Contract analysis

1. Plaintiff Marguerite D. Fonseca is, and at all times relevant hereto was, an individual residing in the City of Los Angeles, County of Los Angeles, State of California. Fonseca's address is 2817 Cheremoya Avenue, Los Angeles, California 90068.

2. Defendant Desmond R. Rennick ("Rennick") is, and at all times relevant hereto was, an individual residing in the City of Santa Monica, County of Los Angeles, State of California. Rennick's address is 438 Georgina Avenue, Santa Monica, California 90402. At all relevant times, Rennick was a partner in Coastal Meridian Productions LLP ("CMP") and the sole member of Rennick Slate Ventures LLC ("RSV"). Rennick served a

3. Defendant Rennick Slate Ventures LLC ("RSV") is a California limited liability company organized on June 22, 2018, by Desmond R. Rennick as its sole member and manager. RSV's principal place of business is located at 1925 Ocean Park Blvd., Suite 200, Santa Monica, California 90405. RSV's employer identification number is 84-3056178. At all relevant times, RSV invoiced CMP for production-management, post-production

4. Plaintiff is ignorant of the true names and capacities of defendants sued herein as DOES 1 through 25, inclusive. Plaintiff is informed and believes, and thereon alleges, that each of the fictitiously named defendants is in some manner responsible for the occurrences herein alleged and the damages suffered by Plaintiff. Plaintiff will amend this Complaint to allege their true names and capacities when the same hav

5. This Court has jurisdiction over this action pursuant to Article VI, Section 10 of the California Constitution because the amount in controversy exceeds Twenty-Five Thousand Dollars ($25,000.00), exclusive of interest and costs. All parties named in this Complaint reside in the County of Los Angeles, State of California, and the events and transactions giving rise to Plaintiff's claims occurred within the State of

6. Venue is proper in the Superior Court for the County of Los Angeles pursuant to California Code of Civil Procedure Section 395 because the partnership's principal office is located at 1140 N. La Brea Avenue, Suite 300, Los Angeles, California 90038, within this County, and the acts and omissions giving rise to each cause of action pleaded herein occurred in this County. Additionally, Defendant Rennick resides in t

7. On or about March 8, 2017, Fonseca and Rennick formed Coastal Meridian Productions LLP ("CMP"), a California limited liability partnership formed and existing under the California Revised Uniform Partnership Act, California Corporations Code Sections 16100 et seq. CMP's stated purpose was the development, production, and exploitation of feature-film properties for theatrical, home-entertainment, television, and di

8. The CMP Partnership Agreement dated March 8, 2017 (the "Original Agreement"), was amended once, on January 15, 2019 (the "First Amendment"; the Original Agreement and the First Amendment are referred to collectively herein as the "Agreement"). The Agreement provides that Fonseca holds a fifty-five percent (55%) partnership interest and Rennick holds a forty-five percent (45%) partnership interest. To fund the part

9. Section 6.2 of the Agreement provides that management fees payable to a partner or a partner's designee shall not exceed five percent (5%) of gross receipts per film property. Rennick, as Managing Partner, had day-to-day operational control of CMP's business and sole signing authority over CMP's operating accounts. In connection with CMP's development and production activities, CMP maintained a One Million Four Hu

10. Over the course of its operations from 2017 through mid-2022, CMP produced and exploited four feature films (collectively, the "Film Properties"), as follows: (a) Iron Lullaby — released in 2018 — aggregate gross receipts through Q2 2022: Six Million Four Hundred Twenty Thousand Dollars ($6,420,000.00); (b) The Perdition Room — released in 2019 — aggregate gross receipts through Q2 2022: Four Million One Hundred

11. CMP's outside accounting firm, Clearfield & Moss CPAs (partner-in-charge: Howard Moss, CPA), prepared annual partnership tax returns (IRS Form 1065) and quarterly financial statements for CMP. CMP's revenue waterfall, as set forth in Section 7.1 of the Agreement, governed the distribution of proceeds from each Film Property, with provisions for distributor fees and expenses, management fees (subject to the five-p

12. On or about June 22, 2018, Rennick formed RSV as his wholly owned service company, serving as its sole member and manager. Thereafter, Rennick caused CMP to engage RSV for production-management, post-production supervision, and festival/distribution services in connection with all four Film Properties. All RSV invoices submitted to CMP were approved solely by Rennick in his capacity as CMP's Managing Partner. Non

