Judge: Christian R. Gullon, Case: 21PSCV00970, Date: 2025-03-05 Tentative Ruling

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Case Number: 21PSCV00970    Hearing Date: March 5, 2025    Dept: O

Tentative Ruling

GOLDEN GLOBALINKS CORP.’S MOTION TO DISCHARGE & DISQUALIFY ATTORNEY, KAISHENG YANG is TBD; the Board of Directors did not retain Counsel Yang (only Jay Chen did).

Background

This case arises from a business dispute between Carrien Qian He (“Carrien” or “He”) and Jay Min Chen (“Jay” or “Chen”).

On November 23, 2021, Chen filed the action against Carrien, NINGYUAN HE, and Golden Globalinks Corp (the “Corporation” or “Golden”) which is named as a nominal defendant) for:

1)         Fraud

2)         Breach Of Fiduciary Duty

3)         Removal Of Dishonest And Fraudulent Director And Officer

4)         Appointment Of Provisional Director

5)         Accounting

6)         Violation Of Corp. Code 1600, Et Seq.; and

7)         Violation Of Penal Code 496(C).

On January 25, 2024, the court held its hearing on Jay’s Chen's Ex Parte Notice and Application for (1) Temporary Restraining Order (2) Order to Show Cause Re: Preliminary Injunction (3) Ex Parte Order Granting Indemnification for the Court Appointed Third Director and Ordering a Director's Vote. The minute order provides, in relevant part, the following: “Payment for Counsel William Cumming's Fees are no longer to be satisfied by the Corporation unless Ordered by the Court. The issue of the payment of Attorney's Fees by the Corporation is to be addressed by way of a Formal Motion.”

On February 6, 2024, Jay filed a ‘Brief For Preliminary Injunction’ (“Jay’s Motion”) wherein he sought to enjoin Carrien from using company funds to pay her legal fees.

On February 15, 2024, Carrien filed an ‘Opposition To Jay Chen’s Motion To Preclude Golden Globalinks Corp. From Paying Defense Fees And Declarations Of Carrien Qian He And William R. Cumming.’

On February 21, 2024, Jay filed a ‘Reply In Support Of Preliminary Injunction Against Defendant Carrien He.’

On March 29, 2024, the Corporation filed an ‘ASSOCIATION OF COUNSEL’ indicating that the Corporation “associates Bryan Zuetel of the law firm ZUETEL LAW GROUP, APLC as counsel in the above entitled matter.”

On April 5, 2024, Carrien, for the Corporation, filed a ‘Substitution of Attorney’ indicating that the Corporation is now self-represented.

On April 12, 2024, the court held its hearing re: ‘Case Management Conference; Hearing on Ex Parte Application .; Hearing on Ex Parte Application for (1) OSC re Contempt (2) OSC re Monetary, Issue and evidentiary sanctions against defendant Carrie He; Hearing on Motion - Other Property; Status Conference Re: Board of Director's Meeting; Order to Show Cause Re: Why the Court Should Not Modify the Existing Preliminary Injunction/Why the Court Should not Allow Jay Min Chen Access; Hearing on Ex Parte Application’ which provides in relevant part that “The Ex Parte Application Temprorary restraining order; order to OSC and order granting indemnification for the court appointed third direction and ordering a director's vote filed by Jay Min Chen on is Denied…The issue of payment of Attorney's Fees by the Corporation is to be addressed by way of a Formal Motion on May 13, 2024.”

On May 10, 2024, Carrien filed a ‘MOTION REGARDING WHETHER GLOBALINKS CORP. CAN PAY CARRIEN HE’S ATTORNEY FEES AND COSTS AND DECLARATION OF WILLIAM R. CUMMING,’ which the court on denied.

On September 29, 2024, Carrien He filed a motion for leave to file a SAC; the proposed amended complaint to this motion kept the involuntary dissolution COA.

On September 30, 2024, Carrien filed a request for dismissal of the involuntary dissolution COA on the FAC. According to the POS, the request for dismissal was electronically served on 9/27/24; the court received the request on 9/30/24 at 12 AM.

That same day on 9/30/24 at 8:26 AM, the Corporation filed the instant ex-parte to reject or stay Carrien He’s request for dismissal. That same day at 1:49 PM, Jay Chen filed a joinder to the Corporation’s ex-parte.

On October 1, 2024, the court held its hearing re: Hearing on Ex Parte Application to Reject or Stay Request for Dismissal; the court ruled that “The request for dismissal submitted on 09/30/2024, will NOT BE processed by the clerk” and that the parties may file their respective opposition and reply.

On October 2, 2024 at 4:05 PM,Carrien He filed an AMENDED motion for leave to file a SAC; the proposed amendment to this motion does omit the involuntary dissolution COA.

