This case was last updated from Los Angeles County Superior Courts on 09/03/2020 at 01:05:19 (UTC).

ZHAO HUI SHI ET AL VS RACHEL H LEW ET AL

Case Summary

On 05/25/2017 ZHAO HUI SHI filed a Property - Other Property Fraud lawsuit against RACHEL H LEW. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are MARC MARMARO and EDWARD B. MORETON. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****2775

  • Filing Date:

    05/25/2017

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Property - Other Property Fraud

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

MARC MARMARO

EDWARD B. MORETON

 

Party Details

Plaintiffs, Petitioners and Appellants

SHI ZHAO HUI

LU JUN

Defendants and Respondents

THROPAY JOHN P.

LEW RACHEL H.

DOES 1 THROUGH 50

MILLER MAYER LLP

WOLFDORF ROSENTHAL LLP

US REGIONAL ECONOMIC DEVELOPMENT AUTH.

DERRICO DAVID GERALD

Not Classified By Court

TEST PARTY FOR TRUST CONVERSION

WILCOX #9178 WIL S.

GUERRA #10977 SANDRA

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

LAW OFFICES OF STEVEN P. SCANDURA

SCANDURA STEVEN P.

Defendant and Respondent Attorneys

LEW RACHEL H.

LAW OFFICES OF TAMMY H. LUND

LUND TAMMY ESQ.

TRAYLOR JENNIFER E. ESQ.

SAUNDERS JENNIFER K.

WAXLER ANDREW J. ESQ.

LUND TAMMY

TRAYLOR JENNIFER E.

WAXLER ANDREW J.

NEWCOMB JENNIFER ELIZABETH

BRYNER CANDICE

NEWCOMB JENNIFER E.

 

Court Documents

Minute Order - MINUTE ORDER (COURT ORDER)

7/27/2020: Minute Order - MINUTE ORDER (COURT ORDER)

Writ of Execution - WRIT OF EXECUTION (LOS ANGELES)

8/26/2020: Writ of Execution - WRIT OF EXECUTION (LOS ANGELES)

Opposition - OPPOSITION TO PLAINTIFFS' EX PARTE APPLICATION FOR ORDER TO SHORTEN TIME TO BRING MOTION TO CONTINUE TRIAL

8/30/2019: Opposition - OPPOSITION TO PLAINTIFFS' EX PARTE APPLICATION FOR ORDER TO SHORTEN TIME TO BRING MOTION TO CONTINUE TRIAL

Abstract of Judgment - Civil and Small Claims

10/2/2019: Abstract of Judgment - Civil and Small Claims

Proof of Service by Mail

10/17/2019: Proof of Service by Mail

Reply - REPLY IN SUPPORT OF DEMURRER TO PLAINTIFFS' THIRD AMENDED COMPLAINT

10/30/2019: Reply - REPLY IN SUPPORT OF DEMURRER TO PLAINTIFFS' THIRD AMENDED COMPLAINT

Motion for Attorney Fees

12/31/2019: Motion for Attorney Fees

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S DEMURRER TO PLAINTIFFS' FIRST AMENDED COMPLAINT

2/8/2018: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT'S DEMURRER TO PLAINTIFFS' FIRST AMENDED COMPLAINT

PROOF OF SERVICE

2/20/2018: PROOF OF SERVICE

DEFENDANT RACHEL H. LEW'S NOTICE OF MOTION AND MOTION TO STRIKE PLAINTIFFS' CLASS ACTION FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

2/20/2018: DEFENDANT RACHEL H. LEW'S NOTICE OF MOTION AND MOTION TO STRIKE PLAINTIFFS' CLASS ACTION FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF

NOTICE OF HEARING ON DEFENDANT MILLER MAYER LLP'S SPECIAL MOTION TO STRIKE PLAINTIFFS' COMPLAINT PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 425.16

4/9/2018: NOTICE OF HEARING ON DEFENDANT MILLER MAYER LLP'S SPECIAL MOTION TO STRIKE PLAINTIFFS' COMPLAINT PURSUANT TO CODE OF CIVIL PROCEDURE SECTION 425.16

ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE

4/17/2018: ORDER APPOINTING COURT APPROVED REPORTER AS OFFICIAL REPORTER PRO TEMPORE

Proof of Service -

6/29/2018: Proof of Service -

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT WOLFSDORF ROSENTHAL, LLP'S MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT

