Preview
FILED: KINGS COUNTY CLERK 03/30/2022
04/13/2022 01:51
06:01 PM INDEX NO. 509214/2022
506569/2022
NYSCEF DOC. NO. 1
35 RECEIVED NYSCEF: 03/30/2022
04/13/2022
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
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In the Matter of the Application of Index No.:
SUSAN HUA CHEN, as a 50% Shareholder of At Angel
Gift Nail Spa III Inc., a domestic corporation, VERIFIED PETITION
Petitioner,
-against-
JUN YAN GUAN a/k/a JAMES GUAN, as a 50% Place of Business:
Shareholder of At Angel Gift Nail Spa III Inc., 8409 5th Avenue
Brooklyn, NY 11209
Respondent.
For Judicial Dissolution of At Angel Gift Nail Spa III
Inc. Pursuant to Section 1104(a) of the Business
Corporation Law
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TO THE SUPREME COURT OF THE STATE OF NEW YORK,
COUNTY OF KINGS:
Petitioner, SUSAN HUA CHEN (“Chen”), as for her Verified Petition against JUN
YAN GUAN a/k/a JAMES GUAN (“Guan”), for judicial dissolution of AT ANGEL GIFT
NAIL SPA III, INC. (“At Angel III” or the “Corporation”), a domestic corporation,
pursuant to Section 1104(a) of the New York Business Corporation Law (“BCL”), for an
order appointing a temporary receiver pursuant to BCL § 1113 to preserve the Corporation’s
assets, appraise the business of the Corporation, and sell its assets and distribute the proceeds
to the shareholders, and for such other and further relief as the Court deems just and proper,
respectfully shows to the Court and alleges:
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PARTIES, JURISDICTION, AND VENUE
1. At Angel III was formed pursuant to BCL § 402 on or about November 2,
2018 for the sole purpose of operating and managing a nail spa.
2. At Angel III has maintained its business location at 8409 5th Avenue,
Brooklyn, NY 11209.
3. At Angel III, through its predecessors-in-interest, started doing nail salon
business in or about January 2011 at the same business location.
4. Petitioner Chen is a natural person residing in Brooklyn, Kings County.
5. Respondent Guan is a natural person residing in Little Neck, Queens County.
6. Chen and Guan are the only two shareholders of the Corporation, each owing
fifty (50%) percent of the Corporation’s outstanding shares.
7. The Court has jurisdiction over the Petition pursuant to BCL § 1104.
8. Venue is proper in this judicial district pursuant to BCL § 1112.
9. The basis for the dissolution is that there exists an internal dissention between
the two equal shareholders, that the dissention has posed an irreconcilable barrier to the
continued functioning and prosperity of the Corporation, and that dissolution will be
beneficial to the shareholders pursuant to BCL § 1104(a)(3).
STATEMENT OF FACTS
A. Chen, Guan, and the Corporation
10. Chen, a 58 year old female, immigrated to the U.S. in 1997 from China.
11. Chen has been engaged in nail salon business in Brooklyn, New York, for
more than 20 years since 2001 when she obtained her license issued by the New York
Department of State.
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12. In or about August 2006, Chen bought a nail store by the name of Century 21
Nail Salon, Inc. located at 383 Myrtle Avenue, Brooklyn, and began to operate the store as
its sole owner.
13. Guan was at that time (and still is) married to a cousin of Chen’s ex-husband,
Jianping Dai (“Dai”).
14. In 2007, about one year after Chen opened her store, Dai asked Chen to hire
Guan to work in her store to help his cousin (Guan’s wife).
15. Chen agreed and hired Guan. A few months later, Guan asked Chen to let her
wife (Dai’s cousin) to work in the store to learn the nail salon skills. Chen agreed and taught
Guan’s wife the trade skills. Guan’s wife left after about three months.
16. In or about January 2011, Chen and Guan agreed to form a partnership to do
nail salon business together.
17. Therefore, in January 2011, Chen and Guan found a store location at 8409 5th
Avenue, Brooklyn, and entered a lease agreement with the landlord for a term of 10 years,
expiring on January 31, 2021. A true copy of the store lease is submitted herein as Exhibit
A.
18. On or about January 19, 2011, Chen and Guan formed Angel Gift Nail Spa Inc.
(“Angel”) and operated the store continuously through Angel until 2015.
19. On or about August 19, 2015, Chen and Guan, upon the advice of their
accountant, formed a new successor corporation, Angel Gift Nail Spa III Inc. (“Angel III”)
and continuously operated the store at the same premises until 2018.
20. After forming Angel III, Chen and Guan discontinued using Angel for any
business activities.
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21. On or about November 2, 2018, Chen and Guan, upon the advice of their
accountant, formed At Angel III (the Corporation) and have continuously operated the store
at the same premises until March 17, 2022.
22. After forming At Angel III, Chen and Guan discontinued using Angel III for
any business activities.
23. The lease term expired on January 31, 2021 and the Corporation has not
entered into a new lease with the landlord. As a result, the Corporation has been operating
its business since February 1, 2021 as a month-to-month tenant.
24. On March 17, 2022, the shareholders closed the store and the store has since
remained closed to the public.
B. The Shareholder’s Capital Investment in the Corporation
25. A total amount of capital of about $180,000 was invested in the Corporation
for renovating the store and purchasing store equipment, such as pedicure chairs, foot spas,
and manicure tables.
