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CALDERWOOD & HARKNESS LLP

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT

MATTER CLOSING MEMORANDUM

TO: File

FROM: Jeffrey Park, Lead Associate, Litigation (General)

DATE: July 14, 2023

RE: Closing Summary — Fonseca v. Rennick, Matter No. 1035-00004

1. Matter Overview

This memorandum sets forth a comprehensive closing summary of the representation of Marguerite D. Fonseca in the matter captioned Fonseca v. Rennick et al., filed in the Superior Court of the State of California, County of Los Angeles, Case No. 23STCV01897. The matter has been resolved by settlement, and the file is being closed as of the date of this memorandum.

Client: Marguerite D. Fonseca, an individual domiciled in Los Angeles, California. Ms. Fonseca serves as Co-Managing Partner of Coastal Meridian Productions LLP ("CMP"), in which she holds a 55% equity interest. Ms. Fonseca's capital contributions to CMP totaled $2,850,000 at the time of the partnership's formation and subsequent capitalization.

Opposing Party: Desmond R. Rennick, an individual domiciled in Santa Monica, California. Mr. Rennick serves as Co-Managing Partner of CMP, in which he holds a 45% equity interest. Mr. Rennick is also the sole member and manager of Rennick Slate Ventures LLC ("RSV"), a California limited liability company through which Mr. Rennick invoiced CMP for management fees and service charges that are at the center of the dispute underlying this matter.

Court: Superior Court of the State of California, County of Los Angeles.

Case Number: 23STCV01897.

Matter Type: Partnership dispute involving claims for an accounting, breach of fiduciary duty, breach of the partnership agreement, constructive fraud, and unjust enrichment. The factual core of the dispute concerned Rennick's misapplication of partnership funds through the systematic overcharging of management fees in excess of contractual caps, as well as his fraudulent manipulation of the revenue waterfall governing profit distributions from four feature-film properties produced by CMP. The manipulation took the form of reclassifying domestic distribution revenues as recoupable producer-advance repayments for advances that had already been fully recouped.

Matter Opened: October 10, 2022.

Matter Closed: July 14, 2023.

Status: Closed — Completed.

Governing Law: State of California.

2. Engagement Team

The following Calderwood & Harkness professionals were assigned to this matter:

Partner Samuel Eklund supervised all strategic decisions, attended the full-day mediation session on May 19, 2023, and served as the primary relationship partner for the client throughout the engagement. Partner Linda Osei served as billing partner, reviewed all invoices, and managed the client's retainer account. Associate Jeffrey Park served as lead associate, responsible for all substantive work product, court filings, day-to-day case management, and coordination with the forensic accountant and mediator. Associate Yuki Nakamura provided research and drafting support, prepared the internal case assessment memorandum, and assisted with document review and analysis of the forensic accounting findings.

3. Opposing Counsel

Firm: Hargrove, Pettit & Sun LLP 800 South Figueroa Street, Suite 3100 Los Angeles, CA 90017

Lead Partner: Elaine Chow

Associate: Marcus Webb

Hargrove, Pettit & Sun LLP appeared on behalf of Desmond R. Rennick. The firm's initial response to our pre-litigation demand letter was received on November 2, 2022 and was signed by Ms. Chow. Ms. Chow and Mr. Webb handled all aspects of the defense, including the filing of Rennick's answer and counterclaim, participation in mediation, and negotiation of the settlement agreement. Throughout the matter, opposing counsel was professional and responsive, which facilitated an efficient resolution process.

4. Key Consultants and Third Parties

The following consultants and third parties played significant roles in the matter:

Forensic Accountant: Tillerman Forensic Advisory LLC 350 South Grand Avenue, Suite 1480 Los Angeles, CA 90071 Principal: Greta Sørensen, CPA, CFF

Tillerman Forensic Advisory was retained by Calderwood & Harkness on behalf of Ms. Fonseca prior to the opening of this matter. Ms. Sørensen was engaged on August 15, 2022, to conduct a preliminary forensic review of CMP's financial records, with a particular focus on management-fee invoices submitted by RSV and the revenue-waterfall calculations used to compute partner distributions. Ms. Sørensen delivered her preliminary forensic accounting memorandum on December 19, 2022. That memorandum provided a detailed, invoice-by-invoice analysis of all 142 RSV invoices submitted to CMP between 2018 and mid-2022, as well as a comprehensive timeline of the revenue reclassification entries affecting the Salt Wind and Iron Lullaby distribution waterfalls. Ms. Sørensen's analysis formed the factual backbone of both the complaint and our mediation brief.

Partnership Accountant: Clearfield & Moss CPAs 9100 Sunset Blvd., Suite 220 West Hollywood, CA 90069 Partner-in-Charge: Howard Moss, CPA

Clearfield & Moss has served as CMP's outside accounting firm since the partnership's formation in 2017. The firm is responsible for preparing CMP's annual partnership tax returns (Form 1065 and associated Schedules K-1) and quarterly financial statements. Mr. Moss cooperated with the Tillerman forensic review and provided CMP's general ledger, bank statements, and supporting documentation in response to Ms. Sørensen's requests. Under the terms of the settlement, Clearfield & Moss will continue as partnership accountant, subject to the oversight arrangements described in Section 7.3 below.

Mediator: Hon. Patricia Villareal (Ret.) through Apex Mediation Services 633 West 5th Street, Suite 2600 Los Angeles, CA 90071

Judge Villareal was jointly selected by the parties as mediator. She conducted a full-day mediation session on May 19, 2023, and subsequently issued a mediator's proposal that the parties accepted with modifications. Judge Villareal's extensive experience with complex commercial disputes in Los Angeles County proved valuable, and her proposal closely tracked our pre-mediation position on structural governance reforms.

Lender: Ridgeline Commercial Bank 555 West 7th Street, 18th Floor Los Angeles, CA 90014

Ridgeline Commercial Bank maintains a $1.4 million revolving credit facility secured by CMP's receivables. The bank holds a first-priority lien on distribution proceeds from CMP's film properties. Ms. Fonseca has personally guaranteed this credit facility. The existence of the Ridgeline facility was a relevant consideration in settlement negotiations, as the diversion of partnership funds through excess management fees and revenue reclassifications had the potential to impair CMP's ability to service the credit facility and, by extension, to trigger Ms. Fonseca's personal guarantee obligations. The settlement agreement permits disclosure of settlement terms to Ridgeline as a specified exception to the confidentiality provisions.

5. Background Summary

5.1 The Partnership and Its Properties

Coastal Meridian Productions LLP ("CMP") is a California limited liability partnership, EIN 83-2197644, formed on March 8, 2017. CMP's registered agent is Pacific Coast Registered Agents, Inc., located at 4200 Wilshire Blvd., Suite 610, Los Angeles, CA 90010. The partnership's principal office is located at 1140 N. La Brea Avenue, Suite 300, Los Angeles, CA 90038.

CMP is governed by a Partnership Agreement dated March 8, 2017, as amended by the First Amendment to the Partnership Agreement dated January 15, 2019 (collectively, the "Partnership Agreement"). The partnership was formed for the purpose of developing, producing, and exploiting feature-film properties, with Fonseca and Rennick serving as Co-Managing Partners.

Capital contributions to CMP were made as follows:

Under the Partnership Agreement, profits are split 55% to Fonseca and 45% to Rennick after recoupment of production and distribution costs. Section 6.2 of the Partnership Agreement provides for a management-fee cap of 5% of gross receipts per film, payable to the Managing Partner's designee. This provision was the contractual baseline against which the excess management fees were measured.

CMP has produced four feature films since its formation. The aggregate gross receipts for these properties through the second quarter of 2022 were as follows:

Salt Wind was the partnership's most commercially successful property, generating $8,740,000 in gross receipts. It was also the property most significantly affected by Rennick's revenue reclassification scheme, as discussed below.

5.2 The Disputed Accounting

Rennick Slate Ventures LLC ("RSV") is a California limited liability company, EIN 84-3056178, organized on June 22, 2018, with Desmond R. Rennick as its sole member and manager. RSV's principal address is 1925 Ocean Park Blvd., Suite 200, Santa Monica, CA 90405. RSV was formed approximately fifteen months after CMP's inception and was used by Rennick as the vehicle through which he invoiced CMP for management fees and purported service charges.

