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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO .
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Nov-07-2011 3:46 pm
Case Number: CGC-10-500934
Filing Date: Nov-07-2011 3:46
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OPPOSITION
CATHAY BANK, A CALIFORNIA BANKING CORPORATION VS. RAYMOND XIANG ZHANC
EXHIBIFC
001003377173 Missing trem 7he
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Instructions:
Please place this sheet on top of the document to be scanned.LAW OFFICE OF”
CHIJEH HU
456 6 STREET
OAKLAND, CA 94607
(510) 832-1686
Chijeh Hu (SBN 241271)
LAW OFFICE OF CHIJEH HU
456 8" Street
Oakland, California 94607 rp don
Telephone: (510) 832-1686 Pere e oat
Fax: (510) 893-0155 CLERIC C Se ey
< I THE COURT
ch@cjhulaw.com ey ee) : £Oi 4
Attorney for Defendants/Cross-Complainants,
Raymond Xiang Kai Zhang et al.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
UNLIMITED JURISDICTION
CATHAY BANK, a California banking Case No. CGC-10-500934
Corporation,
OPPOSITION TO PLAINTIFF’S MOTION
Plaintiff, TO STRIKE SECOND AMENDED CROSS-
COMPLAINT
v.
Date: November 21, 2011
RAYMOND XIANG KAI ZHANG, et al., Time: 9:30a.m.
Dept.: 302
Defendants. 400 McAllister St.
San Francisco, CA 94102
RAYMOND ZHANG, an individual; CINDY
ZHANG, an individual; ZHANGS, LLC, a
California limited liability company; and
RAY KAI, LLC, a California limited liability
company,
Cross-Complainants,
ve
CATHAY BANK, a California banking
corporation; and DOES 201-230, inclusive,
Cross-Defendants.
Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-Complaintoem ND NH
LAW OFFICE OF.
CHIJEH HU
456 8™ STREET
OAKLAND, CA 94607
(510) 832-1686
XIANG KAI, LLC, a California limited
liability company,
Cross-Complainant,
v.
CATHAY BANK, a California banking
corporation; and DOES 231-260, inclusive,
Cross-Defendants.
INTRODUCTION
Defendants/Cross-Complainants Raymond Xiang Kai Zhang, aka Raymond Kai Zhang,
aka Raymond Zhang, aka Xiang Kai Zhang, aka Xiang Zhang, aka Zhang Xiang (“Raymond”),
Cindy Zhang (“Cindy”), Ray Kai, LLC (“Ray Kai”), and Zhangs LLC (‘“Zhangs”) (collectively
“Cross-Complainants”) hereby submit through their attorney of record the following
Memorandum of Points and Authorities in Support of their Opposition to Plaintiff Cathay Bank
(“Plaintiff or “Bank”)’s Motion to Strike Cross-Complainants’ Second Amended Cross
Complaint (“SACC”).
FACTUAL BACKGROUND
Raymond and Cindy are the sole members of Ray Kai and Zhangs LLCs. They created
the LLCs because their trusted long time accountant, who is and was not a lawyer, advised them
that the LLCs would protect them from losing their personal properties for business dealings.
Raymond and Cindy immigrated to the United States in the 1980’s from China. Both
Raymond and Cindy are obviously unsophisticated by casual observation. Raymond graduated
from high school in China and Cindy did not. With limited adult school education after they
arrived in the United States, they have managed to speak basic conversational English but neither
can read much English or comprehend English sentence structure.
Raymond and Cindy built up their businesses by working as laborers in the 80’s and 90’s,
saving as much as they could, and being honest and fair with people they dealt with, doing
business mostly on verbal agreements as they had very limited English reading comprehension.
By the mid 1990’s, Raymond and Cindy began to invest their savings by purchasing
residential building lots and building single family residences, financing the construction costs
Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-Complaintom ND WH BF Ww NY =
N NoON Ree a sa a ee
NoRRRP BBB SFSGe DADE BSH EH S
LAW OFFICE OF”
CHIJEH HU
456 87" STREET
OAKLAND, CA 94607
(510) 832-1686
using construction loans from local bank lenders. They knew these local bank lenders personally
and have been successful in profiting from the sales of the residences after completion of the
construction. Their cash flow began to stabilize and their financial situation appeared secure.
During the summer of 2005, their long time accountant introduced them to a Cantonese-
speaking employee of the Bank. Raymond subsequently commenced negotiations with the Bank,
through the employee, to obtain a business loan to provide for long-term working capital for their
businesses. The negotiations of the loan between the Bank, through its Chinese-Cantonese-
speaking employees, and Raymond, were entirely conducted in Cantonese, a dialect of Southern
China.
In the second half of 2006, Ray Kai, through Raymond and Cindy, started negotiating
with the Bank to obtain a construction loan for a four story residential condominium and one
story commercial unit on MacArthur Boulevard in Oakland, California. They entered into a
construction loan agreement with the Bank in the amount of Seven Million Two Hundred Thirty-
Eight Thousand dollars ($7,238,00.00) in October 2006, secured by a Bank Deed of Trust
against the MacArthur project property, allowing for an Eighteen (18) month construction time,
and maturing on or about May 1, 2008.
The construction at the MacArthur project experienced unforeseen delays outside the
control of Raymond, Cindy or Ray Kai: PG&E took more than a year to relocate a high-voltage
power line crossing over the Ray Kai project. Construction was halted as a result. The power
line issue was finally resolved about mid to late October 2008. Understanding that the delay was
beyond the control of Raymond, Cindy, and Ray Kai, the Bank represented that it would extend
the maturity date for the construction loan first from May 1, 2008 to February 1, 2009, and then
from February 1, 2009 to October 1, 2009 at no cost to Cross-Complainants.
At each extension, Raymond and Cindy were approached by Bank employees and were
told to execute signature pages presented to them within minutes. Significantly, and without the
knowledge of Raymond and Cindy, some of the signature pages were attached to extension
documents which included a nondescript provision entitled “Conditions Precedent” that
purportedly secured the loan modification with Raymond and Cindy’s real property located at
Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-Complaint1 |} 4900 Third Street, San Francisco, California. Neither Raymond nor Cindy signed any of these
2 || documents in the presence of a notary.
3 At this time, around October 2009, the MacArthur project was about 90% complete, the
project team was working on the completion certificate and final punch list items. Raymond was
actively marketing the project condo units and had promising prospects. Ray Kai’s contractors
4
5
6 || submitted payment requests to the Bank but no funds were disbursed. Faced with a dreary
7 || economic free fall dominating the news at the time, Ray Kai’s contractors demanded prompt
8 || payment or threatened to stop work. Upon inquiry, Raymond was told by the Bank that their
9 || payment requests were being processed but it would “take some time.” If Raymond needed
10 || funds promptly, the Bank told Raymond, he should put up his own funds. To keep the project
11 || from halting, Raymond advanced approximately $150,000 needed for payments to the
12 || contractors. In the meantime, the Bank again extended the maturity date for the construction loan
13. || from October 1, 2009 to February 1, 2010 to allow Raymond to market the condos.
14 Raymond and Cindy were again approached by Bank employees and told to execute
15 || signature pages presented to them within minutes. Significantly, and again without the
16 || knowledge of Raymond and Cindy, some of the signature pages were attached to extension
17 || documents which included a nondescript provision entitled “Conditions Precedent” that
18 || purportedly secured the loan modification with Raymond and Cindy’s real properties located at
19 || 480 Potrero Street, San Francisco, California and 229-255 International Boulevard, Oakland,
20 |) California.
21 In December 2009, the MacArthur project was approximately 95% complete, and the
22 || pending progress payments were still being processed by the Bank, and remain unpaid to this
23 || date. Raymond, however, had solid leads for multiple buyers for the project condos, some from
24 || the Bay Area, and some from China as employment based investment immigrants. Raymond’s
25 || immigration attorney advised him that it would take up to 18 months to complete the investment
26 || immigration process. In late November 2009, Raymond, for the first time at his own initiative,
27 || approached the Bank, asking for an 18-month extension of the maturity date to accommodate the
immigration process. The Bank told Raymond that he needed to provide additional collateral to
LAW OFFICE OF”
CHIJEH HU
456 8™ STREET 4
OAKLAND, CA 94607
(510) 832-1686
Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-ComplaintLAW OFFICE OF’
CHIJEH HU
456 8" STREET
OAKLAND, CA 94607
(510) 832.1686
get the 18-month extension. Raymond agreed and delivered guarantee trust deeds against real
properties located at 480 Potrero Street, San Francisco, California and 229-255 International
Boulevard, Oakland, California. Shortly after the meeting with the Bank, Raymond left for
China to solidify the condo sales.
Raymond returned from China in January, believing that the maturity of the construction
loan had been extended for 18-month, and was devastated to be notified by the Bank that his
collateral on the Potrero and International properties bought him a mere 2-month extension as
opposed to the agreed upon 18-month extension.
After the two months had lapsed, the Bank locked Cross-Complainants out from the
MacArthur property, despite the Bank having no legal right to the control of the property. The
Bank further deceived and made false statements to Raymond, by telephoning him directly, and
not through legal counsel, dissuaded Raymond from showing up at a hearing to object to the
appointment of a receiver for the collateralized properties. The lockout at MacArthur, guarantee
trust deeds, and subsequent foreclosure, deterred and terminated various deals to sell the condos
and properties, costing Cross-Complainants millions of dollars. The Bank is in the process of
foreclosing on the International property.
Put in perspective, the Bank has loaned Ray Kai a total of approximately $6.4 million, as
the Bank never disbursed the payment requests from Ray Kai’s contractors. Presumably they are
still being processed and may “take some time.” But the Bank wasted no time in collecting, from
ill-gotten collaterals including the MacArthur property, 480 Potrero, and 4900 3" Street
properties, approximately $12.75 million from the Cross-Complainants. The foreclosure of the
International property in Oakland, if carried out as scheduled on November 10, 2011, would
increase the profitability of the Bank further.
ARGUMENT.
