Case Name: Albert Jen-TA Lee v. Peng Ren Pan., et al.
Case No.: 2015-1-CV-279652

This action arises from an alleged conspiracy to defraud investors in Pascha Capital Management Limited (“Pascha Capital”). In the complaint, plaintiff Albert Jen-Ta Lee (“Plaintiff”) asserts causes of action against defendants Peng Ren Pan a.k.a. Larry Pan (“Pan”) and Qian Huang a.k.a. Elise Huang (“Huang”) (collectively, “Defendants”) for: (1) breach of contract; (2) breach of good faith and fair dealing; (3) intentional misrepresentation; (4) negligent misrepresentation; (5) fraud and deceit; (6) civil conspiracy; (7) violation of the unfair competition law (“UCL”); (8) breach of fiduciary duty; (9) negligence; (10) unjust enrichment; (11) conversion; and (12) accounting. Plaintiff alleges the following: In 2007, Defendants—husband and wife—conspired to defraud Plaintiff by soliciting him to invest and fraudulently misrepresenting facts about their qualifications, the investment, and the expected returns in 2007. (Compl., ¶¶ 8-14 & 67-72.) Also, unbeknownst to Plaintiff, Pan had secretly transferred ownership of Pascha Capital to his sister in 2007. (Id., ¶ 28.) In reliance on Defendants’ representations, Plaintiff entered into an agreement (“the Agreement”) and deposited $200,000 into an off-shore account held in Pascha Capital’s name. (Id., ¶¶ 15-18.) Defendants failed to pay any return as promised while reassuring Plaintiff and other investors that payment was forthcoming. (Id., ¶¶ 19-24.) Pan ultimately absconded to China, and Plaintiff never received his promised return on his investment or a refund. (Id., ¶¶ 25-27 & 29-30.)

Huang moves for summary judgment or, in the alternative, summary adjudication of 12 issues corresponding with each cause of action in the complaint against Plaintiff, and makes a request for judicial notice in support thereof. (See Code Civ. Proc. [“CCP”], § 437c.) Plaintiff opposes the motion. With the reply, Huang asserts objections to Plaintiff’s evidence.

As explained below, Defendant’s Motion for Summary Adjudication is GRANTED, solely as to Issue/Cause of Action No. 8 – Breach of Fiduciary Duty. The motion is DENIED on all other grounds, as to all other issues presented.

I. Judicial Notice

Huang’s request for judicial notice of court records, including the dissolution judgment (“Dissolution Judgment”), is GRANTED. (See Evid. Code, § 452, subd. (d); see also People ex rel. Lockyer v. Shamrock Foods Co. (2000) 24 Cal.4th 415, 422, fn. 2; see also see also Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1568 [a court may take judicial notice of the existence and content of each document in a court file, but cannot take judicial notice of the truth of hearsay statements or factual findings therein].)

II. Motion for Summary Judgment or, in the Alternative, Summary Adjudication

Huang moves for summary judgment of the entire action or, alternatively, summary adjudication of each cause of action in the complaint against Plaintiff based on 12 issues that correspond with Plaintiff’s twelve causes of action. Issue Nos. 1-12 are based in part on the assertion that Plaintiff cannot establish an essential element of her claims and in part on the contention that the Dissolution Judgment provides a defense to Plaintiff’s claims. Issue Nos. 3, 4, 5, 6, 9 and 11 are additionally based on Huang’s statute of limitations defense.

To the extent Huang’s motion is based on affirmative defenses, her initial burden requires her to proffer evidence to support each element of the defense. (See Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 467-468.)
The moving defendant’s initial burden in support of a motion based on an affirmative defense differs from the initial burden in support of a motion based on the plaintiff’s ability to establish an essential element of a cause action. (See Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 467-468.) Therefore, the affirmative defenses will be discussed separately from Plaintiff’s ability to establish essential elements of his claims.

A. Affirmative Defenses

A defendant moving for summary judgment may meet its initial burden to show that a cause of action has no merit by showing a complete defense to the cause of action. (See CCP, § 437c, subds. (o)(2) & (p)(2).) The initial burden on a defendant moving for summary judgment based upon the assertion of an affirmative defense requires the defendant to present evidence to show that undisputed facts support each element of the affirmative defense. (Consumer Cause, Inc. v. SmileCare, supra, 91 Cal.App.4th, at pp. 467-468.) The plaintiff is not obligated to produce any evidence in opposition unless the defendant moving for summary judgment meets its evidentiary burden. (Id., at p. 468.)

