This case was last updated from Los Angeles County Superior Courts on 07/05/2019 at 07:44:40 (UTC).

MEDITECH LABORATORIES INC VS LSCD4635 INC ET AL

Case Summary

On 03/26/2015 MEDITECH LABORATORIES INC filed a Contract - Other Contract lawsuit against LSCD4635 INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are SAMANTHA P. JESSNER, YOLANDA OROZCO and EDWARD B. MORETON. The case status is Other.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****6721

  • Filing Date:

    03/26/2015

  • Case Status:

    Other

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

SAMANTHA P. JESSNER

YOLANDA OROZCO

EDWARD B. MORETON

 

Party Details

Plaintiff and Petitioner

MEDITECH LABORATORIES INC.

Defendants and Respondents

CONEXEM SOFTWARE LLC

DOES 1-25

LSCD4635 INC.

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

LAW OFFICES OF JAMES A. ANTON

VU ROMAN CHRISTIAN ESQ.

RHAMES MICHAEL R ESQ.

Defendant and Respondent Attorneys

SILVERMAN STEPHEN A. ESQ.

PC THEODORA ORINGHER

DUMAS JAMES ALEXANDER JR

 

Court Documents

Minute Order

1/11/2018: Minute Order

STATUS REPORT OF PLAINTIFF MEDITECH LABORATORIES, INC.

5/7/2018: STATUS REPORT OF PLAINTIFF MEDITECH LABORATORIES, INC.

JOINT STIPULATION AND ORDER CONTINUING POST ARBITRATION STATUS CONFERENCE AND STAY OF ACTION

5/16/2018: JOINT STIPULATION AND ORDER CONTINUING POST ARBITRATION STATUS CONFERENCE AND STAY OF ACTION

POST ARBITRATION CASE MANAGEMENT CONFERENCE STATUS REPORT

7/12/2018: POST ARBITRATION CASE MANAGEMENT CONFERENCE STATUS REPORT

PLAINTIFF MEDITECH LABORATORIES, INC.'S POST ARBITRATION STATUS CONFERENCE REPORT

7/17/2018: PLAINTIFF MEDITECH LABORATORIES, INC.'S POST ARBITRATION STATUS CONFERENCE REPORT

Substitution of Attorney

10/16/2018: Substitution of Attorney

Minute Order

11/9/2018: Minute Order

Declaration

11/28/2018: Declaration

Reply

12/7/2018: Reply

Notice of Case Reassignment and Order for Plaintiff to Give Notice

12/21/2018: Notice of Case Reassignment and Order for Plaintiff to Give Notice

Proof of Service by Mail

1/3/2019: Proof of Service by Mail

1ST AMENDED COMPLA1NT

3/30/2015: 1ST AMENDED COMPLA1NT

DECLARATION OF CHRIS MORROW RE: EXPARTE NOTICE

4/14/2015: DECLARATION OF CHRIS MORROW RE: EXPARTE NOTICE

OPPOSITION TO EX PARTE TRO

4/14/2015: OPPOSITION TO EX PARTE TRO

EVIDENTIARY OBJECTIONS TO DECLARATION OF KIM TRAN IN SUPPORT OF PRELIMINARY INJUNCTION

4/21/2015: EVIDENTIARY OBJECTIONS TO DECLARATION OF KIM TRAN IN SUPPORT OF PRELIMINARY INJUNCTION

JOINT STIPULATION AND ORDER TO CONTINUE CASE MANAGEMENT CONFERENCE DATE

7/22/2015: JOINT STIPULATION AND ORDER TO CONTINUE CASE MANAGEMENT CONFERENCE DATE

CASE MANAGEMENT ORDER

11/12/2015: CASE MANAGEMENT ORDER

Minute Order

9/27/2016: Minute Order

83 More Documents Available

 

Docket Entries

  • 06/21/2019
  • at 08:30 AM in Department 44, Edward B. Moreton, Presiding; Hearing on Application for Order for Appearance and Examination - Not Held - Taken Off Calendar by Party