A. The Second Amended Cross-Complaint Should Not Be Stricken
The Bank argues that Cross-Complainants’ Second Amended Complaint should be stricken in
its entirety because “For over a year ... cross-complainants have yet again failed to state any facts
which would constitute a claim against the Bank. The Court should prevent this continued waste
5
Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-ComplaintoOo ID WH BF WN =
Noy RN
NoRRR BR FPS SGe WADE H HS
LAW OFFICE OF”
CHIJEH HU
436 8" STREET
OAKLAND, CA 94607
(510) 832-1686
of judicial resources by refusing to accept cross-complainants’ late-filed second amended cross-
complaint.” (Plaintiff's Motion to Strike SACC Pg. 5 Lines 18-24). The Bank’s statement is
wrong as Cross-Complainants have stated facts sufficient to sustain the causes of actions as
provided in their Opposition to Plaintiff's Demurrer to Second Amended Cross-Complaint.
Further, to the extent that the Bank’s demurrer to Cross-Complainants’ prior amendments,
including the active Second Amended Cross-Complaint, were sustained, it was largely attributed
to the inability of Cross-Complainant’s previous counsel to communicate effectively with Cross-
Complainants, a fact the Bank’s own counsel has observed and recognized, and as a consequence
offered the Bank’s interpreter to assist such communication. (Exhibit A — Bank attorney
recognizing communication problems between Raymond and Cross-Complainants’ counsel at
deposition of Raymond) Further transcript passages highlight the extent of the
miscommunication between the Cross-Complainants and the previous counsel. (Exhibit B —
Various statements regarding a declaration prepared by the previous counsel) Such
ineffectiveness was not a product of bad faith delay tactics, and is no longer an issue with the
recent substitution of Cross-Complainants’ counsel. The Second Amended Cross-Complaint
should not be stricken based on ineffectiveness of the previous counsel.
B. The Newly Added Causes of Action Should Not Be Stricken Because Judicial Policy
Favors Deciding Litigation on its Merits.
The Bank further argues that Cross-Complainants were only allowed to amend the causes of
action addressed by ruling sustaining the Bank’s demurrer, not add entirely new causes of action,
unless, of course, Cross-Complainants obtain a leave to amend to add the new causes of action.
That argument lose sight of a maxim of jurisprudence: “The law respects form less than
substance.” (See California Civil Code §3528) California judicial policy has always favored
deciding litigation on its merits. An order denying relief runs counter to the law's policy
encouraging trial and disposition on the merits. Daley v. County of Butte, 227 Cal.App.2d. 380
(1964). To the extent, however, that this Court deems that the lack of a motion for leave to
amend the second amended cross-complaint is a technical obstacle to allowing the first and fourth
causes of action, Cross-Complainants hereby respectfully request such leave to amend, adding
Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-Complaintom ND WH FF WY =
yeN YR NR NN &* Se Be Se ee Be Se Se Ss
a ana & oO YO fF SO we AR DH FF YW Nn =
27
LAW OFFICE OF”
CHIJEH HU
456 8™ STREET
OAKLAND, CA 94607
(510) 832-1686
the first and fourth causes of action. It is beyond dispute that this Court has discretion under CCP
§426.50 to allow leave to amend new causes of action absent a showing of bad faith. As there is
no showing of Cross-Complainants’ bad faith, the new cause of action should be allowed, and the
issue the cause of action seeks to raise should be decided on its merits.
Conclusion
Plaintiff's Motion to Strike fails to put forth sufficient support for its positions, and thus
the Cross-Complainants respectfully pray this Court overrules the Bank’s Motion to Strike in its
entirety. Alternatively, should this Court sustain any part of Plaintiff's Motion to Strike, Cross-
Complainants pray that leave to amend be granted as stated above.
Dated: November 7, 2011 LAW OFFICE OF CHIJEH
Complainants,
Raymond Xiang Kai Zhang et al.
Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-ComplaintEXHIBIT ARAYMOND XIANG KAI ZHANG - 4/15/2011
1 Q. When you say "redraw," you mean change the 1
2 construction budget? (2
3. A. No. Well, when we do work, we have to apply 3
4 with the bank before they could provide the funding. 14
5 Q. The phrase that you used -- and maybe it's a 5
6 translation issue -- was you used Mr. Langdon when you | 6
7 had to redraw [sic] the loan documents. 7
8
8 THE WITNESS (in English): Not "redraw." |
9 MR. CHEVALIER: Withdraw? 9
10 THE WITNESS (in English): If like I want to 110
11. try to draw the money. ua
12 MR. RUSSAK: Oh, withdraw. Make a draw onthe | 12
13 loan. 13
14 THE WITNESS (in English): Yeah. 14
15 MR. RUSSAK: Okay. A disbursement request, jis
16 something like that. Okay. 116
a7 ‘THE INTERPRETER: It's a pronunciation issue | 17
18 nota translation issue. (18
19 MR. RUSSAK: Let the record so reflect. 19
20 Okay. Counsel, for fear of using all of my 20
21. time to review compliance with the remaining categories. 21
22. of the document request, I will ask that perhaps during (22
23. the lunch break you might review this. And if I would | 23
24 be so bold, I would even offer the services of the (24
25. translator, if she’s willing, just to make sure 25
Page 46
1 Mr. Zhang understands the scope of his production 1
2 obligation, and see whether there aren't other things (2
3 that can be produced. 13
4 And maybe we can take a break afterwards and | 4
5 you can work with him -- I don't know if it's 38
6 appropriate or inappropriate for you to do so ~-justto 6
7 translate the documents. ,7
8 THE INTERPRETER: Yeah, I could. AlthoughI | 8
9 would also afterwards need my own lunch break. ' 9
10 MR. RUSSAK: Oh, absolutely. I would hope that | 10
11. that wouldn't take too terribly long. Well, we'll talk sll
12 about that when -- i 12
13 THE INTERPRETER: So if we have an extended | 13
14 lunch break, then I could take part of that time to do 14
15. this and then have my regular lunch break. )15
16 MR. RUSSAK: Okay. That would be great. Let's | 16
17 go off the record for a second. lug
18 (Off the record from 11:51 until 11:53.) 18
19 MR. RUSSAK: Allright. We are going to take | 19
20 an hour-and-a-half lunch break, the first half hour of | 20
make sure that the witness understands the production
obligations of those demands.
And I have offered to stipulate, and hereby
renew that stipulation, which counsel I believe is happy
to accept, that the translation services provided by our
translator will be treated as confidential, that I will
not ask her about her conversation except whatever
statements we might make on the record, but that it's
not a waiver of the attorney-client privilege for her to
communicate in those communications between the lawyer
and his client, the witness, and that it will be treated
as essentially a deep dark secret.
MR. CHEVALIER: Yes.
MR. RUSSAK: So with that, itis now 11:54. We
will resume at 1:30 p.m. today.
Off the record.
(Recess was taken from 11:55 until 1:37.)
MR. RUSSAK: Let's go on the record. We are
back on the record. It is about 1:38. And I think
Mr. Chevalier has a brief statement to make about what
he has learned about the document production during the
lunch break with the assistance of the translator.
MR. CHEVALIER: Okay. The entirety of the
eight special demands contained in Notice of Deposition
for Raymond Zhang was translated by the interpreter to
Page 48
Mr. Zhang, and the significance of each of the demands
was explained using the assistance of the translator.
And following today's deposition, Mr. Zhang and I are
going to work together to make certain that all the
documents that are available are produced.
MR. RUSSAK: I think you also told me that, as
for Categories 6, 7, and 8 on Exhibit 1, that you're
fairly certain that there are not additional documents
to be produced in those categories; is that right?
MR. CHEVALIER: Yes.
MR. RUSSAK: Okay. And then I asked you during
the break -- and I think you agreed, but you'll take
your own counsel, obviously -- that what I would like to
see happen, if it’s not terribly burdensome, would be
for Mr. Zhang to actually deliver the files that are
identified in Category 1, to the extent that he has
actually created or has and maintained physical files to
(a) the loan, (b) the bank, (c) the project, et cetera,
that he deliver those to you so that you can inspect
them and make sure that everything in there that you
21. which, at least for the three people sitting on the | 21 believe is called for in the request is produced.
22. other side of the table, will be to have counsel forthe | 22 MR. CHEVALIER: Yes, correct.
23 witness, the witness, and our translator to go through 123 MR. RUSSAK: Thank you.
24 the inspection demands, which are the last three pages 24 In addition -- I meant to make a reservation at
1, so that the translator and the lawyer can | 25_ the beginning of deposition, but especially given the
Page 47 Page 49
13 (Pages 46 to 49)
Merrill Corporation - Los Angeles
800-826-0277
www.merrillcorp.com/lawEXHIBIT _B_RAYMOND XIANG KAI
ZHANG - 4/15/2011
require collateral. However, maybe 1
the timing correctly. I remember that I had signed a
research to correct any potential misstatements?
A. Ihave to go back to my company‘to look at my
records.
MR. RUSSAK: I will now asX the translator to
translate paragraph 21 on page 5 Sf your declaration.
And for the record, I'm gging to just read it
and some identifying senteng€s for the prior work that
you've done, to avoid any Ambiguity in the record.
/, which we previous discussed,
ords "On or about February 4, 2010,"
t the bottom of page 3 on line 27 with the words
r about December 3, 2009," and ends at line 3 on
1 record, { would tend to agree you, so let's nov
2 Well, bear with me one second. I want to see -- Before
3 we go to the next phase, let's go off the record for a
4 second, please.
5 (Off the record from 3:14 until 3:14.)
6 MR. RUSSAK: Okay. Back on the record.
7 THE WITNESS: Maybe it's because my English
8 isn't that good, so when I try to explain in English,
9 Quinn did not completely understand.
10 MR. RUSSAK: That's fine. What we're trying to
11. do today and in connection with this lawsuit is find out
| 12. the true facts about what really happened. Okay? And
| 13. so if we have to correct a declaration, we correct a
!14 declaration, but we need to find out the true facts.
(15 While we were off the record previously we
| 16 marked a series of additional documents that I'm going
17 to quickly identify for the record and then, with the
it 8 help of Ms. Raanan, distribute. And these are
) 49 Exhibits 9 through 13, | believe. Yes, 9 through 13.
| 20 Each of them is an Extension Maturity Date Agreement,
| 21. and they are different in that they are different dates
| 22. of execution.
123 Exhibit 9 is executed as of September 12, 2008.
24 Excuse me. Let me start over again so we have
|
|
i
i
i
|
i
25 page 4 with the words "extended to February 1, 2010." | 25 them in the right order.
