complaint-fonseca-v-rennick.docx

1035-00004 · Client 1035 · Pleadings

complaint-fonseca-v-rennick.docx DOCUMENT Litigation

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Attorneys for Plaintiff MARGUERITE D. FONSECA

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

Plaintiff Marguerite D. Fonseca ("Fonseca") alleges as follows:

PARTIES

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 as CMP's day-to-day Managing Partner with signing authority over CMP's operating accounts, including but not limited to the partnership's primary operating account and its dedicated production-funding account, both maintained at Ridgeline Commercial Bank.

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 supervision, and festival/distribution services in connection with CMP's film properties, as more fully alleged below.

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 have been ascertained.

JURISDICTION AND VENUE

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 California.

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 this County and Defendant RSV's principal place of business is located in this County.

GENERAL ALLEGATIONS

Formation of the Partnership

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 digital-platform distribution. CMP's principal office was established at 1140 N. La Brea Avenue, Suite 300, Los Angeles, California 90038. CMP's employer identification number is 83-2197644. CMP designated Pacific Coast Registered Agents, Inc., 4200 Wilshire Blvd., Suite 610, Los Angeles, California 90010, as its registered agent for service of process.

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 partnership, Fonseca contributed initial capital of Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000.00), and Rennick contributed initial capital of Two Million Three Hundred Thirty-One Thousand Eight Hundred Eighteen Dollars ($2,331,818.00), for total capitalization of Five Million One Hundred Eighty-One Thousand Eight Hundred Eighteen Dollars ($5,181,818.00). Under the Agreement, profits are distributed fifty-five percent (55%) to Fonseca and forty-five percent (45%) to Rennick after the recoupment of contributed capital and permissible expenses in accordance with the revenue waterfall set forth in Section 7.1 of the Agreement.

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 Hundred Thousand Dollar ($1,400,000.00) revolving credit facility with Ridgeline Commercial Bank (the "Credit Facility"), secured by CMP's receivables and distribution proceeds. Fonseca personally guaranteed the Credit Facility, thereby exposing herself to significant personal liability in the event of a default by CMP.

The Film Properties

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 Ten Thousand Dollars ($4,110,000.00);

(c) Salt Wind — released in 2020 — aggregate gross receipts through Q2 2022: Eight Million Seven Hundred Forty Thousand Dollars ($8,740,000.00);

(d) Nightjars — released in 2021 — aggregate gross receipts through Q2 2022: Three Million Nine Hundred Fifty Thousand Dollars ($3,950,000.00).

The total aggregate gross receipts generated by the four Film Properties through Q2 2022 were Twenty-Three Million Two Hundred Twenty Thousand Dollars ($23,220,000.00).

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-percent cap in Section 6.2), capital recoupment, and profit distributions to the partners in proportion to their respective partnership interests.

The Excess Management Fees

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. None of the invoices were countersigned by Fonseca, and Fonseca was not consulted with respect to the engagement of RSV or the scope of services RSV purported to provide.

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), calculated as five percent (5%) of total aggregate gross receipts of $23,220,000.00. The excess fees paid to RSV therefore totaled One Million Five Hundred Thirty-Three Thousand Five Hundred Dollars ($1,533,500.00) ($2,694,500.00 minus $1,161,000.00). Broken down by Film Property, the excess management fees were as follows:

(a) Iron Lullaby: RSV invoiced $612,300.00 against a permissible cap of $321,000.00 (5% of $6,420,000.00), resulting in excess fees of $291,300.00;

(b) The Perdition Room: RSV invoiced $473,200.00 against a permissible cap of $205,500.00 (5% of $4,110,000.00), resulting in excess fees of $267,700.00;

(c) Salt Wind: RSV invoiced $1,034,800.00 against a permissible cap of $437,000.00 (5% of $8,740,000.00), resulting in excess fees of $597,800.00;

(d) Nightjars: RSV invoiced $574,200.00 against a permissible cap of $197,500.00 (5% of $3,950,000.00), resulting in excess fees of $376,700.00.

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-correction, sound mixing, and visual-effects work for which CMP had already paid in full. An additional eighteen (18) invoices totaling Four Hundred Twelve Thousand Nine Hundred Dollars ($412,900.00) purported to be for "festival and distribution services" rendered after the relevant film's theatrical release, yet CMP's files contain no corresponding deliverables, attendance records, or festival-submission confirmations to support these charges. The remaining excess of approximately Three Hundred Six Thousand Dollars ($306,000.00) consisted of miscellaneous charges for line-producing, scheduling, and budgeting services billed at rates exceeding comparable industry rates by approximately forty to sixty-five percent (40%–65%). Rennick approved all of the foregoing invoices unilaterally, without Fonseca's knowledge or consent, in violation of his fiduciary duties and in contravention of the Agreement.