26. Chen fully paid her portion of the investment. Guan, however, only
contributed $20,000 because he told Chen that he did not have enough money. Guan agreed
to pay back his portion of the investment over time with his share of profits from the nail
salon business.
27. At Guan’s request, Chen obtained a personal loan of $50,000 from her aunt for
Guan, which Guan agreed to return the loan with his share of profits from the nail store.
28. Chen paid off the personal loan with his share of profits of about $2,000 per
month for about 2 years.
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29. As a result, Guan still owes Chen an amount of $20,000 as unpaid capital
investment.
C. Store Operations and Profits Distribution
30. From the inception of the nail spa business in 2011 until the closing of store on
March 17, 2022, both shareholders worked at the store to service customers, earning their
base salary and tips.
31. The shareholders would use the earnings first to pay the employees’ weekly
wages and then all business expenses, including monthly rents, utilities, supplies, taxes, gifts,
and advertisement and share equally the net profits on a weekly basis.
32. The shareholders normally used the receipts paid by the customers with credit
cards to pay store overhead expenses. When there was insufficient funds in the credit card
account to pay the overheads, the shareholders would use their cash receipts to make up the
difference. A portion of the employees’ weekly wages were also paid from the cash receipts
and, after that, the shareholders equally share the remaining cash receipts.
D. Daily Income Accounting and Bookkeeping
33. From the inception of the store business until sometime in September 2020,
both shareholders accounted daily income receipts together at the end of each working day.
34. On February 14, 2020, Chen’s house was caught on fire by a tenant’s cigarette
smoking. Although no person was injured from the fire, the house, together with everything
inside, was burned down to ashes.
35. The insurance company fully compensated Chen for the loss, including
rebuilding the house from the ground.
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36. During the period of rebuilding the house of about one year, Chen and her
family lived in a friend’s house.
37. Shortly thereafter, the store was closed in compliance with the Governor’s
Executive Order due to COVID-19 and not reopened until July, 2020.
38. As Chen temporarily lived at her friend’s house and was required to participate
in the rebuilding of her house from time to time, Chen asked Guan to process the accounting
of the business receipts and expenses himself and kept all record for her.
39. It took a few months after reopening for the business to improve until about
September 2020.
40. Therefore, starting in September, 2020 Guan has been solely responsible for
the accounting of the store’s business income and expenses.
41. After accounting the daily receipts of both credit card and cash payment, Guan
would staple the credit card “Batch Report” and payment receipts together and then wrote in
the back of each stapled daily credit card payment receipts the date, total cash received, and
deductions of employee bonuses. Guan would also deduct from the total receipts his own
personal expenses, such as lunch, coffee (sometimes it could be $50 a day), parking, and
gasoline (about $100 each time) for his personal vehicle. Guan would then give the daily
accounting records to Chen.
42. True copies of the daily accounting records processed by Guan for the time
period from February 25, 2021 to January 26, 2022 are submitted herein as Exhibit B.
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E. The Second Nail Store
43. On or about October 8, 2013, Chen and Guan entered a store lease for a
second store located at 7810 3rd Avenue, Brooklyn, for a term of 10 years expiring on
September 30, 2023. A true copy of the store lease is submitted herein as Exhibit C.
44. Chen and Guan formed a new corporation, Angel Gift Nail Spa II Inc. (“Angel
II”) to operate the second store, on or about October 9, 2013.
45. Both Chen and Guan managed worked at this Second Store until October, 2016.
46. On October 1, 2016, Chen and Guan agreed to sell and did sell 100% of their
shares of Angel II to Dai, for the sales price of $130,000. On that day in the store Guan,
Chen, and Dai signed a Share Transfer Agreement making the transfer of ownership
effective on October 1, 2016 and Dai paid the purchase money to Guan and Chen. A true
copy of the Share Transfer Agreement is submitted herein as Exhibit D.
F. Tao Lin’s Nail Store
47. Tao Lin (“Lin”), who is Chen’s current husband, owned and operated a buffet
restaurant in Kansas as a chef prior to 2013.
48. In or about 2013, Lin sold his shares in the buffet restaurant and began to help
Chen in the two nail stores owned by Chen and Guan, mostly doing maintenance of the
premises, supplies pickups, and transporting employees between work and their homes.
49. In 2015, Lin decided to open a nail store for himself which Chen agreed.
50. In late 2015, Lin located a store front located at 8905 3rd Avenue, Brooklyn,
and entered into a lease agreement with the landlord for a term of 10 years expiring on
October 30, 2025.
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51. On November 2, 2015, Lin formed Angel City Nail Spa Inc. (“Angel City”) to
operate his nail store business.
52. Lin himself made all initial capital investment for renovation and purchase of
equipment and has been operating the store himself, with Chen’s help.
53. Guan did not make any monetary contribution to Tao Lin’s nail store, was not
a signatory of the store’s lease agreement, did not have any interest in the store, and neither
Lin nor Chen ever promised to give any interest in the store to Guan.
G. Guan’s Diversion of Corporation’s Business,
Expulsion, Harassment and Extortion of Chen
54. In the past years on several occasions Chen caught Guan stealing money from
the cash register at the Corporation’s store and falsifying cash work tickets to pocket money
for himself.
55. Guan used the store’s cash receipts to pay for his personal expenses.
56. In June 2021, Chen’s 33-year old daughter was diagnosed of lung cancer. In
August 2021, Chen’s daughter underwent a surgery. As a result, during this time period,
Chen worked in the store less regularly than before. Guan, instead of lending a hand of
sympathy and support, began to reduce Chen’s weekly wages by three days a week even
though he himself never came to work on time and often arrived at the store at mid-days.
