Judge: James C. Chalfant, Case: 22STCV34062, Date: 2023-12-14 Tentative Ruling

Case Number: 22STCV34062    Hearing Date: February 22, 2024    Dept: 85

            Defendant Kin Hui (“Kin”) moves for reconsideration of the court’s order granting Plaintiff Gang Ding (“Ding”)’s application for a right to attach order against Kin in the amount of $1,088,592.18.  Alternatively, Kin moves to vacate the order.

            The court has read and considered the moving papers, opposition, and reply, and renders the following tentative decision.

            A. Statement of the Case

            1. First Amended Complaint

            Plaintiff Ding filed the Complaint against Defendants Kin and William Chu (“Chu”) on October 24, 2022.  The operative pleading is the First Amended Complaint (“FAC”) filed on January 3, 2023, alleging seven counts of breach of contract, one count of breach of the covenant of good faith and fair dealing, and common count.  The FAC alleges in pertinent part as follows.

            On August 2, 2018, the parties entered into a Loan Agreement (“August 2018 Loan”) whereby Chu borrowed $60,000 at an annual interest rate of 6%.  Chu agreed to repay the loan in full within three years, but that term could be extended.  The loan also listed Kin as guarantor.  On August 2, 2021, the parties mutually agreed to extend the term to August 2, 2022.

            On April 9, 2019, Ding and Kin entered into a Promissory Note (“April 2019 Note”) for principal of $44,640 with the commercial loan interest rate of Shanghai Commercial Bank, Los Angeles Branch.  Kin agreed to repay the note in 12 months, and the note was not eligible for renewal or extension. 

            On May 9, 2019, Ding and Kin entered into a Promissory Note (“May 2019 Note”) for principal of $43,630 with the commercial loan interest rate of Shanghai Commercial Bank, Los Angeles Branch.  Kin agreed to repay the note in 12 months, and the note was not eligible for renewal or extension. 

            On August 8, 2019, Ding and Kin entered into a Loan Agreement (“August 2019 Loan”) whereby Chu borrowed $100,000 at an annual interest rate of 6%.  The August 2019 Loan also listed Kin as guarantor.  Chu agreed to repay the loan in full within two years, but that term could be extended.  On August 8, 2021, the parties mutually agreed to extend the term to August 8, 2022.

            On October 9, 2019, Ding and Kin entered into a Promissory Note (“October 2019 Note”) for principal of $1,000,000 plus interest, to be repaid within three years.

            Of the amounts owed, Chu and Kin have only repaid the $100,000 principal for the August 2019 Loan without interest.  Ding has sent written demands for all outstanding amounts to no avail.

            Ding seeks compensatory damages of over $2,000,000 plus interest, attorney’s fees, and costs.

            2. Cross-Complaint

            Cross-Complainants Kin, Singpoli Milpitas, LP (“Milpitas”), and Singpoli Capital Corporation (“Capital”) filed a Cross-Complaint against Cross-Defendants Ding and American BD Investment Group, LLC (“American”) and Nominal Cross-Defendant BDK Capital, LLC (“BDKC”) on February 17, 2023, alleging (1) breach of contract, (2) breach of fiduciary duty, (3) breach of the covenant of good faith and fair dealing, (4) breach of contract, and (5) reformation of contract.  The Cross-Complaint alleges in pertinent part as follows.

            In November 2014, Milpitas and American entered into a joint venture to develop and manage Landmark Tower at 600 Barber Lane, Milpitas, CA (“Landmark”).  Milpitas closed escrow and acquired Landmark on November 20, 2014, subject to a $10,500,000 seller’s carry back loan (“Seller Loan”) which was 50% of the purchase price.

            On December 18, 2014, the parties entered into a written BDKC Operating Agreement.  Per this agreement, American would inject sufficient capital to repay the Seller Loan in exchange for 50% of BDKC.  Milpitas and American would then become BDKC’s managers. 

            Per section 5.1 of the BDKC operating agreement, any important issue would require the unanimous agreement or written consent of the BDKC members.  Section 5.3 extended this requirement to any decision that would cause BDKC to incur a debt or obligation of $100,000 or more.  However, only one member’s signature would be required to enter contracts on BDKC’s behalf.  Section 5.5 imposed a fiduciary duty on every member such that no member would partake in any activity that would harm BDKC.

