Judge: Curtis A. Kin, Case: 24STCP00630, Date: 2024-05-28 Tentative Ruling

Case Number: 24STCP00630    Hearing Date: May 28, 2024    Dept: 86

MOTION FOR ORDER APPOINTING RECEIVER

Date:               5/28/24 (1:30 PM)

Case:                           Alma Mamolo as Trustee of The Mamolo Living Trust, as amended and restated v. Viktor Benes Continental Pastries, Inc. (24STCP00630)

TENTATIVE RULING:     

Plaintiff Alma Mamolo’s Motion for Order Appointing Receiver is DENIED.

I.                   EVIDENTIARY MATTERS

Defendant Viktor Benes Continental Pastries, Inc.’s requests to take judicial notice of Exhibits A, C, and D are GRANTED, but only for the existence of the documents, not the truth of the matters asserted therein. (See Evid. Code § 452(d); Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-69.) Defendant Viktor Benes Continental Pastries, Inc.’s requests to take judicial notice of Exhibits B, E, and F are GRANTED, pursuant to Evidence Code § 452(d).

All evidentiary objections are OVERRULED.

II.                FACTUAL BACKGROUND

Plaintiff Alma Mamolo, as Trustee of The Mamolo Living Trust, seeks an order for involuntary dissolution of defendant Viktor Benes Continental Pastries, Inc. (“VBC”), pursuant to Corporations Code § 1800, et seq.

Starting in 1973, VBC was owned in equal shares by Ugo Mamolo, husband of plaintiff, and Ruggero “Roger” Terzuolo. (Mamolo Decl. ¶¶ 4, 5; Terzuolo Decl. ¶ 3.) Ugo Mamolo died on October 24, 2021. (Mamolo Decl. ¶ 5.)

Plaintiff contends that she owns 50% of the shares of VBC pursuant to the Declaration of Trust for The Mamolo Living Trust, three times amended (“Mamolo Trust”), a General Assignment of Assets signed by plaintiff and her husband, and a “pour over” will signed by plaintiff’s husband. (Mamolo Decl. ¶¶ 6-8 & Exs. 1-3.) Plaintiff is the surviving spouse and trustee of the Mamolo Trust. (Mamolo Decl. ¶ 11.)

On September 21, 1978, Ugo Mamolo, plaintiff, Roger Terzuolo, and his spouse, Ritta Terzuolo, signed a Buy-Out Agreement of the Shareholders (“Shareholder Agreement”). Upon the death of either of the shareholders, the Shareholder Agreement requires the surviving shareholder to purchase the decedent’s shares at the price set forth in the agreement. (Mamolo Decl. ¶ 9 & Ex. 4 at 7.) Plaintiff maintains that Roger Terzuolo never purchased the shares of Ugo Mamolo. (Mamolo Decl. ¶ 10.)

On July 8, 2004, Ugo Mamolo, Roger Terzuolo, and their respective spouses entered into a Spousal Agreement to “establish a schedule of compensation to the surviving spouse in case one of the partners should die.” The Spousal Agreement provides that upon the death of one the shareholders, the surviving spouse shall receive $1,500 per week for 270 weeks after which the remaining partner shall become the sole owner of two Viktor Benes bakeries held by VBC. (Terzuolo Decl. ¶ 5 & Ex. G at 1.) The Spousal Agreement also entitles the surviving spouse to receive 50% of the royalties paid by independent operators of other Viktor Benes bakery locations, as well as 20% of the proceeds from the sale of real property owned by VBC. (Terzuolo Decl. ¶ 5 & Ex. G at 1-2.) The Spousal Agreement also charges the surviving shareholder with the responsibility to appoint a manager/operator or to join with one or more partners. (Terzuolo Decl. ¶ 5 & Ex. G at 2.) After Ugo Mamolo died, Roger Terzuolo purportedly paid plaintiff $1,500 per week, plus $2,500 per week from the royalties. (Terzuolo Decl. ¶ 6.) Around December 2022, VBC contends that  plaintiff started rejecting the payments. (Terzuolo Decl. ¶ 6.)

