Case name: Jennifer Chang vs Wenjun Li

Case No.: 18CV326719

Before the Court is plaintiff J. Chang’s renewed motion for leave to conduct financial discovery. Plaintiff’s original motion was denied without prejudice on July 5, 2018.

The motion is not for reconsideration, and may be heard by a judge who did not hear the original motion. The relevant inquiry is similar in that the Court is asked to consider new facts, law or other circumstances that did not exist or the moving party was justifiably unaware of at the time of the original motion.

Here, the new facts relate to evidence of a dissolution of marriage action filed and pursued to judgment by defendant W. Li and his former spouse. The filing of the dissolution of marriage action and entry of judgment, with incorporated confidential property settlement agreement, on its face does not support plaintiff’s conclusion that the proceeding was to accomplish fraudulent transfers of property. Similarly, the fact one spouse may receive two real properties and the other receives one real property as separate property in the division of property does not itself support plaintiff’s conclusion of fraudulent transfers.

That said, whether or not the net equity value of the division of community assets and debts effects an equal division of community property depends on the equity value of the community estate and the portion awarded to each spouse. One-sided divisions can be construed as fraudulent conveyances. Similarly, confirming assets and/or debts as a spouse’s separate property can be improper where the basis for that characterization is not supported by the facts or law.

Accordingly, the previously undisclosed facts of the filing and entry of judgment dissolving the marriage and dividing the marital assets and debts are new, material facts supporting plaintiff’s renewed motion.

The second set of new facts relate to representations of defendant’s criminal law attorney at the hearing on the original motion. The first involves the alleged inability of defendant to provide assistance to counsel in the defense of his criminal action due to medical incompetence which was offered in the civil case as evidence of inability to assist counsel and participate in discovery.

A new fact is the discovery that defendant participated as a self-represented party in a dissolution of marriage action which included negotiation and execution of a property settlement agreement. This was a proceeding known to defendant’s criminal law attorney at the time of the hearing which he failed to disclose to the Court. Further, the attorney asserted at the hearing that defendant was incompetent, yet he did not intervene on behalf of defendant in the dissolution action – an action where defendant was not represented by counsel and disposition of defendant’s property was at stake. Instead, the attorney intervened in the civil case to oppose discovery of information about defendant’s property. Moreover, defendant’s spouse and additional professionals were involved in the dissolution of marriage of action, all of whom were apparently satisfied with defendant’s capacity to negotiate and execute documents for a property settlement and judgment. This evidences that defendant has capacity to assist counsel in responding to discovery requests about the same property he addressed in the dissolution of marriage action. Defendant was able to represent himself and negotiate and execute a settlement which infers a higher level of capacity than that needed here to assist counsel in discovery.

The second set of new facts involve statements of defendant’s criminal law attorney that “(T)here is no prejudice to the plaintiff at this point” and that the real properties of the defendant and his spouse “isn’t going anywhere.” Literally, the statement about the real properties is true; however, the context of the statement infers that there was no plan to sell, transfer, encumber or dispose of the real properties. The opposition brief does not refute that title to the real properties has or will be transferred through the judgment of dissolution of marriage. At the very least, the representations are misleading, and the discovered action now raises legitimate concern of prejudice to the plaintiff.

Civil Code section 3295 subdivision (c) permits pretrial discovery of a defendant’s financial information upon plaintiff establishing a substantial probability of prevailing on the claim for punitive damages under Civil Code section 3294. This requires plaintiff to prove by clear and convincing evidence that defendant is guilty of oppression, fraud or malice.

Defendant argues that he is incapable of being guilty of oppression, fraud or malice because Parkinson’s disease rendered him of unsound mind and incapable of knowing that his assault of plaintiff was wrongful. Civil Code section 41 provides that “A person of unsound mind, of whatever degree, is civilly liable for the wrong done, but is not liable for exemplary damages unless at the time of the act the person was capable of knowing that the act was wrongful.” He asks that the Court take judicial notice of his application for diversion filed in the criminal law proceeding based on the effect of Parkinson’s disease.

The court declines to exercise discretionary judicial notice of the pending application. Although the document is filed in a court proceeding, the facts and propositions in the document described and relied on by defendant in this motion are not reasonably beyond dispute. Evidence Code section 452.

Based on the evidence currently before the Court, defendant was employed for years and at the time of the incident by the same employer as plaintiff, and his conduct towards plaintiff escalated over the years to the point where plaintiff complained to the employer about harassment. Earlier on the day of the incident, defendant met with representatives of the employer about plaintiff’s complaint. Defendant left the meeting angry, and allegedly, that evening assaulted plaintiff with a hunting knife at the parking lot of her residence, inflicting serious injuries. If proven true, the evidence indicates anger, motive, planning, and knowledge that his conduct was wrongful. The viciousness of the assault supports findings of oppression and malice. Based on the state of the current evidence, including the submitted declarations in support and opposition, the Court finds that plaintiff has established that there is a substantial probability that that she will prevail on the claim for punitive damages pursuant to Civil Code section 3294.

Plaintiff’s renewed motion for leave to conduct financial discovery is therefore GRANTED.