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SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
Oct-31-2012 11:29 am
Case Number: CGC-10-500934
Filing Date: Oct-31-2012 11:28
Filed by: CAROL BALISTRERI
Juke Box: 001 Image: 03823920
EX PARTE APPLICATION FOR ORDER
CATHAY BANK, A CALIFORNIA BANKING CORPORATION VS. RAYMOND
XIANG ZHANG et al
001C03823920
Instructions:
Please place this sheet on top of the document to be scanned.
deRoe
aD nA BF Ww
Chijeh Hu (SBN 241271)
Maureen McCuaig (SBN 279036)
Scott Nenni (SBN 280990)
CJH & ASSOCIATES, P.C.
1440 Broadway, Suite 1000
Oakland, CA 94612
Telephone: (510) 832-1686
Fax: (510) 251-1155
Attorney for Defendants/Cross Complainants,
RAYMOND ZHANG, et al.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO
CATHAY BANK, a California banking Case No. CGC-10-500934
Corporation
DEFENDANTS’ EX PARTE APPLICATION
Plaintiff, FOR LEAVE TO AMEND ANSWER AND
TO VERIFY ANSWER
vs.
Date: October 31, 2012
RAYMOND XIANG KAI ZHANG, et al., Time: 11:00 a.m.
Dept.: 302
Defendants.
To all parties and their attorneys of record:
Defendants RAYMOND ZHANG (“ZHANG”) et al applies for leave to amend the
answer and to verify answer.
This application is made under Code Civ. Proc.. § 473(a)(1) on the grounds that: “The
court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend
any pleading or proceeding by adding or striking out the name of any party, or by correcting a
mistake in the name of a party, or a mistake in any other respect: . . . The court may likewise, in
its discretion, after notice to the adverse party, allow, upon any terms as may be just, an
-1-
DEFENDANTS’ EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY ANSWERamendment to any pleading or proceeding in other particulars [.]”
Plaintiff has not previously applied to any judicial officer for similar relief.
This application is based on the complaint on file in this case, the attached declaration of
Maureen McCuaig, a memorandum of points and authorities, all pleadings, documents, records,
and files in this action, and such oral and documentary evidence as may be presented at the
hearing.
DATED: October 4\ » 2012 CJH & ASSOCIATES
Attorney for Defendants,
RAYMOND ZHANG, et al.
CERTIFICATION OF NOTIFICATION
1 am an attorney for Defendants in this action. In accordance with California Rules of
Court, Rule 3.1203, at approximately 9:49am on October 30, 2012, I notified opposing counsel
Kenneth Russak and Hanna Raanan by email and fax that I would be appearing ex parte on
October 31, 2012 for leave to amend to verify answer. I have attached the email, fax cover sheet
and confirmation pages to my declaration as Exhibit A. Counsel for Plaintiff responded via email
that they would not oppose Defendants request to attach a verification page. but would oppose
other substantive changes. Said email response is contained within the same email string attached
as Exhibit A.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct and that this declaration was executed in Oakland, California on
October 3}, 2012 Stas
} aureen McCuaig LZ
-2-
DEFENDANTS’ EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY ANSWER0 wm OND
Chijeh Hu (SBN 241271)
Maureen McCuaig (SBN 279036)
Scott Nenni (280990)
CJH & ASSOCIATES, P.C.
1440 Broadway, Suite 1000
Oakland, CA 94612
Telephone: (510) 832-1686
Fax: (510) 251-1155
Attorney for Defendants/Cross Complainants,
RAYMOND ZHANG, et al.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO
CATHAY BANK, a California banking Case No. CGC-10-500934
Corporation
DEFENDANT’S MEMORANDUM OF
Plaintiff, POINTS AND AUTHORITIES IN
SUPPORT OF DEFENDANT’S EX PARTE
vs. APPLICATION FOR LEAVE TO AMEND
ANSWER AND TO VERIFY ANSWER
RAYMOND XIANG KAI ZHANG, et al.,
Date: October 31, 2012
Defendants. Time: 11:00 a.m.
Dept.: 302
FACTUAL AND PROCEDURAL BACKGROUND
On June 22, 2010, Plaintiff Cathay Bank filed its Verified Complaint, commencing the
present action, in which it named Raymond Zhang individually as a defendant. Decl. of
McCuaig, §3. At the time, Defendants were represented by Michael Schinner and Quinn
Chevalier of the Schinner Law Group. Decl. of McCuaig, §4. On May 12, 2011, attorneys at
Schinner Law Group filed Defendant’s Answer. Decl. of McCuaig, 5. Defendant’s Answer was
drafted as a verified answer, but no verification was attached to the answer. Id. On September
27, 2011, Chijeh Hu, present counsel, substituted as counsel of record for Defendants. Decl. of
-1-
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S EX PARTE APPLICATION FOR LEAVE TO AMEND
TO VERIFY ANSWERn
oD em ND
McCuaig, (6. Plaintiff does not oppose this ex parte request to attach a verification page. Decl. of
McCuaig, Exh. A. However, Plaintiff may oppose the substantive changes Defendants wish to
make to paragraphs 55, and 58, striking the same phrase in each paragraph.