With respect to the statute of limitations defense (Issue Nos. 3-6, 9, & 11), each claim against Huang is based on a conspiracy theory of liability and Pan’s wrongful conduct. (Compl., ¶¶ 53-72, 85-89, & 96-101.) The statute of limitations for a conspiracy begins when the “last overt act” pursuant to the conspiracy has been completed. (CCP, § 338, subd. (d); Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 786.) “While a conspiracy is in existence, the statute of limitations will not begin to run until there is a cessation of the wrongful acts committed in furtherance of the conspiracy.” (Schessler v. Keck, supra, 125 Cal.App.2d, at p. 832.) Huang’s separate submits evidence showing that Pan—her alleged co-conspirator (Compl., ¶¶ 68-72)—continued to engage in wrongful acts in furtherance of the conspiracy after Plaintiff sent and received the correspondence at issue in 2011 and 2012. (Huang’s decl., ¶¶ 14-18; Huang’s Doc. Evid., Exs. 10-14.) Huang proffers no facts in her separate statement of undisputed material fact (“UMF”) or evidence to show whether or when Pan’s wrongful conduct in furtherance of the conspiracy ceased. Huang therefore has not presented evidence to show that the claims for fraud, conspiracy, negligence, or conversion accrued and that the applicable limitations periods commenced. Accordingly, Huang has not met her initial burden in support of the motion as to the statute of limitations defense with respect to the third, fourth, fifth, sixth, ninth, and eleventh causes of action raised in connection with Issue Nos. 3, 4, 5, 6, 9, and 11. (See CCP, § 437c, subd. (p)(2); see also Consumer Cause, Inc. v. SmileCare (2001) 91 Cal.App.4th 454, 467-468.)

As for the defenses of waiver and release, Huang argues that the Dissolution Judgment is a defense against each cause of action asserted against her. The affirmative defenses of waiver and release may be adjudicated by a motion for summary judgment or adjudication. (See Benedek v. PLC Santa Monica, LLC (2002) 104 Cal.App.4th 1351, 1355-1357.) A written release may exculpate a tortfeasor from future negligence or misconduct. (Id., at p. 1356.)

To be effective, a written release purporting to exculpate a tortfeasor from future negligence or misconduct must be clear, unambiguous, and explicit in expressing the intent of the subscribing parties. ([Citation].) Language that would release a party from its own tortious conduct “must be clear, explicit and comprehensible in each of its essential details. Such an agreement, read as a whole, must clearly notify the prospective releasor or indemnitor of the effect of signing the agreement.” ([Citations].)

(Bennett v. United States Cycling Federation (1987) 193 Cal.App.3d 1485, 1490.) Huang’s evidence shows that, pursuant to the Dissolution Judgement, Pan agreed to hold Huang harmless for Pascha Capital’s liabilities. (Huang’s UMF Nos. 1(iv), 2(iv), 3(ii), 4(ii), 5(ii), 6(ii), 7(ii), 8(iv), 9(iv), 10(iv0, 11(iv), & 12(iii), citing Huang’s Doc. Evid., Ex. 4 & Huang’s decl., ¶ 7.) This does not suggest that she cannot be held liable to Plaintiff. There is no evidence showing that Plaintiff is a party to the Dissolution Judgment or that she otherwise agreed to release Huang from liability. Thus, Huang has not submitted evidence to show the existence of a waiver or release by Plaintiff. Thus, Huang has not met her initial burden in support of the motion as to her affirmative defenses relating to the Dissolution Judgment in support of Issue Nos. 1-12. (See CCP, § 437c, subd. (p)(2); see also Consumer Cause, Inc. v. SmileCare, supra, 91 Cal.App.4th, at pp. 467-468.)

B. Evidence to Establish Essential Elements of the Claims

Huang asserts that Plaintiff cannot establish a necessary element of each of her twelve causes of action based on twelve corresponding issues (Issue Nos. 1-12). A defendant may meet the initial burden in support of a motion for summary judgment or adjudication by submitting evidence to show that the plaintiff cannot establish one or more essential elements of the cause of action. (CCP, § 437c, subd. (p)(2).) To show that an essential element cannot be established, the defendant must present affirmative evidence to either: (a) negate an essential element of the claim, or (b) show that the plaintiff does not possess and cannot reasonably obtain needed evidence as through admissions that he or she has discovered nothing after extensive discovery. (Guz v. Bechtel Nat’l, Inc. (2000) 24 Cal.4th 317, 334; Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854-855.)

