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AAO
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
May-12-2011 9:18 am
Case Number: CGC-10-500934
Filing Date: May-12-2011 9:13
Juke Box: 001 Image: 03209760
ANSWER TO COMPLAINT FILED BY DEFENDANT
CATHAY BANK, A CALIFORNIA BANKING CORPORATION VS. RAYMOND XIANG ZHANC
001003209760
Instructions:
Please place this sheet on top of the document to be scanned.Michael G. Schinner (SBN 142363)
Quinn J. Chevalier (SBN 255934)
THE SCHINNER LAW GROUP
96 Jessie St.
San Francisco, CA 94105
Tei: (415) 369-9050 3
Fax: (415) 369-9053
Attorneys for Defendants Raymond Zhang; Cindy Zhang; RAL KAI, LLC: XIANG racic
and ZHANGS, LLC
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
CATHAY BANK. a California banking Case No. CGC-10-500934
corporation,
. ANSWER TO COMPLAINT FOR:
Plaintiff,
1. (cause of action dismissed)
ve
RAYMOND XIANG KAI ZHANG, aka 2 TO ENFORCE Tom ONcE
RAYMOND KAI ZHANG, aka RAYMOND
PROVISIONS OF DEED OF
ZHANG, aka XIANG KAI ZHANG, aka TRUST; APPOINTMENT OF
XIANG ZHANG, aka ZHANG XIANG, an RECEIVER: AND
individual; CINDY ZHANG, an individual; UNCTIV}
DONG YING QUI. an individual; XIANG KAL INJUNCTIVE RELIEF
LLC, a California limited liability company; . —o,
RAY KAI. LLC. a California limited liability 3. (cause of action dismissed)
company; ZHANGS, LLC, a California limited
liability company; and DOES 1 through 200, 4. SPECIFIC PERFORMANCE
inclusive. TO ENFORCE TERMS AND
PROVISIONS OF DEED OF
Defendants. TRUST; APPOINTMENT OF
RECEIVER; AND
Tormmmmnse rnc nnn nnn tenn cane nn aan m canteen INJUNCTIVE RELIEF
RAYMOND ZHANG, an individual; CINDY . i ism):
ZHANG, an individual: ZHANGS, LLC. a 5: {cause of action dismissed)
California limited liability company: and RA.
RAI ELC. a California limited tabilite 6. TO ENFORCE Toe ONCE
company, PROVISIONS OF DEED OF
Cross-Complainants. Recon POINTMENT OF
vy. INJUNCTIVE RELIEF
CATHAY BANK, a California banking 7. (cause of action dismissed)
corporation; and DOES 201-230, inclusive, . .
8. (cause of action dismissed)
Cross-Defendants.
1
ANSWER TO COMPLAINT
Case No. CGC-10-500934
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Defendants Raymond Zhang: Cindy Zhang; RA] KAI LLC (aka RAY KAI, LLC);
XIANG KAI, LLC; and ZHANGS, LLC (collectively, the “Defendants”) answer as follows to
the complaint of CATHAY BANK (the “Plaintiff”).
ADMISSIONS AND DENIALS
1. For paragraph 1 of the complaint, the Defendants lack information or belief
sufficient to admit or deny the allegations of that paragraph, and on that basis, they deny them.
2. For paragraph 2. the Defendants admit that Raymond Zhang is, and at all relevant
times was, an individual residing in the county of San Francisco, California.
3. For paragraph 3, the Defendants admit that Cindy Zhang is, and at all relevant
times was, an individual residing in the county of San Francisco, California. Raymond Zhang
and Cindy Zhang are sometimes collectively referred to as the “Zhangs.”
4, For paragraph 4, the Defendants lack information or belief sufficient to admit or
deny the allegations of that paragraph, and on that basis, they deny them.
5. For paragraph 5, the Defendants admit that XIANG KAI, LLC is a California
limited liability company and has its principal place of business in San Francisco, California.
6. For paragraph 6, the Defendants admit that RAI KAI, LLC is a California limited
liability company.
7. For paragraph 7. the Defendants admit that ZHANGS, LLC is a California limited
liability company and has its principal place of business in San Francisco, California.
8. For paragraph 8. the Defendants lack information or belief sufficient to admit or
deny the allegations of that paragraph, and on that basis. they deny them.
9. For paragraph 9, the Defendants deny every allegation.
10. For paragraph 10, the Defendants admit every allegation.
11. For paragraph 11, the Defendants lack information or belief sufficient to admit or
deny the allegations of that paragraph, and on that basis, they deny them.
12. For paragraph 12, the Defendants admit that the Zhangs entered into a business
loan agreement on or about November 2006 (the “LOC Loan”), and that a document is attached
2
ANSWER TO COMPLAINT
Case No. CGC-10-500934SS yA DWH BB ww
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16
to the complaint as Exhibit 1.
13. For paragraph 13, the Defendants assert that the terms of Exhibit | speak for
themselves. Except for this admission, the Defendants deny each remaining allegation of that
paragraph.
14. For paragraph 14, the Defendants assert that the terms of Exhibit 1 speak for
themselves. Except for this admission, the Defendants deny each remaining allegation of that
paragraph.
