Electronically FILED by Superior Court of California, County of Los Angeles on 07/08/2021 05:08 PM Sherri R.
Carter, Executive Officer/Clerk of Court, by W. Moore,Deputy Clerk
1 Adam M. Satnick, California State Bar No. 302326
(adam@satnicklau.com)
2 Benson K. Lau, California State Bar No. 287429
(benson@satnicklau.com)
3 SATNICK LAU LLP
4 11755 Wilshire Blvd., Suite 1250
Los Angeles, CA 90025
5 Telephone: (310) 356-8472
Facsimile: (310) 436-4969
6
Attorneys for Defendants TYRONE FREEMAN and WOLFGANG & ASSOCIATES, LLC
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 FOR THE COUNTY OF LOS ANGELES - CENTRAL
10
SLW HOLDINGS, LLC, a California limited Case No.: 21STCV20050
11 liability company;
[Assigned to the Honorable Judge Mary H.
12 Strobel; Dept. 82]
Plaintiff,
13
11755 Wilshire Blvd., Suite 1250
vs. NOTICE OF RULING RE: ORDER TO
Telephone: (310) 356-8472
14 SHOW CAUSE FOR ISSUANCE OF
Los Angeles, CA 90025
SATNICK LAU LLP
TYRONE FREEMAN, an individual; PRELIMINARY INJUNCTION
15 WOLFGANG & ASSOCIATES; DAUDE
Hearing: July 8, 2021; 1:30 p.m.
16 SHERRILLS, an individual; LAMAR HOUSE, an Judge: Hon. Mary H. Strobel
individual; and DOES 1 through 30, inclusive, Dept.: 82
17 Action Filed: May 28, 2021
Defendants. Trial Date: TBD
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23 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
24 PLEASE TAKE NOTICE that on July 8, 2021 the Order to Show Cause for Issuance of
25 Preliminary Injunction (“OSC”) on Plaintiff SLW HOLDINGS, LLC’s (“Plaintiff”) Application (the
26 “Application”) came on regularly for hearing in Dept. 82 of the Superior Court of the State of
27 California for the County of Los Angeles – Central located at 111 N. Hill Street, Los Angeles, CA
28 90012, the Honorable Judge Mary H. Strobel, presiding.
1
NOTICE OF RULING
1 Rafe Emanuel, Esq. appeared on behalf of Plaintiff. Marc Smith, Esq. and Kathleen Fuster,
2 Esq. appeared on behalf of Defendant Lamarr House (“House”). Benson K. Lau, Esq. appeared on
3 behalf of Defendants Tyrone Freeman (“Freeman”) and Wolfgang & Associates, LLC (“Wolfgang”).
4 No appearances were made on behalf of Defendant Daude Sherrills. After oral argument, the Court
5 adopted its tentative ruling as its final ruling on Plaintiff’s Application. Counsel for Defendants
6 Freeman and Wolfgang was ordered to give notice.
7 Attached hereto as Exhibit “A” is a true and correct copy of the Court’s Minute Order of July
8 8, 2021.
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10 DATED: July 8, 2021 SATNICK LAU LLP
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By:
13
11755 Wilshire Blvd., Suite 1250
ADAM M. SATNICK
BENSON K. LAU
Telephone: (310) 356-8472
14
Los Angeles, CA 90025
SATNICK LAU LLP
Attorneys for Defendants TYRONE
15 FREEMAN and WOLFGANG &
ASSOCIATES, LLC
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2
NOTICE OF RULING
EXHIBIT A
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
APPEARANCES:
For Plaintiff(s): Raphael B Emanuel (Telephonic) (X)
For Defendant(s): Lamar House BY: Marc Smith (X) (Telephonic); Benson Kwok Lau (x)
(Telephonic)
NATURE OF PROCEEDINGS: ORDER TO SHOW CAUSE RE PRELIMINARY
NJUNCTION
Matter comes on for hearing and is argued.
.
The court adopts its tentative ruling as the order of the court and is set forth in this minute order.
