Case Number: KC066749    Hearing Date: July 16, 2014    Dept: J

Re: Hong Kong Gree Electric Appliances Sales Ltd., etc. v.East West Bank, etc. (KC066749)

MOTION TO STRIKE PUNITIVE DAMAGES AND PRAYER FOR ATTORNEYS’ FEES

Moving Party: Defendant East West Bank

Respondent: Plaintiff Hong Kong Gree Electric Appliances Sales Ltd.

POS: Moving OK; Opposing served by regular mail contrary to CCP § 1005(c)

The Complaint alleges that Defendant East West Bank unlawfully seized funds that belong to Plaintiff in a direct and knowing violation of a court order. The Complaint, filed 3/26/14 asserts causes of action for:

1. Conversion
2. Avoidance and Recovery of a Fraudulent Transfer

On 4/1/14, the case was deemed related to Hong Kong Gree Electric Appliance Sales, Ltd. v. MJC Supply LLC, Case No. KC066119.

The Trial Setting Conference is set for 8/19/14.

Defendant East West Bank (“EWB”) moves to strike portions of the Complaint seeking punitive damages and prayer for attorneys’ fees.

PUNITIVE DAMAGES:

Punitive damages may be recovered in an action for conversion, but only upon a showing of malice, fraud, or oppression. (Krusi v. Bear, Stearns & Co (1983) 144 Cal.App.3d 664, 678.) In order to plead punitive damages, a plaintiff must plead allegations of fraud, malice, or oppression with sufficient particularity. (Hilliard v. AH Robbins Co. (1983) 148 Cal.App.3d 374, 392.) “Fraud” means “an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (CC § 3294(c)(3).) “Malice” means “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (CC § 3294(c)(1).) “Oppression” means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights. (CC § 3294(c)(2).)

The Complaint alleges that Gree USA Sales Ltd. (“Gree USA”) is the victim of the unlawful conversion of $28,622,320.81 (the “Funds”) by Jimmy Loh and Charley Loh (the “Lohs”) and MJC America, Inc. (“MJC America”). (Complaint ¶ 2.) Some of the Funds were deposited in accounts at EWB that were held in the names of Simon Chu and MJC America (the “EW Bank Accounts”). As soon as Plaintiff learned of the Lohs’ embezzlement, it filed suit and obtained a temporary restraining order (“TRO”) protecting most of the Funds. (Id. ¶ 4.) EWB honored that order. (Id. ¶ 5.) But when the Funds were subject to writs of attachment, EWB claimed to have a perfected security interest in the EW Bank Account and improperly seized the funds in those accounts. (Ibid.) EWB did this despite the fact that the TRO had informed EWB that the funds did not belong to the account holders and despite the fact that the funds were still subject to the TRO. (Ibid.)

EWB’s seizure of the funds was a conversion of funds that belong to Gree USA. (Id. ¶ 6.) Alternatively, EWB is a subsequent transferee of an intentional fraudulent conveyance of Gree USA’s funds carried out by the Lohs. (Ibid.)

EWB claims to have made a loan to MJC Americas (the “MJC America Loan”) that was guaranteed by the Lohs and by Simon Chu pursuant to written guarantees (the “Guarantees”) and further claims to have a duly perfected security interest in the EW Bank Account to secure the MJC America Loan and the Guarantees. (Id. ¶ 45.) According to EWB, the levy of the writs of attachment against the EW Bank Accounts constituted a default under the MJC America Loan, and the Guarantees allowed the Bank to declare the obligations due and payable and sweep the EW Bank Accounts. (Ibid.)

However, MJC America’s alleged default is irrelevant because the funds the bank seized were not the property of MJC America, the Lohs, or Simon Chu. (Id. ¶ 46.) They were being held in trust for Gree USA. (Ibid.) EWB was aware the funds had been converted and did not belong to MJC America, the Lohs, or Simon Chu because it had been served with and complied with the TRO. (Ibid.) MJC America’s alleged default is also irrelevant because the TRO was in place at the time the writs were executed and prohibited the transfer of the funds at issue. (Id. ¶ 47.) By sweeping the EW Bank Accounts, EWB knowing and intentionally converted Gree USA’s Funds to its own use. (Id. ¶ 54.)

The Complaint alleges adequate facts to support punitive damages by alleging malice, i.e., a conduct which is intended by the defendant to cause injury to the plaintiff. Specifically, the Complaint alleges that EWB knowing seized funds that belonged to Plaintiff. (Complaint ¶¶ 37-42.) Thus, motion to strike allegations of punitive damages is denied.

ATTORNEY’S FEES:

Attorney’s fees are allowable only when authorized by contract, statute, or law. (CCP § 1033.5(a)(10).)

The Complaint fails to adequately allege a contract, statute or law to support its request for attorney’s fees. Plaintiff, in opposition, represents that it does not oppose the motion and withdraws its request for attorneys’ fees. Thus, the motion to strike prayer for attorney’s fees is granted.