Judge Randolph M. Hammock, Case 21STCV21723 2022-10-03 Tentative Ruling

Judge: Randolph M. Hammock, Case: 21STCV21723, Date: 2022-10-03 Tentative Ruling

This is an action for breach of contract, breach of guaranty, fraud, breach of fiduciary duty, and an accounting. On June 10, 2021, plaintiff Khorgos Haokan Pictures & TV Co., Ltd. (“Plaintiff”) filed the instant action’s Complaint against defendants Tianjin Tianyishenghua Culture Communication Co., Ltd. (“TTCC”) and Yuan Hui (“Hui”).

The Complaint alleges as follows. In early 2017, Plaintiff and TTCC entered into a contract to co-produce a television series (the “Show”). Both Plaintiff and TTCC are incorporated in the People’s Republic of China (“China”). In late 2017, Plaintiff and TCCC entered into a written agreement (the “Copyright Transfer Agreement”), wherein Plaintiff agreed to transfer its rights to income derived from the Show to TCCC in exchange for a certain sum (the “Obligation”). TCCC only paid a portion of the Obligation, but it later entered into 2 written agreements with Plaintiff (the “First Supplemental Agreement” and the “Second Supplemental Agreement”) to secured extensions from Plaintiff in return for personal guaranties from TCCC’s principal, Hui. (Compl., ¶¶ 6-22, 29-49.)

TCCC was unable to pay the Obligation consistent with the agreements above and defaulted in December 2020. (Compl., ¶¶ 15-16, 62.) “Unbeknownst to Plaintiff at the time of TTCC’s default in December 2020 and Plaintiff’s communications with Hui, TTCC’s guarantor, Hui had recently sold one of her real properties located at 38982 Waterview Dr., Big Bear Lake, California (the “Big Bear Property”), for $1,663,500. Hui concealed that sale from Plaintiff, however, and falsely told Plaintiff that she had no money to pay TTCC’s debt or honor Hui’s guaranty.” (Id., ¶ 62.)

In April 2021, Hui agreed to execute and record a deed of trust against her real property located at 603 Chatham Place, La Canada Flintridge, California (the “La Canada Property”), as security for the outstanding Obligation, per the parties’ written agreements. (Id., ¶ 33.) Unbeknownst to Plaintiff, in March 2021, Hui listed the La Canada Property for sale. (Id. ¶ 34.) Thus, Hui did not actually intend to execute and record the deed of trust to the La Canada Property. (Id.)

Plaintiff has also filed an action against defendants TCCC and Hui (collectively, the “Defendants”) in China. Defendants represent that following the filing of the instant action’s Complaint, another action was filed an action against them in China by a third-party to whom Plaintiff assigned its rights to the Obligation. (Declaration of Yuan Hui (“Hui Decl.”), ¶¶ 6, 8.)

Defendants move the Court to dismiss the instant action’s Complaint or, in the alternative, stay the proceedings on the grounds of forum non-conveniens. At the hearing on the original Tentative Ruling, this court permitted the parties to submit supplemental briefing, and continued the hearing to June 1, 2022. At the June 1 hearing, Plaintiff’s counsel represented that a judgment in China was being finalized. Without objection and on the court’s own motion, the case was ordered stayed. The court then continued the hearing on the motion for forum non conveniens to this date, and ordered the parties to file supplemental reports one week prior to the hearing.

It should be noted that this Court has made no findings at this time as to whether certain defendants have made a general appearance as a result of the prior ex parte application. Likewise, this court makes no findings at this time as to whether Plaintiff’s purported service on Defendant Yuan Hui’s daughter was proper or improper.

A new CMC/TSC shall be set in this matter.

In their September 26, 2022, Reports, the parties agree that two money judgments for a total of $5.27 million have been entered in China against Defendants Tianjin Tianyishenghua Culture Communication Co., Ltd. (“TTCC”) and Yuan Hui. TTCC and Yuan Hui did not appeal those judgments, and they are now final. Chinese courts have seized approximately $40,100 of Defendants’ assets. (See Declarations of Guangdong Ren and Yuting Li.) The parties further agree that this moots the FNC motion and the stay should be lifted.

Plaintiff represents that it intends to amend the Complaint to assert a cause of action for recognition of the China judgments pursuant to California’s Uniform Foreign Country Money Judgments Recognition Act (the “UFMJRA,” Cal. Code Civ. Proc. § 1713 et seq.). Defendants agree that “Plaintiff should be allowed to file a First Amended Complaint.” (Status Brief 1: 4.)

FN 1 - Plaintiff represents that “on July 7, 2022, KHPT effected substitute service of the Summons and Complaint on Yuan Hui’s adult daughter, who was residing at the La Canada Property.” (Report 4: 15-17.) Defendant contends, however, that “this is impossible because Yuan Hi’s daughter was in the U.K. during the month of July.” (Report 1: 9-10.)

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.