Plaintiff SLW Holdings, LLC (“Plaintiff”) moves for a preliminary injunction enjoining (1)
Defendants Tyrone Freeman and Daude Sherrills from participating in the operation of
Genetixcs, LLC, unless and until they first pass a background check as required by law (i.e., Live
Scan) and receive a badge; and (2) Defendant Lamar House from turning off the track and trace
system, i.e., METRCS, or effectively locking it, or withholding the passwords from a person or
persons who is competent and will operate the system per state law.
Judicial Notice; and Defendants’ Objections Thereto
(1) - (3) Sustained. Plaintiff has not authenticated these documents or provided certified copies.
(See Evid. Code § 453(b); People v. Maxwell (1978) 78 Cal. App. 3d 124, 130-131.)
(4) Overruled. Sufficient authentication. (See Van Beek Decl. ¶ 19, Exh. C; see also White Decl.
¶¶ 13-19.) The court does not judicially notice the truth of hearsay statements in the notice of
violation, only the existence of this public record.
Defendants’ Evidentiary Objections to Plaintiff’s Declarations
Declaration of John Van Beek
(1) Overruled.
Minute Order Page 1 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
(2) Overruled as to “I was the general contractor that built the building at 65401 two Bunch
Palms Trail from the ground up.” Sustained as to remainder. .
(3) Sustained.
(4) Overruled.
(5) Overruled.
(6) Sustained. .
(7) Sustained.
(8) Sustained as to “I am informed that soon after we began questioned M. Freeman’s proxy
claim [sic], the recordings of our meetings, which were always available suddenly become
unavailable for us to view.” Overruled as to remainder. .
(9) Overruled.
(10) Overruled
(11) Overruled.
(12) Overruled.
(13) Overruled.
(14) Overruled.
(15) Sustained as to “I had a recent conversation with Klarissa Vera. She is with Desert Hot
Springs Cannabis compliance division of the police department. She informed me one morning
after the judgments (public record) were provided to her regarding Tyrone Freeman and Daude
Sherrills, she went back and did some investigating on Genetixcs [sic] application and
discovered that Tyrone Freeman was the applicant.” Overruled as to remainder.
(16) Sustained.
(17) Sustained as to “and given that his cousin Mr. Sherrills also has a documented history with
organized crime” Overruled as to remainder.
(18) Overruled.
(19) Overruled.
Declaration of Sharod (Roddy) White
(1) Sustained.
(2) Overruled.
(3) Sustained.
(4) Sustained.
(5) Sustained.
(6) Overruled as to first sentence. Sustained as to remainder.
(7) Overruled.
(8) Sustained.
(9) Sustained.
Minute Order Page 2 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
(10) Sustained as to “Soon after members began questioning Mr. Freeman’s proxy claim, the
recordings of the boards’ meetings, which had always been available suddenly became
unavailable.” Overruled as to remainder.
(11) Overruled as to last sentence. Sustained as to remainder.
(12) Sustained as to “Genetixcs must fix the violations forthwith or will its license.” Overruled as
to remainder.
(13) Sustained.
(14) Sustained as to “The City notified members of Genetixcs[sic] and Mr. Van Reek, that the
company will lose its regulatory permit/license if the violations are not corrected forthwith.”
Overruled as to remainder.
(15) Sustained.
(16) Sustained.
(17) Sustained.
(18) Sustained.
Defendants’ Objections to Reply Evidence
Defendants object and move to strike to all evidence submitted by Plaintiff in reply. “The
salutary rule is that points raised in a reply brief for the first time will not be considered unless
good cause is shown for the failure to present them before.” (Balboa Ins. Co. v. Aguirre (1983)
149 Cal.App.3d 1002, 1010.) The court has discretion to accept new evidence in reply papers so
long as the opposing party is provided an opportunity to respond. (Alliant Ins. Services, Inc. v.
Gaddy (2008) 159 Cal.App.4th 1292, 1307-1308.) Defendants do not identify which specific
evidence or arguments they believe were improperly raised in reply. The reply declarations
provide some evidence that could be viewed as proper rebuttal to evidence submitted in
opposition. Defendants may respond to the reply declarations and arguments at the hearing. The
court exercises its discretion to consider all reply evidence and arguments. The objection is
OVERRULED and the motion to strike is DENIED.