Page 74 Page 76
1 And paragraphs 8 through 1! previously referred | 1 Exhibit 8 is the first, June 4, 2008.
2 to are on page 3, starting with line 2 with the words | 2 Exhibit 9 is as of September 12, 2008. Exhibit 10 is As
3 “On or about June 4, 2008," and ending with the words 3 of December 18, 2010.
4 "extended to October 1, 2009," on line 19. 4 Excuse me. Did I misread a date again?
5 Now, if you would please translate the | 5 have those back? I want to start from the begining,
6 statements made in paragraph 21 on page 5. | © because I want this record to be clear. And
7 THE WITNESS: Are you talking about the sixth | 7 apologize.
8 extension or when? 8 Exhibit 8 is June 4, 2008. Exhibit is an
9 MR. RUSSAK: Q. Mr. Zhang, these are your 9 Extension of Maturity Date Agreemept dated as of
10 words, not mine. | 10 September 12, 2008. Exhibit 10 is # Extension Maturity
ll A. Well, could I have it read back again? | 11 Date Agreement executed as of Décember 18, 2008.
12, Q, Yes. {12 Exhibit 11 is titled different. I1/s titled "Loan
13 (The interpreter repeats the translation.) |13 Modification and Extension Xgreement," dated as of
14 THE WITNESS: So this is the first extension -- 14 February 26, 2009. Exhibiy/12 is a Loan Modification
15 THE INTERPRETER: He wants to ask me -- | 15 and Extension Agreement dated December 3, 2009. And
16 MR. RUSSAK: Q. Mr. Zhang, let me help you. 16 Exhibit 13 is a Loan ification and Extension
17 If there's a statement in here that is incorrect, it's | 17 Agreement dated Feptuary 4, 2011
18 better to correct it now. (18 (WhereuponMeposition Exhibit 8 through
19 A. (In English): Yeah, I know. That's why I -- it 9 Exhibit 13Avere marked for identification.)
20 Q. Okay. But if I'm overhearing your | 20 MR. RUSSAK: Q. Mr. Zhang, I've separately
21 conversations with the translator, I think what 21. marked andAttached to this deposition transcript these
22 paragraph 21 says is "Since executing the First . 22. exhibits. Ythink they are the same documents as are
23 Extension Agreement." Okay? | 23 attached/to your declaration as the First through Sixth
24 A. (In English): Looks like this one not clear. 24 Extension Agreements, but I think my copies are a lot
25 accurate, okay. Based on my review of the 25 more legible than yours, so I've attached copies for
Page 75! Page 77
20 (Pages 74 to 77)
Merrill Corporation - Los Angeles
800-826-0277
www.merrillcorp.com/lawRAYMOND XIANG
KAI ZHANG ~ 4/15/2011
1. read it," any answer he's going to give is going to 1
2 imply that he has read it. 2
3 MR. RUSSAK: Well, let me back up, then, 13
4 because that's not quite as I understood his testimony, 4
5 but let me see if I can clarify. 5
6 Q. You testified earlier that you first lyarned 6
7 that there was a deed of trust encumberjng the Third | 7
8 Street property when you had received the Complaint. | 8
9. Did you notice that before you gavefhe document to your | 9
10 attorney? 10
11 A. No. il
12 Q. How did you receive thé lawsuit in the very 12
13 first instance? )13
14 A. The people from the/bank. 1 don't know who it ;14
15 was, but the person calle¢ and sent -- and delivered it. 115
16 Q. Personally to you? (16
17 A. Yes. (17
18 Q. Did the mn who delivered it to you speak {18
19 Chinese? i19
20 A. Idon'tXnow. [20
21 Q. Did she person who delivered it to you say (21
22 anything/to you when he delivered it to you? 22
23 A. Xo. He was just a person who delivered (23
24 packdges. (24
25 . When you received Exhibit 17, what did you 25
Page 110 i
i
1 think it was? 1
2 A. We know it has to do with the bank but not what 2
3. itsays. 3
4 Q. Did you know that it was a lawsuit against ydu? 4
5S A. I knew that it had to do with the bank and I 15
6 only knew what it was after I showed it to my att 6
7 Q. So when you first received it, you did yfot 7
8 believe that it was a lawsuit against you? 8
9 A. Thad guessed that it was. | 9
10 Q. And what about it led you to tht guess? |10
11 A. Well, Ican't read English, but [daw this ul
12 (indicating). }12
13 Q. Youknow, during a brea, Mr. Zhang, [saw you | 13
14_ staring very intently at a couple of documents, flipping 14
You learned that the bank had a deed of trust
against your Third Street property sometime after you
were served with the lawsuit in June of -- in or about
June of 2010: correct?
A. Yes.
Q. And did you believe that the bank had tricked
you into signing the deed of trust?
A. Yes.
Q. Did you tell that to your lawyer?
A. Yes.
Q. Do you believe your lawyer understood you when
you told him that?
A. I think he understood.
MR. RUSSAK: Let's take a break for a second.
1 want to chat with you for a moment.
Off the record.
(Recess was taken from 5:16 until 5:32.)
MR. RUSSAK: Q. I'd like to turn your
attention back to Exhibit 6, your declaration. And I
will ask the translator to read to you paragraphs 12 and
13 of the declaration.
Mr. Zhang, are the statements in paragraphs 12
and 13 of your declaration, which is Exhibit 6, true and
correct?
A. 12 and 13?
Page 112
Q. Yes.
A. I think that these two paragraphs are not that
correct.
Q. In what way are they incorrect?
A. We didn't know we had to provide the Third
Street as collateral.
Q. So why did you sign a declaration that included
this language?
‘A. Maybe there was some places where J and the
attorney did not quite understand each other.
Q. I want to draw your attention back to the day
on which you signed this declaration. It was the day
before the TRO hearing.
And you know what I mean by "TRO hearing,"
don't you?
A. Yes.
Q. What do you understand the TRO hearing to be?
A. The restraining order.
Q. For the foreclosure?
A. Yes.
Q. Okay. How did you communicate with your lawyer
prior to the preparation of this declaration? Did you
sit down and have a meeting with him and talk with him
Page 113
29 (Pages 110 to 113)
23 (Off He record from 5:13 until 5:14.) 123
24 MR. RUSSAK: Q. Mr. Zhang. did you tell your 24 about the facts?
25 lawyer that -- Well, strike that. (250 A. Yes.
Page 111
Merrill Corporation - Los Angeles
800-826-0277
www.merrillcorp.com/lawRAYMOND XIANG KAI ZHANG - 4/15/2011
Q. And when you had that conversation with him for |
1 1
2 the first time, was there already a draft declaration ; 2
3. prepared that he had written first? 13
4A. Yes. 4
5 Q. Before the draft declaration was prepared, did = 5
6 you have any discussions with him about the facts of | 6
7 your case? 7
8 A. Yes. 8
9 Q. And when did that conversation take place? 19
10 A. Before -- One week before March 9th. 10
11 Q. Did you have an in-person meeting with him? | 11
12. A. Yes. (12
13 Q. Who else was present? i 13
14 A. Michael. p14
15 Q. Another lawyer? (as
16 A. Yes. i 16
17 Q. Somebody who works with Mr. Chevalier? i 17
18 A. Yes jis
19 Q. Would that be Michael Schinner? ; 19
20 A. Yes. 120
21 Q. How do you know Mr. Schinner? (2.
22 A. Friend introduced us. 122
23 MR. RAANAN: Before I forget: Bill, what's his | 23
24 last name? (24
25 MS. RAANAN: Langdon. 125
Page 114)
|
1 MR. RUSSAK: Q. Bill Langdon, how did you meet | 1
2 Mr. Langdon and how did he come to be working on your 2
3 project? (3
4 A. Italso was a referral from a friend. | 4
5 Q. But it was not a referral from the bank? 15
6 A. No. ,6
7 Q. Okay. So you had a meeting with Mr. Schinner | 7
8 and Mr. Chevalier, and you discussed the facts of your | 8
9 case about a week before the TRO hearing; correct? = 9
10 A. Yes. /10
11 Q. What did you tell them about the deed of trust. =| 11
12 on the Third Street property? f12
13 A, Isaid I did not know that that was there. (13
14 Q. Did you tell them that you thought you had been ' 14
15. tricked into signing it? 15
16 A. Yes. 16
17 Q. Was anybody other than Mr. Schinner and 17
18 Mr. Chevalier with you in the meeting? (18
19° A. No. (19
20 Q. Your wife wasn't there, or your son? §20
21 A.No. faa
22 Q. So after your first meeting, your lawyers (22
23 prepared a draft declaration. And then you came back | 23
24 later to review it and sign it maybe the day before the | 24
25 hearing; is that right? 125
Page 115)
A. Yes.
Q. What was the process by which you -- Well, back
up.
Did you review the declaration before you
signed it?
A. I did not, because I cannot read it.
Q. Did you spend time discussing your declaration
with your lawyers before you signed it?
A. Yes.
Q. How much time did you spend with them doing
that task?
A. Around half an hour.
Q. And who was involved in that process at your
lawyer's law firm?
A. Quinn and Michael.
Q. Was anyone else present at that meeting?
A. No.
Q. Did they read each paragraph of the declaration
to you in English?
A. Yes.
Q. And did you understand at least as you -- At
any time did you believe that you did not understand
what they were saying to you?
A. A little bit.
Q. In which instances? Do you recall any specific
Page 116
areas where you thought you didn't understand them?
A. Every so often there would be something I did
not understand.
Q. Okay. But they read each and every paragraph
to you in English?
A. Yes.
Q. On the very last page of the document, of your
declaration, excuse me, page 6, the words are, on line
17, "I declare under penalty of perjury under the laws
of the State of California that the foregoing is true
and correct."
Do you see that language?
A. I didn't really know how to read it. I just
signed.
Q. No, did your lawyers read that particular
sentence to you?
A. They did.
Q. Did you understand what they said when they
read that sentence to you?
A. No.
Q. Did you ask them to explain it to you?
A. No.
Q. Why not?
A. I trusted the attorney.
Q. Do you understand what "penalty of perjury"
Page 117
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means?
A. No.
Q. In other instances where there was something
that they read to you that you didn't understand, what
did you do?
A. If it's not that important, then it's just what
itis.
Q. But did you say anything to your lawyers if you
did not understand a statement that they were reading to |
you? | 10
A. Yes.
Q. And were any changes made to the draft after
you started that meeting, the second meeting?