ARGUMENT
This Court should grant Defendant’s leave to amend to verify Defendant’s Answer.
California law provides for liberal standards in amending pleadings. CCP §473(a)(1). CCP
§473(a)(1) provides that, “The court may, in furtherance of justice, and on any terms as may be
proper, allow a party to amend any pleading or proceeding by adding or striking out the name of
any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; . . .
The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms
as may be just, an amendment to any pleading or proceeding in other particulars[.]” CCP.
§473(a)(1). Here, the Answer requires amendment to verify, as Defendants’ former counsel did
not file a verified Answer in response to Plaintiffs verified Complaint. CCP §446(a) (“When the
complaint is verified, the answer shall be verified.”).
Courts may allow amendment of a pleading at any time up to and including trial. Singh v.
Southland Stone, U.S.A., Inc. (2010) 186 Cal. App 4th 338, 354. “Any judge, at any time before
or after commencement of trial, in the furtherance of justice, and upon such terms as may be
proper, may allow the amendment of any pleading[.]” CCP §576. It is also in the interest of
justice, as it allows Defendant’s the ability to raise a proper defense. Thus, allowing amendment
of Defendant’s answer to conform to the requirements under CCP § 446 is proper.
Leave to amend should be granted liberally where no prejudice to the non-moving part
can be shows. Morgan v. Superior Court of Los Angeles County (1959) 172 Cal. App. 2d 527,
530. Denying leave to amend, in the absence of prejudice, is error and an abuse of discretion. Id.
Prejudice to an opposing party has generally been attributed to such consequences as, “delay in
trial, loss of critical evidence, or added preparation costs.” Solit v. Tokai Bank (1999) 68 Cal.
App. 4th 1435, 1448. Here, granting leave to amend will not prejudice Plaintiffs. No evidence
2.
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S EX PARTE APPLICATION FOR LEAVE TO AMEND
TO VERIFY ANSWERwill be lost by granting Defendants leave to amend. More importantly, Defendants will suffer
prejudice if leave to amend is denied, as denying leave to amend will prevent Defendants’ ability
to raise a proper defense. This risk of denying Defendants’ ability to have an adequate defense
greatly outweighs any possible inconvenience to the Plaintiffs.
Defendants only desire to attach a verification page (unopposed by Plaintiff), and to strike
the phrase “in connection with the Loan Mod 2” contained within both paragraphs 55, and 58.
No other changes are intended to be made.
CONCLUSION
For the foregoing reasons, Defendants respectfully request the Court grant Defendant
leave to amend the answer and to verify answer and deeming the attached answer with
verification as filed.
DATED: October 31 » 2012 CJH & ASSOCIATES
My Z&
Attorney for Defendants,
RAYMOND ZHANG, et al.
3-
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S EX PARTE APPLICATION FOR LEAVE TO AMEND
TO VERIFY ANSWERaN HD Ww FF WN
Chijeh Hu (SBN 241271)
Maureen McCuaig (SBN 279036)
Scott Nenni (SBN 280990)
CJH & ASSOCIATES, P.C.
1440 Broadway, Suite 1000
Oakland, CA 94612
Telephone: (510) 832-1686
Fax: (510) 251-1155
Attorney for Defendants/Cross Complainants,
RAYMOND ZHANG, et al.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO
CATHAY BANK, a California banking Case No. CGC-10-500934
Corporation
DECLARATION OF MAUREEN MCCUAIG
Plaintiff, IN SUPPORT OF DEFENDANT’S EX
PARTE APPLICATION FOR LEAVE TO
vs. AMEND ANSWER AND TO VERIFY
ANSWER
RAYMOND XIANG KAI ZHANG, et al.,
Date: October 31, 2012
Defendants. Time: 11:00 a.m.
Dept.: 302
DECLARATION OF CHIJEH HU
I, Maureen McCuaig. declare:
1. Iam an attorney at law at CIH& ASSOCIATES, counsel for for Defendants Raymond Zhang,
et al. in the above-entitled matter. | am a member in good standing of the Bar of the State of
California. I have personal knowledge of the following facts, and would competently testify
to them if called upon to do so.
2. This declaration outlines events pertaining to Defendant after Plaintiff filed the Complaint on
June 22, 2010.
3. On June 22, 2010, Plaintiff Cathay Bank filed its Verified Complaint, commencing the
present action, in which it named Raymond Zhang individually as a defendant.
