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CIV-130
ATTORNEY OR PARTY WITHOUT ATTORNEY (Name, State Bar number, and address): FOR COURT USE ONLY
t~ Ellyn BE. Nesbit 136398
willoughby, Stuart, Bening & Cook
50 W. San Fernando Street, Suite 400
San Jose, CA 95113
TeLepHone No.:.408-289~1972 FAX NO. (Optionay:4 08 - 295-6375
E-MAIL ADDRESS (Optionay: Cll yn@wsbclawyers.com
ATTORNEY FOR (Name): Defendants Wang and Wong
SUPERIOR COURT OF CALIFORNIA, COUNTYOF Santa Clara
STREET ADDRESS: 191 North First Street
MAILING ADDRESS:
CITY AND ZIP CODE: San Jose, CA 95113
BRANCH NAME:
PLAINTIFF/PETITIONER: THE TDS GROUP, et al.
DEFENDANT/RESPONDENT: YA HUI (EMILY) WANG, et al.
NOTICE OF ENTRY OF JUDGMENT oe
OR ORDER 18CV333695
(Check one): Q&} UNLIMITED CASE {)} LiMiTED CASE
(Amount demanded (Amount demanded was
exceeded $25,000) $25,000 or less)
TO ALL PARTIES:
1. Ajudgment, decree, or order was entered in this action on (date): May 1, 2019
2. A copy of the judgment, decree, or order is attached to this notice.
Date: May 21, 2019
2 -
Ellyn EB. Nesbit > Aig Ee Ua
(TYPE OR PRINT NAME OF QXQ attorney (2) party witHouT aTToRNEY) (SIGNATURE)
Page 4 of 2
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Decision on Submitted Matter
F ile
MAY ~ 1 2019
Clerk of the Court
COUNTY OF SANTA CLARA’
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Case No. 18CV333695
THE TDS GROUP etal.,
Plaintiffs, ORDER REGARDING VARIOUS
MOTIONS
v.
YA HUI (EMILY) WANG; CHUN DOK
(CHRIS) WONG et al.,
Defendants.
L BACKGROUND
This is Round 3 of the long-running dispute (10 years and counting) between the parties.
On one side is TDS Group, R.A. Lotter Insurance Marketing, and Robert A. Lotter (collectively
“TDS”), On the other side is Ya Hui (Emily) and Chun Dok (Chris) Wong (collectively
“Emily”) on the other.
In Round 1, Emily sued TDS on contract and tort claims. Emily received a judgment in
2012 on these claims in her favor for $4.7 million, but the judgment was overturned on appeal.
Specifically, the appellate court affirmed the trial court’s new trial grant on the contract claim
and did not review the trial court’s post-trial JNOV grants on the tort claims.
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In Round 2, a new trial was held on Emily’s breach of contract claim against TDS. That
lawsuit resulted in an April 2018 judgment in favor of TDS, but the trial judge, in June 2018,
ordered a new trial. The following matters are now on appeal: a) the new trial order; b) the
overall 2018 judgment; and c) the overall 2012 judgment (which would include the JNOV orders!
on the tort claims).
Round 3 is this action, filed in August 2018. Here, TDS has alleged that Emily
transferred assets to Taiwan to avoid the likely attorney fee award TDS would get if the Round 2
judgment is reinstated on appeal. This conduct, in TDS’s view, gives rise to statutory and
common law fraudulent transfer causes of action.
In response to this Round 3 lawsuit, Emily has filed four motions: a) to stay this action
pending the Round 2 appeal; and b) to abate or dismiss this action because of the currently-
pending Round 2 action (which, as already stated, is on appeal); c) a motion for judgment on the
pleadings; and d) a motion to quash the depositions of Emily and Chris Wang (and
accompanying document production). For its part, TDS has filed a motion to compel these
depositions (and accompanying document production).
Both sides have filed briefs and supporting papers for all motions, and the Court heard
oral argument on April 19, 2019. The Court took the matter under submission and now issues its
rulings.
Il. DOES TDS HAVE A “CLAIM” AGAINST EMILY UNDER THE UVTA?
A threshold question for all of these motions (and the main question for Emily’s motion
for judgment on the pleadings) is whether TDS has a claim against Emily under the Uniform
Voidable Transactions Act (“UVTA”). TDS says yes, Emily says no. The Court therefore will
start with this issue.