A. I don't know.
Q. I want to try to jog your memory just a little
bit. Okay?
It's possible that you got there and they |
presented you with a document; and as they read through 18
the document to you, you might have interrupted them or) 19
corrected them at some point and said, "What you said = 20
about that thing is not quite right." hai
Did anything like that happen? (22
A. Yes, but when they read it again, sometimes I (23
still did not understand. \24
Q. But if you corrected them and said something is | 25
Page 118)
1
wrong, you know, did they make changes to the document? | 1
Did something like that happen? 2
A. If it was not correct, it was corrected. 13
Q. Did something like that happen? I'mnotasking 4
you to tell me, you know, what would have happened, I'm | 5
asking: Do you remember that something like that (6
actually happened where you told them to change 7
something? 18
A. That draft was not changed. 19
Q. There's no changes to the text that you had /10
read to you in your second meeting before you signed it; | 11
is that what you're saying? 12
A. No. 13
Q. What are you saying? 1 think we have a (14
double-negative problem. (15
‘You showed up at a meeting, It was the day /16
before the hearing; is that correct? 117
A. Yes. (18
Q. March 9, 20117 19
A. Um-hum. (20
Q. And at the beginning or near the beginning of (21
the meeting they gave you a draft of the declaration (22
that ultimately you signed as Exhibit 6; correct? 123
A. Yes. (24
Q. And they read through the declaration word by 25
Page 119
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word for you; correct?
A. Yes.
Q. And if there was something you didn't
understand, you asked them to explain it to you;
correct?
A. Yes.
Q. Do you believe that any of the statements --
Well, back up.
Were there any statements that they read to you
that they did not explain to your satisfaction?
A. I don't remember.
Q. Did anybody attempt to translate the document
from English into Chinese for you while you were there?
A. No.
Q. Does Mr. Schinner speak Chinese?
A. No.
Q. So your meeting with them was entirely in the
English language; is that correct?
A. Yes.
Q. Did they ask you whether you felt the need for
a translator to assist you in the meeting?
A. No.
Q. Did you tell them you would prefer discussing
it with a translator present?
A. No.
Page 120
Q. And you felt comfortable, did you not, that you
understood what they read to you; correct?
A. Yes.
Q. Okay. Do you recall hearing them read to you
the text in paragraphs 12 and 13? And now I'm going to
read it out loud in English after the translator
translates my question.
Quote: ‘Under the terms of the Fourth
Extension Agreement, Cathay Bank required
that Rai Kai, LLC, provide additional
collateral as consideration for further
extending the maturity date. Rai Kai, LLC,
arranged for a third party to provide
additional collateral."
Do you remember them saying those words to you
in English?
THE INTERPRETER: You don't want me to
translate --
MR. RUSSAK: I want just the question.
THE INTERPRETER: Just the question, okay.
THE WITNESS: I don't remember.
MR. RUSSAK: Q. When I said it in English, did
you understand me?
A. Half and half.
Q. Was there anything that your lawyers read to
Page 121
(Pages 118 to 121)
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1 you where you said you felt like you understood it only | 1
2 half and half? 12
3 A. Yes. 13
4 Q. Did you let them know that you only understood | 4
5 some portions of what they read to you half and half? 5
6 A. Well, I don't know if they knew. | 6
7 Q. I'masking you: Did you tell them that some | 7
8 things you only understood half and half? 1 8
9 A. Itold them that my English wasn't good. 19
10 — Q. I'mgoing to read some more words to you. 1 | 10
11 don't want the translator to translate them, but I want | 11
12 you to explain to me what you understand by the words | 12
13 that I say. Okay? 3
14 A. Okay. 14
15 Q. "Rai Kai arranged for a third party to provide | 15
16 additional collateral." Do you understand what I just 16
17. said? {17
18 MR. CHEVALIER: I just want to object just on (18
19. the basis -- I want to say that your voice speaking now 19
20 is different than my voice or Michael Schinner's voice (20
21 speaking at the time in our office. }21
22 And now she can translate. I just want that on [22
23. the record. | 23
24 THE WITNESS: I don't understand that. (24
25 MR. RUSSAK: Q. Nothing about it at all? (25
a Page 122
1 A. Tonly know and understood the word fa
2 “collateral.” (2
3 Q. "Additional collateral"; right? You understand | 3
4 the word "additional," don't you, in the context of 14
5 “additional collateral"? 15
6 Let me rephrase the question. You understand | 6
7 the word "collateral"; correct? 7
8 A. Yes. 18
9 Q. And you understand the word "additional"; 19
10 correct? (10
11 A. Tthink that means extra. al
12 Q, And so when you heard the phrase “additional | 12
13 collateral," did that mean anything to you when 13
14 Mr. Chevalier or Mr. Schinner said those word to you | 14
15 when reading this declaration? 15
16 A. Somy understanding is that they additionally (16
17 took Third Street, they additionally took that property 7
18 of mine. (18
19 Q. Who is Dong Ying Qui? 19
20 A. That person has 30 percent of Third Street. 120
21 — Q, Will you turn to the signature pages of (21
Exhibit 14, which is around page 44, And there are two 22
copies of page 44, One has and the other one doesn't / 23
have the signature of Dong Ying Qui. (24
Do you see that? / 25
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800-826-0277
A. Yes.
Q. So--
A. However, I believe that he did not sign this.
Q. Well, that was my question to you: Do you
recognize that signature as the signature of Dong Ying
Qui? Are you familiar with his signature so you'd be
able to recognize it?
A. I don't think he signed --
THE INTERPRETER: “He" or "she." The
interpreter will clarify.
"I don't think she signed it."
MR. RUSSAK: Q. Who do you think signed it?
A. I don't know.
Q. Are you saying you think somebody forged her
signature?
A. Yes. Because she's not even here.
Q. So who is Dong Ying Qui?
A. She is another person who put out money to have
30 percent of this property as another partner.
Q. Other than as a partner in this property, do
you have or does your wife have any relationship of any
nature with Dong Ying Qui?
A. No.
Q. How did she come to invest in the property with
you?
Page 124
A. Friend.
Q. So you have a friend relationship with her;
correct?
A. Yes.
Q. Okay. How long have you known Dong Ying Qui?
A. Ten, eleven years.
Q. And have you asked her whether she signed this
deed of trust?
A. No.
Q. Have you told her that the property is in
foreclosure?
A. No.
Q. Don't you think that's something that you would
be obligated to tell her, as your friend?
A. I don't have her phone number. She's moved to
another state. I can't find her at the moment.
Q. How did you first come to meet Dong Ying Qui?
A. She used to live in San Francisco, but she
moved to Texas around three years ago.
Q. So before 2009 she moved?
A. Yes.
Q. When you say she lived in San Francisco, how
did her life here in San Francisco bring her into your
circle of friends?
A. Well, friends know each other. At work, a
Page 125
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MR. CHEVALIER: I have to object to that,
though. Because those phone numbers, given that those
ladies are so far removed from the parties here, that is
private, confidential.
MR. RUSSAK: Well, you're welcome to make that
objection. I will move to compel if you assert that in
any obstructive way. It is reasonably calculated to
lead to the discovery of admissible evidence: the
address and phone number of Dong Ying Qui. If the
witness wants to do his own investigation and, in lieu
of filling our that information, give us Dong Ying Qui's
updated contact information, that's all I need. But
failing that, I need the other phone numbers.
MR. CHEVALIER: All right. So, yeah, I mean,
leave the space. I'll probably do that if we can find
it.
|
|
|
|
MR. RUSSAK: I have to tell you, these are very
serious allegations of potential forgery in the deed of
trust, and I intend to investigate them fully and I will
not stand still for obstruction. |
MR. CHEVALIER: Okay. |
MR. RUSSAK: Q. Turn back to your declaration, |
please, Exhibit 6. And if you'll turn to the fifth |
page, and I'll ask the translator to read to you again |
paragraph 21. I know we discussed it previously, butI |
Page 130/
i
want to direct your attention to it again.
A. Could you read that again?
Q. I just want the translator to read to you
paragraph 21 and then I'll ask you a question about it.
A. Not so.
MR. RUSSAK: You read it to him?
THE INTERPRETER: Yeah, and he said, “Not so." |
MR. RUSSAK: Q. And I think earlier in our i
deposition today you said that that paragraph was not
completely accurate. My question to you is: What would
you change in that paragraph to make it accurate?
A. It's the bank did not give me any since the |
fast extension.
Q. Since the sixth extension agreement?
A. Yes.
Q. And that's Exhibit 13; correct?
A. Yeah.
Q. Has it given you any money since you executed
the fifth extension agreement, which is Exhibit 12?
A. Yes. {
Q. When and how much?
A. I don't remember when and how much.
Q. After you signed Exhibit 13, you were told by
Nicholas Chung that the maturity date would be extended
to April 1, 2010; correct? |
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18
19
20
2i
22
23
24
25
Corporation
A. When I signed this (indicating), I know that it
went until February; but when I signed this
(indicating), he said that along with the collateral he
will give us 18 months.
Q. The "this," what are you referring to? What
"this"?
A. When we signed this and this (indicating), he
said that he will give us 18 months, and that's why we
signed the collateral to the property.
Q. "This and this," is that Exhibit 15 and
Exhibit 16?
A. 14and 15.
Q. Well, 14 was signed in 2009; correct?
14 is dated as of February 26, 2009; 15 and 16
are dated as of December 3, 2009.
A. Yeah, I think that it's 15 and 16.
Q. Allright. I think we previously established
on the record that 15 was the 225 International property
and 16 is the deed of trust on the 480 Potrero property.
Okay?
A. Yes.
Q. Okay. And after you signed these two
documents -- And if you look at the notary at the back,
the notary at the back indicates that the documents were
executed on December 16 and 17 respectively by you and
Page 132
your wife.
A. Yes.
Q. Okay. Did you receive any loan disbursements
after December 17, from the bank?
A. Any disbursements?
Q. Any loan money.
A. Yes.
Q. Okay. At some point after December 17, 2010,
did you complain to Nicholas Chung or Dominic Li that
you had not gotten additional money from the bank?
A. Yes.
Q. When?
A. I think that it was February or March 2010.
Q. Again, think carefully about the year. 2010?
A. Yes.
Q. Okay, 2010. When you complained to them, did
you do so by telephone or in person or some other
manner?
