Case Background

The Sarkissians were longtime friends of Antranik Baghdassarian and his family. They supported the family’s dairy business, Karoun Dairies, Inc. In September 1998, Antranik asked Sue Sarkissian for $350,000 to expand Karoun. Trusting their close relationship, Sue agreed. The Sarkissians provided the funds without a formal agreement, believing it would become an investment in Karoun.

Cause

In March 2000, the parties formalized their arrangement. Antranik formed Central Valley Cheese Co. (CVC) to own the production facilities. The Sarkissians received a 10% stake in CVC, while Antranik retained 90%. They accepted because they trusted him. CVC manufactured products exclusively for Karoun. The Sarkissians relied on the defendants to operate both companies in good faith. The defendants allegedly manipulated revenues and expenses between CVC and Karoun. This manipulation reduced the cheese price from CVC to Karoun, which lowered CVC’s profitability and the Sarkissians’ dividends.

Injury

The Sarkissians suffered financial harm from reduced profitabi