15. For paragraph 15, the Defendants admit that the Zhangs executed a promissory
note in favor of the Plaintiff on or about June 2007 (the “LOC Note 1”), and that a document is
attached to the complaint as Exhibit 2.
16. For paragraph 16, the Defendants assert that the terms of Exhibit 2 speak for
themselves. Except for this admission, the Defendants deny each remaining allegation of that
paragraph.
17. For paragraph 17, the Defendants assert that the terms of Exhibit 2 speak for
themselves. Except for this admission, the Defendants deny each remaining allegation of that
paragraph.
18. For paragraph 18, the Defendants assert that the terms of Exhibit 2 speak for
themselves. Except for this admission, the Defendants deny each remaining allegation of that
paragraph.
19. For paragraph 19, the Defendants admit that XIANG KAI, LLC executed a deed
of trust in favor of the Plaintiff on or about June 2007 (the “LOC DOT 1”), and that a document
is attached to the complaint as Exhibit 3.
20. For paragraph 20, the Defendants assert that the terms of Exhibit 3 speak for
themselves. Except for this admission, the Defendants deny cach remaining allegation of that
paragraph.
21. For paragraph 21, the Defendants assert that the terms of Exhibit 3 speak for
themselves. Except for this admission, the Defendants deny each remaining allegation of that
3
ANSWER TO COMPLAINT
Case No. CGC-10-500934ronp
ner Law
9050. Kax (415) 369-9033
cS uP em a DWH Bw Pp
paragraph.
22. For paragraph 22, the Defendants assert that the terms of Exhibit 3 speak for
themselves. Except for this admission, the Defendants deny each remaining allegation of that
paragraph.
23. For paragraph 23, the Defendants admit that the Zhangs executed two LOC
extension agreements with the Plaintiff beginning on or about June 2009 (the “LOC Extension
Agreements”), and that a document is attached to the complaint as Exhibit 4.
24. For paragraph 24, the Defendants admit that the Zhangs executed two change-in-
terms agreements with the Plaintiff beginning on or about December 2009 (the “LOC CITAs”),
and that a document is attached to the complaint as Exhibit 5.
25. For paragraph 25, the Defendants admit that the Zhangs executed a loan
modification agreement with the Plaintiff on or about December 2009 (the “LOC Mod”), and that
a document is attached to the complaint as Exhibit 6.
26. For paragraph 26, the Defendants admit that XIANG KAL LLC executed a
guaranty in favor of the Plaintiff on or about December 2009 (the “XIANG LOC Guaranty”), and
that a document is attached to the complaint as Exhibit 7.
27. For paragraph 27. the Defendants assert that the terms of Exhibit 7 speak for
themselves.
28. For paragraph 28, the Defendants admit that XIANG KAI, LLC and the Zhangs
executed a security agreement in favor of the Plaintiff on or about December 2009 (the “LOC
Security Agreement”), and that a document is attached to the complaint as Exhibit 8.
29, For paragraph 29, the Defendants assert that the terms of Exhibit 8 speak for
themselves.
30. For paragraph 30, the Defendants assert that the terms of Exhibit 8 speak for
themselves.
31. For paragraph 31, the Defendants lack information or belief sufficient to admit or
deny the allegations of that paragraph, and on that basis. they deny them
4
ANSWER TO COMPLAINT
Case No. CGC-10-5009341 32. For paragraph 32, an admission or denial is not required,
33. For paragraph 33, the Defendants admit that RAI KAI, LLC entered into a
construction loan agreement with the Plaintiff on or about June 2006 (the “Construction Loan
2”), and that a document is attached to the complaint as Exhibit 10. The Defendants also admit
that the maximum principal amount of the loan was $7,238,000, Except for these admissions, the
34. For paragraph 34, the Defendants assert that the terms of Exhibit 10 speak for
themselves.
35. For paragraph 35. the Defendants assert that the terms of Exhibit 10 speak for
2
3
4
5
6} Defendants deny each remaining allegation of that paragraph.
7
8
9
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themselves.
it 36. For paragraph 36, the Defendants assert that the terms of Exhibit 10 speak for
12] themselves.
13 37. For paragraph 37, the Defendants assert t at the terms of Exhibit 10 speak for
14] themselves.
15 38. For paragraph 38, the Defendants assert that the terms of Exhibit 10 speak for
16] themselves.
‘Tel (415) 369-9080 Fax (415) 369-9053
17 39. For paragraph 39, the Defendants admit that RAI KAT, LLC executed a
18] promissory note in favor of the Plaintiff on or about October 2006 in the amount of $7,238,000
19] (the “Construction Note 2”), and that a document is attached to the complaint as Exhibit 11.
20 Except for these admissions, the Defendants deny each remaining allegation of that paragraph
21 40. For paragraph 40, the Defendants assert that the terms of Exhibit 11 speak for
22] themselves.
23 41. For paragraph 41, the Defendants assert that the terms of Exhibit |] speak for
24] themselves.
