Case Number: EC057603    Hearing Date: September 12, 2014    Dept: B

16. EC057603
SUNHEE K. WALL vs JUNG SE PARK et al
Motion for Summary Judgment

The Plaintiff obtained a judgment in bankruptcy court of $477,000 plus prejudgment interest against the Defendant, Jeff Lee. The Complaint alleges that Jeff Lee has transferred assets to Jung Park or JSP Entertainment, Inc. in an effort to hinder, delay, or defraud the Plaintiff in the Plaintiff’s efforts to enforce a judgment against Jeff Lee. The Plaintiff brought this action to set aside these fraudulent transfers and to seek damages.
The causes of action in the Second Amended Complaint are for:
1) Intentional Fraudulent Transfer
2) Constructive Fraudulent Transfer
3) Constructive Fraudulent Transfer
4) Express Trust
5) Resulting Trust
6) Tortious Acts to Hinder, Deter, and Defraud Creditor
7) Fraudulent Tranfers/Conspirator Liability

Trial is set for October 27, 2014.

This hearing concerns the motion for summary judgment of the Defendants, K&T Enterprises, Heeun Lee, and Steve Kim. These Defendants were identified as the following DOE Defendants:

1) DOE Defendant 1 – K&T Enterprises;
2) DOE Defendant 4 – Heeun Lee; and
3) DOE Defendant 5 – Steve Kim.

The operative pleadings are the Second Amended Complaint. The only remaining cause of action directed at these Defendants is the seventh cause of action for conspiracy to engage in a fraudulent transfer.

Under CCP section 437c, the Defendants, as the moving parties, have the burden of demonstrating that the Plaintiff’s cause of action lacks merit with facts demonstrating that the Plaintiff cannot establish an essential element in the cause of action for conspiracy to engage in a fraud transfer or that the Defendants have a complete defense. A claim for conspiracy liability can be based on the civil wrong of a fraudulent transfer. Monastra v. Konica Business Machs, U.S.A. (1996) 43 Cal. App. 4th 1628, 1645 (finding that individuals who participated in a conspiracy to hinder and delay a creditor through fraudulent transfers were jointly liable with the person making the fraudulent transfers). A claim for conspiracy liability must include the following:

1) the formation and operation of the conspiracy;
2) the wrongful act or acts done pursuant thereto; and
3) the damage resulting.
Unruh v. Truck Insurance Exchange (1972) 7 Cal. 3d 616, 631.

The Plaintiff alleges in her Second Amended Complaint that the Plaintiff is a creditor of Jeff Lee and that Jeff Lee fraudulently transferred his interest in a Karaoke night club to avoid the debt owed to Plaintiff. The Plaintiff alleges that the asset was transferred to Jung Park and that Jung Park then conspired with the other Defendants to engage in a further fraudulent transfer that involved the following:

1) Jung Park pretended to default on his lease with the landlord, Pong Wang;
2) Jung Park conspired with Pong Wang so that Pong Wang would evict Jung Park and enter into a new lease with the co-conspirators, K&T Enterprises, Heeun Lee, and Steve Kim;
3) Pong Wang filed an unlawful detainer complaint to recover possession of the property;
4) Pong Wang entered into a new agreement with K&T Enterprises, Heeun Lee, and Steve Kim;
5) Jung Park transferred the property at the nightclub to K&T Enterprises, Heeun Lee, and Steve Kim for no consideration; and
6) K&T Enterprises, Heeun Lee, and Steve Kim then operated the nightclub.

The Defendants provide the following evidence from the declarations

1) Teh Pang, who is the landlord of the premises for the nightclub;
2) Choong Hoon Oh, who manages the premises for the owner, Tah Pong;
3) Defendant, Heeun Lee; and
4) Defendant, Steve Kim;

The Defendants direct the Court to the following evidence in their Separate Statement of Facts (“SSF”) to meet their burden of proof with regards to the element of the formation and operation of the alleged conspiracy to engage in a fraudulent transfer:

1) the Defendants did not enter into a conspiracy to evict Jung Park from the property or to hinder, defraud, or delay the Plaintiff’s efforts to collect or recover amounts owed to her (SSF 12); and
2) the Defendants did not agree to conspire with Jung Park to defraud the Plaintiff (SSF 14).

These facts declared by the moving Defendants, K&T Enterprises, Heeun Lee, and Steve Kim, that they did not enter into, form, or operate an agreement with the Jung Park for the purpose of fraudulently transferring assets, is sufficient evidence to demonstrate Defendants’ burden of showing that the Plaintiff cannot establish the element that the Defendants formed and operated a conspiracy to engage in a fraudulent transfer. It is sufficient to meet the Defendants’ burden of proof with regards to the first element of the cause of action.

The Defendants then direct the Court to the following evidence in their SSF to meet their burden of proof with regards to the element of a wrongful act done pursuant to the conspiracy:

3) the property owner evicted Jung Park from the property for the failure to pay rent in June 2012 (SSF 7);
4) Teh Pang served a three notice to pay or quit upon Jung Park (SSF 8);
5) the unlawful detainer action was then commenced against Jung Park because he failed to pay the rent due for June 2012 (SSF 9); and
6) the moving Defendants, K&T Enterprises, Heeun Lee, and Steve Kim, took possession of the premises after the eviction (SSF 19).

These facts indicate that there was no wrongful act when possession of the premises was transferred from Jung Park to the moving Defendants. Instead, the facts demonstrate that Jung Park lost possession due to his failure to pay rent and the owner’s recovery of possession through the unlawful detainer action. The moving Defendants then obtained possession. Since this evidence demonstrates that the Plaintiff cannot establish the element that a wrongful act occurred, i.e., that a fraudulent transfer occurred, it is sufficient to meet the Defendants’ burden of proof with regards to the second element of the cause of action.

