Opinion
A149083
10-27-2017
EVARISTE GROUP, LLC, Plaintiff and Respondent, v. SECURITY NATIONAL GUARANTY, INC. et al., Defendants and Appellants.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Sonoma County Super. Ct. No. SCV-258451)
Defendants Security National Guaranty, Inc. (SNC) and its principal, Edmond Ghandour, appeal from an order granting a preliminary injunction in favor of plaintiff Evariste Group, LLC (Evariste), enjoining SNC from serving as manager of the parties' resort development project. Defendants contend that the trial court abused its discretion because it misinterpreted the parties' memorandum of understanding (MOU) in the course of finding Evariste is likely to prevail on the merits of its action and that it is favored with respect to the balance of harms. We find no merit to defendants' arguments and affirm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This matter concerns a business relationship created to facilitate the development of real property known as the Monterey Bay Shores Resort (Property), located in the city of Sand City. Defendants have been attempting to develop the Property for many years. In July 2015, Mahender Makhijani, Evariste's principal, was introduced to Ghandour. At that time, SNG was nearing the end of a protracted process to obtain approval of a coastal development permit (CDP) from the California Coastal Commission.
Gandour told Makhijani that the Property was encumbered with significant secured debt, including about $5.1 million secured by a first mortgage and about $17.2 million secured by a second mortgage. The Property was also burdened by junior debt, including about $2 million owed to a company owned by Ghandour's wife. Makhijani agreed to obtain funds to pay off these debts in exchange for equity in the Property.
Ghandour had represented that the junior debt held by his wife's company was about $2 million. The principal on the debt, however, was only $612,000.
On September 23, 2015, the parties created a joint venture known as SNG Evariste, LLC (JV LLC) to own and manage the development of the Property and share in the proceeds from its eventual sale. A week later, SNG deeded the property to JV LLC.
On September 30, 2015, the parties entered into an MOU. Under the terms of the MOU, Evariste agreed to loan $27 million to SNG. Of this amount, $24.3 million was to be used to pay off SNG's lenders, and the remaining $2.7 million was to be used solely as working capital for development of the Property. SNG represented that it had no existing creditors and that the Property would not be subject to any liens or encumbrances other than the Evariste loan. The parties agreed to incorporate the terms of the MOU into an operating agreement (the JV Agreement), to be executed within five business days following the anticipated issuance of the CDP. The MOU expressly provides that its terms remain binding and enforceable until the JV Agreement is executed.
Per the MOU, Evariste provided SNG with $27 million in two transactions, one dated September 30, 2015, and the other dated October 8, 2015. After paying the existing debts on the Property, SNG retained approximately $2.7 million.
The MOU bars SNG from taking certain major actions absent approval by member vote. One such action is the "[t]aking [of] any action . . . which would result in expenses . . . in excess of $25,000 in any month." Such excessive spending without approval by member vote constitutes an "Event of Default" under the MOU. Other grounds for default include failure to execute the JV Agreement within five business days following the issuance of the CDP, as well as the breach of any of SNG's representations, including the representation regarding its creditor status. Under the MOU, SNG was to be the manager of JV LLC, with Ghandour acting as SNG's agent. In the event of SNG's default, however, the MOU gives Evariste the right to remove SNG and appoint a successor manager.
Makhijani held the tie-breaking member vote, effectively giving him the ability to approve all major actions.
On November 2, 2015, Makhijani sent Ghandour a draft JV Agreement.
On November 9, 2015, the California Coastal Commission issued the CDP for development of the Property.
On November 10, 2015, SNG's attorney sent Makhijani's attorney a revised draft of the JV Agreement. SNG made changes, including changes to the agreement's management provisions that Makhijani found objectionable. However, he continued to negotiate in good faith. The JV Agreement was never finalized or executed.
According to Makhijani's declaration submitted in support of Evariste's motion for preliminary injunction, defendants abandoned negotiations on the terms of the JV Agreement and announced that they would seek new investors to buy out Evariste.