            On December 23, 2014, Milpitas transferred Landmark’s property to BDKC.  In February 2015, Ding borrowed money from Bank of Shanghai to use for Landmark.  Kin believed that these funds would be used only for Landmark and to infuse more capital into BDKC.  Ding instead used the Bank of Shanghai loan to purchase personal residences for himself and family.

            On March 27, 2015, Milpitas and American executed the first amendment to BDKC’s    Operating Agreement which reflected new ownership interests and defined a Majority-In-Interest as any member or group of members who in the aggregate had more than a 50% interest in BDKC.  A majority interest owner could not take any action adverse to the benefit of other BDKC members without consent of all members.

            On March 15, 2017, Milpitas and American executed the second amendment to the BDKC Operating Agreement which reduced the amount a BDKC member could pay to a third party without the other members’ consent.

            On December 17, 2018, Ding proposed to Kin a plan to reduce costs for Landmark.  The proposal would require a reduced scope and new entitlements.  In September 2020, Kin first learned that Ding unilaterally submitted and obtained approvals for new entitlements that reduced Landmark’s expected value by over 50%.  Kin would never have agreed to this.

            New complications required BDKC members to provide more equity for Landmark.  Ding’s associate Frank Lin (“Lin”) offered to Kin and Milpitas that Ding would take full responsibility over all financing matters and ensure that Landmark remained profitable after the change in plans.  In return, Kin, on Milpitas’s behalf, would abdicate control as a BDKC manager and leave Ding as sole manager.  On September 30, 2020, Kin executed a third amendment to the BDKC Operating Agreement to that effect.  This gave Ding sole authority to act on BDKC’s behalf except as limited by the BDKC Operating Agreement.  Ding has not made any reasonable progress on Landmark in the two and a half years since this amendment.

            Milpitas seeks compensatory damages from Ding and American with pre-judgment interest, constructive trust over the personal properties Ding purchased with BDKC funds, and punitive damages.  Kin and Capital both seek from American compensatory damages and pre-judgment interest.  Kin also seeks reformation of the April 9, 2019 Note and the May 9, 2019 Note to reflect that he borrowed that money on Singboli BD Media’s behalf.

            3. Course of Proceedings

            On January 3, 2023, Ding served Kin with the FAC.

            On January 10, 2023, Chu signed a Notice of Acknowledgement of Receipt of the FAC and First Amended Summons.

            On February 17, 2023, Cross-Complainants Kin, Milpitas, and Capital served Ding with the Cross-Complaint and Kin’s Answer to the FAC.

            On February 21, 2023, Chu filed and served his Answer to the FAC.

            On March 10, 2023, Kin served American and BDKC with the Cross-Complaint.

            On March 31, 2023, Ding filed and served an Answer to the Cross-Complaint.

            On April 24, 2023, American and BDKC filed an Answer to the Cross-Complaint.

            On December 14, 2023, this court granted Ding’s application for a right to attach order against Kin in the amount of $1,088,592.18.

            On December 22, 2023, Department 86 (Hon. Mitchell Beckloff) denied Kin’s ex parte application to stay enforcement of the order granting a right to attach order against him.  On January 4, 2024, this court denied a second ex parte application for such a stay.

            On January 17, 2024, this court granted Kin’s ex parte application to hear an objection to the undertaking’s amount for the right to attach order against him for $1,088,592.18.  On January 22, the court granted the motion in part by raising the undertaking to $50,000.

            B. Applicable Law

            Code of Civil Procedure section 1008(a) (“section 1008(a)”) provides for reconsideration of court orders.  Section 1008(a)’s motion to reconsider is broad in scope and allows any party affected by the order to seek reconsideration and modification, amendment or vacation of prior orders.  Relief under section 1008(a) is strictly limited; motions to reconsider must be brought within 10 days of service of written notice of the original order. 

