Judge: Mark A. Young, Case: 24SMCV03866, Date: 2025-05-09 Tentative Ruling

Case Number: 24SMCV03866    Hearing Date: May 9, 2025    Dept: M

CASE NAME:           Zarrabian, v. Zarrabian

CASE NO.:                24SMCV03866

MOTION:                  OSC Re: Preliminary Injunction

HEARING DATE:   5/9/2025

Legal Standard

            Under Code of Civil Procedure (CCP) section 526(a), a preliminary injunction may be issued 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.

            In determining whether to issue a preliminary injunction, the trial court considers two factors: 1) the reasonable probability that the plaintiff will prevail on the merits at trial (CCP §526(a)(1)); and 2) a balancing of the “irreparable harm” that the moving party is likely to sustain if the injunction is denied compared to the harm that the non-moving party is likely to suffer if the court grants a preliminary injunction. (CCP §526(a)(2); 14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396, 1402.) “A preliminary injunction is an interim remedy designed to maintain the status quo pending a decision on the merits.” (MaJor v. Miraverde Homeowners Assn. (1992) 7 Cal.App.4th 618, 623.) “[A] cause of action must exist before injunctive relief may be granted.” (Id.)

            The court’s ruling on a preliminary injunction is not an adjudication of the merits, is not a trial, and does not require a statement of decision. (Cohen v. Board of Supervisors, (1985) 40 Cal.3d 277, 286.) The judge is not required to state her reasons for granting or denying a preliminary injunction; a cursory statement is sufficient. (City of Los Altos v. Barnes, (1992) 3 Cal.App.4th 1193, 1198.)

            A proposed order must be presented to the judge for signature, with any required undertaking, within one day after the preliminary injunction is granted, or other time ordered by the judge. (CRC 3.1150(f).)

Analysis

Plaintiff Tucson Zarrabian, individually and derivatively on behalf of Golden Cove, LLC, moves for a preliminary injunction enjoining Defendant Vala Zarrabian from “taking any funds or assets of Golden Cove, LLC to pay for her personal debts, expenses, or legal fees during the pendency of this action.” Plaintiff asserts that Vala engaged and continues to engage in unlawful self-dealing and misappropriation of company funds, in violation of Golden Cove, LLC’s Operating Agreement.

Plaintiff demonstrates a reasonable probability of prevailing on the breach of fiduciary duty claims. Plaintiff presents evidence that the Golden Cove’s Operating Agreement prohibits Defendant’s self-dealing and payment with company funds for personal expenditures unrelated to business operations. The Golden Cove Shopping Center is a retail shopping center located at 31098 and 31100 Hawthorne Boulevard, Rancho Palos Verdes and owned by Golden Cove Center, LLC. (T. Zarrabian Decl. ¶ 4.) Golden Cove, LLC is owned in equal parts by its two members: the Vala Zarrabian Irrevocable Trust (VZIT) and the Tucson Zarrabian Irrevocable Trust (TZIT). Tucson is the Trustee of VZIT and the beneficiary of TZIT. Vala is the Trustee of TZIT and the beneficiary of VZIT. In their individual capacities, Tucson and Vala also serve as Managers of Golden Cove, LLC and Golden Cove Center, LLC.

Golden Cove, LLC is governed by its Operating Agreement and three amendments thereto (collectively, the “Operating Agreement”). (T. Zarrabian Decl. ¶ 5; Ex. 1.) Only Members (TZIT and VZIT) of Golden Cove LLC are entitled to receive distributions from Golden Cove LLC. (Ex. 5, § 4.1.) Tucson and Vala are not individual members of Golden Cove, but managers. (Id. ¶ 6.) The managers are not entitled to any fee, salary, compensation, or fringe benefit, or reimbursement of any expenses for their service, except as set forth in the Operating Agreement. (Id., Ex. 5, § 7.10.) Managers cannot incur indebtedness on behalf of the Company except in the ordinary and customary course of business; to incur any capital expenditure or series of expenditures on behalf of the Company exceeding $100,000; or to enter transactions in which the Manager has a material financial interest, without first obtaining the affirmative vote or written consent of a Majority in Interest of the Members. (Id., Ex. 5, § 7.4.)