Under CCP section 437c, the burden then shifts to the Plaintiff to produce facts that demonstrate that there is a question of fact regarding these two elements.

The Plaintiff attempts to demonstrate that the Defendants’ facts are inadmissible by making objections to the facts in the declarations. As noted above, the Plaintiff’s conspiracy theory is that Jung Park entered into an agreement with the owner, Teh Wang, in which Jung Park pretended to default so that the leasehold interest in the nightclub could be transferred through an eviction to the moving Defendants.

The owner, Teh Wang states in paragraph 8 of his declaration that he did not enter into any agreement with any party, and not with the moving Defendants, K&T Enterprises, Heeun Lee, and Steve Kim, to transfer the leasehold interest in the nightclub for the purpose of defrauding the Plaintiff or any other person. In paragraph 9, Teh Wang states that he had no conversation with Jung Park, or anyone on his behalf, regarding a request that the lease be transferred. In paragraph 10, Teh Wang states that he had no conversation with K&T Enterprises, Heeun Lee, and Steve Kim regarding the Plaintiff. These facts indicate that Teh Wang did not enter into the alleged conspiracy with Jung Park to transfer the leasehold interest in the nightclub from Jung Park to the moving Defendants.
The Plaintiff objects that these statements lack foundation and are legal conclusions. There is no need for a foundation for Teh Wang to state that he had no conversations with the Defendants about the Plaintiff or to state that he did not enter into any agreement to defraud the Plaintiff. Further, these statements are not legal conclusions because they are facts showing that Teh Wang did not have conversations or enter into agreements with the other Defendants. These objections lack merit.
Further, the Plaintiff objections that paragraph 10 is based on information and belief. This is not accurate. Paragraph 10 of Mr. Wang’s declaration states:

“I had no conversation with K&T Entertainment, Inc., Steve Kim or
Heeun Lee regarding Ms. Wall.”

There are no grounds to find that the facts in paragraph 10 are based on information and belief.

The Defendant, Heeun Lee, states in paragraph 11 that he had no agreement with Jung Park, Jeff Lee, or any other person regarding taking any of the assets or anything else from Jung Park, Jeff Lee, or any other person in connection with the business venture of the property. In paragraph 12, Heeun Lee states that he made no agreement with Jung Park, Jeff Lee, or any other person to pay them money with regards to the property or the business on the property. In paragraph 14, Heeun Lee states that he did not conspire with Jung Park, Jeff Lee, Teh Wang, Steven Kim, or any other person to hide, possess, or remove any assets from the Plaintiff that may be due to her.
The Defendant, Steve Kim, states the same facts in paragraphs 11, 12, and 14 of his declaration.
The Plaintiff objects that these paragraphs are legal conclusions. The statements in the paragraphs are not legal conclusions because they are facts showing that the Defendants, Heeun Lee and Steve Kim, did not enter into any agreement to conceal assets from the Plaintiff through a transfer of assets from Jung Park to themselves.

The property manager, Choong Oh, states in paragraph 3 that he managed the property for Teh Wang. In paragraph 4, Mr. Oh states that the tenant, Jung Park, had failed to pay rent due in June 2012 and he prepared a three day notice to pay rent or quit and caused it to be served on Jung Park. In paragraph 5, Mr. Oh states that Mr. Park did not respond to the notice to pay rent or quit and that an unlawful detainer action was commenced. Mr. Oh states in paragraph 5 that a default judgment was entered because Mr. Park did not respond to the complaint. In paragraph 6, Mr. Oh states that he requested a lockout of Jung Park from the Sheriff’s Department. In paragraph 9, Mr. Oh states that after the eviction, he negotiated an agreement with Heeun Lee and Steve Kim to lease the property to K&T Enterprises.
The Plaintiff objected that these statements lack foundation. Since Mr. Oh states that he manages the property, he provides a foundation for the facts regarding his management of the property, his eviction of Jung Park for the failure to pay rent, and his negotiations with Heeun Lee and Steven Kim to lease the property to K&T Enterprises.
Accordingly, the Plaintiff’s objections do not offer any basis to find that the Defendants’ evidence is inadmissible.

The Plaintiff also offers a three paragraph declaration from Nam Kwon Kim. In this declaration, Nam Kwon Kim states

1) she has known the Defendant, Steve Kim, for twelve years;
2) Steve Kim told her that he had a business deal with “Mr. Park” to run a karaoke club on the second floor above Mr. Park’s Korean barbecue business; and
3) under the agreement, Steven Kim would pay a portion of the profits from the karaoke business to Mr. Park.

There are no facts that identify who “Mr. Park” is. There are no facts that identify a time frame in which the events occurred, i.e., when there was a business deal to operate a karaoke club. There are no facts that identify the address for the club. Since the declaration lacks the facts necessary to demonstrate that “Mr. Park” is the Defendant, Jung Park, that the agreement is in the relevant time frame, or that the agreement concerns the club at the premises at issue, this is insufficient to demonstrate that there is a triable issue of fact with the Defendants’ evidence.
Accordingly, the Plaintiff did not meet her burden because she has not offered any facts that create a dispute of fact with the Defendants’ evidence. The undisputed facts demonstrate that the Plaintiff cannot establish the essential element that the moving Defendants formed and operated a conspiracy to engage in a fraudulent transfer or that a wrongful act occurred to advance the conspiracy.

Therefore, the Court grants the Defendants’ motion for summary judgment because the undisputed facts demonstrate that the Plaintiff’s cause of action for conspiracy to engage in a fraudulent transfer has no merit.