Huang proffers sufficient evidence to negate the essential element of an act performed in furtherance of the conspiracy in support of the claim for conspiracy (Issue No. 6). (See Huang’s UMF Nos. 6(i)-(iv); see also Stueve Bros. Farms, LLC v. Berger Kahn (2013) 222 Cal.App.4th 303, 324; see also Holder v. Home Sav. & Loan Assn. of Los Angeles (1968) 267 Cal.App.2d 91, 108.) She also proffers evidence to negate the essential element of the existence of a contract in connection with the claims for breach of contract and breach of the implied covenant of good faith and fair dealing (Issue Nos. 1-2). (See Huang’s UMF Nos. 19i)-2(v); see also McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489; see also Smith v. City and County of San Francisco (1990) 225 Cal.App.3d 38, 49.) Huang’s evidence is sufficient to negate the essential element of a fraudulent statement in support of the three fraud claims and the UCL claim (Issue Nos. 3-5 & 7). (See Huang’s UMF Nos. 3(i)-5(ii) & 7(i)-(iii); see also Nelson v. Gaunt (1981) 125 Cal.App.3d 623, 635; see also Conroy v. Regents of University of Cal. (2009) 45 Cal.4th 1244, 1255; see also Gagne v. Bertran (1954) 43 Cal.2d 481, 487-488; see also Krantz v. BT Visual Images, L.L.C. (2001) 89 Cal.App.4th 164, 178.) Huang submits sufficient evidence to negate the existence of a fiduciary duty or an ordinary duty of care in connection with the claims for breach of fiduciary duty and negligence (Issue Nos. 8-9). (See Huang’s UMF Nos. 8(i)-9(v); see also Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917; see also Mosier v. Southern California Physicians Ins. Exchange (1998) 63 Cal.App.4th 1022, 1044; see also GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc. (2000) 83 Cal.App.4th 409, 416, disapproved on other grounds in Reeves v. Hanlon (2004) 33 Cal.4th 1140, 1154.) Finally, Huang’s evidence negates essential elements of the claims for unjust enrichment, conversion, and accounting (Issue Nos. 10-12). (See Huang’s UMF Nos. 10(i)-12(iv); see also Lectrodryer v. SeoulBank (2000) 77 Cal.App.4th 723, 726; see also Burlesci v. Petersen (1998) 68 Cal.App.4th 1062, 1066; see also Teselle v. McLoughlin (2009) 173 Cal.App.4th 156, 179-180.) Therefore, Huang has met her initial burden as to Issue Nos. 1-12. (See CCP, § 437c, subd. (p)(2).)

Since Huang has met her initial burden to show that Plaintiff cannot establish one or more essential elements of each cause of action, Plaintiff bears the burden in opposition to “show that a triable issue of one or more material facts exists.” (See CCP, § 437c, subd. (p)(2).) The plaintiff must proffer evidence that “allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” (Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th, at p. 850.)
Plaintiff asserts that Huang engaged in misconduct in furtherance of the conspiracy by making fraudulent statements. (Plaintiff’s UMF Nos. 3(i), 4(i), 5(i), & 6 (iii).) This evidence demonstrates that Huang engaged in wrongful act in furtherance of the alleged conspiracy to defraud by making fraudulent misrepresentations to Plaintiff to cause him to make the investment in Pascha Capital. Such evidence is sufficient to raise a triable issue of material fact as to the civil conspiracy claim (Issue No. 6) against Huang. (See CCP, § 437c, subd. (p)(2).)