Between 2018 and mid-2022, RSV invoiced CMP a total of $2,694,500 in management fees and related service invoices. Under the 5% management-fee cap set forth in Section 6.2 of the Partnership Agreement, the maximum permissible fees for the period were calculated as follows:

Aggregate gross receipts: $23,220,000 × 5% = $1,161,000 (permissible cap)

Total RSV invoices: $2,694,500

Excess management fees: $2,694,500 − $1,161,000 = $1,533,500

In addition to the excess management fees, the forensic review revealed that Rennick had reclassified a total of $847,200 in domestic distribution revenues as recoupable producer-advance repayments. Specifically, the reclassification affected two properties:

• Salt Wind: $538,200 in domestic distribution revenues reclassified in Q3 2020

• Iron Lullaby: $309,000 in domestic distribution revenues reclassified in Q1 2021

These reclassifications were improper because the producer advances to which they purportedly related had already been fully recouped by Q4 2019, as confirmed by Ms. Sørensen's forensic analysis of the partnership's general ledger and supporting loan documentation. The effect of the reclassification was to divert $847,200 from the distributable profit pool, thereby reducing both partners' distributions — but disproportionately benefiting Rennick, who was simultaneously extracting excess management fees through RSV.

Ms. Fonseca's damages were calculated as follows:

Fonseca's 55% share of excess management fees: $1,533,500 × 55% = $843,425

Fonseca's 55% share of reclassified revenues: $847,200 × 55% = $465,960

Total claimed damages (excluding interest): $1,309,385

Pre-judgment interest at 10% statutory rate (Cal. Civ. Code § 3289(b)), calculated over approximately nine months: $98,204

Total claim (approximate): $1,407,589

The irregularities were first discovered by Ms. Fonseca in Q3 2022 when her distributions fell approximately $1.18 million short of the amounts she had projected based on her independent review of publicly available box-office and distribution data for CMP's film properties. This discrepancy prompted Ms. Fonseca to engage Tillerman Forensic Advisory, which in turn led to the engagement of Calderwood & Harkness.

6. Procedural History / Timeline

The following timeline summarizes the key events in the matter from the formation of the partnership through the execution of the settlement agreement:

7. Result Summary

7.1 Settlement Payment

The parties agreed to a total settlement payment of $975,000, representing approximately 69.3% of the total claimed amount of approximately $1,407,589 (inclusive of estimated pre-judgment interest). The settlement amount is payable in two installments:

First Installment: $600,000, due within fifteen (15) business days of the execution of the Settlement Agreement, which yields a payment deadline of August 4, 2023.

Second Installment: $375,000, due on or before October 15, 2023.

All payments are to be made by wire transfer to a trust account designated by Calderwood & Harkness LLP. Any late payment shall bear interest at the rate of 10% per annum from the due date until the date of actual payment.

The Settlement Amount is a personal obligation of Desmond R. Rennick and is expressly not payable from CMP partnership funds. This provision was a critical negotiating point, as permitting payment from partnership funds would have effectively required Ms. Fonseca to bear 55% of her own settlement recovery through the diminution of partnership assets.

7.2 Restated Revenue Waterfall

A Restated Distribution Waterfall, effective as of January 1, 2023, is attached as Exhibit A to the Settlement Agreement. The key terms of the restated waterfall are as follows:

Reduced Management-Fee Cap. The management-fee cap applicable to RSV invoices is reduced from 5% to 3% of gross receipts for all current and future CMP-produced films. This reduction represents a meaningful prospective savings to the partnership and ensures that the ratio of management fees to gross receipts remains within commercially reasonable bounds going forward.

Restoration of Reclassified Revenues. The $847,200 in domestic distribution revenues that Rennick improperly reclassified as recoupable producer-advance repayments is restored in full to the distributable profit pool. Specifically, the Salt Wind reclassification of $538,200 (Q3 2020) and the Iron Lullaby reclassification of $309,000 (Q1 2021) are reversed. CMP's partnership accountant (Clearfield & Moss CPAs) is required to restate the applicable waterfall schedules within thirty (30) days of the execution of the Settlement Agreement to reflect these reversals.

Treatment of Excess Fees. All excess management fees totaling $1,533,500 are deemed satisfied by the settlement payment. No further clawback of previously paid RSV invoices will be pursued by Fonseca or by CMP.

Consent Requirement for Future Reclassifications. Any future reclassification of revenues within the CMP waterfall requires the prior written consent of both partners. This provision is designed to prevent a recurrence of the unilateral reclassification conduct that gave rise to this dispute.

Continued RSV Services. RSV may continue providing management services to CMP, but all future invoices are subject to the reduced 3% cap and must receive dual-signature approval from both Fonseca and Rennick before payment.

7.3 Governance Reforms (Second Amendment to Partnership Agreement)

Concurrent with the execution of the Settlement Agreement, the parties executed a Second Amendment to the CMP Partnership Agreement implementing the following governance reforms:

Dual-Signature Requirement. Any single CMP expenditure exceeding $25,000 requires the prior written approval of both Fonseca and Rennick. This threshold applies to all categories of expenditure, including but not limited to production costs, marketing expenses, and management-fee payments.

Quarterly Financial Reporting. CMP's partnership accountant is required to prepare and deliver a quarterly financial-reporting package to both partners within forty-five (45) days of the end of each calendar quarter. The reporting package must include, at a minimum, a balance sheet, income statement, cash flow statement, and a waterfall distribution schedule for each film property.

Annual Audit. An annual audit of CMP's financial statements is required, with the audit report to be delivered within ninety (90) days of the end of each fiscal year. This represents a new requirement; the Partnership Agreement as originally drafted did not mandate annual audits.

Independent Accountant Oversight. Clearfield & Moss CPAs will continue to serve as CMP's partnership accountant. However, for calendar years 2023 and 2024, the annual audits will be subject to oversight by Tillerman Forensic Advisory LLC, at fees capped at $40,000 per audit cycle ($80,000 aggregate for the two-year period). Beginning with calendar year 2025, the parties will mutually select a successor accountant or reappoint Clearfield & Moss, and Tillerman's mandatory oversight role will terminate.

These governance reforms were a high priority for Ms. Fonseca throughout the engagement. As noted in the internal case assessment memorandum, the client made clear that prospective structural protections were as important to her as the monetary recovery, given her intention to continue operating CMP as a going concern with Rennick.

7.4 Mutual Release

The Settlement Agreement contains a mutual general release of all claims arising from CMP's financial affairs from the date of CMP's inception through December 31, 2022. Both parties expressly waived the protections of California Civil Code Section 1542, which provides:

"A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party."

The mutual release was appropriate given the comprehensive nature of the forensic accounting review, which gave the engagement team confidence that the full scope of the accounting irregularities had been identified and quantified. The release does not extend to any claims arising after December 31, 2022, or to any breach of the Settlement Agreement itself.

7.5 Dismissal. The parties agreed to the following dismissal terms:

• Ms. Fonseca's Complaint (Case No. 23STCV01897) will be dismissed with prejudice.

• Mr. Rennick's Counterclaim will be dismissed with prejudice.

• Each side bears its own attorney's fees and costs.

• The Court retains jurisdiction under California Code of Civil Procedure Section 664.6 to enforce the terms of the Settlement Agreement. This retention of jurisdiction is critical, as it provides an expedited enforcement mechanism in the event of a default on the settlement payment obligations.

• A Joint Stipulation for Dismissal with Prejudice is to be filed upon receipt of the First Installment ($600,000). The executed stipulation is currently held in escrow pending confirmation of receipt of the wire transfer.

7.6 Non-Disparagement and Confidentiality

The Settlement Agreement includes mutual non-disparagement and confidentiality provisions:

Non-Disparagement. Neither party shall make any disparaging statements about the other in connection with CMP, the lawsuit, or the settlement. This provision runs to statements made to third parties, including but not limited to industry contacts, lenders, distributors, talent, and the media.

Confidentiality. The terms of the Settlement Agreement are confidential and may not be disclosed by either party, subject to the following exceptions:

• Disclosure to each party's legal and tax advisors as reasonably necessary for the purpose of obtaining professional advice;

• Disclosure compelled by court order or legal requirement; and

• Disclosure to Ridgeline Commercial Bank as reasonably necessary in connection with CMP's $1.4 million revolving credit facility and Ms. Fonseca's personal guarantee thereof.