Background
Plaintiff SLW Holdings, LLC (“Plaintiff” or “SLW”) is an investor and member of Genetixs,
LLC (“Genetixs”). (See House Decl. ¶ 6, Exh. A; Reply Jones Decl. ¶¶ 1-10; Reply White Decl.
¶¶ 1-12.) According to an operating agreement dated March 2020, the other members of
Genetixs are House, Defendant Daude Sherrills, The Rite-Lab, LLC, and Wolfgang &
Associates, LLC. (House Decl. ¶ 6, Exh. A.)
Genetixs leases real property at 65401 Two Bunch Palms Trail, Desert Hot Springs, CA
Minute Order Page 3 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
(“Premises”) and operates a cannabis facility at the Premises. (House Decl. ¶ 15, Exh. B; Van
Beek Decl. ¶¶ 2-19, Exh. C.)
Procedural History
On May 28, 2021, Plaintiff filed a complaint against Defendants Tyrone Freeman, Wolfgang &
Associates, Daude Sherrills, and Lamar House (collectively
“Defendants”) for breach of fiduciary duty, fraudulent concealment, unfair business practices,
and judicial expulsion under Corporations Code section 17706.01(b)(2)(B).
On May 28, 2021, the court granted Plaintiff’s ex parte application for a temporary retraining
order (“TRO”) and order to show cause (“OSC”) re: preliminary injunction against Defendants
Freeman and Sherrills (as to part one, set forth above) and against Defendant House (as to part
two). The court did not grant the ex parte as to Defendant Wolfgang & Associates and struck that
defendant from the proposed order. The court also struck from the OSC additional requests for
relief made by Plaintiff, including an order expelling Freeman and Sherrills from Genetixs, an
order appointing a receiver, and an order enjoining dissipation or transfer of assets. The stricken
requests for relief are therefore not at issue in the OSC and are not analyzed in this ruling.
The court set the OSC for hearing on June 17, 2021, and set a briefing schedule. The court
ordered Plaintiff to personally serve all moving papers, the TRO/OSC, the summons, and the
complaint by June 1, 2021. Any opposition was due June 10, 2021, and any reply June 14, 2021.
On June 4, 2021, Plaintiff filed several proofs of service.
On June 8, 2021, the court denied Plaintiff’s ex parte application for an order regarding service,
or alternatively, extension of time for service of summons, complaint, and TRO.
On June 17, 2021, the OSC came for hearing before the court. After oral argument, the court
reissued the TRO and continued the OSC to July 8, 2021, pursuant to CCP section 527(d)(5).
The court ordered Plaintiff to personally serve the summons, complaint, supplemental moving
papers, and TRO/OSC by June 18, 2021. The court ordered any opposition to be filed and served
by June 30, 2021, and any reply by July 2, 2021. The court’s order stated: “If the plaintiff has not
personally served the temporary restraining order on House and Sherrills, it must personally
serve them. If plaintiff contends these two defendants have already been personally served with
all of the papers, then notice must be given of the continued order to show cause date.”
On June 30, 2021, Defendant House filed and served an opposition to the OSC, evidentiary
Minute Order Page 4 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
objections, and multiple declarations on the merits.
On June 30, 2021, Defendants Tyrone Freeman and Wolfgang & Associates filed and served a
joinder in House’s opposition.
On June 30, 2021, Plaintiff filed proof of substitute service of the summons, complaint, and other
papers on Defendant Sherrills.
On July 2, 2021, Plaintiff filed and served a reply.
Legal Standard for Preliminary Injunction
The purpose of a preliminary injunction is to preserve the status quo pending a decision on the
merits. (Major v. Miraverde Homeowners Ass’n. (1992) 7 Cal. App. 4th 618, 623.) In deciding
whether or not to grant a preliminary injunction, the court looks to two factors, including “(1) the
likelihood that the plaintiff will prevail on the merits, and (2) the relative balance of harms that is
likely to result from the granting or denial of interim injunctive relief.” (White v. Davis (2003)
30 Cal.4th 528, 553-54.) The factors are interrelated, with a greater showing on one permitting a
lesser showing on the other. (Dodge, Warren & Peters Ins. Services, Inc. v. Riley (2003) 105
Cal.App.4th 1414, 1420.) However, the party seeking an injunction must demonstrate at least a
reasonable probability of success on the merits. (IT Corp. v. County of Imperial (1983) 35 Cal.3d
63, 73-74.) The party seeking the injunction bears the burden of demonstrating both a likelihood
of success on the merits and the occurrence of irreparable harm. (Savage v. Trammell Crow Co.
