Geraci v. Geraci LLP

v. Wells Fargo Bank, NA (2011) 198 Cal.App.4th 256, 264; Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482.)

The parties’ evidentiary objections are OVERRULED.

Defendants shall give notice. 7 Fleck v. O/C AutoNation, Inc. 8 Geraci v. Before the Court are the following two motions: (1) motion to Geraci LLP disqualify attorney of record filed by plaintiffs Anthony Geraci and Geraci Legal Corporation (collectively, Plaintiffs); and (2) motion to compel arbitration filed by defendants Geraci LLP; Daghbandan Service APC; KKCN Legal APC; Wimeo APC; Lightning Docs LLC; Nema Daghbandan; Natalie Daghbandan; Melissa Martorella; Kevin Kim; Siuen Kim; Dennis Baranowski; and Cameo Baranowski (collectively, Defendants).

For the reasons set forth below, Motion 1 is DENIED and Motion 2 is GRANTED.

Motion No. 1: Motion to Disqualify Attorney

Plaintiffs move for an order disqualifying Raines Feldman Littrell LLP (Defense Counsel) as counsel of record for Defendants.

Plaintiffs contend Defense Counsel’s concurrent representation of Geraci LLP and Lightning Docs LLC, as well as the individual defendants and their alter ego entities, creates an irreconcilable conflict of interest necessitating Defense Counsel’s disqualification. (See Cal. Rules of Prof. Conduct, Rule 1.7.) Plaintiffs contend a conflict exists because Defense Counsel simultaneously represents the very entities harmed—Geraci LLP and Lightning Docs LLC— alongside the insiders of those entities accused of “looting and mismanaging them.”

“[W]here the same attorney simultaneously represents potentially conflicting parties, the primary interest at stake is the attorney's duty of loyalty. (Citation.)...When the duty of loyalty applies, courts have found the conflict to require “per se, or automatic disqualification, in all but a few instances.” (Citation.) “The strict proscription against dual representation of clients with adverse interests thus derives from a concern with protecting the integrity of the attorney-client relationship rather than from concerns with the risk of specific acts of disloyalty or diminution of the quality of the attorney’s representation.” (Citation.) ... [¶] A potential conflict, however, does not warrant automatic disqualification of joint counsel. (Citations.)” (Gong v. RFG Oil, Inc. (2008) 166 Cal.App.4th 209, 214-215.)

Here, Plaintiffs have not shown that any actual conflict exists. Plaintiffs argue summarily that the complaint alleges insider misconduct and looting and mismanagement of Geraci LLP and

Lightning Docs LLC, but they fail to point to any specific complaint allegations to support their argument. A review of the complaint does not appear to show any claims for damages on behalf of these entities or any personal use of corporate funds or other conduct harming the entities. Rather, the complaint appears to show Plaintiffs are seeking damages solely on behalf of themselves and are alleging misconduct directed to Plaintiffs, i.e., that Defendants are attempting to “squeeze” Mr. Geraci out of the businesses.

The only allegation that could be deemed to allege misconduct or damage directed to the entities is the allegation regarding conversion of LLP property to Fortra law. (See Compl., ¶ 30.) But this allegation is conclusory as there are no facts alleged to support this claim. The complaint also alleges Defendants are advertising that Geraci LLP has changed its name to Fortra Law, so it appears the companies are the same. (See Compl., ¶ 32.) This undermines any allegation of corporate waste or conversion.

Moreover, to the extent Mr. Geraci states in his declaration that Defendants unlawfully converted the firm’s assets to Fortra Law, no evidence is offered to back up this claim. All that is presented is the conclusory statement in Mr. Geraci’s declaration. In addition, Defendants’ evidence shows Fortra Law is actually a rebranding of Geraci LLP and is thus the same company. (See Daghbandan Decl., ¶ 46, ROA 79.)

In terms of the involuntary dissolution causes of action, these claims do not automatically mandate disqualification. “[A]bsent a factual scenario suggesting a conflict exists, an involuntary dissolution action does not necessarily pit the corporation against the defendant owner in the manner of a derivative action...Thus a dissolution cause of action does not, by its nature, create the sort of conflict a derivative action creates.” (Coldren v. Hart, King & Coldren, Inc. (2015) 239 Cal.App.4th 237, 247.) As discussed above, Plaintiffs have not clearly shown any conflict of interest exists.

