Judge: Joel R Wohlfeil, Case: 37-2021-00024970-CU-BC-CTL, Date: 2024-01-19 Tentative Ruling
SUPERIOR COURT OF CALIFORNIA,
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HALL OF JUSTICE
TENTATIVE RULINGS - January 16, 2024
01/19/2024 09:00:00 AM C-73 COUNTY OF SAN DIEGO
JUDICIAL OFFICER:Joel R. Wohlfeil
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Civil - Unlimited Breach of Contract/Warranty Motion Hearing (Civil) 37-2021-00024970-CU-BC-CTL AMERICAN PRO-COATING LLC VS ACKAD [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 11/02/2023
The continued Motion (ROA # 204) of Cross-Complainants YUHONG E. ACKAD and COFFEE FUSION, LLC (collectively 'ACKAD') to (A) set the date of valuation of Coffee Fusion, LLC's shares, and (B) dissociate Cross-Defendant JOSEPH P. MARTINEZ ('MARTINEZ') from his LLC membership in CoffeeFusion, LLC, is GRANTED IN PART and DENIED IN PART.
As discussed below, the date of valuation is set on August 20, 2021. However, the dissociation of Martinez from Coffee Fusion, LLC will not be ordered at this time.
This ruling is based on the analysis set forth below.
Ackad's Request (ROA # 206) for judicial notice is GRANTED IN PART and DENIED IN PART. The Court takes judicial notice of the dates only on which Exh's '1 - 3' were filed with the Court; otherwise, the Request is DENIED.
MARTINEZ's Request (ROA # 221) for judicial notice is GRANTED.
Whether Cross-Complainant Ackad Can Initiate Judicial Dissolution Procedure? Martinez argues that Ackad 'lacks standing' to initiate the dissolution procedure.
Corporations Code section 17707.03 allows for the dissolution of a limited liability company under certain circumstances specified within subsection (b). Ontiveros v. Constable (2018) 27 Cal. App. 5th 259, 273.
Subsection (c) describes how the buyout procedure is conducted. Id. Ackad is following the procedure within section 17707.03(c) by initiating the judicial dissolution procedure. Thus far, this process is proper.
Date of Valuation '... [T]he valuation date shall be the date upon which the action for judicial dissolution was commenced.
However, the court may, upon the hearing of a motion by any party, and for good cause shown, designate some other date as the valuation date.' Corp. Code 17707.03(c)(5).
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3064074 CASE NUMBER: CASE TITLE: AMERICAN PRO-COATING LLC VS ACKAD [IMAGED] 37-2021-00024970-CU-BC-CTL The cross-action seeking dissolution was initiated on August 20, 2021. However, Ackad argues the earlier date of January 16, 2021 is the appropriate date of valuation because this is when the business relationship became irreconcilable, Martinez no longer performed any services or labor for the restaurant, and Martinez no longer made capital contributions to the business.
The argument for the earlier valuation date is not persuasive, and the date of valuation will be August 20, 2021.
The facts relied on by Ackad are disputed. No legal authority is provided supporting the 'good cause' for the earlier date.
Dissociation of Martinez from Coffee Fusion, LLC Corporations Code section 17706.02 provides, in part: 'A person is dissociated as a member from a limited liability company when any of the following occur: (a) The limited liability company has notice of the person's express will to withdraw as a member....
(b) An event stated in the operating agreement as causing the person's dissociation to occur.
(c) The person is expelled as a member pursuant to the operating agreement.
(d) The person is expelled as a member by the unanimous consent of the other members because any of the following applies: (1) It is unlawful to carry on the limited liability company's activities with the person as a member.
(2) There has been a transfer of all of the person's transferable interest....
(3) The person is a corporation....
(4) The person is a limited liability company or partnership....
(e) On application by the limited liability company, the person is expelled as a member by judicial order because the person has done any of the following: (1) Engaged, or is engaging, in wrongful conduct that has adversely and materially affected, or will adversely and materially affect, the limited liability company's activities.
(2) Willfully or persistently committed, or is willfully and persistently committing, a material breach of the operating agreement or the person's duties or obligations under Section 17704.09.
(3) Engaged, or is engaging, in conduct relating to the limited liability company's activities that makes it not reasonably practicable to carry on the activities with the person as a member.
(f) In the case of a person who is an individual, if either of the following applies: (1) The person dies.
(2) In a member-managed limited liability company if either of the following applies: (A) A guardian or general conservator for the person is appointed.
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3064074 CASE NUMBER: CASE TITLE: AMERICAN PRO-COATING LLC VS ACKAD [IMAGED] 37-2021-00024970-CU-BC-CTL (B) There is a judicial order that the person has otherwise become incapable of performing....
(g) In a member-managed limited liability company, the person becomes a debtor in bankruptcy.
(h) In the case of a person that is a trust....
(i) In the case of a person that is an estate....
(j) In the case of a member that is not an individual, partnership, limited liability company, corporation, trust, or estate, the termination of the member.
(k) The limited liability company participates in a merger....
(l) The limited liability company terminates.' This aspect of the Motion is not persuasive. It is disputed whether Martinez has committed any acts warranting dissociation.
Subsection (e) does not apply because there has not yet been a judicial order expelling Martinez. This aspect of the Motion is premature. A trier of fact has not yet made findings warranting dissociation.
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