8. Fee Summary

The following table summarizes the total fees, costs, and net recovery in this matter:

The total all-in client cost of $251,470 came in significantly below the estimated through-trial budget of $630,000, reflecting the efficient pre-trial resolution achieved through mediation. The Calderwood & Harkness professional fees of $148,500, combined with disbursements of $4,320, tracked closely to the pre-litigation and mediation scenario budget of approximately $165,000 that was discussed with the client at the outset of the engagement (before accounting for the Tillerman and mediation costs, which were budgeted separately).

The remaining balance due from the client of $77,820 will be invoiced on the August 2023 billing cycle.

9. Key Documents in File

The following twelve documents are maintained in the matter file for Matter No. 1035-00004:

(a) Engagement Letter — executed by Ms. Fonseca and Calderwood & Harkness LLP, dated October 10, 2022, setting forth the scope of the engagement, fee arrangements, and retainer terms.

(b) Pre-Litigation Demand Letter to Rennick — dated October 10, 2022, sent to Desmond R. Rennick at 438 Georgina Avenue, Santa Monica, CA 90402, demanding a full accounting and payment of $1,309,385 plus interest.

(c) Internal Case Assessment Memorandum — dated November 18, 2022, prepared by Park and Nakamura, analyzing the merits of each cause of action, litigation risk, and budget estimates for trial and mediation resolution scenarios.

(d) Summary of Tillerman Forensic Advisory Findings / Forensic Accounting Analysis Memorandum — dated January 9, 2023, prepared by Nakamura, summarizing the key conclusions of the Sørensen preliminary forensic accounting memorandum dated December 19, 2022.

(e) Complaint — Fonseca v. Rennick et al., filed in the Superior Court of the State of California, County of Los Angeles, Case No. 23STCV01897, dated January 24, 2023, setting forth five causes of action (breach of fiduciary duty, breach of partnership agreement, accounting, constructive fraud, and unjust enrichment) with a demand for jury trial.

(f) Mediation Brief — submitted to Hon. Patricia Villareal (Ret.) on May 12, 2023, setting forth the factual and legal basis for Ms. Fonseca's claims and the remedies sought, including both monetary recovery and governance reforms.

(g) Settlement Term Sheet — executed by Fonseca, Rennick, and their respective counsel on June 8, 2023, memorializing the principal terms of the settlement as modified from the mediator's proposal.

(h) Settlement Agreement and Mutual Release — executed by both parties on July 14, 2023, containing the definitive settlement terms, including the payment schedule, mutual release, Section 1542 waiver, non-disparagement, confidentiality provisions, and retention of court jurisdiction under CCP § 664.6.

(i) Restated Distribution Waterfall — Exhibit A to Settlement Agreement — effective January 1, 2023, setting forth the revised waterfall mechanics including the reduced 3% management-fee cap, restoration of the $847,200 in reclassified revenues, consent requirements for future reclassifications, and terms for continued RSV services.

(j) Joint Stipulation for Dismissal with Prejudice — to be filed upon receipt of the First Installment ($600,000). Currently held in escrow by Calderwood & Harkness pending confirmation of wire transfer.

(k) Client Closing Letter — dated July 14, 2023, addressed to Ms. Fonseca, confirming the execution of the Settlement Agreement, summarizing the key terms, identifying follow-up items, and providing instructions regarding the remaining balance due for professional fees.

(l) Matter Closing Memorandum — this document, dated July 14, 2023, prepared by Jeffrey Park.

10. Follow-Up Items

The following items require attention after the date of this memorandum and should be tracked by the engagement team until completed:

1. Monitor Receipt of First Installment ($600,000). The First Installment is due by wire transfer within fifteen (15) business days of the execution of the Settlement Agreement, yielding a deadline of August 4, 2023. Upon confirmation of receipt, the Joint Stipulation for Dismissal with Prejudice should be filed promptly with the Court. If the First Installment is not received by the August 4 deadline, contact Hargrove, Pettit & Sun LLP to inquire as to the status of payment and advise the client of her enforcement rights under California Code of Civil Procedure Section 664.6 and the 10% per annum interest provision in the Settlement Agreement.

2. Monitor Receipt of Second Installment ($375,000). The Second Installment is due on or before October 15, 2023. The same enforcement protocol applies: if payment is not received by the deadline, contact opposing counsel and advise the client of her enforcement rights.

3. File Joint Stipulation for Dismissal with Prejudice. Upon confirmation of receipt of the First Installment, file the Joint Stipulation for Dismissal with Prejudice with the Superior Court, County of Los Angeles, Case No. 23STCV01897.

4. Render Final Invoice. The remaining balance of approximately $77,820 (professional fees of $148,500 plus disbursements of $4,320, less the $75,000 initial retainer) should be invoiced to the client on the August 2023 billing cycle.

5. Deliver Executed Originals. Deliver executed originals of the Settlement Agreement and Mutual Release, the Restated Distribution Waterfall (Exhibit A), and the Second Amendment to the CMP Partnership Agreement to the client under separate cover.

6. Transfer File to Closed-Matter Storage. In accordance with the Firm's standard document-retention policy, the file should be transferred to closed-matter storage after all of the following conditions have been satisfied:

(i) All settlement payments (First and Second Installments) have been confirmed received;

(ii) The Joint Stipulation for Dismissal has been filed and the dismissal has been entered by the Court; and

(iii) The final invoice has been paid by the client.

11. Lessons and Notes

The following observations are recorded for the benefit of the engagement team and the Firm's institutional knowledge:

Value of Early Forensic Engagement. The early engagement of Tillerman Forensic Advisory — and in particular the retention of Greta Sørensen, CPA, CFF — was critical to building leverage throughout this matter. Ms. Sørensen's December 19, 2022 preliminary forensic accounting memorandum provided a clear, detailed, invoice-by-invoice analysis of all 142 RSV invoices and a comprehensive timeline of the revenue reclassification entries. This work product gave the engagement team a strong factual foundation at every stage: the pre-litigation demand letter, the complaint, and the mediation brief all drew heavily on the Tillerman analysis. Without the forensic memorandum, the complaint would have been significantly less specific, and the mediation position would have been materially weaker.

Forensic Confirmation of Advance Recoupment Timeline. Ms. Sørensen's analysis confirmed that the producer advances on Salt Wind and Iron Lullaby had been fully recouped by Q4 2019, well before the reclassification entries in Q3 2020 and Q1 2021. This finding effectively destroyed Rennick's position on the $847,200 reclassification, as there was no legitimate basis for treating domestic distribution revenues as advance repayments once the underlying advances had been repaid in full. Opposing counsel appeared to recognize the weakness of this position during the mediation, which contributed to the favorable outcome on the structural reforms.

Mediator Effectiveness. Hon. Patricia Villareal (Ret.) was an effective mediator whose extensive experience with complex commercial disputes in Los Angeles County proved valuable. Her mediator's proposal closely tracked our pre-mediation position on structural governance reforms, including the dual-signature requirement, quarterly financial reporting, and independent accountant oversight. These structural reforms proved as important to the client as the monetary recovery, given Ms. Fonseca's intention to continue operating CMP as a going concern. Judge Villareal's ability to convey to Rennick and his counsel the litigation risk associated with the forensic evidence — and the reputational risk of a public trial involving allegations of fraud — was instrumental in moving the parties toward agreement.

Rennick's Counterclaim. Rennick's counterclaim, alleging that Fonseca had breached her duty of good faith and fair dealing by retaining Tillerman Forensic Advisory without Rennick's prior consent, had no basis in the Partnership Agreement. The Partnership Agreement contains no provision requiring mutual consent for the retention of professional advisors by individual partners, and the duty of good faith does not extend to precluding a partner from investigating potential misconduct by the other partner. The counterclaim never progressed beyond the initial pleading stage and was dismissed with prejudice as part of the settlement. It is worth noting, however, that the counterclaim served a tactical purpose for Rennick's counsel by creating a bargaining chip in settlement negotiations — albeit a chip of limited value given its legal deficiencies.