To the extent Plaintiffs argue they have brought a derivative suit which mandates disqualification, Plaintiffs have not shown their claims are indeed derivative. Plaintiffs argue summarily that their complaint asserts derivative claims, but they fail to offer any reasoned analysis, or cite any authority, showing why this is so. Plaintiffs offer no discussion of the requirements of a derivative litigation, and they fail to cite to any specific complaint allegations to support their contention they have brought derivative claims.

Further, contrary to Plaintiffs’ argument, the ongoing JAMS arbitration between the parties tends to show Defendants’ interests are aligned in that all Defendants apparently seek to protect against Plaintiffs’ alleged attempts to harm the businesses and seek to enforce the terms of the Operating Agreement and Partnership Agreement.

Based on the foregoing, the motion to disqualify is DENIED.

Defendants’ request for judicial notice is DENIED as the documents sought to be judicially noticed are not relevant to the disposition of this motion.

Defendants’ evidentiary objections are SUSTAINED as to objection nos. 4 through 11, based on lack of foundation. The remaining objections are OVERRULED.

Motion No. 2: Motion to Compel Arbitration

A party seeking to compel arbitration pursuant to Code of Civil Procedure section 1281.2 “has the burden of proving the existence of a valid arbitration clause and the dispute is covered by the agreement.” (Larian v. Larian (2004) 123 Cal.App.4th 751, 760.) “If the moving party meets its burden, the opponent of arbitration has to prove by a preponderance of the evidence any defense to the petition or motion to compel the dispute to be arbitrated.” (Ibid.)

“ ‘[T]he decision as to whether a contractual arbitration clause covers a particular dispute rests substantially on whether the clause in question is ‘broad’ or ‘narrow.’ ” (Citation.) “A ‘broad’ clause includes those using language such as ‘any claim arising from or related to this agreement’ ” (Citation.) or “arising in connection with the [a]greement” (Citation). “It has long been the rule in California that a broadly worded arbitration clause ... may extend to tort claims that may arise under or from the contractual relationship... “ ‘[W]here contracts provide arbitration for “ ‘any controversy ... arising out of or relating to the contract ...’ ” the courts have held such arbitration agreements sufficiently broad to include torts, as well as contractual, liabilities so long as the tort claims “have their roots in the relationship between the parties which was created by the contract.” ” (Rice v. Downs (2016) 248 Cal.App.4th 175, 186.) (Emphasis in original.)

Defendants seek to compel arbitration of all causes of action asserted against them in Plaintiffs’ complaint based on the arbitration clauses contained in the December 4, 2023 Partnership Agreement for Geraci LLP (Partnership Agreement) and the December 4, 2023 Limited Liability Company Operating Agreement for Lightning Docs LLC (Operating Agreement). (See Daghbandan Decl., Exhs. 1 & 2.)

The Court finds the arbitration clauses at issue are broad provisions covering the claims at issue in this dispute. All claims arise out of or relate to the Partnership Agreement and/or Operating Agreement or consist of a dispute between members of the LLC. (See generally, Complaint.)

Although defendants Natalie Daghbandan, Siun Kim, and Cameo Baranowski are not signatories to either the Partnership Agreement or Operating Agreement and not every defendant is a party to both agreements, because Plaintiffs have alleged that all Defendants are alter egos and/or agents of each other, each defendant may invoke the arbitration clauses at issue. (See Compl., ¶¶ 16, 35-40; see also, Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1284-1285

[nonsignatory could compel arbitration of breach of contract claim when sued as a signatory’s alter ego]; Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 788—“[A] defendant may enforce the arbitration agreement, ‘when a plaintiff alleges a defendant acted as an agent of a party to an arbitration agreement....’”.)

Based on the foregoing, Defendants met their initial burden of demonstrating the existence of a written arbitration agreement between the parties covering the instant dispute. The burden thus shifted to Plaintiffs to prove any defense to enforcement. Plaintiffs failed to meet that burden.

In the Opposition, Plaintiffs argue the motion should be denied because: (1) California Corporations Code sections 16103, subd. (b)(8) and 17701.10, subd. (c)(7) prohibit arbitration provisions from divesting the Superior Court of jurisdiction to decree the dissolution of a partnership or limited liability company; (2) Plaintiffs’ tort causes of action fall outside of the language of the subject arbitration provisions; (3) granting the petition will result in Plaintiffs’ claims being divided into three different jurisdictions resulting in the possibility of conflicting rulings and duplication of efforts; and (4) Defendants’ motion to compel arbitration should be stricken based on the conflict of interest identified in Plaintiff’s motion to disqualify counsel.

