2014-00159680-CU-BC

SFC Leasing LP vs. Ethan Conrad

Nature of Proceeding:    Motion for Preliminary Injunction

Filed By:   Pruski, Jennifer L.
Plaintiffs SFC Leasing, L.P. (“SFC”), Charles A. Urata, Trustee of the Charles A. Urata
Revocable Trust dated February 24, 2004 (“Charles Urata”), Kelly K. Urata, Trustee of
the Kelly K. Urata Revocable Trust dated June 22, 2004 (“Kelly Urata”), and Karly M.
Urata, Trustee of the Karly Urata Living Trust dated August 12, 2004’s (“Karly Urata”)
motion for preliminary injunction is DENIED.

Plaintiffs’ request for judicial notice judicial notice of the webpage printout from the
Department of Consumer Affairs Contractors State License Board License Detail for
Ethan Conrad Properties, Inc. is DENIED.

This is an action for: (1) Breach of Contract; (2) Breach of Implied Covenant of Good
Faith and Fair Dealing; (3) Breach of Fiduciary Duty of Utmost Good Faith; (4) Breach
of Duty of Loyalty; (5) Conversion; (6) Accounting; (7) Declaratory Relief; and (8)
Injunctive Relief.

Plaintiffs allege in September 2010, they entered into a Conditional Settlement
Agreement (“Settlement Agreement”) with Defendant Ethan Conrad (“Ethan Conrad”).
Pursuant to the Settlement Agreement, the parties entered into an agreement relating
to the purchase of real properties which may be suitable for purchase as an
investment by Ethan Conrad and one or more partner(s) or tenant(s) in common.  The
parties also agreed that a Tenancy in Common Agreement (“TIC Agreement”) would
be prepared for each investment property purchased by the partnership and would
include certain terms.  Plaintiffs allege that they formed at least four LLCs with Ethan
Conrad pursuant to various Operating Agreements to which certain real properties
were to be operated/managed. Plaintiffs allege that Defendant Ethan Conrad
Properties, Inc. (“ECP”) acted as the listing agent and construction manager for the
properties. Plaintiffs allege that Defendants breached the agreements by paying to
third-parties or to itself, a commission or an excessive commission.  Plaintiffs also
allege that they entered into Tenancy in Common Agreements with Defendants for
various properties. Plaintiffs allege that Defendants breached the agreements by
paying themselves excessive commissions.   Plaintiffs further allege that there were
certain real properties to which there is no Operating Agreement, TIC Agreement, or
Property Management Agreement, however, Defendants paid themselves
commissions without SFC’s approval or consent.  Plaintiffs further allege that
Defendants sold certain real property and retained commissions on the sale, without
Plaintiffs’ agreement.

The preliminary injunction is DENIED as there is no evidence that Plaintiffs cannot be
compensated in monetary damages.  Injunctions are rarely granted where a suit for
damages provides a clear remedy.  (See Thayer Plymouth Ctr. Inc v. Chrysler  Motors
Corp. (1967) 255 Cal.App.2d 300, 307.)  Moreover, injunctive relief is generally not
available to prevent the breach of a contract or where it will require continuing judicial
intervention to regulate the relationship of the parties
to a business operation over a sustained period of time. (Code Civ. Proc. §526(b)(5);
Oceanside Community Assn. v. Oceanside Land Co. (1983) 147 Cal.App.3d 166, 176-
177; Klein v. Chevron U.S.A. (2012) 202 Cal.App.4th 1342, 1362.)

Defendants’ objections to the Declaration of Kelly K. Urata are ruled upon as follows:

Sustained: 1, 2, 10, 21, 23            Overruled: 3, 4, 5, 6, 7, 8, 9, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 22, 24, 25, 26, 27,
28

Plaintiffs’ objections to the Declaration of Ethan Conrad are ruled upon as follows.  The
Court notes that Plaintiffs have not numbered their objections, therefore, Court has
numbered the objections based on the sequence of Plaintiffs’ objections.

Sustained: 8, 9, 16, 18, 19,

Overruled: 1, 2, 3, 4, 5, 6, 7, 10, 11, 12, 13, 14, 15, 17, 20

The minute order is effective immediately.  No formal order pursuant to CRC Rule
3.1312 or further notice is required.