China Aerospace Science and Technology Corporation Liable for Millions in Amended Judgment
In recent news, the Superior Court determined that CASC was the owner and “alter ego” of another state owned company, “China Lucky Film Corporation” and was therefore liable for a prior judgment entered against China Lucky and in favor of Royal Marketing (Los Angeles Superior Court Case No. PC 040277).
A Los Angeles Superior Court judge has entered a multimillion dollar judgment against one of the largest state owned conglomerates in China (Los Angeles Superior Court Case No. PC 040277). The China Aerospace Science and Technology Corp. (“CASC”) headquartered in Beijing is engaged in the research, design, manufacture and launch of space systems such as launch vehicles, satellites and manned spaceships as well as strategic and tactical missiles, and also provides international commercial satellite launch service. CASC boasts more than 120 thousand employees in total, including more than 30 academicians of the Chinese Academy of Sciences and the Chinese Academy of Engineering.
The judgment against CASC arose out of a 2009 multimillion dollar jury verdict against China Lucky in a broad and sweeping finding of wrongdoing (Los Angeles Superior Court Case No. PC 040277). Per court records, a jury found China Lucky liable for negligent misrepresentation, breach of warranty and breach of the implied covenant of good faith and fair dealing in connection with its business dealings with Royal Marketing, a world- wide photo-imaging business based in Los Angeles.
After the jury announced its verdict, Royal Marketing’s President, Bob Bakhshi stated, “We are ecstatic. We always knew that when a jury heard the truth of what transpired and how China Lucky behaved, how they treated us, and the facts surrounding the product they sold us, it would make the findings it did.”
Court records state that Royal Marketing had been in business 25 years when it started purchasing photo-imaging product from China Lucky. Prior to that, Royal had been one of Konica Minolta’s largest and most successful independent distributors of its photo imaging products – catering the cruise line industry among others. “We've never been able to recoup the losses we sustained to our goodwill nor were we able to locate any alternate suppliers,” said Bakhshi. “The jury made it clear that they harmed us, and that they must reimburse us for the substantial and severe damages they caused.” As indicated in the amended judgment, both CASC and China Lucky have refused to pay any sums ordered by the jury.
Court Ordered Seizure and Liquidation of All China Lucky Patents and Intellectual Property.
According to court records, as a result of China Lucky’s refusal to pay the judgment, the Superior Court Judge appointed a Receiver to take possession and control of China Lucky’s ownership position in its patent for double sided Photographic paper and the patent for the back sheet for Solar Cell – patents that were issued by the U.S. Patent and Trademark Office last year (Los Angeles Superior Court Case No. PC 040277). The Receiver was appointed to liquidate the patents and other China Lucky intellectual property – including its trade name and logo -- and to use the proceeds to satisfy the judgment which continues to accrue interest.
When asked about the last five years and the fact that China Lucky and CASC have refused to honor and pay the judgment ordered by the jury verdict and the U.S. courts of law, Royal Marketing’s co-owner, Farshid Ourian, stated “Considering that the judge and jury have ordered China Lucky and CASC to pay this judgment, we are shocked that a company of their caliber refuses to pay for the substantial and irreparable damage that they have caused."
In 2012, China Aerospace Science and Technology Corp. became the owner of China Lucky and the court ruled it is now responsible to pay the China Lucky judgment (Los Angeles Superior Court Case No. PC 040277).
Mr. Ourian noted that “Businesses like CASC and China Lucky should not be permitted to do business in the U.S. until judgments like these are paid; it’s just that simple.”
California Jury Vindicates Royal Marketing and Slams Chinese Government Owned China Lucky Film Corporation With $3 Million Dollar Verdict
Lucky Film Corporation (“China Lucky”) in broad and sweeping finding of wrongdoing. According to evidence introduced at the trial, China Lucky touts itself as “a trans regional and conglomerate modern company in the field of imaging and information recording industrial sector of China in terms of largest scale, strongest technical force, varieties of product and market share.” China Lucky claims to be one of 189 large size China owned enterprises financed by the State Assets Administration and that it engages in the manufacture of photo-imaging products such a film, digital and analog paper that are manufactured for civilian as well as military use.
On March 27, 2009 a California jury found China Lucky liable for negligent misrepresentation, breach of warranty and breach of the implied covenant of good faith and fair dealing arising out of its business dealings with Royal Marketing, a Los Angeles based photo-imaging distribution company with worldwide distribution.