Efficient Resolution and Cost Management. The matter was resolved efficiently. Total fees and costs of $251,470 came in significantly below the $630,000 estimated through-trial budget. The Calderwood & Harkness professional fees of $148,500, together with disbursements of $4,320, tracked roughly to the $165,000 pre-litigation/mediation budget estimate (the difference being attributable to the addition of Tillerman forensic fees and mediation costs, which were budgeted separately). The mediation-track resolution avoided the substantial additional costs that would have been incurred through discovery, depositions, expert retention for trial, and trial preparation.

Quality of Outcome. The settlement recovery of $975,000 — approximately 69.3% of the total claim of approximately $1,407,589 — represents a strong outcome when assessed against the litigation risk factors identified in the November 18, 2022 case assessment memorandum. The memorandum assessed the likelihood of success on the reclassification claim at 70%, and the overall recovery percentage is broadly consistent with that risk assessment. Equally important, the non-monetary components of the settlement — including the reduced management-fee cap (from 5% to 3%), the dual-signature requirement for expenditures exceeding $25,000, the quarterly financial reporting obligation, and the independent accountant oversight for the 2023 and 2024 audit cycles — provide meaningful prospective protections against a recurrence of the conduct underlying the dispute.

Client Satisfaction and Future Engagement. Ms. Fonseca expressed satisfaction with both the monetary and structural components of the outcome and indicated her interest in retaining Calderwood & Harkness for future partnership matters involving CMP. This is consistent with the engagement team's approach of prioritizing the client's long-term interests in the continued viability of CMP as a business enterprise, rather than pursuing maximalist litigation positions that might have jeopardized the ongoing business relationship between the partners.

Prospective Risk Reduction. The restructured waterfall, with its reduced 3% management-fee cap, dual-signature approval requirement for RSV invoices, consent requirement for revenue reclassifications, and independent accountant oversight administered by Tillerman Forensic Advisory, should significantly reduce the risk of future accounting disputes within CMP. If the governance reforms are faithfully implemented, the partnership should be positioned for a more transparent and accountable financial relationship between the partners going forward.

[END OF DOCUMENT]

Name	Role	Practice Group
Samuel Eklund	Responsible Partner	Litigation (General)
Linda Osei	Billing Partner	Litigation (General)
Jeffrey Park	Lead Associate	Litigation (General)
Yuki Nakamura	Working Associate	Litigation (General)
Partner	Capital Contribution	Equity Interest
Marguerite D. Fonseca	$2,850,000	55%
Desmond R. Rennick	$2,331,818	45%
Total Capitalization	$5,181,818	100%
Film	Release Year	Gross Receipts (Through Q2 2022)
Iron Lullaby	2018	$6,420,000
The Perdition Room	2019	$4,110,000
Salt Wind	2020	$8,740,000
Nightjars	2021	$3,950,000
Total	$23,220,000
Date	Event
March 8, 2017	CMP Partnership Agreement executed by Fonseca and Rennick; CMP formed as a California limited liability partnership.
June 22, 2018	Rennick forms Rennick Slate Ventures LLC ("RSV") as sole member and manager. RSV subsequently begins invoicing CMP for management fees and service charges.
January 15, 2019	First Amendment to Partnership Agreement executed, addressing certain administrative and operational matters. The 5% management-fee cap in Section 6.2 was not modified by the First Amendment.
August 15, 2022	Ms. Fonseca engages Tillerman Forensic Advisory LLC (Principal: Greta Sørensen, CPA, CFF) to conduct a preliminary forensic review of CMP's financial records, following the discovery of an approximately $1.18 million shortfall in her expected distributions.
October 10, 2022	Calderwood & Harkness engagement opens. Matter No. 1035-00004 established. Pre-litigation demand letter sent to Desmond R. Rennick at his personal residence, 438 Georgina Avenue, Santa Monica, CA 90402. The demand letter set forth the factual basis for Ms. Fonseca's claims, demanded a full accounting of all RSV invoices and revenue reclassifications, and demanded payment of $1,309,385 plus interest.
November 2, 2022	Hargrove, Pettit & Sun LLP responds on behalf of Rennick. The response denied any breach of the Partnership Agreement or fiduciary duty, asserted a course-of-dealing defense with respect to the management fees (arguing that Fonseca had acquiesced to the fee structure over several years), and foreshadowed a potential counterclaim alleging that Fonseca had breached her duty of good faith by retaining Tillerman Forensic Advisory without obtaining Rennick's prior consent as Co-Managing Partner.
November 18, 2022	Internal case assessment memorandum prepared by Park and Nakamura. The memorandum analyzed the merits of each potential cause of action, assessed litigation risk (including a 70% likelihood of success on the reclassification claim), and provided a budget estimate of approximately $630,000 through trial and approximately $165,000 for pre-litigation/mediation resolution.
December 19, 2022	Tillerman Forensic Advisory delivers preliminary forensic accounting memorandum authored by Greta Sørensen. The memorandum provided a detailed, invoice-by-invoice analysis of all 142 RSV invoices submitted to CMP between 2018 and mid-2022, and established a comprehensive timeline demonstrating that the producer advances had been fully recouped by Q4 2019, well before the revenue reclassifications in Q3 2020 and Q1 2021.
January 9, 2023	Internal summary of Tillerman findings prepared by Nakamura for the engagement team, distilling the key conclusions of the Sørensen memorandum and identifying the strongest evidentiary points for the complaint.

January 24, 2023	Complaint filed in the Superior Court of the State of California, County of Los Angeles, Case No. 23STCV01897. The complaint set forth five causes of action: (1) breach of fiduciary duty; (2) breach of partnership agreement; (3) accounting; (4) constructive fraud; and (5) unjust enrichment. A demand for jury trial was included.
March 6, 2023	Rennick, through Hargrove, Pettit & Sun LLP, files his answer and counterclaim. The answer denied the material allegations of the complaint and asserted affirmative defenses including waiver, estoppel, laches, and course of dealing. The counterclaim alleged that Fonseca had breached her partnership duties of good faith and fair dealing by retaining Tillerman Forensic Advisory without Rennick's knowledge or consent, and sought unspecified damages.
April 11, 2023	The parties stipulate to mediation before Hon. Patricia Villareal (Ret.). The Court enters an order staying the action pending mediation, with a status conference set for July 2023.
May 12, 2023	Mediation brief submitted to Hon. Patricia Villareal (Ret.) on behalf of Ms. Fonseca. The brief set forth a detailed factual narrative supported by the Tillerman forensic analysis, a legal analysis of each cause of action, and a discussion of the remedies sought, including both monetary recovery and prospective governance reforms.
May 19, 2023	Full-day mediation session conducted before Hon. Villareal at Apex Mediation Services, 633 West 5th Street, Suite 2600, Los Angeles, CA 90071. All parties and counsel attended in person. Following extensive shuttle diplomacy, the mediator issued a mediator's proposal at the conclusion of the session.
June 8, 2023	Both parties accept the mediator's proposal with modifications. Settlement Term Sheet executed by Fonseca, Rennick, and their respective counsel, memorializing the principal terms of the settlement, including the settlement payment amount, the restated revenue waterfall, governance reforms, mutual release, and dismissal provisions.
July 14, 2023	Settlement Agreement and Mutual Release executed by both parties. The Restated Distribution Waterfall is attached as Exhibit A. The Second Amendment to the CMP Partnership Agreement implementing the agreed-upon governance reforms is executed simultaneously. Client closing letter issued. This Matter Closing Memorandum prepared. Matter closed.
Item	Amount
Calderwood & Harkness professional fees	$148,500.00
Calderwood & Harkness disbursements (filing fees, service of process, copying, etc.)	$4,320.00
Initial retainer received from client	($75,000.00)
Balance due from client (professional fees + disbursements less retainer applied)	$77,820.00
Tillerman Forensic Advisory fees (billed directly to client by Tillerman)	$92,400.00
Apex Mediation Services fees (client's half of total mediation cost)	$6,250.00
Total all-in client cost	$251,470.00
Settlement recovery	$975,000.00
Net monetary recovery to client (settlement less all-in costs)	$723,530.00

