MOTION FOR PRELIMINARY INJUNCTION

Moving Party: Defendant Glendora Courtyard, LLC

Respondent: Plaintiff Route 66 CPAs, LLC

POS: Moving, Opposing, and Reply OK

Plaintiff and Defendant are owners of real property development called Glendora Courtyard. Defendant owns Parcels 1 and 2. Plaintiff owns Parcel 3. Under CC&Rs, each owner is responsible for its proportionate share of the common area expenses. Plaintiff alleges that beginning in October 2011, Defendant has been threatening to make substantial capital improvements to the common area, i.e., landscaping, new security fence, resurfacing the parking lot, and exterior painting, without Plaintiff’s consent, and to pass those charges on to Plaintiff. Plaintiff opposes the improvements on the grounds that they are unnecessary and excessive, and that if they are made Plaintiff’s proportionate share of the monthly common area maintenance would increase substantially. The Complaint, filed on 4/9/12, asserts causes of action for:

1. Preliminary and Permanent Injunction
2. Breach of the CC&Rs
3. Breach of Implied Covenant of Good Faith and Fair Dealing
4. Breach of Fiduciary Duty
5. Declaratory Relief

Defendant Glendora Courtyard, LLC (“Defendant” or “Glendora”) now seeks a preliminary injunction against Plaintiff Route 66 CPAs, LLC (“Plaintiff” or “Route 66”). Specifically, Defendants seeks an order that:

1. Route 66 shall not assert itself as Majority-in-Interest or take any other actions toward the removal of the Maintenance Director of Glendora Courtyard;
2. Route 66 must refrain from any further interference with the maintenance of the Glendora Courtyard by either Glendora, Equity Ag Financial, Inc., or any other appointed Maintenance Director; and
3. Route 66 is not entitled to the books, records, contracts, or purchase orders pertaining to common area maintenance of the Glendora Courtyard.

An injunction may be granted “[w]hen 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.” (CCP § 526(a)(3).) The purpose of a preliminary injunction is to preserve the status quo pending a determination on the merits of the claim. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) In deciding whether to issue a preliminary injunction, a trial court weighs two interrelated factors: the likelihood the moving party ultimately will prevail on the merits, and the relative interim harm to the parties from the issuance or nonissuance of the injunction. A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim. (Hunt v. Superior Court (1999) 21 Cal. 4th 984, 999-1000.) Proof of facts is ordinarily made by affidavits or declarations. (CCP § 2009.)

LIKELIHOOD OF SUCCESS ON THE MERITS:

Glendora submits evidence that the current Maintenance Director Equity Ag Financial, Inc. (“EAF”) has not resigned (Motion, Posner Decl. ¶ 7); Glendora is the Majority-in-Interest (Id., NOL, Exh. B, Route 66’s Verified Complaint ¶ 25); and that EAF cannot be removed by Route 66 because pursuant to Section 5.3.2 of the CC&Rs, the Maintenance Director may only be removed by a Majority-in-Interest AND only for “Cause” (NOL, Exh. C, CC&Rs § 5.3.2).

Route 66, in opposition contends that Glendora is the Maintenance Director, not EAF. Route 66 submits evidence that Glendora and EAF are sister companies that are controlled by the Marrelli family. (Opposition, Exh. M, Marrelli Depo.) However, the fact that the two companies are controlled by the same principal(s) does not mean that they are the one and same company. While Route 66 also submits evidence that Marilena Marrelli testified in her deposition that Glendora was the Maintenance Director, she also testified that she was the president of both Glendora and EAF and that EAF managed the subject property. (Ibid.) Moreover, Route 66 previously admitted on April 8, 2013, that EAF is the Maintenance Director. (Reply, Exh. K, Route 66’s Separate Statement, ¶ 30.)

Route 66 also contends that EAF is barred from being the Maintenance Director because Section 5.3.3 states that only an owner or an occupant may be a Maintenance Director, and EAF is neither an owner nor an occupant of the property. Route 66 submits evidence that during discovery in the first lawsuit, Glendora produced a list of all of the lessees in the building, but EAF was not listed as a lessee. (Opposition, Exh. N, Detail Rent Roll as of January 31, 2012.) However, the Detail Rent Roll as of January 31, 2012, does not establish a lack of EAF’s current tenancy which qualifies it to act as Maintenance Director. Thus, Glendora has demonstrated a likelihood of success on the merits as to the first two items of the injunctive relief sought .

However, Glendora fails to demonstrate that Route 66 is not entitled to the books, records, contracts, or purchase orders pertaining to common area maintenance of the Glendora Courtyard.

INADEQUATE LEGAL REMEDY OR IRREPARABLE HARM:

Glendora also submits evidence that will suffer irreparable harm if the Maintenance Director is removed. (See Posner Decl.) While Route 66 contends that the declaration of Philip Posner is insufficient to establish irreparable harm, Route 66 fails submit adequate evidence refuting Mr. Posner’s declaration and contentions therein.

Glendora contends that even if Route 66 had the ability to remove the Maintenance Director, Route 66 cannot establish the “cause” requirement because most of the alleged wrongdoings by the Maintenance Director were litigated and resolved in favor of Glendora in the first lawsuit, Route 66 CPAs, LLC v. Glendora Courtyard, LLC, Case Number KC063544. (NOL, Exhs. D and E.) However, it appears that these “issues” were not fully litigated in the first lawsuit. Further, the first lawsuit involved a dispute between Route 66 and Glendora, and did not necessarily involve the Maintenance Director. However, it appears that Route 66 is attempting to remove the Maintenance Director based on the alleged wrongdoings of Glendora, and not the Maintenance Director, and that since EAF is the current Maintenance Director, allowing EAF to remain as the Maintenance Director would maintain the status quo in this case.

Accordingly, the preliminary injunction is granted. Plaintiff Route 66 CPAs is enjoined from asserting itself as the Majority-in-Interest or taking other actions to remove the Maintenance Director of Glendora Courtyard, and is to refrain from interference with the maintenance of the Glendora Courtyard by Equity Ag Financial, Inc. or any other duly appointed Maintenance Director.

The court will hear from the parties regarding the proposed bond amount at the hearing.