25 42. For paragraph 42, the Defendants admit that RAI KAI, LLC executed a deed of
26] trust concerning the MacArthur Blvd property in favor of the Plaintiff on or about October 2009
27] (the “Construction DOT 2”), and that a document is attached to the complaint as Exhibit 12.
28 5
ANSWER TO COMPLAINT
Case No. CGC-10-500934Tel (415) 369-9950 Fax (415) 369-9053
1} Except for these admissions, the Defendants deny each remaining allegation of that paragraph
2]| and assert that the terms of Exhibit 12 speak for themselves.
3 43. For paragraph 43, the Defendants assert that the terms of Exhibit 12 speak for
4] themselves.
5 44. For paragraph 44, the Defendants lack information or belief sufficient to admit or
6], deny the allegations of that paragraph, and on that basis, they deny them. They also admit that a
7|| document is attached to the complaint as Exhibit 13.
8 45. For paragraph 45, the Defendants admit that Raymond Zhang executed a personal
9] guarantee in favor of the Plaintiff concerning Construction Note 2 on or about October 2006, and
10] that a document is attached to the Complaint as Exhibit 14. Except for these admissions. the
11] Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit
12] 14 speak for themselves.
13 46. For paragraph 46, the Defendants admit that Cindy Zhang executed a personal
14 | guarantee in favor of the Plaintiff concerning Construction Note 2 on or about October 2006, and
15]| that a document is attached to the Complaint as Exhibit 15, Except for these admissions, the
16] Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit
17 | 15 speak for themselves.
18 47, For paragraph 47, the Defendants admit that RAL KAI, LLC and the Plaintiff
19] entered into three extension agreements concerning the Construction Note 2 beginning on or
20]| about June 2008 (the “Extension Agreements”), and that a document is attached to the complaint
21] as Exhibit 16. Except for these admissions, the Defendants deny each remaining allegation of
22] that paragraph and assert that the terms of Exhibit 16 speak for themselves.
23 48. For paragraph 48, the Defendants admit that RAI KAI, LLC and the Plaintiff
24} entered into a loan modification agreement concerning the Construction Note 2 on ot about
25 || February 2009 (the “Loan Mod 1”), and that a document is attached to the complaint as Exhibit
26] 17. Except for these admissions, the Defendants deny cach remaining allegation of that
27|| paragraph and assert that the terms of Exhibit 17 speak for themselves.
28 6
ANSWER TO COMPLAINT
Case No. CGC-10-50093415) 369-9953
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49. For paragraph 49, the Defendants admit that RAI KAI, LLC and the Plaintiff
entered into a loan modification agreement concerning the Construction Note 2 on or about
December 2009 (the “Loan Mod 2”), and that a document is attached to the complaint as Exhibit
18. Except for these admissions, the Defendants deny each remaining allegation of that
paragraph and assert that the terms of Exhibit 18 speak for themselves.
50. For paragraph 50, the Defendants admit that RAI KAI, LLC and the Plaintiff
entered into a loan modification agreement concerning the Construction Note 2 on or about
February 2010 (the “Loan Mod 3”), and that a document is attached to the complaint as Exhibit
19. Except for these admissions, the Defendants deny each remaining allegation of that
paragraph and assert that the terms of Exhibit 19 speak for themselves.
51. For paragraph 51, the Defendants deny each and every allegation, Except for
these denials, the Defendants admit that a document is attached to the complaint as Exhibit 20.
52. For paragraph 52, the Defendants assert that the terms of Exhibit 20 speak for
themselves.
53. For paragraph 53, the Defendants assert that the terms of Exhibit 20 speak for
themselves.
54. For paragraph 54, the Defendants assert that the terms of Exhibit 20 speak for
themselves.
55. For paragraph 55, the Defendants admit that the Zhangs executed a deed of trust
in favor of the Plaintiff in connection with the Loan Mod 2 on or about December 2009 (the
“DOT 4”), and that a document is attached to the complaint as Exhibit 21. Except for these
admissions, the Defendants deny each remaining allegation of that paragraph and assert that the
terms of Exhibit 21 speak for themselves.
56. For paragraph 56, the Defendants assert that the terms of Exhibit 21 speak for
themselves.
57. For paragraph 57, the Defendants assert that the terms of Exhibit 21 speak for
themselves.
7
ANSWER TO COMPLAINT
Case No. CGC-10-500934369-9050 Fax (415) 369-9083
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58. For paragraph 58. the Defendants admit that the ZHANGS, LLC executed a deed
of trust in favor of the Plaintiff in connection with the Loan Mod 2 on or about December 2009
(the “DOT 5”), and that a document is attached to the complaint as Exhibit 22. Except for these
admissions, the Defendants deny each remaining allegation of that paragraph and assert that the
terms of Exhibit 22 speak for themselves.
59. For paragraph 59, the Defendants assert that the terms of Exhibit 22 speak for
themselves.
60. For paragraph 60, the Defendants assert that the terms of Exhibit 22 speak for
themselves.