CALDERWOOD & HARKNESS LLP
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
MATTER CLOSING MEMORANDUM
TO: File
FROM: Jeffrey Park, Lead Associate, Litigation (General)
DATE: July 14, 2023
RE: Closing Summary — Fonseca v. Rennick, Matter No. 1035-00004
1. Matter Overview
This memorandum sets forth a comprehensive closing summary of the representation of Marguerite D. Fonseca in the matter captioned Fonseca v. Rennick et al., filed in the Superior Court of the State of California, County of Los Angeles, Case No. 23STCV01897. The matter has been resolved by settlement, and the file is being closed as of the date of this memorandum.
Client: Marguerite D. Fonseca, an individual domiciled in Los Angeles, California. Ms. Fonseca serves as Co-Managing Partner of Coastal Meridian Productions LLP ("CMP"), in which she holds a 55% equity interest. Ms. Fonseca's capital contributions to CMP totaled $2,850,000 at the time of the partnership's formation and subsequent capitalization.
Opposing Party: Desmond R. Rennick, an individual domiciled in Santa Monica, California. Mr. Rennick serves as Co-Managing Partner of CMP, in which he holds a 45% equity interest. Mr. Rennick is also the sole member and manager of Rennick Slate Ventures LLC ("RSV"), a California limited liability company through which Mr. Rennick invoiced CMP for management fees and service charges that are at the center of the dispute underlying this matter.
Court: Superior Court of the State of California, County of Los Angeles.
Case Number: 23STCV01897.
Matter Type: Partnership dispute involving claims for an accounting, breach of fiduciary duty, breach of the partnership agreement, constructive fraud, and unjust enrichment. The factual core of the dispute concerned Rennick's misapplication of partnership funds through the systematic overcharging of management fees in excess of contractual caps, as well as his fraudulent manipulation of the revenue waterfall governing profit distributions from four feature-film properties produced by CMP. The manipulation took the form of reclassifying domestic distribution revenues as recoupable producer-advance repayments for advances that had already been fully recouped.
Matter Opened: October 10, 2022.
Matter Closed: July 14, 2023.
Status: Closed — Completed.
Governing Law: State of California.
2. Engagement Team
The following Calderwood & Harkness professionals were assigned to this matter:
Partner Samuel Eklund supervised all strategic decisions, attended the full-day mediation session on May 19, 2023, and served as the primary relationship partner for the client throughout the engagement. Partner Linda Osei served as billing partner, reviewed all invoices, and managed the client's retainer account. Associate Jeffrey Park served as lead associate, responsible for all substantive work product, court filings, day-to-day case management, and coordination with the forensic accountant and mediator. Associate Yuki Nakamura provided research and drafting support, prepared the internal case assessment memorandum, and assisted with document review and analysis of the forensic accounting findings.
3. Opposing Counsel
Firm: Hargrove, Pettit & Sun LLP 800 South Figueroa Street, Suite 3100 Los Angeles, CA 90017
Lead Partner: Elaine Chow
Associate: Marcus Webb
Hargrove, Pettit & Sun LLP appeared on behalf of Desmond R. Rennick. The firm's initial response to our pre-litigation demand letter was received on November 2, 2022 and was signed by Ms. Chow. Ms. Chow and Mr. Webb handled all aspects of the defense, including the filing of Rennick's answer and counterclaim, participation in mediation, and negotiation of the settlement agreement. Throughout the matter, opposing counsel was professional and responsive, which facilitated an efficient resolution process.
4. Key Consultants and Third Parties
The following consultants and third parties played significant roles in the matter:
Forensic Accountant: Tillerman Forensic Advisory LLC 350 South Grand Avenue, Suite 1480 Los Angeles, CA 90071 Principal: Greta Sørensen, CPA, CFF
Tillerman Forensic Advisory was retained by Calderwood & Harkness on behalf of Ms. Fonseca prior to the opening of this matter. Ms. Sørensen was engaged on August 15, 2022, to conduct a preliminary forensic review of CMP's financial records, with a particular focus on management-fee invoices submitted by RSV and the revenue-waterfall calculations used to compute partner distributions. Ms. Sørensen delivered her preliminary forensic accounting memorandum on December 19, 2022. That memorandum provided a detailed, invoice-by-invoice analysis of all 142 RSV invoices submitted to CMP between 2018 and mid-2022, as well as a comprehensive timeline of the revenue reclassification entries affecting the Salt Wind and Iron Lullaby distribution waterfalls. Ms. Sørensen's analysis formed the factual backbone of both the complaint and our mediation brief.
Partnership Accountant: Clearfield & Moss CPAs 9100 Sunset Blvd., Suite 220 West Hollywood, CA 90069 Partner-in-Charge: Howard Moss, CPA
Clearfield & Moss has served as CMP's outside accounting firm since the partnership's formation in 2017. The firm is responsible for preparing CMP's annual partnership tax returns (Form 1065 and associated Schedules K-1) and quarterly financial statements. Mr. Moss cooperated with the Tillerman forensic review and provided CMP's general ledger, bank statements, and supporting documentation in response to Ms. Sørensen's requests. Under the terms of the settlement, Clearfield & Moss will continue as partnership accountant, subject to the oversight arrangements described in Section 7.3 below.
Mediator: Hon. Patricia Villareal (Ret.) through Apex Mediation Services 633 West 5th Street, Suite 2600 Los Angeles, CA 90071
Judge Villareal was jointly selected by the parties as mediator. She conducted a full-day mediation session on May 19, 2023, and subsequently issued a mediator's proposal that the parties accepted with modifications. Judge Villareal's extensive experience with complex commercial disputes in Los Angeles County proved valuable, and her proposal closely tracked our pre-mediation position on structural governance reforms.
Lender: Ridgeline Commercial Bank 555 West 7th Street, 18th Floor Los Angeles, CA 90014
Ridgeline Commercial Bank maintains a $1.4 million revolving credit facility secured by CMP's receivables. The bank holds a first-priority lien on distribution proceeds from CMP's film properties. Ms. Fonseca has personally guaranteed this credit facility. The existence of the Ridgeline facility was a relevant consideration in settlement negotiations, as the diversion of partnership funds through excess management fees and revenue reclassifications had the potential to impair CMP's ability to service the credit facility and, by extension, to trigger Ms. Fonseca's personal guarantee obligations. The settlement agreement permits disclosure of settlement terms to Ridgeline as a specified exception to the confidentiality provisions.
5. Background Summary
5.1 The Partnership and Its Properties
Coastal Meridian Productions LLP ("CMP") is a California limited liability partnership, EIN 83-2197644, formed on March 8, 2017. CMP's registered agent is Pacific Coast Registered Agents, Inc., located at 4200 Wilshire Blvd., Suite 610, Los Angeles, CA 90010. The partnership's principal office is located at 1140 N. La Brea Avenue, Suite 300, Los Angeles, CA 90038.
CMP is governed by a Partnership Agreement dated March 8, 2017, as amended by the First Amendment to the Partnership Agreement dated January 15, 2019 (collectively, the "Partnership Agreement"). The partnership was formed for the purpose of developing, producing, and exploiting feature-film properties, with Fonseca and Rennick serving as Co-Managing Partners.
Capital contributions to CMP were made as follows:
Under the Partnership Agreement, profits are split 55% to Fonseca and 45% to Rennick after recoupment of production and distribution costs. Section 6.2 of the Partnership Agreement provides for a management-fee cap of 5% of gross receipts per film, payable to the Managing Partner's designee. This provision was the contractual baseline against which the excess management fees were measured.
CMP has produced four feature films since its formation. The aggregate gross receipts for these properties through the second quarter of 2022 were as follows:
Salt Wind was the partnership's most commercially successful property, generating $8,740,000 in gross receipts. It was also the property most significantly affected by Rennick's revenue reclassification scheme, as discussed below.
5.2 The Disputed Accounting
Rennick Slate Ventures LLC ("RSV") is a California limited liability company, EIN 84-3056178, organized on June 22, 2018, with Desmond R. Rennick as its sole member and manager. RSV's principal address is 1925 Ocean Park Blvd., Suite 200, Santa Monica, CA 90405. RSV was formed approximately fifteen months after CMP's inception and was used by Rennick as the vehicle through which he invoiced CMP for management fees and purported service charges.
Between 2018 and mid-2022, RSV invoiced CMP a total of $2,694,500 in management fees and related service invoices. Under the 5% management-fee cap set forth in Section 6.2 of the Partnership Agreement, the maximum permissible fees for the period were calculated as follows:
