Storix v. Johnson | Consolidated California Appeals

Judge Judith Haller, Judge Joan Irion & Judge Patricia Guerrero

Johnson appealed the state court rulings of Judges Kevin A. Enright & Judge Katherine A. Bacal, and neither Wilson/Elser (representing Management) or Procopio (still purporting to represent Storix) responded to most issues. The appellate court allowed oral arguments (which were video-taped but too large to upload here) where Johnson reiterated that the opposing parties didn't respond to most issues, Most notably, Storix remained under the exclusive control of Management, so none of Storix's acts throughout the litigation (or on appeal) were ever approved by a disinterested board. Johnson also argued that Procopio illegally fought against Storix's own derivative claims and Management unlawfully self-approved having Storix fund their defense against every action.

 

The 3-judge panel (Judges Judith Haller, Joan Irion & Patricia Guerrero) were repeatedly asked by Johnson to look to his reply brief showing that he clearly defeated all the opposing arguments. Notably, "Storix" raised the $3,739.14 "loss of employee productivity" claim against him in the Janstor Suit for the first time in closing arguments when he had no opportunity to dispute it. Also, Management raised a new defense of "at-will employment" for the first time in closing arguments when he again had no opportunity to respond. The panel ignored these facts as well as the most important issue underlying every claim and defense - whether the Storix board was disinterested in any  of its decisions.

The panel couldn't defeat Johnson's argument that the Storix board was disinterested, so they simply ignored the argument and instead allowed Procopio to raise new arguments on appeal (which is not allowed by law) asserting that Storix's president, David Huffman, approved the Janstor Suit lawsuit against Johnson - completely contradicting their consistent argument at trial that the lawsuit was approved by he Storix board. The panel issued a 47-page unpublished order that raised new arguments in their favor (so Johnson would have no opportunity to respond ) and actually added over 40 new case citations to support the respondents (against the "party presentation rule" requiring the parties to argue their own cases), and never addressed Johnson's key facts and arguments properly raised in the trial court and on appeal that would have required reversal of the decisions against him.

 

The California Court of Appeals, like every trial court, simply refused to address the key issue of whether the Storix board was ever disinterested while continuing treat Storix and Management as separate and distinct parties - never acknowledging that Johnson funded the Shareholder Derivative Suit on Storix's behalf or that he had any rights as a 40% owner of the company. Pay special attention to the Petition for Rehearing showing all the important facts, issues, statutes and case law Johnson presented that the panel simply ignored. The panel ensured their 47-page opinion would have no chance of review by the California Supreme Court simply refusing to publish it.  

Then, in an extraordinary decision, they ordered Johnson to pay Management's costs and attorney fees for the appeal - while also refusing to address the fact (ignored by both Enright and Bacal) that they used Storix (and thus Johnson's only income) to pay all their expenses for the entire 5 years of litigation.

(2020-12-18 Video of Oral Arguments too large)