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  • 06/19/2019
  • at 08:30 AM in Department 44, Edward B. Moreton, Presiding; Hearing on Application for Order for Appearance and Examination - Not Held - Taken Off Calendar by Party

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  • 06/17/2019
  • at 08:30 AM in Department 44, Edward B. Moreton, Presiding; Hearing on Application for Order for Appearance and Examination - Not Held - Taken Off Calendar by Party

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  • 06/14/2019
  • at 08:30 AM in Department 44, Edward B. Moreton, Presiding; Hearing on Application for Order for Appearance and Examination - Not Held - Taken Off Calendar by Party

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  • 06/12/2019
  • at 08:30 AM in Department 44, Edward B. Moreton, Presiding; Hearing on Application for Order for Appearance and Examination - Not Held - Taken Off Calendar by Party

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  • 06/10/2019
  • at 08:30 AM in Department 44, Edward B. Moreton, Presiding; Hearing on Application for Order for Appearance and Examination - Not Held - Taken Off Calendar by Party

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  • 01/29/2019
  • Judgment (Confirming Arbitratioin Award); Filed by LSCD4635, Inc. (Defendant)

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  • 01/29/2019
  • Notice of Entry of Judgment / Dismissal / Other Order; Filed by Clerk

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  • 01/03/2019
  • Proof of Service by Mail; Filed by LSCD4635, Inc. (Defendant)

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  • 01/02/2019
  • Notice (OF CASE REASSIGNMENT); Filed by Meditech Laboratories, Inc. (Plaintiff)

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172 More Docket Entries
  • 04/09/2015
  • PROOF OF SERVICE SUMMONS

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  • 04/09/2015
  • Proof-Service/Summons

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  • 04/09/2015
  • PROOF OF SERVICE SUMMONS

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  • 04/02/2015
  • Notice of Case Management Conference; Filed by Clerk

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  • 04/02/2015
  • NOTICE OF CASE MANAGEMENT CONFERENCE

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  • 03/30/2015
  • 1ST AMENDED COMPLA1NT

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  • 03/30/2015
  • First Amended Complaint; Filed by Plaintiff/Petitioner

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  • 03/26/2015
  • Complaint; Filed by Meditech Laboratories, Inc. (Plaintiff)

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  • 03/26/2015
  • SUMMONS

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  • 03/26/2015
  • COMPLAINT 1. SPECIFIC PERFORMANCE (EQUITY); ETC

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Tentative Rulings

Case Number: BC576721    Hearing Date: March 09, 2020    Dept: 44

HEARING DATE: March 9, 2020

CASE NUMBER: BC576721

CASE NAME: Meditech Laboratories, Inc. v. LSCD4635, Inc. et al

MOVING PARTY: Defendant and Judgment Creditor LSCD4635, Inc.

OPPOSING PARTY: Business Services of America, Inc.

MOTION: Motion to Amend Judgment

OPPOSITION: Filed

REPLY: Filed

TENTATIVE Defendant LSCD4635, Inc.’s Motion to Amend Judgment is

RULING: GRANTED.

Evidentiary Objections

BSA’s evidentiary objections are OVERRULED. BSA has failed to file objections in the proper format in compliance with California Rules of Court, rule 3.1354(c).

Judicial Notice

Defendant’s request for judicial notice is GRANTED as to Exhs. 1, 2, 4, 5, 6, 10, 12, 13, 16, 18, 21, 22, 23, 24, 25, 26, 27, 28, and 30. (Evid. Code § 452.) These are documents of this court, certified copies of documents in other courts, and certified public records. The Court takes judicial notice of the documents, but not the truth of their contents.

Defendant’s request for judicial notice of Exhs. 3, 7, 8, 9, 11, and 14 is DENIED because they are not certified copies. Judicial notice is DENIED as to Exhs. 15, 17, 19, and 29 because they are not properly authenticated.