57. In October 2021, Chen’s daughter began chemotherapy treatment and has
recovered from the surgery with promising prognostics to become cancer free. Again,
instead of showing Chen any sympathy or support, Guan stopped to pay any weekly wages
to Chen completely.
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58. At the same time, Guan started to implement his evil scheme to divert the
business of the Corporation to himself, to expel Chen from the premises, and to extort Chen
for money he was not entitled to.
59. Guan’s wrongful report to the police. After Guan stopped paying Chen her
weekly salaries, Chen began to take money from the register to pay her weekly salary of
$500. Each time Chen took any money from the register, she always left a handwritten note
there to record the amount she took and Guan would take a picture with his phone of the
notes. On the Christmas Eve of 2021, around 3:00 p.m., Chen took $200 from the store
register. However, knowing fully well that Chen was taking the money to pay her weekly
wage, Guan called the police and falsely reported to the police officers that Chen was
stealing money from the Corporation. The police did not take any action and told Guan that
this is a shareholders dispute and that Guan should not call the police about this dispute.
60. Forming a corporation of his own (Angel Bar). On or about January 7, 2022,
Guan formed a corporation of his own, ANGEL BAR INC. (“Angel Bar”). A true copy of
the printout of Entity Information of Angel Bar at the Department of State, Division of
Corporations, is submitted herein as Exhibit E.
61. Opening bank account for Angel Bar. On or about January 10, 2022, Guan
opened a bank account with Northfield Bank under the name of Angel Bar using the
Corporation’s store address (8409 5th Avenue, Brooklyn). A monthly statement ending on
January 31, 2022 was mailed to the store and was received by Chen, a true copy of which is
submitted herein as Exhibit F.
62. Setting up credit card merchant account for Angel Bar. Also in January,
2022, Chen, wondering why the credit card account of the Corporation did not receive any
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daily receipts, discovered that the credit card processing machine had been changed and
realized that Guan had been diverting the Corporation’s credit card receipts to himself.
Chen later called the credit card processing company and requested a new machine to
replace Guan’s machine.
63. Opening ConEdison account for Angel Bar. Also at the beginning of
January, 2022, Guan opened a utility account with ConEdison for the Corporation’s
premises location (8409 5th Avenue, Brooklyn). A monthly bill due on March 15, 2022 was
mailed to the store and received by Chen, a true copy of the ConEdison bill is submitted
herein as Exhibit G.
64. Sabotaging Corporation’s signage. On or 1/28/2022, Chen noticed that the
word “gift” was cut off from the store awning, leaving only the “Angel Nail Spa,” so that it
would look closer to Angel Bar. A screen shot from a video taken by Chen on 1/28/2022
showing the cutting out and the Guan’s own telephone number is submitted herein as
Exhibit H.
65. Later, on March 10, 2022, Guan affixed to the store awning a new store phone
number (929) 293-2049 which was for his Angel Bar and tried to cover the store’s number
(718) 833-8896 with duct tape of a matching color. Chen stopped Guan from covering the
store’ phone number. Chen later discovered that Guan had cancelled the store’s number and
immediately contacted the telephone company to request that the store’s main number be
restored. The number was restored after about one week. A screen shot from a video taken
by Chen on March 10, 2022 is submitted herein as Exhibit I.
66. Failing to pay the February monthly rent. As a result of Guan’s diverting
of the business and income receipt in January, the Corporation did not have enough money
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to pay the February rent to the landlord. As a result, Chen asked her husband to help and
paid the February rent using the funds belong to Tao Lin’s nail store. A true copy of the
check image in payment of the store’s February rent is submitted herein as Exhibit J.
67. Sabotaging Corporation’s internet system and surveillance cameras. On
2/10/2022 10:00 pm , Guan removed the store’s modem and router and dismantled the
surveillance cameras from store. Two screenshots from a video taken by Chen on February
10, 2022 are submitted herein as Exhibit K.
68. Continued harassment of Chen by wrongful report to the police. On two
additional occasions on January 28, 2022 and February 7, 2022, Guan called the police again
and, like he did on December 24, 2021, falsely reported to the police officers that Chen was
stealing money from the Corporation. The police told Guan again that he should not call the
police because the situation was a civil matter.
69. Finally on March 10, 2022, Guan and a female associate of his, Betty, who has
told Chen that she worked for a law firm, called the police and falsely reported Chen cut the
electricity wires which Chen believed was done by Guan and his female associate
themselves to create a scene of criminal activity. The police believed Chen’s explanation
and told Guan that he should not call the police again.
70. Guan’s extortion of Chen for money. After he failed to expel Chen from the
store’s premises under the false pretense of the owner of the store and repeated harassment
by falsely reporting to the police, Guan resorted to extorting money payment from Chen to
which he knew he was and is not entitled. Guan began to tell Chen that Chen owed him
money because (i) Chen did not account for the profits the store even though he and Chen
accounted the store’s income together before September 2020 and exclusively accounted the
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receipts from September 2020 to March 17, 2022 (Ex. B); (ii) he was and still is a
shareholder of the Second Store even though Dai fully paid him for his 50% shares on
October 1, 2016 (Ex. D); and (iii) he was and still is a shareholder of Tao Lin’s nail store
even though the store was established from scratch solely by Tao Lin without any capital
injection or any in-kind contribution from Guan.
