King City Entertainment v. Town & Country Investments CA4/2

BACKGROUND

I. The partnership agreement

Before they became business partners, Munoz and Baker had known each other

for many years through their involvement in a youth football organization in Norco. The

idea for the restaurant arose after Munoz mentioned to Baker’s wife, Michelle, that she

(Munoz) had recently received an inheritance of roughly $260,000. They discussed the

possibility of opening a daycare center, but shortly thereafter the Bakers approached

Munoz with the idea of opening a bar and grill called Cowboy Joe’s Sports Saloon

instead. At trial, Munoz testified that Baker “claimed to be a licensed contractor and he

said that he could build it out. And he also said he had restaurant experience, so he could

actually run the restaurant once it opened.”

Munoz agreed to go into the restaurant business with the Bakers and to form her

own corporation for that purpose. At the time, Munoz owned and operated two vehicle-

related companies—a used car dealership and a vehicle registration business. After

consulting with the bookkeeper for those companies, Munoz formed King City, a

3 corporation of which she was the sole officer, employee, and shareholder. The…