-1-
DECLARATION OF CHIJEH HU IN SUPPORT OF DEFENDA)
ANS)
=X PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY
R4. At that time, Defendants were represented by Michael Schinner and Quinn Chevalier of the
Schinner Law Group.
5. On May 12, 2011, attorneys at Schinner Law Group filed Defendant’s Answer. Defendant’s
Answer was not verified.
6. On September 27, 2011, Chijeh Hu, present counsel, substituted as counsel of record for
Defendants, including Raymond Zhang individually.
7. On October 30, 2012, I notified Plaintiff's counsel Kenneth Russak and Hanna Raanan via
email and fax at 9:49am of our office’s intent to apply ex parte for leave to amend
Defendant’s answer by attaching a verification page. Plaintiff's counsel responded by saying
they would not oppose our request to attach a verification page. The email chain and fax
cover and confirmation sheets are attached hereto as Exhibit A.
I declare under penalty of perjury under the laws of the State of California that the foregoing
is true and correct.
Executed this 3 day of October 2012 at Oakland, California.
MOR
DECLARATION OF CHIJEH HU IN SUPPORT OF DEFENDANT'S EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY
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1440 BROADWAY
SUITE 1000
OAKLAND, CA 94612
(510) 832.1686
Chijeh Hu (SBN 241271)
Maureen McCuaig (SBN 279036)
Scott Nenni (SBN 280990)
CJH & ASSOCIATES, P.C.
1440 Broadway, Suite 1000
Oakland, CA 94612
Telephone: (510) 832-1686
Fax: (510) 251-1155
Attorney for Defendants/Cross Complainants,
RAYMOND ZHANG, et al.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF SAN FRANCISCO
CATHAY BANK, a California banking CASE NO: CGC- 10 - 500934
Corporation,
[PROPOSED] ORDER GRANTING
DEFENDANT’S EX PARTE APPLICATION
Plaintiff, FOR LEAVE TO AMEND ANSWER AND TO
VERIFY ANSWER
v.
Date: October 31, 2012
RAYMOND XIANG KAI ZHANG, et al.,_ | Time: 11:00am
Dept.: 302
Complaint filed: June 22, 2010
Defendants.
The ex parte application of Defendants Raymond Zhang, et al, for an order granting
Defendants leave to amend answer and to verify answer was regularly heard at the above date
and time. The Court has determined that Plaintiff filed a verified Complaint and Defendant did
not file a verified Answer. Plaintiff does not oppose Defendant’s ex parte request to amend
answer by attaching a verification page. Defendants have shown good cause to amend
paragraphs 55 and 58 of the answer by striking the same phrase in each: “in connection with the
Loan Mod 2.”
[PROPOSED] ORDER GRANTING DEFENDANT LEAVE TO AMEND TO VERIFY ANSWER.aya nw
27
ie mosowae
OAKLAND, CA 94612
(S10) 832-1608
IT IS ORDERED that Defendant be granted leave to amend and verify the Answer, and
that the attached Answer with Verification be deemed filed.
Dated:
JUDGE OF THE SUPERIOR COURT
[PROPOSED] ORDER GRANTING DEFENDANT LEAVE TO AMEND TO VERIFY ANSWER,The Schinner Law Group
10 Fax (415) 369-9053
Tel (415) 369-
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ENDORSED Rs
FILED FUE
Pt
Superior Cot of Culllornin Syperion Court 5 Colrnia
Michael G. Schinner (SBN 142363) ay an
Quinn J. Chevalier (SBN 255934) May 1? 2011 MY To
THE SCHINNER LAW GROUP
96 Jessie St. CLERK OF THE COWRERK OF Th COURT
San Francisco, CA 94105 By: ___MICHAE!. A/ BAY A caceMMICHAEL,
Tel: (415) 369-9050
Fax: (415) 369-9053
Attorneys for Defendants Raymond Zhang; Cindy Zhang; RAI KAI, LLC; XIANG KAI, LLC;
and ZHANGS, LLC
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Case No. CGC-10-500934
ANSWER TO COMPLAINT FOR:
CATHAY BANK, a California banking
corporation,
Plaintiff,
1. (cause of action dismissed)
2. SPECIFIC PERFORMANCE
ve
RAYMOND XIANG KAI ZHANG, aka
RAYMOND KAI ZHANG, aka RAYMOND GUO OE SND
ZHANG, aka XIANG KAI ZHANG, aka TRUST: APPOINTMENT OF
XIANG ZHANG, aka ZHANG XIANG, an RECEIVER: AND
individual; CINDY ZHANG, an individual; IN JUNCTIVE RELIEF
DONG YING QUI, an individual; XIANG KAI,
LLC, a California limited liability company; . wo
RAY KAI, LLC, a Galfer limited babi ity 4 3. (cause of action dismissed)
5 ZHANGS, LLC, a California limite
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
aneeecnecncecsesenectenensnatennatenenenncntemennneaten INJUNCTIVE RELIEF
RAYMOND ZHANG, an individual; CINDY . i ismi:
ZHANG, an individual ZHANGS, “TLC, a 5. (cause of action dismissed)
California limited liability company; an
KAI, LLC, a California Tite liability 6. SO TNFORGE og Wee
company, PROVISIONS OF DEED OF
Cross-Complainants, RUST Re At MENT OF
v. INJUNCTIVE RELIEF
CATHAY BANK, a California banking 7. (cause of action dismissed)
corporation; and DOES 201-230, inclusive, . co.