6/29/2018: MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT WOLFSDORF ROSENTHAL, LLP'S MOTION TO STRIKE PORTIONS OF PLAINTIFFS' SECOND AMENDED COMPLAINT

DECLARATION OF PATRICK J. GOODE II IN SUPPORT OF MOTION FOR SANCTIONS BY DEFENDANT WOLFSEJORF ROSENTHAL LLP

8/3/2018: DECLARATION OF PATRICK J. GOODE II IN SUPPORT OF MOTION FOR SANCTIONS BY DEFENDANT WOLFSEJORF ROSENTHAL LLP

Other - - Other - Court's Tentative Ruling

11/15/2018: Other - - Other - Court's Tentative Ruling

Memorandum of Costs After Judgment, Acknowledgment of Credit, and Declaration of Accrued Interest

5/7/2019: Memorandum of Costs After Judgment, Acknowledgment of Credit, and Declaration of Accrued Interest

Abstract of Judgment - Civil and Small Claims

5/21/2019: Abstract of Judgment - Civil and Small Claims

383 More Documents Available

 

Docket Entries

  • 07/27/2021
  • Hearing07/27/2021 at 10:00 AM in Department 37 at 111 North Hill Street, Los Angeles, CA 90012; Jury Trial

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  • 07/20/2021
  • Hearing07/20/2021 at 08:30 AM in Department 37 at 111 North Hill Street, Los Angeles, CA 90012; Final Status Conference

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  • 08/27/2020
  • DocketWrit of Execution ((Los Angeles)); Filed by Wolfsdorf Rothenthal LLP (Defendant)

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  • 08/27/2020
  • DocketAmended Complaint ( (4th)); Filed by Jun Lu (Plaintiff); Zhao Hui Shi (Plaintiff)

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  • 08/26/2020
  • DocketWrit of Execution ((Los Angeles)); Filed by Wolfsdorf Rothenthal LLP (Defendant)

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  • 08/25/2020
  • DocketAbstract of Judgment - Civil and Small Claims; Filed by Wolfsdorf Rothenthal LLP (Defendant)

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  • 08/25/2020
  • DocketMemorandum of Costs After Judgment, Acknowledgment of Credit, and Declaration of Accrued Interest; Filed by Wolfsdorf Rothenthal LLP (Defendant)

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  • 08/25/2020
  • DocketNotice of Lien; Filed by Wolfsdorf Rothenthal LLP (Defendant)

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  • 08/25/2020
  • DocketNotice of Lien; Filed by Wolfsdorf Rothenthal LLP (Defendant)

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  • 08/25/2020
  • DocketNotice of Lien; Filed by Wolfsdorf Rothenthal LLP (Defendant)

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634 More Docket Entries
  • 08/11/2017
  • DocketCase Management Statement; Filed by Plaintiff/Petitioner

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  • 08/01/2017
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 08/01/2017
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 08/01/2017
  • DocketORDER TO SHOW CAUSE HEARING

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  • 08/01/2017
  • DocketOSC-RE Other (Miscellaneous); Filed by Clerk

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  • 08/01/2017
  • DocketProof-Service/Summons; Filed by Zhao Hui Shi (Plaintiff)

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  • 08/01/2017
  • DocketPROOF OF SERVICE SUMMONS

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  • 05/25/2017
  • DocketComplaint; Filed by Zhao Hui Shi (Plaintiff); Jun Lu (Plaintiff)

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  • 05/25/2017
  • DocketSUMMONS

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  • 05/25/2017
  • DocketCONPLAINT FOR: (1) FRAUD ;ETC

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Tentative Rulings

Case Number: BC662775    Hearing Date: August 20, 2020    Dept: 37

HEARING DATE: August 20, 2020

CASE NUMBER: BC662775

CASE NAME: Zhao Hui Shi and Jun Lu v. Rachel H. Lew, et al.

MOVING PARTY: Judgment Creditor Wolfsdorf Rosenthal LLP

OPPOSING PARTY: Plaintiffs, Zhao Hui Shi and Jun Lu

TRIAL DATE: July 27, 2021

PROOF OF SERVICE: OK

MOTION: Motion for Order to Show Cause Regarding Contempt Against Plaintiffs

OPPOSITION: August 6, 2020

REPLY: None as of August 18, 2020

TENTATIVE: Wolfsdorf Rosenthal’s motion for order to show cause re contempt is DENIED. Wolfsdorf Rosenthal to give notice.