71. Guan’s Filing a baseless lawsuit against Chen, Dai, Guan, and the
Corporation outside accountant. After he failed to expel Chen from the store premises
under false pretense of the store owner, and after he failed to get any money from Chen by
his harassment and criminal extortion, Guan continued with his extortionate efforts by filing
a complaint of 34 counts on March 7, 2022, amended on the same day of the filing of the
original complaint (Guan v. Chen, Index No. 506569/2022): 18 counts against Chen, 4
counts against Dai (the owner of the second store since October 1, 2016), 4 counts against
Lin (the owner of the Tao Lin’s nail store since October 2015), 6 counts against both the
Corporation itself and the corporations under which Dai and Lin operated their stores, and 2
counts against the Corporation’s outside accountant. A true copy of the summons and
amended complaint dated and filed on March 7, 2022 is submitted herein as Exhibit L.
72. Egregiously, Guan filed a Notice of Pendency against Chen’s house based on
the allegation that his share of the partnership’s net profits was used for the downpayment
on the purchase of her house, even though he was not owed any of his share of profits and
even assuming so the established legal authority has long held that such allegation does not
support a claim for constructive trust for purposes of filing a Notice of Pendency.
73. The civil action against Chen, Dai, Lin, and the Corporation’s outside account
is based on nothing but false allegations and fabrications for no other purpose but to harass
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and maliciously injure Chen, to tarnish Chen’s reputation and standing in the community,
and to cause Chen to incur costs and fees.
74. Indeed, Guan’s female associate, Betty, has told Chen that the lawyers of the
law firm she worked for would “help Guan litigate his lawsuit without charge to the end.”
75. Tellingly, Guan filed his lawsuit on the same day when he admitted to Chen in
a telephone conversation that Chen did not owe him any money.
H. The current status of the Corporation
76. Guan has caused the demise of the Corporation by his callous betrayal and
insatiable greed.
77. The nail store of the Corporation has remained closed since March 17, 2022.
78. The Corporation’s lease for the nail spa has expired as of January 31, 2021 (Ex.
A) and the Corporation has since operated its nail spa business from the premises as a
month-to-month tenant.
79. Chen paid the store’s February rent with the funds of her husband’s store (Tao
Lin’s nail store). (Ex. J) The Corporation paid the March rent with its own funds. It is not
known at this time whether the Corporation is able to pay the rent for April.
JUDICIAL DISSOLUTION PURSUANT TO BCL § 1104(a)
80. Petitioner repeats and realleges each and every allegation set forth hereinbefore.
81. BCL § 1104 provides, in pertinent part, as follows:
§ 1104. Petition in case of deadlock among directors or shareholders
(a) Except as otherwise provided in the certificate of
incorporation under section 613 (Limitations on right to vote),
the holders of shares representing one-half of the votes of all
outstanding shares of a corporation entitled to vote in an
election of directors may present a petition for dissolution on
one or more of the following grounds:
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(1) That the directors are so divided respecting the management
of the corporation’s affairs that the votes required for action by
the board cannot be obtained.
(2) That the shareholders are so divided that the votes required
for the election of directors cannot be obtained.
(3) That there is internal dissension and two or more factions of
shareholders are so divided that dissolution would be beneficial
to the shareholders.
82. Petitioner respectfully submits that as a result of Respondent’s unlawful
conduct, there exists an internal dissention between the two equal shareholders, that the
dissention has posed an irreconcilable barrier to the continued functioning and prosperity of
the Corporation, and that dissolution will be beneficial to the shareholders pursuant to BCL
§ 1104(a)(3).
83. The Corporation can no longer carry on the business intended by the partners
that required mutual trust, equal management, meaningful employment, and shared business
objectives. In fact, the Corporation has closed its business and ceased to furnish nail
services to the customers at the corporate premises.
84. The conflict and internal dissention between the two equal shareholders cannot
be overcome and can only be resolved by a permanent severance of their shareholder
relationship.
85. Dissolution of the Corporation will be and is beneficial to the shareholders
such that the shareholders will be able to sever their toxic shareholder relationship and
protect each of them from incurring any potential financial liabilities if the Corporation is
allowed to continue to exist.
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86. Therefore, Petitioner respectfully request that the Court grant judicial
dissolution of the Corporation pursuant to BCL § 1104(a).
APPOINTMENT OF A TEMPORARY RECEIVER PURSUANT TO BCL § 1113
87. BCL § 1113 provides as follows:
§ 1113. Preservation of assets; appointment of receiver
At any stage of an action or special proceeding under this article, the
court may, in its discretion, make all such orders as it may deem proper
in connection with preserving the property and carrying on the business
of the corporation, including the appointment and removal of a receiver
under article 12 (Receivership), who may be a director, officer or
shareholder of the corporation.
88. Petitioner further respectfully requests that the Court appoint a temporary
receiver pursuant to BCL § 1113 to preserve the Corporation’s assets, to appraise the
business of the Corporation, and sell is assets and distribute the proceeds to the shareholders.
89. Because the shareholders’ relationship has been irretrievably strained and the
operation of the Corporation has become dysfunctional, it will be essentially impracticable
to conduct a proper winding up of the Corporation’s affairs without a court-appointed
Receiver. In light of the unlawful and destructive conduct of Respondent, Petitioner does
not have any faith that Respondent will reasonably cooperate in winding up the
Corporation’s affairs for the best interests of the shareholders and potential third-party
creditors and claimants.
90. A temporary receiver is also necessary that Respondent will not take, remove,
or dispose of any of the property located in the store of the Corporation during the pendency
of the proceeding.