On October 3, 2024, Jay Chen and the Corporation filed the instant ex parte to stay proceedings to allow for the buy-out. According to (one of) the Corporation’s attorneys, Kaishen Yang, a notice of shareholders meeting of Golden Globalinks Corp. was given to all shareholders of Gloden Globalinks Corp. on September 17, 2024. The shareholder meeting was scheduled for October 2, 2024, at 12:00 p.m. (Yang Decl., ¶2.) The agenda of the shareholder meeting was to determine whether to elect the company Golden Globalinks Corp. to purchase Carrien Qian He’s shares of Golden Globalinks Corp. (Yang Decl., ¶5.) Jay Chen made a motion and voted in favor of his motion to order the company Gloden Gloablinks Corp. to purchase Carrien Qian He’s outstanding share of the corporation; Junmei Li (represented by Carrien as a proxy) voted in opposition to the motion; and Carrien Qian He did not vote due to that her votes were excluded under statutory provisions Cal. Corp. Code 2000(a) as the moving party of the involuntary dissolution proceeding.

On October 4, 2024, the court held a hearing re: Ex Parte Application (Joint) - for a Stay and Order of Special Proceeding Pursuant to California Corporations Code 2000 and continued the hearing to 10/29/24. The court informed the parties it did not need supplemental briefing as the relevant corporations code.

On October 11, 2024, Carrien filed her ‘SUPPLEMENTAL OPPOSITION TO GOLDEN GLOBALINKS CORP’S. AND JAY CHEN’S EX PARTE APPLICATION TO REQUEST A STAY OF THE ENTIRE ACTION.’

On October 16, 2024, the corporate Defendant and Jay filed separate oppositions to Carrien’s motion to leave to file a SAC.

On October 18, 2024, the corporate defendant filed its ‘REPLY TO DEFENDANT CARRIEN QIAN HE’S OPPOSITION TO EX PARTE APPLICATION TO STAY OR REJECT CARRIEN QIAN HE’S REQUEST FOR DISMISSAL AS TO INVOLUNTARY DISSOLUTION.’

On October 22, 2024, Carrien filed her respective replies to the oppositions to her motion for leave to file a SAC.

On October 28, 2024, Carrien He filed a SUPPLEMENTAL RESPONSE TO GOLDEN GLOBALINKS CORP’S. REPLY TO THE EX PARTE APPLICATION TO SAY OR REJECT CARRIEN QIAN HE’S REQUEST FOR DISMISSAL. In this filing, she stated that she agrees to dismiss the involuntary dissolution COA with prejudice. (p. 5.) That same day, the corporation’s other counsel, Counsel Bryan Zuetel, filed an OBJECTION AND REQUEST TO STRIKE KAISHENG YANG’S IMPROPER FILINGS FOR GOLDEN GLOBALINKS CORP. indicating that as a nominal defendant (i.e., neutral party), Counsel Yang’s filings on behalf of the corporation are improper. That same day, the court held its hearing on Carrien He’s Ex Parte Application to Request an Opportunity to Submit Additional Briefing, which the court denied as it would allow the parties to make any and all arguments they sought fit during the 10/29/24 hearing.

On October 29, 2024, the court held its hearing on the instant ex-partes and the motion for leave to file a SAC. No tentative ruling was published. Following the hearing and the lengthy oral argument, the court took the matters under submission.

On November 15, 2024, the court issued its final ruling on the above and denied all three (denied the two ex-partes and denied the motion to file a SAC).

On December 2, 2024, Carrien He filed a ‘MOTION FOR RECONSIDERATION OF CARRIEN HE’S MOTION TO FILE A SECOND AMENDED COMPLAINT AND DECLARATION OF WILLIAM R. CUMMING.’ (The hearing on that motion is set for 4/4/25.)

On January 3, 2025, Jay Chen filed his opposition to the motion for reconsideration.

On January 9, 2025, Carrien He filed her reply.

On January 14, 2025, the Corporation filed the instant motion.

On January 27, 2025, Carrien he filed a NOTICE OF RELATED CASE, case 25PSCV00153.

On February 21, 2025, the Corporation filed its opposition to the instant motion (filed by Counsel Kaisheng Yang).[1]

On February 26, 2025, the Corporation filed its reply.

Discussion

Nominal defendant, Golden Globalinks Corp. brings this Motion to Discharge Kaisheng Yang under Code of Civil Procedure section 284 and to Disqualify Kaisheng Yang under Code of Civil Procedure section 128(a)(5).

