plaintiff shall file and serve a revised proposed order conforming to the court’s ruling granting item (3) recited in Plaintiff’s proposed order filed on March 5.

Because Defendant has not requested an undertaking, the court does not order one. (Code of Civ. Proc. § 529.)

[1] The court notes Plaintiff’s proposed preliminary injunction would enjoin Defendant from disposing of Plaintiff’s personal property, including a 2004 Porsche. The proposed injunction would also require Defendant to return to Plaintiff his personal property, including the 2004 Porsche. But the vehicle has been returned to Plaintiff. (Whittmore Supp. Decl., ¶ 29.) Moreover, the ex parte application and proposed order do not identify the other personal property to which the injunction would apply. Thus, the court will not grant this portion of the preliminary injunction Plaintiff seeks.