Background

This action arises out of an alleged conspiracy by Defendants to defraud investors in connection with an investment visa program under the United States Government’s EB-5 investment visa program.  Plaintiffs Zhao Hui Shi (“Shi”) and Jun Lu (“Lu”) seek to bring a class action on behalf of themselves and others similarly situated against Defendants who allegedly assisted nonparties Charles C. Liu (“Liu”) and Lisa Wang (“Wang”) in operating a fraudulent investment visa program (the “program”).  Plaintiffs bring this action against Defendants Rachel H. Lew (“Lew”), John P. Thropay (“Thropay”), Wolfsdorf Rosenthal LLP (“Wolfsdorf Rosenthal”), erroneously sued as Wolfsdorf Rothenthal LLP, Miller Mayer, LLP (“Miller Mayer”), David Gerald Derrico (”Derrico”), and U.S. Regional Economic Development Authority, LLC (“USREDA”). 

Plaintiffs filed the First Amended Complaint (“FAC”) on December 19, 2017, asserting four causes of action for: (1) fraud; (2) legal malpractice; (3) negligent misrepresentation; and (4) violation of Penal Code, section 496, subdivision (c), which relates to receipt of stolen property. The FAC named Moving Defendant Miller Mayer, LLP (“Miller Mayer”) as well as several new defendants.

On February 22, 2018 Miller Mayer filed a special motion to strike (“anti-SLAPP motion”). Miller Mayer’s anti-SLAPP motion was granted in its entirety on May 2, 2018. Plaintiffs appealed this May 2, 2018 order and on October 29, 2019 the Court of Appeal ruled in Plaintiffs’ favor, reversing the May 2, 2018 order. The Court of Appeal’s October 29, 2019 order explicitly stated that it only considered whether Miller Mayer’s activity constituted protected activity for purposes of the anti-SLAPP statute and further, stated that it did not consider the merits of Plaintiffs’ allegations against Miller Mayer.

Plaintiffs filed the now operative Third Amended Complaint (“TAC”) on July 15, 2019 during the pendency of Plaintiffs’ appeal of the May 2, 2018 order. The TAC alleges the same four causes of action against each Defendant.

On November 27, 2019, the court granted Wolfsdorf Rosenthal’s motion to Compel Responses to Special Interrogatories, Set One from Plaintiffs. Plaintiffs were ordered to provide responses without objection within 20 days and to pay sanctions of $1,000 to Wolfsdorf Rosenthal.

On March 16, 2020, Wolfsdorf Rosenthal filed the instant Motion for Order to Show Cause re Contempt against Plaintiffs. Wolsdorf Rosenthal motion argues that Plaintiffs should be held in contempt for failure to obey the court’s November 27, 2019 Order and that Plaintiffs should be ordered to pay Wolfsdorf Rosenthal’s attorney’s fees incurred in connection with this motion.

Discussion

Code of Civil Procedure, section 128(a)(4) provide that every court shall have the power to compel obedience of its judgments, orders, and process. Code of Civil Procedure, section 1209(a)(5) provides that disobedience of any lawful order constitutes contempt of the authority of the Court. Per Code of Civil Procedure, section 1211(a), when this contempt is not committed in the presence of the Court, an affidavit “shall be presented to the court or judge of the facts constituting the contempt.” Further, Code of Civil Procedure, section 1218(a) provides that the court, upon answer and evidence taken, shall determine if the party is guilty of contempt, and may impose a fine not exceeding $1,000, payable to the Court. The elements necessary to show contempt are: (1) the making of the order, (2) knowledge of the order, (3) ability of the accused to render compliance, and (4) willful disobedience of the order. (Conn v. Superior Court (1987) 196 Cal.App.3d 774, 784.)

The party seeking to charge another with contempt must complete service of the affidavit provided for in Code of Civil Procedure, section 1211(a) through personal service. (Koehler v. Superior Court (2010) 181 Cal.App.4th 1153, 1169.)

Wolfsdorf Rosenthal argues that Plaintiffs should be held in contempt because Plaintiffs knew of the court’s November 27, 2019 Order requiring them to serve responses to Special Interrogatories, Set One without objection and pay sanctions, and that Plaintiffs willfully disobeyed this order by failing to serve responses or pay sanctions as of the filing of this motion. (Motion, 4-5.)