On December 22, 2015, Ghandour sent an e-mail message to Makhijani indicating that he had spent approximately $250,000 of the JV LLC's working capital and promising to provide an accounting for the expenditures. According to Makhijani's declaration, Ghandour subsequently failed to provide the promised accounting.
SNG also obtained a grading permit from Sand City, at an estimated cost of $467,000.
On December 23, 2015, SNG sued Evariste and Makhijani in Orange County Superior Court. The complaint contains nine causes of action, including claims for breach of contract, promissory fraud, usury, and unfair competition.
Reportedly, SNG's Orange County action has since been transferred to Sonoma County.
In January 2016, Makhijani learned that SNG had failed to pay two of its prior attorneys, both of whom sought to assert charging liens against the Property. SNG had not identified these attorneys as creditors when it entered into the MOU.
On February 29, 2016, Evariste filed this action against defendants.
On March 16, 2016, Evariste's counsel sent SNG's counsel a letter exercising Evariste's right to remove SNG as the manager of JV LLC and replace it with its own manager, Jerry Marcil. The letter instructed SNG to transmit the relevant books and records to Marcil. SNG refused to comply.
On May 12, 2016, SNG submitted responses to Evariste's requests for admissions. SNG admitted that it "took at least one action in connection with the PROJECT that resulted in expenses in excess of $25,000 in the month of October 2015." As noted above, the terms of the MOU state that spending over $25,000 in any given month constitutes a "major action" requiring a member vote.
On May 13, 2016, Evariste filed a motion for preliminary injunction seeking to remove SNG as manager of the joint venture. Evariste alleged defendants were wrongfully expending the joint venture's capital funds and were thus subject to removal under the terms of the MOU. It also alleged defendants' conduct threatened irreparable injury.
On July 8, 2016, Evariste submitted documents to the trial court as evidence that SNG had spent in excess of $25,000 every month, including one month (October 2015) in which it spent approximately $850,000.
On July 15, 2016, SNG filed its opposition to the motion for preliminary injunction. The pleadings include a 31-page declaration by Ghandour dated July 14, 2016.
On August 1, 2016, the trial court filed its order granting the motion for preliminary injunction. In the course of its ruling, the court sustained all but three of Evariste's objections to Ghandour's July 14, 2016 declaration.
DISCUSSION
I. Standards of Review
A. General Rules for Appellate Review of Preliminary Injunction Orders
In determining whether to issue a preliminary injunction, the trial court considers two related factors: (1) the likelihood that the plaintiff will prevail on the merits of its case at trial, and (2) the interim harm that the plaintiff is likely to sustain if the injunction is denied as compared to the harm that the defendant is likely to suffer if the court grants a preliminary injunction. (14859 Moorpark Homeowner's Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396, 1402 (Moorpark).) " 'The latter factor involves consideration of such things as the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo.' " (Ibid., quoting Abrams v. St. John's Hospital & Health Center (1994) 25 Cal.App.4th 628, 636.) The determination of whether to grant a preliminary injunction generally rests in the sound discretion of the trial court. (Moorpark, at p. 1402.) Discretion is abused when a court exceeds the bounds of reason or contravenes uncontradicted evidence. (Ibid.) "[W]ith respect to questions of construction of statutes and contracts not involving assessment of extrinsic evidence, our standard of review is de novo." (Davenport v. Blue Cross of California (1997) 52 Cal.App.4th 435, 445 (Davenport).)
The court properly exercises its discretion where its determination is supported by substantial evidence. (Monogram Industries, Inc. v. Sar Industries, Inc. (1976) 64 Cal.App.3d 692, 703.) " 'In determining the validity of the injunction, we look at the evidence presented to the trial court to determine if there was substantial support for the trial court's determination that the plaintiff was entitled to the relief granted.' [Citation.] 'Where the evidence before the trial court was in conflict, we do not reweigh it or determine the credibility of witnesses on appeal. "[T]he trial court is the judge of the credibility of the affidavits filed in support of the application for preliminary injunction and it is that court's province to resolve conflicts." [Citation.] Our task is to ensure that the trial court's factual determinations, whether express or implied, are supported by substantial evidence. [Citation.] Thus, we interpret the facts in the light most favorable to the prevailing party and indulge in all reasonable inferences in support of the trial court's order.' " (Alliant Ins. Services, Inc. v. Gaddy (2008) 159 Cal.App.4th 1292, 1300; see Moorpark, supra, 63 Cal.App.4th at pp. 1402-1403 [reviewing court will presume the trial court made appropriate factual findings in the absence of express findings and review the record for substantial evidence to support the rulings].)
