Memorandum Points and Authorities

Cal. Super. - 6th Dist.March 29, 2021

PARKER LAW GROU P 555 Capitol Moll, Suite 1230 Sacramento, CA 95814 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 CV38141 8 Santa Clara - Civil Port J. Parker, SBN 179256 Myles G. Taylor, SBN 298687 Suliman Khan, SBN 322173 PARKER LAW GROUPATTORNEYS A Professional Corporation 555 Capitol Mall, Suite 1230 Sacramento, CA 958 1 4 Telephone: (916) 996-0400 Facsimile: (916) 668-5760 myles@parlawgroup.com suliman@parlawgroup.com Electronically Filed by Superior Court of CA, County of Santa Clara, on 11l1 0/2021 10:59 AM Reviewed By: J. Ngo Case #21CV381418 Envelope: 7641 001 Attorneys for BRYAN CARRERA SUPERIOR COURT OF CALIFORNIA IN AND FOR THE COUNTY OF SANTA CLARA BRYAN CARRERA, directly and derivatively Case No. 21CV38141 8 on behalf ofAXON DESIGN, INC., MEMORANDUM 0F POINTS AND Plaintiff, AUTHORITIES IN SUPPORT OF V. PLAINTIFF’S MOTION FOR INSPECTION 0F CORPORATE RECORDS JOHN NOORI, an individual; AXON DESIGN INC., a California Corporation dba NTERRA GROUP; and DOES 1 through 50, Date: inclusive, Time: Dept: Defendants, and AXON DESIGN, INC., as a Nominal Defendant as to derivate claims Complaint Filed: March 29, 2021 I. INTRODUCTION Plaintiff Bryan Carrera (“Carrera”) co-founded Axon Design, Inc. (“Axon”) with Defendant John Noori (“Noori”) and thereafter initiated a lawsuit concerning the two men and their involvement with Axon. Carrera made numerous written requests for inspection of Axon’s corporate records pursuant t0 Corporations Code § 1601, et. seq. Noori, on behalf ofAxon, ignored Carrera’s requests, forcing Carrera to send a representative from a copy service to physically copy the corporate documents. This attempt was also unsuccessful as Noori refused t0 comply with this request. Noori’s MPA ISO PLAINTIFF’S MOTION FOR INSPECTION 0F CORPORATE RECORDS 1 J. Ngo PARKER LAW GROU P 555 Capitol Moll, Suite 1230 Sacramento, CA 95814 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 repeated refusal to provide the requested corporate documents necessitated the filing of this Motion. The Court should order Noori, on behalf of Axon, to produce for inspection: all of Axon’s: meeting minutes; bylaws; financial statements from 2018 t0 2020, and 2021 year t0 date; current accounts receivable and accounts payable; payroll reports for reflecting employee compensation and benefits from 2018 to 2021, and 2021 year-to-date; and copies of each contract for Which Axon provided services t0 a client from 2020 to 2021 year to-date pursuant t0 Corporations Code § 1601, et. seq. The Court should order this production because Noori failed to comply with Carrera’s previous requests for corporate records during Axon’s ordinary business hours, Carrera is a shareholder and director of Axon, and the requested records are reasonably related t0 Carrera’s interests as a shareholder. Further, the Court should award $3,226.50 in attorneys’ fees and costs to Carrera because Axon’s failure to comply With Carrera’s numerous requests for corporate records was unjustified. II. FACTUAL BACKGROUND Carrera co-founded Axon in March of 2015 along with Noori. Carrera became owner 0f25% 0f the outstanding voting shares of Axon, While Noori held the remaining 75% of the shares. (Declaration 0f Bryan Carrera (“Carrera Dec.”) 11 3, EX. A.) Carrera and Noori were the original directors ofAxon and are still the only directors 0f the company. (Id.) On March 29, 2021, Carrera filed a verified complaint against Noori with derivative claims for breach of fiduciary duty; abuse 0f control; and corporate waste and with direct claims for unpaid wages pursuant to Labor Code § 201; waiting time penalties; Violation of Corp. Code § 1600, et. seq.; and involuntary dissolution. (Verified Complaint, p. 1 .) On 0r around May 4, 2020, Carrera made a request t0 inspect corporate records Via email. (Carrera Dec. 11 4, Ex. B.) Carrera specified that he made this request in his capacity as a shareholder and director 0f Axon. This request was made for purposes of understanding the value of Carrera’s shares and Axon’s activities since Carrera’s termination from Axon. (Id.) Noori ignored this request. (161.) Carrera thereafter issued his original demand letter on