            A motion for reconsideration constitutes the exclusive means for a party seeking modification, amendment or revocation of an order.  Morite of Calif. v. Superior Court, (1993) 19 Cal.App.4th 485, 490.  To be entitled to reconsideration, a party must show (1) new or different facts, circumstances, or law and (2) a satisfactory explanation for failing to produce such evidence earlier.  Kalivas v. Barry Controls Corp., (“Kalivas”) (1996) 49 Cal.App.4th 1152, 1160-61.  The requirement of satisfactory explanation for failing to provide the evidence earlier can only be described as a strict requirement of diligence.  Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 690.  A motion for reconsideration cannot be granted on the ground that the court misapplied the law in its initial ruling.  Gilberd v. AC Transit (1995) 32 Cal.App.4th 1494, 1500.  A mistake based on ignorance of law is not a proper basis for reconsideration.  Pazderka v. Caballeros Dimas Alang, Inc. (1998) 62 Cal.App.4th 658, 670. 

            Relief under CCP section 1008(a) is strictly limited.  A motion to reconsider must be brought within ten days of service of written notice of the original order.  Kalivas, supra, 49 Cal.App.4th at 1160. 

            C. Statement of Facts

            1. Original Evidence

            Relevant evidence from the original hearing is as follows.

            On June 30, 2017, BDKA pledged a $1,000,000 time certificate as collateral for a loan EverTrust Bank made to Kin.  Ding App. Supp. Decl.,[1] ¶4. 

            On October 9, 2019, Ding and Kin signed the October 2019 Note pursuant to which Kin borrowed $1,000,000.  Ding App. Decl., ¶19, Ex. 8.  The recitals explained that Kin had borrowed $1 million from EverTrust Bank on March 28, 2017, secured by a $1,000,000 certificate of deposit (“CD”) pledged by BDK Arcadia (“BDKA”).  Ex. 8.  BDKA had borrowed $2,500,000 from BDKC on March 28, 2017.  Ex. 8.  As of October 9, 2019, Ding had repaid $1,300,000 of BDKA’s $2,500,000 loan and $1.2 million in loan principal remained outstanding.  Ding App. Decl., ¶20, Ex. 8; Ding App. Supp. Decl. ¶6. 

            Kin promised to repay $1,000,000 of the $1.3 million outstanding loan from BDKC to BDKA, plus any accrued interest, within three years of the October 2019 Note’s effective date.  Ding App. Decl., ¶21, Ex. 8.  The parties agreed to mutually agree to an extension after the expiration of this three-year period.  Ding App. Decl., ¶21, Ex. 8.  Kin’s BDKC membership interest would serve as collateral, and this note would take priority over all other agreements for which Kin had offered his BDKC membership interest as collateral.  Ding App. Decl., ¶20, Ex. 8.  In exchange, Ding, as the lender, agreed to repay Kin’s loan to EverTrust Bank from the proceeds of liquidating the $1 million CD for Kin’s loan by October 8, 2020.  Ding App. Decl., ¶20, Ex. 8.  The October 2019 Note provided that it could only be amended with Ding’s written consent.  Ding App. Decl., ¶20, Ex. 8. 

            Beginning October 11, 2019 thereafter, Ding paid BDKC the amounts Kin owed under the loan from BDKC.  Ding App. Supp. Decl. ¶7, Ex. A.  These payments total $1,138,300, albeit commingled in checks to BDKC for unrelated expenses.  Ding App. Supp. Decl. ¶7, Ex. A.  As of the application for a right to attach order, Kin had not repaid the $1,000,000 owed to Ding under the October 2019 Note.  Ding App. Supp. Decl. ¶8. 

            On May 28, 2022, Ding’s manager Lin sent an email to Chu and Kin’s wife Ivy (“Ivy”) to confirm a list of 16 loans, including the Loans and Notes at issue in the right to attach order.  Lin App. Decl., ¶2, Ex. 9.  On June 29, 2022, Ivy asserted that only two loans, including the October 2019 Note, were past due.   Lin App. Decl., ¶10, Ex. 9. 