According to the motion, “[a] client has “both the power and the right at any time to discharge his attorney with or without cause.” (Motion p. 5, quoting Fracasse v. Brent (1972) 6 Cal.3d 784, 790; see also Motion p. 6, Champion v. Superior Court (1988) 201 Cal.App.3d 777, 783 [client’s right and power to discharge an attorney “is the client's right to retain counsel of choice.”].) With that, a lawyer “shall withdraw from the representation of a client if … the client discharges the lawyer.” (Motion p. 6, citing Cal. Rules of Prof. Conduct, Rule 1.16(a)) Furthermore, the Corporation seemingly argues it is a client because in derivative actions, the corporation, although named as a nominal defendant, is effectively a plaintiff seeking recovery against the directors or officers accused of wrongdoing. (Motion p. 7:9-12.) This creates an inherent conflict of interest because the corporation's interests are adverse to those of the accused directors or officers such that dual representation of a corporation and directors in a shareholder derivative suit is forbidden. (Motion p. 7, citing Beachcomber Management Crystal Cove, LLC v. Superior Court (2017) 13 Cal.App.5th 1105; Gong v. RFG Oil, Inc. (2008) 166 Cal.App.4th 209; Forrest v. Baeza (1997) 58 Cal.App.4th 65, 74.) Effectively, the Corporation, as a client, seeks to exercise its absolute power and right to sever the alleged relationship with Kaisheng Yang and to have Mr. Yang discharged from the purported representation of the corporation in this matter.” (Motion p. 6:9-11.)

The court isn’t entirely persuaded by Counsel Zuetel’s argument for a few reasons.

First, the motion appears somewhat ironic, which Counsel Yang suggests in opposition. While the motion is brought by the Corporation, i.e., what the Corporation wants, it is what Carrien He wants. On November 13, 2024, Carrien He emailed Counsel Yang stating that she requests that Counsel Yang resign. (See Zuetel Decl., Ex. 2, p. 8 of 10 of PDF.) Thus, it appears Carrien He has directed a client (i.e., the Company) to file a motion despite the Company and Carrien He having a conflict of interest. Put differently, the very thing that the Company and Carrien He are accusing Jay Chen of doing–i.e., having corporate counsel advocate on behalf of a client–is exactly what they (Corporation and Carrien He) are doing.

Second, the Corporation/Zuetel/Carrien argue that “while purporting to represent Golden Globalinks Corp., Mr. Yang has advocated for Jay Min Chen and taken positions against Golden Globalinks Corp. and in support of Mr. Chen.” (Motion p. 8:2-5.) Not necessarily. As to Counsel Yang’s opposition to Carrien He’s 10/2/24 motion for leave to file an amended complaint to assert a specific performance COA to compel Jay Chen to sell his shares for 3.5x EBITDA, that could be interpreted as “saving” the corporation because in this action, Carrien He is alleged to be committing fraud such that by “ousting” Jay Chen the Company’s corporate assets would continue to be misused. (See e.g., Complaint ¶9.) Second, Counsel Yang’s 9/30/24 ex-parte to reject the stay was arguably proper because court approval is required for the dismissal of certain claims. Third, Counsel Yang’s 10/3/24 opposition to the ex-parte to prevent the dissolution of the Company to allow for a buyout was arguably proper as without that move, the Company would no longer be in existence. In sum, Counsel Yang made certain filings to save the Company, which is a part of his duties of loyalty to the Company.

Third, the Corporation/Counsel Zuetel/Carrien He argue that Jay Chen hired the Corporation to represent him. That is based upon speculation, which is conceded as much by Counsel Zuetel. (See Zuetel Decl., ¶6 [“Mr. Yang can only be presumed to be improperly representing both Mr. Chen and the corporation….”], emphasis added.) According to Counsel Yang’s declaration, he has never entered any attorney-client relationship with Jay Chen (Yang Decl. ¶2) and he was never retained as Jay Chen’s personal counsel for any cases and any matters (Yang Decl. ¶3).

Notwithstanding, the Board of Directors did not decide to retain Counsel Yang; that decision was unilaterally made by Jay Chen in August 2024. (Zuetel Law Group, APLC was retained and substituted into this matter on July 22, 2024 to represent the nominal defendant corporation, Golden Globalinks Corp.)^[2] Counsel Yang sent Counsel Zuetel a partial copy of a Fee Agreement with the representation that he had been retained by Golden Globalinks Corp. and the purported signature of Jay Min Chen, director and shareholder for Golden Globalinks Corp, but Carrien He did not consent to the retention of Counsel Yang as co-corporate counsel. As both Carrien He and Jay Chen are board members, both of their approval is required.

Conclusion

Based on the foregoing, the motion is TBD pending clarification as to Counsel Yang’s (purported) retention.