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JAY L. POMERANTZ (CSB No. 209869)
jpomerantz@fenwick.com
WILLIAM BRENC (CSB No. 318544)
wbrenc@fenwick.com
FENWICK & WEST LLP
Silicon Valley Center
801 California Street
Mountain View, CA 94041
Telephone: 650.988.8500
Facsimile: 650.938.5200
Attorneys for Defendant NAN ZHANG
SUPERIOR COURT OF THE STATEOF CALIFORNIA
COUNTY OF SANTA CLARA
YING (CINDY) XIONG and YUNLONG Lead Case No.: 16cv292330
(MARK) WANG, [Consolidated with 17cv307462]
LLP
Plaintiffs REPLY MEMORANDUM IN
SUPPORT OF DEFENDANT NAN
ES T
TTO RNEY S AT
ZHANG’S MOTION TO REOPEN
DISCOVERY
ENWICK
PINGYI YAN, an individual; NAN ZHANG, an
individual; MICROPOINT BIOSCIENCE, INC., Date: May 14, 2019
a California corporation, SHENZHEN Time: 9:00 a.m.
MICROPOINT BIOSCIENCE, INC., a China Dept: 9
corporation; and DOES 1 through 10, inclusive, Judge: Mary E. Arand
Date Action Filed: March 4, 2016
Defendants
AND CONSOLIDATED ACTION.
ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330
DISCOVERY
INTRODUCTION
Zhang’s Motion established that there is a credible and serious concern that Plaintiffs
recent transfer of nearly $1.5 million offshore may have been done to avoid Wang’s obligations
to pay Zhang’s attorneys’ fees. The Motion further established thatthe Court may grant limited
and narrowly tailored post judgment discovery under the Civil Discover Act where, as here, “it
may be needed.” In re Marriage of Boblitt, 233 Cal. App. 4th 1004, 1024 (2014); Opening Br. at
In response, Plaintiffs concede itheir Opposition to Defendant’s Ex ParteApplication to
Reopen Discovery (“Opposition” or “Opp.”)that they used an offshore lender to remove nearly
$1.5 million in equity from their two California real estate propertiesOpp. at 2 3 (admitting to
the two loans at issue Moreover, it is undisputed that these transactions occurred after it became
clear Wang was obligated to pay Zhang’s attorneys’ fees in this actionId. Nonetheless,
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Plaintiffs have arguedthat these loans are of no consequence because Plaintiffs are free to do
ES T
TTO RNEY S AT
with their real estate whatever they wish But this assertion flies in the f ace of the VTA,
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which prohibits encumbrance for the purpose of avoiding a creditor’s claim, “ hether or not the
[creditor’s] right is reduced to judgment. . . .” Cal. Civ. Code § (b)(emphasis added)
Oiye v. Fox, 211 Cal. App. 4th 1036, 1057 (2012).generallyCal Civ. Code § 3439 et seq.
Because the Opposition fails to provide any legal or factual basis to deny Zhang’s motion, the
Court should reopen discovery on a limited basis.
ARGUMENT
Zhang’s Opening Brief Established hat he Court May Grant Leave to Seek
Limited Post udgment Discovery. The Opposition Cites No Authority
Suggesting that Such Discovery Is Not Permitted.
The pening rief established thata court may authorize post judgmentdiscovery
pursuant to California Code of Civil Procedure section 2024.050. ening Br. at 5. Plaintiffs
not dispute that the Court has the discretion to permit such discovery. Instead, theironly response
The defined terms in the Opening Brief are used herein.
Reply eclaration of Jay L. Pomerantzin Support of Zhang’s Motion to Reopen Discovery
(“Reply Dec.”) (emphasis added) see also Opp. at 2 (arguing there is no basis to conclude
that “anything was done [by Plaintiffs, in connection with these loans] that was wrong”).
ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330
DISCOVERY
is a sequitur they argue that Zhang has not been diligent in seeking post judgment
discovery that is only available to judgment creditors. Opp. at 1 (citing Cal. Civ. Proc. Code §§
708.010(a), 708.030(a), 708.110(a), and 708.120). However, i t is precisely because Zhang cannot
yet avail herself of these discovery mechanism that she has asked the Court for limited discovery
pursuant to section2024.050(a). See Opening Br. at 5 (citing n re Marriage of Boblitt, 233 Cal.