61. For paragraph 61, the Defendants lack information or belief sufficient to admit or
deny the allegations of that paragraph, and on that basis, they deny them
62. For paragraph 62, the Defendants admit that the RAI KAI, LLC executed
additional loan documents in favor of the Plaintiff in comnection with the Construction Note 2.
and that a document is attached to the complaint as Exhibit 24, Except for these admissions, the
Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit
24 speak for themselves.
63. For paragraph 63, an admission or denial is not required.
64. For paragraph 64, the Defendants admit that the Zhangs are in default under the
LOC Note 1.
65. For paragraph 65, the Defendants admit every allegation.
66. For paragraph 66, the Defendants deny every allegation.
67. For paragraph 67, the Defendants admit every allegation.
68. For paragraph 68, the Defendants lack information or belief sufficient to admit or
deny the allegations of that paragraph, and on that basis, they deny them.
69. For paragraph 69, the Defendants deny every allegation.
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8
ANSWER TO COMPLAINT
Case No. CGC-10-500934Sa
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27
28
AFFIRMATIVE DEFENSES
First Affirmative Defense: ESTOPPEL
1. As a first and separate affirmative defense to all of the Plaintiff's causes of action,
the complaint is barred by the doctrine of estoppel.
Second Affirmative Defense: LACHES
2. As a second and separate affirmative defense to all of the Plaintiff's causes of
action, the complaint is barred by the doctrine of laches.
Third Affirmative Defense: WAIVER
3. As a third and separate affirmative defense to all of the Plaintiff's causes of
action, the complaint is barred by the doctrine of waiver.
Fourth Affirmative Defense: UNCLEAN HANDS
4. Asa fourth and separate affirmative defense to all of the Plaintiff's causes of
action, the Plaintiff has unclean hands with regards to the matters and events referenced in the
complaint. which are incorporated into this affirmative defense as though fully set forth by this
reference. The Plaintiff also has unclean hands with regards to other matters and events,
Fifth Affirmative Defense: PUBLIC INTEREST
5, Asa fifth and separate affirmative defense to all of the Plaintiff's causes of action.
the Plaintiff is barred from relief because of an overriding public interest.
Sixth Affirmative Defense: CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OR
FAULT
6. Asa sixth and separate affirmative defense to all of the Plaintiff's causes of
action, any damages sustained by the Plaintiff as a result of the occurrences alleged in the
complaint were legally and proximately caused, in whole or in part, by the Plaintiff's own
contributory or comparative negligence or fault.
Seventh Affirmative Defense: ADDITIONAL AFFIRMATIVE DEFENSES
7. As a seventh and separate affirmative defense to all of Plaintiff's causes of action,
the Defendants reserve the right to assert additional affirmative defenses based on information
9
ANSWER TO COMPLAINT
Case No. CGC-10-5009341 || gathered in the course of investigation and discovery.
2 PRAYER FOR RELIEF
3 Defendants seek judgment as follows:
4 (1) That the plaintiff recovers nothing by way of its complaint.
5 (2) That the Court enter judgment for the Defendants.
6 (3) For reimbursement of costs incurred in defense of this action.
7 (4) For reimbursement of attorney fees in an amount determined by the Court to be
8 reasonable.
9 (5) For such other relief as the Court may deem proper.
0
11] Date: May 12,2011 THE INNER LAW GROUP
2012
? 3 By:
Cae 13 fuinn J. Chevalier
2208 14
E35 Attorneys for Defendants
2322 15 Raymond Zhang
4 a 8 Cindy Zhang
e& “5 16 RAI KAI, LLC, aka RAY KAI, LLC
zB XIANG KAI, LLC
7 ZHANGS, LLC
8
19
20
21
22
23
24
25
26
27
28 10
ANSWER TO COMPLAINT
Case No. CGC-10-500934hinner Law Group
"A 94105
wx (415) 369-9053
Tel (415) 369-9050
w
Co Oo UD
PROOF OF SERVICE
I declare that I am over the age of 18 years and not a party to this action. My business address is
96 Jessie Street, San Francisco, California, 94105.
On MM \ 2 ot . served a true copy of the following documents:
- ANSWER TO COMPLAINT
on the following parties:
CATHAY BANK
Hanna B. Raanan
FRANDZEL ROBINS BLOOM
& CSATO, L.C.
6500 Wilshire Blvd., 17th Floor
Los Angeles, CA 90048-4920
hraanan‘@.frandzel.com
DO By Personal Service. The documents listed above were hand delivered to the parties named
above or to their agents authorized to accept personal service on their behalf. A declaration of
personal service is attached.
O By Hand Delivery. The documents listed above were placed in a sealed envelope and,
arrangements were made for the sealed envelope to be hand delivered to the following person:
. at the following time:
O By Facsimile. The documents listed above were faxed to each of the fax numbers listed above.
By Email, The documents listed above were emailed to each of the email addresses listed
bove.
