Judge Lee W. Tsao, Case Number: 23NWCV03762, Date: 2024-09-12 Tentative Ruling

Judge: Lee W. Tsao, Case: 23NWCV03762, Date: 2024-09-12 Tentative Ruling

Case Number: 23NWCV03762 Hearing Date: September 12, 2024 Dept: C

BR CO I, LLC v. COOKIES CREATIVE CONSULTING & PROMOTIONS, INC.

CASE NO.: 23NWCV03762

HEARING: 09/12/24

Petitioner BR CO I, LLC’s petition for writ of mandate to compel inspection of company records is GRANTED.

Moving Party to give notice.

Petitioner BR CO I, LLC (“Petitioner”) moves to compel compliance with Corp. Code §1601.

“The accounting books and records and minutes of proceedings of the shareholders and the board and committees of the board of any domestic corporation, and of any foreign corporation keeping any such records in this state or having its principal executive office in this state, shall be open to inspection upon the written demand on the corporation of any shareholder or holder of a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to such holder’s interests as a shareholder or as the holder of such voting trust certificate.” (Corp. Code §1601(a).) “Such inspection by a shareholder…includes the right to copy and make extracts.” (Corp. Code §1601(b).) “Upon refusal of a lawful demand for inspection, the superior court…may enforce the right of inspection….” (Corp. Code §1603(a).) “In any action or proceeding under Section 1600 or Section 1601, if the Court finds the failure of the corporation to comply with a proper demand thereunder was without justification, the court may award an amount sufficient to reimburse the shareholder or holder of a voting trust certificate for the reasonable expenses incurred by such holder, including attorneys’ fees, in connection with such action or proceeding.” (Corp. Code §1604.)

In Opposition, Respondent argues that the right of a shareholder to inspect corporate records is limited to purposes reasonably related to the holder’s interests as a shareholder—and that Petitioner’s request goes beyond this right. Respondent maintains that the instant Petition is no more than a fishing expedition to aid Petitioner in their four other lawsuits against Respondent in the LASC and AAA. (See Ward Decl., ¶¶3, 7, and 11.) Respondent further argues that the Petitioner is improperly engaging in “forum shopping” by filing the instant Petition in Norwalk, despite the fact that numerous related cases are ongoing throughout Los Angeles County.

The Court notes that no cases have been related to the subject Petition. (See Reply, Ex. B.)

Corp. Code §1603(a) does not limit this court’s authority to “enforce the right of inspection” of a shareholder when the claim is related to pending litigation. It merely provides that the court has authority to enforce the shareholders’ rights in “any action or proceeding under Section 1600 or Section 1601.” This hearing constitutes a “proceeding” under Corp. Code §1601, et seq.

To prevail on the instant motion, Defendants must demonstrate: (1) that they are shareholders, (2) have made a written demand; and (3) that their purpose is reasonably related to its interests as a shareholder. (Corp. Code §1601.)

The Court finds that Petitioner’s written request for Respondent’s Bylaws; accounting books and records; annual financial reports; and minutes of all shareholder and board meetings is specifically authorized by Corp. Code §1601, and that the request is for a purpose reasonably related to Petitioner’s interest as a shareholder because the foregoing records would help Petitioner evaluate the financial condition of the company.

The Petition for Writ of Mandate is GRANTED. Respondent is ORDERED to produce the documents referenced in the Petition within 30 days of the date of the Court’s issuance of this Order. Costs may be sought by separately noticed motion.