App. 4th 1004, 1024 (2014) . The Opposition never even mentions Boblitt, much less argues why
it might not apply. Plaintiffs silencespeaks volumes they ignore Boblittbecause it is
controlling; it held that where, as here,the Civil Discovery Actdoes not automatically permit
discovery, post judgment discovery should be granted pursuant to CCP 2024.050(a) to ensure
that parties are not left “without any access to discovery on post judgment matters where it ma
be needed. . . .” 233 Cal. App. 4th at 1024.
The Opposition Never Contests the Numerous Undisputed Facts Creating a
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Serious and Pressing Concern that Plaintiffs May Have Engaged in UVTA
ES T
Violations.
TTO RNEY S AT
Zhang’s request for limited discovery is based on undisputed factscreating a serious
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concern that Plaintiffs may have moved nearly $1.5 million of their assets in the United States
offshore in violation of the UVTA. While the Opposition argues in a conclusory manner that
“there is no emergency and no harm” and no reason to believe “anything was done that was
wrong” (Opp. at 1, 2),the se bald assertions ignore the following ndisputedfacts
In the fall of 2018, s after it was clear that the Court would dismiss all of
Plaintiffs’ claimsand that Wang would have to pay Zhang’s attorneys’ fees , Plaintiffs withdrew
nearly $1.5 million of equity from their California properties(Pomerantz Dec. ¶¶ 5
Plaintiffs withdrew thisequity via two cash loans from a bank located in the
Republic of Seychelles, a country off the coast of Africa. ¶¶ 6
Although Plaintiffs obtained these loans inNovember 2018, the y were not
recorded until January 14, 2019i.e , five days after the filing of the Notice of Entry of Judgment
in favor of Defendants’ Summary Judgment Motion. This is highly unusual, as loans on real
property are generally recorded shortly after the loans are made. ( ¶ 12
Plaintiffs obtained another loan on the San Ramon House in April 2017 for
ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330
DISCOVERY
The entire balance is still outstanding ; this means that Plaintiffs have taken $1,568,000
of equity from the SanRamon House alone over the past two years.
Wang has admitted under oath that he is willing to engage in improper banking
transactions, i.e. he provided false documents and information to the lender on the San Ramon
House for the purpose of obtaining the loan on this property. ¶ 14
This undisputed evidence as well as credible evidence that Wang made an admissible
admission against interest that he moved assets offshore for thevery purpose of making himself
judgment proof in the UnitedStates ( id. more than e stablish a serious concern of
potentially improper conduct justifying limited discovery on these issues.Even if Plaintiffs’
assertion that these undisputed facts are “as consistent with legal and permissible conduct as the
inferences Defendants propose” (Opp. at 2) ere correct (it is not), that would mean there is a
fifty percent chancethat Plaintiffs engaged in improper and illegal conduct. Such odds provide
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ample basis for this Court to grant the request for limiteddiscovery on these issues.
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TTO RNEY S AT
Plaintiffs’ Conclusory Assertion that There Is Sufficient Equity in Their
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California Real Estate Properties to Cover Any Judgment for Attorneys’ Fees
Is Not Supported by Admissible Evidence.
Based on conclusory and inadmissible statements in their attorney’s declaration and
tortured arithmeticbased on hypothetical assumptions not grounded in any facts or evidence
before this Court Plaintiffs argue that, even though they recently reduced the equity in their
California properties by nearly $1.5 million, these properties nonetheless retain sufficient equity
to cover any judgment for attorneys’ fees. This argument fails for several reasons.
First, it ignores the undisputed fact thattwo loans encumber the San Ramon House oth
made in the last two years,in the total amount of Pomerantz Dec. ¶ 9.
Second, compounding this error, the Opposition’s conjecture as to how much equity
remains in this property is based solely on an admitted “assumption,” without any factual support,
that the mortgage on the San Ramon House is “a typical 30 year mortgage of about 80% the 2009
While the Declaration of Jack Russo in Opposition to Defendant’s Ex Parte Application to
Reopen Discoverypurports to estimate the unencumbered equity in Plaintiffs’ two real properties
in California ( ), that estimation wholly ignores the undisputed fact that the San Ramon House
has a total encumbrance of Pomerantz Dec. ¶ 9.
ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330
DISCOVERY
purchase price, paid down 33% over the past ten years.” Opp. at 2. But Plaintiffs concede they
have at least two loanson this property ; Plaintiffs obviously know the actualterms of the se loans
and theircounsel stated he would confer with Plaintiffs before submi tting the Opposition
Pomerantz Dec., Ex. 4. Despite these undisputed facts, the Opposition purports to calculate the
equity in the San Ramon House based entirely on hypothetical loan terms rather than the actual
terms of the loan . Once again, Plaintiffs’ silence is deafening; the only logical inference is that
they have something to hide.