(@ By Mail. The documents listed above were placed in a sealed envelope for mailing following
this business’s ordinary business practices for collecting and processing mail, of which | am
readily familiar. On each business day, all documents collected for mailing are deposited in the
ordinary course of business in a USPS mailbox in a prepaid sealed envelope.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
Date: Jon \&U oth
cS t
Quinn J. Chevalier
11
ANSWER TO COMPLAINT
Case No. CGC-10-500934
Preview
AAO SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet May-12-2011 9:18 am Case Number: CGC-10-500934 Filing Date: May-12-2011 9:13 Juke Box: 001 Image: 03209760 ANSWER TO COMPLAINT FILED BY DEFENDANT CATHAY BANK, A CALIFORNIA BANKING CORPORATION VS. RAYMOND XIANG ZHANC 001003209760 Instructions: Please place this sheet on top of the document to be scanned.Michael G. Schinner (SBN 142363) Quinn J. Chevalier (SBN 255934) THE SCHINNER LAW GROUP 96 Jessie St. San Francisco, CA 94105 Tei: (415) 369-9050 3 Fax: (415) 369-9053 Attorneys for Defendants Raymond Zhang; Cindy Zhang; RAL KAI, LLC: XIANG racic and ZHANGS, LLC SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO CATHAY BANK. a California banking Case No. CGC-10-500934 corporation, . ANSWER TO COMPLAINT FOR: Plaintiff, 1. (cause of action dismissed) ve RAYMOND XIANG KAI ZHANG, aka 2 TO ENFORCE Tom ONcE RAYMOND KAI ZHANG, aka RAYMOND PROVISIONS OF DEED OF ZHANG, aka XIANG KAI ZHANG, aka TRUST; APPOINTMENT OF XIANG ZHANG, aka ZHANG XIANG, an RECEIVER: AND individual; CINDY ZHANG, an individual; UNCTIV} DONG YING QUI. an individual; XIANG KAL INJUNCTIVE RELIEF LLC, a California limited liability company; . —o, RAY KAI. LLC. a California limited liability 3. (cause of action dismissed) company; ZHANGS, LLC, a California limited liability company; and DOES 1 through 200, 4. SPECIFIC PERFORMANCE inclusive. TO ENFORCE TERMS AND PROVISIONS OF DEED OF Defendants. TRUST; APPOINTMENT OF RECEIVER; AND Tormmmmnse rnc nnn nnn tenn cane nn aan m canteen INJUNCTIVE RELIEF RAYMOND ZHANG, an individual; CINDY . i ism): ZHANG, an individual: ZHANGS, LLC. a 5: {cause of action dismissed) California limited liability company: and RA. RAI ELC. a California limited tabilite 6. TO ENFORCE Toe ONCE company, PROVISIONS OF DEED OF Cross-Complainants. Recon POINTMENT OF vy. INJUNCTIVE RELIEF CATHAY BANK, a California banking 7. (cause of action dismissed) corporation; and DOES 201-230, inclusive, . . 8. (cause of action dismissed) Cross-Defendants. 1 ANSWER TO COMPLAINT Case No. CGC-10-500934 &SoM DH Rw KH Re pPpreereepnve sewn notte SWS 4M Fe nt s Sek AU KRT ESCH Defendants Raymond Zhang: Cindy Zhang; RA] KAI LLC (aka RAY KAI, LLC); XIANG KAI, LLC; and ZHANGS, LLC (collectively, the “Defendants”) answer as follows to the complaint of CATHAY BANK (the “Plaintiff”). ADMISSIONS AND DENIALS 1. For paragraph 1 of the complaint, the Defendants lack information or belief sufficient to admit or deny the allegations of that paragraph, and on that basis, they deny them. 2. For paragraph 2. the Defendants admit that Raymond Zhang is, and at all relevant times was, an individual residing in the county of San Francisco, California. 3. For paragraph 3, the Defendants admit that Cindy Zhang is, and at all relevant times was, an individual residing in the county of San Francisco, California. Raymond Zhang and Cindy Zhang are sometimes collectively referred to as the “Zhangs.” 4, For paragraph 4, the Defendants lack information or belief sufficient to admit or deny the allegations of that paragraph, and on that basis, they deny them. 5. For paragraph 5, the Defendants admit that XIANG KAI, LLC is a California limited liability company and has its principal place of business in San Francisco, California. 6. For paragraph 6, the Defendants admit that RAI KAI, LLC is a California limited liability company. 7. For paragraph 7. the Defendants admit that ZHANGS, LLC is a California limited liability company and has its principal place of business in San Francisco, California. 8. For paragraph 8. the Defendants lack information or belief sufficient to admit or deny the allegations of that paragraph, and on that basis. they deny them. 9. For paragraph 9, the Defendants deny every allegation. 10. For paragraph 10, the Defendants admit every allegation. 11. For paragraph 11, the Defendants lack information or belief sufficient to admit or deny the allegations of that paragraph, and on that basis, they deny them. 12. For paragraph 12, the Defendants admit that the Zhangs entered into a business loan agreement on or about November 2006 (the “LOC Loan”), and that a document is attached 2 ANSWER TO COMPLAINT Case No. CGC-10-500934SS yA DWH BB ww noo Ss a EG 16 to the complaint as Exhibit 1. 13. For paragraph 13, the Defendants assert that the terms of Exhibit | speak for themselves. Except for this admission, the Defendants deny each remaining allegation of that paragraph. 14. For paragraph 14, the Defendants assert that the terms of Exhibit 1 speak for themselves. Except for this admission, the Defendants deny each remaining allegation of that paragraph. 