MARTINEZ, et al. vs GILES, et al.

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

Tentative Ruling

Defendants Robert E. Giles (“Giles”), Giles Automotive, Inc. and Drive Family First, LLC (collectively, “Defendants”) order to show cause regarding issuance of preliminary injunction against Plaintiffs Robert Martinez (“Martinez”) and 5M Motors, Inc’s (jointly, “Plaintiffs”) is ruled upon as follows.

I.

Background

This case involves a business dispute regarding the management and business practices of Drive Family First, LLC (“DFF”), which comprises two auto dealerships and an auto repair facility. Under the Operating Agreement for DFF (“Operating Agreement”), Giles Automotive owned and controlled 72% of the Company, while 5M Motors owned and controlled 28% of the Company. Plaintiffs generally allege that Defendants have interfered in the daily operations of DFF and have improperly attempted to terminate Martinez and oust him from the business. Plaintiffs allege causes of action for breach of fiduciary duty, promissory fraud and misrepresentation, breach of contract, breach of the covenant of good faith and fair dealing, and declaratory relief.

On May 27, 2026, Plaintiffs filed an ex parte application for a temporary restraining order and order to show cause re: preliminary injunction seeking to enjoin Defendants as stated below until adjudication of the pending motion for appointment of a receiver, set for hearing on January 21, 2027. Plaintiffs sought to restrain Defendants from:

1. Terminating the employment of Plaintiff, Robert Martinez, as President and Chief Executive Officer of Drive Family First, LLC.

2. Undertaking any action that would trigger the redemption of Plaintiff 5M Motors, Inc.’s membership interest in Drive Family First, LLC.

3. Removing Robert Martinez as the Partnership Representative of Drive Family First, LLC under Internal Revenue Code section 6223(a).

4. Requiring the return of company vehicles by Robert Martinez and Shelley Martinez.

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

5. Holding the Special Meeting of Members contemplated by the Combined Notice to Members, dated May 22, 2026, or acting upon that notice by written consent in lieu of meeting.

6. Issuing any further Notice of Special Meeting of Members having the intent and purpose set forth in the Combined Notice to Members, dated May 22, 2026.

7. Interfering with the day-to-day operations and management of Drive Family First, LLC.

8. Undertaking any other act in furtherance of any of the foregoing.

(Plaintiffs’ Ex Parte Application, filed 5/27/2026, at p. 2:10-23.)

On May 29, 2026, the Court granted Plaintiffs’ ex parte application and set a hearing for Defendants to show cause as to why they should not be enjoined on August 4, 2026.

On June 4, 2026, Defendants filed an ex parte application for a temporary restraining order seeking to enjoin Plaintiffs “from performing or participating in any exercise or attempt to exercise a purchase of all or any portion of the Membership Interest of Giles' Automotive company and issuance of an Order to Show Cause as to why plaintiffs should not be enjoined from taking such actions pending the resolution of the Order to Show Cause or the pending Motion to Appoint a Receiver.” (Defendants’ Ex Parte Application, filed 6/4/2026, at p. 2:3-8.)

On June 26, 2026, the Court granted Defendants’ ex parte application and set a hearing for Plaintiffs to show cause as to why they should not be enjoined on August 4, 2026, to be heard concurrently with Plaintiffs’ motion.

Defendants did not file new moving papers in support of their motion for preliminary injunction. As a result, the Court construes Defendants’ ex parte application and evidence filed in support thereof as the moving papers for Defendants’ motion for preliminary injunction.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

On July 22, 2026, Plaintiffs filed an opposition to the order to show cause.

On July 28, 2026, Defendants filed a reply.

II. The Operating Agreement

The parties entered into an operating agreement for DFF on January 28, 2025 (“Operating Agreement”). The relevant portions of the Operating Agreement are set forth below.

5.1 The business and affairs of the Company shall be managed by or under the direction of the Managers, with one manager chosen by each Applicable Member with a membership interest in the Company. Unless otherwise provided in this Agreement, all decisions concerning the management of the Company’s business shall be made by the Managers[1]. The Managers shall have exclusive control over the business of the Company, including the power to assign duties, to sign and deliver deeds, notes, deeds of trust, contracts, and leases, and to assume the direction of business operations and shall have all rights, powers, and authorities generally conferred by law and such rights, power, and authority as is necessary, advisable, or consistent with accomplishing the purposes of the Company.

If the Managers are unable to agree on a matter of interest for the Company, the Managers shall present the matter of interest to the Members having voting rights and the Majority-in-Interest shall resolve the matter of interest.

5.8 Robert Martinez shall be the President of the Company and Robert E. Giles shall be the Secretary/Treasurer of the Company. The President shall have the powers and duties described in this paragraph and such other powers and duties as may be prescribed in this Agreement, by a Majority of Members, or by the Managers. The President of the Company shall be the chief executive officer of the Company, shall have general supervision of the business and affairs of the Company, shall preside at all meetings of the Members and of the Managers, and shall have such other powers and duties usually vested in a chief executive officer.