(1990) 223 Cal.App.3d 1562, 1571.) Irreparable harm may exist if the plaintiff can show an
inadequate remedy at law. (CCP § 526(a).) “A preliminary injunction is not a determination on
the merits.” (Yee v. American National Ins. Co. (2015) 235 Cal.App.3d 363, 458.)
Analysis
Procedural Issues
Notice
Code of Civil Procedure section 527(d) provides in pertinent part: “The party who obtained the
temporary restraining order shall, within five days from the date the temporary restraining order
is issued or two days prior to the hearing, whichever is earlier, serve on the opposing party a
copy of the complaint if not previously served, the order to show cause stating the date, time, and
place of the hearing, any affidavits to be used in the application, and a copy of the points and
Minute Order Page 5 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
authorities in support of the application.” (CCP § 527(d)(2).) “When the matter first comes up
for hearing, … if the party has failed to effect service as required by paragraph (2), the court
shall dissolve the temporary restraining order.” (CCP § 527(d)(3).)
“Upon the filing of an affidavit by the applicant that the opposing party could not be served
within the time required by paragraph (2), the court may reissue any temporary restraining order
previously issued. The reissued order shall be made returnable as provided by paragraph (1),
with the time for hearing measured from the date of reissuance.” (CCP § 527(d)(5).)
“An OSC must be used when a temporary restraining order (TRO) is sought, or if the party
against whom the preliminary injunction is sought has not appeared in the action. If the
responding party has not appeared, the OSC must be served in the same manner as a summons
and complaint.” (California Rules of Court 3.1150(a).)
“An … appearance at a hearing for which an ex parte application for a provisional remedy is
made, is not a general appearance ….” (CCP § 418.11.) An appearance at the OSC re:
preliminary injunction, however, may be a general appearance if the defendant addresses the
merits of the case. (California Overseas Bank v. French Am. Banking Corp. (1984) 154
Cal.App.3d 179, 183-84.)
On June 30, 2021, Defendant House filed and served an opposition to the OSC, evidentiary
objections, and multiple declarations on the merits. On June 30, 2021, Defendants Tyrone
Freeman and Wolfgang & Associates filed and served a joinder in House’s opposition. By
addressing the merits of the OSC and requesting relief from the court, i.e. rulings on evidentiary
objections, Defendants House, Freeman, and Wolfgang & Associates have recognized the court’s
jurisdiction and made a general appearance. They have also waived any procedural defect in
service of the TRO/OSC and moving papers. For these reasons, the court need not analyze the
parties’ remaining contentions about service on these defendants.
On June 30, 2021, Plaintiff filed proof of substitute service of the summons, complaint, the ex
parte papers, and TRO/OSC on Defendant Sherrills. The proof of service states that the process
server sub-served the documents on Lorraine Molina, co-occupant on June 24, 2021, and then
mailed the documents to the service address on June 24, 2021. Substitute service is not complete
until the tenth day after mailing and would not result in timely service for the OSC date. (See
CCP §§ 415.20(a), (b); 415.95(a).) The court also ordered personal service by June 18, 2021.
Accordingly, the ex parte and OSC papers have not been timely or properly served on Sherrills.
Plaintiff requests that the court renew the TRO and allow for personal service on Sherrills.
Minute Order Page 6 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
(Reply 3.) Plaintiff does not submit an affidavit in support of this request. To the extent Plaintiff
relies on the declaration of diligence filed with the June 30 proof of service, the evidence is
insufficient. The process server indicates that Lorraine Molina stated on June 23, 2021, that she
did not know Sherrills. Plaintiff provides insufficient evidence that it could not timely serve
Sherrills by June 18, 2021. The court has already continued the OSC once.
