Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Zhu v. Li

United States District Court, N.D. California

November 15, 2019

JIAJIE ZHU, Plaintiff,
v.
JING LI, et al., Defendants.

          ORDER DENYING MOTION TO DISMISS RE: DKT. NO. 17

          Jeffrey S. White United States District Judge

         Now before the Court is the motion to dismiss filed by Defendants Dong Chen and Jing Li (“Defendants”). The Court has considered the parties' papers, relevant legal authority, and the record in this case, and it finds the motion suitable for disposition without oral argument. See Civil L.R. 7-1(b). For the reasons set forth below, the Court HEREBY DENIES Defendants' motion to dismiss.

         BACKGROUND

         Teetex, LLC (“Teetex”) is a California-based limited liability company engaged in the business of importing textiles from China for resale in the United States. (Dkt. No. 6 (First Amended Complaint (“FAC”)) ¶ 10.) The parties heatedly contest most other pertinent facts about the company, its origins, and its makeup. The claims in the FAC center around Plaintiff Jiajie Zhu's contention that Defendants misrepresented Teetex's profits and therefore underpaid Mr. Zhu when Mr. Zhu sold his interest in Teetex to Defendant Jing Li. In their motion, Defendants argue that Mr. Zhu lacks standing to sue because Mr. Zhu was only a “nominal”[1] member of Teetex on behalf of his father-in-law Anwen Li.[2] Therefore, according to Defendants, Mr. Zhu did not own the shares Mr. Zhu claims to have sold. Mr. Zhu contends that he was never a “nominal” member or a proxy and argues that he, not Mr. Li, had rights of membership with respect to the pertinent shares.

         Several agreements are tangled in this dispute. The first pertinent agreement is titled “Limited Liability Company [M]anagement Operating Agreement of TEETEX, LLC” (“Operating Agreement”). (Dkt. No. 17-1 (Exhibits to Declaration of Doug Chen) p. 11.) The first paragraph of the Operating Agreement states that it is effective as of October 28, 2012, and “is adopted by the members whose signatures appear at the end of this agreement.” (Id.) The Operating Agreement is signed by Mr. Zhu, Ms. Li, and Mr. Guan. (Id. p. 20.) Each are identified in this agreement as “Members.” (Id.)

         Under the heading “Membership Withdrawal and Transfer Provisions, ” the Operating Agreement states:

Restrictions on the Transfer of Membership: A member shall not transfer his or her membership in the LLC unless all nontransferring [sic] members in the LLC first agree to approve the admission of the transferee into this LLC. Further, no member may encumber a part or all of his or her membership in the LLC by mortgage, pledge, granting of a security interest, lien or otherwise, unless the encumbrance has first been approved in writing by all other members of the LLC.
Notwithstanding the above provision, any member shall be allowed to assign an economic interest in his or her membership to another person without the approval of the other members. Such an assignment shall not include a transfer of the member's voting or management rights in this LLC, and the assignee shall not become a member of the LLC.

(Id. p. 19-20.) The Operating Agreement is in English, and there is no indication the document provided to the Court is a translation from Chinese.[3] An exhibit to the Operating Agreement is a document titled “Chinese Agreement, ” which is not translated.

         The second pertinent agreement is an “Internal Agreement to Form a New Company in San Francisco, California, the United States of America” (“Internal Agreement”). (Id. p. 7.) The Internal Agreement, of which Mr. Zhu avers he was heretofore unaware, states that “[t]hrough discussion and negotiation among Anwen Li (Alvin Li), Tony Chen (Dong Chen), and Juan Hu (Joanne Hu), the parties reached an [sic] unanimous agreement to form a new company (TEETEX LLC) in San Francisco, California. . . .” (Id. (emphasis in original denotes original text in English).) The agreement provides that: “The initial registered capital of [Teetex] shall be US$100, 000 structured as the following: Anwen Li (Alvin Li) holds 60% of shares, Tony Chen (Dong Chen) holds 30% of shares, and Juan Hu (Joanne Hu) holds 10% of shares. . . .” (Id. (emphasis in original denotes original text in English).) The agreement notes that Mr. Li's share of capital investment is $60, 000. (Id.)

         The Internal Agreement also contains the following clause: “The Nominal Shareholders of the Company shall be LI, Jing (in place of Tony Chen), GUAN, Xin (in place of Juan Hu), and ZHU, Jia Jie (in place of Anwen Li).” (Id. (capitalization and emphasis in original denotes original text in English).) This agreement is dated October 29, 2012 and is signed by Mr. Chen, Mr. Li, and Ms. Hu. (Id. p. 9.) The top of the document as provided to the Court states “Certified Translation, ” but the document is not accompanied by a certification from the translator.

         The third agreement is an “Assignment.” (Id. at 44.) This document states[4]: “THIS ASSIGNMENT is made and executed between Xin Guan, member of the Teetex LLC (“Assignor”) and Jiajie Zhu, member of the Teetex, LLC (“Assignee”) dated on August 28, 2014. Assignor does hereby assign, transfer[, ] and convey to Assignee, without consideration, 10% of the membership interest in Teetex LLC.” (Id. (capitalization in original).) Mr. Guan signed below this text. (Id.) Under “Acceptance of Assignment, ” the following appears: “I accept the above assignment of 10% of the membership interest in Teetex LLC and agree to hold it subject to the provision of the operation agreement for Teetex LLC.” (Id.) Under “Agreement Regarding Transfer of [M]embership Interest, ” the document states:

On or about August 28, 2014, Mr. Xin Guan as member of Teetex LLC (“LLC”) agreed to transfer all his right, title, and interest in the LLC, 10% membership interest in the LLC to Jiajie Zhu without consideration. After this transfer, Jiajie Zhu has 70% membership interest in the LLC, Jing Li has 30% membership interest in the LLC, Xing Guan is no longer the member of the LLC. All parties to the transfer hereby and all members in the LLC acknowledge and consent to such transfer.

(Id. p. 45.) Mr. Zhu, Ms. Li, and Mr. Guan's signatures all appear at the bottom of this ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.