Alter-Ego

CCP § 187 states: “[w]hen jurisdiction is, by the Constitution or this Code, or by any other statute, conferred on a Court or judicial officer, all the means necessary to carry it into effect are also given; and in the exercise of this jurisdiction, if the course of proceeding be not specifically pointed out by this Code or the statute, any suitable process or mode of proceeding may be adopted which may appear most conformable to the spirit of this code.” “Code of Civil Procedure section 187 may be used, ‘‘at any time so that the judgment will properly designate the real defendants.’’ [Citation.]” (Wells Fargo Bank, National Association v. Weinberg (2014) 227 Cal.App.4th 1, 7.)

“Under Code of Civil Procedure section 187, ‘the trial court has jurisdiction to modify a judgment to add additional judgment debtors.’ [Citation.]” (Wolf Metals Inc. v. Rand Pacific Sales, Inc. (2016) 4 Cal.App.5th 698, 703.) Section 187 “empowers trial courts to amend a judgment to add additional judgment debtors in appropriate circumstances and most frequently has been invoked in the context of alter egos.” (Hearn Pacific Corporation v. Second Generation Roofing Inc. (2016) 247 Cal.App.4th 117, 132.)

“To prevail on the motion, the judgment creditor must show, by a preponderance of the evidence, that: ‘(1) the parties to be added as judgment debtors had control of the underlying litigation and were virtually represented in that proceeding; (2) there is such a unity of interest and ownership that the separate personalities of the entity and the owners no longer exist; and (3) an inequitable result will follow if the acts are treated as those of the entity alone.’ [Citation.] The decision to grant or deny the motion lies within the sound discretion of the trial court [citation] and will not be disturbed on appeal if there is a legal basis for the decision and substantial evidence supports it. [Citation.]” (Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 280.)

“Alter ego ‘is an extreme remedy, sparingly used.’ [Citation.] ‘‘The standards for the application of alter ego principles are high, and the imposition of [alter ego] liability . . . is to be exercised reluctantly and cautiously.’’ [Citation.] Still, ‘‘[t]he greatest liberality is to be encouraged’’ in allowing judgments to be amended to add the ‘real defendant,’ or alter ego of the original judgment debtor, ‘‘in order to see that justice is done.’’ [Citations.]” (Id. p. 281.)

“In determining whether there is a sufficient unity of interest and ownership, the court considers many factors[.]” (Highland, supra, 244 Cal.App.4th 267, 280–281.) Those factors are: “‘[1] [c]ommingling of funds and other assets, failure to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses . . .; [2] the treatment by an individual of the assets of the corporation as his own . . .; [3] the failure to obtain authority to issue stock or to subscribe to or issue the same . . .; [4] the holding out by an individual that he is personally liable for the debts of the corporation . . .; the failure to maintain minutes or adequate corporate records, and the confusion of the records of the separate entities . . .; [5] the identical equitable ownership in the two entities; the identification of the equitable owners thereof with the domination and control of the two entities; identification of the directors and officers of the two entities in the responsible supervision and management; sole ownership of all of the stock in a corporation by one individual or the members of a family . . .; [6] the use of the same office or business location; the employment of the same employees and/or attorney . . .; [7] the failure to adequately capitalize a corporation; the total absence of corporate assets, and undercapitalization . . .; [8] the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual or another corporation . . .; [9] the concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities . . .; [10] the disregard of legal formalities and the failure to maintain arm's length relationships among related entities . . .; [11] the use of the corporate entity to procure labor, services or merchandise for another person or entity . . .; [12] the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another . . .; [13] the contracting with another with intent to avoid performance by use of a corporate entity as a shield against personal liability, or the use of a corporation as a subterfuge of illegal transactions . . .; [14] and the formation and use of a corporation to transfer to it the existing liability of another person or entity.” . . . [¶] This long list of factors is not exhaustive. The enumerated factors may be considered “[a]mong” others “under the particular circumstances of each case.’’ . . . ‘No single factor is determinative, and instead a court must examine all the circumstances to determine whether to apply the doctrine . . . .’’ [Citation.]” (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 512–513.)