Plaintiff demonstrates that Defendant diverted over $560,000 in company funds for personal use in violation of the terms of the Operating Agreement. This includes transferring money out of the LLC operating accounts and to her personal creditors. (T. Zarrabian Decl. ¶ 8.) Plaintiff presents evidence that, between October 2020 to February 2025, Vala paid the following expenses from Golden Cove, LLC assets:

a) $152,675 in property taxes and HOA dues for Vala’s personal residence;

b) $48,304 in automobile expenses for Vala’s lease of a Mercedes Benz;

c) $13,812 in home and auto insurance expense for Vala;

d) $41,213 in health insurance premiums for Vala’s child;

e) $157,891 in attorney fees to the law firm Buchalter LLP;

f) $62,465 in attorney fees to the law firm Moder Berman LLP;

g) $20,118 in attorney fees to the Blut Law Group; and

h) $64,154 in payments to her personal credit card.

(Id., Ex. 3.)

In May 2024, Tucson observed that Vala had diverted an additional sum of

$47,884 from the Golden Cove operating account to an unrecognized recipient: Moder Berman

LLP, a family law firm in Beverly Hills representing Vala in a child custody dispute with her ex-

fiancee. (T. Zarrabian Decl. ¶ 11; Ex. 10.) In November 2024, Vala began diverting funds from Golden Cove, LLC to yet another unrecognized recipient: her legal counsel herein, Blut Law Group, APC. Blut Law Group, APC is Vala’s counsel and has bever represented Golden Cove, LLC in any matter or capacity. (Id., ¶ 15.) Over $20,000 in assets belonging to Golden Cove, LLC has been diverted to the Blut Law Group, APC to date. (Id., ¶ 15; Ex. 21.)

Vala diverted an additional $30,454 on February 11, 2025, and $33,699 on March 7, 2025 (a total of $64,154) from the Golden Cove operating account to pay off her personal credit card debts with Citi. (T. Zarrabian Decl. ¶ 8; Ex. 4.) In February 2025, Tucson discovered that Vala withdrew $30,454 from the Golden Cove operating account to pay off her personal credit card debt. (Id., ¶ 16; Ex. 22.) Vala has made no mention and submitted no documentation to substantiate this additional taking of company funds for personal use to Tuscon. (Id., ¶ 16.) Vala has only falsely claimed to Tuscon that these were legitimate business expenses via a “long-standing agreement which expenses are a draw on equity.” (Id., ¶ 13, Ex. 13, p. 3.) Tuscon denies the existence of such an agreement. (Id.) Tuscon presents evidence of correspondences which show that he and VZIT did not approve of these purported expenditures, and that he consistently objected to the payments. (Id., ¶¶ 10-15.)

In opposition, Defendant fails to justify her withdrawals. Defendant does not deny making the various withdrawals at issue. Defendant states that Plaintiff cut off her only accessible income by refusing to authorize distributions from the VZIT despite her repeated requests since 2020. (V. Zarabian Decl., ¶ 11.) She alleges that Tucson obstructed distributions from Golden Cove by refusing to cooperate in making member-level disbursements until 2024, and only when necessary to cover tax obligations tied to the trust he controls. (¶ 12.) As a result, Defendant has been “forced to draw on equity in Golden Cove” for her expenses. (¶ 13.) Defendant asserts that her distributions were not new or extraordinary, as such distributions are “part of a long-standing financial practice within the family business.” (¶ 14.) Defendant does not show, however, that her debits against her capital account are consistent with the terms of the Operating Agreement. Defendant does not cite any portion of the Operating Agreement, or other written agreements between the parties, which would show her withdrawals under such circumstances were proper.

Defendant argues Plaintiff fails to show an irreparable injury because the harm is completely financial and may be remedied through monetary compensation. However, this fact neither controls the irreparability of the harm alleged, nor the weight of the equities. (Mitsui Manufacturers Bank v. Texas Commerce Bank-Fort Worth (1984) 159 Cal.App,3d 1051, 1057-1059.)  The fact that “only money is involved… does not prevent the issuance of a preliminary injunction. [Citation.] In the last [step] of the analysis the trial court must determine which party is the more likely to be injured by the exercise of its discretion [citation] and it must then be exercised in favor of that party.” (Id. at 1059.) The “irreparable injury” element has been met under similar circumstances to this action. In Wind, the Court of Appeal affirmed a trial court's preliminary injunction in a partnership’s dissolution action which was designed to maintain the status quo pending adjudication on the merits. (Wind v. Herbert (1960) 186 Cal.App.2d 276, 279-283.) The injunction enjoined a partner in a card club from breaching a partnership agreement by depositing money from the club into a bank account that was not accessible to the other parties. (Id.) The injunction was within the court’s discretion because the partner would continue to dissipate the assets of the partnership. (See Id. at 285.) The Court of Appeal noted that the trial court also could have found that the disbursements might be able to be adequately traced, and that an accounting that could eventually be ordered “might not fully disclose the damages suffered.” (Id.) “Further, use by defendants of partnership assets for their own gain and to the detriment of plaintiffs is a species of damage, ‘that ought not to be submitted to on the one hand or inflicted on the other.’ Such acts would constitute a flagrant breach of trust. Under the circumstances, the trial court properly issued a preliminary injunction to assure that the partnership assets will remain intact pending an accounting and a final hearing on the merits.” (Id., at 285-286.) Like the partner in Wind, Defendant should be enjoined from making withdrawals from Golden Cove LLC in direct violation of the LLC’s Operating Agreement.