8. (cause of action dismissed)
Cross-Defendants.
1
ANSWER TO COMPLAINT
Case No. CGC-10-50093496 Jessie Street
San Francisco, CA 94105
Tel (415) 369-9050 Fax (415) 369-9053
The Schinner Law Group
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Defendants Raymond Zhang; Cindy Zhang; RAI 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-10-50093496 Jessie Street
San Francisco, CA 94105
Tel (415) 369-9050 Fax (415) 369-9053
The Schinner Law Group
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to the complaint as Exhibit 1.
13. For paragraph 13, 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.
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.
6. 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.
7. 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.
8. 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 each 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-10-500934. 8
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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 KAI, 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-10-500934The Schinner Law Group
96 Jessie Street
San Francisco, CA 94105
Tel (415) 369-9050 Fax (415) 369-9053
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32. For paragraph 32, an admission or denial is not required.
33. For paragraph 33, the Defendants admit that RAI KAI, LLC entered intoa
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
Defendants deny each remaining allegation of that paragraph.
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
themselves.
36. For paragraph 36, the Defendants assert that the terms of Exhibit 10 speak for
themselves.
37. For paragraph 37, the Defendants assert that the terms of Exhibit 10 speak for
themselves.
38. For paragraph 38, the Defendants assert that the terms of Exhibit 10 speak for
themselves.
39. For paragraph 39, the Defendants admit that RAI KAI, LLC executed a
promissory note in favor of the Plaintiff on or about October 2006 in the amount of $7,238,000
(the “Construction Note 2”), and that a document is attached to the complaint as Exhibit 11.
Except for these admissions, the Defendants deny each remaining allegation of that paragraph
40. For paragraph 40, the Defendants assert that the terms of Exhibit 11 speak for
themselves.
41. For paragraph 41, the Defendants assert that the terms of Exhibit 11 speak for
themselves.
42. For paragraph 42, the Defendants admit that RAI KAI, LLC executed a deed of
trust concerning the MacArthur Blvd property in favor of the Plaintiff on or about October 2009
(the “Construction DOT 2”), and that a document is attached to the complaint as Exhibit 12.
5
ANSWER TO COMPLAINT
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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 RAI KAI, LLC and the Plaintiff
19 I 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 or 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 each 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-10-50093496 Jessie Street
San Francisco, CA 94105
Tel (415) 369-9050 Fax (415) 369-9053
The Schinner Law Group
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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 japeppesction suisse 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
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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 jjeeiaiannaebiaitaliidleiatulniigbieses-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 connection 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.
8
ANSWER TO COMPLAINT
Case No. CGC-10-500934The Schinner Law Group
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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. As a 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. As a 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 Plaintiffs 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.
10 :
11} Date: May 12, 2011 THE INNER LAW GROUP
12
By:
3 ainn J. Chevalier
14
Attomeys for Defendants
15 Raymond Zhang
Cindy Zhang
16 RAI KAI, LLC, aka RAY KAI, LLC
XIANG KAI, LLC
17 ZHANGS, LLC
18
19
20
21
22
23
24
25
26
27
28 10
ANSWER TO COMPLAINT
Case No. CGC-10-500934:
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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 M 2 Zoi , | 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
CO 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 I 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: Man \U_ 2ol\
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Quinn J. Chevalier
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ANSWER TO COMPLAINT
Case No. CGC-10-500934lam a defendant in this action. I have read the foregoing answer to the complaint. The
matters stated in the answer are true of my own knowledge except those matters stated on
information and belief, and as to those matters I believe them to be true.
I declare under penalty of perjury under the laws of the State of California that the
foregoing is true and correct.
