Mahaffey & Assoc. v. Angus Petroleum CA4/3

FACTS

A. Background In 2006, Mahaffey represented several creditors of South Coast Oil Corporation (South Coast), which eventually filed for bankruptcy. Those creditors included BG Operations, LLC (BG), its manager and owner, Bob W. Grayson, and Donald W. White, who, among other things, was a major shareholder in South Coast. One of South Coast’s assets was the entirety of the stock of Angus Petroleum Corporation (Angus). In March 2007, White was appointed as sole officer of Angus. White then hired Mahaffey to “handle on White’s behalf Angus’s CEO tasks.” On May 1, 2007, BG and Angus executed an independent contractor agreement with respect to the Springfield facility in Huntington Beach. Although the agreement was entitled “Independent Contractor Agreement,” Mahaffey later referred to this as a “joint venture.” In short, BG was to advance certain funds on Angus’s behalf, and Angus agreed to repay the funds as soon as it had the capital to do so. BG, in turn, was to receive 25 percent of the net revenue from certain sales and activities. On that same date, according to the operative complaint, “White and BG executed a Multiple Parties Conflict Waiver that stated in part that both…