The Improper Revenue Reclassifications

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 Dollars ($538,200.00) in domestic home-entertainment revenue from Salt Wind, received in Q3 2020, was reclassified from "distributable revenue" to "advance recoupment — Tranche B" on the Q3 2020 waterfall schedule prepared under Rennick's direction; and

(b) Three Hundred Nine Thousand Dollars ($309,000.00) in domestic subscription video-on-demand ("SVOD") revenue from Iron Lullaby, received in Q1 2021, was reclassified in the same manner on the Q1 2021 waterfall schedule.

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 improper, without basis in the Agreement or in the underlying advance agreements between CMP and its distributors, and served no legitimate business purpose. Fonseca did not consent to, authorize, or have knowledge of these reclassifications at the time they were made.

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 hold such funds within the waterfall at a recoupment level that benefited Rennick and/or RSV by increasing the relative proportion of revenues flowing through the management-fee tier before reaching the profit-distribution tier.

Damages Summary.

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;

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 Four Dollars ($98,204.00) ($1,309,385.00 × 10% × 9/12). The total approximate claim, inclusive of estimated pre-judgment interest, is One Million Four Hundred Seven Thousand Five Hundred Eighty-Nine Dollars ($1,407,589.00). Fonseca also seeks attorney's fees incurred in connection with this action pursuant to Section 12.3 of the Partnership Agreement, which provides for the recovery of reasonable attorney's fees and costs by the prevailing party in any action arising from or relating to a material breach of the Agreement.

FIRST CAUSE OF ACTION

Breach of Fiduciary Duty

(Against Defendant Desmond R. Rennick)

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 conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership (California Corporations Code Section 16404(b)(2)). Rennick's duty of care required him to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law (California Corporations Code Section 16404(c)).

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 Fonseca's knowledge, consent, or authorization, and without disclosing to Fonseca the nature, extent, or amount of such invoices;

(c) Rennick reclassified $847,200.00 in domestic distribution revenues from Salt Wind and Iron Lullaby as recoupable advance repayments after the relevant Tranche B advances had already been fully recouped by Q4 2019, thereby artificially depressing the distributable profit pool and reducing Fonseca's share of distributable profits;

(d) Rennick failed to disclose these self-interested transactions and revenue reclassifications to Fonseca, despite his affirmative obligation as a fiduciary to make full and fair disclosure of all material facts affecting the partnership.

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 through the foregoing conduct, as well as pre-judgment interest, attorney's fees, and such other equitable and legal relief as the Court deems appropriate.

SECOND CAUSE OF ACTION

Breach of Partnership Agreement

(Against Defendant Desmond R. Rennick)

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 revenue waterfall) by improperly reclassifying $847,200.00 in distributable revenues as recoupable producer-advance repayments, thereby reducing the distributable profit pool and depriving Fonseca of distributions to which she was contractually entitled;

(c) Rennick breached Section 8.4 of the Agreement (governing partnership accounting and the maintenance of books and records) by failing to maintain accurate, complete, and truthful books and records reflecting the true financial position of CMP, including by permitting or directing the entry of improper and misleading classifications on CMP's waterfall schedules and quarterly financial statements.

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 the Court.

THIRD CAUSE OF ACTION

Accounting.

(Against Defendants Desmond R. Rennick and Rennick Slate Ventures LLC)

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 information regarding the partnership's operations and financial condition.

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 amendments thereto, all advance-recoupment schedules, and all records reflecting the basis for revenue reclassifications made on CMP's waterfall schedules.

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 basis and timing of all revenue reclassifications made on CMP's waterfall schedules, including the reclassification of $538,200.00 in Salt Wind home-entertainment revenue and $309,000.00 in Iron Lullaby SVOD revenue;

(c) The status of advance recoupment for each Film Property, including all underlying advance agreements and evidence of recoupment;

(d) The correct calculation of distributable profits and the distributions owed to Fonseca for each fiscal quarter from Q1 2018 through Q2 2022.

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.