As to the first argument, as Defendants contend, neither the Operating Agreement nor the Partnership Agreement purports to divest the Court of jurisdiction to enter a dissolution decree. The subject arbitration clauses specifically provide that judgment upon the arbitrator’s award may be entered by the court. Thus, as Defendants assert, following arbitration, the arbitrator’s award would then be confirmed by the Court, which would enter the dissolution decree based on the arbitrator’s findings.

Plaintiffs cite no authority prohibiting the foregoing procedure or prohibiting the arbitrator from deciding the underlying factual disputes. Moreover, Defendants’ cited authority shows the dissolution claims in this action may be arbitrated based on the broad arbitration clauses contained in the subject agreements. (See Larkin v. Williams, Woolley, Cogswell, Nakazawa & Russell (1999) 76 Cal.App.4th 227, 229-231.)

Plaintiffs’ second argument fails because, as discussed above, all claims herein are encompassed by the broad arbitration clauses at issue, and all defendants may invoke the arbitration clauses.

As to the third argument, Plaintiffs cite no authority showing concerns pertaining to judicial economy and duplication of efforts are a permissible basis to deny a motion to compel arbitration. In terms of the possibility of conflicting rulings under Code of Civil Procedure section 1281.2, this concern is not triggered unless there are some claims that are not arbitrable. “‘The court’s discretion under section 1281.2, subdivision (c) does not come into play until it is ascertained that the subdivision applies, which requires the threshold determination of whether there are nonarbitrable claims against at least one of the parties to the litigation.” (Avila v. S.

California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 840.) Here, as discussed above, all claims are arbitrable.

Regarding Plaintiff’s fourth argument, as discussed above in connection with the motion to disqualify, Plaintiffs failed to demonstrate any conflict of interest.

Based on the foregoing, the motion to compel arbitration is GRANTED.

This matter is hereby STAYED.

A Status Conference Re: Status of Arbitration is scheduled for October 16, 2026 at 9:30 a.m.

Counsel for Defendants shall give notice of these rulings. 9 Vivian v. Before the Court are 1) a motion for sanctions pursuant to Code of MHCC, Inc. Civil Procedure section 128.5 and 2) a motion for attorney fees pursuant to Code of Civil Procedure section 2033.420, both filed by defendant Ohio Security Insurance Company (Defendant) against plaintiffs Scott Vivian and Pacific Construction Management International LLC (Plaintiffs). For the reasons set forth below, the motion for sanctions is DENIED, and the motion for attorney fees is CONTINUED for further proof.

Motion for Sanctions:

Code of Civil Procedure Section 128.5, subdivision (a) provides that: “[a] trial court may order a party, the party’s attorney, or both, to pay the reasonable expenses, including attorney's fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.” The responding party must have acted in subjective bad faith, that is, personally intended to use improper tactics. (In re Marriage of Sahafzadeh-Taeb & Taeb (2019) 39 Cal.App.5th 124, 134; 7 Witkin Cal.

Procedure Trial (2025 update) § 206.) Section 128.5 provides a mandatory safe harbor provision, i.e., the moving party must serve the notice of motion at least 21 days before filing the motion to give the offending party an opportunity to withdraw or correct its action or tactic during that time. (Code of Civ. Proc. § 128.5, subd. (f)(1).) The safe-harbor provision applies in the “filing and service of a complaint . . . that can be withdrawn or appropriately corrected.” (Code of Civ. Proc. § 128.5, subd. (f)(1).)

Here, Defendant failed to show compliance with the 21-day safe harbor provision. Defendant complains the “entire action” – meaning the Complaint – is frivolous, but there is no evidence Defendant gave Plaintiffs the opportunity to withdraw or correct the Complaint, prior to Defendant filing the instant motion. Defendant’s failure to comply with the safe-harbor provision is fatal to the motion. (Code of Civ. Proc. § 128.5, subd. (f)(1); Nutrition Distribution, LLC v. Southern SARMS, Inc. (2018) 20 Cal.App.5th 117, 130.)