Security Management Group Internat. v. Jenkins CA1/2

BACKGROUND

SMGI brought suit against Jenkins, asserting causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, breach of fiduciary duty, conversion, intentional interference with contractual relations, violation of the Unfair Competition Law (Bus. and Prof.

1 Code, § 17200), and declaratory relief. It alleged that during Jenkins’ three- year tenure as C.E.O., Jenkins misappropriated more than $400,000 from the company through a combination of writing unauthorized checks and making unauthorized withdrawals and wire transfers (including $21,500 in unauthorized wire transfers for personal expenses relating to his divorce); ran up $60,000 in unauthorized credit card charges; and unilaterally gave himself $35,000 in unauthorized pay raises. SMGI also alleged that Jenkins, while still employed, had been engaged in a secret plot with a competitor, Resolute Security Group, Inc. (RSG), to destroy the company by stealing its customers and hiring away its employees. SMGI alleged that, as part of the plot, Jenkins tried to acquire a controlling stake in SMGI but failed to disclose to members of SMGI’s board of directors during negotiations…