“A court may also disregard the corporate form in order to hold one corporation liable for the debts of another affiliated corporation when the latter ‘is so organized and controlled, and its affairs are so conducted, as to make it merely an instrumentality, agency, conduit, or adjunct of another corporation.’ ” (Toho-Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096, 1107 [quoting Las Palmas Assocs. v. Las Palmas Center Assocs. (1991) 235 Cal.App.3d 1220, 1249] [internal quotations omitted].) “Thus, where there is ‘such domination of finances, policies and practices that the controlled corporation has, so to speak, no separate mind, will or existence of its own and is but a business conduit for its principal’ [citations], the affiliated corporations may be deemed to be a single business enterprise, and the corporate veil pierced.” (Id. at 1107.) “Under the ‘single business enterprise’ doctrine, separate corporations may operate with integrated resources in pursuit of a single business purpose.” (Id. at 1107-08 [citations omitted].) “The ‘single-business-enterprise’ theory is an equitable doctrine applied to reflect partnership-type liability principles when corporations integrate their resources and operations to achieve a common business purpose.” (Id. at 1108 [citations omitted].)

Defendant argues that Meditech was one of several entities that were effectively a single business venture controlled and equitably owned by Quoc (Daniel) Ha and/or his wife. There were longstanding problems with lawsuits by Boston Medical Group (“BMG”) patients, thus there was a pattern of creating structures to insulate from liability the entities and persons profiting from BMG and Meditech. Ha has identified White Star Universal, LLC, of which he is the manager, as the owner of BSA. He claims non-ownership of BSA but refuses to identify the owners. Ha, through BSA, drains Meditech of its profits through “bogus” management fees, lease arrangements, and fails to pay BMG receivables. The substance of the relationship between BSA and Meditech is that the entities are effectively just one company since they manipulate the assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another. BSA was created in 2016 to avoid liabilities of its predecessors and was engaged with managing the BMG clinics and in relation to Meditech was an artificial structure intended to put its cash flow beyond the reach of its creditors.

Defendant argues that BSA controlled the litigation because Ha’s wife (“Tran”), the ostensible President and shareholder of Meditech, did not even attend the arbitration. Ha was there everyday and based on his admitted control of Meditech through BSA, and Tran’s evident disengagement, he can be presumed to have exercised primary control of the litigation.

Defendant also argues that as of March 31, 2019, the paid-in-capital of Meditech was $500 and its retained earnings were negative $84,882. Defendant argues that this capital is in relation to several million dollars in management fees charged by BSA and its predecessors, and the over $875,000 in rent it was charged by the QK Partnership.

In support of these arguments Defendant presents the following evidence. BMG offers expensive alternatives to orally ingested erectile dysfunction medications. BMG has 11 clinics in 6 states, including 3 in California, but has no connection to the city of Boston. (Dumas Decl., ¶ 2, Exh. A.) The website of BMG states that Ha is the Founder and Ha admits in his deposition that he was “running” BMG. (Dumas Decl., ¶ 2, Exh. A; JDE, 120:21-23.) Defendant provides a lawsuit that BMG and its supplier, Meditech, were a target of, where BMG patients alleged that they were rendered impotent by BMG treatments and Meditech medications. (RJN, Exh. 4.) Defendant argues that these lawsuits are why Ha developed structures to protect the earnings of BMG and Meditech, including through the use of management companies such as BSA.

Ha claims to not own or have any position with any entity that directly operates a BMG clinic. (Ha Depo., 11:18-12:4.) Entities manage the BMG clinics and Meditech, the pharmacy that supplied the medications to BMG patients until 2016. The first entity was Boston Men’s Health Center, Inc. (“BMHC”), which Ha set up in 1998 to help establish Boston Medical Groups and was incorporated in both California and Florida. (RJN, Exh. 5-6; Ha Depo., 22:15-24.) Defendant argues that BMHC Florida was owned by another Florida corporation, North America Men’s Health, Inc. (“NAMH”) and uses RJN, Exhibit 7 as support. Exhibit 7 is not a certified copy, but Defendant indicates that he will provide a certified copy prior to the hearing. If this is done, then the Court may consider it.[1] Defendant asserts that NAMH was owned by a Virgin Islands entity, Finca Verde, Ltd., which Ha is a shareholder of. (RJN, Exh. 4.) However, the only evidence provided for this assertion is a complaint in another case. The allegations of another complaint cannot be held as true here. Defendant also asserts that Ha was the only officer of both BMHC and NAMH. (RJN, Exhs. 7*, 10.) BMHC grossed $16,402,318 in the fiscal year ending June 30, 2009. (RJN, Exh. 8*.)