October 29, 2020, wherein he made a formal written request to inspect corporate records pursuant to Corporations Code §§ 1601 and 1602. (Carrera Dec. 11 4.) This request was similarly ignored. (Id.) Carrera made another request 0n August MPA ISO PLAINTIFF’S MOTION FOR INSPECTION 0F CORPORATE RECORDS 2 PARKER LAW GROU P 555 Capitol Moll, Suite 1230 Sacramento, CA 95814 QONU‘IAUJN 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18, 2021. (Declaration of Myles G. Taylor (“Taylor Dec.”) 11 3, EX. C.) This request was made with reference to all meeting minutes; bylaws; financial statements from 2018 to 2020, and 2021 year to date; current accounts receivable and accounts payable; payroll reports for reflecting employee compensation and benefits from 2018 to 2021, and 2021 year-to-date; and copies of each contract for Which Axon provided services to a client from 2020 to 2021 year to-date. (Id.) Like previous requests, this request was also made for the purposes ofunderstanding the value 0f Carrera’s shares and Axon’s activities since Carrera’s termination from Axon. (Id.) Again Mr. Noori failed to substantively respond to Carrera’s request. (Id.) Carrera then enlisted the services 0f Slayer Legal Service t0 send a representative to Axon’s office during Axon’s ordinary business hours and physically copy and inspect the relevant Axon corporate documents Carrera was entitled t0 inspect, as written requests had proved ineffective. (Taylor Dec. 1] 4.) On Monday August 30, 2021, Slayer Legal sent a representative to Axon’s office during Axon’s ordinary business hours, at approximately 10:00 AM, for copies of the relevant corporate documents. (Taylor Dec. 11 5.). Noori claimed that he did not have any physical copies of corporate documents and only had electronic files. (Id.) Noori did not allow the copy service to obtain any records and purportedly told the copy service that he would be able to send the electronic version of the documents to Carrera shortly after. (Id.) Noori never sent the documents and still has not complied with any of Carrera’s requests for corporate documents. (Id.) III. LEGAL STANDARD AND BASIS FOR MOTION “The accounting books, records, and minutes ofproceedings of the shareholders and the board and committees of the board of any domestic corporation, and of any foreign corporation keeping any records in this state or having its principal executive office in this state, or a true and accurate copy thereof if the original has been lost, destroyed, or is not normally physically located Within this state shall be open t0 inspection at the corporation's principal office in this state, 0r if none, at the physical location for the corporation's registered agent for service 0f process in this state, upon the written demand on the corporation of any shareholder 0r holder 0f a voting trust certificate at any reasonable time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder ofa voting trust certificate.” (Corp. Code § 1601 (a)(l ).) “As an alternative MPA ISO PLAINTIFF’S MOTION FOR INSPECTION 0F CORPORATE RECORDS 3 PARKER LAW GROU P 555 Capitol Moll, Suite 1230 Sacramento, CA 95814 QONUIhUJN 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 to the procedure in subdivision (a), the shareholder or holder of a voting trust certificate may elect to request that the corporation produce the books, records, and minutes by mail or electronically, if the shareholder or holder of a voting trust certificate pays for the reasonable costs for copying 0r converting the requested documents to electronic format.” (Corp. Code § 1601 (2).) Section 1602 provides “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and t0 inspect the physical properties of the corporation 0f which such person is a director and also 0f its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney and the right of inspection includes the right t0 copy and make extracts.” (Corp. Code § 1602.) Section 1603(3) provides in pertinent part that “[u]pon refusal 0f a lawful demand for inspection, the superior court of the proper county, may enforce the right of inspection with just and proper conditions.” (Corp. Code § 1603(a).) Carrera has made numerous unsuccessful lawful requests for inspection to Noori. Carrera