Judge: Christian R. Gullon, Case: 21PSCV00970, Date: 2023-06-21 Tentative Ruling

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Case Number: 21PSCV00970    Hearing Date: June 21, 2023    Dept: O

Tentative Ruling

Counsel Rutan & Tucker, LLP’s MOTION TO BE RELIEVED AS COUNSEL is GRANTED, effective upon [see below].

Background

This is a shareholder derivative action. Plaintiff Carrien Qian He (“Plaintiff”) alleges as follows: On or about October 11, 2016, Plaintiff, Defendant Jay Min Chen (“Defendant” or “Jay”), and Hiu Kwong Hung (“Hung”) jointly opened, owned, and operated the Restaurant in which (1) Plaintiff would own 50%, Jay would own 42%, and Hung would own 8% and (2) they agreed to split the profits of the Restaurant proportionally to their respective ownership percentages. Plaintiff, Jay, and Hung (collectively, “Franchisees”) entered into the Golden Corral Franchise Agreement (the “Franchise Agreement”). The Franchisees incorporated Globalinks Corp. for the purpose of running and operating the Restaurant at the Ontario location according to the Franchise Agreement. Shortly after the Restaurant started, Plaintiff discovered Jay was interfering with business operations. According to Plaintiff, Jay has a long history of documented incidents (i.e., January 1, 2018, and to the present) of interfering with the Restaurant’s business operations, trespassing at the Restaurant, creating a hostile work environment, and threatening violence. Consequently, on February 20, 2019, Plaintiff filed a civil action against Jay entitled Carrien Qian He v. Jay Min Chen, et al. at the Superior Court of the State of California, County of Los Angeles, East District, Case No. 19PSCV00181 (“Civil Action”).[1] The Civil Action contained 11 causes that included: conversion, unauthorized transfer of corporate assets, breach of fiduciary duty, embezzlement, fraud and concealment, negligent misrepresentation and concealment, unjust enrichment, removal of a director, accounting, declaratory relief, violation of Business & Professions Code § 17200. Plaintiff and Jay settled their disputes and entered into a Shareholder Agreement dated January 20, 2021. However, Jay’s conduct has resumed by way of interfering with the Restaurant’s business operations, trespassing at the Restaurant, creating a hostile work environment, and threatening violence.

On December 23, 2021, Plaintiff filed a complaint against Defendant Jay Min Chen, Golden Globalinks Corp., and Does 1 through 30 for:

            1. Intentional Interference With Economic Relations,

            2. Negligent Interference With Economic Relations,

            3. Trespass,

            4. Temporary Restraining Order; Preliminary and Permanent Injunction,

            5. Petition for Appointment of Provisional Director (Corp. Code § 308)

On December 23, 2021, Plaintiff filed a ‘Notice of Related Case’ identifying the related case of Jay Min Chen v. Carrien Qian He, et al. (Case No.: 21PSCV00970) which was filed on

November 23, 2021.

On April 29, 2022, Plaintiff filed its First Amended Complaint (“FAC”).

On May 12, 2023, the court selected a third board member.

On May 22, 2023, Defense Counsel for Golden Globalinks Corp. filed the instant motion.

Discussion

Counsel seeks to be relieved as counsel for nominal defendant Golden Globalinks Corp. because “there has been a significant breakdown of attorney-client relationship and counsel [is] communicating with one or more client representative to the point that Rutan & Tucker, LLP can no longer adequately represent the client.” (Motion p. 1.) This is likely due to the fact that Golden Globalinks is a nominal defendant as to derivate claims alleged by both of the two primary owners, Carrien He and Jay Chen. Moreover, as for any prejudice to the parties, Counsel explains that Golden Globalinks has started a process for retaining new counsel for the corporation and that both Carrien He and Jay Chen are personally represented by separate personal counsel of record in this action. Furthermore, the motions in the case have generally been between Carrien and Jay, such that immediate retention of counsel for Golden Globallinks corporation is not of exigent concern. Lastly, to the extent there is prejudice unknown to the court, no opposition been filed.

Conclusion

Based on the foregoing, Counsel’s Motion to Be Relieved as Counsel is GRANTED, effective upon the filing of proof of service of this court’s order relieving Counsel, sent to Plaintiff, Defendants, and all other parties who have appeared in the case.