(Against Defendant Desmond R. Rennick)

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, or authorization, and without providing Fonseca with any notice or explanation of the basis for such reclassifications;

(c) Profiting from the reclassifications by increasing the relative proportion of CMP revenues flowing to Rennick or to RSV before the profit-split step of the waterfall, thereby diverting funds that would otherwise have been distributed to Fonseca in proportion to her fifty-five percent (55%) partnership interest;

(d) Failing to disclose to Fonseca material information regarding CMP's financial condition, including the fact that Tranche B advances had been fully recouped and that the ongoing reclassification of revenues to the advance-recoupment tier lacked any contractual or factual basis.

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 fraud, without the necessity of proving actual intent to deceive.

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 and all intercompany transactions between CMP and RSV.

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 by RSV were, as alleged above, inflated, duplicative, and in many instances unsupported by any corresponding work product, deliverable, or attendance record.

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 may be established according to proof at trial.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff Marguerite D. Fonseca prays for judgment against Defendants Desmond R. Rennick and Rennick Slate Ventures LLC, and each of them, as follows:

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 Plaintiff MARGUERITE D. FONSECA

VERIFICATION

I, Marguerite D. Fonseca, am the Plaintiff in the above-entitled action. I have read the foregoing Complaint and know its contents. The matters stated therein are true of my own knowledge, except as to those matters that are stated on information and belief, and as to those matters, I believe them to be true.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

Executed on January 24, 2023, at Los Angeles, California.

________________________________________

MARGUERITE D. FONSECA

MARGUERITE D. FONSECA, an individual,	Case No. 23STCV01897
Plaintiff,	COMPLAINT FOR:
v.	(1) Breach of Fiduciary Duty;

(2) Breach of Partnership Agreement;

DESMOND R. RENNICK, an individual; RENNICK SLATE VENTURES LLC, a California limited liability company; and DOES 1 through 25, inclusive,

(4) Constructive Fraud;

Defendants.