15. For paragraph 15, the Defendants admit that the Zhangs executed a promissory note in favor of the Plaintiff on or about June 2007 (the “LOC Note 1”), and that a document is attached to the complaint as Exhibit 2. 16. For paragraph 16, the Defendants assert that the terms of Exhibit 2 speak for themselves. Except for this admission, the Defendants deny each remaining allegation of that paragraph. 17. For paragraph 17, the Defendants assert that the terms of Exhibit 2 speak for themselves. Except for this admission, the Defendants deny each remaining allegation of that paragraph. 18. For paragraph 18, the Defendants assert that the terms of Exhibit 2 speak for themselves. Except for this admission, the Defendants deny each remaining allegation of that paragraph. 19. For paragraph 19, the Defendants admit that XIANG KAI, LLC executed a deed of trust in favor of the Plaintiff on or about June 2007 (the “LOC DOT 1”), and that a document is attached to the complaint as Exhibit 3. 20. For paragraph 20, the Defendants assert that the terms of Exhibit 3 speak for themselves. Except for this admission, the Defendants deny cach remaining allegation of that paragraph. 21. For paragraph 21, the Defendants assert that the terms of Exhibit 3 speak for themselves. Except for this admission, the Defendants deny each remaining allegation of that 3 ANSWER TO COMPLAINT Case No. CGC-10-500934ronp ner Law 9050. Kax (415) 369-9033 cS uP em a DWH Bw Pp paragraph. 22. For paragraph 22, the Defendants assert that the terms of Exhibit 3 speak for themselves. Except for this admission, the Defendants deny each remaining allegation of that paragraph. 23. For paragraph 23, the Defendants admit that the Zhangs executed two LOC extension agreements with the Plaintiff beginning on or about June 2009 (the “LOC Extension Agreements”), and that a document is attached to the complaint as Exhibit 4. 24. For paragraph 24, the Defendants admit that the Zhangs executed two change-in- terms agreements with the Plaintiff beginning on or about December 2009 (the “LOC CITAs”), and that a document is attached to the complaint as Exhibit 5. 25. For paragraph 25, the Defendants admit that the Zhangs executed a loan modification agreement with the Plaintiff on or about December 2009 (the “LOC Mod”), and that a document is attached to the complaint as Exhibit 6. 26. For paragraph 26, the Defendants admit that XIANG KAL LLC executed a guaranty in favor of the Plaintiff on or about December 2009 (the “XIANG LOC Guaranty”), and that a document is attached to the complaint as Exhibit 7. 27. For paragraph 27. the Defendants assert that the terms of Exhibit 7 speak for themselves. 28. For paragraph 28, the Defendants admit that XIANG KAI, LLC and the Zhangs executed a security agreement in favor of the Plaintiff on or about December 2009 (the “LOC Security Agreement”), and that a document is attached to the complaint as Exhibit 8. 29, For paragraph 29, the Defendants assert that the terms of Exhibit 8 speak for themselves. 30. For paragraph 30, the Defendants assert that the terms of Exhibit 8 speak for themselves. 31. For paragraph 31, the Defendants lack information or belief sufficient to admit or deny the allegations of that paragraph, and on that basis. they deny them 4 ANSWER TO COMPLAINT Case No. CGC-10-5009341 32. For paragraph 32, an admission or denial is not required, 33. For paragraph 33, the Defendants admit that RAI KAI, LLC entered into a construction loan agreement with the Plaintiff on or about June 2006 (the “Construction Loan 2”), and that a document is attached to the complaint as Exhibit 10. The Defendants also admit that the maximum principal amount of the loan was $7,238,000, Except for these admissions, the 34. For paragraph 34, the Defendants assert that the terms of Exhibit 10 speak for themselves. 35. For paragraph 35. the Defendants assert that the terms of Exhibit 10 speak for 2 3 4 5 6} Defendants deny each remaining allegation of that paragraph. 7 8 9 0 themselves. it 36. For paragraph 36, the Defendants assert that the terms of Exhibit 10 speak for 12] themselves. 13 37. For paragraph 37, the Defendants assert t at the terms of Exhibit 10 speak for 14] themselves. 15 38. For paragraph 38, the Defendants assert that the terms of Exhibit 10 speak for 16] themselves. ‘Tel (415) 369-9080 Fax (415) 369-9053 17 39. For paragraph 39, the Defendants admit that RAI KAT, LLC executed a 18] promissory note in favor of the Plaintiff on or about October 2006 in the amount of $7,238,000 19] (the “Construction Note 2”), and that a document is attached to the complaint as Exhibit 11. 20 Except for these admissions, the Defendants deny each remaining allegation of that paragraph 21 40. For paragraph 40, the Defendants assert that the terms of Exhibit 11 speak for 22] themselves. 23 41. For paragraph 41, the Defendants assert that the terms of Exhibit |] speak for 24] themselves. 25 42. For paragraph 42, the Defendants admit that RAI KAI, LLC executed a deed of 26] trust concerning the MacArthur Blvd property in favor of the Plaintiff on or about October 2009 27] (the “Construction DOT 2”), and that a document is attached to the complaint as Exhibit 12. 