Judge: David A. Hoffer, Case: 30-2022-1286584, Date: 2022-11-07 Tentative Ruling

Before the court is a petition for a Preliminary Injunction (and Order to Show Cause Regarding Issuance of a Preliminary Injunction) enjoining defendant Joni Lundstrom aka Jennifer Garcia (“Defendant” or “Joni”) from certain acts regarding business entity and nominal defendant Shirt Agency Inc. (“SAI”).  The petition is GRANTED, and the court issues the injunction as set forth below.

 

An injunction may be granted in several instances, including:

 

“(a) An injunction may be granted in the following cases: (1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.

(2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.

(3) When it appears, during the litigation, that a party to the action is doing, or threatens, or is about to do, or is procuring or suffering to be done, some act in violation of the rights of another party to the action respecting the subject of the action, and tending to render the judgment ineffectual.

(4) When pecuniary compensation would not afford adequate relief.

(5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief.

(6) Where the restraint is necessary to prevent a multiplicity of judicial proceedings.

(7) Where the obligation arises from a trust.

. . .”  (Civ. Proc. Code § 526.)

 

The burden is on the moving party to show all elements necessary to support issuance of a preliminary injunction.  (O’Connell v. Superior Court (2006) 141 Cal.App. 4th 1452, 1481.)  The moving party has the burden to show that it is reasonably probable it will prevail on the merits.  (San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442; Weil & Brown, ¶ 9:632.1.)

 

Additionally, “[i]n deciding whether to issue a preliminary injunction, a trial court weighs two interrelated factors: [1] the likelihood the moving party ultimately will prevail on the merits, and [2] the relative interim harm to the parties from the issuance or noninsurance of the injunction.”  (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1449–1450.)

 

The court finds plaintiff Cole Lundstrom (“Plaintiff” or “Cole”) has met his initial burden on each of the eight causes of action alleged in his Complaint by showing there is a reasonable probability Plaintiff will prevail on the causes of action.  This is aided by the fact that Defendant submitted a declaration wherein she largely admits to most of the acts alleged by Plaintiff.  These acts include taking all of SAI’s money, closing financial accounts, changing passwords/access on some accounts, shutting down Plaintiff’s phone, taking computer hardware and corporate work product/documents, removing Plaintiff as signatory to bank accounts, freezing payroll accounts, etc.  Defendant also failed to make any arguments against Plaintiff’s motion other than a jurisdiction argument which will be discussed below.

 

In determining the relative interim harm, the harm is greater to Plaintiff and SAI than it is to Defendant.  Plaintiff has alleged the acts of Defendant have, in essence, prohibited (1) SAI from operating as a business entity and (2) Plaintiff from participating in that business.  Ultimately, Defendant’s admitted actions could cause the business to cease to operate.  The PI as amended will simply require Defendant to return all assets taken from the business and restore Plaintiffs access to corporate accounts. 

 

To the extent that Defendant argues Fam. Code § 2040 applies and this court is without jurisdiction, this court notes there is no evidence before this court that the Family Law court has taken exclusive jurisdiction over the issues before this court.  Additionally, this ruling seeks only to put the business and the parties into the same position they were in prior to when the dispute between the parties arose so the business can proceed.  This order does not divide SAI, its assets, or prohibit either party from actively participating in the corporate entity, and therefore would not interfere with or adversely affect the family court’s exercise of its powers in a dissolution of marriage proceeding.  (Askew v. Askew (1994) 22 Cal. App. 4th 942, 961–62; Dale v. Dale (1998) 66 Cal. App. 4th 1172, 1183.)

 

As parties are each 50% owner of SAI, they will need to work with one another and obtain permission from each other regarding overall business decisions.  This ruling does not run afoul of any potential ATRO in Family Court as Fam. Code § 2040 specifically requires parties to obtain written consent from each other or the court before transferring or disposing of any property, yet still permits actions performed “in the usual course of business” to occur.  (Fam. Code § 2040(2)(A).)  Types of things that would require joint permission of the parties include, but are not limited to, opening new corporate accounts, interfering with or transferring away from corporate accounts sums of money/capital greater than what is necessary for the day-to-day operations of SAI, obtaining corporate loans, and/or transferring other corporate assets away from corporate use.

 

The intent of this order is to return SAI to its normal course of business as it was in progress prior to September 2021.  The court hereby orders Defendant is enjoined from:

 

-          Interfering with access to SAI’s bank accounts with Chase Bank or Bank of America or any other former bank accounts, email, website, cellular telephones, landlines, payroll platforms, building security, or any other real or intellectual property belonging to Shirt Agency, Inc. Interference includes changing usernames or passwords or refusing to provide usernames or passwords necessary for access;

-          Deleting company email, invoices, client artwork, order system, payroll, bank access, or Dropbox data on the cloud, back-up server, or on the Dell computer which Defendant removed from SAI;

-          Opening any bank account or investment account or any other financial account on behalf of SAI without joint approval from Plaintiff and Plaintiff’s equal access to said accounts;

-          Seeking any loan or credit or advance of any type on behalf of SAI without joint approval from Plaintiff and Plaintiff’s equal access to said accounts;

-          Accessing, withdrawing or using funds from SAI' s bank accounts or investment account funds that are or were in the name of Shirt Agency Inc. as of September 1, 2022, for any purpose not consistent with the day-to-day functions of SAI;

-          Accessing, withdrawing or using funds from credit cards or any line of credit of SAI for any purpose not consistent with the day-to-day functions of SAI;

 

-          Using or registering SAI's name for any purpose other than for the benefit of SAI;

 

Defendant is further ordered to return to SAI all SAI property that Defendant removed from the business since September 2021.  This includes but is not limited to all monetary funds, laptops, cell phones and numbers, hard drives, corporate books, and account and financial statements.  Defendant is also ordered to immediately provide equal access to all SAI accounts to Plaintiff, which includes but is not limited to all banking and credit accounts, payroll accounts, email access, Dropbox, security accounts, and web domain access. 

 

Again, the point it to provide equal access over the business to both Plaintiff and Defendant who are equal co-owners of the business, and not to completely prohibit either party from participating therein.  (Cole Decl., Ex. A; Complaint ¶¶ 1-2.)

 

Plaintiff is ordered to give notice and to prepare an order in strict compliance with this ruling.