Date: October “S) _, 2012
=
Raymond Zhang
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ZHANG APPLICATION FOR LEAVE TO AMEND ANSWER TO ATTACH VERIFICATION
Preview
IO SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet Oct-31-2012 11:29 am Case Number: CGC-10-500934 Filing Date: Oct-31-2012 11:28 Filed by: CAROL BALISTRERI Juke Box: 001 Image: 03823920 EX PARTE APPLICATION FOR ORDER CATHAY BANK, A CALIFORNIA BANKING CORPORATION VS. RAYMOND XIANG ZHANG et al 001C03823920 Instructions: Please place this sheet on top of the document to be scanned. deRoe aD nA BF Ww Chijeh Hu (SBN 241271) Maureen McCuaig (SBN 279036) Scott Nenni (SBN 280990) CJH & ASSOCIATES, P.C. 1440 Broadway, Suite 1000 Oakland, CA 94612 Telephone: (510) 832-1686 Fax: (510) 251-1155 Attorney for Defendants/Cross Complainants, RAYMOND ZHANG, et al. SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO CATHAY BANK, a California banking Case No. CGC-10-500934 Corporation DEFENDANTS’ EX PARTE APPLICATION Plaintiff, FOR LEAVE TO AMEND ANSWER AND TO VERIFY ANSWER vs. Date: October 31, 2012 RAYMOND XIANG KAI ZHANG, et al., Time: 11:00 a.m. Dept.: 302 Defendants. To all parties and their attorneys of record: Defendants RAYMOND ZHANG (“ZHANG”) et al applies for leave to amend the answer and to verify answer. This application is made under Code Civ. Proc.. § 473(a)(1) on the grounds that: “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect: . . . The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an -1- DEFENDANTS’ EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY ANSWERamendment to any pleading or proceeding in other particulars [.]” Plaintiff has not previously applied to any judicial officer for similar relief. This application is based on the complaint on file in this case, the attached declaration of Maureen McCuaig, a memorandum of points and authorities, all pleadings, documents, records, and files in this action, and such oral and documentary evidence as may be presented at the hearing. DATED: October 4\ » 2012 CJH & ASSOCIATES Attorney for Defendants, RAYMOND ZHANG, et al. CERTIFICATION OF NOTIFICATION 1 am an attorney for Defendants in this action. In accordance with California Rules of Court, Rule 3.1203, at approximately 9:49am on October 30, 2012, I notified opposing counsel Kenneth Russak and Hanna Raanan by email and fax that I would be appearing ex parte on October 31, 2012 for leave to amend to verify answer. I have attached the email, fax cover sheet and confirmation pages to my declaration as Exhibit A. Counsel for Plaintiff responded via email that they would not oppose Defendants request to attach a verification page. but would oppose other substantive changes. Said email response is contained within the same email string attached as Exhibit A. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration was executed in Oakland, California on October 3}, 2012 Stas } aureen McCuaig LZ -2- DEFENDANTS’ EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY ANSWER0 wm OND Chijeh Hu (SBN 241271) Maureen McCuaig (SBN 279036) Scott Nenni (280990) CJH & ASSOCIATES, P.C. 1440 Broadway, Suite 1000 Oakland, CA 94612 Telephone: (510) 832-1686 Fax: (510) 251-1155 Attorney for Defendants/Cross Complainants, RAYMOND ZHANG, et al. SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO CATHAY BANK, a California banking Case No. CGC-10-500934 Corporation DEFENDANT’S MEMORANDUM OF Plaintiff, POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT’S EX PARTE vs. APPLICATION FOR LEAVE TO AMEND ANSWER AND TO VERIFY ANSWER RAYMOND XIANG KAI ZHANG, et al., Date: October 31, 2012 Defendants. Time: 11:00 a.m. Dept.: 302 FACTUAL AND PROCEDURAL BACKGROUND On June 22, 2010, Plaintiff Cathay Bank filed its Verified Complaint, commencing the present action, in which it named Raymond Zhang individually as a defendant. Decl. of McCuaig, §3. At the time, Defendants were represented by Michael Schinner and Quinn Chevalier of the Schinner Law Group. Decl. of McCuaig, §4. On May 12, 2011, attorneys at Schinner Law Group filed Defendant’s Answer. Decl. of McCuaig, 5. Defendant’s Answer was drafted as a verified answer, but no verification was attached to the answer. Id. On September 27, 2011, Chijeh Hu, present counsel, substituted as counsel of record for Defendants. Decl. of -1- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY ANSWERn oD em ND McCuaig, (6. Plaintiff does not oppose this ex parte request to attach a verification page. Decl. of McCuaig, Exh. A. However, Plaintiff may oppose the substantive changes Defendants wish to make to paragraphs 55, and 58, striking the same