B. Mandatory Injunctions
Defendants contend the injunction at issue is subject to stricter scrutiny because it is mandatory in character. Evariste urges that the injunction is prohibitory, and not mandatory, because it restrains defendants from acting as manager or exerting authority or control over the JV LLC. However, in an order entered on October 19, 2016, denying a motion for contempt filed by Evariste, the trial court found the preliminary injunction to be mandatory "as it compels Defendants to take affirmative action, relinquish their position and claimed rights which they currently hold, and thus change the relative circumstances of the parties." The court cited to Dosch v. King (1961) 192 Cal.App.2d 800, 804, which states that "[i]f an injunction compels a party to surrender a position he holds and which upon the facts alleged by him he is entitled to hold, it is mandatory." We agree with the trial court that the injunction here is mandatory in that it compels SNG to surrender its position as manager of JV LLC.
The trial court ultimately concluded the injunction was stayed by the filing of the appeal. Consequently, there was no basis on which to hold defendants in contempt.
" 'Where . . . the preliminary injunction mandates an affirmative act that changes the status quo, we scrutinize it even more closely for abuse of discretion. "The judicial resistance to injunctive relief increases when the attempt is made to compel the doing of affirmative acts. A preliminary mandatory injunction is rarely granted, and is subject to stricter review on appeal." [Citation.] . . . "[T]he granting of a mandatory injunction pending the trial, and before the rights of the parties in the subject matter which the injunction is designed to affect have been definitely ascertained by the chancellor, is not permitted except in extreme cases where the right thereto is clearly established and it appears that irreparable injury will flow from its refusal." ' " (Davenport, supra, 52 Cal.App.4th at p. 446.) II. Likelihood of Success on the Merits
A. Defendants' Claims of Error
In challenging the trial court's conclusion that Evariste is likely to succeed on the merits, defendants first assert the court erred in interpreting three provisions of the MOU. Based on these alleged errors, defendants argue that Evariste breached the MOU first. They also claim that SNG was not subject to the capital fund spending limitations provided for in the MOU. Defendants' arguments are not persuasive.
1. "Proof of Funds"
SNG first asserts that the trial court erroneously interpreted the MOU as to whether Evariste had provided SNG with "proof of funds." The MOU states that Evariste was required to show proof of funds for $75 million upon issuance of the CDP. Evariste did provide SNG with bank statements from third parties showing significant funds. SNG contends the parties did not agree that third party bank statements would suffice as proof of funds.
SNG's claim is not advanced by the citations to the record it makes in its opening brief. In asserting the trial court misinterpreted the MOU, SNG cites to two pages from the complaint that it filed in Orange County on December 23, 2015, and two pages from Makhijani's deposition in which he states that, at some undefined point in time, Evariste provided SNG with proof of about $50 million in funds by presenting bank statements of Marcil and of another individual named John Walsh. We note pleadings are allegations, not evidence, and do not suffice to satisfy a party's evidentiary burden. (See San Diego Police Officers Assn. v. City of San Diego (1994) 29 Cal.App.4th 1736, 1744.) Further, the excerpts from Makhijani's deposition do not establish the proposition defendants seek to advance.
Nor does it appear that the argument was pursued in the trial court, as it is not articulated in SNG's opposing brief below. Legal theories may not be raised for the first time on appeal. (See Johnson v. Greenelsh (2009) 47 Cal.4th 598, 603 [issues not raised in the trial court cannot be raised for the first time on appeal]; Dietz v. Meisenheimer & Herron (2009) 177 Cal.App.4th 771, 799-801 [declining to consider arguments where the appellant failed to demonstrate they were raised in the trial court].) Accordingly, the argument both lacks merit and has been forfeited.