A. I called; I also went to their office.
Q. And the telephone call that you had, was that a
long telephone call or was it very brief?
Or, actually, let me -- Describe for me, if you
will, the telephone call, the sum and substance of what
was said by both you and whomever it was you were
speaking to at the bank.
Page 133
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Preview
WOMAN SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO . Document Scanning Lead Sheet Nov-07-2011 3:46 pm Case Number: CGC-10-500934 Filing Date: Nov-07-2011 3:46 Juke Box: 001 Image: 03377173 OPPOSITION CATHAY BANK, A CALIFORNIA BANKING CORPORATION VS. RAYMOND XIANG ZHANC EXHIBIFC 001003377173 Missing trem 7he original J Instructions: Please place this sheet on top of the document to be scanned.LAW OFFICE OF” CHIJEH HU 456 6 STREET OAKLAND, CA 94607 (510) 832-1686 Chijeh Hu (SBN 241271) LAW OFFICE OF CHIJEH HU 456 8" Street Oakland, California 94607 rp don Telephone: (510) 832-1686 Pere e oat Fax: (510) 893-0155 CLERIC C Se ey < I THE COURT ch@cjhulaw.com ey ee) : £Oi 4 Attorney for Defendants/Cross-Complainants, Raymond Xiang Kai Zhang et al. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO UNLIMITED JURISDICTION CATHAY BANK, a California banking Case No. CGC-10-500934 Corporation, OPPOSITION TO PLAINTIFF’S MOTION Plaintiff, TO STRIKE SECOND AMENDED CROSS- COMPLAINT v. Date: November 21, 2011 RAYMOND XIANG KAI ZHANG, et al., Time: 9:30a.m. Dept.: 302 Defendants. 400 McAllister St. San Francisco, CA 94102 RAYMOND ZHANG, an individual; CINDY ZHANG, an individual; ZHANGS, LLC, a California limited liability company; and RAY KAI, LLC, a California limited liability company, Cross-Complainants, ve CATHAY BANK, a California banking corporation; and DOES 201-230, inclusive, Cross-Defendants. Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-Complaintoem ND NH LAW OFFICE OF. CHIJEH HU 456 8™ STREET OAKLAND, CA 94607 (510) 832-1686 XIANG KAI, LLC, a California limited liability company, Cross-Complainant, v. CATHAY BANK, a California banking corporation; and DOES 231-260, inclusive, Cross-Defendants. INTRODUCTION Defendants/Cross-Complainants Raymond Xiang Kai Zhang, aka Raymond Kai Zhang, aka Raymond Zhang, aka Xiang Kai Zhang, aka Xiang Zhang, aka Zhang Xiang (“Raymond”), Cindy Zhang (“Cindy”), Ray Kai, LLC (“Ray Kai”), and Zhangs LLC (‘“Zhangs”) (collectively “Cross-Complainants”) hereby submit through their attorney of record the following Memorandum of Points and Authorities in Support of their Opposition to Plaintiff Cathay Bank (“Plaintiff or “Bank”)’s Motion to Strike Cross-Complainants’ Second Amended Cross Complaint (“SACC”). FACTUAL BACKGROUND Raymond and Cindy are the sole members of Ray Kai and Zhangs LLCs. They created the LLCs because their trusted long time accountant, who is and was not a lawyer, advised them that the LLCs would protect them from losing their personal properties for business dealings. Raymond and Cindy immigrated to the United States in the 1980’s from China. Both Raymond and Cindy are obviously unsophisticated by casual observation. Raymond graduated from high school in China and Cindy did not. With limited adult school education after they arrived in the United States, they have managed to speak basic conversational English but neither can read much English or comprehend English sentence structure. Raymond and Cindy built up their businesses by working as laborers in the 80’s and 90’s, saving as much as they could, and being honest and fair with people they dealt with, doing business mostly on verbal agreements as they had very limited English reading comprehension. By the mid 1990’s, Raymond and Cindy began to invest their savings by purchasing residential building lots and building single family residences, financing the construction costs Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-Complaintom ND WH BF Ww NY = N NoON Ree a sa a ee NoRRRP BBB SFSGe DADE BSH EH S LAW OFFICE OF” CHIJEH HU 456 87" STREET OAKLAND, CA 94607 (510) 832-1686 using construction loans from local bank lenders. They knew these local bank lenders personally and have been successful in profiting from the sales of the residences after completion of the construction. Their cash flow began to stabilize and their financial situation appeared secure. During the summer of 2005, their long time accountant introduced them to a Cantonese- speaking employee of the Bank. Raymond subsequently commenced negotiations with the Bank, through the employee, to obtain a business loan to provide for long-term working capital for their businesses. The negotiations of the loan between the Bank, through its Chinese-Cantonese- speaking employees, and Raymond, were entirely conducted in Cantonese, a dialect of Southern China. In the second half of 2006, Ray Kai, through Raymond and Cindy, started negotiating with the Bank to obtain a construction loan for a four story residential condominium and one story commercial unit on MacArthur Boulevard in Oakland, California. They entered into a construction loan agreement with the Bank in the amount of Seven Million Two Hundred Thirty- Eight Thousand dollars ($7,238,00.00) in October 2006, secured by a Bank Deed of Trust against the MacArthur project property, allowing for an Eighteen (18) month construction time, and maturing on or about May 1, 2008. The construction at the MacArthur project experienced unforeseen delays outside the control of Raymond, Cindy or Ray Kai: PG&E took more than a year to relocate a high-voltage power line crossing over the Ray Kai project. Construction was halted as a result. The power line issue was finally resolved about mid to late October 2008. Understanding that the delay was beyond the control of Raymond, Cindy, and Ray Kai, the Bank represented that it would extend the maturity date for the construction loan first from May 1, 2008 to February 1, 2009, and then from February 1, 2009 to October 1, 2009 at no cost to Cross-Complainants. At each extension, Raymond and Cindy were approached by Bank employees and were told to execute signature pages presented to them within minutes. Significantly, and without the knowledge of Raymond and Cindy, some of the signature pages were attached to extension documents which included a nondescript provision entitled “Conditions Precedent” that purportedly secured the loan modification with Raymond and Cindy’s real property located at Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-Complaint1 |} 4900 Third Street, San Francisco, California. Neither Raymond nor Cindy signed any of these 2 || documents in the presence of a notary. 3 At this time, around October 2009, the MacArthur project was about 90% complete, the project team was working on the completion certificate and final punch list items. Raymond was actively marketing the project condo units and had promising prospects. Ray Kai’s contractors 4 5 6 || submitted payment requests to the Bank but no funds were disbursed. Faced with a dreary 7 || economic free fall dominating the news at the time, Ray Kai’s contractors demanded prompt 8 || payment or threatened to stop work. Upon inquiry, Raymond was told by the Bank that their 9 || payment requests were being processed but it would “take some time.” If Raymond needed 10 || funds promptly, the Bank told Raymond, he should put up his own funds. To keep the project 11 || from halting, Raymond advanced approximately $150,000 needed for payments to the 12 || contractors. In the meantime, the Bank again extended the maturity date for the construction loan 13. || from October 1, 2009 to February 1, 2010 to allow Raymond to market the condos. 14 Raymond and Cindy were again approached by Bank employees and told to execute 15 || signature pages presented to them within minutes. Significantly, and again without the 16 || knowledge of Raymond and Cindy, some of the signature pages were attached to extension 17 || documents which included a nondescript provision entitled “Conditions Precedent” that 18 || purportedly secured the loan modification with Raymond and Cindy’s real properties located at 19 || 480 Potrero Street, San Francisco, California and 229-255 International Boulevard, Oakland, 20 |) California. 21 In December 2009, the MacArthur project was approximately 95% complete, and the 22 || pending progress payments were still being processed by the Bank, and remain unpaid to this 23 || date. Raymond, however, had solid leads for multiple buyers for the project condos, some from 24 || the Bay Area, and some from China as employment based investment immigrants. Raymond’s 25 || immigration attorney advised him that it would take up to 18 months to complete the investment 26 || immigration process. In late November 2009, Raymond, for the first time at his own initiative, 27 || approached the Bank, asking for an 18-month extension of the maturity date to accommodate the immigration process. The Bank told Raymond that he needed to provide additional collateral to LAW OFFICE OF” CHIJEH HU 456 8™ STREET 4 OAKLAND, CA 94607 (510) 832-1686 Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-ComplaintLAW OFFICE OF’ CHIJEH HU 456 8" STREET OAKLAND, CA 94607 (510) 832.1686 get the 18-month extension. Raymond agreed and delivered guarantee trust deeds against real properties located at 480 Potrero Street, San Francisco, California and 229-255 International Boulevard, Oakland, California. Shortly after the meeting with the Bank, Raymond left for China to solidify the condo sales. Raymond returned from China in January, believing that the maturity of the construction loan had been extended for 18-month, and was devastated to be notified by the Bank that his collateral on the Potrero and International properties bought him a mere 2-month extension as opposed to the agreed upon 18-month extension. After the two months had lapsed, the Bank locked Cross-Complainants out from the MacArthur property, despite the Bank having no legal right to the control of the property. The Bank further deceived and made false statements to Raymond, by telephoning him directly, and not through legal counsel, dissuaded Raymond from showing up at a hearing to object to the appointment of a receiver for the collateralized properties. The lockout at MacArthur, guarantee trust deeds, and subsequent foreclosure, deterred and terminated various deals to sell the condos and properties, costing Cross-Complainants millions of dollars. The Bank is in the process of foreclosing on the International property. Put in perspective, the Bank has loaned Ray Kai a total of approximately $6.4 million, as the Bank never disbursed the payment requests from Ray Kai’s contractors. Presumably they are still being processed and may “take some time.” But the Bank wasted no time in collecting, from ill-gotten collaterals including the MacArthur property, 480 Potrero, and 4900 3" Street properties, approximately $12.75 million from the Cross-Complainants. The foreclosure of the International property in Oakland, if carried out as scheduled on November 10, 2011, would increase the profitability of the Bank further. ARGUMENT. A. The Second Amended Cross-Complaint Should Not Be Stricken The Bank argues that Cross-Complainants’ Second Amended Complaint should be stricken in its entirety because “For over a year ... cross-complainants have yet again failed to state any facts which would constitute a claim against the Bank. The Court should prevent this continued waste 5 Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-ComplaintoOo ID WH BF WN = Noy RN NoRRR BR FPS SGe WADE H HS LAW OFFICE OF” CHIJEH HU 436 8" STREET OAKLAND, CA 94607 (510) 832-1686 of judicial resources by refusing to accept cross-complainants’ late-filed second amended cross- complaint.” (Plaintiff's Motion to Strike SACC Pg. 5 Lines 18-24). The Bank’s statement is wrong as Cross-Complainants have stated facts sufficient to sustain the causes of actions as provided in their Opposition to Plaintiff's Demurrer to Second Amended Cross-Complaint. Further, to the extent that the Bank’s demurrer to Cross-Complainants’ prior amendments, including the active Second Amended Cross-Complaint, were sustained, it was largely attributed to the inability of Cross-Complainant’s previous counsel to communicate effectively with Cross- Complainants, a fact the Bank’s own counsel has observed and recognized, and as a consequence offered the Bank’s interpreter to assist such communication. (Exhibit A — Bank attorney recognizing communication problems between Raymond and Cross-Complainants’ counsel at deposition of Raymond) Further transcript passages highlight the extent of the miscommunication between the Cross-Complainants and the previous counsel. (Exhibit B — Various statements regarding a declaration prepared by the previous counsel) Such ineffectiveness was not a product of bad faith delay tactics, and is no longer an issue with the recent substitution of Cross-Complainants’ counsel. The Second Amended Cross-Complaint should not be stricken based on ineffectiveness of the previous counsel. B. The Newly Added Causes of Action Should Not Be Stricken Because Judicial Policy Favors Deciding Litigation on its Merits. The Bank further argues that Cross-Complainants were only allowed to amend the causes of action addressed by ruling sustaining the Bank’s demurrer, not add entirely new causes of action, unless, of course, Cross-Complainants obtain a leave to amend to add the new causes of action. That argument lose sight of a maxim of jurisprudence: “The law respects form less than substance.” (See California Civil Code §3528) California judicial policy has always favored deciding litigation on its merits. An order denying relief runs counter to the law's policy encouraging trial and disposition on the merits. Daley v. County of Butte, 227 Cal.App.2d. 380 (1964). To the extent, however, that this Court deems that the lack of a motion for leave to amend the second amended cross-complaint is a technical obstacle to allowing the first and fourth causes of action, Cross-Complainants hereby respectfully request such leave to amend, adding Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-Complaintom ND WH FF WY = yeN YR NR NN &* Se Be Se ee Be Se Se Ss a ana & oO YO fF SO we AR DH FF YW Nn = 27 LAW OFFICE OF” CHIJEH HU 456 8™ STREET OAKLAND, CA 94607 (510) 832-1686 the first and fourth causes of action. It is beyond dispute that this Court has discretion under CCP §426.50 to allow leave to amend new causes of action absent a showing of bad faith. As there is no showing of Cross-Complainants’ bad faith, the new cause of action should be allowed, and the issue the cause of action seeks to raise should be decided on its merits. Conclusion Plaintiff's Motion to Strike fails to put forth sufficient support for its positions, and thus the Cross-Complainants respectfully pray this Court overrules the Bank’s Motion to Strike in its entirety. Alternatively, should this Court sustain any part of Plaintiff's Motion to Strike, Cross- Complainants pray that leave to amend be granted as stated above. Dated: November 7, 2011 LAW OFFICE OF CHIJEH Complainants, Raymond Xiang Kai Zhang et al. Opposition to Plaintiffs’s Motion to Strike Second Amended Cross-ComplaintEXHIBIT ARAYMOND XIANG KAI ZHANG - 4/15/2011 1 Q. When you say "redraw," you mean change the 1 2 construction budget? (2 3. A. No. Well, when we do work, we have to apply 3 4 with the bank before they could provide the funding. 14 5 Q. The phrase that you used -- and maybe it's a 5 6 translation issue -- was you used Mr. Langdon when you | 6 7 had to redraw [sic] the loan documents. 7 8 8 THE WITNESS (in English): Not "redraw." | 9 MR. CHEVALIER: Withdraw? 9 10 THE WITNESS (in English): If like I want to 110 11. try to draw the money. ua 12 MR. RUSSAK: Oh, withdraw. Make a draw onthe | 12 13 loan. 13 14 THE WITNESS (in English): Yeah. 14 15 MR. RUSSAK: Okay. A disbursement request, jis 16 something like that. Okay. 116 a7 ‘THE INTERPRETER: It's a pronunciation issue | 17 18 nota translation issue. (18 19 MR. RUSSAK: Let the record so reflect. 19 20 Okay. Counsel, for fear of using all of my 20 21. time to review compliance with the remaining categories. 21 22. of the document request, I will ask that perhaps during (22 23. the lunch break you might review this. And if I would | 23 24 be so bold, I would even offer the services of the (24 25. translator, if she’s willing, just to make sure 25 Page 46 1 Mr. Zhang understands the scope of his production 1 2 obligation, and see whether there aren't other things (2 3 that can be produced. 13 4 And maybe we can take a break afterwards and | 4 5 you can work with him -- I don't know if it's 38 6 appropriate or inappropriate for you to do so ~-justto 6 7 translate the documents. ,7 8 THE INTERPRETER: Yeah, I could. AlthoughI | 8 9 would also afterwards need my own lunch break. ' 9 10 MR. RUSSAK: Oh, absolutely. I would hope that | 10 11. that wouldn't take too terribly long. Well, we'll talk sll 12 about that when -- i 12 13 THE INTERPRETER: So if we have an extended | 13 14 lunch break, then I could take part of that time to do 14 15. this and then have my regular lunch break. )15 16 MR. RUSSAK: Okay. That would be great. Let's | 16 17 go off the record for a second. lug 18 (Off the record from 11:51 until 11:53.) 18 19 MR. RUSSAK: Allright. We are going to take | 19 20 an hour-and-a-half lunch break, the first half hour of | 20 make sure that the witness understands the production obligations of those demands. And I have offered to stipulate, and hereby renew that stipulation, which counsel I believe is happy to accept, that the translation services provided by our translator will be treated as confidential, that I will not ask her about her conversation except whatever statements we might make on the record, but that it's not a waiver of the attorney-client privilege for her to communicate in those communications between the lawyer and his client, the witness, and that it will be treated as essentially a deep dark secret. MR. CHEVALIER: Yes. MR. RUSSAK: So with that, itis now 11:54. We will resume at 1:30 p.m. today. Off the record. (Recess was taken from 11:55 until 1:37.) MR. RUSSAK: Let's go on the record. We are back on the record. It is about 1:38. And I think Mr. Chevalier has a brief statement to make about what he has learned about the document production during the lunch break with the assistance of the translator. MR. CHEVALIER: Okay. The entirety of the eight special demands contained in Notice of Deposition for Raymond Zhang was translated by the interpreter to Page 48 Mr. Zhang, and the significance of each of the demands was explained using the assistance of the translator. And following today's deposition, Mr. Zhang and I are going to work together to make certain that all the documents that are available are produced. MR. RUSSAK: I think you also told me that, as for Categories 6, 7, and 8 on Exhibit 1, that you're fairly certain that there are not additional documents to be produced in those categories; is that right? MR. CHEVALIER: Yes. MR. RUSSAK: Okay. And then I asked you during the break -- and I think you agreed, but you'll take your own counsel, obviously -- that what I would like to see happen, if it’s not terribly burdensome, would be for Mr. Zhang to actually deliver the files that are identified in Category 1, to the extent that he has actually created or has and maintained physical files to (a) the loan, (b) the bank, (c) the project, et cetera, that he deliver those to you so that you can inspect them and make sure that everything in there that you 21. which, at least for the three people sitting on the | 21 believe is called for in the request is produced. 22. other side of the table, will be to have counsel forthe | 22 MR. CHEVALIER: Yes, correct. 23 witness, the witness, and our translator to go through 123 MR. RUSSAK: Thank you. 24 the inspection demands, which are the last three pages 24 In addition -- I meant to make a reservation at 1, so that the translator and the lawyer can | 25_ the beginning of deposition, but especially given the Page 47 Page 49 13 (Pages 46 to 49) Merrill Corporation - Los Angeles 800-826-0277 www.merrillcorp.com/lawEXHIBIT _B_RAYMOND XIANG KAI ZHANG - 4/15/2011 require collateral. However, maybe 1 the timing correctly. I remember that I had signed a research to correct any potential misstatements? A. Ihave to go back to my company‘to look at my records. MR. RUSSAK: I will now asX the translator to translate paragraph 21 on page 5 Sf your declaration. And for the record, I'm gging to just read it and some identifying senteng€s for the prior work that you've done, to avoid any Ambiguity in the record. /, which we previous discussed, ords "On or about February 4, 2010," t the bottom of page 3 on line 27 with the words r about December 3, 2009," and ends at line 3 on 1 record, { would tend to agree you, so let's nov 2 Well, bear with me one second. I want to see -- Before 3 we go to the next phase, let's go off the record for a 4 second, please. 5 (Off the record from 3:14 until 3:14.) 6 MR. RUSSAK: Okay. Back on the record. 7 THE WITNESS: Maybe it's because my English 8 isn't that good, so when I try to explain in English, 9 Quinn did not completely understand. 10 MR. RUSSAK: That's fine. What we're trying to 11. do today and in connection with this lawsuit is find out | 12. the true facts about what really happened. Okay? And | 13. so if we have to correct a declaration, we correct a !14 declaration, but we need to find out the true facts. (15 While we were off the record previously we | 16 marked a series of additional documents that I'm going 17 to quickly identify for the record and then, with the it 8 help of Ms. Raanan, distribute. And these are ) 49 Exhibits 9 through 13, | believe. Yes, 9 through 13. | 20 Each of them is an Extension Maturity Date Agreement, | 21. and they are different in that they are different dates | 22. of execution. 