DEMAND FOR JURY TRIAL

CALDERWOOD & HARKNESS LLP Samuel Eklund (SBN 198456) Jeffrey Park (SBN 302814) Yuki Nakamura (SBN 341276) 725 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-8200 Facsimile: (213) 555-8201
Attorneys for Plaintiff MARGUERITE D. FONSECA
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES
Plaintiff Marguerite D. Fonseca ("Fonseca") alleges as follows:
PARTIES
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 as CMP's day-to-day Managing Partner with signing authority over CMP's operating accounts, including but not limited to the partnership's primary operating account and its dedicated production-funding account, both maintained at Ridgeline Commercial Bank.
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 supervision, and festival/distribution services in connection with CMP's film properties, as more fully alleged below.
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 have been ascertained.
JURISDICTION AND VENUE
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 California.
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 this County and Defendant RSV's principal place of business is located in this County.
GENERAL ALLEGATIONS
Formation of the Partnership
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 digital-platform distribution. CMP's principal office was established at 1140 N. La Brea Avenue, Suite 300, Los Angeles, California 90038. CMP's employer identification number is 83-2197644. CMP designated Pacific Coast Registered Agents, Inc., 4200 Wilshire Blvd., Suite 610, Los Angeles, California 90010, as its registered agent for service of process.
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 partnership, Fonseca contributed initial capital of Two Million Eight Hundred Fifty Thousand Dollars ($2,850,000.00), and Rennick contributed initial capital of Two Million Three Hundred Thirty-One Thousand Eight Hundred Eighteen Dollars ($2,331,818.00), for total capitalization of Five Million One Hundred Eighty-One Thousand Eight Hundred Eighteen Dollars ($5,181,818.00). Under the Agreement, profits are distributed fifty-five percent (55%) to Fonseca and forty-five percent (45%) to Rennick after the recoupment of contributed capital and permissible expenses in accordance with the revenue waterfall set forth in Section 7.1 of the Agreement.
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 Hundred Thousand Dollar ($1,400,000.00) revolving credit facility with Ridgeline Commercial Bank (the "Credit Facility"), secured by CMP's receivables and distribution proceeds. Fonseca personally guaranteed the Credit Facility, thereby exposing herself to significant personal liability in the event of a default by CMP.
The Film Properties
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 Ten Thousand Dollars ($4,110,000.00);
(c) Salt Wind — released in 2020 — aggregate gross receipts through Q2 2022: Eight Million Seven Hundred Forty Thousand Dollars ($8,740,000.00);
(d) Nightjars — released in 2021 — aggregate gross receipts through Q2 2022: Three Million Nine Hundred Fifty Thousand Dollars ($3,950,000.00).
The total aggregate gross receipts generated by the four Film Properties through Q2 2022 were Twenty-Three Million Two Hundred Twenty Thousand Dollars ($23,220,000.00).
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-percent cap in Section 6.2), capital recoupment, and profit distributions to the partners in proportion to their respective partnership interests.
The Excess Management Fees
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. None of the invoices were countersigned by Fonseca, and Fonseca was not consulted with respect to the engagement of RSV or the scope of services RSV purported to provide.
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), calculated as five percent (5%) of total aggregate gross receipts of $23,220,000.00. The excess fees paid to RSV therefore totaled One Million Five Hundred Thirty-Three Thousand Five Hundred Dollars ($1,533,500.00) ($2,694,500.00 minus $1,161,000.00). Broken down by Film Property, the excess management fees were as follows:
(a) Iron Lullaby: RSV invoiced $612,300.00 against a permissible cap of $321,000.00 (5% of $6,420,000.00), resulting in excess fees of $291,300.00;
(b) The Perdition Room: RSV invoiced $473,200.00 against a permissible cap of $205,500.00 (5% of $4,110,000.00), resulting in excess fees of $267,700.00;
(c) Salt Wind: RSV invoiced $1,034,800.00 against a permissible cap of $437,000.00 (5% of $8,740,000.00), resulting in excess fees of $597,800.00;
(d) Nightjars: RSV invoiced $574,200.00 against a permissible cap of $197,500.00 (5% of $3,950,000.00), resulting in excess fees of $376,700.00.
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-correction, sound mixing, and visual-effects work for which CMP had already paid in full. An additional eighteen (18) invoices totaling Four Hundred Twelve Thousand Nine Hundred Dollars ($412,900.00) purported to be for "festival and distribution services" rendered after the relevant film's theatrical release, yet CMP's files contain no corresponding deliverables, attendance records, or festival-submission confirmations to support these charges. The remaining excess of approximately Three Hundred Six Thousand Dollars ($306,000.00) consisted of miscellaneous charges for line-producing, scheduling, and budgeting services billed at rates exceeding comparable industry rates by approximately forty to sixty-five percent (40%–65%). Rennick approved all of the foregoing invoices unilaterally, without Fonseca's knowledge or consent, in violation of his fiduciary duties and in contravention of the Agreement.
The Improper Revenue Reclassifications
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 Dollars ($538,200.00) in domestic home-entertainment revenue from Salt Wind, received in Q3 2020, was reclassified from "distributable revenue" to "advance recoupment — Tranche B" on the Q3 2020 waterfall schedule prepared under Rennick's direction; and
(b) Three Hundred Nine Thousand Dollars ($309,000.00) in domestic subscription video-on-demand ("SVOD") revenue from Iron Lullaby, received in Q1 2021, was reclassified in the same manner on the Q1 2021 waterfall schedule.
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 improper, without basis in the Agreement or in the underlying advance agreements between CMP and its distributors, and served no legitimate business purpose. Fonseca did not consent to, authorize, or have knowledge of these reclassifications at the time they were made.
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 hold such funds within the waterfall at a recoupment level that benefited Rennick and/or RSV by increasing the relative proportion of revenues flowing through the management-fee tier before reaching the profit-distribution tier.
Damages Summary.
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): $1,309,385.00.