not only made numerous written requests, but also physically sent a representative to Axon’s office during ordinary business hours t0 make copies 0fthe corporate documents. Indeed, Carrera has tried multiple ways to obtain Axon’s corporate documents without the need for court involvement. However, Noori’s failure t0 comply With his legal obligation forced Carrera to file this Motion. IV. ARGUMENT a. The Court Should Grant This Motion Because Carrera is Entitled to Inspection 0fAxon’s Corporate Records. i. Carrera is entitled t0 production/inspection 0f corporate records because he is a shareholder 0f Axon and the inspection is reasonably related t0 his interests as shareholder. Carrera has made multiple proper requests for inspection of records, and on each occasion, has been denied access. This occurred on May 4, 2020, October 29, 2020, and then most recently on August 18, 2021, and August 23, 2021. The requests are specified to be for the purposes of understanding the value of Carrera’s shares and Axon’s activities since Carrera’s termination from Axon. These purposes are reasonably related to his interests as a shareholder. Therefore, Carrera is entitled t0 inspection of Axon’s corporate records. /// MPA ISO PLAINTIFF’S MOTION FOR INSPECTION 0F CORPORATE RECORDS 4 PARKER LAW GROU P 555 Capitol Moll, Suite 1230 Sacramento, CA 95814 QONUIhUJN 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 ii. Carrera’s right t0 production/inspection is even more pronounced given he is not only a shareholder but also a director. In addition t0 Carrera’s position as a shareholder, he is also a director of the company and has been denied access to records for an extended period of time. “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents 0f every kind and t0 inspect the physical properties of the corporation of which such person is a director and also of its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person 0r by agent 0r attorney and the right 0f inspection includes the right t0 copy and make extracts.” (Corp. Code, § 1602.) Carrera and Noori are the only members of Axon’s board of directors and have been since its inception. Therefore, Carrera, as director, is entitled t0 inspect and copy Axon’s corporate records. b. The Court Should Award Attorneys’ Fees t0 Reimburse Carrera for Reasonable Expenses Incurred. “In any action or proceeding under Section 1600 or Section 1601, if the court finds the failure ofthe corporation to comply with a proper demand thereunder was without justification, the court may award an amount sufficient to reimburse the shareholder 0r holder 0f 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.) Noori has not offered any excuse t0 justify his failure t0 comply With Carrera’s numerous requests for inspection. Noori’s repeated inaction left Carrera with no choice but to bring this motion. Carrera’s counsel spent time and incurred expenses in bn'nging this motion, as provided in the Taylor Declaration. (See Taylor Dec., 1} 6.) Carrera seeks an award under Corporations Code § 1604 in the amount of $3,226.50 because these were expenses reasonably incurred by Carrera in connection with obtaining the records that he is entitled to receive as a matter of law. V. CONCLUSION Based on the foregoing the Court should order Axon to produce for inspection, all of Axon’s: meeting minutes; bylaws; financial statements from 2018 t0 2020, and 2021 year t0 date; current accounts receivable and accounts payable; payroll reports for reflecting employee compensation and benefits from 2018 t0 2021, and 2021 year-to-date; and copies of each contract for Which Axon MPA ISO PLAINTIFF’S MOTION FOR INSPECTION OF CORPORATE RECORDS 5 PARKER LAW GROUP MC CA 95:3 4 VOW? CC Lick] C tame 555 :aowrc‘ u OOQQUIA 0 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 provided services to a client from 2020 to 2021 year to-date. Further the Court should award Carrera attomey’s fees in the amount of $3,226.50 because Axon’s refusal to comply with Carrera’s previous requests was unjustified. PARKER LAW GROUP ATTORNEYS ?7mwation MYLES G. TAYLOR SULIMAN KHAN Attorneys for PlaintiffBRYAN CARRERA DATED: November IO, 2021 MPA ISO PLAINTIFF’S MOTION FOR INSPECTION 0F CORPORATE RECORDS 6