123 Exhibit 9 is executed as of September 12, 2008. 24 Excuse me. Let me start over again so we have | | i i i | i 25 page 4 with the words "extended to February 1, 2010." | 25 them in the right order. Page 74 Page 76 1 And paragraphs 8 through 1! previously referred | 1 Exhibit 8 is the first, June 4, 2008. 2 to are on page 3, starting with line 2 with the words | 2 Exhibit 9 is as of September 12, 2008. Exhibit 10 is As 3 “On or about June 4, 2008," and ending with the words 3 of December 18, 2010. 4 "extended to October 1, 2009," on line 19. 4 Excuse me. Did I misread a date again? 5 Now, if you would please translate the | 5 have those back? I want to start from the begining, 6 statements made in paragraph 21 on page 5. | © because I want this record to be clear. And 7 THE WITNESS: Are you talking about the sixth | 7 apologize. 8 extension or when? 8 Exhibit 8 is June 4, 2008. Exhibit is an 9 MR. RUSSAK: Q. Mr. Zhang, these are your 9 Extension of Maturity Date Agreemept dated as of 10 words, not mine. | 10 September 12, 2008. Exhibit 10 is # Extension Maturity ll A. Well, could I have it read back again? | 11 Date Agreement executed as of Décember 18, 2008. 12, Q, Yes. {12 Exhibit 11 is titled different. I1/s titled "Loan 13 (The interpreter repeats the translation.) |13 Modification and Extension Xgreement," dated as of 14 THE WITNESS: So this is the first extension -- 14 February 26, 2009. Exhibiy/12 is a Loan Modification 15 THE INTERPRETER: He wants to ask me -- | 15 and Extension Agreement dated December 3, 2009. And 16 MR. RUSSAK: Q. Mr. Zhang, let me help you. 16 Exhibit 13 is a Loan ification and Extension 17 If there's a statement in here that is incorrect, it's | 17 Agreement dated Feptuary 4, 2011 18 better to correct it now. (18 (WhereuponMeposition Exhibit 8 through 19 A. (In English): Yeah, I know. That's why I -- it 9 Exhibit 13Avere marked for identification.) 20 Q. Okay. But if I'm overhearing your | 20 MR. RUSSAK: Q. Mr. Zhang, I've separately 21 conversations with the translator, I think what 21. marked andAttached to this deposition transcript these 22 paragraph 21 says is "Since executing the First . 22. exhibits. Ythink they are the same documents as are 23 Extension Agreement." Okay? | 23 attached/to your declaration as the First through Sixth 24 A. (In English): Looks like this one not clear. 24 Extension Agreements, but I think my copies are a lot 25 accurate, okay. Based on my review of the 25 more legible than yours, so I've attached copies for Page 75! Page 77 20 (Pages 74 to 77) Merrill Corporation - Los Angeles 800-826-0277 www.merrillcorp.com/lawRAYMOND XIANG KAI ZHANG ~ 4/15/2011 1. read it," any answer he's going to give is going to 1 2 imply that he has read it. 2 3 MR. RUSSAK: Well, let me back up, then, 13 4 because that's not quite as I understood his testimony, 4 5 but let me see if I can clarify. 5 6 Q. You testified earlier that you first lyarned 6 7 that there was a deed of trust encumberjng the Third | 7 8 Street property when you had received the Complaint. | 8 9. Did you notice that before you gavefhe document to your | 9 10 attorney? 10 11 A. No. il 12 Q. How did you receive thé lawsuit in the very 12 13 first instance? )13 14 A. The people from the/bank. 1 don't know who it ;14 15 was, but the person calle¢ and sent -- and delivered it. 115 16 Q. Personally to you? (16 17 A. Yes. (17 18 Q. Did the mn who delivered it to you speak {18 19 Chinese? i19 20 A. Idon'tXnow. [20 21 Q. Did she person who delivered it to you say (21 22 anything/to you when he delivered it to you? 22 23 A. Xo. He was just a person who delivered (23 24 packdges. (24 25 . When you received Exhibit 17, what did you 25 Page 110 i i 1 think it was? 1 2 A. We know it has to do with the bank but not what 2 3. itsays. 3 4 Q. Did you know that it was a lawsuit against ydu? 4 5S A. I knew that it had to do with the bank and I 15 6 only knew what it was after I showed it to my att 6 7 Q. So when you first received it, you did yfot 7 8 believe that it was a lawsuit against you? 8 9 A. Thad guessed that it was. | 9 10 Q. And what about it led you to tht guess? |10 11 A. Well, Ican't read English, but [daw this ul 12 (indicating). }12 13 Q. Youknow, during a brea, Mr. Zhang, [saw you | 13 14_ staring very intently at a couple of documents, flipping 14 You learned that the bank had a deed of trust against your Third Street property sometime after you were served with the lawsuit in June of -- in or about June of 2010: correct? A. Yes. Q. And did you believe that the bank had tricked you into signing the deed of trust? A. Yes. Q. Did you tell that to your lawyer? A. Yes. Q. Do you believe your lawyer understood you when you told him that? A. I think he understood. MR. RUSSAK: Let's take a break for a second. 1 want to chat with you for a moment. Off the record. (Recess was taken from 5:16 until 5:32.) MR. RUSSAK: Q. I'd like to turn your attention back to Exhibit 6, your declaration. And I will ask the translator to read to you paragraphs 12 and 13 of the declaration. Mr. Zhang, are the statements in paragraphs 12 and 13 of your declaration, which is Exhibit 6, true and correct? A. 12 and 13? Page 112 Q. Yes. A. I think that these two paragraphs are not that correct. Q. In what way are they incorrect? A. We didn't know we had to provide the Third Street as collateral. Q. So why did you sign a declaration that included this language? ‘A. Maybe there was some places where J and the attorney did not quite understand each other. Q. I want to draw your attention back to the day on which you signed this declaration. It was the day before the TRO hearing. And you know what I mean by "TRO hearing," don't you? A. Yes. Q. What do you understand the TRO hearing to be? A. The restraining order. Q. For the foreclosure? A. Yes. Q. Okay. How did you communicate with your lawyer prior to the preparation of this declaration? Did you sit down and have a meeting with him and talk with him Page 113 29 (Pages 110 to 113) 23 (Off He record from 5:13 until 5:14.) 123 24 MR. RUSSAK: Q. Mr. Zhang. did you tell your 24 about the facts? 25 lawyer that -- Well, strike that. (250 A. Yes. Page 111 Merrill Corporation - Los Angeles 800-826-0277 www.merrillcorp.com/lawRAYMOND XIANG KAI ZHANG - 4/15/2011 Q. And when you had that conversation with him for | 1 1 2 the first time, was there already a draft declaration ; 2 3. prepared that he had written first? 13 4A. Yes. 4 5 Q. Before the draft declaration was prepared, did = 5 6 you have any discussions with him about the facts of | 6 7 your case? 7 8 A. Yes. 8 9 Q. And when did that conversation take place? 19 10 A. Before -- One week before March 9th. 10 11 Q. Did you have an in-person meeting with him? | 11 12. A. Yes. (12 13 Q. Who else was present? i 13 14 A. Michael. p14 15 Q. Another lawyer? (as 16 A. Yes. i 16 17 Q. Somebody who works with Mr. Chevalier? i 17 18 A. Yes jis 19 Q. Would that be Michael Schinner? ; 19 20 A. Yes. 120 21 Q. How do you know Mr. Schinner? (2. 22 A. Friend introduced us. 122 23 MR. RAANAN: Before I forget: Bill, what's his | 23 24 last name? (24 25 MS. RAANAN: Langdon. 125 Page 114) | 1 MR. RUSSAK: Q. Bill Langdon, how did you meet | 1 2 Mr. Langdon and how did he come to be working on your 2 3 project? (3 4 A. Italso was a referral from a friend. | 4 5 Q. But it was not a referral from the bank? 15 6 A. No. ,6 7 Q. Okay. So you had a meeting with Mr. Schinner | 7 8 and Mr. Chevalier, and you discussed the facts of your | 8 9 case about a week before the TRO hearing; correct? = 9 10 A. Yes. /10 11 Q. What did you tell them about the deed of trust. =| 11 12 on the Third Street property? f12 13 A, Isaid I did not know that that was there. (13 14 Q. Did you tell them that you thought you had been ' 14 15. tricked into signing it? 15 16 A. Yes. 16 17 Q. Was anybody other than Mr. Schinner and 17 18 Mr. Chevalier with you in the meeting? (18 19° A. No. (19 20 Q. Your wife wasn't there, or your son? §20 21 A.No. faa 22 Q. So after your first meeting, your lawyers (22 23 prepared a draft declaration. And then you came back | 23 24 later to review it and sign it maybe the day before the | 24 25 hearing; is that right? 125 Page 115) A. Yes. Q. What was the process by which you -- Well, back up. Did you review the declaration before you signed it? A. I did not, because I cannot read it. Q. Did you spend time discussing your declaration with your lawyers before you signed it? A. Yes. Q. How much time did you spend with them doing that task? A. Around half an hour. Q. And who was involved in that process at your lawyer's law firm? A. Quinn and Michael. Q. Was anyone else present at that meeting? A. No. Q. Did they read each paragraph of the declaration to you in English? A. Yes. Q. And did you understand at least as you -- At any time did you believe that you did not understand what they were saying to you? A. A little bit. Q. In which instances? Do you recall any specific Page 116 areas where you thought you didn't understand them? A. Every so often there would be something I did not understand. Q. Okay. But they read each and every paragraph to you in English? A. Yes. Q. On the very last page of the document, of your declaration, excuse me, page 6, the words are, on line 17, "I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct." Do you see that language? A. I didn't really know how to read it. I just signed. Q. No, did your lawyers read that particular sentence to you? A. They did. Q. Did you understand what they said when they read that sentence to you? A. No. Q. Did you ask them to explain it to you? A. No. Q. Why not? A. I trusted the attorney. Q. Do you understand what "penalty of perjury" Page 117 Merrill Corporation 800-826-0277 30 (Pages 114 to 117) - Los Angeles www.merrillcorp.com/lawRAYMOND XIANG KAI ZHANG - 4/15/2011 means? A. No. Q. In other instances where there was something that they read to you that you didn't understand, what did you do? A. If it's not that important, then it's just what itis. Q. But did you say anything to your lawyers if you did not understand a statement that they were reading to | you? | 10 A. Yes. Q. And were any changes made to the draft after you started that meeting, the second meeting? A. I don't know. Q. I want to try to jog your memory just a little bit. Okay? It's possible that you got there and they | presented you with a document; and as they read through 18 the document to you, you might have interrupted them or) 19 corrected them at some point and said, "What you said = 20 about that thing is not quite right." hai Did anything like that happen? (22 A. Yes, but when they read it again, sometimes I (23 still did not understand. \24 Q. But if you corrected them and said something is | 25 Page 118) 1 wrong, you know, did they make changes to the document? | 1 Did something like that happen? 