            On December 30, 2022, EverTrust Bank sent Ding a “Notice of Liquidation of BDK Capital LLC Certificate of Deposit Account” (“Liquidation Notice”).  Hallock App. Supp. Decl., ¶5, Ex. B.  The Liquidation Notice informed Ding that Evertrust Bank had liquidated the $1,000,000 collateral time certificate from “BDK Investment LLC” the day before.  Hallock App. Supp. Decl., ¶5, Ex. B.  The proceeds exceeded the outstanding balance on the loan EverTrust Bank made to Kin.  Hallock App. Supp. Decl., ¶5, Ex. B. 

            On July 20, 2023, Plaintiffs deposed Kin in this case.  Hallock App. Decl., ¶12, Ex. 14 (“Kin Depo.”).  Kin admitted that he borrowed $1,000,000 as reflected in the October 2019 Note to pay debts owed through different restaurants.  Kin Depo., p. 111.  Kin has not repaid it because he and Ding have a dispute as to whether the amount owed exceeds any offset.  Kin Depo., pp. 111-12.

            2. Kin’s Evidence

            a. Transaction History

            On February 5, 2020, Kin borrowed $2,000,000 from East West Bank (“EWB Loan”).  Kin Decl., ¶2, Ex. A.  An event of default under the EWB Loan included any material adverse change in Kin’s financial condition.  Kin Decl., ¶2, Ex. A. 

            On January 16, 2020, BDKA and BDKC agreed to change title of CD Account #28877108 from BDKA to BDKC.  Kin Decl., ¶5, Ex. D.  Accordingly, EverTrust Bank was directed to close this CD and transfer its $1,019,770.05 balance to Checking Account No. 2516912.  Kin Decl., ¶5, Ex. D.  Evertrust Bank then was to withdraw $1,000,000 from that account and open a new six-month CD Account #2883692 under BDKC’s name.  Kin Decl., ¶5, Ex. D.  BDKC would then pledge this CD to Kin’s “CD loan #3217012016.”  Kin Decl., ¶5, Ex. D.  BDKC’s 2020 ledger confirms that it received a $1,000,000 deposit from BDKA’s account.  Gamarnik Decl., ¶2, Ex. A.

            EverTrust Bank’s counsel Roger Yuen, Esq. (“Yuen”) made a typographical error in the Liquidation Notice.  Yuen Decl., ¶3, Ex. A.  The reference to “BDK Investment LLC” should have been to BDKC.  Yuen Decl., ¶4, Ex. A.  Yuen wrote this letter in response to a letter from Ding’s counsel Karen Hallock, Esq. (“Hallock”) seeking termination of the CD and return of the funds to BDKC.  Yuen Decl., ¶4, Ex. A.  Evertrust Bank subsequently liquidated the BDKC CD on or about December 30, 2022, and applied the proceeds to pay off the Kin loan.  Yuen Decl., ¶4.

            b. Course of Proceedings

            Kin’s counsel Kevin Gamarnik, Esq. (“Gamarnik”) reviewed Ding’s declaration in support of the application for a right to attach order.  Gamarnik Decl., ¶7.  He knew there was a “glaring hole” as to whose collateral was liquidated, but he did not think the court would interpret this to mean it was BDKA’s collateral.  Gamarnik Decl., ¶7.  Ding never affirmatively said so, and Gamarnik did not recognize that someone unfamiliar with the facts would not consider this “slight nuance” obvious.  Gamarnik Decl., ¶7.  Kin therefore did not submit any evidence showing the liquidated CD belonged to BDKC.  Gamarnik Decl., ¶7. 

            Gamarnik also did not anticipate that this court would think EverTrust Bank’s December 30, 2022 Liquidation Notice erred in saying the liquidated collateral belonged to BDKC.  Gamarnik Decl., ¶8.  He was shocked when Hallock did not clarify this mistake during the hearing, even after he invited her to do so.  Gamarnik Decl., ¶¶ 4, 8.  He therefore did not provide a declaration from Yuen, the letter’s author, before the hearing.  Gamarnik Decl., ¶8.