Royal Marketing introduced at trial, a very detailed written agreement signed by it and China Lucky. The Agreement obligated China Lucky to sell very specific products to Royal Marketing. Royal Marketing argued that China Lucky refused to sell certain products contained in the agreement and that the products that China Lucky did sell were of inferior quality. For instance, a number of witnesses, including experts in the photo-imaging industry, testified that the quality problems stemmed from the fact that China Lucky photo papers were not manufactured to American photo-imaging companies’ standards. American photo-imaging companies all use standardized “chemistry” in the processing of film to pictures. Several witnesses at the trial testified that China Lucky’s technician told them that the China Lucky paper required the photo laboratories to add varying amounts of other chemicals – including ammonia. Witnesses called by Royal Marketing, including several of its customers, all complained about the China Lucky photo paper’s poor quality.
After the trial concluded, Royal’s Vice President, Farshid Ourian noted that “When one of our customers was told by a China Lucky technician who had visited his lab, that he was supposed to add ammonia, I thought he was going to call the police to have the guy physically removed. All of our clients were utterly shocked at what they were being told by the China Luck representative.” After the jury announced its verdict, Royal Marketing’s President stated: “We are ecstatic. We always knew that when a jury heard the truth of what transpired and how China Lucky behaved, how they treated us, and the facts surrounding the product they sold us, it would make the findings it did.”
Although Royal Marketing and China Lucky had entered into a long term distribution deal, almost from the beginning, China Lucky started giving Royal Marketing problems. Bob Bakhshi testified that first China Lucky refused to sell them one of the main products set forth in the written agreement. The jury was told that Royal Marketing found out later, after having purchased and re-sold in the United States hundreds of thousands of dollars of the China Lucky photo paper that the paper was not manufactured to U.S. standards and was of poor quality. A China Lucky consultant actually admitted at the trial that the China Lucky paper was not suitable for the U.S. Market. “That admission was astonishing” noted Bakhshi, after the jury returned its verdict.
Royal Marketing had been in business 25 years when it started purchasing photo-imaging product from China Lucky. Prior to that, Royal had been one of Konica Minolta’s largest and most successful independent distributors of its photo imaging products – catering the cruise line industry among others. “Our deal with China Lucky killed our business.” Said Bakhshi. “We have never been able to recoup the losses we sustained to our goodwill nor were we able to locate any alternate suppliers. The jury made it clear that China Lucky harmed us, and that they must reimburse us for the substantial and severe damages they caused. Incredibly, and after everything China Lucky put us through, they refused so far, to pay any sums ordered by the jury.”
Jury verdict or not, China Lucky is moving on in the United States and apparently is still attempting doing business with other American companies. To those other American companies willing to do business with the Chinese government backed conglomerate, Bakhshi states: “Given what happened to us and their refusal so far to pay the judgment ordered by the court, all I can say is, good luck.”
SOURCE Royal Marketing Source: PR Newswire
Appellate Court Reverses $9-Million Beverly Hills Option Contract Ruling
The California Court of Appeal has directed a Los Angeles Superior Court judge to set aside his order in favor of the Sellers of a $9-million dollar Beverly Hills residence. (Court of Appeal Case No. B266675; LASC Case No. SC 123764) The Appellate Court ruling arose out of a lawsuit filed by the Buyers of the property seeking specific performance to compel the sale of the Beverly Hills estate, pursuant to an option agreement. The Buyers resided in the property pursuant to a lease agreement since 2013. After signing a lease, lease addendum, purchase option agreement and living in the property since that time, the Buyers and their five children (including one with cerebral palsy) were on the verge of being evicted as a result of the trial court’s order granting summary adjudication in the Sellers favor.
One of the central reasons the property at issue was optioned by the Buyers was their ability to create a hospital like environment in one of the rooms for their 14 year old son, who is stricken with cerebral palsy, requires round the clock live-in medical care and is on life support. The Buyers adjusted portions of the house to be an in-home “hospital” so that he could be cared for by five rotating nurses, 24 hours per day. The Buyers claimed to have spent about $1 million in renovations on the property.
After the option was exercised, the Buyers' alleged that the Sellers' repudiated the option agreement and filed an unlawful detainer action seeking to evict the Buyers' entire family. The Sellers contended among other things, that the Buyers' renovations were not authorized and that they therefore, breached the lease and option agreements. As a result of those claimed breaches, the Sellers argued they were entitled to declare the option rights cancelled and were further entitled to possession of the premises and to evict the Buyers and their family. The Sellers also contended that the parties never agreed to all material terms of the purchase, which was yet a separate basis to nullify the option rights.