On August 6, 2020, Plaintiffs filed their opposition to the instant motion. Plaintiffs’ opposition argues that an order to show cause re contempt is not warranted because Plaintiffs have complied with the November 27, 2019 Order by serving responses without objection and by paying sanctions. (Opposition, 1; Declaration of Steven P. Scandura, ¶¶ 2-3, Exhibits A-B.) However, it appears the discovery responses were served on August 6, 2020, which is much later than the date required by the Order. Also, the answers from Plaintiff Lu have a verification dated April 8, 2019 that is not signed by Lu. Finally, the Scandura Declaration purports to have two Exhibits B. The second one is purportedly a wire transfer record paying the sanctions, but the Scandura Declaration, Exhibit B does not contain a copy of any wire transfer records regarding the sanctions to be paid.

Further, Plaintiffs contend that Wolfsdorf Rosenthal’s motion must be denied because the contempt motion was not served personally. Plaintiff’s counsel Steven P. Scandura attests that he has searched his records and has found no record that the contempt motion was personally served. (Scandura Decl. ¶ 4.) Further, Scandura attests that he does not believe his clients were personally served. (Id.) Scandura also attests that he is informed that Plaintiff Lu has not been in the United States since the interrogatories at issue were originally served and that he is informed and believes Plaintiff Lu cannot verify responses under penalty or perjury “because he is in China where to do so would be illegal under Chinese law.” (Scandura Decl. ¶ 5.)

Contrary to their assertions, Plaintiffs have not demonstrated that they have fully complied with the court’s November 27, 2019 order.

However, moving party has not shown personal service on Plaintiffs of this motion or the order on which it is based.

Wolfsdorf Rosenthal’s motion for an order to show cause re contempt is DENIED.

Conclusion

Wolfsdorf Rosenthal’s motion for order to show cause re contempt is DENIED. Wolfsdorf Rosenthal to give notice.

Case Number: BC662775    Hearing Date: July 28, 2020    Dept: 37

HEARING DATE: July 28, 2020

CASE NUMBER: BC662775

CASE NAME: Zhao Hui Shi and Jun Lu v. Rachel H. Lew, et al.

MOVING PARTY: Defendant, Miller Mayer LLP

OPPOSING PARTY: Plaintiffs, Zhao Hui Shi and Jun Lu

TRIAL DATE: September 29, 2020

PROOF OF SERVICE: OK

MOTION: Defendant’s Demurrer to the Third Amended Complaint; Motion to Strike Portions of Third Amended Complaint

OPPOSITION: July 13, 2020

REPLY: July 21, 2020

TENTATIVE: Miller Mayer’s demurrer to the TAC is sustained. Plaintiffs are given 20 days leave to amend from this date. Miller Mayer is to give notice.

Background

This action arises out of an alleged conspiracy by Defendants to defraud investors in connection with an investment visa program under the United States Government’s EB-5 investment visa program.  Plaintiffs Zhao Hui Shi (“Shi”) and Jun Lu (“Lu”) seek to bring a class action on behalf of themselves and others similarly situated against Defendants who allegedly assisted nonparties Charles C. Liu (“Liu”) and Lisa Wang (“Wang”) in operating a fraudulent investment visa program (the “program”).  Plaintiffs bring this action against Defendants Rachel H. Lew (“Lew”), John P. Thropay (“Thropay”), Wolfsdorf Rosenthal LLP (“Wolfsdorf Rosenthal,” erroneously sued as Wolfsdorf Rosenthal LLP), Miller Mayer, LLP (“Miller Mayer”), David Gerald Derrico (”Derrico”), and U.S. Regional Economic Development Authority, LLC (“USREDA”). 

Plaintiffs filed the First Amended Complaint (“FAC”) on December 19, 2017, asserting four causes of action for: (1) fraud; (2) legal malpractice; (3) negligent misrepresentation; and (4) violation of Penal Code, section 496, subdivision (c), which relates to receipt of stolen property. The FAC named Moving Defendant Miller Mayer, LLP (“Miller Mayer”) as well as several new defendants.