A Majority of Members may provide for additional officers of the Company, may alter the powers and duties of the President, and shall establish the powers and duties of all other officers and the compensation of all Company officers. Any officer may be removed, without cause, and a replacement appointed by a Majority of Members.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

8.9 Transfer upon Cessation of Robert Martinez's employment with Company with Cause.

(a) Upon the termination or cessation of Robert Martinez's employment with the Company, the Company shall purchase the interest held by 5M Motors, Inc. (the “Transferring Member”) and Robert Martinez shall cause 5M Motors, Inc. to sell, all, but not less than all, of its Membership Interest in the Company (the “Offered Interest”). The Company's purchase of the Offered Interest of a Transferring Member shall be made for the Purchase Price and on the terms and conditions as those set forth in Article 8. 11 (c) of this Agreement.

(b) For the purposes of this Agreement, “cause” shall include, but not be limited to: (i) fraud, misappropriation or embezzlement; (ii) felony conviction; (iii) use of illegal drugs; (iv) the intentional breach of the provisions of this Agreement; (v) repeated willful failure to perform services to the Company; and (iv) [sic] incapacity.

8.10 Transfer upon Cessation of Robert Martinez's employment with Company without Cause.

(a) Upon the termination or cessation of Robert Martinez's employment with the Company without cause, the Company shall purchase the interest held by 5M Motors, Inc. (the “Transferring Member”) and Robert Martinez shall cause 5M Motors, Inc., to sell, all, but not less than all, of its Membership Interest in the Company (the “Offered Interest”). The Company’s purchase of the Offered Interest of a Transferring Member shall be made for the Purchase Price and on the terms and conditions as those set forth in Article 8.11 (d) of this Agreement.

8.11 Agreement Price; Terms; Closing.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

(c) Company’s Obligation to Purchase upon Termination without Cause. In the event of the termination of Robert Martinez’s employment by the Company without cause, the Company shall be required to purchase all of 5M Motors, Inc.'s Membership Interest in the Company at a purchase price equal to the book value of the Company, as reflected on the Dealer Financial Statement (not including goodwill) for the month-end immediately preceding the termination of employment of Robert Martinez, plus Thirteen Million Dollars ($13,000,000), then multiplied by the Membership Interest percentage of the Company to be purchased (not factoring in any valuation discounts).

For the purpose of determining the Purchase Price, the amount of the LIFO reserve after deducting the applicable state and federal income taxes shall be added to the book value. The purchase price owed to Transferring Member under this paragraph 8.11(c) shall be reduced by any amounts owed by the Transferring Member to the Company or the Other Member. . . .

(d) Company's Obligation to Purchase upon Termination with Cause. In the event of the termination of Robert Martinez's employment by the Company with cause, then the Company shall be required to purchase all of Transferring Member's Membership Interest in the Company, for a purchase price equal to the lesser of: (i) the Transferring Members share of the book value of the Company, as reflected on the Dealer Financial Statement (not including goodwill) for the month-end immediately preceding the termination of the employment Robert Martinez, plus Thirteen Million Dollars ($ 13,000,000), then multiplied by the Membership Interest percentage of the Company to be purchased (not factoring in any valuation discounts).

For the purpose of determining the Purchase Price, the amount of the LIFO reserve after deducting the applicable state and federal income taxes shall be added to the book value or (ii) the fair market value of the Transferring Member's Membership Interest as determined by the independent certified public accountant ('CPA') regularly employed by the Company or, if the Company has no regularly employed independent CPA, an independent CPA selected by the Company for this purpose. The purchase price owed to Transferring Member under this Paragraph 8.11(d) shall be reduced by any amounts owed by the Transferring Member to the Company or the Other Member.

8.19 Purchase Option. Beginning after the end of a fiscal year 2026, and on or before October 1 each year thereafter, and provided that 5M Motors, Inc. is not in breach of any of the terms contained under this Agreement, and Robert Martinez remains an employee of the Company, without interruption, 5M Motors, Inc. shall have the option to purchase

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

the Membership Interest held by Giles Automotive, Inc., provided, however, that all of the Non-Voting Membership Interest held by Giles Automotive, Inc. shall be purchase first before purchasing the Voting Membership Interest held by Giles Automotive, Inc. . . .

(Declaration of Robert Martinez (“Martinez Decl.”), Ex. A.)

III. Legal Standard

“As its name suggests, a preliminary injunction is an order that is sought by a plaintiff prior to a full adjudication of the merits of its claim. [Citation.]” (White v. Davis (2003) 30 Cal.4th 528, 554.) “The purpose of such an order ‘is to preserve the status quo . . . .’ It ‘does not constitute a final adjudication of the controversy.’ [Citation.]” (Costa Mesa City Employees Ass’n v. City of Costa Mesa (2012) 209 Cal.App.4th 298, 305.)