As stated above, Plaintiff’s claims are based in part on an alleged conspiracy theory of liability. (Compl., ¶¶ 67-72.) A conspiracy theory of liability “renders each participant in the wrongful act responsible as a joint tortfeasor for all damages ensuing from the wrong . . . regardless of the degree of his activity.” (Stueve Bros. Farms, LLC v. Berger Kahn, supra, 222 Cal.App.4th, at pp. 323-324.) Accordingly, Plaintiff’s evidence of acts performed by Huang in furtherance of the conspiracy (Plaintiff’s UMF Nos. 3(i), 4(i), 5(i), & 6 (iii)) is sufficient to show the existence of triable issues of material fact as to the claims for breach of contract, breach of the implied covenant of good faith and fair dealing, fraud, violation of the UCL, negligence, unjust enrichment, conversion, and accounting (Issue Nos. 1-5, 7, 9, & 10-12). (See CCP, § 437c, subd. (p)(2).)
However, a co-conspirator cannot be liable for breach of fiduciary duty unless the co-conspirator also owed a fiduciary duty to the plaintiff. (E.g., Everest Investors 8 v. Whitehall Real Estate Limited Partnership XI (2002) 100 Cal.App.4th 1102, 1106-1108.) Therefore, Plaintiff’s evidence to support a conspiracy theory of liability is insufficient to show a triable issue of material fact as to the existence of fiduciary duties owed by Huang (Issue No. 8) unless Plaintiff also submits evidence showing that Huang owed a fiduciary duty.
Fiduciary duties may be imposed by law or be undertaken by agreement. (GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc., supra, 83 Cal.App.4th, at p. 416; see also Mosier v. Southern California Physicians Ins. Exchange, supra, 63 Cal.App.4th, at p. 1044.) To undertake a fiduciary duty by agreement, the defendant must have knowingly agreed to undertake to act on behalf and for the benefit of the plaintiff. (See Hasso v. Hapke (2014) 227 Cal.App.4th 107, 140.) Fiduciary duties are imposed by law between partners and in an investor/client relationship. (Hasso v. Hapke, supra, 227 Cal.App.4th, at p. 140; see also Koyer v. Willmon (1907) 150 Cal. 785, 787-788; see also Corp. Code, § 16404.)

Plaintiff’s evidence shows that Huang drafted the Agreement, held meetings, and sent communications to investors, including Plaintiff. (Plaintiff’s UMF Nos. 8(i)-iii); Plaintiff’s Doc. Evid., Exs. 3-8; Plaintiff’s decl., ¶¶ 11-18.) This evidence does not establish the existence of a fiduciary relationship with Huang. Plaintiff’s other evidence regarding Huang’s involvement in the management/control over Pascha Capital and its assets (Plaintiff’s decl., ¶¶ 10-11, 14-16, & 29) is not based on personal knowledge and supported by adequate foundation. Such speculative and conclusory assertions are insufficient to raise a triable issue of material fact. (See CCP, § 437c, subds. (d)-(e); see also Trujillo v. First American Registry, Inc. (2007) 157 Cal.App.4th 628, 636; see also Sinai Memorial Chapel v. Dudler (1991) 231 Cal.App.3d 190, 196-197.) Therefore, Plaintiff has not raised a triable issue of material fact as to whether Huang owed him fiduciary duties as a partner/manager of Pascha Capital with control over its assets or pursuant to an agreement.

Finally, Plaintiff asserts that Huang is liable by virtue of her marriage to Pan. (E.g., Plaintiff’s UMF Nos. 6(i) & 8(iv)-(v).) Plaintiff argues that Huang is necessarily liable for her husband’s wrongful acts or omissions and debts that arose during marriage pursuant to Family Code sections 910 through 916. This argument lacks merit because liability against Huang cannot be based solely on her marital status. “A married person is not liable for any injury or damage caused by the other spouse except in cases where the married person would be liable therefor if the marriage did not exist.” (Fam. Code, § 1000, subd. (a).) Therefore, evidence showing that Huang was married to Pan is inadequate to raise a triable issue of material fact as to whether Huang owes a fiduciary duty to Plaintiff.

Accordingly, Plaintiff has not met his burden in opposition to show the existence of a triable issue of material fact as to whether Huang owes fiduciary duties to him (Issue No. 8). (See CCP, § 437c, subd. (p)(2).) Huang has shown that she is entitled to summary adjudication of the eighth cause of action. (See id., subd. (f).)

Accordingly, Huang’s motion for summary judgment or adjudication is GRANTED only as to Issue No. 8. Otherwise, the motion is DENIED.
III. Objections

Huang’s written objections on the grounds of CCP section 437c, subdivision (d) and lack of foundation to paragraphs 10 (to the extent it states “[t]he truth is that HUANG was the mastermind and spokesperson for Pascha Capital”), 11 (to the extent it states that “HUANG represented herself as the person who managed Pascha Capital”), 14 (in its entirety), 15 (to the extent it states that Huang “had set-up” the off-shore account), 16 (to the extent it states that “HUANG represented herself as the person who was managing and controlling the Pascha Capital fund”), & 29 (to the extent it states that “HUANG played a major and active role in the Pascha Capital management”) are SUSTAINED. The written objections on the grounds of CCP section 437c, subdivision (d) and lack of foundation to Plaintiff’s other evidence are OVERRULED. The Court declines to rule on the other evidentiary objections. (See CCP, § 437c, subd. (q).)