Judge: Wesley L. Hsu, Case: 21PSCV00449, Date: 2023-04-19 Tentative Ruling

Case Number: 21PSCV00449    Hearing Date: April 19, 2023    Dept: L

Counsel for Defendant Wei Yuan Chen’s (i.e., Shulman Bastian Friedman & Bui LLP)

Motion to be Relieved as Counsel is GRANTED, effective upon the filing of the proof of

service showing service of the signed order upon the Client at the Client’s last known

address.

Background   

Plaintiff Pu Dong (“Plaintiff”) alleges as follows: Plaintiff and Defendant Weiyuan Chen aka Wei Yuan Chen (“Chen”) were longtime acquaintances, with Chen having served as Deputy General Manager of several companies owned by Plaintiff. In 2009, Chen introduced Plaintiff to Annie Zhang (“Zhang”), an associate of Defendant David Hsu (“Hsu”). Chen and Zhang told Plaintiff about an opportunity to invest in Defendant SolarMax Technology, Inc. (“SolarMax”), a company founded by Hsu, Ching Liu and Simon Yuan. Plaintiff began speaking with Hsu directly and sent Chen to Riverside to inspect SolarMax’s business and report back to him as to his observations. In or around December 2009, based largely on Chen’s report, Plaintiff agreed to purchase 6 million shares of common stock at $.60/share for $3.6 million and the right to appoint two directors to SolarMax’s board. After receiving Plaintiff’s $3.6 million, SolarMax sent Plaintiff a Subscription Agreement which stated that Plaintiff was purchasing 3 million shares for $1.8 million, payable in 4 tranches: April 30, 2010, July 31, 2010, August 31, 2010 and October 31, 2010. Upon receipt of the Subscription Agreement, Plaintiff contacted Hsu about the discrepancy regarding the number of shares and purchase price. Hsu told Plaintiff he was still purchasing 6 million shares but that the remaining 3 million shares would be held in trust by Chen and Zhang for Plaintiff’s benefit and would be retitled in Plaintiff’s name upon SolarMax’s sale, acquisition or initial public offering. Following Plaintiff’s execution of the Subscription Agreement, SolarMax issued 1.75 million shares of common stock to Chen and 1.25 shares of common stock to Zhang. Plaintiff received 3 million shares of common stock in 4 tranches. After April 2010, Zhang pressured Plaintiff to assign full legal and equitable ownership of the 1.25 million shares held in Zhang’s name to her mother as a “commission” for introducing Plaintiff to SolarMax. Plaintiff agreed to do so and executed a Share Transfer Agreement to document the assignment. Solar Max subsequently filed applications to register its securities with the SEC, but withdrew same on October 28, 2020; that day, Defendant Alberton Acquisition Corporation (“Alberton”) announced that its wholly-owned subsidiary, Alberton Merger Subsidiary, Inc., would be merged into SolarMax with SolarMax being the surviving entity. As part of the merger, SolarMax shareholders would surrender their shares in SolarMax and receive Alberton shares purportedly worth $300,000,000. The merger has not yet been consummated. Plaintiff became aware of the merger when he received a “Lockup Agreement” on February 6, 2021; shortly thereafter, Plaintiff contacted Hsu to inquire about retitling the shared held by Chen (which, by that time, had increased to 2,956,800 due to “stock distribution”) in trust for Plaintiff. Hsu did not take a definite position. Plaintiff has also sent demands to Chen and SolarMax to re-title the shares held by Chen in trust for Plaintiff, but has received no response.

On June 1, 2021, Plaintiff filed a complaint, asserting causes of action against SolarMax, Chen, Hsu, Alberton and Does 1-30 for:

1.      Breach of Oral Contract

2.      Fraud

3.      Violation of Bus. & Prof. Code §§ 17200, et seq.

4.      Conversion

5.      Breach of Fiduciary Duty

6.      Declaratory Relief

On August 13, 2021, Hsu was dismissed, without prejudice, and SolarMax was dismissed from the first-fourth causes of action only, without prejudice.

On November 10, 2021, Alberton’s default was entered.

The Final Status Conference and an Order to Show Cause Re: Default Judgment as to Alberton are set for October 3, 2023. Trial is set for October 17, 2023.

Discussion

Shulman Bastian Friedman & Bui LLP (“Firm”) seeks to be relieved as counsel of record for Chen (“Client”).

The court has discretion to allow an attorney to withdraw, and such a motion should be granted provided that there is no prejudice to the client and it does not disrupt the orderly process of

justice. (See Ramirez v. Sturdevant (1994) 21 Cal.App.4th 904, 915; People v. Prince (1968) 268 Cal.App.2d 398.)

California Rule of Court (“CRC”) Rule 3.1362 requires (1) a notice of motion and motion directed to the client (made on the Notice of Motion and Motion to Be Relieved as Counsel—Civil form (MC-051)); (2) a declaration stating in general terms and without compromising the confidentiality of the attorney-client relationship why a motion under Code of Civil Procedure § 284(2) is brought instead of filing a consent under section 284(1) (made on the Declaration in Support of Attorney's Motion to Be Relieved as Counsel—Civil form (MC-052)); (3) service of the notice of motion and motion, the declaration, and the proposed order on the client and on all other parties who have appeared in the case; and (4) a proposed order relieving counsel (prepared on the Order Granting Attorney's Motion to Be Relieved as Counsel—Civil form (MC-053)). The court may delay the effective date of the order relieving counsel until proof of service of a copy of the signed order on the client has been filed with the court.

Attorney Gary Pemberton (“Pemberton”) represents that “irreconcilable differences have arisen” between the Client and himself. He represents that, because he has been advised that Chen is not fluent in English, all of his communications with Chen during Firm’s representation of Chen in this action have been via email through Chen’s local counsel in China at email address: bingzi.lian163@163.com. He represents that the most recent communication with Chen’s local counsel was via email on July 18, 2022 and that, since that date, he has made multiple unsuccessful attempts to communicate with Chen via email through his local co-counsel. He represents that “[t]he circumstances leading to the irreconcilable differences, and the likely consequences, have been repeatedly conveyed to Mr. Chen’s local counsel over the past several months.”

Pemberton states that he has served the Client by mail at the Client’s last known address with copies of the motion papers served with this declaration and that co-Defendant SolarMax has confirmed, within the past 30 days, that the address is current, via the company stock records. Pemberton represents that, in addition to serving Client at his mailing address, the motion papers have also been emailed to Client through his local counsel.

The court determines that the requirements of Rules of Court Rule 3.1362 enumerated above

have been sufficiently met.

Accordingly, the motion is granted, effective upon the filing of the proof of service showing

service of the signed order upon the Client at the Client’s last known address.