The UVTA permits “creditors” who have “claims” to sue the transferor for improper
transfer. (Civ. Code, § 3439.01, subd. (c),)! A “claim” is a “tight to payment.” (§ 3439.01,
subd. (b).) The term “claim” is interpreted broadly, as a claim exists “whether or not the right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
' All undesignated statutory references will be to the Civil Code.Boe eee ee a
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undisputed, legal, equitable, secured, or unsecured.” (bid.) The Court agrees with TDS that
“the right may be contingent, unmatured, and disputed, and still constitute a ‘claim’ under the
UVTA.” (JOP Opp’n, at p. 4.) But a claim cannot be completely speculative. A mere hope or
expectancy of future payment isn’t enough, nor is a “mere possibility” of a right to payment.
At bottom, the Court must determine when TDS’s claim accrues. For instance, in a tort
case (say, a bicycle accident), the plaintiff's “claim” would accrue at the time of the accident,
(See Estate of Blanco (1978) 86 Cal.App.3d 826, 832.) That would be true, even though: a)
there was not yet a judgment in favor of the plaintiff; b) the defendant might have vali
that may defeat the plaintiff’s claim; and c) the amount of damages are not yet known.
Similarly, in a contract action, the plaintiff’s claim typically would accrue at the time of the
alleged breach, Whorton v, Dillingham (1988) 202 Cal.App.3d 447, 456, even if the defendant
were to claim there was no breach.
But in our case, TDS is not the plaintiff in the underlying action—Emily is. As the
defendant in the underlying action, TDS’s claim for attomey fees accrues when a court finally
determines, at the end of the underlying action, that TDS is the prevailing party under Civil Code|
section 1717. (See Estate of Drummond (2007) 149 Cal.App.4th 46, 53 [no right to attorney fees
as a prevailing party until final resolution of case].) Put another way, the triggering event that
creates a right of payment is a final determination that TDS is the prevailing party in the
underlying action? Until that occurs, TDS merely has an expectancy or hope for fees, and that’s
insufficient.
Heller Ehrman LLP v, David Wright Tremaine LLP (2018) 4 Cal.5th 467 (Heller) is
instructive. In that case, the Heller Ehrman law firm, upon dissolution, waived its right to seek
payment for legal work done after the lawyers left Heller. The bankruptcy judge found that this
waiver was a fraudulent transfer under the Bankruptcy Code because the Heller estate had a
? The Court understands that Whorton is a statute of limitations case, not a UVTA case.
But the considerations for accrual are similar.
3 Even then, the claim is somewhat contingent: not all prevailing parties obtain fees; the
amount of fees is unknown; there may be other defenses to fees; and so on. But those
considerations wouldn’t stop TDS from having a “claim,” once there has been a final
determination that it is the prevailing party in the underlying action.
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after the April 2018 jury verdic
“claim.” (The definition of “claim” under the Bankruptcy Code is very similar to the definition
of “claim” under the UVTA. [Compare 11 U.S.C. § 105 with § 3439.01, subd. (b)].) Upon
certified question from the Ninth Circuit Court of Appeals, the California Supréme Court found
that these post-dissolution legal fees did not constitute a “claim” because they were not a true.
property interest, but instead only a “speculative” hope by the Heller estate. (/d., at p, 477-478.)
That is true here as well: TDS has only a speculative hope that it will obtain attorney fees.
TDS has three main responses. First, it argues.that because it had a judgment in its favor
(Round 2); it had a “claim” under the UVTA. ‘But as’
admits, whether a party has a judgment doesn’t matter when determining whether a claim exists.
Second, it argues that federal bankruptcy cases find that “a ‘claim’ can exist under the
[Bankruptcy] Code before a right to payment exists under state law.” (in re Grossman's Inc.
Grd Cir. 2010) 607 F.3d 114, 121, quoted in JOP Opp’n, at p. 7.) While there are similarities
between bankruptcy law and the UVTA (as discussed above), these similarities cannot override
the text of the UVTA. The term “claim” under the UVTA is defined as a “tight to payment,” and
that “right to payment” is defined by state law. (See Heller, supra, 4 Cal.5th 467, 476-478.) In
any event, one main reason why these federal bankruptcy cases find a claim to exist under the
Code before a right to payment arises under state law is bankruptcy-specific: to determine when
and how to discharge a claim in bankruptcy. That reason doesn’t exist for fraudulent transfer
claims under the UVTA.
Third, it characterizes Heller as a.partnership case and thus not applicable to our facts.
But the portion of Heller upon which the Court is relying focuses on property definition, not
partnership law. That makes it applicable to defining property—and thus defining a “claim”—
under the UVTA. , /
For these reasons, the Court finds that TDS does not have a “claim” against Emily, as
defined by the UVTA.Noe a
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III. MOTION FOR JUDGMENT ON THE PLEADINGS
The above discussion disposes of TDS’s UVTA claim. As for TDS’s common law
fraudulent transfer claim, it fails because there is no live judgment in TDS’s favor. (See
Aigeltinger v. Einstein (1904) 143 Cal. 609, 111.)
