Varrick Partners, LLC v. Yellowwood Capital, Inc., et al.

According to RB’s FAXC, RB and Wine Globe Holdings, LLC (“Holdings”) entered in an agreement whereby Holdings agreed to purchase, and RB agreed to sell substantially all of RB’s assets for over $600,000. (FAXC, ¶ 7.) The agreement was thereafter amended. (FAXC, ¶ 8.) As amended, Varick and Holdings executed a promissory note in favor of RB calling for payments in three installments and then escrow closed in March 2020. (FAXC,

7 The order on Hurley’s anti-SLAPP refers to Rekhi’s pleading as the first amended

cross-complaint or FAXC. The Court does the same here. (See Court’s February 13, 2026 Order, p. 1.)

¶¶ 9-10.) RB received two untimely payments and Holdings intended to make a third payment but Varick’s managing member, Hurley, took a series of actions preventing Holdings from doing so. (FAXC, ¶ 12.)

On June 6, 2020, Hurley distributed a letter to Holdings’ vendors and business contacts representing that Holdings’ former president, Gibbs, had been terminated, causing concern that Holdings was no longer operating legally as Gibbs was the only individual listed on the liquor license. (FAXC, ¶ 13.) Despite Hurley’s letter, Gibbs continued to operate Holdings after coming to an agreement with Hurley, but the letter caused substantial disruption to Holdings’ business. (Ibid.) In February 2021, Hurley took actions to exclude Gibbs from the business entirely in an attempt to operate the business himself; however, he was unable to do so as he had no legal ability to use Holdings’ liquor license. (Ibid.)

Hurley also took control of Holdings’ warehouse and changed the locks. (Ibid.) Upon realizing he could not operate without the license, Hurley had the liquor inventory removed to a storage facility that he controlled and is still in possession of the inventory. (Ibid.)

As a result of these actions, Holdings could not remain in good standing with the Franchise Tax Board and is suspended from doing business in California and RB is owed over $184,071. (FAXC, ¶¶ 14-17.)

On October 9, 2025, Hurley filed a special motion to strike RB’s FAXC pursuant to Code of Civil Procedure section 425.16. RB subsequently opposed the anti-SLAPP motion.

On February 13, 2026, this Court (Hon. Parrett) issued an order denying Hurley’s anti-SLAPP motion. The crux of Hurley’s argument was that 1) the letter he sent about Gibbs’ termination, redirecting accounts, and warehouse changes constituted protected petitioning (Court’s Order, p. 7:20-25); and 2) a deposition exchange with RB’s counsel was likewise protected activity (id. at p. 8:2-7). In addressing Hurley’s arguments, the Court reasoned that Hurley failed to meet his threshold burden to show the FAXC arises from protected activity.

As to the second argument, the Court explained that Hurley failed to demonstrate that the FAXC arose from exchanges with RB’s counsel. (Id. at pp. 8:25-9:1.) As for Hurley’s first argument, the Court stated that he did not explain how the actions arose from protected activity and failed to present any supporting evidence. (Id. at p. 10:17- 19.) For these reasons, the Court denied the motion and determined it did not need to reach the issue of whether RB had demonstrated a probability of prevailing on its claims. (Id. at p. 11:6-10.)

Hurley has filed an appeal of the Court’s order denying his anti-SLAPP. An appeal of an order denying an anti-SLAPP motion does not divest the trial court of jurisdiction to consider the plaintiff’s motion for attorney fees and costs. (Carpenter v. Jack in the Box Corp. (2007) 151 Cal.App.4th 454, 461.)

Currently before the court is RB’s Motion for attorney fees brought as the prevailing party on the anti-SLAPP motion. The Motion is opposed.

ANALYSIS OF MOTION

RB seeks to recover $21,202.50 from Hurley under Code of Civil Procedure Section 425.16, subdivision (c)(1), which provides:

(c)(1) Except as provided in paragraph (2), in any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover that defendant’s attorney’s fees and costs. If the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney’s fees to a plaintiff prevailing on the motion, pursuant to Section 128.5.

C.C.P. § 425.16(c)(1).

Code of Civil Procedure section 128.5, provides, in part:

(a) 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. . . .

(b) For purposes of this section:

(1) “Actions or tactics” include, but are not limited to, the making or opposing of motions or the filing and service of a complaint, cross-complaint, answer, or other responsive pleading. . . .

(2) “Frivolous” means totally and completely without merit or for the sole purpose of harassing an opposing party.

C.C.P. § 128.5.