Aggregate gross receipts: $23,220,000 × 5% = $1,161,000 (permissible cap)
Total RSV invoices: $2,694,500
Excess management fees: $2,694,500 − $1,161,000 = $1,533,500
In addition to the excess management fees, the forensic review revealed that Rennick had reclassified a total of $847,200 in domestic distribution revenues as recoupable producer-advance repayments. Specifically, the reclassification affected two properties:
• Salt Wind: $538,200 in domestic distribution revenues reclassified in Q3 2020
• Iron Lullaby: $309,000 in domestic distribution revenues reclassified in Q1 2021
These reclassifications were improper because the producer advances to which they purportedly related had already been fully recouped by Q4 2019, as confirmed by Ms. Sørensen's forensic analysis of the partnership's general ledger and supporting loan documentation. The effect of the reclassification was to divert $847,200 from the distributable profit pool, thereby reducing both partners' distributions — but disproportionately benefiting Rennick, who was simultaneously extracting excess management fees through RSV.
Ms. Fonseca's damages were calculated as follows:
Fonseca's 55% share of excess management fees: $1,533,500 × 55% = $843,425
Fonseca's 55% share of reclassified revenues: $847,200 × 55% = $465,960
Total claimed damages (excluding interest): $1,309,385
Pre-judgment interest at 10% statutory rate (Cal. Civ. Code § 3289(b)), calculated over approximately nine months: $98,204
Total claim (approximate): $1,407,589
The irregularities were first discovered by Ms. Fonseca in Q3 2022 when her distributions fell approximately $1.18 million short of the amounts she had projected based on her independent review of publicly available box-office and distribution data for CMP's film properties. This discrepancy prompted Ms. Fonseca to engage Tillerman Forensic Advisory, which in turn led to the engagement of Calderwood & Harkness.
6. Procedural History / Timeline
The following timeline summarizes the key events in the matter from the formation of the partnership through the execution of the settlement agreement:
7. Result Summary
7.1 Settlement Payment
The parties agreed to a total settlement payment of $975,000, representing approximately 69.3% of the total claimed amount of approximately $1,407,589 (inclusive of estimated pre-judgment interest). The settlement amount is payable in two installments:
First Installment: $600,000, due within fifteen (15) business days of the execution of the Settlement Agreement, which yields a payment deadline of August 4, 2023.
Second Installment: $375,000, due on or before October 15, 2023.
All payments are to be made by wire transfer to a trust account designated by Calderwood & Harkness LLP. Any late payment shall bear interest at the rate of 10% per annum from the due date until the date of actual payment.
The Settlement Amount is a personal obligation of Desmond R. Rennick and is expressly not payable from CMP partnership funds. This provision was a critical negotiating point, as permitting payment from partnership funds would have effectively required Ms. Fonseca to bear 55% of her own settlement recovery through the diminution of partnership assets.
7.2 Restated Revenue Waterfall
A Restated Distribution Waterfall, effective as of January 1, 2023, is attached as Exhibit A to the Settlement Agreement. The key terms of the restated waterfall are as follows:
Reduced Management-Fee Cap. The management-fee cap applicable to RSV invoices is reduced from 5% to 3% of gross receipts for all current and future CMP-produced films. This reduction represents a meaningful prospective savings to the partnership and ensures that the ratio of management fees to gross receipts remains within commercially reasonable bounds going forward.
Restoration of Reclassified Revenues. The $847,200 in domestic distribution revenues that Rennick improperly reclassified as recoupable producer-advance repayments is restored in full to the distributable profit pool. Specifically, the Salt Wind reclassification of $538,200 (Q3 2020) and the Iron Lullaby reclassification of $309,000 (Q1 2021) are reversed. CMP's partnership accountant (Clearfield & Moss CPAs) is required to restate the applicable waterfall schedules within thirty (30) days of the execution of the Settlement Agreement to reflect these reversals.
Treatment of Excess Fees. All excess management fees totaling $1,533,500 are deemed satisfied by the settlement payment. No further clawback of previously paid RSV invoices will be pursued by Fonseca or by CMP.
Consent Requirement for Future Reclassifications. Any future reclassification of revenues within the CMP waterfall requires the prior written consent of both partners. This provision is designed to prevent a recurrence of the unilateral reclassification conduct that gave rise to this dispute.
Continued RSV Services. RSV may continue providing management services to CMP, but all future invoices are subject to the reduced 3% cap and must receive dual-signature approval from both Fonseca and Rennick before payment.
7.3 Governance Reforms (Second Amendment to Partnership Agreement)
Concurrent with the execution of the Settlement Agreement, the parties executed a Second Amendment to the CMP Partnership Agreement implementing the following governance reforms:
Dual-Signature Requirement. Any single CMP expenditure exceeding $25,000 requires the prior written approval of both Fonseca and Rennick. This threshold applies to all categories of expenditure, including but not limited to production costs, marketing expenses, and management-fee payments.
Quarterly Financial Reporting. CMP's partnership accountant is required to prepare and deliver a quarterly financial-reporting package to both partners within forty-five (45) days of the end of each calendar quarter. The reporting package must include, at a minimum, a balance sheet, income statement, cash flow statement, and a waterfall distribution schedule for each film property.
Annual Audit. An annual audit of CMP's financial statements is required, with the audit report to be delivered within ninety (90) days of the end of each fiscal year. This represents a new requirement; the Partnership Agreement as originally drafted did not mandate annual audits.
Independent Accountant Oversight. Clearfield & Moss CPAs will continue to serve as CMP's partnership accountant. However, for calendar years 2023 and 2024, the annual audits will be subject to oversight by Tillerman Forensic Advisory LLC, at fees capped at $40,000 per audit cycle ($80,000 aggregate for the two-year period). Beginning with calendar year 2025, the parties will mutually select a successor accountant or reappoint Clearfield & Moss, and Tillerman's mandatory oversight role will terminate.
These governance reforms were a high priority for Ms. Fonseca throughout the engagement. As noted in the internal case assessment memorandum, the client made clear that prospective structural protections were as important to her as the monetary recovery, given her intention to continue operating CMP as a going concern with Rennick.
7.4 Mutual Release
The Settlement Agreement contains a mutual general release of all claims arising from CMP's financial affairs from the date of CMP's inception through December 31, 2022. Both parties expressly waived the protections of California Civil Code Section 1542, which provides:
"A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party."
The mutual release was appropriate given the comprehensive nature of the forensic accounting review, which gave the engagement team confidence that the full scope of the accounting irregularities had been identified and quantified. The release does not extend to any claims arising after December 31, 2022, or to any breach of the Settlement Agreement itself.
7.5 Dismissal. The parties agreed to the following dismissal terms:
• Ms. Fonseca's Complaint (Case No. 23STCV01897) will be dismissed with prejudice.
• Mr. Rennick's Counterclaim will be dismissed with prejudice.
• Each side bears its own attorney's fees and costs.
• The Court retains jurisdiction under California Code of Civil Procedure Section 664.6 to enforce the terms of the Settlement Agreement. This retention of jurisdiction is critical, as it provides an expedited enforcement mechanism in the event of a default on the settlement payment obligations.
• A Joint Stipulation for Dismissal with Prejudice is to be filed upon receipt of the First Installment ($600,000). The executed stipulation is currently held in escrow pending confirmation of receipt of the wire transfer.
7.6 Non-Disparagement and Confidentiality
The Settlement Agreement includes mutual non-disparagement and confidentiality provisions:
Non-Disparagement. Neither party shall make any disparaging statements about the other in connection with CMP, the lawsuit, or the settlement. This provision runs to statements made to third parties, including but not limited to industry contacts, lenders, distributors, talent, and the media.
Confidentiality. The terms of the Settlement Agreement are confidential and may not be disclosed by either party, subject to the following exceptions:
• Disclosure to each party's legal and tax advisors as reasonably necessary for the purpose of obtaining professional advice;