“To obtain a preliminary injunction, a plaintiff ordinarily is required to present evidence of the irreparable injury or interim harm that it will suffer if an injunction is not issued pending an adjudication of the merits. [Citation.]” (White, supra, 30 Cal.4th at 554; see generally Code Civ. Proc. § 526, subd. (a)(2) [a preliminary injunction “may be granted . . . [w]hen it appears . . . that the commission or continuance of some act during the litigation would produce . . . great or irreparable injury . . . to a party to the action].) “‘[T]he extraordinary remedy of injunction’ cannot be invoked without showing the likelihood of irreparable harm. [Citation.]” (Intel Corp. v.

Hamidi (2003) 30 Cal.4th 1342, 1352.) Similarly, “if the plaintiff may be fully compensated by the payment of damages in the event he prevails, then preliminary injunctive relief should be denied.” (Tahoe Keys Property Owners’ Ass’n v. State Water Resources Control Bd. (1994) 23 Cal.App.4th 1459, 1471 [stating “[t]he showing of potential harm that a plaintiff must make in support of a request for preliminary injunctive relief may be expressed in various linguistic formulations, such as the inadequacy of legal remedies or the threat of irreparable injury [citations], but whatever the choice of words it is clear that a plaintiff must make [a] showing which would support the exercise of the rather extraordinary power to restrain the defendant’s actions prior to a trial on the merits”].)

“If the threshold requirement of irreparable injury is established, then [the court] must examine two interrelated factors to determine whether . . . a preliminary injunction should be [issued]: ‘(1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance or nonissuance of the injunction.’ [Citation.]” (Costa Mesa City Employees Assn., supra, 209 Cal.App.4th at 306.) The greater the showing on one factor, the lesser the showing must be on the other. (Butt v. State of California (1992) 4 Cal.4th

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

668, 678.) However, a preliminary injunction may not be granted, regardless of the balance of interim harm, unless it is reasonably probable that the moving party will prevail on the merits. (San Francisco Newspaper Printing Co. v. Superior Court (1985) 170 Cal.App.3d 438, 442.)

A motion for preliminary injunction is an evidentiary motion. (Code Civ. Proc. §527(a) [preliminary injunction may be granted upon a verified complaint or affidavits].) The party seeking injunctive relief bears the burden of showing all elements necessary to support issuance of a preliminary injunction. (O'Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.)

Courts will deny a preliminary injunction unless there is a reasonable probability that the plaintiff will be successful in his or her assertion of rights. (Continental Baking Co. v. Katz (1968) 68 Cal.2d 512, 528.) A preliminary injunction will not be issued simply to prevent the possibility of some remote future injury. Issuing a preliminary injunction based only on a possibility of irreparable harm is inconsistent with the characterization of injunctive relief as an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief. (Winter v. Natural Resources Defense Council, Inc. (2008) 555 U.S. 7, 22.)

IV.

Discussion

A. Irreparable Injury

Defendants argue that they will be irreparably harmed if Plaintiffs are allowed to purchase Defendants’ interests in DFF as permitted by Section 8.19 of the Operating Agreement. Defendants contend that the only reason Plaintiffs are in a position to purchase Defendants' interest is that Plaintiffs obtained a TRO that prevented Defendants from terminating Martinez and forcing a buyout of his interests before June 30, 2026. Defendants argue that it would be extremely difficult to ascertain their potential losses if Plaintiffs are able to buy their interests because this is a “lost opportunity” calculation, whereby Defendants will lose any potential increase in value of the business as well as yearly distributions.

Plaintiffs oppose, arguing that Defendants’ arguments are premised on a hypothetical scenario and that Defendants have failed to identify a cause of action that would entitle them to the relief sought.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

As stated above, in order to issue any preliminary injunction, the moving party must establish that it will suffer irreparable harm unless the injunction is issued. Further, a preliminary injunction will not be issued simply to prevent the possibility of some remote future injury. Issuing a preliminary injunction based only on a possibility of irreparable harm is inconsistent with the characterization of injunctive relief as an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief. (Winter, supra, 555 U.S. at p. 22.)

Here, Defendants offer no evidence that would support their contention that Plaintiffs will exercise their option to purchase 5M. As a result, Defendants’ showing of irreparable harm is based on unsupported speculation about what might happen if Plaintiffs are able to exercise their purchase rights.