phrase in each paragraph. ARGUMENT This Court should grant Defendant’s leave to amend to verify Defendant’s Answer. California law provides for liberal standards in amending pleadings. CCP §473(a)(1). CCP §473(a)(1) provides that, “The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading or proceeding by adding or striking out the name of any party, or by correcting a mistake in the name of a party, or a mistake in any other respect; . . . The court may likewise, in its discretion, after notice to the adverse party, allow, upon any terms as may be just, an amendment to any pleading or proceeding in other particulars[.]” CCP. §473(a)(1). Here, the Answer requires amendment to verify, as Defendants’ former counsel did not file a verified Answer in response to Plaintiffs verified Complaint. CCP §446(a) (“When the complaint is verified, the answer shall be verified.”). Courts may allow amendment of a pleading at any time up to and including trial. Singh v. Southland Stone, U.S.A., Inc. (2010) 186 Cal. App 4th 338, 354. “Any judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading[.]” CCP §576. It is also in the interest of justice, as it allows Defendant’s the ability to raise a proper defense. Thus, allowing amendment of Defendant’s answer to conform to the requirements under CCP § 446 is proper. Leave to amend should be granted liberally where no prejudice to the non-moving part can be shows. Morgan v. Superior Court of Los Angeles County (1959) 172 Cal. App. 2d 527, 530. Denying leave to amend, in the absence of prejudice, is error and an abuse of discretion. Id. Prejudice to an opposing party has generally been attributed to such consequences as, “delay in trial, loss of critical evidence, or added preparation costs.” Solit v. Tokai Bank (1999) 68 Cal. App. 4th 1435, 1448. Here, granting leave to amend will not prejudice Plaintiffs. No evidence 2. MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY ANSWERwill be lost by granting Defendants leave to amend. More importantly, Defendants will suffer prejudice if leave to amend is denied, as denying leave to amend will prevent Defendants’ ability to raise a proper defense. This risk of denying Defendants’ ability to have an adequate defense greatly outweighs any possible inconvenience to the Plaintiffs. Defendants only desire to attach a verification page (unopposed by Plaintiff), and to strike the phrase “in connection with the Loan Mod 2” contained within both paragraphs 55, and 58. No other changes are intended to be made. CONCLUSION For the foregoing reasons, Defendants respectfully request the Court grant Defendant leave to amend the answer and to verify answer and deeming the attached answer with verification as filed. DATED: October 31 » 2012 CJH & ASSOCIATES My Z& Attorney for Defendants, RAYMOND ZHANG, et al. 3- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY ANSWERaN HD Ww FF WN Chijeh Hu (SBN 241271) Maureen McCuaig (SBN 279036) Scott Nenni (SBN 280990) CJH & ASSOCIATES, P.C. 1440 Broadway, Suite 1000 Oakland, CA 94612 Telephone: (510) 832-1686 Fax: (510) 251-1155 Attorney for Defendants/Cross Complainants, RAYMOND ZHANG, et al. SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF SAN FRANCISCO CATHAY BANK, a California banking Case No. CGC-10-500934 Corporation DECLARATION OF MAUREEN MCCUAIG Plaintiff, IN SUPPORT OF DEFENDANT’S EX PARTE APPLICATION FOR LEAVE TO vs. AMEND ANSWER AND TO VERIFY ANSWER RAYMOND XIANG KAI ZHANG, et al., Date: October 31, 2012 Defendants. Time: 11:00 a.m. Dept.: 302 DECLARATION OF CHIJEH HU I, Maureen McCuaig. declare: 1. Iam an attorney at law at CIH& ASSOCIATES, counsel for for Defendants Raymond Zhang, et al. in the above-entitled matter. | am a member in good standing of the Bar of the State of California. I have personal knowledge of the following facts, and would competently testify to them if called upon to do so. 2. This declaration outlines events pertaining to Defendant after Plaintiff filed the Complaint on June 22, 2010. 3. On June 22, 2010, Plaintiff Cathay Bank filed its Verified Complaint, commencing the present action, in which it named Raymond Zhang individually as a defendant. -1- DECLARATION OF CHIJEH HU IN SUPPORT OF DEFENDA) ANS) =X PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY R4. At that time, Defendants were represented by Michael Schinner and Quinn Chevalier of the Schinner Law Group. 5. On May 12, 2011, attorneys at Schinner Law Group filed Defendant’s Answer. Defendant’s Answer was not verified. 6. On September 27, 2011, Chijeh Hu, present counsel, substituted as counsel of record for Defendants, including Raymond Zhang individually. 