91. No previous application has been made for the relief herein sought to any
Court or Justice thereof.
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Preview
FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF KINGS ---------------------------------------------------------------------x In the Matter of the Application of Index No.: SUSAN HUA CHEN, as a 50% Shareholder of At Angel Gift Nail Spa III Inc., a domestic corporation, VERIFIED PETITION Petitioner, -against- JUN YAN GUAN a/k/a JAMES GUAN, as a 50% Place of Business: Shareholder of At Angel Gift Nail Spa III Inc., 8409 5th Avenue Brooklyn, NY 11209 Respondent. For Judicial Dissolution of At Angel Gift Nail Spa III Inc. Pursuant to Section 1104(a) of the Business Corporation Law ---------------------------------------------------------------------x TO THE SUPREME COURT OF THE STATE OF NEW YORK, COUNTY OF KINGS: Petitioner, SUSAN HUA CHEN (“Chen”), as for her Verified Petition against JUN YAN GUAN a/k/a JAMES GUAN (“Guan”), for judicial dissolution of AT ANGEL GIFT NAIL SPA III, INC. (“At Angel III” or the “Corporation”), a domestic corporation, pursuant to Section 1104(a) of the New York Business Corporation Law (“BCL”), for an order appointing a temporary receiver pursuant to BCL § 1113 to preserve the Corporation’s assets, appraise the business of the Corporation, and sell its assets and distribute the proceeds to the shareholders, and for such other and further relief as the Court deems just and proper, respectfully shows to the Court and alleges: -1- 1 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 PARTIES, JURISDICTION, AND VENUE 1. At Angel III was formed pursuant to BCL § 402 on or about November 2, 2018 for the sole purpose of operating and managing a nail spa. 2. At Angel III has maintained its business location at 8409 5th Avenue, Brooklyn, NY 11209. 3. At Angel III, through its predecessors-in-interest, started doing nail salon business in or about January 2011 at the same business location. 4. Petitioner Chen is a natural person residing in Brooklyn, Kings County. 5. Respondent Guan is a natural person residing in Little Neck, Queens County. 6. Chen and Guan are the only two shareholders of the Corporation, each owing fifty (50%) percent of the Corporation’s outstanding shares. 7. The Court has jurisdiction over the Petition pursuant to BCL § 1104. 8. Venue is proper in this judicial district pursuant to BCL § 1112. 9. The basis for the dissolution is that there exists an internal dissention between the two equal shareholders, that the dissention has posed an irreconcilable barrier to the continued functioning and prosperity of the Corporation, and that dissolution will be beneficial to the shareholders pursuant to BCL § 1104(a)(3). STATEMENT OF FACTS A. Chen, Guan, and the Corporation 10. Chen, a 58 year old female, immigrated to the U.S. in 1997 from China. 11. Chen has been engaged in nail salon business in Brooklyn, New York, for more than 20 years since 2001 when she obtained her license issued by the New York Department of State. -2- 2 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 12. In or about August 2006, Chen bought a nail store by the name of Century 21 Nail Salon, Inc. located at 383 Myrtle Avenue, Brooklyn, and began to operate the store as its sole owner. 13. Guan was at that time (and still is) married to a cousin of Chen’s ex-husband, Jianping Dai (“Dai”). 14. In 2007, about one year after Chen opened her store, Dai asked Chen to hire Guan to work in her store to help his cousin (Guan’s wife). 15. Chen agreed and hired Guan. A few months later, Guan asked Chen to let her wife (Dai’s cousin) to work in the store to learn the nail salon skills. Chen agreed and taught Guan’s wife the trade skills. Guan’s wife left after about three months. 16. In or about January 2011, Chen and Guan agreed to form a partnership to do nail salon business together. 17. Therefore, in January 2011, Chen and Guan found a store location at 8409 5th Avenue, Brooklyn, and entered a lease agreement with the landlord for a term of 10 years, expiring on January 31, 2021. A true copy of the store lease is submitted herein as Exhibit A. 18. On or about January 19, 2011, Chen and Guan formed Angel Gift Nail Spa Inc. (“Angel”) and operated the store continuously through Angel until 2015. 19. On or about August 19, 2015, Chen and Guan, upon the advice of their accountant, formed a new successor corporation, Angel Gift Nail Spa III Inc. (“Angel III”) and continuously operated the store at the same premises until 2018. 20. After forming Angel III, Chen and Guan discontinued using Angel for any business activities. -3- 3 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 21. On or about November 2, 2018, Chen and Guan, upon the advice of their accountant, formed At Angel III (the Corporation) and have continuously operated the store at the same premises until March 17, 2022. 22. After forming At Angel III, Chen and Guan discontinued using Angel III for any business activities. 23. The lease term expired on January 31, 2021 and the Corporation has not entered into a new lease with the landlord. As a result, the Corporation has been operating its business since February 1, 2021 as a month-to-month tenant. 24. On March 17, 2022, the shareholders closed the store and the store has since remained closed to the public. B. The Shareholder’s Capital Investment in the Corporation 25. A total amount of capital of about $180,000 was invested in the Corporation for renovating the store and purchasing store equipment, such as pedicure chairs, foot spas, and manicure tables. 26. Chen fully paid her portion of the investment. Guan, however, only contributed $20,000 because he told Chen that he did not have enough money. Guan agreed to pay back his portion of the investment over time with his share of profits from the nail salon business. 27. At Guan’s request, Chen obtained a personal loan of $50,000 from her aunt for Guan, which Guan agreed to return the loan with his share of profits from the nail store. 