Judge Christian R. Gullon, Case Number: 24PSCV03654, Date: 2025-06-12 Tentative Ruling

Judge: Christian R. Gullon, Case: 24PSCV03654, Date: 2025-06-12 Tentative Ruling

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The Tentative Ruling is not an invitation, nor an opportunity, to file any further documents relative to the hearing in question. No such filing will be considered by the Court in the absence of permission first obtained following ex-parte application therefore.

SHUAI DENG’s Motion to DISMISS FOR FORUM NON CONVENIENS is CONTINUED; the court continues the hearing to allow for revival. To the extent that Deng also seeks a stay to file motions to set aside defaults, that is not within the purview of this order.

This case arises from an unpaid investment. Plaintiff Haifang Yao alleges the following against Defendants SHUAI DENG aka STANLEY DENG (“Deng”): SHANG WU aka TONY WU (“Wu”); FANTASY CAR RENTAL GROUP, a California corporation (“Fantasy”), PRODIGY INVESTMENT GROUP, a California corporation (“Prodigy Investment”), and PRODIGY ASSET MANAGEMENT GROUP LLC (“Prodigy Asset”) (collectively, “entity Defendants”): In October 2018, Plaintiff paid Defendants $400,000 to facilitate a nonimmigrant visa in exchange for investing in FANTASY, PRODIGY, and PRODIGY ASSET, which DENG, FANTASY, PRODIGY, and PRODIGY ASSET communicated a promise to repay Plaintiff in three years, but Defendants have failed to do so. Plaintiff believes that Defendants Deng and Wu embezzled the money.

On October 28, 2024, Plaintiff filed suit asserting the following causes of action (COAs):

On February 25, 2025, proofs of service (POS) were filed as to the entity Defendants and Deng.

No POS has been served as to Wang, whom, according to the complaint is a resident of China. Additionally, for clarity, the motion was only filed and made on behalf of Deng; not Wu nor the entity Defendants.

This Motion is based pursuant to Code of Civil Procedure section 410.30 and 418.10.

The court turns to the recent case of Grove v. Juul Labs, Inc. (2022) 77 Cal.App.5th 1081 as it provides a synthesis of the law.

A section 410.30 motion is a proper vehicle for enforcing a forum selection clause. California favors contractual forum selection clauses so long as they are entered into freely and voluntarily, and their enforcement would not be unreasonable. Both California and federal law presume a contractual forum selection clause is valid and place the burden on the party seeking to overturn the forum selection clause. Thus, when a section 410.30 motion is based on a mandatory forum clause, arguments ‘that the previously chosen forum is unfair or inconvenient are generally rejected.’ Instead, the party opposing the motion must establish that enforcement of the clause would be unreasonable. (Id. at p. 1090, internal citations and quotations omitted.)[1]

Defendant argues that the complaint must be dismissed or, in the alternative, stayed because two written contracts provide a mandatory and exclusive forum whereby all claims arising out of or in connection with the contract must be submitted to the China Zhanjiang Court of International Arbitration (CZCIA) located in Nanjing, China.[2] (See Deng Decl., Exs. 1 [Stock

Purchase Agreement], 2 [Put Call Agreement].) Deng argues that since Plaintiff signed the contracts as the “Vice General Manager” on behalf of the Buyer, Wuiiang HongWei Advertising Co. Ltd (a Chinese company), and that since the allegations essentially merge herself with the Buyer conflating its payment and contractual obligations with her own, then Plaintiff cannot evade the mandatory forum selection clauses.

Plaintiff in opposition do not dispute much of the foregoing.[3] Plaintiff not dispute that the Stock Purchase and Put Call Agreement provide that any disputes shall be submitted to CZCIA for arbitration. Plaintiff also does not dispute that while some of Plaintiffs claims sound in tort, the claims relate to the interpretation of the agreements, arise out of them, and are connected with them while involving the same nucleus of operative facts. (Motion pp. 9-10 citing Bancomer v. Superior Court, (1996) 44 Cal.App.4th 1450, 1461.) Instead, Plaintiff’s predominant opposing argument is that as a suspended corporation, Fantasy cannot defendant itself, and it has been a suspended corporation for about four and a half years. (Plaintiff states that Exhibit 1 attached to the RJN shows that Fantasy has been suspended since December 1, 2020 (Opp. p. 2), but the court does not see such a date.) And Deng does not dispute otherwise. The law is clear on this matter: Under the California Revenue & Taxation Code, a corporation may be 'suspended" for failure to pay taxes and/or penalties or failing to file one or more tax returns. (cal. Rev. & Tax. code § 23301.) A suspended corporation may not defend itself in an action. (Reply p. 7, citing Schwartz v. Magyar House, Inc. (1959) 168 Cal.App.2d 182, 188 [“[S]uspended corporation cannot defend until it is reinstated.”].) After all, “Section 23301 was intended to persuade corporations to pay back taxes and not to preclude meritorious defenses on technical grounds.” (United States v. 2.61 Acres of Land, More or Less, Situated in Mariposa Cty., State of Cal., 791 F.2d 666, 670-671 (9th Cir. 1985) (Mariposa County).)[4]

Here, while the court notes that there has been no indication that Deng has already acted promptly by securing a complete corporate revivor nor were there attempts during the period of suspension, this court reasons that denying such a request for a request would be unreasonable namely as there is no indication that granting the request would prejudice Plaintiff, but would but only prejudice Defendant.

Based on the foregoing, the court grants a short stay to permit revival of Fantasy. To the extent that Deng also seeks a stay to file motions to set aside defaults, that is not within the purview of this order.

[1] See also Intershop Communications, AG v. Superior Court (2002) 104 Cal.App.4th 191, 199 [“Although not even a ‘mandatory’ forum selection clause can completely eliminate a court's discretion to make appropriate rulings regarding choice of forum, the modern trend is to enforce mandatory forum selection clauses unless they are unfair or unreasonable… The party's burden on a motion to enforce a mandatory forum selection clause is to demonstrate that the contractually selected forum would be unavailable or unable to accomplish substantial justice or that no rational basis exists for the choice of forum. [] Neither inconvenience nor the additional expense of litigating in the selected forum are factors to be considered.”].)

[2] Though not addressed in reply, the opposition takes issue with the contracts suggesting that they have been fabricated or otherwise been doctored. (See Opp. p. 2:24-27 [“[F]ormatting of the documents appears to be a ‘cut and paste’ job….”].) For one, Deng as an officer of Fantasy (the ‘seller’ per the agreements), would be able to authenticate the contracts. Second, Plaintiff has not attached contracts to the complaint or opposition, let alone shown that certain provisions of the contracts or contracts themselves are not what Plaintiff signed. Thus, for purposes of this

motion, the court will treat the contracts Defendant Deng has provided as the relevant contracts.

[3] Plaintiff also argues that Fantasy has waived its right to arbitration but has not cited authority that Fantasy has relinquished any right to arbitrate based upon suspended status. Plaintiff argues that the motion is untimely, but with the court’s impacted schedule, many parties are unable to schedule hearings within certain statutory time requirements. Thus, neither are reasons to deny the motion.

[4] This case was cited by Defendant Deng.