            On December 18, 2023, Gamarnik sent a letter to Hallock Gamarnik Decl., ¶5, Ex. B.  He asserted that this court’s decision to grant the right to attach order as to the October 2019 Note presumed the CD thereunder belonged to BDKA.  Gamarnik Decl., ¶5, Ex. B.  Gamarnik alleged Hallock knew that the liquidated collateral in fact belonged to CDKC.  Gamarnik Decl., ¶5, Ex. B.  Despite this, she refused to clarify the matter when invited to do so at the hearing.  Gamarnik Decl., ¶5, Ex. B.  She had therefore violated California Rules of Professional Conduct (“CRPC”), Rule 3.3(a)(1)(3), which prohibits an attorney from knowingly failing to correct a false statement of material fact.  Gamarnik Decl., ¶5, Ex. B.  Gamarnik asked Hallock whether Ding would agree to stay entry of the attachment order while the court decides how to respond to “this new understanding” of relevant facts.  Gamarnik Decl., ¶5, Ex. B.  Hallock never responded.  Gamarnik Decl., ¶6

            3. Ding’s Evidence

            On December 18, 2014, Milpitas and American entered into the BDKC Operating Agreement.  Ding Decl., ¶3, Ex. 1.  Per this agreement, Milpitas and American became BDKC’s managers.  Ding Decl., ¶3, Ex. 1.  Under section 5.1, any important issue requires the unanimous agreement or written consent of the BDKC members.  Ding Decl., ¶3, Ex. 1.  Section 5.5 imposes a fiduciary duty on every member, such that no member was to partake in any activity that would harm BDKC.  Ding Decl., ¶3, Ex. 1. 

            On March 27, 2015 Milpitas and American executed the first amendment to the BDKC Operating Agreement.  Ding Decl., ¶4, Ex. 2.  Section 5.7 was modified to define a member holding a majority-in-interest as any member or group of members who in the aggregate had more than a 50% interest in BDKC.  Ding Decl., ¶4, Ex. 2.  Such member(s) could not add capital, incur debt, or take any action adverse to the benefits of other BDKC members without consent of all members.  Ding Decl., ¶4, Ex. 2. 

            In October 2019, Kin asked Lin if he could borrow $1,000,000 from Ding to secure another loan from EverTrust Bank to pay back debts for his restaurant business.  Lin Jan. 2024 Decl., ¶7.  Soon after, Kin sent Lin the October 2019 Note, drafted by one of Kin’s representatives,  for Ding’s signature.  Lin Jan. 2024 Decl., ¶8.  Ding used his entity, BDKA, to loan the money to Kin for the October 2019 Noe.  Lin Jan. 2024 Decl., ¶9.  However, Ding remade the lender and holder of the October 2019 Note.  Lin Jan. 2025 Decl., ¶9.

            On September 30, 2020, Milpitas and American executed the third amendment to the BDKC Operating Agreement.  Ding Decl., ¶6, Ex. 4.  It identified Ding as the manager and gave the manager the authority to act on BDKC’s behalf.  Ding Decl., ¶6, Ex. 4.  This would include the right to assign BDKC’s claim under the October 2019 note to Ding so that he can collect the amounts past due by Kin to BDKC.  Ding Decl., ¶10.

            On July 12, 2023, Kin produced both the October 2019 Note and the transfer of the CD in response to Ding’s Request for Production of Documents.  Hallock Decl., ¶4, Ex. 1.

            4. Reply Evidence

            On December 22, 2023, during a hearing on an ex parte application to stay enforcement of this right to attach order, Department 86 asked why the transfer of the CD in the October 2019 Note would be material.  Gamarnik Supp. Decl., Ex. A.  Kin responded that the October 2019 Note required BDKA, which Ding wholly owns, to post collateral.  Gamarnik Supp. Decl., Ex. A.  BDKA instead used that CD to repay Ding’s debt to BDKC, a third of which Kin owns.  Gamarnik Supp. Decl., Ex. A.  BDKC then posted a different CD with a different CD number, but the ownership of this collateral was different from the original CD.  Gamarnik Supp. Decl., Ex. A. 

            D. Analysis

            Thes court granted an application for a right to attach order against Kin totaling $1,088,592.18.  Kin moves for reconsideration of, or alternatively to vacate, the court’s decision for the $1,000,000 portion of this order that concerns the October 2019 Note.