28. Chen paid off the personal loan with his share of profits of about $2,000 per month for about 2 years. -4- 4 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 29. As a result, Guan still owes Chen an amount of $20,000 as unpaid capital investment. C. Store Operations and Profits Distribution 30. From the inception of the nail spa business in 2011 until the closing of store on March 17, 2022, both shareholders worked at the store to service customers, earning their base salary and tips. 31. The shareholders would use the earnings first to pay the employees’ weekly wages and then all business expenses, including monthly rents, utilities, supplies, taxes, gifts, and advertisement and share equally the net profits on a weekly basis. 32. The shareholders normally used the receipts paid by the customers with credit cards to pay store overhead expenses. When there was insufficient funds in the credit card account to pay the overheads, the shareholders would use their cash receipts to make up the difference. A portion of the employees’ weekly wages were also paid from the cash receipts and, after that, the shareholders equally share the remaining cash receipts. D. Daily Income Accounting and Bookkeeping 33. From the inception of the store business until sometime in September 2020, both shareholders accounted daily income receipts together at the end of each working day. 34. On February 14, 2020, Chen’s house was caught on fire by a tenant’s cigarette smoking. Although no person was injured from the fire, the house, together with everything inside, was burned down to ashes. 35. The insurance company fully compensated Chen for the loss, including rebuilding the house from the ground. -5- 5 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 36. During the period of rebuilding the house of about one year, Chen and her family lived in a friend’s house. 37. Shortly thereafter, the store was closed in compliance with the Governor’s Executive Order due to COVID-19 and not reopened until July, 2020. 38. As Chen temporarily lived at her friend’s house and was required to participate in the rebuilding of her house from time to time, Chen asked Guan to process the accounting of the business receipts and expenses himself and kept all record for her. 39. It took a few months after reopening for the business to improve until about September 2020. 40. Therefore, starting in September, 2020 Guan has been solely responsible for the accounting of the store’s business income and expenses. 41. After accounting the daily receipts of both credit card and cash payment, Guan would staple the credit card “Batch Report” and payment receipts together and then wrote in the back of each stapled daily credit card payment receipts the date, total cash received, and deductions of employee bonuses. Guan would also deduct from the total receipts his own personal expenses, such as lunch, coffee (sometimes it could be $50 a day), parking, and gasoline (about $100 each time) for his personal vehicle. Guan would then give the daily accounting records to Chen. 42. True copies of the daily accounting records processed by Guan for the time period from February 25, 2021 to January 26, 2022 are submitted herein as Exhibit B. -6- 6 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 E. The Second Nail Store 43. On or about October 8, 2013, Chen and Guan entered a store lease for a second store located at 7810 3rd Avenue, Brooklyn, for a term of 10 years expiring on September 30, 2023. A true copy of the store lease is submitted herein as Exhibit C. 44. Chen and Guan formed a new corporation, Angel Gift Nail Spa II Inc. (“Angel II”) to operate the second store, on or about October 9, 2013. 45. Both Chen and Guan managed worked at this Second Store until October, 2016. 46. On October 1, 2016, Chen and Guan agreed to sell and did sell 100% of their shares of Angel II to Dai, for the sales price of $130,000. On that day in the store Guan, Chen, and Dai signed a Share Transfer Agreement making the transfer of ownership effective on October 1, 2016 and Dai paid the purchase money to Guan and Chen. A true copy of the Share Transfer Agreement is submitted herein as Exhibit D. F. Tao Lin’s Nail Store 47. Tao Lin (“Lin”), who is Chen’s current husband, owned and operated a buffet restaurant in Kansas as a chef prior to 2013. 48. In or about 2013, Lin sold his shares in the buffet restaurant and began to help Chen in the two nail stores owned by Chen and Guan, mostly doing maintenance of the premises, supplies pickups, and transporting employees between work and their homes. 49. In 2015, Lin decided to open a nail store for himself which Chen agreed. 50. In late 2015, Lin located a store front located at 8905 3rd Avenue, Brooklyn, and entered into a lease agreement with the landlord for a term of 10 years expiring on October 30, 2025. -7- 7 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 51. On November 2, 2015, Lin formed Angel City Nail Spa Inc. (“Angel City”) to operate his nail store business. 52. Lin himself made all initial capital investment for renovation and purchase of equipment and has been operating the store himself, with Chen’s help. 53. Guan did not make any monetary contribution to Tao Lin’s nail store, was not a signatory of the store’s lease agreement, did not have any interest in the store, and neither Lin nor Chen ever promised to give any interest in the store to Guan. G. Guan’s Diversion of Corporation’s Business, Expulsion, Harassment and Extortion of Chen 54. In the past years on several occasions Chen caught Guan stealing money from the cash register at the Corporation’s store and falsifying cash work tickets to pocket money for himself. 55. Guan used the store’s cash receipts to pay for his personal expenses. 56. In June 2021, Chen’s 33-year old daughter was diagnosed of lung cancer. In August 2021, Chen’s daughter underwent a surgery. As a result, during this time period, Chen worked in the store less regularly than before. Guan, instead of lending a hand of sympathy and support, began to reduce Chen’s weekly wages by three days a week even though he himself never came to work on time and often arrived at the store at mid-days. 57. In October 2021, Chen’s daughter began chemotherapy treatment and has recovered from the surgery with promising prognostics to become cancer free. Again, instead of showing Chen any sympathy or support, Guan stopped to pay any weekly wages to Chen completely. -8- 8 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 58. At the same time, Guan started to implement his evil scheme to divert the business of the Corporation to himself, to expel Chen from the premises, and to extort Chen for money he was not entitled to. 59. Guan’s wrongful report to the police. After Guan stopped paying Chen her weekly salaries, Chen began to take money from the register to pay her weekly salary of $500. Each time Chen took any money from the register, she always left a handwritten note there to record the amount she took and Guan would take a picture with his phone of the notes. On the Christmas Eve of 2021, around 3:00 p.m., Chen took $200 from the store register. However, knowing fully well that Chen was taking the money to pay her weekly wage, Guan called the police and falsely reported to the police officers that Chen was stealing money from the Corporation. The police did not take any action and told Guan that this is a shareholders dispute and that Guan should not call the police about this dispute. 