2 A. If it was not correct, it was corrected. 13 Q. Did something like that happen? I'mnotasking 4 you to tell me, you know, what would have happened, I'm | 5 asking: Do you remember that something like that (6 actually happened where you told them to change 7 something? 18 A. That draft was not changed. 19 Q. There's no changes to the text that you had /10 read to you in your second meeting before you signed it; | 11 is that what you're saying? 12 A. No. 13 Q. What are you saying? 1 think we have a (14 double-negative problem. (15 ‘You showed up at a meeting, It was the day /16 before the hearing; is that correct? 117 A. Yes. (18 Q. March 9, 20117 19 A. Um-hum. (20 Q. And at the beginning or near the beginning of (21 the meeting they gave you a draft of the declaration (22 that ultimately you signed as Exhibit 6; correct? 123 A. Yes. (24 Q. And they read through the declaration word by 25 Page 119 Merrill Corporation 800-826-0277 word for you; correct? A. Yes. Q. And if there was something you didn't understand, you asked them to explain it to you; correct? A. Yes. Q. Do you believe that any of the statements -- Well, back up. Were there any statements that they read to you that they did not explain to your satisfaction? A. I don't remember. Q. Did anybody attempt to translate the document from English into Chinese for you while you were there? A. No. Q. Does Mr. Schinner speak Chinese? A. No. Q. So your meeting with them was entirely in the English language; is that correct? A. Yes. Q. Did they ask you whether you felt the need for a translator to assist you in the meeting? A. No. Q. Did you tell them you would prefer discussing it with a translator present? A. No. Page 120 Q. And you felt comfortable, did you not, that you understood what they read to you; correct? A. Yes. Q. Okay. Do you recall hearing them read to you the text in paragraphs 12 and 13? And now I'm going to read it out loud in English after the translator translates my question. Quote: ‘Under the terms of the Fourth Extension Agreement, Cathay Bank required that Rai Kai, LLC, provide additional collateral as consideration for further extending the maturity date. Rai Kai, LLC, arranged for a third party to provide additional collateral." Do you remember them saying those words to you in English? THE INTERPRETER: You don't want me to translate -- MR. RUSSAK: I want just the question. THE INTERPRETER: Just the question, okay. THE WITNESS: I don't remember. MR. RUSSAK: Q. When I said it in English, did you understand me? A. Half and half. Q. Was there anything that your lawyers read to Page 121 (Pages 118 to 121) 31 - Los Angeles www.merrillcorp.com/lawRAYMOND XIANG KAI ZHANG - 4/15/2011 1 you where you said you felt like you understood it only | 1 2 half and half? 12 3 A. Yes. 13 4 Q. Did you let them know that you only understood | 4 5 some portions of what they read to you half and half? 5 6 A. Well, I don't know if they knew. | 6 7 Q. I'masking you: Did you tell them that some | 7 8 things you only understood half and half? 1 8 9 A. Itold them that my English wasn't good. 19 10 — Q. I'mgoing to read some more words to you. 1 | 10 11 don't want the translator to translate them, but I want | 11 12 you to explain to me what you understand by the words | 12 13 that I say. Okay? 3 14 A. Okay. 14 15 Q. "Rai Kai arranged for a third party to provide | 15 16 additional collateral." Do you understand what I just 16 17. said? {17 18 MR. CHEVALIER: I just want to object just on (18 19. the basis -- I want to say that your voice speaking now 19 20 is different than my voice or Michael Schinner's voice (20 21 speaking at the time in our office. }21 22 And now she can translate. I just want that on [22 23. the record. | 23 24 THE WITNESS: I don't understand that. (24 25 MR. RUSSAK: Q. Nothing about it at all? (25 a Page 122 1 A. Tonly know and understood the word fa 2 “collateral.” (2 3 Q. "Additional collateral"; right? You understand | 3 4 the word "additional," don't you, in the context of 14 5 “additional collateral"? 15 6 Let me rephrase the question. You understand | 6 7 the word "collateral"; correct? 7 8 A. Yes. 18 9 Q. And you understand the word "additional"; 19 10 correct? (10 11 A. Tthink that means extra. al 12 Q, And so when you heard the phrase “additional | 12 13 collateral," did that mean anything to you when 13 14 Mr. Chevalier or Mr. Schinner said those word to you | 14 15 when reading this declaration? 15 16 A. Somy understanding is that they additionally (16 17 took Third Street, they additionally took that property 7 18 of mine. (18 19 Q. Who is Dong Ying Qui? 19 20 A. That person has 30 percent of Third Street. 120 21 — Q, Will you turn to the signature pages of (21 Exhibit 14, which is around page 44, And there are two 22 copies of page 44, One has and the other one doesn't / 23 have the signature of Dong Ying Qui. (24 Do you see that? / 25 Page 123 Merrill Corporation 800-826-0277 A. Yes. Q. So-- A. However, I believe that he did not sign this. Q. Well, that was my question to you: Do you recognize that signature as the signature of Dong Ying Qui? Are you familiar with his signature so you'd be able to recognize it? A. I don't think he signed -- THE INTERPRETER: “He" or "she." The interpreter will clarify. "I don't think she signed it." MR. RUSSAK: Q. Who do you think signed it? A. I don't know. Q. Are you saying you think somebody forged her signature? A. Yes. Because she's not even here. Q. So who is Dong Ying Qui? A. She is another person who put out money to have 30 percent of this property as another partner. Q. Other than as a partner in this property, do you have or does your wife have any relationship of any nature with Dong Ying Qui? A. No. Q. How did she come to invest in the property with you? Page 124 A. Friend. Q. So you have a friend relationship with her; correct? A. Yes. Q. Okay. How long have you known Dong Ying Qui? A. Ten, eleven years. Q. And have you asked her whether she signed this deed of trust? A. No. Q. Have you told her that the property is in foreclosure? A. No. Q. Don't you think that's something that you would be obligated to tell her, as your friend? A. I don't have her phone number. She's moved to another state. I can't find her at the moment. Q. How did you first come to meet Dong Ying Qui? A. She used to live in San Francisco, but she moved to Texas around three years ago. Q. So before 2009 she moved? A. Yes. Q. When you say she lived in San Francisco, how did her life here in San Francisco bring her into your circle of friends? A. Well, friends know each other. At work, a Page 125 32 (Pages 122 to 125) - Los Angeles www.merrillcorp.com/lawRAYMOND XIANG KAI ZHANG - 4/15/2011 MR. CHEVALIER: I have to object to that, though. Because those phone numbers, given that those ladies are so far removed from the parties here, that is private, confidential. MR. RUSSAK: Well, you're welcome to make that objection. I will move to compel if you assert that in any obstructive way. It is reasonably calculated to lead to the discovery of admissible evidence: the address and phone number of Dong Ying Qui. If the witness wants to do his own investigation and, in lieu of filling our that information, give us Dong Ying Qui's updated contact information, that's all I need. But failing that, I need the other phone numbers. MR. CHEVALIER: All right. So, yeah, I mean, leave the space. I'll probably do that if we can find it. | | | | MR. RUSSAK: I have to tell you, these are very serious allegations of potential forgery in the deed of trust, and I intend to investigate them fully and I will not stand still for obstruction. | MR. CHEVALIER: Okay. | MR. RUSSAK: Q. Turn back to your declaration, | please, Exhibit 6. And if you'll turn to the fifth | page, and I'll ask the translator to read to you again | paragraph 21. I know we discussed it previously, butI | Page 130/ i want to direct your attention to it again. A. Could you read that again? Q. I just want the translator to read to you paragraph 21 and then I'll ask you a question about it. A. Not so. MR. RUSSAK: You read it to him? THE INTERPRETER: Yeah, and he said, “Not so." | MR. RUSSAK: Q. And I think earlier in our i deposition today you said that that paragraph was not completely accurate. My question to you is: What would you change in that paragraph to make it accurate? A. It's the bank did not give me any since the | fast extension. Q. Since the sixth extension agreement? A. Yes. Q. And that's Exhibit 13; correct? A. Yeah. Q. Has it given you any money since you executed the fifth extension agreement, which is Exhibit 12? A. Yes. { Q. When and how much? A. I don't remember when and how much. Q. After you signed Exhibit 13, you were told by Nicholas Chung that the maturity date would be extended to April 1, 2010; correct? | Page 131 Merrill 800-826-0277 18 19 20 2i 22 23 24 25 Corporation A. When I signed this (indicating), I know that it went until February; but when I signed this (indicating), he said that along with the collateral he will give us 18 months. Q. The "this," what are you referring to? What "this"? A. When we signed this and this (indicating), he said that he will give us 18 months, and that's why we signed the collateral to the property. Q. "This and this," is that Exhibit 15 and Exhibit 16? A. 14and 15. Q. Well, 14 was signed in 2009; correct? 14 is dated as of February 26, 2009; 15 and 16 are dated as of December 3, 2009. A. Yeah, I think that it's 15 and 16. Q. Allright. I think we previously established on the record that 15 was the 225 International property and 16 is the deed of trust on the 480 Potrero property. Okay? A. Yes. Q. Okay. And after you signed these two documents -- And if you look at the notary at the back, the notary at the back indicates that the documents were executed on December 16 and 17 respectively by you and Page 132 your wife. A. Yes. Q. Okay. Did you receive any loan disbursements after December 17, from the bank? A. Any disbursements? Q. Any loan money. A. Yes. Q. Okay. At some point after December 17, 2010, did you complain to Nicholas Chung or Dominic Li that you had not gotten additional money from the bank? A. Yes. Q. When? A. I think that it was February or March 2010. Q. Again, think carefully about the year. 2010? A. Yes. Q. Okay, 2010. When you complained to them, did you do so by telephone or in person or some other manner? A. I called; I also went to their office. Q. And the telephone call that you had, was that a long telephone call or was it very brief? Or, actually, let me -- Describe for me, if you will, the telephone call, the sum and substance of what was said by both you and whomever it was you were speaking to at the bank. Page 133 (Pages 130 to 133) Los Angeles www.merrillcorp.com/law 34