13. Between 2018 and mid-2022, Rennick caused CMP to pay management fees and service invoices to RSV totaling Two Million Six Hundred Ninety-Four Thousand Five Hundred Dollars ($2,694,500.00). Under the five-percent (5%) cap set forth in Section 6.2 of the Agreement, the maximum permissible management fees across the four Film Properties were One Million One Hundred Sixty-One Thousand Dollars ($1,161,000.00), calcula

14. Many of the RSV invoices were inflated, duplicative, or lacked any basis in services actually rendered on behalf of CMP. Specifically, thirty-seven (37) invoices totaling Eight Hundred Fourteen Thousand Six Hundred Dollars ($814,600.00) purported to be for "post-production supervision" for work that had already been performed by third-party post-production houses independently engaged by CMP, including color-corr

15. In addition to the excess management fees described above, Rennick improperly reclassified Eight Hundred Forty-Seven Thousand Two Hundred Dollars ($847,200.00) in domestic distribution revenues as recoupable producer-advance repayments, thereby reducing the distributable profit pool available for partnership distributions to Fonseca and Rennick. Specifically: (a) Five Hundred Thirty-Eight Thousand Two Hundred Dol

16. The underlying Tranche B advances for both Salt Wind and Iron Lullaby had been fully recouped by Q4 2019, as confirmed by the quarterly financial reports prepared by Clearfield & Moss CPAs for that period. The reclassifications described in the preceding paragraph occurred approximately nine (9) to fifteen (15) months after the relevant advances had been fully recouped. The reclassifications were therefore improp

17. By reclassifying revenues associated with fully recouped advances, Rennick artificially depressed the distributable profit pool, with the result that Fonseca received reduced quarterly distributions. The effect of these reclassifications was to divert funds that should have been distributed to the partners in accordance with their respective partnership interests (55% to Fonseca and 45% to Rennick) and instead to

18. As a direct and proximate result of the foregoing conduct, Fonseca has been deprived of her rightful partnership distributions. Fonseca's fifty-five percent (55%) share of the combined irregularities is as follows: (a) Excess management fees paid to RSV: $1,533,500.00 × 55% = $843,425.00; (b) Improperly reclassified revenues: $847,200.00 × 55% = $465,960.00; (c) Total damages (exclusive of interest): $1,309,385.0

19. Fonseca is further entitled to pre-judgment interest at the statutory rate of ten percent (10%) per annum pursuant to California Civil Code Section 3289(b). Calculated from approximately October 2022, when Fonseca first made written demand upon Rennick for an accounting and payment, to the filing of this Complaint (approximately nine months), pre-judgment interest is estimated at Ninety-Eight Thousand Two Hundred

20. Fonseca incorporates by reference each and every allegation set forth in Paragraphs 1 through 19 above as though fully set forth herein.

21. At all relevant times, Rennick owed Fonseca fiduciary duties as a partner in CMP under the California Revised Uniform Partnership Act, California Corporations Code Sections 16403 and 16404. These fiduciary duties included, without limitation, the duty of loyalty, the duty of care, and the obligation of good faith and fair dealing owed by each partner to the other partners and to the partnership.

22. Rennick's duty of loyalty required him, inter alia, to account to the partnership for any property, profit, or benefit derived by him in the conduct and winding up of the partnership business or derived from a use by him of partnership property, including the appropriation of a partnership opportunity (California Corporations Code Section 16404(b)(1)), and to refrain from dealing with the partnership in the condu

23. Rennick breached his fiduciary duties to Fonseca and to CMP in the following respects, among others: (a) Rennick caused CMP to pay inflated and duplicative management fees and service charges to RSV, Rennick's wholly owned entity, totaling $1,533,500.00 in excess of the five-percent (5%) management-fee cap established by Section 6.2 of the Agreement; (b) Rennick approved all RSV invoices unilaterally, without Fon

24. Rennick's breaches of fiduciary duty were committed knowingly and for his personal benefit and financial gain, through the interposition of RSV as a conduit for the diversion of partnership funds, and to the direct detriment of Fonseca's partnership interest and her right to receive distributions in accordance with the Agreement.

25. As a direct and proximate result of Rennick's breach of fiduciary duty, Fonseca has suffered damages in an amount not less than One Million Three Hundred Nine Thousand Three Hundred Eighty-Five Dollars ($1,309,385.00), exclusive of interest, the exact amount of such damages to be established according to proof at trial. Fonseca is further entitled to disgorgement of all profits wrongfully obtained by Rennick thro

26. Fonseca incorporates by reference each and every allegation set forth in Paragraphs 1 through 25 above as though fully set forth herein.