• Disclosure compelled by court order or legal requirement; and
• Disclosure to Ridgeline Commercial Bank as reasonably necessary in connection with CMP's $1.4 million revolving credit facility and Ms. Fonseca's personal guarantee thereof.
8. Fee Summary
The following table summarizes the total fees, costs, and net recovery in this matter:
The total all-in client cost of $251,470 came in significantly below the estimated through-trial budget of $630,000, reflecting the efficient pre-trial resolution achieved through mediation. The Calderwood & Harkness professional fees of $148,500, combined with disbursements of $4,320, tracked closely to the pre-litigation and mediation scenario budget of approximately $165,000 that was discussed with the client at the outset of the engagement (before accounting for the Tillerman and mediation costs, which were budgeted separately).
The remaining balance due from the client of $77,820 will be invoiced on the August 2023 billing cycle.
9. Key Documents in File
The following twelve documents are maintained in the matter file for Matter No. 1035-00004:
(a) Engagement Letter — executed by Ms. Fonseca and Calderwood & Harkness LLP, dated October 10, 2022, setting forth the scope of the engagement, fee arrangements, and retainer terms.
(b) Pre-Litigation Demand Letter to Rennick — dated October 10, 2022, sent to Desmond R. Rennick at 438 Georgina Avenue, Santa Monica, CA 90402, demanding a full accounting and payment of $1,309,385 plus interest.
(c) Internal Case Assessment Memorandum — dated November 18, 2022, prepared by Park and Nakamura, analyzing the merits of each cause of action, litigation risk, and budget estimates for trial and mediation resolution scenarios.
(d) Summary of Tillerman Forensic Advisory Findings / Forensic Accounting Analysis Memorandum — dated January 9, 2023, prepared by Nakamura, summarizing the key conclusions of the Sørensen preliminary forensic accounting memorandum dated December 19, 2022.
(e) Complaint — Fonseca v. Rennick et al., filed in the Superior Court of the State of California, County of Los Angeles, Case No. 23STCV01897, dated January 24, 2023, setting forth five causes of action (breach of fiduciary duty, breach of partnership agreement, accounting, constructive fraud, and unjust enrichment) with a demand for jury trial.
(f) Mediation Brief — submitted to Hon. Patricia Villareal (Ret.) on May 12, 2023, setting forth the factual and legal basis for Ms. Fonseca's claims and the remedies sought, including both monetary recovery and governance reforms.
(g) Settlement Term Sheet — executed by Fonseca, Rennick, and their respective counsel on June 8, 2023, memorializing the principal terms of the settlement as modified from the mediator's proposal.
(h) Settlement Agreement and Mutual Release — executed by both parties on July 14, 2023, containing the definitive settlement terms, including the payment schedule, mutual release, Section 1542 waiver, non-disparagement, confidentiality provisions, and retention of court jurisdiction under CCP § 664.6.
(i) Restated Distribution Waterfall — Exhibit A to Settlement Agreement — effective January 1, 2023, setting forth the revised waterfall mechanics including the reduced 3% management-fee cap, restoration of the $847,200 in reclassified revenues, consent requirements for future reclassifications, and terms for continued RSV services.
(j) Joint Stipulation for Dismissal with Prejudice — to be filed upon receipt of the First Installment ($600,000). Currently held in escrow by Calderwood & Harkness pending confirmation of wire transfer.
(k) Client Closing Letter — dated July 14, 2023, addressed to Ms. Fonseca, confirming the execution of the Settlement Agreement, summarizing the key terms, identifying follow-up items, and providing instructions regarding the remaining balance due for professional fees.
(l) Matter Closing Memorandum — this document, dated July 14, 2023, prepared by Jeffrey Park.
10. Follow-Up Items
The following items require attention after the date of this memorandum and should be tracked by the engagement team until completed:
1. Monitor Receipt of First Installment ($600,000). The First Installment is due by wire transfer within fifteen (15) business days of the execution of the Settlement Agreement, yielding a deadline of August 4, 2023. Upon confirmation of receipt, the Joint Stipulation for Dismissal with Prejudice should be filed promptly with the Court. If the First Installment is not received by the August 4 deadline, contact Hargrove, Pettit & Sun LLP to inquire as to the status of payment and advise the client of her enforcement rights under California Code of Civil Procedure Section 664.6 and the 10% per annum interest provision in the Settlement Agreement.
2. Monitor Receipt of Second Installment ($375,000). The Second Installment is due on or before October 15, 2023. The same enforcement protocol applies: if payment is not received by the deadline, contact opposing counsel and advise the client of her enforcement rights.
3. File Joint Stipulation for Dismissal with Prejudice. Upon confirmation of receipt of the First Installment, file the Joint Stipulation for Dismissal with Prejudice with the Superior Court, County of Los Angeles, Case No. 23STCV01897.
4. Render Final Invoice. The remaining balance of approximately $77,820 (professional fees of $148,500 plus disbursements of $4,320, less the $75,000 initial retainer) should be invoiced to the client on the August 2023 billing cycle.
5. Deliver Executed Originals. Deliver executed originals of the Settlement Agreement and Mutual Release, the Restated Distribution Waterfall (Exhibit A), and the Second Amendment to the CMP Partnership Agreement to the client under separate cover.
6. Transfer File to Closed-Matter Storage. In accordance with the Firm's standard document-retention policy, the file should be transferred to closed-matter storage after all of the following conditions have been satisfied:
(i) All settlement payments (First and Second Installments) have been confirmed received;
(ii) The Joint Stipulation for Dismissal has been filed and the dismissal has been entered by the Court; and
(iii) The final invoice has been paid by the client.
11. Lessons and Notes
The following observations are recorded for the benefit of the engagement team and the Firm's institutional knowledge:
Value of Early Forensic Engagement. The early engagement of Tillerman Forensic Advisory — and in particular the retention of Greta Sørensen, CPA, CFF — was critical to building leverage throughout this matter. Ms. Sørensen's December 19, 2022 preliminary forensic accounting memorandum provided a clear, detailed, invoice-by-invoice analysis of all 142 RSV invoices and a comprehensive timeline of the revenue reclassification entries. This work product gave the engagement team a strong factual foundation at every stage: the pre-litigation demand letter, the complaint, and the mediation brief all drew heavily on the Tillerman analysis. Without the forensic memorandum, the complaint would have been significantly less specific, and the mediation position would have been materially weaker.
Forensic Confirmation of Advance Recoupment Timeline. Ms. Sørensen's analysis confirmed that the producer advances on Salt Wind and Iron Lullaby had been fully recouped by Q4 2019, well before the reclassification entries in Q3 2020 and Q1 2021. This finding effectively destroyed Rennick's position on the $847,200 reclassification, as there was no legitimate basis for treating domestic distribution revenues as advance repayments once the underlying advances had been repaid in full. Opposing counsel appeared to recognize the weakness of this position during the mediation, which contributed to the favorable outcome on the structural reforms.
Mediator Effectiveness. Hon. Patricia Villareal (Ret.) was an effective mediator whose extensive experience with complex commercial disputes in Los Angeles County proved valuable. Her mediator's proposal closely tracked our pre-mediation position on structural governance reforms, including the dual-signature requirement, quarterly financial reporting, and independent accountant oversight. These structural reforms proved as important to the client as the monetary recovery, given Ms. Fonseca's intention to continue operating CMP as a going concern. Judge Villareal's ability to convey to Rennick and his counsel the litigation risk associated with the forensic evidence — and the reputational risk of a public trial involving allegations of fraud — was instrumental in moving the parties toward agreement.
Rennick's Counterclaim. Rennick's counterclaim, alleging that Fonseca had breached her duty of good faith and fair dealing by retaining Tillerman Forensic Advisory without Rennick's prior consent, had no basis in the Partnership Agreement. The Partnership Agreement contains no provision requiring mutual consent for the retention of professional advisors by individual partners, and the duty of good faith does not extend to precluding a partner from investigating potential misconduct by the other partner. The counterclaim never progressed beyond the initial pleading stage and was dismissed with prejudice as part of the settlement. It is worth noting, however, that the counterclaim served a tactical purpose for Rennick's counsel by creating a bargaining chip in settlement negotiations — albeit a chip of limited value given its legal deficiencies.