At the hearing, SNG's attorney made an oblique reference to the argument: "So Evariste breached first. Not only did they fail to execute the operating agreement timely, there were other failures. For example, the MOU on page eight requires that they submit to SNG proof of funds of $75 million. That $75 million proof of funds that Evariste can perform was supposed to be done on the day of issuance of the CDP. That has never happened." SNG's counsel did not acknowledge that plaintiff had offered third party bank statements, much less make an argument that the statements were insufficient.
2. Creditor Disclosures
Defendants also contend the trial court erred in concluding SNG failed to disclose all of its creditors in accordance with the MOU. Evariste had argued below that SNG improperly failed to disclose claims for fees filed by SNG's prior attorneys. Defendants assert the court erred in concluding the disclosure provision applied to these claims. In part, they argue that SNG was not aware of the claims until after the MOU was executed. Assuming for purposes of argument that defendants are correct, the issue is not dispositive in light of Evariste's primary argument to the trial court, which was that SNG breached the MOU by making unauthorized monthly expenditures without a member vote.
3. Whether SNG Was Subject to the MOU's Spending Limitations
In an attempt to avoid the MOU's spending restrictions, defendants assert the trial court incorrectly interpreted SNG's authority because nothing in the MOU restricts "SNG's use of its own working capital." (Italics added.) Evariste counters that this theory is not properly before us because it was not included in SNG's brief in opposition to the preliminary injunction, having been raised for the first time in an unauthorized supplemental brief filed after Evariste had filed its reply brief. We disagree that defendants forfeited the argument, as it was raised by SNG's counsel during the July 27, 2016 hearing. However, we agree with Evariste that the argument lacks merit.
The MOU states that Evariste funded $27 million in exchange for a note obligation and an equity interest in the newly formed JV LLC. The MOU also directs how the $27 million must be spent in furtherance of the JV LLC. First, it provides that, after refinancing and/or paying off existing debt, the "balance of the loan proceeds" were to be "disbursed to SNG," to "provid[e] working capital until the Permits [from Sand City and the California Coastal Commission] issue." As manager of the JV LLC, SNG was "responsible for all day-to-day and general management" of the venture within the limitations and structure established by the MOU.
For example, the MOU states that the manager's actions "will be limited by the business plan for the Project approved by Member Vote . . . and the budget for the Project approved by Member Vote." The MOU further specifies that "[a]ll major actions relating to the Property or the Project . . . will require a Member Vote," including spending "in excess of $25,000 in any month" during "any phase" of the project in the absence of an approved budget. Notably, defendants offer no explanation of what funds these provisions govern if not the JV LLC's $2.7 million in working capital. Additionally, defendants do not contest the factual basis of Evariste's argument that SNG spent over $25,000 per month without first obtaining a member vote as required by the MOU. In sum, we conclude SNG has not demonstrated that the trial court misinterpreted the MOU in the course of rendering its decision on Evariste's motion for a preliminary injunction.
At oral argument, defendants' counsel contended that SNG could withdraw capital funds in excess of $25,000 in any month without complying with the MOU conditions, namely, without obtaining the consent of Evariste before the withdrawal. Counsel argued that only after the Business Plan was adopted would the need for permission as indicated in the MOU be triggered. The contention runs afoul of the MOU's terms: "Upon the occurrence of an Event of Default . . ., SNG shall be deemed to be in default . . . and Evariste may exercise any remedy available to Evariste . . ., including, without limitation, foreclosing on the Property. [¶] 'Event of Default' shall mean any of the following: [¶] . . . [¶] c. SNG . . . has taken any Major Action without Member Vote." Later, a "Major Action" is defined to encompass "[t]aking any action outside the scope of the Business Plan or which would result in expenses in excess of those expenses set forth in the Budget by an amount great than: (i) 10% per line item in the Budget or (ii) 5% in the aggregate, or if there is no Budget for any phase, then expenses in excess of $25,000 in any month." (Italics added.) The record here supports the conclusion that within days after the MOU was signed (September 30, 2015) and before the CDP was issued (November 9, 2015), SNG was engaging in a "Major Action" by overspending without the proper "Member Vote" called for in the MOU.