60. Forming a corporation of his own (Angel Bar). On or about January 7, 2022, Guan formed a corporation of his own, ANGEL BAR INC. (“Angel Bar”). A true copy of the printout of Entity Information of Angel Bar at the Department of State, Division of Corporations, is submitted herein as Exhibit E. 61. Opening bank account for Angel Bar. On or about January 10, 2022, Guan opened a bank account with Northfield Bank under the name of Angel Bar using the Corporation’s store address (8409 5th Avenue, Brooklyn). A monthly statement ending on January 31, 2022 was mailed to the store and was received by Chen, a true copy of which is submitted herein as Exhibit F. 62. Setting up credit card merchant account for Angel Bar. Also in January, 2022, Chen, wondering why the credit card account of the Corporation did not receive any -9- 9 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 daily receipts, discovered that the credit card processing machine had been changed and realized that Guan had been diverting the Corporation’s credit card receipts to himself. Chen later called the credit card processing company and requested a new machine to replace Guan’s machine. 63. Opening ConEdison account for Angel Bar. Also at the beginning of January, 2022, Guan opened a utility account with ConEdison for the Corporation’s premises location (8409 5th Avenue, Brooklyn). A monthly bill due on March 15, 2022 was mailed to the store and received by Chen, a true copy of the ConEdison bill is submitted herein as Exhibit G. 64. Sabotaging Corporation’s signage. On or 1/28/2022, Chen noticed that the word “gift” was cut off from the store awning, leaving only the “Angel Nail Spa,” so that it would look closer to Angel Bar. A screen shot from a video taken by Chen on 1/28/2022 showing the cutting out and the Guan’s own telephone number is submitted herein as Exhibit H. 65. Later, on March 10, 2022, Guan affixed to the store awning a new store phone number (929) 293-2049 which was for his Angel Bar and tried to cover the store’s number (718) 833-8896 with duct tape of a matching color. Chen stopped Guan from covering the store’ phone number. Chen later discovered that Guan had cancelled the store’s number and immediately contacted the telephone company to request that the store’s main number be restored. The number was restored after about one week. A screen shot from a video taken by Chen on March 10, 2022 is submitted herein as Exhibit I. 66. Failing to pay the February monthly rent. As a result of Guan’s diverting of the business and income receipt in January, the Corporation did not have enough money - 10 - 10 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 to pay the February rent to the landlord. As a result, Chen asked her husband to help and paid the February rent using the funds belong to Tao Lin’s nail store. A true copy of the check image in payment of the store’s February rent is submitted herein as Exhibit J. 67. Sabotaging Corporation’s internet system and surveillance cameras. On 2/10/2022 10:00 pm , Guan removed the store’s modem and router and dismantled the surveillance cameras from store. Two screenshots from a video taken by Chen on February 10, 2022 are submitted herein as Exhibit K. 68. Continued harassment of Chen by wrongful report to the police. On two additional occasions on January 28, 2022 and February 7, 2022, Guan called the police again and, like he did on December 24, 2021, falsely reported to the police officers that Chen was stealing money from the Corporation. The police told Guan again that he should not call the police because the situation was a civil matter. 69. Finally on March 10, 2022, Guan and a female associate of his, Betty, who has told Chen that she worked for a law firm, called the police and falsely reported Chen cut the electricity wires which Chen believed was done by Guan and his female associate themselves to create a scene of criminal activity. The police believed Chen’s explanation and told Guan that he should not call the police again. 70. Guan’s extortion of Chen for money. After he failed to expel Chen from the store’s premises under the false pretense of the owner of the store and repeated harassment by falsely reporting to the police, Guan resorted to extorting money payment from Chen to which he knew he was and is not entitled. Guan began to tell Chen that Chen owed him money because (i) Chen did not account for the profits the store even though he and Chen accounted the store’s income together before September 2020 and exclusively accounted the - 11 - 11 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 receipts from September 2020 to March 17, 2022 (Ex. B); (ii) he was and still is a shareholder of the Second Store even though Dai fully paid him for his 50% shares on October 1, 2016 (Ex. D); and (iii) he was and still is a shareholder of Tao Lin’s nail store even though the store was established from scratch solely by Tao Lin without any capital injection or any in-kind contribution from Guan. 71. Guan’s Filing a baseless lawsuit against Chen, Dai, Guan, and the Corporation outside accountant. After he failed to expel Chen from the store premises under false pretense of the store owner, and after he failed to get any money from Chen by his harassment and criminal extortion, Guan continued with his extortionate efforts by filing a complaint of 34 counts on March 7, 2022, amended on the same day of the filing of the original complaint (Guan v. Chen, Index No. 506569/2022): 18 counts against Chen, 4 counts against Dai (the owner of the second store since October 1, 2016), 4 counts against Lin (the owner of the Tao Lin’s nail store since October 2015), 6 counts against both the Corporation itself and the corporations under which Dai and Lin operated their stores, and 2 counts against the Corporation’s outside accountant. A true copy of the summons and amended complaint dated and filed on March 7, 2022 is submitted herein as Exhibit L. 72. Egregiously, Guan filed a Notice of Pendency against Chen’s house based on the allegation that his share of the partnership’s net profits was used for the downpayment on the purchase of her house, even though he was not owed any of his share of profits and even assuming so the established legal authority has long held that such allegation does not support a claim for constructive trust for purposes of filing a Notice of Pendency. 