7. On October 30, 2012, I notified Plaintiff's counsel Kenneth Russak and Hanna Raanan via email and fax at 9:49am of our office’s intent to apply ex parte for leave to amend Defendant’s answer by attaching a verification page. Plaintiff's counsel responded by saying they would not oppose our request to attach a verification page. The email chain and fax cover and confirmation sheets are attached hereto as Exhibit A. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this 3 day of October 2012 at Oakland, California. MOR DECLARATION OF CHIJEH HU IN SUPPORT OF DEFENDANT'S EX PARTE APPLICATION FOR LEAVE TO AMEND TO VERIFY ANSWEREXHIBIT A“spieBey |aissod se uoos se sxaded Buypoui nok apnoid aseeiq “way) asoddo jm am “suoneoydde eyed xe Joyjo ey} 0} Sy “JOMsUE OY} 0} STUELIPUOLE yeyjo Aue asoddo jm am — epew Bujaq jusuipueute Aluo yy si! 1eu) oun peproid ‘aBed UoNBoyLAN Buiysene Aq semsue puawe 0) uoneolidde eyed xe ayy asoddo you jm an “EWE SIM) mes ISNI | ‘ueanen, ‘ye ye ‘Bueyz puoukey “A yueg AewpeD sy sPelgns PSST "N WRAUUDY ‘SUIqoY SeLOY 4,120} UeLIA, 299 Woo"sdeyP@byenss.uwW, 701 WY ZS:TT 7102 ‘Og 4aq0;90 ‘Aepsan, sqUaS ueueey ‘g euueH uO. “uyosay, (shisqew parejarxe; Aue hued semoue 01 Surpuomuiosa. 10 Gunaysew ‘Bupowoud (z) Jo apg enuoAcy [ew1aIU] ay ‘uy paujewoo 20] ape xe] jexeped “sf Aue yeUR NOK WHOJU! 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Date: October 31, 2012 RAYMOND XIANG KAI ZHANG, et al.,_ | Time: 11:00am Dept.: 302 Complaint filed: June 22, 2010 Defendants. The ex parte application of Defendants Raymond Zhang, et al, for an order granting Defendants leave to amend answer and to verify answer was regularly heard at the above date and time. The Court has determined that Plaintiff filed a verified Complaint and Defendant did not file a verified Answer. Plaintiff does not oppose Defendant’s ex parte request to amend answer by attaching a verification page. Defendants have shown good cause to amend paragraphs 55 and 58 of the answer by striking the same phrase in each: “in connection with the Loan Mod 2.” [PROPOSED] ORDER GRANTING DEFENDANT LEAVE TO AMEND TO VERIFY ANSWER.aya nw 27 ie mosowae OAKLAND, CA 94612 (S10) 832-1608 IT IS ORDERED that Defendant be granted leave to amend and verify the Answer, and that the attached Answer with Verification be deemed filed. Dated: JUDGE OF THE SUPERIOR COURT [PROPOSED] ORDER GRANTING DEFENDANT LEAVE TO AMEND TO VERIFY ANSWER,The Schinner Law Group 10 Fax (415) 369-9053 Tel (415) 369- 0 mem TD DN BP WH °o ENDORSED Rs FILED FUE Pt Superior Cot of Culllornin Syperion Court 5 Colrnia Michael G. Schinner (SBN 142363) ay an Quinn J. Chevalier (SBN 255934) May 1? 2011 MY To THE SCHINNER LAW GROUP 96 Jessie St. CLERK OF THE COWRERK OF Th COURT San Francisco, CA 94105 By: ___MICHAE!. A/ BAY A caceMMICHAEL, Tel: (415) 369-9050 Fax: (415) 369-9053 Attorneys for Defendants Raymond Zhang; Cindy Zhang; RAI KAI, LLC; XIANG KAI, LLC; and ZHANGS, LLC SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Case No. CGC-10-500934 ANSWER TO COMPLAINT FOR: CATHAY BANK, a California banking corporation, Plaintiff, 1. (cause of action dismissed) 2. SPECIFIC PERFORMANCE ve RAYMOND XIANG KAI ZHANG, aka RAYMOND KAI ZHANG, aka RAYMOND GUO OE SND ZHANG, aka XIANG KAI ZHANG, aka TRUST: APPOINTMENT OF XIANG ZHANG, aka ZHANG XIANG, an RECEIVER: AND individual; CINDY ZHANG, an individual; IN JUNCTIVE RELIEF DONG YING QUI, an individual; XIANG KAI, LLC, a California limited liability company; . wo RAY KAI, LLC, a Galfer limited babi ity 4 3. (cause of action dismissed) 5 ZHANGS, LLC, a California limite 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 aneeecnecncecsesenectenensnatennatenenenncntemennneaten INJUNCTIVE RELIEF RAYMOND ZHANG, an individual; CINDY . i ismi: ZHANG, an individual ZHANGS, “TLC, a 5. (cause of action dismissed) California limited liability company; an KAI, LLC, a California Tite liability 6. SO TNFORGE og Wee company, PROVISIONS OF DEED OF Cross-Complainants, RUST Re At MENT OF v. INJUNCTIVE RELIEF CATHAY BANK, a California banking 7. (cause of action dismissed) corporation; and DOES 201-230, inclusive, . co. 8. (cause of action dismissed) Cross-Defendants. 1 ANSWER TO COMPLAINT Case No. CGC-10-50093496 Jessie Street San Francisco, CA 94105 Tel (415) 369-9050 Fax (415) 369-9053 The Schinner Law Group 0 Oe ND HW BF WD zs Defendants Raymond Zhang; Cindy Zhang; RAI 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-10-50093496 Jessie Street San Francisco, CA 94105 Tel (415) 369-9050 Fax (415) 369-9053 The Schinner Law Group 0 oe NY DHA FF WN NN YN NN NNN BY Be ew SB oe Se eB ee oN DAA BP wWwNH KF GOD MAIDA UN BF WNH | CO to the complaint as Exhibit 1. 