Thirdthe Opposition relies on inadmissible testimony from their counsel as to the current
value of these two properties. Plaintiffs’ counsel’s opinion as to current market value of these
properties, based solely on so called “Zillow reports,” should be afforded no weight. Searles
Valley Minerals Operations, Inc. v. State Bd. of Equalization, 160 Cal. App. 4th 514, 519(2008)
(courts may take judicial notice of the existence of a website, but not of its factual content) see
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Zhang’s Objections to Evidence Submitted by Plaintiffs in Opposition to Motion to Reopen
ES T
TTO RNEY S AT
Discovery
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Fourth, even if counsel’s unsupported opinion that “there is unencumbered equity of at
least several hundreds of thousands of dollars” in these properties Opp. at 2; Russo Dec. ¶5)
were afforded any weight (it should not there is no reasonable basis to assume that the Court
will reduce Zhang’s request for attorneys’ fees substantially, much less to the absurdly low level
suggested by Plaintiffs. This is particularly true given that (as discussed in detail in Zhang’s
separate motion for fees and costs) Plaintiffs’ own litigation tactics forced Zhang to incur those
fees
In sum, Plaintiffs’ withdrawal of nearly $1.5 million of cash from their California
properties shortly after they learned that their claims would be dismissed creates a cloud of
uncertainty as to their motives for this withdrawal and the Opposition posits no facts (as opposed
to sheer conjecture) that might lift this cloud. Plaintiffs’ failure to provide actualinformation
regarding the status of their California properties more than justifies the concerns underpinning
hang’s request for limited discovery into this issue.
ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330
DISCOVERY
CONCLUSION
For these reasons, Defendant Zhang respectfully requests that this Court grant hermotion
to reopen discovery and order Wang to respond to Zhang’s limited requests for deposition and
production.Further, because Zhangbrought this motion in the interest of judicial efficiency after
unsuccessfully attempting to reach an agreement with Plaintiffsregarding this discovery and
because she has shown substantial justification for this request Zhang respectfully submits that
she should not be sanctionedin the event the Court does not grant her motion
Dated May 2, 2019 FENWICK & WEST LLP
/s/ Jay Pomerantz
Jay Pomerantz
LLP
Attorneys for Defendant
Nan Zhang
ES T
TTO RNEY S AT
ENWICK
ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330
DISCOVERY
Preview
JAY L. POMERANTZ (CSB No. 209869) jpomerantz@fenwick.com WILLIAM BRENC (CSB No. 318544) wbrenc@fenwick.com FENWICK & WEST LLP Silicon Valley Center 801 California Street Mountain View, CA 94041 Telephone: 650.988.8500 Facsimile: 650.938.5200 Attorneys for Defendant NAN ZHANG SUPERIOR COURT OF THE STATEOF CALIFORNIA COUNTY OF SANTA CLARA YING (CINDY) XIONG and YUNLONG Lead Case No.: 16cv292330 (MARK) WANG, [Consolidated with 17cv307462] LLP Plaintiffs REPLY MEMORANDUM IN SUPPORT OF DEFENDANT NAN ES T TTO RNEY S AT ZHANG’S MOTION TO REOPEN DISCOVERY ENWICK PINGYI YAN, an individual; NAN ZHANG, an individual; MICROPOINT BIOSCIENCE, INC., Date: May 14, 2019 a California corporation, SHENZHEN Time: 9:00 a.m. MICROPOINT BIOSCIENCE, INC., a China Dept: 9 corporation; and DOES 1 through 10, inclusive, Judge: Mary E. Arand Date Action Filed: March 4, 2016 Defendants AND CONSOLIDATED ACTION. ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330 DISCOVERY INTRODUCTION Zhang’s Motion established that there is a credible and serious concern that Plaintiffs recent transfer of nearly $1.5 million offshore may have been done to avoid Wang’s obligations to pay Zhang’s attorneys’ fees. The Motion further established thatthe Court may grant limited and narrowly tailored post judgment discovery under the Civil Discover Act where, as here, “it may be needed.” In re Marriage of Boblitt, 233 Cal. App. 4th 1004, 1024 (2014); Opening Br. at In response, Plaintiffs concede itheir Opposition to Defendant’s Ex ParteApplication to Reopen Discovery (“Opposition” or “Opp.”)that they used an offshore lender to remove nearly $1.5 million in equity from their two California real estate propertiesOpp. at 2 3 (admitting to the two loans at issue Moreover, it is undisputed that these transactions occurred after it became clear Wang was obligated to pay Zhang’s attorneys’ fees in this actionId. Nonetheless, LLP Plaintiffs have arguedthat these loans are of no consequence because Plaintiffs are free to do ES T TTO RNEY S AT with their real estate whatever they wish But this assertion flies in the f ace of the VTA, ENWICK