27. The CMP Partnership Agreement, dated March 8, 2017, as amended by the First Amendment dated January 15, 2019, constitutes a valid, binding, and enforceable contract between Fonseca and Rennick, setting forth the parties' respective rights and obligations with respect to the governance, financing, operations, and profit distribution of CMP.

28. Fonseca has performed all conditions, covenants, and obligations required of her under the Agreement, or, in the alternative, is excused from such performance by reason of Rennick's material breaches as alleged herein.

29. Rennick materially breached the Agreement in the following respects, among others: (a) Rennick breached Section 6.2 of the Agreement by causing CMP to pay management fees to RSV, his wholly owned designee, in an aggregate amount of $2,694,500.00, which exceeded the five-percent (5%) management-fee cap by $1,533,500.00; (b) Rennick breached Section 7.1 of the Agreement (governing partnership distributions and the

30. As a direct and proximate result of Rennick's material breaches of the Agreement, Fonseca has suffered damages in an amount not less than One Million Three Hundred Nine Thousand Three Hundred Eighty-Five Dollars ($1,309,385.00), exclusive of interest, the exact amount of such damages to be established according to proof at trial.

31. Section 12.3 of the Agreement provides for the recovery of reasonable attorney's fees and costs by the prevailing party in any action arising out of or related to a material breach of the Agreement. By reason of Rennick's material breaches as alleged herein, Fonseca is entitled to recover her reasonable attorney's fees and costs incurred in bringing and prosecuting this action, in an amount to be determined by th

32. Fonseca incorporates by reference each and every allegation set forth in Paragraphs 1 through 31 above as though fully set forth herein.

33. A fiduciary relationship exists and at all relevant times existed between Fonseca and Rennick as partners in CMP. Rennick, as CMP's Managing Partner, had exclusive day-to-day control over CMP's financial records, operating accounts, distribution proceeds, and intercompany transactions, including all transactions between CMP and RSV. Fonseca relied upon Rennick to maintain and provide accurate financial informatio

34. Rennick has failed and refused to provide Fonseca with a full, complete, and accurate accounting of CMP's financial affairs, notwithstanding Fonseca's written demand dated on or about October 2022. Specifically, Rennick has failed to provide a complete accounting of all intercompany transactions between CMP and RSV, all waterfall calculations for each Film Property, all domestic distribution agreements and amendm

35. Fonseca is entitled to a court-ordered accounting of CMP's partnership affairs pursuant to California Corporations Code Section 16405(b), which provides that a partner may maintain an action against the partnership or another partner for, inter alia, an accounting of the partnership's affairs whenever circumstances render it just and reasonable.

36. An accounting is necessary and appropriate to determine the full extent of Rennick's misapplication of partnership funds and the complete scope of damages to which Fonseca is entitled, including but not limited to: (a) The complete universe of RSV invoices submitted to CMP and all corresponding payments made by CMP to RSV, including the dates, amounts, and descriptions of services purportedly rendered; (b) The ba

37. Without such a comprehensive accounting, Fonseca is unable to determine the full extent of damages to which she is entitled. The complexity of the intercompany transactions, the multiple Film Properties, and the multi-tiered waterfall structure render it impracticable for Fonseca to ascertain the amounts owed to her through means other than a court-supervised accounting. FOURTH CAUSE OF ACTION Constructive Fraud.

38. Fonseca incorporates by reference each and every allegation set forth in Paragraphs 1 through 37 above as though fully set forth herein.

39. At all relevant times, Rennick stood in a fiduciary relationship with Fonseca as her co-partner in CMP. By virtue of this fiduciary relationship, Rennick owed Fonseca the highest duties of loyalty, disclosure, honesty, and good faith, and Fonseca reposed trust and confidence in Rennick with respect to the management and financial affairs of the partnership.