As mentioned above, the Court has already determined that RB is the prevailing party in opposing the anti-SLAPP motion. Thus, RB is entitled to a mandatory award of fees if Hurley’s motion was frivolous. (Foundation for Taxpayer & Consumer Rights v. Garamendi (2005) 132 Cal.App.4th 1375, 1388 [“The imposition of sanctions for a frivolous anti-SLAPP motion is therefore mandatory.”].) Frivolousness is found where “any reasonable attorney would agree such motion is totally devoid of merit.” (Ibid.). And RB asserts that Hurley’s motion was frivolous.

Hurley has opposed the motion. In support of the argument that his motion was not frivolous, Hurley argues that the Court did not find that he “fabricated facts, cited nonexistent authority, filed the motion solely to cause delay, or brought the motion solely to harass Plaintiff. Nor did the Court expressly find that the motion was ‘totally and completely without merit’ under section 128.5.” (Opposition, p. 1:14-19.) In ruling on the anti-SLAPP, however, the Court did not concern itself with these issues and only decided that Hurley failed to meet his threshold burden to show the FAXC arises from protected

activity. To further support his assertions, Hurley relies on the same facts he relied on in bringing the underlying motion. Hurley contends that the Court determined his theories were “inadequately shown” and this is not the same as a theory that no reasonable litigant could advance. (Opposition, p. 5.)

In this Motion, RB argues that the gravamen of the FAXC is that “Hurley, using Varick [] as his alter ego, prevented [] Holdings from making the final payment on the Promissory Note. None of the actions attributed to Hurley in the FA[X]C took place within the context of a judicial or other official proceeding, and Hurley’s anti-SLAPP provides no explanation for why these actions should be considered protected petitioning.” (Motion, p. 11:7-11.) The Court finds RB’s argument to be persuasive and true.

RB’s action arises from nonpayment under the promissory note and not out of protected activity in sending a letter regarding termination or deposition testimony. (See e.g., Olive Properties, L.P. v. Coolwaters Enterprises, Inc. (2015) 241 Cal.App.4th 1169, 1177 [“an ordinary review of established legal authorities would have disclosed the inadequacies of the motion.”].) Accordingly, in the broad exercise of its discretion after reviewing all the papers and the record, the Court finds that Hurley’s motion was frivolous and thus that RB is entitled an award of fees now.

Although the Court has determined that RB is entitled to an award of fees, the Court must still determine that the amount of the fees sought by this Motion is reasonable. (Cabral v. Martins (2009) 177 Cal.App.4th 471, 491; see also, Robertson v. Rodriguez (1995) 36 Cal.App.4th 347, 361 [court must determine if fee award sought is reasonable]; Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131-1132 [same].)

Specifically, RB seeks sanctions in the amount of $21,202.50 for attorneys’ fees, which equals approximately 72 hours of professional time at an hourly rate of $295.00 per hour. (Declaration of Arthur Connors, ¶ 7.) RB asserts that this amount of attorney time at this hourly rate sought is reasonable because RB’s counsel’s work on the anti-SLAPP motion involved analyzing moving papers, reviewing Hurley’s Request for Judicial Notice and attached documents, researching the law, moving ex parte to advance the hearing date, and preparing opposition papers. (Ibid.).

The Court agrees. In the broad exercise of its discretion, the Court finds that this number of hours at this hourly rate sought is reasonable, and thereby awards RB sanctions to be paid by Hurley in the amount of $21,202.50 for RB’s reasonable attorneys’ fees and costs for the anti-SLAPP Motion. And Hurley will pay this amount within 30 days of today.

In addition to the $21,202.50 sought, RB also seeks an additional amount of fees for an anticipated additional 15-35 hours to finalize the opposition, draft objections, draft reply briefs, and appear at oral arguments. In the broad exercise of its discretion, the Court does not award any amount for these anticipated expenses.

Accordingly, the Motion is GRANTED in the total amount of $21,202.50. Specifically, Hurley is ORDERED to pay $21,202.50 to RB’s counsel within 30 day of today.

Moreover, Hurley is put on NOTICE that if he violates this ORDER by failing to pay $21,202.50 to RB’s counsel within 30 day of today, Hurley and his counsel may be subject to escalating monetary sanctions as well as non-monetary sanctions.

CONCLUSION & ORDER

Plaintiff Rekhi Bros. Inc.’s Motion is GRANTED. Specifically, Defendant Kenneth Hurley is ORDERED to pay $21,202.50 to Plaintiff Rekhi Bros. Inc.’s counsel within 30 days of today.

SO ORDERED.

Date: August 7, 2026 Hon. Vincent I. Parrett Superior Court of the State of California, County of Santa Clara

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