The trial court judge adopted the Sellers' arguments, granted their summary adjudication motion and declared the Buyers option rights unenforceable, thereby paving the way for the Sellers to evict the Buyers entire family.
The Buyers, represented by Daniel L. Krishel, Esq. petitioned the California Court of Appeal for relief from the trial court's order. On the issue of authorization to engage in the renovations, Mr. Krishel directed the Appellate Court's attention to one of the Buyer's sworn statements that the Sellers were at the property many times, saw all of the construction, approved of each and every improvement the Buyers made and never voiced one single objection – not one – until after they were sued for specific performance. On the issue of whether or not all material terms had been agreed to, the Appellate Court was informed the Seller admitted under oath that "The deal he [buyer] and I discussed from the very beginning was crystal clear" and that when asked at his deposition "What other terms between you and the [Sellers] would still have to be negotiated?" the Seller responded, "...I think that's something that...I am not sure, you know, hypothetically, you know, how to answer that." The seller also sent an email that stated: “This confirms our telephone call that you are willing and ready to deliver $9 million and purchase the house by January 31, 2015. Please confirm.”
In short, Mr. Krishel argued the evidence established substantial factual disputes existed that needed to be resolved at a trial, and stated in support of the Petition, "...'the trial court’s obligation was to insure justice and the rule of law prevailed...a judge is not a mere umpire presiding over a contest of wits between professional opponents, but a judicial officer entrusted with the grave task of determining where justice lies under the law and the facts between the parties who have sought the protection of our courts.' Miller v. Republic Grocery (1952) 110 Cal.App.2d 187, 191. In this case, the trial court was clearly taken in and even confused by all of the endless minutiae raised by [Sellers]...The result was that the trial court did not fulfill its grave task of determining where justice lies."
Upon review of the Buyer's Petition, the Sellers response thereto, and after a hearing in front of a three-judge panel, the California Court of Appeal granted the Buyers Petition and ruled that there was indeed a "triable controversy." The Court of Appeal directed the Superior Court judge to issue a new order denying the Sellers motion. As a result and for now, the eviction of the Buyers' family is off, and the matter will be determined at a trial later this year wherein it will be decided if the Buyers can proceed with their planned purchase.
TRIAL COURT VINDICATES ESCROW COMPANY AND THROWS OUT LAWSUIT
In a sharp rebuke to a plaintiff that filed a lawsuit against an escrow company, a Los Angeles Superior Court judge ruled that despite escrow allegedly losing an original deed of trust valued at more than $300,000.00, the escrow company did not cause plaintiff any damage and further ruled the plaintiff sustained no damage. Judgment was entered in favor of the escrow company. (LASC Case No. BC 556427)
This lawsuit arose out of a debt allegedly owed by an individual to the Plaintiff. The debt was evidenced by a promissory note and deed of trust (DOT). Plaintiff contended she hired the escrow company to record the DOT as security for the alleged debt. Her complaint stated a single cause of action against the escrow company for “negligence” and contended escrow was responsible for the $323,000.00 owed on the promissory note because the DOT was allegedly “lost.”
On its motion for summary judgment (MSJ), the escrow company, represented by Krishel Law Offices and Daniel L. Krishel, argued that if plaintiff was to prevail on her negligence claim, she had to establish a causal connection between escrow's conduct and her claimed injury pursuant to CA Civil Code Section 3333 and other California law. Plaintiff was contending the alleged “loss” of the DOT, somehow prevented her from collecting on the underlying promissory note. Escrow argued that the DOT was simply security for repayment of that note and nothing prevented Plaintiff from suing or collecting on the note, even if the DOT was “lost.” Because Plaintiff was not claiming escrow was somehow responsible for the alleged default on the note, escrow did not cause the Plaintiff any damages. The court agreed with the escrow company.
Furthermore, the escrow company argued that despite the alleged loss of the DOT, Plaintiff could still proceed by way of judicial foreclosure, a recognized procedure in California that could be used in this instance. As a result, escrow argued that whether or not the original DOT was lost or recorded was entirely irrelevant both to the underlying debt and Plaintiff’s ability to foreclose because in either case, the alleged loss of the original DOT did not prevent the plaintiff from foreclosing. The court agreed with the escrow company.