Beyond Defendant’s misappropriation of LLC assets, Plaintiff identifies a risk of irreparable harm to Golden Cove, LLC’s business. Plaintiff explains that, consistent with its sole purpose, Golden Cove LLC has a Loan Agreement which includes a covenant that prohibits it from paying for the expenses or debts of any other person. The Loan Agreement requires the company to “(viii) not enter into any transaction with any Affiliate, except on an arm’s-length basis on terms which are intrinsically fair and substantially similar to those that would be available for unaffiliated third parties, and pursuant to written, enforceable agreements;” “(x) not commingle its assets or funds with those of any other Person; (xi) not assume, guarantee or pay the debts or obligations of any other Person;” “(xiv) not make loans or advances to any other Person;” and “(xviii) cause the managers, officers, employees, agents and other representatives of Borrower to act at all times with respect to Borrower consistently and in furtherance of the foregoing and in the best interests of Borrower.” (T. Zarrabian Decl. ¶ 7; Ex. 2, p. 44.) Defendant’s violations of these provisions of the Loan Agreement risk a default/acceleration on the Loan, a non-renewal of the mortgage, and impacting the company’s ability to refinance the mortgage coming due in December 2026. (Id., ¶ 19.) Moreover, Defendant’s conduct risks turning the LLC into a mere alter ego, exposing the entity members and individual managers to personal liability. (See Leek v. Cooper (2011) 194 Cal.App.4th 399, 417 [factors include commingling of funds, the unauthorized diversion of corporate funds or assets to other than corporate uses, and the treatment by an individual of the assets of the corporation as his own].) Absent a preliminary injunction, Defendant’s misappropriation of the LLC funds will continue and create a further risk of harm which cannot be easily measured.

Plaintiff also claims that an injunction would avoid the need for a multiplicity of suits. This factor does not weigh in favor of an injunction. Plaintiff does not cite authority pertaining to the harm analysis of preliminary injunctions. (See Warren v. Kaiser Foundation Health Plan, Inc. (1975) 47 Cal.App.3d 678, 684 [declaratory relief appropriate where a relationship between the parties continues so that a declaration may guide their future conduct or where a declaration would avoid multiplicity of suits].) Plaintiff fails to show that, but for an injunction, additional suits would entail. At worst, Plaintiff would have to amend or supplement the complaint in this action to include new acts of misappropriation. Thus, there is little risk of multiplicity of suits.

Here, the balance of equities favors an injunction which would preserve the status quo in this action. Golden Cove, LLC would risk irreparable harm if Defendant was not enjoined from taking funds or assets of Golden Cove, LLC to pay for her personal debts, expenses, or legal fees during the pendency of this action. While Vala Zarrabian states that "[c]ontinued access to income is necessary for me to maintain and meet the needs of her child” there is no evidence that this “income” is necessary. (V. Zarrabian Decl., ¶¶ 18-20.)  Furthermore, Defendants fails to identify how she was permitted, as only a manager, to take the funds and directly pay for her personal needs, as opposed through VZIT as a beneficiary. As a result, Defendant would suffer little harm if she was prevented from withdrawing funds or assets of Golden Cove LLC to pay for her personal debts, etc., since she is not entitled to do so under the Operating Agreement. Further, she would not be precluded from the payment of regular, pro rata distributions called for in the Operating Agreement. (See Agreement § 5.1.)

Accordingly, the motion is GRANTED.  A bond is ordered in the amount of $10,000.

Furthermore, there is a motion to seal set for October 30, 2025.  If there is no opposition from Plaintiff, the Court on its own motion would advance the motion to seal the opposition and grant it. Defendant demonstrates a sufficient overriding privacy interest: her child's medical conditions. This has little to do with the merits of the action at hand. Thus, the public has relatively little interest in this information. Defendant redacts only information pertaining to her child's medical condition. Thus, the redactions are narrowly tailored and no less restrictive means exist to achieve the overriding interest. Sealing would be warranted.