Defendants unpersuasively cite to a hearsay statement contained in Ghandour's declaration as "evidence" that Makhijani confirmed to Ghandour that the working capital was SNG's money to use.
B. Other Alleged Evariste Failures to Perform
SNG raises several other arguments in an effort to further demonstrate that Evariste breached the MOU first. The arguments are not compelling.
1. Failure to Execute Revised Draft JV Agreement
Defendants fault Evariste for failing to execute the revised draft JV Agreement within five days after the CDP was issued, as contemplated by the MOU. However, it is undisputed that Evariste transmitted the first proposed draft of a JV Agreement on November 2, 2015. On appeal, defendants assert that Evariste's draft was inconsistent with the MOU, without providing sufficient evidence as to the contours of these alleged inconsistencies.
Notably, defendants' assertion that Evariste's initial proposed draft JV Agreement was "inconsistent with the parties' rights and obligations under the MOU" is not supported by citation to any admissible evidence. Instead, they cite to (1) the memorandum in opposition that they filed below, (2) a statement from Ghandour's July 14, 2016 declaration filed in support of defendants' opposition, and (3) an e-mail message from defendants' attorney to Evariste's attorney dated November 10, 2015, which simply transmitted SNG's revisions to the initial proposed draft. Significantly, the trial court sustained Evariste's objection to the following conclusory statement from Ghandour's declaration: "Mr. Makhijani provided a draft at 8:00 p.m. on November 2, 2015 that was inconsistent with the rights and obligations of the parties in the MOU."
On appeal, defendants also fail to properly challenge the trial court's evidentiary rulings regarding Ghandour's declaration. Their argument appears in a footnote containing a cursory argument lacking in persuasive authority. It is an appellant's "burden on appeal to affirmatively challenge the trial court's evidentiary ruling, and demonstrate the court's error." (Roe v. McDonald's Corp. (2005) 129 Cal.App.4th 1107, 1114.) While defendants state that the trial court erred in sustaining the objections to the Ghandour declaration, they fail "to identify the court's evidentiary ruling as a distinct assignment of error, and there is no separate argument heading or analysis of the issue." (Ibid., see Opdyk v. California Horse Racing Bd. (1995) 34 Cal.App.4th 1826, 1830-1831, fn. 4.)
Defendants rely on Strategix, Ltd. v. Infocrossing West, Inc. (2006) 142 Cal.App.4th 1068, 1072 for the proposition that the decision to sustain or overrule an objection is subject to de novo review. The case does not address evidentiary rulings, instead holding that "[w]here the propriety of an order granting a preliminary injunction ' "depends upon a question of law . . . the standard of review is not abuse of discretion but whether the superior court correctly interpreted and applied [the] law, which we review de novo." ' " (Ibid.)
As noted above, the trial court sustained multiple objections to Ghandour's declaration, overruling only three. Defendants make no attempt to demonstrate how any of the evidentiary rulings were erroneous. They have not specified the evidentiary objections to which their cursory argument is addressed, nor have they discussed the multiple grounds on which each objection was sustained. "We are not required to search the record to ascertain whether it contains support for [defendants'] contentions." (Mansell v. Board of Administration (1994) 30 Cal.App.4th 539, 545.) Because defendants fail to properly raise a challenge to the court's many evidentiary rulings and fail to support such challenge with reasoned argument and citations to relevant authority, they have forfeited their challenge to the virtual exclusion of most of declaration. (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785; see City of Crescent City v. Reddy (2017) 9 Cal.App.5th 458, 463-464.)
2. Refusal to Approve Business Plan and Budget
Defendants allege Evariste breached the MOU by refusing to approve a business plan and budget. However, the MOU does not explicitly require Evariste to approve a business plan by any set deadline. The relevant passage states: "Manager's actions will be limited by the business plan for the Project approved by Member Vote from time to time . . . and the budget for the Project approved by Member Vote from time to time." Assuming this issue was brought before the trial court, defendants fail to demonstrate error.