Finally, escrow argued that the plaintiff admitted at her deposition, that she had no evidence the underlying debt was actually incurred, i.e., that she actually lent any funds and that she failed to prove she was actually owed any money – despite the existence of the note and DOT. Escrow cited California law that states when a promissory note fails as an obligation, the deed of trust associated with it, also fails. Coon v. Shry (1930) 209 Cal. 612, 289 P. 815; Lee v Joseph (1968) 257 Cal.App.2d 30, 72 Cal.Rptr. 471 98 Cal. Rptr. 3d 837. Escrow argued that if the actual debt did not exist because no funds were actually lent by plaintiff, then despite the existence of the promissory note, she would have no right to foreclose on the property because the DOT would be rendered wholly unenforceable. The alleged “loss” of the DOT would again be meaningless and irrelevant and could not be the cause of any alleged damages.
The trial court agreed with the arguments made by the escrow company and their counsel and granted escrow's summary judgment motion. Judgment was entered in favor of the escrow company and the plaintiff was ordered to “take nothing” on her complaint and to pay the escrow company’s costs in defending the action.
JUDGE TOSSES FUJIFILM ARBITRATION AGREEMENT
On August 31, 2017, a Los Angeles Superior Court Judge declared a Fujifilm arbitration agreement was “unconscionable” and therefore unenforceable. The case involves a lawsuit filed by BFK, Inc. against Fujifilm North American Corporation. For more than 30 years, BFK has been a Los Angeles based company in the business of distributing photographic imaging products. In March 2014, BFK and Fujifilm entered into a written Distribution Agreement in which Fujifilm granted to BFK, a non-exclusive right to sell, market and distribute, Fujifilm color photographic paper in certain foreign countries. According to BFK’s complaint, for approximately 30 months Fujifilm for the most part, complied with the terms and conditions of the Agreement.
The complaint alleges that in September 2016, without warning or cause, Fujifilm suddenly refused to accept any new BFK orders. BFK contends Fujifilm breached the distribution agreement and caused BFK to sustain millions of dollars in damage.
In response to BFK’s lawsuit, Fujifilm filed a motion to stay the case and asked the court to send it to binding arbitration. In its Motion to Compel Arbitration and Stay Action, Fujifilm argued that the distribution agreement contained an arbitration provision which mandated the dispute was required to be resolved through the American Arbitration Association in New York – all per the express terms of the arbitration provision.
In response to Fujifilm’s request, BFK, represented by the Krishel Law Offices and Daniel Krishel, argued that the arbitration provision was per se oppressive, unconscionable and unenforceable because among other things, the provision was buried at the end of the agreement in a single sentence in very small print. BFK argued that “state and federal courts have made it abundantly and crystal clear that a worldwide corporation like Fujifilm will not be permitted to bury a one sentence arbitration provision in tiny point font at the tail end of a five page, dual column, boiler plate adhesion agreement that it thrusts upon its customers in a ‘take it or leave it’ manner.” BFK further argued that an adhesion contract is an indicator of procedural unconscionability and that a contract of adhesion is “a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it...The Fujifilm prepared contract is per se, adhesion. It is a multi page pre-printed standardized agreement, with dual columns and printed on small point font....There was no negotiation on this adhesive form – it was take it or leave it.”
The court conducted two hearings over the last two months and noted that the vast majority of arbitration provisions are upheld and that the court routinely enforces them, sending those affected lawsuits to binding arbitration. In its written ruling the court confirmed “A written agreement to submit to arbitration an existing controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract. (Cal. Code of Civ. Proce. Section 1281).” Nevertheless, the court agreed with BFK and stated “Plaintiff is also correct that the arbitration provision is hidden in the agreement. The provision appears on the fifth and last page of the agreement, which is written in double column text and is in a section entitled “Governing Law...The section does not include a heading referring to arbitration or dispute resolution...This is sufficient to establish procedural unconscionability.” The court concluded its ruling and stated “the court finds plaintiff has demonstrated sufficient substantive unconscionablilty based on the significant costs associating with arbitrating out of state.” (BFK Inc. v. Fujifilm North American Corporation BC 660411.)
After the hearing, BFK’s principals were extremely pleased with the court ruling and are looking forward to a jury of Fujifilm’s peers, deciding the matter at trial, which presumably will be held some time next year.