Efficient Resolution and Cost Management. The matter was resolved efficiently. Total fees and costs of $251,470 came in significantly below the $630,000 estimated through-trial budget. The Calderwood & Harkness professional fees of $148,500, together with disbursements of $4,320, tracked roughly to the $165,000 pre-litigation/mediation budget estimate (the difference being attributable to the addition of Tillerman forensic fees and mediation costs, which were budgeted separately). The mediation-track resolution avoided the substantial additional costs that would have been incurred through discovery, depositions, expert retention for trial, and trial preparation.
Quality of Outcome. The settlement recovery of $975,000 — approximately 69.3% of the total claim of approximately $1,407,589 — represents a strong outcome when assessed against the litigation risk factors identified in the November 18, 2022 case assessment memorandum. The memorandum assessed the likelihood of success on the reclassification claim at 70%, and the overall recovery percentage is broadly consistent with that risk assessment. Equally important, the non-monetary components of the settlement — including the reduced management-fee cap (from 5% to 3%), the dual-signature requirement for expenditures exceeding $25,000, the quarterly financial reporting obligation, and the independent accountant oversight for the 2023 and 2024 audit cycles — provide meaningful prospective protections against a recurrence of the conduct underlying the dispute.
Client Satisfaction and Future Engagement. Ms. Fonseca expressed satisfaction with both the monetary and structural components of the outcome and indicated her interest in retaining Calderwood & Harkness for future partnership matters involving CMP. This is consistent with the engagement team's approach of prioritizing the client's long-term interests in the continued viability of CMP as a business enterprise, rather than pursuing maximalist litigation positions that might have jeopardized the ongoing business relationship between the partners.
Prospective Risk Reduction. The restructured waterfall, with its reduced 3% management-fee cap, dual-signature approval requirement for RSV invoices, consent requirement for revenue reclassifications, and independent accountant oversight administered by Tillerman Forensic Advisory, should significantly reduce the risk of future accounting disputes within CMP. If the governance reforms are faithfully implemented, the partnership should be positioned for a more transparent and accountable financial relationship between the partners going forward.
[END OF DOCUMENT]
Name | Role | Practice Group
Samuel Eklund | Responsible Partner | Litigation (General)
Linda Osei | Billing Partner | Litigation (General)
Jeffrey Park | Lead Associate | Litigation (General)
Yuki Nakamura | Working Associate | Litigation (General)
Partner | Capital Contribution | Equity Interest
Marguerite D. Fonseca | $2,850,000 | 55%
Desmond R. Rennick | $2,331,818 | 45%
Total Capitalization | $5,181,818 | 100%
Film | Release Year | Gross Receipts (Through Q2 2022)
Iron Lullaby | 2018 | $6,420,000
The Perdition Room | 2019 | $4,110,000
Salt Wind | 2020 | $8,740,000
Nightjars | 2021 | $3,950,000
Total | $23,220,000
Date | Event
March 8, 2017 | CMP Partnership Agreement executed by Fonseca and Rennick; CMP formed as a California limited liability partnership.
June 22, 2018 | Rennick forms Rennick Slate Ventures LLC ("RSV") as sole member and manager. RSV subsequently begins invoicing CMP for management fees and service charges.
January 15, 2019 | First Amendment to Partnership Agreement executed, addressing certain administrative and operational matters. The 5% management-fee cap in Section 6.2 was not modified by the First Amendment.
August 15, 2022 | Ms. Fonseca engages Tillerman Forensic Advisory LLC (Principal: Greta Sørensen, CPA, CFF) to conduct a preliminary forensic review of CMP's financial records, following the discovery of an approximately $1.18 million shortfall in her expected distributions.
October 10, 2022 | Calderwood & Harkness engagement opens. Matter No. 1035-00004 established. Pre-litigation demand letter sent to Desmond R. Rennick at his personal residence, 438 Georgina Avenue, Santa Monica, CA 90402. The demand letter set forth the factual basis for Ms. Fonseca's claims, demanded a full accounting of all RSV invoices and revenue reclassifications, and demanded payment of $1,309,385 plus interest.
November 2, 2022 | Hargrove, Pettit & Sun LLP responds on behalf of Rennick. The response denied any breach of the Partnership Agreement or fiduciary duty, asserted a course-of-dealing defense with respect to the management fees (arguing that Fonseca had acquiesced to the fee structure over several years), and foreshadowed a potential counterclaim alleging that Fonseca had breached her duty of good faith by retaining Tillerman Forensic Advisory without obtaining Rennick's prior consent as Co-Managing Partner.
November 18, 2022 | Internal case assessment memorandum prepared by Park and Nakamura. The memorandum analyzed the merits of each potential cause of action, assessed litigation risk (including a 70% likelihood of success on the reclassification claim), and provided a budget estimate of approximately $630,000 through trial and approximately $165,000 for pre-litigation/mediation resolution.
December 19, 2022 | Tillerman Forensic Advisory delivers preliminary forensic accounting memorandum authored by Greta Sørensen. The memorandum provided a detailed, invoice-by-invoice analysis of all 142 RSV invoices submitted to CMP between 2018 and mid-2022, and established a comprehensive timeline demonstrating that the producer advances had been fully recouped by Q4 2019, well before the revenue reclassifications in Q3 2020 and Q1 2021.
January 9, 2023 | Internal summary of Tillerman findings prepared by Nakamura for the engagement team, distilling the key conclusions of the Sørensen memorandum and identifying the strongest evidentiary points for the complaint.
January 24, 2023 | Complaint filed in the Superior Court of the State of California, County of Los Angeles, Case No. 23STCV01897. The complaint set forth five causes of action: (1) breach of fiduciary duty; (2) breach of partnership agreement; (3) accounting; (4) constructive fraud; and (5) unjust enrichment. A demand for jury trial was included.
March 6, 2023 | Rennick, through Hargrove, Pettit & Sun LLP, files his answer and counterclaim. The answer denied the material allegations of the complaint and asserted affirmative defenses including waiver, estoppel, laches, and course of dealing. The counterclaim alleged that Fonseca had breached her partnership duties of good faith and fair dealing by retaining Tillerman Forensic Advisory without Rennick's knowledge or consent, and sought unspecified damages.
April 11, 2023 | The parties stipulate to mediation before Hon. Patricia Villareal (Ret.). The Court enters an order staying the action pending mediation, with a status conference set for July 2023.
May 12, 2023 | Mediation brief submitted to Hon. Patricia Villareal (Ret.) on behalf of Ms. Fonseca. The brief set forth a detailed factual narrative supported by the Tillerman forensic analysis, a legal analysis of each cause of action, and a discussion of the remedies sought, including both monetary recovery and prospective governance reforms.
May 19, 2023 | Full-day mediation session conducted before Hon. Villareal at Apex Mediation Services, 633 West 5th Street, Suite 2600, Los Angeles, CA 90071. All parties and counsel attended in person. Following extensive shuttle diplomacy, the mediator issued a mediator's proposal at the conclusion of the session.
June 8, 2023 | Both parties accept the mediator's proposal with modifications. Settlement Term Sheet executed by Fonseca, Rennick, and their respective counsel, memorializing the principal terms of the settlement, including the settlement payment amount, the restated revenue waterfall, governance reforms, mutual release, and dismissal provisions.
July 14, 2023 | Settlement Agreement and Mutual Release executed by both parties. The Restated Distribution Waterfall is attached as Exhibit A. The Second Amendment to the CMP Partnership Agreement implementing the agreed-upon governance reforms is executed simultaneously. Client closing letter issued. This Matter Closing Memorandum prepared. Matter closed.
Item | Amount
Calderwood & Harkness professional fees | $148,500.00
Calderwood & Harkness disbursements (filing fees, service of process, copying, etc.) | $4,320.00
Initial retainer received from client | ($75,000.00)
Balance due from client (professional fees + disbursements less retainer applied) | $77,820.00
Tillerman Forensic Advisory fees (billed directly to client by Tillerman) | $92,400.00
Apex Mediation Services fees (client's half of total mediation cost) | $6,250.00
Total all-in client cost | $251,470.00
Settlement recovery | $975,000.00
Net monetary recovery to client (settlement less all-in costs) | $723,530.00

CALDERWOOD & HARKNESS LLP

MATTER CLOSING MEMORANDUM

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