which prohibits encumbrance for the purpose of avoiding a creditor’s claim, “ hether or not the [creditor’s] right is reduced to judgment. . . .” Cal. Civ. Code § (b)(emphasis added) Oiye v. Fox, 211 Cal. App. 4th 1036, 1057 (2012).generallyCal Civ. Code § 3439 et seq. Because the Opposition fails to provide any legal or factual basis to deny Zhang’s motion, the Court should reopen discovery on a limited basis. ARGUMENT Zhang’s Opening Brief Established hat he Court May Grant Leave to Seek Limited Post udgment Discovery. The Opposition Cites No Authority Suggesting that Such Discovery Is Not Permitted. The pening rief established thata court may authorize post judgmentdiscovery pursuant to California Code of Civil Procedure section 2024.050. ening Br. at 5. Plaintiffs not dispute that the Court has the discretion to permit such discovery. Instead, theironly response The defined terms in the Opening Brief are used herein. Reply eclaration of Jay L. Pomerantzin Support of Zhang’s Motion to Reopen Discovery (“Reply Dec.”) (emphasis added) see also Opp. at 2 (arguing there is no basis to conclude that “anything was done [by Plaintiffs, in connection with these loans] that was wrong”). ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330 DISCOVERY is a sequitur they argue that Zhang has not been diligent in seeking post judgment discovery that is only available to judgment creditors. Opp. at 1 (citing Cal. Civ. Proc. Code §§ 708.010(a), 708.030(a), 708.110(a), and 708.120). However, i t is precisely because Zhang cannot yet avail herself of these discovery mechanism that she has asked the Court for limited discovery pursuant to section2024.050(a). See Opening Br. at 5 (citing n re Marriage of Boblitt, 233 Cal. App. 4th 1004, 1024 (2014) . The Opposition never even mentions Boblitt, much less argues why it might not apply. Plaintiffs silencespeaks volumes they ignore Boblittbecause it is controlling; it held that where, as here,the Civil Discovery Actdoes not automatically permit discovery, post judgment discovery should be granted pursuant to CCP 2024.050(a) to ensure that parties are not left “without any access to discovery on post judgment matters where it ma be needed. . . .” 233 Cal. App. 4th at 1024. The Opposition Never Contests the Numerous Undisputed Facts Creating a LLP Serious and Pressing Concern that Plaintiffs May Have Engaged in UVTA ES T Violations. TTO RNEY S AT Zhang’s request for limited discovery is based on undisputed factscreating a serious ENWICK concern that Plaintiffs may have moved nearly $1.5 million of their assets in the United States offshore in violation of the UVTA. While the Opposition argues in a conclusory manner that “there is no emergency and no harm” and no reason to believe “anything was done that was wrong” (Opp. at 1, 2),the se bald assertions ignore the following ndisputedfacts In the fall of 2018, s after it was clear that the Court would dismiss all of Plaintiffs’ claimsand that Wang would have to pay Zhang’s attorneys’ fees , Plaintiffs withdrew nearly $1.5 million of equity from their California properties(Pomerantz Dec. ¶¶ 5 Plaintiffs withdrew thisequity via two cash loans from a bank located in the Republic of Seychelles, a country off the coast of Africa. ¶¶ 6 Although Plaintiffs obtained these loans inNovember 2018, the y were not recorded until January 14, 2019i.e , five days after the filing of the Notice of Entry of Judgment in favor of Defendants’ Summary Judgment Motion. This is highly unusual, as loans on real property are generally recorded shortly after the loans are made. ( ¶ 12 Plaintiffs obtained another loan on the San Ramon House in April 2017 for ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330 DISCOVERY The entire balance is still outstanding ; this means that Plaintiffs have taken $1,568,000 of equity from the SanRamon House alone over the past two years. Wang has admitted under oath that he is willing to engage in improper banking transactions, i.e. he provided false documents and information to the lender on the San Ramon House for the purpose of obtaining the loan on this property. ¶ 14 This undisputed evidence as well as credible evidence that Wang made an admissible admission against interest that he moved assets offshore for thevery purpose of making himself judgment proof in the UnitedStates ( id. more than e stablish a serious concern of potentially improper conduct justifying limited discovery on these issues.Even if Plaintiffs’ assertion that these undisputed facts are “as consistent with legal and permissible conduct as the inferences Defendants propose” (Opp. at 2) ere correct (it is not), that would mean there is a fifty percent chancethat Plaintiffs engaged in improper and