The Court does not believe that TDS can amend its pleading at this time to state a valid
claim under either the UVTA or the common law. Nor did TDS request leave to amend.
Therefore, the Court GRANTS Emily’s motion for judgment on the pleadings WITHOUT leave
to amend.
IV. MOTIONS TO STAY AND ABATE/DISMISS.
These motions are DENIED AS MOOT, in light of the Court’s grant of judgment on the
pleadings.
Vv. DISCOVERY MOTIONS
These motions are DENIED AS MOOT, in light of the Court’s grant of judgment on the
pleadings,
VI. CONCLUSION
The Court GRANTS Emily’s motion for judgment on the pleadings WITHOUT
leave to amend. All other motions are DENIED AS MOOT.
Dated: 5 |
The Honorable Sunil R. Kulkarni
Judge of the Superior CourtSUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
DOWNTOWN COURTHOUSE
191 NORTH FIRST STREET
SAN Jos&, CALIFORNIA 95113
CIVIL DIVISION
Randall Edmans Willoughby
50 W San Fernando St #400
San Jose CA 95113
RE: The TDS Group Inc. et al vs Ya Hui (Emily) Wang et al
Case Number: 18CV333695
" PROOF OF SERVICE
Order Regarding Various Motions was delivered to the parties listed below the above entitled case as set forth
in the sworn declaration below.
If you, a party retested by you, ora witness to be called on behalf of that party need an accommodation under the American with
Disabllitles Act, please Contact the Court Administrator's office at (408) 882-2700, or use the Court's TDD line (408) 882-2690 or the
Voice/TDD California Relay Séivicg ( (800) 735-2922,
DECLARATION OF SERVICE BY ait? | declare that | served this notice by enclosing a true copy In a sealed envelope, addressed to
each person whose name Is shown below, and by depositing the envelope with postage fully prepaid, in the United States Mall at San Jose,
CA on May 01, 2019. CLERK OF THE COURT, by Mark Rosales, Deputy.
cc: Maro Alan Eisenhart 125 S Market St Suite 1200 San Jose CA 95113
CW-9027 REV 12/08/16 PROOF OF SERVICE0 Oo YN DH BF WN
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Case Name: The TDS Group, Inc. v. Wang, et al.
Court: Santa Clara Superior Court
Case No. 18CV333695
Our File No. 2155.13491B
PROOF OF SERVICE
STATE OF CALIFORNIA ]
ss.
COUNTY OF SANTA CLARA ]
Iam a citizen of the United States and a resident of the County of Santa Clara, State of
California; I am over the age of eighteen years and not a party to the within action; my business
address is 50 W. San Fernando Street, Suite 400, San Jose, San Jose, CA 95113. On the date set
forth below I served the document|[s] described as:
NOTICE OF ENTRY OF ORDER REGARDING VARIOUS MOTIONS
on the following person[s] in this action by placing a true copy thereof enclosed in a sealed
envelope addressed as follows:
Marc A. Eisenhart, Esq. Attomey for Plaintiffs
Gates Eisenhart Dawson
125 South Market Street, Suite 1200
San Jose, CA 95113
(408) 288-8100
(408) 288-9409
mae@gedlaw.com
[X] [BY MAIL] I caused such envelope[s] with postage thereon fully prepaid by
placing the envelope for collection and mailing following our ordinary business
practices. I am readily familiar with this business’s practice for collection and
processing correspondence for mailing. On the same day that correspondence is
placed for collection and mailing, it is deposited in the ordinary course of
business with the United States Postal Service.
{[ ] [BY PERSONAL SERVICE] I caused such envelope[s], as indicated above, to be
delivered by hand this date to the offices of the addressee[s].
[ ] [BY FACSIMILE] I caused such document{[s] to be transmitted by facsimile on this date
to the offices of addressee[s] and the facsimile machine complies with Rule 2003(3) of
the California Rules of Court and was reported as complete and without error at the time
specified on the transmission confirmation report and was properly issued by the
transmitting facsimile machine operating at [408]295-6375.CoC em ND HW RF WN
[BY ELECTRONIC MAIL] I caused such document{[s] to be transmitted by electronic
mail on May 21, 2019 to the offices of addressee[s] without return error notification.
[BY FEDERAL EXPRESS] I caused such envelope[s] with postage thereon fully
prepaid to be placed for collection by Federal Express at San Jose, California.
[STATE] I declare under penalty of perjury under the laws of the State of California that
the foregoing is true and correct.
[FEDERAL] I declare that I am employed in the office of a member of the bar of this
court at whose direction the service was made.
Executed on May 21, 2019 at San Jose, California.
Marsa Meath.
MARSHA NOVACK