On April 28, 2017, Ugo Mamolo, Roger Terzuolo, their respective spouses, and VBC entered into a Settlement Agreement. Under the Settlement Agreement, Frank Romano, the nephew of Ugo Mamolo and plaintiff, and Frank Romano, Inc. shall make weekly payments totaling $910,000 in exchange for assets of VBC including Viktor Benes trademarks, Viktor Benes recipes, physical assets, machinery, personal property, merchandise, inventory, leases, and goodwill of the Viktor Benes North Hollywood and Century City stores. (Mamolo Decl. ¶ 12 & Ex. 5 at §§ 3.3, 3.4.) The Settlement Agreement was never fully implemented. (Mamolo Decl. ¶ 15.)

III.             MOTION TO APPOINT RECEIVER

Pursuant to CCP § 564(b)(1) and Corporations Code § 1803, plaintiff seeks the appointment of a receiver to wind down the business and affairs of defendant Viktor Benes Continental Pastries, Inc.

A receiver may be appointed in an action by a party whose right to or interest in property or proceeds of the property is probable, where the property is in danger of being lost, removed, or materially injured. (CCP § 564(b)(1).) Under Corporations Code § 1803, “  If…the court has reasonable grounds to believe that unless a receiver of the corporation is appointed the interests of the corporation and its shareholders will suffer pending the hearing and determination of the complaint…the court may appoint a receiver to take over and manage the business and affairs of the corporation and to preserve its property pending the hearing and determination of the complaint for dissolution.”

“The power to appoint a receiver for a going corporation should be exercised sparingly. It is a drastic remedy and one which should not be invoked unless there is a threatened injury to a corporation of a serious nature.” (Starbird v. Lane (1962) 203 Cal.App.2d 247, 261.) “The appointment of a receiver is a drastic remedy and is one which should not be invoked unless there is an actual or threatened cessation or diminution of the business.” (In re Jamison Steel Corp. (1958) 158 Cal.App.2d 27, 35.)

Even assuming plaintiff is a shareholder (a question which is before the independent calendar court assigned to the involuntary dissolution action), plaintiff fails to show that VBC is in danger of cessation or dissipation of its assets. Plaintiff maintains that the VBC has refused to hold annual shareholder meetings and has not provided past minutes of director and shareholder meetings or corporate and financial documents and information. (Mamolo Decl. ¶ 18, 19, 24.) According to plaintiff, VBC has appointed Ritta Terzuolo and Rebecca Terzuolo as officers without plaintiff’s consent. (Mamolo Decl. ¶ 20 & Ex. C.) While plaintiff seeks to have input in the operation of VBC and increase transparency, plaintiff does not show that VBC’s property is in danger of dissipation or in need of preservation.

Plaintiff argued in the motion that an employee named VBC and its managers for employment and wage and hour claims. (Salvato Decl. ¶ 9 & Ex. G.) Even though plaintiff was named as a defendant, the case has since settled. (Hofman Decl. ¶ 7; Salvato Reply Decl. ¶¶ 3, 4.)

Plaintiff also objects to Roger Terzuolo and VBC’s having filed a lawsuit against Frank Romano and Frank Romano, Inc. without her authorization. (Mamolo Decl. ¶ 31; Salvato Decl. ¶ 8 & Ex. F.) Plaintiff also presents evidence that VBC may be uninsured. (Mamolo Decl. ¶ 26; Salvato Reply Decl.  ¶¶ 13-15 & Ex. 3.) However, the filing of a lawsuit and the non-payment of a premium do not demonstrate that VBC is in danger of ceasing business. With respect to the insurance policy, Rowena Hofman, VBC’s current controller in charge of accounting and bookkeeping, appears to be overseeing the reduction of VBC’s debts which accumulated under the oversight of Ugo Mamolo. (Hofman Decl. ¶¶ 5, 9.)

In sum, plaintiff fails to show why the Court should order the drastic remedy of a receiver. The motion for appointment of a receiver is DENIED.