40. Rennick engaged in constructive fraud by, among other things: (a) Reclassifying $847,200.00 in domestic distribution revenues from Salt Wind and Iron Lullaby as recoupable advance repayments after said Tranche B advances had been fully recouped by Q4 2019, as confirmed by Clearfield & Moss CPAs' quarterly financial reports for that period; (b) Making these reclassifications without Fonseca's knowledge, consent, o

41. Rennick's conduct as alleged herein, regardless of whether actual fraudulent intent existed, constituted a breach of duty arising from a relationship of trust and confidence between the parties. Such conduct constitutes constructive fraud under California law. See Cal. Civ. Code § 1573. A fiduciary who gains an advantage through the breach of a confidential or fiduciary relationship is liable for constructive fra

42. As a direct and proximate result of Rennick's constructive fraud, Fonseca has suffered actual damages in an amount not less than Four Hundred Sixty-Five Thousand Nine Hundred Sixty Dollars ($465,960.00), representing her fifty-five percent (55%) share of the $847,200.00 in improperly reclassified revenues, exclusive of interest. Fonseca's damages may increase upon a complete accounting of CMP's financial affairs

43. By reason of the foregoing, Fonseca is entitled to recover actual damages, disgorgement of all profits wrongfully obtained by Rennick through the reclassification scheme, pre-judgment interest, and such other equitable and legal relief as the Court deems just and appropriate. FIFTH CAUSE OF ACTION Unjust Enrichment. (Against Defendant Rennick Slate Ventures LLC)

44. Fonseca incorporates by reference each and every allegation set forth in Paragraphs 1 through 43 above as though fully set forth herein.

45. Between 2018 and mid-2022, RSV received management fees and service payments from CMP totaling Two Million Six Hundred Ninety-Four Thousand Five Hundred Dollars ($2,694,500.00), purportedly in exchange for production-management, post-production supervision, and festival/distribution services rendered in connection with CMP's four Film Properties.

46. Of this total, One Million Five Hundred Thirty-Three Thousand Five Hundred Dollars ($1,533,500.00) was paid in excess of the five-percent (5%) management-fee cap established by Section 6.2 of the Partnership Agreement. These excess payments were not authorized under the Agreement, were not the product of arm's-length negotiation, and were not approved by Fonseca or by any disinterested party.

47. RSV was not entitled to receive or retain these excess payments. The fees were procured through Rennick's unilateral action in his dual capacity as both Managing Partner of CMP (the party approving the invoices) and sole member and manager of RSV (the party issuing the invoices and receiving the payments). RSV had no independent contractual right to fees exceeding the five-percent cap, and the invoices submitted

48. RSV has been unjustly enriched by the receipt and retention of $1,533,500.00 in excess fees at the expense of CMP and, derivatively, at the expense of Fonseca, who as a fifty-five percent (55%) partner in CMP is entitled to the benefit of partnership funds that were improperly diverted to RSV. It would be inequitable and unjust for RSV to retain these funds.

49. Fonseca is entitled to restitution and disgorgement from RSV of all improperly received funds. The amount to which Fonseca is entitled is not less than One Million Five Hundred Thirty-Three Thousand Five Hundred Dollars ($1,533,500.00) in full, or, in the alternative, Fonseca's fifty-five percent (55%) share thereof, totaling Eight Hundred Forty-Three Thousand Four Hundred Twenty-Five Dollars ($843,425.00), as ma

1. For compensatory damages in an amount according to proof at trial, but not less than One Million Three Hundred Nine Thousand Three Hundred Eighty-Five Dollars ($1,309,385.00);

2. For pre-judgment interest at the statutory rate of ten percent (10%) per annum pursuant to California Civil Code Section 3289(b) from the date each sum became due, and for post-judgment interest at the legal rate;

3. For an order requiring Defendants Rennick and RSV to provide a full, complete, and accurate accounting of all financial affairs of CMP, including but not limited to all intercompany transactions between CMP and RSV, all waterfall calculations for each Film Property, all domestic distribution agreements and amendments thereto, and all advance-recoupment schedules;

4. For restitution and disgorgement from Defendant RSV of all improperly diverted funds in the amount of One Million Five Hundred Thirty-Three Thousand Five Hundred Dollars ($1,533,500.00), or such other amount as may be established according to proof at trial;

5. For reasonable attorney's fees and costs of suit incurred herein pursuant to Section 12.3 of the CMP Partnership Agreement and California Code of Civil Procedure Section 1021.5;

6. For such other and further relief as the Court deems just and proper. DATED: January 24, 2023 CALDERWOOD & HARKNESS LLP By: ________ Samuel Eklund (SBN 198456) Attorneys for Plaintiff MARGUERITE D. FONSECA DEMAND FOR JURY TRIAL Plaintiff Marguerite D. Fonseca hereby demands a trial by jury of all issues so triable in this action. CALDERWOOD & HARKNESS LLP By: ________ Samuel Eklund (SBN 198456) Attorneys for Plain