On June 24, 2011, BMHC filed a Chapter 11 bankruptcy in the Central District of California, initially scheduling $18,855,912 in general unsecured debts. (RJN, Exh. 7*.) In the BMHC bankruptcy, the declaration of Ha stated that proposal was to sell the BMHC assets to Optimum Physician’s Management Services, Inc. (“OPMS”), which Ha admitted an ownership interest in. (RJN, Exh. 11*, Ha Decl., ¶¶ 13-19.) Ha served as the president and director of OPMS which became the manager of Meditech and may have managed BMG clinics. (Ha Depo. 16:23-17:6; 23:13-26; RJN, Exh. 12.)

OPMS was succeeded in 2016 by BSA, which Ha serves as CEO. (RJN, Exh. 13.) Ha testified that he is a director, officer, president, secretary, and treasurer of BSA, even though their 2017 Statement of Information states that there is a different secretary and CFO. (RJN, Exh. 13; Ha Depo., 27:1-13.) BSA which was formed to replace OPMS, now manages Meditech, and Ha is "the president who run [sic] the day-to-day work of BSA.” (Ha depo., 16:20-22, 19: 3-4, 26:21-22.) Ha has testified that neither he nor his wife, Tran, have any ownership interest in BSA. (Ha Depo., 15:16-16:10.) In the post-judgment proceedings, Ha refused to identify the BSA shareholders or to produce any documents regarding its finances, although he previously testified that he believes that the shareholder is a company called White Star Universal, LLC., for which he serves as manager. (Ha depo., 36:12-25.)

Defendant points out that OPMS had been a target in a major lawsuit brought against BMG. (RJN, Exh. 4.) Ha claims that OPMS was dissolved and BSA formed because "some of the people from Boston Medical Group did not like the performance of OPMS, which hurt them financially. So they stopped employing OPMS." Yet both companies were managed by Ha and about 10 other people from OPMS were brought over to work at BSA. (Ha Depo., 17:2-18:2.)

The property at South Pointe Drive, Laguna Hills, CA 92653 (the "South Pointe Drive Property") was transferred to the QK Ha Family Limited Partnership (the "QK Partnership") by a deed recorded December 12, 2012. (RJN, Exh. 16. JDE, 70:21-71:1.) Thereafter, except for the BMG clinics, and the Meditech pharmacy in Las Vegas, BMHC, NAMH, OFIG, and BSA have been located at the South Pointe Drive address. (RJN, Exhs. 6, 10, 12, 13.)

Ha’s wife, Tran, is the owner of Meditech. (Tran Depo., 8:8-9.) She bought Meditech from Ha, her husband, while they were married in 2009. (Tran Depo., 66:8-19.) She testified that BSA manages for Meditech “pretty much everything” from accounting, payroll, hiring people, day-to-day business, administration, and compliance. (Tran Depo., 16: 1-7.) Tran works at a home office, with no computer links to the South Pointe Drive Property. She has a Meditech e-mail address, but mainly uses her personal Yahoo e-mail. (Tran Depo., 20:17-21:23.) Tran stated in her deposition that "[Ha] is the management team ... So he's the one who pretty much negotiated the deals and whatnot for me." (Tran depo., 44:24-45:1.) Tran described the agreement between Meditech and LSCD4635 as an agreement between "Daniel Ha and Stephen.” (Tran depo., 44:19-21.) Stephen is the President of Defendant. Defendant represents that Stephen only dealt with Ha and Tran did not attend the arbitration, but Ha attended everyday.