28 5 ANSWER TO COMPLAINT Case No. CGC-10-500934Tel (415) 369-9950 Fax (415) 369-9053 1} Except for these admissions, the Defendants deny each remaining allegation of that paragraph 2]| and assert that the terms of Exhibit 12 speak for themselves. 3 43. For paragraph 43, the Defendants assert that the terms of Exhibit 12 speak for 4] themselves. 5 44. For paragraph 44, the Defendants lack information or belief sufficient to admit or 6], deny the allegations of that paragraph, and on that basis, they deny them. They also admit that a 7|| document is attached to the complaint as Exhibit 13. 8 45. For paragraph 45, the Defendants admit that Raymond Zhang executed a personal 9] guarantee in favor of the Plaintiff concerning Construction Note 2 on or about October 2006, and 10] that a document is attached to the Complaint as Exhibit 14. Except for these admissions. the 11] Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit 12] 14 speak for themselves. 13 46. For paragraph 46, the Defendants admit that Cindy Zhang executed a personal 14 | guarantee in favor of the Plaintiff concerning Construction Note 2 on or about October 2006, and 15]| that a document is attached to the Complaint as Exhibit 15, Except for these admissions, the 16] Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit 17 | 15 speak for themselves. 18 47, For paragraph 47, the Defendants admit that RAL KAI, LLC and the Plaintiff 19] entered into three extension agreements concerning the Construction Note 2 beginning on or 20]| about June 2008 (the “Extension Agreements”), and that a document is attached to the complaint 21] as Exhibit 16. Except for these admissions, the Defendants deny each remaining allegation of 22] that paragraph and assert that the terms of Exhibit 16 speak for themselves. 23 48. For paragraph 48, the Defendants admit that RAI KAI, LLC and the Plaintiff 24} entered into a loan modification agreement concerning the Construction Note 2 on ot about 25 || February 2009 (the “Loan Mod 1”), and that a document is attached to the complaint as Exhibit 26] 17. Except for these admissions, the Defendants deny cach remaining allegation of that 27|| paragraph and assert that the terms of Exhibit 17 speak for themselves. 28 6 ANSWER TO COMPLAINT Case No. CGC-10-50093415) 369-9953 Group San Tel (415) é é cS me NIN DH BRB WwW Ww S DOH Oe Re a a a - oOo OW ADH BR WwW HP 2 Nh NS YN YY KR ww ec NUN DH FD 49. For paragraph 49, the Defendants admit that RAI KAI, LLC and the Plaintiff entered into a loan modification agreement concerning the Construction Note 2 on or about December 2009 (the “Loan Mod 2”), and that a document is attached to the complaint as Exhibit 18. Except for these admissions, the Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit 18 speak for themselves. 50. For paragraph 50, the Defendants admit that RAI KAI, LLC and the Plaintiff entered into a loan modification agreement concerning the Construction Note 2 on or about February 2010 (the “Loan Mod 3”), and that a document is attached to the complaint as Exhibit 19. Except for these admissions, the Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit 19 speak for themselves. 51. For paragraph 51, the Defendants deny each and every allegation, Except for these denials, the Defendants admit that a document is attached to the complaint as Exhibit 20. 52. For paragraph 52, the Defendants assert that the terms of Exhibit 20 speak for themselves. 53. For paragraph 53, the Defendants assert that the terms of Exhibit 20 speak for themselves. 54. For paragraph 54, the Defendants assert that the terms of Exhibit 20 speak for themselves. 55. For paragraph 55, the Defendants admit that the Zhangs executed a deed of trust in favor of the Plaintiff in connection with the Loan Mod 2 on or about December 2009 (the “DOT 4”), and that a document is attached to the complaint as Exhibit 21. Except for these admissions, the Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit 21 speak for themselves. 56. For paragraph 56, the Defendants assert that the terms of Exhibit 21 speak for themselves. 57. For paragraph 57, the Defendants assert that the terms of Exhibit 21 speak for themselves. 7 ANSWER TO COMPLAINT Case No. CGC-10-500934369-9050 Fax (415) 369-9083 wn So Oem I Aw 58. For paragraph 58. the Defendants admit that the ZHANGS, LLC executed a deed of trust in favor of the Plaintiff in connection with the Loan Mod 2 on or about December 2009 (the “DOT 5”), and that a document is attached to the complaint as Exhibit 22. Except for these admissions, the Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit 22 speak for themselves. 59. For paragraph 59, the Defendants assert that the terms of Exhibit 22 speak for themselves. 60. For paragraph 60, the Defendants assert that the terms of Exhibit 22 speak for themselves. 61. For paragraph 61, the Defendants lack information or belief sufficient to admit or deny the allegations of that paragraph, and on that basis, they deny them 62. For paragraph 62, the Defendants admit that the RAI KAI, LLC executed additional loan documents in favor of the Plaintiff in comnection with the Construction Note 2. and that a document is attached to the complaint as Exhibit 24, Except for these admissions, the Defendants deny each remaining allegation of that paragraph and assert that the terms of Exhibit 24 speak for themselves. 