            1. Timeliness

            A motion to reconsider must be filed within ten days of service of written notice of the original order.  Kalivas, supra, 49 Cal.App.4th at 1160.  The court granted the right to attach order on December 14, 2023.  Kin filed the motion to reconsider on December 21, 2023, and the motion is timely.

            2. Request to Reconsider

            To be entitled to reconsideration, a party must show (1) new or different facts, circumstances, or law and (2) a satisfactory explanation for failing to produce such evidence earlier.  Kalivas, supra, 49 Cal.App.4th at 1160-61. The requirement of satisfactory explanation for failing to provide the evidence earlier can only be described as a strict requirement of diligence.  Garcia, supra, 58 Cal.App.4th at 690. 

            On October 9, 2019, Ding and Kin signed the October 2019 Note, pursuant to which Kin borrowed $1,000,000.  Ding App. Decl., ¶19, Ex. 8.  The recitals explained that Kin had borrowed $1 million from EverTrust Bank on March 28, 2017, secured by a $1 million CD pledged by BDKA.  Ex. 8.  BDKA borrowed $2,500,000 from BDKC on March 28, 2017.  Ex. 8.  As of October 9, 2019, Ding had repaid $1,300,000 of BDKA’s $2,500,000 loan and $1.2 million in loan principal remained outstanding.  Ding App. Decl., ¶20, Ex. 8; Ding App. Supp. Decl. ¶6.  Kin promised to repay $1 million of the $1.3 million outstanding loan from BDKC to BDKA, plus any accrued interest, within three years of the October 2019 Note’s effective date.  Ding App. Decl., ¶21, Ex. 8.  The parties agreed to mutually agree to an extension after the expiration of this three-year period.  Ding App. Decl., ¶21, Ex. 8.  Kin’s BDKC membership interest would serve as collateral, and this note would take priority over all other agreements for which Kin had offered his BDKC membership interest as collateral.  Ding App. Decl., ¶20, Ex. 8.  In exchange, Ding, as the lender, agreed to repay Kin’s loan to EverTrust Bank from the proceeds of liquidating the $1 million CD pledged by BDKA by October 8, 2020.  Ding App. Decl., ¶20, Ex. 8.  The October 2019 Note could only be amended with Ding’s written consent.  Ding App. Decl., ¶20, Ex. 8. 

             On December 30, 2022, EverTrust Bank sent Ding a Liquidation Notice.  Hallock App. Supp. Decl., ¶5, Ex. B.  It informed Ding that it had liquidated the $1,000,000 CD from “BDK Investment LLC” the day before.  Hallock App. Supp. Decl., ¶5, Ex. B.  The proceeds exceeded the outstanding balance on Kin’s loan from EverTrust Bank.  Hallock App. Supp. Decl., ¶5, Ex. B.

            In opposition to Ding’s application for a right to attach order, Kin argued that Ding had not liquidated BDKA’s CD collateral to repay Kin’s loan as required.  Ding App. Decl., ¶20, Ex. 8.  The new facts relied on by Kin for this motion concern whether the CD liquidated as reflected in the Liquidation Notice belonged to BDKA or BDKC.  Kin now presents evidence of a January 2020 CD transfer in which EverTrust Bank closed BDKA’s CD, transferred its $1,019,770.05 balance to BDKC’s checking account, and used $1,000,000 of that money to open a new CD that BDKC pledged to Kin’s loan.  Kin Decl., ¶5, Ex. D.  He also presents statements from the author of the Liquidation Notice that its reference to “BDK Investment LLC” was to BDKC, not BDKA.  Yuen Decl., ¶4, Ex. A. 

            Kin asserts that the facts are new insofar as he had no reason to believe the court would think the Liquidation Notice referred to BDKA instead of BDKC.  Gamarnik Decl., ¶8.  He was shocked when Hallock did not clarify otherwise during the hearing, even after he invited her to do so.  Gamarnik Decl., ¶¶ 4, 8.  He therefore did not provide a declaration from Yuen, the letter’s author, before the hearing.  Gamarnik Decl., ¶8.

Ding asserts that none of these qualify as new facts before Kin knew about them years before the hearing.  Opp. at 8.  Kin shared the CD transfer with Ding during discovery along with the October 2019 Note.  Hallock Decl., ¶4, Ex. 1. 