In an agreement dated July 1, 2016, Meditech agreed to pay BSA a fixed fee of $75,000 for “general administrative services” and a further $95,000 for “advertising and marketing,” an aggregate of $170,000 per month or a total of $2,040,000 for the first year. This is more than double what OPMS had charged and is high in relation to the $4,085,445 in gross income of the recently completed 2015-2016 fiscal year. (Dumas Decl., ¶¶ 7, 10, Exhs. F, I.) At Tran’s deposition in May 2017, she stated that BSA charges Meditech $35,000 a month to manage the company. (Tran Depo., 21:24-22:1.) Further, Meditech’s General Ledger shows irregular payments. $2,030,000 in management fees was deducted. There are also charges for marketing and advertising totaling $1,087,551. There are also fees for billing services and collection fees totaling $580,410. On the first day of the arrangement, July 1, 2016, Meditech paid BSA $200,000. Thereafter, and repeating a pattern that had prevailed in the prior fiscal year with OPMS, payments ran from as low as $10,000 to as high as $210,000 on December 14, 2016. The sum of $607,000 was paid in the month of December 2016. (Dumas Decl., ¶ 5, Exh. D.)

An agreement on July 1, 2017 reduced the fee for general administration from $75,000 to $70,000 and eliminated the advertising and marketing component. (Dumas Decl., ¶ 14, Exh. M.) Meditech appears to have abandoned marketing efforts thereafter. (Dumas Decl., ¶ 15, Exh. N; JDE, 20:20-24:17.) On July 2, 2017, $303,368 of debt of Meditech to OPMS was transferred from OPMS to BSA without any explanation of obligation. (Dumas Decl., ¶ 5, 19, Exhs. D, R.) Defendant represents that revenues of Meditech halted in the first half of 2018, but the $70,000 per month charges for management fees continued. (Dumas Decl., ¶ 15, Exh. N.)

Defendant argues that once it prevailed in arbitration in July 2018, a process began to transfer the assets of Meditech and terminate its operations. However, the $70,000 per month management fee continued until the end of October. (Dumas Decl., ¶ 16, Exh. 0.) BSA was obligated to pay Meditech, as the master tenant, rent for the South Pointe Drive Property in the amount of $11,000 per month until June 2019. In July 2017, the obligation decreased to $5,000 per month. (Dumas Decl., ¶ 14, Exh. M.) Ha testified that Meditech agreed to the decreased because BSA was going to use less room and wanted smaller costs. (JDE, 65:20-69:1.) In September 2016, Medtiech ceased making lease payments to QK Partnership and Ha testified that the company doesn’t have money to pay, so the money owed was still on the book. (Dumas Decl., ¶ 17, Exh. P; JDE, 76:8-79:12.) Ha testified that QK Partnership did not seek the rent from the subtenant BSA because that was not how the contract was struck. (JDE, 80:4-9.)

After the issuance of the interim arbitration award in favor of Defendant, on July 26, 2018, Meditech recorded a UCC Financing Statement for a security interest in all Meditech assets in favor of White Universal LLC, the Nevada entity that owns BSA, for the purpose of securing an indebtedness to White Star. (RJN, Exh. 21.) On August 7, 2018, this was replaced by a UCC Statement in favor of White Star Investment Universal Limited, a Virgin Islands entity. (RJN, Exh. 22.) Ha is the manager of the Nevada entity and at least a director of the Virgin Islands entity because he signed three agreements on behalf of it in the period from August 2018 through February 2019. (Dumas Decl., ¶¶ 24, 26, 27, Exhs. W, Y, Z.) On August 7 a UCC Statement was recorded in favor of Tran securing an indebtedness to her of $815,000, Statements in favor of BSA to secure a $1.3 million debt on August 15, $303,368.68 on August 30, and $2,568,891 on October 12, Statement in favor of MBC to secure $415,000 on August 15, and a Statement in favor of QK Ha Partnership on October 12 for $417,705. (RJN, Exhs. 23, 24, 25, 26, 27, and 28.) All of these debts have corresponding belatedly prepared Promissory Notes and Security Agreements. (Dumas Decl., ¶¶ 28-31, Exhs. AA-CC.) Defendant argues that none of the debts figured in the internally prepared balance sheet for the fiscal year ending June 30, 2017 or the balance sheets on the tax return for that year. (Dumas Decl. ¶¶ 20-21, Exhs. S, T.)