Based on the foregoing, the application is DENIED as to Sherrills for insufficient service of the
moving papers and OSC.
Disqualification Issue
In a reply declaration, witness and non-party John Van Beek objects to “attorney Marc Smith
acting in any adverse role to me and/ or SLW Holdings LLC, or its members, based on material
confidential information that was shared with Mr. Smith for the purpose of obtaining legal
representation in this case.” (Reply Van Beek Decl. ¶ 1.)
Plaintiff has not filed a motion to disqualify Smith as counsel for Defendants. Absent a properly
noticed motion to disqualify counsel, the court does not reach the merits of the argument that
attorney Smith should be disqualified. Plaintiff is not precluded from filing a properly noticed
motion in the individual calendar court to which this case is assigned.
Likelihood of Prevailing
Plaintiff’s Standing, and Failure to Plead Derivative Lawsuit
Defendants contend that the complaint alleges harm to Genetixs, not Plaintiff individually; that
Plaintiff lacks standing to bring this action as a minority member of Genetixs; and that Plaintiff
has not satisfied the requirements to bring a derivative action in the name of Genetixs. (Oppo.
10-12.) Plaintiff does not fully respond to these arguments. The reply contains no response to the
argument that Plaintiff’s claims are derivative in nature. Plaintiff even states that “this is not a
direct injury claim.” In these circumstances, Plaintiff concedes the point. (Reply 8-9; see
Sehulster Tunnels/Pre-Con v. Traylor Brothers, Inc. (2003) 111 Cal.App.4th 1328, 1345, fn. 16
[failure to address point is “equivalent to a concession”].)
“Every action must be prosecuted in the name of the real party in interest....” (CCP § 367.)
“Generally, ‘the person possessing the right sued upon by reason of the substantive law is the
real party in interest.’” (Gantman v. United Pacific Ins. Co. (1991) 232 Cal.App.3d 1560, 1566.)
Minute Order Page 7 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
“A shareholder's derivative suit seeks to recover for the benefit of the corporation and its whole
body of shareholders when injury is caused to the corporation that may not otherwise be
redressed because of failure of the corporation to act. Thus, ‘the action is derivative, i.e., in the
corporate right, if the gravamen of the complaint is injury to the corporation, or to the whole
body of its stock and property without any severance or distribution among individual holders….
The stockholder's individual suit, on the other hand, is a suit to enforce a right against the
corporation which the stockholder possesses as an individual.’” (PacLink Communications
Intern., Inc. v. Sup.Ct. (2001) 90 Cal.App.4th 958, 964.) “An individual cause of action exists
only if damages to the shareholders were not incidental to damages to the corporation.” (Schuster
v. Gardner (2005) 127 Cal.App.4th 305, 313.) “Shareholders may bring a derivative suit to, for
example, enjoin or recover damages for breaches of fiduciary duty directors and officers owe the
corporation.” (Ibid.) “‘The two actions are mutually exclusive: i.e., the right of action and
recovery belongs to either the shareholders (direct action) or to the corporation (derivative
action).” (Bader v. Anderson (2009) 179 Cal.App.4th 775, 793.) These same rules apply to
members of an LLC. (PacLink, supra at 964.)
Here, the court need not decide for this motion whether all causes of action in the complaint,
such as the cause of action for fraud, are direct or derivative in nature. The OSC is based on
claims that are derivative in nature. Specifically, Plaintiff alleges that Defendants have engaged
in unfair business practices by refusing to undergo background checks while operating Genetixs,
LLC, in which Plaintiff made investments. (Compl. ¶ 34.) Plaintiff alleges that Defendant House
has engaged in unfair business practices by “shutting down the METRCS system” of Genetixs.
(Id. ¶ 34.) While Plaintiff conclusorily alleges that it has suffered damages from the unfair
practices (Id. ¶ 35), Plaintiff concedes in the complaint that the harm is to Genetixs. Specifically,
Plaintiff alleges: “Due to the unlawful conduct of Defendants, Genetixs is failing.” (Id. ¶ 26.)