Moreover, Defendants’ claims of incalculable future financial damages are not persuasive, and Defendants provide no legal authority that would support their contention that the “lost opportunity” damages would be difficult to calculate. In fact, “[i]ost profits to an established business may be recovered if their extent and occurrence can be ascertained with reasonable certainty . . . Historical data, such as past business volume, supply an acceptable basis for ascertaining lost future profits.” (Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 774.) Because lost profits for an established business are capable of calculation, Defendants have not demonstrated that their losses are not compensable with pecuniary compensation.

In the absence of a showing of irreparable harm, the motion must be denied.

B. Likelihood of Success

Although the Court need not continue, the motion must also be denied as Plaintiffs fail to establish a likelihood of success on the merits.

In order to demonstrate a likelihood of success on the merits, Plaintiffs are required to show a “potential entitlement to such relief.” (Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 447.) Stated differently, “a preliminary injunction may be sought only when the underlying cause of action on which the provisional remedy rests is presented for decision through the pleadings.” (Department of Fair Employment & Housing v. Superior Court (2020) 54 Cal.App.5th 356, 384; see also Moreno Mut. Irr. Co. v. Beaumont Irr. Dist. (1949) 94 Cal.App.2d 766,

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

778 [“A preliminary injunction is warranted only if there is on file a complaint which states a sufficient cause of action for injunctive relief of the character embraced in the preliminary injunction”].)

Here, Defendants seek an injunction to prevent Plaintiffs from exercising their contractual purchase rights. However, Defendants fail to identify which of their alleged causes of action would entitle them to the relief sought. Defendants generally argue they have a very strong likelihood of success on the merits in proving that 5M cannot enforce its purchase option because of Martinez’s purported termination and violation of the Operating Agreement. However, they fail to identify what portion of the complaint or cross-complaint would entitle them to the specific relief they have requested.

Therefore, Defendants’ motion is denied for their failure to demonstrate a likelihood of success on the merits.

C. Balance of Hardships

Because Defendants have failed to establish irreparable harm or a likelihood of success on the merits, the Court need not address the balance of hardships.

V.

Disposition

Accordingly, Defendants’ motion for preliminary injunction is DENIED.

This minute order is effective immediately. No formal order or other notice is required. (Code Civ. Proc., §1019.5; Cal. Rules of Court, rule 3.1312.)

[1] The term “Managers” in the Operating Agreement is defined in section 1.38 as “the

Persons named as such in Exhibit B attached hereto or the Person who from time to time succeeds any Person as the Manager and who, in either case, is serving at the relevant time as the Manager.” Robert Martinez and Robert Giles are the managers identified on Exhibit B to the Operating Agreement.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

NOTICE:

Consistent with Local Rule 1.06(B), any party requesting oral argument on any matter on this calendar must comply with the following procedure:

To request limited oral argument, on any matter on this calendar, you must call the Department 16C Oral Argument Request Line at (916) 874-1475 by 4:00 p.m. the Court day before the hearing and advise opposing counsel. At the time of requesting oral argument, the requesting party shall leave a voice mail message: a) identifying themselves as the party requesting oral argument; b) indicating the specific matter/motion for which they are requesting oral argument; and c) confirming that it has notified the opposing party of its intention to appear and that opposing party may appear via Zoom using the Zoom link and Meeting ID indicated below. If no request for oral argument is made, the tentative ruling becomes the final order of the Court.

Unless ordered to appear in person by the Court, parties may appear remotely either telephonically or by video conference via the Zoom video/audio conference platform with notice to the Court and all other parties in accordance with Code of Civil Procedure §367.75. Although remote participation is not required, the Court will presume all parties are appearing remotely for non-evidentiary civil hearings.

The Department 16C Zoom Link is https://saccourt-cagov.zoomgov.com/j/16030877014 and the Zoom Meeting ID is 160 3087 7014. To appear on Zoom telephonically, call (833) 568-8864 and enter the Zoom Meeting ID referenced above. NO COURTCALL APPEARANCES WILL BE ACCEPTED.

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A Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) is required to be signed by each party, the private court reporter, and the Judge prior to the hearing, if not using a reporter from the Court’s Approved Official Reporter Pro Tempore list.

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

26CV010671: MARTINEZ, et al. vs GILES, et al. 08/04/2026 Hearing on Motion for Preliminary Injunction in Department 16C

Once the form is signed it must be filed with the clerk. If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211) and it must be filed with the clerk at least 10 days prior to the hearing or at the time the proceeding is scheduled if less than 10 days away. Once approved, the clerk will forward the form to the Court Reporter’s Office and an official reporter will be provided.

*** EFFECTIVE APRIL 13, 2026, THIS DEPARTMENT HAS MOVED TO THE TANI G. CANTIL-SAKAUYE COURTHOUSE LOCATED AT 500 G STREET IN SACRAMENTO, CA 95814. ALL HEARINGS NOTICED FOR DEPARTMENT 54 WILL BE HEARD IN DEPARTMENT 16C OF THE NEW COURTHOUSE. ***