HARLAN WERNER, et al. vs ALYSSA CROSBY, AS EXECUTOR OF THE WILL OF DANIEL CROSBY, DECEASED

2025CUBT045643: HARLAN WERNER, et al. vs ALYSSA CROSBY, AS EXECUTOR OF THE WILL OF DANIEL CROSBY, DECEASED

Defendant’s request for judicial notice as to the Court docket is therefore GRANTED, subject to these limitations.

B. Evidentiary Objections

1. Plaintiff and Cross-Defendant’s Objections to the Declaration of Bradley R. Tyer

Evidentiary Objection No. 1: SUSTAINED.

2. Plaintiff and Cross-Defendant’s Objections to the Declaration of Laura Shapiro

Evidentiary Objections Nos. 2-3: SUSTAINED.

Evidentiary Objection Nos. 4-39: OVERRULED.

3. Defendant and Cross-Complainant’s Objections to the Declaration of Harlan Werner

Objections Nos. 1-4, 6, 8-9: SUSTAINED.

Objections Nos. 5, 7: OVERRULED.

4. Defendant and Cross-Complainant’s Objections to the Declaration of Jason Erikson

Objections Nos. 1-4: OVERRULED.

Objections Nos. 5-7: SUSTAINED.

5. Plaintiff and Cross-Defendant’s Objections to the Declaration of Laura Shapiro in Support of Reply

Evidentiary Objections Nos. 40-44: SUSTAINED

C. Tentative Ruling on Motion:

Defendant/Cross-Complainant’s Motion for Preliminary Injunction and Appointment of Receiver is DENIED.

Defendant/Cross-Complainant’s counsel to give notice.

Discussion:

1. Motion for Preliminary Injunction

A preliminary injunction is issued after hearing on either (1) noticed motion or (2) an order to show cause. Its purpose is, at least theoretically and usually in fact, to preserve the status quo and

2025CUBT045643: HARLAN WERNER, et al. vs ALYSSA CROSBY, AS EXECUTOR OF THE WILL OF DANIEL CROSBY, DECEASED

prevent irreparable harm pending trial on the merits. (White v. Davis (2003) 30 Cal.4th 528, 554.)

CCP § 526 states:

An injunction may be granted in the following cases:

(1) When it appears by the complaint that the plaintiff is entitled to the relief demanded, and the relief, or any part thereof, consists in restraining the commission or continuance of the act complained of, either for a limited period or perpetually.

(2) When it appears by the complaint or affidavits that the commission or continuance of some act during the litigation would produce waste, or great or irreparable injury, to a party to the action.

(3) When 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.

(4) When pecuniary compensation would not afford adequate relief.

(5) Where it would be extremely difficult to ascertain the amount of compensation which would afford adequate relief.

(6) Where the restraint is necessary to prevent a multiplicity of judicial proceedings.

(7) Where the obligation arises from a trust.

(CCP § 526 (a).)

“A preliminary injunction may be granted at any time before judgment upon a verified complaint, or upon affidavits if the complaint in the one case, or the affidavits in the other, show satisfactorily that sufficient grounds exist therefor. No preliminary injunction shall be granted without notice to the opposing party.” (CCP § 527, subd. (a).)

“A superior court must evaluate two interrelated factors when ruling on a request for a preliminary injunction: (1) the likelihood that the plaintiff will prevail on the merits at trial and (2) the interim harm that the plaintiff would be likely to sustain if the injunction were denied as compared to the harm the defendant would be likely to suffer if the preliminary injunction were issued. [Citation]. Weighing these factors lies within the broad discretion of the superior court.” (Smith v. Adventist Health System/West (2010) 182 Cal.App.4th 729, 749.)

“[I]n order to obtain injunctive relief the plaintiff must ordinarily show that the defendant's wrongful acts threaten to cause irreparable injuries, ones that cannot be adequately compensated in damages.” (Intel Corp. v. Hamidi (2003) 30 Cal.4th 1342, 1352.) In a suit for constructive

2025CUBT045643: HARLAN WERNER, et al. vs ALYSSA CROSBY, AS EXECUTOR OF THE WILL OF DANIEL CROSBY, DECEASED

trust on specific identifiable funds separately held by defendants, an injunction may issue to prevent dissipation of specific funds. (See Heckmann v. Ahmanson (1985) 168 Cal.App.3d 119, 136.)

“The trial court's determination must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the plaintiff's showing on one, the less must be shown on the other to support an injunction. [Citation]. Of course, ‘[t]he scope of available preliminary relief is necessarily limited by the scope of the relief likely to be obtained at trial on the merits.’ [Citation]. 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.” (Butt v. State of California (1992) 4 Cal.4th 668, 678.)

Here, injunction is not proper as monetary compensation is an adequate remedy for any potential damages claimed by Crosby. Based on this alone, the request for injunction should be denied. (CCP § 526 (a)(4).)

Likelihood of Success on the Merits

There is certainly “some possibility” Crosby will prevail on the merits of her cross-complaint. (Butt v. State of California (1992) 4 Cal.4th 668, 678.)

CCP § 1085 allows a writ of mandate to compel a corporation or person to perform an act the law specially requires, or to admit a party to a right from which the party is unlawfully excluded. Corp. Code § 1601 gives shareholders the right to inspect accounting books, records, and minutes for a purpose reasonably related to their interests as shareholders, and § 1603 allows the superior court to enforce that right upon refusal of a lawful demand. This all hinges on whether Crosby can show: Daniel Crosby owned shares; Alyssa Crosby is the estate representative; she made a proper demand for corporate financial records; and the companies failed to provide adequate access.