63. For paragraph 63, an admission or denial is not required. 64. For paragraph 64, the Defendants admit that the Zhangs are in default under the LOC Note 1. 65. For paragraph 65, the Defendants admit every allegation. 66. For paragraph 66, the Defendants deny every allegation. 67. For paragraph 67, the Defendants admit every allegation. 68. For paragraph 68, the Defendants lack information or belief sufficient to admit or deny the allegations of that paragraph, and on that basis, they deny them. 69. For paragraph 69, the Defendants deny every allegation. ut if 8 ANSWER TO COMPLAINT Case No. CGC-10-500934Sa Tel 415) 36: So PA Dn Bw DP 27 28 AFFIRMATIVE DEFENSES First Affirmative Defense: ESTOPPEL 1. As a first and separate affirmative defense to all of the Plaintiff's causes of action, the complaint is barred by the doctrine of estoppel. Second Affirmative Defense: LACHES 2. As a second and separate affirmative defense to all of the Plaintiff's causes of action, the complaint is barred by the doctrine of laches. Third Affirmative Defense: WAIVER 3. As a third and separate affirmative defense to all of the Plaintiff's causes of action, the complaint is barred by the doctrine of waiver. Fourth Affirmative Defense: UNCLEAN HANDS 4. Asa fourth and separate affirmative defense to all of the Plaintiff's causes of action, the Plaintiff has unclean hands with regards to the matters and events referenced in the complaint. which are incorporated into this affirmative defense as though fully set forth by this reference. The Plaintiff also has unclean hands with regards to other matters and events, Fifth Affirmative Defense: PUBLIC INTEREST 5, Asa fifth and separate affirmative defense to all of the Plaintiff's causes of action. the Plaintiff is barred from relief because of an overriding public interest. Sixth Affirmative Defense: CONTRIBUTORY OR COMPARATIVE NEGLIGENCE OR FAULT 6. Asa sixth and separate affirmative defense to all of the Plaintiff's causes of action, any damages sustained by the Plaintiff as a result of the occurrences alleged in the complaint were legally and proximately caused, in whole or in part, by the Plaintiff's own contributory or comparative negligence or fault. Seventh Affirmative Defense: ADDITIONAL AFFIRMATIVE DEFENSES 7. As a seventh and separate affirmative defense to all of Plaintiff's causes of action, the Defendants reserve the right to assert additional affirmative defenses based on information 9 ANSWER TO COMPLAINT Case No. CGC-10-5009341 || gathered in the course of investigation and discovery. 2 PRAYER FOR RELIEF 3 Defendants seek judgment as follows: 4 (1) That the plaintiff recovers nothing by way of its complaint. 5 (2) That the Court enter judgment for the Defendants. 6 (3) For reimbursement of costs incurred in defense of this action. 7 (4) For reimbursement of attorney fees in an amount determined by the Court to be 8 reasonable. 9 (5) For such other relief as the Court may deem proper. 0 11] Date: May 12,2011 THE INNER LAW GROUP 2012 ? 3 By: Cae 13 fuinn J. Chevalier 2208 14 E35 Attorneys for Defendants 2322 15 Raymond Zhang 4 a 8 Cindy Zhang e& “5 16 RAI KAI, LLC, aka RAY KAI, LLC zB XIANG KAI, LLC 7 ZHANGS, LLC 8 19 20 21 22 23 24 25 26 27 28 10 ANSWER TO COMPLAINT Case No. CGC-10-500934hinner Law Group "A 94105 wx (415) 369-9053 Tel (415) 369-9050 w Co Oo UD PROOF OF SERVICE I declare that I am over the age of 18 years and not a party to this action. My business address is 96 Jessie Street, San Francisco, California, 94105. On MM \ 2 ot . served a true copy of the following documents: - ANSWER TO COMPLAINT on the following parties: CATHAY BANK Hanna B. Raanan FRANDZEL ROBINS BLOOM & CSATO, L.C. 6500 Wilshire Blvd., 17th Floor Los Angeles, CA 90048-4920 hraanan‘@.frandzel.com DO By Personal Service. The documents listed above were hand delivered to the parties named above or to their agents authorized to accept personal service on their behalf. A declaration of personal service is attached. O By Hand Delivery. The documents listed above were placed in a sealed envelope and, arrangements were made for the sealed envelope to be hand delivered to the following person: . at the following time: O By Facsimile. The documents listed above were faxed to each of the fax numbers listed above. By Email, The documents listed above were emailed to each of the email addresses listed bove. (@ By Mail. The documents listed above were placed in a sealed envelope for mailing following this business’s ordinary business practices for collecting and processing mail, of which | am readily familiar. On each business day, all documents collected for mailing are deposited in the ordinary course of business in a USPS mailbox in a prepaid sealed envelope. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Date: Jon \&U oth cS t Quinn J. Chevalier 11 ANSWER TO COMPLAINT Case No. CGC-10-500934