Plaintiff does not show that its fraud claim, which could be direct, is a possible basis for the
requested injunctive relief.
In the ex parte, Plaintiff similarly states that “Mr. Freeman and Mr. Sherrills refusal to comply
with the Notice of Violation is causing Genetixs to be cited, investigated and it is in imminent
danger of losing its license, and going out of business.” (Ex parte 5.) Plaintiff states that
Defendants are “destroying Genetixcs” and their conduct has caused Genetixs’ operations to
come to a “virtual standstill.” (Id. at 8.) From these and other statements in the ex parte papers
and complaint, Defendants have a persuasive argument that the alleged harm at issue in the OSC
is to Genetixs and all LLC membership interests. The alleged harm to Plaintiff is incidental to
the damage to Genetixs. Plaintiff has not developed any argument to the contrary in reply. Thus,
the OSC appears to be based on claims that are derivative in nature.
Minute Order Page 8 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
Defendants contend that Plaintiff has not complied with the procedural requirements to bring a
derivation action. (Oppo. 11-12.) The reply makes no counter argument. California Corporations
Code section 17709.02(a) provides: “No action shall be instituted...in right of any domestic or
foreign limited liability company by any member...unless... (2) [t]he Plaintiff alleges...efforts to
secure from the managers the action the plaintiff desires or the reasons for not making that
effort...” Plaintiff does not allege compliance with this requirement. Plaintiff has not made any
argument or submitted any evidence to support a finding of demand futility.
Further, the Operating Agreement supports Defendants’ standing argument. The Genetixs
operating agreement submitted by House, and not rebutted in reply, shows that Plaintiff owns
237.50 of the total 1000 Governance Units and thus has a minority interest. (House Decl. Exh. A
at p. 38.) Section 7.2 of the operating agreement provides:
Actions by Members. Except as otherwise provided in this Agreement, all decisions requiring
actions by Members or relating to the business or affairs of the Company will be decided by
affirmative vote or consent of the Members holding a Majority in Interest of the Members.
Members owning Governance Units may act with or without a meeting, and any member may
participate in any meeting by written proxy or by means of communication reasonable under the
circumstances. (Id. ¶ 13, Exh. A at p. 12.)
Defendants submit evidence that Plaintiff has not obtained consent of a majority of the Genetixs
membership to file this action. (House Decl. ¶ 14.) Plaintiff submits no evidence to the contrary
in reply.
Because it appears Plaintiff’s claims are derivative in nature and Plaintiff lacks standing to bring
such claims, Plaintiff has not shown a reasonable likelihood of success on the claims upon which
the motion for preliminary injunction is based. Accordingly, the court need not reach Plaintiff’s
remaining arguments.
Balance of Harms
For the second factor, the court must consider “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.” (Smith v. Adventist Health System/West (2010)
182 Cal.App.4th 729, 749.) “Irreparable harm” generally means that the defendant’s act
constitutes an actual or threatened injury to the personal or property rights of the plaintiff that
cannot be compensated by a damages award. (See Brownfield v. Daniel Freeman Marina
Hospital (1989) 208 Cal.App.3d 405, 410.)
Minute Order Page 9 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
Because Plaintiff has not shown a reasonable likelihood of success, the court need not reach the
balance of harms.
However, even if court reach the balance of harms, Plaintiff does not show irreparable harm that
would justify a preliminary injunction. Plaintiff is an investor in Genetixs and has invested
substantial monies in the business. (See Reply Jones Decl. ¶ 10; Reply White Decl. ¶ 12.) The
harm Plaintiff alleges in the motion is monetary in nature. (Ex parte 8-9.) Plaintiff fails to show
that monetary damages would not be sufficient to compensate it for the harm alleged.
Plaintiff alleges that Gentixs could suffer harm if the preliminary injunction is denied. (Ex parte
8:22; 9:19 [“Due to the unlawful conduct of Defendants, Genetixs is failing”].) However,
Genetixs has not been named a party to this action, and Plaintiff has not shown its standing to
sue to protect Genetixs’ interests.