3. Failure to Release and Reconvey Liens
Defendants also claim Evariste breached the MOU by refusing to release and reconvey liens on the property. The MOU provides that "[u]pon the Evariste Note Contribution, Evariste will receive a capital account credit . . .[;] [then] the Evariste Loan will be extinguished and the Evariste Deed of Trust and Assignment of Rents will be reconveyed." However, as Evariste correctly notes, the MOU required such actions to be taken "[p]rovided that no Event of Default has occurred, upon the later of JV Agreement execution of CDP Permit Issuance, or an earlier date determined by Evariste in its sole discretion . . . ." Here, the trial court found that SNG defaulted by spending more than $25,000 per month without a member vote. Additionally, the JV Agreement was never signed and Evariste did not agree to an earlier date. The argument fails.
Defendants also assert Evariste breached the MOU by refusing to release and reconvey liens upon making the capital contribution. Again, they rely on a section of Ghandour's declaration that the trial court ruled inadmissible.
4. Failure to Pay Manager's Compensation
Defendants claim Evariste violated the MOU's terms by failing to pay manager's compensation to SNG. The relevant provision of the MOU states: "Beginning with the Pre-Construction Phase and ending with the Construction Phase, SNG will receive from the JV LLC a management fee of $750,000 per year, payable monthly as prorated, starting on the 1st of the month immediately following CDP Permit Issuance." The plain language of the contract indicates that Evariste was not responsible for making the payments. Instead, the JV LLC was to make the payments. Thus, defendants' claim again falls flat.
5. Appointing Marcil as Manager
Defendants assert Evariste's appointment of Marcil as the JV LLC manager breached the MOU. They argue that Marcil and Makhijani lack relevant experience to manage a project like the one involved here. They do not explain how this factor, even if true, constitutes a breach of the MOU. The MOU simply authorizes Evariste to remove SNG as manager and appoint a new manager in the event of default. There is nothing in the agreement that conditions the appointment of a new manager on that individual's qualifications.
6. Failure to Pay Converted Debt and Fund Costs and Expenses
Finally, defendants claim Evariste failed to pay converted debt in the amount of $13 million, and to fund certain costs and expenses. As the sole evidence for this alleged failure, they cite to a letter sent by their counsel to Evariste's counsel. This is not sufficient evidence of the assertions raised. (See In re Zeth S. (2003) 31 Cal.4th 396, 413-414, fn. 11 ["It is axiomatic that the unsworn statements of counsel are not evidence."].) In sum, defendants have failed to demonstrate that the trial court erred in concluding Evariste is likely to prevail on the merits of its lawsuit. III. Balancing the Harms
A trial court's decision on a motion for a preliminary injunction " 'does not amount to an adjudication of the ultimate rights in controversy. It merely determines that the court, balancing the respective equities of the parties, concludes that, pending a trial on the merits, the defendant should or that he should not be restrained from exercising the right claimed by him [or her].' [Citations.] The general purpose of such an injunction is the preservation of the status quo until a final determination of the merits of the action. [Citations.] Thus, the court examines all of the material before it in order to consider 'whether a greater injury will result to the defendant from granting the injunction than to the plaintiff from refusing it . . . .' [Citations.] In making that determination the court will consider the probability of the plaintiff's ultimately prevailing in the case and, it has been said, will deny a preliminary injunction unless there is a reasonable probability that plaintiff will be successful in the assertion of his rights. [Citations.] . . . 'In the last 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.' " (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.)
In its motion, Evariste argued that it would be irreparably harmed without a preliminary injunction because (1) its bargained-for rights would be denied, resulting in mismanagement of the project, (2) SNG would dissipate the joint venture's capital, and (3) SNG would be unlikely to pay any damages award at the end of the case. On appeal, defendants argue that the trial court ignored and/or improperly excluded evidence that granting the preliminary injunction would endanger the entire Project because SNG "is the only party that has the ability to continue processing the entitlements and see the Project through to a successful conclusion." (Italics added.) They also assert Evariste can be fully compensated by the payment of damages in the event it prevails.