A breach of fiduciary duty claim requires a fiduciary relationship, breach, causation, and damages. CACI frames fiduciary duty as a duty of utmost good faith owed by corporate officers and other fiduciaries to the corporation or relevant beneficiary. (CACI No. 400.) California also recognizes that controlling shareholders may owe fiduciary duties to minority shareholders and the corporation when exercising control. (Jones v. H. F. Ahmanson & Co. (1969) 1 Cal. 3d 93, 109-110.) Crosby must show that Werner allegedly took control, the estate had a right to attend and vote at meetings, he excluded the estate from voting and meetings, withheld records, paid or directed distributions to himself, failed to provide distributions or a reliable accounting to the estate, and operated the companies as if Daniel Crosby’s shares had no voting or economic rights.

If proven, these facts could support a breach of fiduciary duty cause of action based on control-based self-dealing or shareholder exclusion, not ordinary business judgment.

At minimum, it is possible that Crosby could prevail on her statutory right to inspect financial records and obtain an accounting of post-death distributions; and the same evidence supports a reasonable probability of proving fiduciary breach if Werner used his control to benefit himself while excluding the estate’s shares from voting, records, and distributions.

2025CUBT045643: HARLAN WERNER, et al. vs ALYSSA CROSBY, AS EXECUTOR OF THE WILL OF DANIEL CROSBY, DECEASED

Irreparable Harm

Crosby has some showing of irreparable harm, but it is not strong enough to justify the broad injunction she appears to request—removing Werner from management of both companies.

Plaintiffs/Cross-Defendants are correct that unpaid distributions are ordinarily monetary harm. Mere monetary loss usually is not irreparable harm unless there is evidence the defendant is insolvent or otherwise unable to satisfy a damages award. (West Coast Constr. Co. v. Oceano Sanitary Dist. (1971) 17 Cal. App. 3d 693, 700.) While there is a credible showing of harm as to governance exclusion and lack of corporate transparency, the showing for the sweeping relief of removing Werner from control is unsupported.

Balancing of Interests

The balance of interests weighs against the granting of an injunction. Crosby has shown there is a possibility of prevailing on the merits assuming she can establish the estate’s shareholder status. However, the gist of the claim is that Werner has taken significant sums of money by way of disbursements from the companies without providing any information, accounting, or distributions to the Crosby Estate. The remedy for this harm is by way of pecuniary compensation and, therefore, an injunction is not appropriate. For these reasons, Defendant/Cross-Complainant’s motion for preliminary injunction is DENIED.

2. Motion for Appointment of Receiver

Crosby requests the appointment of Kevin A. Singer (“Singer”), founder and President of Empire Brokerage & Real Estate Services, Inc. dba Receivership Specialists as receiver. Crosby argues that the companies are in a governance and financial crisis requiring immediate court intervention. The requested remedy is appointment of a neutral receiver with authority to oversee business operations, finances, employees, and related functions, while ensuring both Werner and Crosby have equal access to company information.

Plaintiffs/Cross-Defendants counter that appointing a receiver and removing Werner from management would likely destroy AOTG and SPS. Plaintiffs/Cross-Defendants contend that both companies depend heavily on Werner’s unpaid labor and his long-standing relationships with artists, athletes, and business partners. Because Werner has been running the companies without taking a salary, the companies have allegedly remained profitable despite modest net income.

Plaintiffs/Cross-Defendants also emphasize the financial burden of a receiver. AOTG allegedly had 2024 revenues of about $2.47 million but only $22,622 in net income, while SPS allegedly had 2024 revenues of about $3.36 million and $128,178 in net income. The proposed receiver charges $350 per hour, which Plaintiffs/Cross-Defendants calculate as roughly $728,000 per year if full-time. The argument is that this cost alone would eliminate all profits and make the businesses financially unsustainable.

2025CUBT045643: HARLAN WERNER, et al. vs ALYSSA CROSBY, AS EXECUTOR OF THE WILL OF DANIEL CROSBY, DECEASED

Plaintiffs/Cross-Defendants argue that Singer lacks experience in sports memorabilia, art sales, and artist management. Because the businesses allegedly depend on personal relationships with figures such as Sandy Koufax and Clayton Kershaw, Plaintiffs/Cross-Defendants claim that clients would leave if Werner were removed, leaving the companies without a viable business.

Plaintiffs/Cross-Defendants request that if the court appoints a receiver despite these risks, it should require a substantial bond of at least $1 million per company to cover losses caused by the receivership.

While Crosby's allegations of a governance and financial crisis fall within the types of disputes regularly addressed under CCP § 564, the court must weigh these allegations against the practical consequences of the appointment. A receiver is a neutral agent of the court who acts for the benefit of all interested persons and holds assets directly for the court. (Cal. Rules of Court, rule 3.1179.)

Plaintiffs/Cross-Defendants persuasively raise significant factual challenges to the propriety of this remedy (destruction of business value and key relationships; financial burden). Additionally, the Court is not satisfied the businesses are in a state where appointment of a receiver is necessary or financially practicable. Appointment of a receiver under these circumstances is too drastic.

Defendant/Cross-Complainant’s Motion for Appointment of a Receiver is DENIED.

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