illegal conduct. Such odds provide LLP ample basis for this Court to grant the request for limiteddiscovery on these issues. ES T TTO RNEY S AT Plaintiffs’ Conclusory Assertion that There Is Sufficient Equity in Their ENWICK California Real Estate Properties to Cover Any Judgment for Attorneys’ Fees Is Not Supported by Admissible Evidence. Based on conclusory and inadmissible statements in their attorney’s declaration and tortured arithmeticbased on hypothetical assumptions not grounded in any facts or evidence before this Court Plaintiffs argue that, even though they recently reduced the equity in their California properties by nearly $1.5 million, these properties nonetheless retain sufficient equity to cover any judgment for attorneys’ fees. This argument fails for several reasons. First, it ignores the undisputed fact thattwo loans encumber the San Ramon House oth made in the last two years,in the total amount of Pomerantz Dec. ¶ 9. Second, compounding this error, the Opposition’s conjecture as to how much equity remains in this property is based solely on an admitted “assumption,” without any factual support, that the mortgage on the San Ramon House is “a typical 30 year mortgage of about 80% the 2009 While the Declaration of Jack Russo in Opposition to Defendant’s Ex Parte Application to Reopen Discoverypurports to estimate the unencumbered equity in Plaintiffs’ two real properties in California ( ), that estimation wholly ignores the undisputed fact that the San Ramon House has a total encumbrance of Pomerantz Dec. ¶ 9. ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330 DISCOVERY purchase price, paid down 33% over the past ten years.” Opp. at 2. But Plaintiffs concede they have at least two loanson this property ; Plaintiffs obviously know the actualterms of the se loans and theircounsel stated he would confer with Plaintiffs before submi tting the Opposition Pomerantz Dec., Ex. 4. Despite these undisputed facts, the Opposition purports to calculate the equity in the San Ramon House based entirely on hypothetical loan terms rather than the actual terms of the loan . Once again, Plaintiffs’ silence is deafening; the only logical inference is that they have something to hide. Thirdthe Opposition relies on inadmissible testimony from their counsel as to the current value of these two properties. Plaintiffs’ counsel’s opinion as to current market value of these properties, based solely on so called “Zillow reports,” should be afforded no weight. Searles Valley Minerals Operations, Inc. v. State Bd. of Equalization, 160 Cal. App. 4th 514, 519(2008) (courts may take judicial notice of the existence of a website, but not of its factual content) see LLP Zhang’s Objections to Evidence Submitted by Plaintiffs in Opposition to Motion to Reopen ES T TTO RNEY S AT Discovery ENWICK Fourth, even if counsel’s unsupported opinion that “there is unencumbered equity of at least several hundreds of thousands of dollars” in these properties Opp. at 2; Russo Dec. ¶5) were afforded any weight (it should not there is no reasonable basis to assume that the Court will reduce Zhang’s request for attorneys’ fees substantially, much less to the absurdly low level suggested by Plaintiffs. This is particularly true given that (as discussed in detail in Zhang’s separate motion for fees and costs) Plaintiffs’ own litigation tactics forced Zhang to incur those fees In sum, Plaintiffs’ withdrawal of nearly $1.5 million of cash from their California properties shortly after they learned that their claims would be dismissed creates a cloud of uncertainty as to their motives for this withdrawal and the Opposition posits no facts (as opposed to sheer conjecture) that might lift this cloud. Plaintiffs’ failure to provide actualinformation regarding the status of their California properties more than justifies the concerns underpinning hang’s request for limited discovery into this issue. ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330 DISCOVERY CONCLUSION For these reasons, Defendant Zhang respectfully requests that this Court grant hermotion to reopen discovery and order Wang to respond to Zhang’s limited requests for deposition and production.Further, because Zhangbrought this motion in the interest of judicial efficiency after unsuccessfully attempting to reach an agreement with Plaintiffsregarding this discovery and because she has shown substantial justification for this request Zhang respectfully submits that she should not be sanctionedin the event the Court does not grant her motion Dated May 2, 2019 FENWICK & WEST LLP /s/ Jay Pomerantz Jay Pomerantz LLP Attorneys for Defendant Nan Zhang ES T TTO RNEY S AT ENWICK ZHANG'S REPLY ISO MOTION TO REOPEN CASE NO.: 16CV292330 DISCOVERY