13. For paragraph 13, 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. 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. 6. 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. 7. 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. 8. 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 each 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-10-500934. 8 3 iss Cae : =z Bes§ o°8 sees i228 2258 2 8S a #2 z 17 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 KAI, 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-10-500934The Schinner Law Group 96 Jessie Street San Francisco, CA 94105 Tel (415) 369-9050 Fax (415) 369-9053 - 0 Oe NDA WH F&F WN on 2S 14 22) 32. For paragraph 32, an admission or denial is not required. 33. For paragraph 33, the Defendants admit that RAI KAI, LLC entered intoa 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 Defendants deny each remaining allegation of that paragraph. 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 themselves. 36. For paragraph 36, the Defendants assert that the terms of Exhibit 10 speak for themselves. 37. For paragraph 37, the Defendants assert that the terms of Exhibit 10 speak for themselves. 38. For paragraph 38, the Defendants assert that the terms of Exhibit 10 speak for themselves. 39. For paragraph 39, the Defendants admit that RAI KAI, LLC executed a promissory note in favor of the Plaintiff on or about October 2006 in the amount of $7,238,000 (the “Construction Note 2”), and that a document is attached to the complaint as Exhibit 11. Except for these admissions, the Defendants deny each remaining allegation of that paragraph 40. For paragraph 40, the Defendants assert that the terms of Exhibit 11 speak for themselves. 41. For paragraph 41, the Defendants assert that the terms of Exhibit 11 speak for themselves. 42. For paragraph 42, the Defendants admit that RAI KAI, LLC executed a deed of trust concerning the MacArthur Blvd property in favor of the Plaintiff on or about October 2009 (the “Construction DOT 2”), and that a document is attached to the complaint as Exhibit 12. 5 ANSWER TO COMPLAINT Case No. CGC-10-500934g g i 38 0,82 EBLE 455% basso £238 2228 BrES ¢ gS A aS & ° 2 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 RAI KAI, LLC and the Plaintiff 19 I 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 or 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 each 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-10-50093496 Jessie Street San Francisco, CA 94105 Tel (415) 369-9050 Fax (415) 369-9053 The Schinner Law Group Oo eo nd HD WHA FF WN | ee —- oO Se a a ee oe NY DH PB WN 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 japeppesction suisse 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-10-500934. 8 i 3k See Sacs BQ bg 8s £533 Ages gees A ao & 3g z Co em rXI DH BF WN 10 58. For paragraph 58, the Defendants admit that the ZHANGS, LLC executed a deed of trust in favor of the Plaintiff jjeeiaiannaebiaitaliidleiatulniigbieses-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 connection 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. 8 ANSWER TO COMPLAINT Case No. CGC-10-500934The Schinner Law Group oO wm ND HW FPF WY Qa RGSS FS 25] 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. As a 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. As a 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 Plaintiffs 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. 10 : 11} Date: May 12, 2011 THE INNER LAW GROUP 12 By: 3 ainn J. Chevalier 14 Attomeys for Defendants 15 Raymond Zhang Cindy Zhang 16 RAI KAI, LLC, aka RAY KAI, LLC XIANG KAI, LLC 17 ZHANGS, LLC 18 19 20 21 22 23 24 25 26 27 28 10 ANSWER TO COMPLAINT Case No. CGC-10-500934: : 8 C8 4 z & (415) 369-9053 Tel (415) 369- 0 Oo YN DH PF WW Be Re Y Dw Bw HE SS i8| 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 M 2 Zoi , | 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 CO 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 I 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: Man \U_ 2ol\ ST Quinn J. Chevalier li ANSWER TO COMPLAINT Case No. CGC-10-500934lam a defendant in this action. I have read the foregoing answer to the complaint. The matters stated in the answer are true of my own knowledge except those matters stated on information and belief, and as to those matters I believe them to be true. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Date: October “S) _, 2012 = Raymond Zhang -l- ZHANG APPLICATION FOR LEAVE TO AMEND ANSWER TO ATTACH VERIFICATION