Defendant House submits some evidence that denial of the preliminary injunction could harm
Defendants. (House Decl. ¶¶ 1-30.) For instance, he declares that Genetixs has retained Tony
Simeone, a feature grower, to manage the Gentixs Cannabis Facility; that the METRIC system is
operational; and that Van Beek has been removed as manager for alleged mismanagement. (Id.
¶¶ 19-29.) Defendants believe that the requested preliminary injunction could harm their interests
in Genetixs. Because Plaintiff has not sufficiently shown standing or any irreparable harm if the
preliminary injunction is denied, the court need not analyze this evidence in detail. The court
finds some irreparable harm to Defendants from the requested preliminary injunction, which
would apply to them and could impact the operations of Genetixs. Because Defendants
themselves would be enjoined, the harm to Defendants from the preliminary injunction would
not be compensable in damages. The balance of harms weighs for denial of the motion.
Having considered Plaintiff’s probability of prevailing and the balance of harms, the court denies
the preliminary injunction.
Undertaking; Mandatory Injunction; Unclean Hands
Because the court denies the application, the court need not analyze the undertaking requirement
or Defendants’ contentions that Plaintiff seeks a mandatory injunction or has unclean hands.
Conclusion
The application is DENIED. The court’s ruling is without prejudice to Plaintiff filing a noticed
Minute Order Page 10 of 11
SUPERIOR COURT OF CALIFORNIA, COUNTY OF LOS ANGELES
Civil Division
Central District, Stanley Mosk Courthouse, Department 82
21STCV20050 July 8, 2021
SLW HOLDINGS, LLC vs TYRONE FREEMAN, et al. 1:30 PM
Judge: Honorable Mary H. Strobel CSR: D Freeman/CSR 12628
Judicial Assistant: N DiGiambattista ERM: None
Courtroom Assistant: R Monterroso Deputy Sheriff: None
motion for preliminary injunction in the individual calendar court to whom the case is assigned.
Counsel for defendant Freeman is to give notice.
Minute Order Page 11 of 11
1 PROOF OF SERVICE
2 I, the undersigned, declare that:
3 I am employed in the County of Los Angeles, State of California, over the age of 18, and not a
party to this cause. My business address is 11755 Wilshire Blvd., Suite 1250, Los Angeles, CA 90025.
4
On July 8, 2021, I served a true copy of the NOTICE OF RULING RE: ORDER TO
5 SHOW CAUSE FOR ISSUANCE OF PRELIMINARY INJUNCTION on all interested parties
in this action by placing a true and correct copy thereof enclosed in a sealed envelope addressed as
6 stated below:
7 Raphael B. Emanuel, Esq. Marc Smith, Esq.
EMANUEL LAW FIRM KRANE & SMITH
8 1100 Glendon Avenue (Westwood Center) 16255 Ventura Blvd., Suite 600
15th Floor Encino, CA 91436
9 Los Angeles, CA 90024 Email: msmith@kranesmith.com
Email: remanuel@emanuel.law Attorneys for Defendant Lamarr House
10 Attorneys for Plaintiff SLW Holdings, LLC
11
Tamara Binns, Esq.
12 TAMARA BINNS LAW OFFICE
315 West Pondera Street
13
11755 Wilshire Blvd., Suite 1250
Lancaster, CA 93534
Email: binnslawgroup@gmail.com
Telephone: (310) 356-8472
14
Los Angeles, CA 90025
SATNICK LAU LLP
Specially Appeared for Defendant Daude Sherrills
15 [ ] (VIA FEDERAL EXPRESS) by placing the above named document in a sealed envelope
addressed as set forth below and by then placing said envelope for collection and overnight
16 delivery via Federal Express, in accordance with my ordinary business
practices.
17
[ ] (BY HAND DELIVERY)—I personally hand delivered said document to the offices of the
18 addressees shown above.
19 [X] (BY ELECTRONIC TRANSMISSION) – I transmitted a PDF version of this
document by electronic mail to the party(s) identified on the attached service list using the
20 email address(es) indicated.
21 [X] I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
22
Executed on July 8, 2021, at Los Angeles, California.
23
/s/
24
Benson K. Lau, Esq.
25
26
27
28
1
PROOF OF SERVICE