Before us as well as in the court below, Evariste relied, in part, on Wisdom Import Sales Co. v. Labatt Brewing Co. (2d Cir. 2003) 339 F.3d 101, 114-115, a case which is not binding but which we find persuasive. There, the defendants, entities associated with Labatt Brewing Company, and the plaintiff, the Wisdom Import Sales Company, entered into a joint venture agreement that gave Wisdom a minority veto over certain fundamental changes in the joint venture. (See id. at pp. 104-105.) The district court found that the defendants likely breached the agreement by approving the integration of new brands into the venture over the objection of Wisdom, issuing a preliminary injunction enjoining the defendants from taking any further action on the integration. (Id. at pp. 105, 107.) Upholding the injunction, the Second Circuit explained that although the right Wisdom sought to enforce was a product of contract, it had "intrinsic value" that could not easily be measured: "Wisdom expressly negotiated for and received the right to veto certain transactions with which it disagreed before those transactions commenced, a right that is irretrievably lost upon breach, and may not be compensable by non-speculative damages." (Id. at p. 114.) The court accordingly held that "the denial of bargained-for minority rights, standing alone, may constitute irreparable harm for purposes of obtaining preliminary injunctive relief where such rights are central to preserving an agreed-upon balance of power . . . in corporate management." (Ibid.)
Without citing to any evidence in the record, defendants offer the conclusory assertion that "Evariste did not present evidence clearly establishing that its ability to seize control from SNG on the basis of Evariste's own bad faith actions is 'central' to preserve an agreed-upon balance of power." However, defendants have not demonstrated that Evariste breached the MOU or otherwise acted in bad faith. Instead, at this stage of the proceedings, the evidence supports the conclusion that SNG has engaged in conduct sufficient to implicate the default provisions under the MOU, thereby triggering Evariste's right to remove SNG from its role as manager. Absent enforcement of the preliminary injunction, Evariste will lose its right to direct the Project's development consistent with the MOU, a right that it obtained in consideration for its $27 million contribution to the Project. Without a preliminary injunction, Evariste is denied the benefit of the parties' "agreed-upon balance of power" in the management of the joint venture.
It also is true that the dissipation of specific, identifiable funds can constitute irreparable harm justifying a preliminary injunction. (See Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 137 ["The trial court could reasonably conclude from this evidence Reliance investment income subsidizes its underwriting losses, and, absent an injunction, the proceeds and profits of the transaction would be dissipated by the time a final judgment could be obtained. Plaintiffs would be left with a constructive trust on the fender of a Buick in Ypsalanti."]) Here, at the time Evariste moved for the preliminary injunction, SNG had spent at least $250,000 and was on pace to spend more if not enjoined. And while defendants' claim that Evariste's alleged harms can be compensated through monetary damages, this factor does not prevent a finding of irreparable injury. (See Mitsui Manufacturers Bank v. Texas Commerce Bank-Fort Worth (1984) 159 Cal.App.3d 1051, 1059 ["that fact [that 'only money is involved'] does not prevent the issuance of a preliminary injunction"].)
Defendants again assert that the trial court abused its discretion by "ignoring evidence in the record demonstrating that Evariste is not equipped to run the Project," and that Ghandour "is the only person with the necessary skills and experience to complete the Project, and without his involvement, the Project is likely to fail." In support of this assertion, they cite again to their own briefing below, the Ghandour declaration that the trial court found to be almost entirely inadmissible, and another Ghandour declaration in which he makes the self-serving statement that "disturbing [his] work, knowledge and expertise would jeopardize permanently the Project permits, entitlements and its core value." As Evariste observes, SNG cannot seriously assert that it will be harmed by the loss of unfettered management authority, as its authority is necessarily limited by the provisions in the MOU that prevent it from taking any major actions without Evariste's consent. We therefore conclude that the trial court did not abuse its discretion in determining that the balance of harms favors Evariste.
In light of our conclusions, defendants' July 24, 2017 motion for an order to show cause re contempt is denied. --------
DISPOSITION
The order is affirmed.
/s/_________
Dondero, J. We concur: /s/_________
Humes, P. J. /s/_________
Banke, J.