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 Four Dollars ($98,204.00) ($1,309,385.00 × 10% × 9/12). The total approximate claim, inclusive of estimated pre-judgment interest, is One Million Four Hundred Seven Thousand Five Hundred Eighty-Nine Dollars ($1,407,589.00). Fonseca also seeks attorney's fees incurred in connection with this action pursuant to Section 12.3 of the Partnership Agreement, which provides for the recovery of reasonable attorney's fees and costs by the prevailing party in any action arising from or relating to a material breach of the Agreement.
FIRST CAUSE OF ACTION
Breach of Fiduciary Duty
(Against Defendant Desmond R. Rennick)
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 conduct or winding up of the partnership business as or on behalf of a party having an interest adverse to the partnership (California Corporations Code Section 16404(b)(2)). Rennick's duty of care required him to refrain from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law (California Corporations Code Section 16404(c)).
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 Fonseca's knowledge, consent, or authorization, and without disclosing to Fonseca the nature, extent, or amount of such invoices;
(c) Rennick reclassified $847,200.00 in domestic distribution revenues from Salt Wind and Iron Lullaby as recoupable advance repayments after the relevant Tranche B advances had already been fully recouped by Q4 2019, thereby artificially depressing the distributable profit pool and reducing Fonseca's share of distributable profits;
(d) Rennick failed to disclose these self-interested transactions and revenue reclassifications to Fonseca, despite his affirmative obligation as a fiduciary to make full and fair disclosure of all material facts affecting the partnership.
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 through the foregoing conduct, as well as pre-judgment interest, attorney's fees, and such other equitable and legal relief as the Court deems appropriate.
SECOND CAUSE OF ACTION
Breach of Partnership Agreement
(Against Defendant Desmond R. Rennick)
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 revenue waterfall) by improperly reclassifying $847,200.00 in distributable revenues as recoupable producer-advance repayments, thereby reducing the distributable profit pool and depriving Fonseca of distributions to which she was contractually entitled;
(c) Rennick breached Section 8.4 of the Agreement (governing partnership accounting and the maintenance of books and records) by failing to maintain accurate, complete, and truthful books and records reflecting the true financial position of CMP, including by permitting or directing the entry of improper and misleading classifications on CMP's waterfall schedules and quarterly financial statements.
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 the Court.
THIRD CAUSE OF ACTION
Accounting.
(Against Defendants Desmond R. Rennick and Rennick Slate Ventures LLC)
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 information regarding the partnership's operations and financial condition.
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 amendments thereto, all advance-recoupment schedules, and all records reflecting the basis for revenue reclassifications made on CMP's waterfall schedules.
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 basis and timing of all revenue reclassifications made on CMP's waterfall schedules, including the reclassification of $538,200.00 in Salt Wind home-entertainment revenue and $309,000.00 in Iron Lullaby SVOD revenue;
(c) The status of advance recoupment for each Film Property, including all underlying advance agreements and evidence of recoupment;
(d) The correct calculation of distributable profits and the distributions owed to Fonseca for each fiscal quarter from Q1 2018 through Q2 2022.
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.
(Against Defendant Desmond R. Rennick)
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, or authorization, and without providing Fonseca with any notice or explanation of the basis for such reclassifications;
(c) Profiting from the reclassifications by increasing the relative proportion of CMP revenues flowing to Rennick or to RSV before the profit-split step of the waterfall, thereby diverting funds that would otherwise have been distributed to Fonseca in proportion to her fifty-five percent (55%) partnership interest;
(d) Failing to disclose to Fonseca material information regarding CMP's financial condition, including the fact that Tranche B advances had been fully recouped and that the ongoing reclassification of revenues to the advance-recoupment tier lacked any contractual or factual basis.
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 fraud, without the necessity of proving actual intent to deceive.
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 and all intercompany transactions between CMP and RSV.
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 by RSV were, as alleged above, inflated, duplicative, and in many instances unsupported by any corresponding work product, deliverable, or attendance record.
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 may be established according to proof at trial.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff Marguerite D. Fonseca prays for judgment against Defendants Desmond R. Rennick and Rennick Slate Ventures LLC, and each of them, as follows:
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 Plaintiff MARGUERITE D. FONSECA
VERIFICATION
I, Marguerite D. Fonseca, am the Plaintiff in the above-entitled action. I have read the foregoing Complaint and know its contents. The matters stated therein are true of my own knowledge, except as to those matters that are stated on information and belief, and as to those matters, I believe them to be true.
I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.
Executed on January 24, 2023, at Los Angeles, California.
________________________________________
MARGUERITE D. FONSECA
MARGUERITE D. FONSECA, an individual, | Case No. 23STCV01897
Plaintiff, | COMPLAINT FOR:
v. | (1) Breach of Fiduciary Duty;
(2) Breach of Partnership Agreement;
DESMOND R. RENNICK, an individual; RENNICK SLATE VENTURES LLC, a California limited liability company; and DOES 1 through 25, inclusive, | (3) Accounting;
(4) Constructive Fraud;
Defendants. | (5) Unjust Enrichment
DEMAND FOR JURY TRIAL

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

PARTIES

JURISDICTION AND VENUE

GENERAL ALLEGATIONS

FIRST CAUSE OF ACTION

SECOND CAUSE OF ACTION

THIRD CAUSE OF ACTION

FOURTH CAUSE OF ACTION

FIFTH CAUSE OF ACTION

PRAYER FOR RELIEF

CALDERWOOD & HARKNESS LLP

DEMAND FOR JURY TRIAL

CALDERWOOD & HARKNESS LLP

VERIFICATION

MARGUERITE D. FONSECA

DEMAND FOR JURY TRIAL

Record

Parties

Dates

Amounts