Based on the above evidence, Defendant argues that it has demonstrated that Ha, through BSA, has drained Meditech of its profits through management fees, lease arrangements, and a failure to pay BMG receivables. Thus, BSA and Meditech were effectively just one company.

In opposition, BSA filed an abundance of evidentiary objections that are not properly formatted. On the merits, it argues that Meditech and BSA are separate entities, with different business purposes and locations. BSA’s president and director is HA, but Joan Simpson is the secretary and Pazhanganattu Asokan is the treasurer. BSA’s revenues were not exclusively from Meditech. Ha does not own Meditech, Tran does not own BSA, and BSA is owned by White Star Universal, LLC, which HA is a manager but not an owner of.

BSA argues that Meditech became unable to pay its debts because its three revenue streams failed when (1) BMG needed to source medication from an FDA 503b pharmacy which Meditech was not after changes in regulations controlling compounding pharmacies, (2) it became expensive to comply with the new regulations requirement Meditech to obtain the 503b license, (3) Meditech could no longer ship outside California, causing Meditech’s marketing companies to stop referring PPO business to Meditech because they did not want to work with a pharmacy that could not fill prescriptions in multiple states, and (4) Workers’ Compensation insurers paid too slowly to cover Meditech’s high up-front costs. BSA’s management fees were reasonable considering the management was a driving force behind Meditech’ s increase in revenues. BSA offers Ha’s, Tran’s, and Asokan’s declarations as evidence as well as some deposition testimony.

Based on the evidence presented, the factors preponderate in Defendant’s favor. (1) There appears to be identical equitable ownership, control, and management in the two entities by HA; (2) They use the same office or business location, or at least have a lease agreement for the same location and Ha is essentially the manager of both entities as Tran has testified that he manages Meditech and is her employee; (3) Meditech is undercapitalized and has recorded UCC Finance Statements for its assets; (4) There is concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities by both Ha and Tran as they provide evasive responses at their depositions and are not able to keep track of all their businesses and/or business dealings; (5) The entities disregard legal formalities and fail to maintain arm's length relationships among related entities by the rent decrease, unjustified management costs, unexplained irregular payments, inconsistent representation of who the secretary and treasurer is for BSA, and the unexplained promissory notes after the interim arbitration award issued; (6) The diversion of assets from Meditech based on the belated promissory notes to the detriment of creditors, and the manipulation of assets and liabilities between entities so as to concentrate the assets in BSA and the liabilities in Meditech based on the unexplained fees, rent payments, and promissory notes.

BSA’s evidence relies on self-serving declarations and it does not attempt to explain the belated promissory notes. Significantly, BSA provides no evidence justifying the high management fees, irregular payments, or belated promissory notes. The ledger and the promissory notes shows an enormous amount of transferred funds that are suspect and BSA does not provide clarity. Further, the inconsistent and evasive testimony shows a disregard for legal formalities and BSA appeared to have control of the litigation as it was apparently managing almost all aspects of Meditech at the time and Ha was present for the arbitration. Tran’s testimony also shows a lack of knowledge of her business and its dealings and relies on BSA’s and Ha’s management. Moreover, Tran testified that the underlying contract between Meditech and Defendant was between Ha and Stephen for Defendant. Tran testified that he was working as an employee of Meditech. There appears to be minimal separation between Ha’s work for BSA and Ha’s work for Meditech.

As such, the three factors for alter-ego liability are met and the motion is GRANTED.


[1] There are other Exhibits in the RJN that Defendant indicates it will provide a certified copy for prior to the hearing. These Exhibits are cited to herein and the corresponding evidence is laid out herin in case these certified copies are provided. The court’s consideration of these is contingent on the certified copies being provided. These contingent exhibits have an indication of “*” next to the exhibit number.