             Kin is correct that the court issued the right to attach with respect to the October 2019 Note based on its belief that the Liquidation Notice’s reference to BDK Investment LLC was to BDKA, not BDKC.  Kin shows that this belief was mistaken.  Kin has presented new facts that justify reconsideration and the motion to reconsider is granted.

            2. Merits

Upon reconsideration, the motion is denied on its merits.[2]  Kin’s argument is that he will prevail at trial because he and Ding agreed to swap debt in the October 2019 Note and Ding did not perform his obligation. 

Through their respective entities, Ding solely owns BDKA but Ding and Kin jointly own BDKC.  Ding controls both BDKA and BDKC.  On Oct. 8, 2019, Kin signed the October 2019 Note which was a debt swap.  The 2019 Note recited that Kin had borrowed $1 million from EverTrust Bank secured by a $1 million CD pledged by BDKA.  Ding agreed to cause EverTrust Bank to liquidate the $1 million CD to pay off Kin’s loan.  In exchange, Kin agreed to pay $1 million of a $1.2 million loan that BDKA had obtained from BDKC.  Kin argues that Ding never caused EverTrust Bank to liquidate BDKA's CD.  Instead, Ding caused a letter to be sent by BDKA and BDKC to EverTrust Bank redesignating the pledged CD from BDKA to BDKC.  Subsequently, BDKC pledged the CD for collateral for Kin's loan and that CD was liquidated.  Kin contends that none of BDKA’s funds were liquidated; it was BDKC’s CD that was liquidated.  Mot. at 1-2.

As stated by the court at the bond hearing, Kin’s theory essentially is that Ding performed his obligations under the October 2019 Note by using BDKC’s funds, not BDKA’s funds.  If true, this theory would be viable because BDKC is partly owned by Kin.  Essentially, Ding would be using money partly owned by Kin to perform his personal obligation.

The theory is not supported by the evidence, however, because Kin fails to show that there was any consideration for the transfer of the pledged CD from BDKA to BDKC.   Rather, it appears to be only a paper transfer between entities controlled by Ding.  There is no evidence that BDKA owed BDKC the money embodied by the transferred CD.  While the October 2019 Note states that BDKA borrowed $2.5 million from BDKC in 2017, it also states that Ding, on behalf of BDKA, had repaid $1.3 million of the loan, leaving $1.2 million in unpaid principal.  Hallock Decl., Ex. 1.  The October 2019 Note provides that Kin would pay $1 million of the BDKC loan plus unpaid interest and Ding would pay the rest.  Beginning October 11, 2019, Ding did pay BDKC the amounts Kin owed under the loan from BDKC.  Ding App. Supp. Decl. ¶7, Ex. A.  As a result, the only debt owed to BDKC by BDKA at the time of the January 16, 2020 transfer of the $1 million CD from BDKA to BDKC was the $1 million plus interest that Kin was required to pay.  The CD transfer did not occur to pay a debt and it still belonged to Ding (through BDKA).  As a result, Kin had no interest in the CD’s funds, which could be used for Ding’s performance of the 2019 Note.

Ding correctly points out that BDKA, BDKC, and Kin (through Milpitas) all agreed to the CD transfer from BDKA and BDKC.  Opp. at 9.  Additionally, Kin has not repaid the $1,000,000 owed to Ding under the October 2019 Note.  Ding App. Supp. Decl. ¶8.  Kin has admitted that he borrowed $1,000,000 as reflected in the October 2019 Note to pay debts owed through different restaurants.  Hallock App. Decl., ¶12, Ex. 14 (“Kin Depo.”), p. 111.  Kin contends that he has not repaid it because he and Ding have a dispute as to whether the amount owed exceeds any offset.  Kin Depo., pp. 111-12.[3]

            Because Kin has not shown that he has any beneficial interest in the CD transferred from BDKA to BDKC, he cannot dispute that Ding performed his obligations in the 2019 Note by causing the CD to be liquidated and used to pay Kin’s debt to EverTrust Bank.  Ding is entitled to Kin’s performance, and therefore attachment of $1 million for Kin’s failure to perform.  The motion to reconsider is denied on its merits.[4]