73. The civil action against Chen, Dai, Lin, and the Corporation’s outside account is based on nothing but false allegations and fabrications for no other purpose but to harass - 12 - 12 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 and maliciously injure Chen, to tarnish Chen’s reputation and standing in the community, and to cause Chen to incur costs and fees. 74. Indeed, Guan’s female associate, Betty, has told Chen that the lawyers of the law firm she worked for would “help Guan litigate his lawsuit without charge to the end.” 75. Tellingly, Guan filed his lawsuit on the same day when he admitted to Chen in a telephone conversation that Chen did not owe him any money. H. The current status of the Corporation 76. Guan has caused the demise of the Corporation by his callous betrayal and insatiable greed. 77. The nail store of the Corporation has remained closed since March 17, 2022. 78. The Corporation’s lease for the nail spa has expired as of January 31, 2021 (Ex. A) and the Corporation has since operated its nail spa business from the premises as a month-to-month tenant. 79. Chen paid the store’s February rent with the funds of her husband’s store (Tao Lin’s nail store). (Ex. J) The Corporation paid the March rent with its own funds. It is not known at this time whether the Corporation is able to pay the rent for April. JUDICIAL DISSOLUTION PURSUANT TO BCL § 1104(a) 80. Petitioner repeats and realleges each and every allegation set forth hereinbefore. 81. BCL § 1104 provides, in pertinent part, as follows: § 1104. Petition in case of deadlock among directors or shareholders (a) Except as otherwise provided in the certificate of incorporation under section 613 (Limitations on right to vote), the holders of shares representing one-half of the votes of all outstanding shares of a corporation entitled to vote in an election of directors may present a petition for dissolution on one or more of the following grounds: - 13 - 13 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 (1) That the directors are so divided respecting the management of the corporation’s affairs that the votes required for action by the board cannot be obtained. (2) That the shareholders are so divided that the votes required for the election of directors cannot be obtained. (3) That there is internal dissension and two or more factions of shareholders are so divided that dissolution would be beneficial to the shareholders. 82. Petitioner respectfully submits that as a result of Respondent’s unlawful conduct, there exists an internal dissention between the two equal shareholders, that the dissention has posed an irreconcilable barrier to the continued functioning and prosperity of the Corporation, and that dissolution will be beneficial to the shareholders pursuant to BCL § 1104(a)(3). 83. The Corporation can no longer carry on the business intended by the partners that required mutual trust, equal management, meaningful employment, and shared business objectives. In fact, the Corporation has closed its business and ceased to furnish nail services to the customers at the corporate premises. 84. The conflict and internal dissention between the two equal shareholders cannot be overcome and can only be resolved by a permanent severance of their shareholder relationship. 85. Dissolution of the Corporation will be and is beneficial to the shareholders such that the shareholders will be able to sever their toxic shareholder relationship and protect each of them from incurring any potential financial liabilities if the Corporation is allowed to continue to exist. - 14 - 14 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022 04/13/2022 86. Therefore, Petitioner respectfully request that the Court grant judicial dissolution of the Corporation pursuant to BCL § 1104(a). APPOINTMENT OF A TEMPORARY RECEIVER PURSUANT TO BCL § 1113 87. BCL § 1113 provides as follows: § 1113. Preservation of assets; appointment of receiver At any stage of an action or special proceeding under this article, the court may, in its discretion, make all such orders as it may deem proper in connection with preserving the property and carrying on the business of the corporation, including the appointment and removal of a receiver under article 12 (Receivership), who may be a director, officer or shareholder of the corporation. 88. Petitioner further respectfully requests that the Court appoint a temporary receiver pursuant to BCL § 1113 to preserve the Corporation’s assets, to appraise the business of the Corporation, and sell is assets and distribute the proceeds to the shareholders. 89. Because the shareholders’ relationship has been irretrievably strained and the operation of the Corporation has become dysfunctional, it will be essentially impracticable to conduct a proper winding up of the Corporation’s affairs without a court-appointed Receiver. In light of the unlawful and destructive conduct of Respondent, Petitioner does not have any faith that Respondent will reasonably cooperate in winding up the Corporation’s affairs for the best interests of the shareholders and potential third-party creditors and claimants. 90. A temporary receiver is also necessary that Respondent will not take, remove, or dispose of any of the property located in the store of the Corporation during the pendency of the proceeding. 91. No previous application has been made for the relief herein sought to any Court or Justice thereof. - 15 - 15 of 17 FILED: KINGS COUNTY CLERK 03/30/2022 04/13/2022 01:51 06:01 PM INDEX NO. 509214/2022 506569/2022 NYSCEF DOC. NO. 1 35 RECEIVED NYSCEF: 03/30/2022