Jason Welsh vs Fiore Management Inc

Case Number

22CV00597

Case Type

Hearing Date / Time

Fri, 07/25/2025 - 10:00

Nature of Proceedings

Motion to Enforce

Tentative Ruling

For all reasons discussed herein, plaintiff’s motion to compel enforcement of settlement agreement and enter judgment is continued to August 8, 2025, at 10:00 a.m., to allow for the filing of proof of proper service on the attorney for Receiver Ryan C. Baker. In the event that Mr. Baker was not properly served with the motion, plaintiff shall take the matter off-calendar and reschedule the motion with sufficient time to effectuate proper service.

Background: 

On February 15, 2022, plaintiff Jason Welsh filed a “Petition to Determine Fair Value of Membership Interest” (Petition) pursuant to Corporations Code section 17711.06. (Petition, p. 4.) In its Minute Order dated May 20, 2022, the court, noting that Corporations Code section 17711.06, subdivision (a), required the filing of a “complaint,” ordered the hearing on the petition off calendar as premature.

On May 23, 2022, Welsh filed his complaint in this matter against defendants Fiore Management, Inc. (Fiore) and Adrian Z. Sedlin, asserting two causes of action for breach of contract and violation of Corporations Code Title 2.6, Article 11. (Complaint, ¶ 8.)

In the complaint, Welsh alleges that on August 10, 2017, he entered into a written agreement with Fiore. (Complaint, ¶ BC-1.) On August 26, 2021, Fiore breached the agreement by acts asserted in attachment BC-2 to the complaint. (Complaint, ¶ BC-2.) On June 23, 2021, Sedlin, who is Fiore’s CEO, notified Fiore’s shareholders of Fiore’s intent to restructure. (Complaint, attachment BC-2, at p. 2 & exhibit B.) On July 15, 2021, Fiore formally notified shareholders of its intent to recapitalize and restructure by “converting the Company from a California limited liability company to a Delaware corporation.” (Complaint, attachment BC-2, at p. 2 & exhibit C.) On July 16, 2021, Welsh notified Fiore of his intent to exercise dissenters’ rights. (Complaint, attachment BC-2, at p. 2.) On September 21, 2021, Fiore notified shareholders that it had “reorganized Fiore Management, LLC into a Delaware C Corp as of August 26, 2021”. (Id. at p. 2 & exhibit E.) To date, Fiore has failed to “ ‘mail to each member a notice of the approval of the reorganization by the requisite vote or consent of the members, within 10 days after the date of the approval, accompanied by a copy of [Corporations Code sections 17711.03,]  17711.01, 17711.02, 17711.04, and 17711.05, a statement of the price determined by the limited liability company to represent the fair market value of its outstanding interests, and a brief description of the procedure to be followed if the member desires to exercise the member’s rights under those sections.’ ” (Complaint, attachment BC-2, at p. 3.)

On December 15, 2022, following the overruling of Fiore’s demurrer, Fiore filed its answer, generally denying the allegations of the complaint and asserting one affirmative defense.

In a separate case, Project No. 33, LLC v. Fiore Management, Inc., Case No. 23CV03719, On September 5, 2023, Ryan C. Baker was appointed as a general equity receiver over all operations of Fiore and all assets of Fiore.

On August 9, 2024, at the Settlement Conference, the parties settled under the following terms:

• Parties agree that Fiore Management Inc., which is in Receivership, owes Mr. Welsh $216,497. Mr. Welsh is entitled to Judgment in this amount, and the Judgment shall dispose of this matter (case # 22CV00597).
• Parties agree that they disagree as to whether Mr. Welsh needs to file a creditor’s claim in order to be paid the $216,497 that is owed to Mr. Welsh or whether the $216,497 should be paid immediately upon Entry of Judgment without a creditor’s claim being filed.
• In order to resolve the disagreement, Parties agree that Mr. Welsh shall intervene in case 23CV03719, which is the case that established the Receivership. Upon intervening, Mr. Welsh shall file a motion requesting that the Court make a ruling instructing Mr. Baker to place $216,497 in an escrow account and instructing Mr. Welsh as to whether a filing of a creditor’s claim is required.
• Parties agree that Mr. Baker may oppose Mr. Welsh’s request to be paid without filing a creditor’s claim, but Mr. Baker does not contest the dollar amount of the Judgment.
• During the period of time between this settlement and the date upon which the Court rules on Mr. Welsh’s motion, Mr. Welsh shall file a motion for ruling on the contested issue.
• Mr. Welsh agrees not to take any additional action that would encumber the assets of Fiore Management Inc. or otherwise enforce the Judgment.
• Parties may further memorialize the terms of this settlement agreement in writing.

The settlement agreement was specifically noted to be enforceable pursuant to Code of Civil Procedure section 664.6.

Welsh originally filed a motion to enforce the settlement and for entry of judgment on March 24, 2025. On April 1, 2025, Welsh withdrew the motion stating that Fiore has executed a Stipulated Entry of Judgment.

Three days later, on April 4, 2025, Welsh filed the present motion to enforce the settlement and for entry of judgment arguing, among other things, that Welsh’s counsel has attempted to contact counsel for the Receiver for Fiore, regarding the execution of a Stipulated Judgment but has been unsuccessful.

Analysis:

“If parties to pending litigation stipulate, in a writing signed by the parties outside of the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement. If requested by the parties, the court may retain jurisdiction over the parties to enforce the settlement until performance in full of the terms of the settlement.” (Code Civ. Proc., § 664.6, subd. (a).)

“Often, in cases where an oral settlement is placed on the record in the trial court, a written agreement will follow. If difficulties or unresolvable conflicts arise in drafting the written agreement, the oral settlement remains binding and enforceable under section 664.6.  Having orally agreed to settlement terms before the court, parties may not escape their obligations by refusing to sign a written agreement that conforms to the oral terms. The oral settlement, like any agreement, ‘imposes upon each party a duty of good faith and fair dealing in its performance and its enforcement.’ [Citations.]” (Elyaoudayan v. Hoffman (2003) 104 Cal.App.4th 1421, 1431.)

A court hearing a motion brought under section 664.6 may “receive evidence, determine disputed facts, and enter the terms of a settlement agreement as a judgment”, but may not “create the material terms of a settlement, as opposed to deciding what terms the parties themselves have previously agreed upon.” (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810.)

While the court would be inclined to grant the motion, under the specific terms that appear in the minute order of August 9, 2024, the proof of service attached to the motion is defective. No boxes are checked showing the manner of service. Further, Michael J. Gomez should have been served on behalf of Receiver for Fiore Ryan C. Baker, rather than with a “courtesy copy”. Because the proof of service does not reflect proper service, the hearing on the motion will be continued.