On February 22, 2018 Miller Mayer filed a special motion to strike (“anti-SLAPP motion”). Miller Mayer’s anti-SLAPP motion was granted in its entirety on May 2, 2018. Plaintiffs appealed this May 2, 2018 order and on October 29, 2019 the Court of Appeal ruled in Plaintiffs’ favor, reversing the May 2, 2018 order. The Court of Appeal’s October 29, 2019 order explicitly stated that it only considered whether Miller Mayer’s activity constituted protected activity for purposes of the anti-SLAPP statute and further, stated that it did not consider the merits of Plaintiffs’ allegations against Miller Mayer.

Plaintiffs filed the now operative Third Amended Complaint (“TAC”) on July 15, 2019 during the pendency of Plaintiffs’ appeal of the May 2, 2018 order. The TAC alleges the same four causes of action against Miller Mayer.

Miller Mayer now demurrers to the first, third and fourth causes of action of the TAC and additionally moves to strike portions of the TAC. Plaintiff opposes both motions.

Request for Judicial Notice

Miller Mayer requests that the court take judicial notice of all of the following:

  1. October 29, 2019 opinion by the Court of Appeal in the matter Zhao Hui Shi v. Wolfsdorf Rosenthal, LLP et al., Case No. B290792 (Exhibit 1);

  2. November 6, 2019 tentative ruling by this court granting Defendant Rachel H. Lew’s demurrer to the TAC (Exhibit 2);

  3. November 7, 2019 Notice of Ruling regarding Demurrers by Wolfsdorf Rosenthal and Lew (Exhibit 3).

Miller Mayer’s request is granted. The existence and legal significance of these documents are judicially noticeable. (Evidence Code § 452, subds. (d), (h).)

Discussion[1]

  1. Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3 (Mahan), citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

  1. Analysis

  1. First Cause of Action: Fraud

The elements of a fraud cause of action are: (1) misrepresentation (false representation, concealment, or omission); (2) knowledge of falsity; (3) intent to induce reliance; (4) justifiable reliance; and (5) resulting damage. (Davis v. Southern California Edison Co. (2015) 236 Cal.App.4th 619.) Fraud must be pled in the complaint specifically. General and conclusory allegations are not sufficient. (Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 74; Nagy v. Nagy (1989) 210 Cal.App.3d 1262, 1268.) Unlike most causes of action where the “the policy of liberal construction of the pleadings,” fraud requires particularity, that is, “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Stansfield, supra, 220 Cal.App.3d at 73; Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) Every element of a fraud cause of action must be alleged both factually and specifically. (Hall v. Department of Adoptions (1975) 47 Cal.App.3d 898, 904; Cooper v. Equity General Insurance (1990) 219 Cal.App.3d 1252, 1262.)

Miller Mayer contends that the TAC’s still fails to plead sufficient facts to allege a cause of action for fraud against it because the TAC fails to plead fraud by Miller Mayer with specificity. (Demurrer 11-12.) Specifically, Miller Mayer contends the TAC fails to allege how, what when, where, to whom and by what means Miller Mayer made allegedly fraudulent representations. (Id.)

In opposition, Plaintiffs contend that the TAC sufficiently alleges fraud against Miller Mayer because Miller Mayer “created a complete investment scam for Liu out of whole cloth” by creating the Escrow Agreement and Private Offering Memorandum (“POM”) which all Defendants used to defraud all investors in this action. (Opposition, 6-12.) Plaintiffs further appear to argue that Miller Mayer’s fraudulent actions in connection with all Defendants’ investment conspiracy are self-evident, and that the TAC’s paragraphs 26 to 46 sufficiently allege a cause of action for fraud. (Id.)

Here, the TAC alleges that Defendants conspired with Liu and Wang to “defraud numerous investors of their money” in that Liu and Wang used “Defendant Thropay and the other Defendant professionals and the other Defendant professionals to give credibility to the project, who did so willingly and with full knowledge of adverse facts.” (TAC ¶ 51.) Further, the POM was “essentially fraudulent,” and all “professional defendants” continued to assist Liu and Wang after the initial investment by “maintain[ing] the appearance of a legitimate project.” (TAC ¶¶ 51, 53.) The TAC also alleges that Plaintiffs relied on the POM to their detriment, and that all Defendants “must have been painfully aware that Liu and Wang were scamming Plaintiffs” because the investment project “was an obvious façade.” (TAC ¶ 56.) Finally, the TAC alleges that each of the defendants “provided material assistance” by “drafting the documents and petitions” needed to consummate the fraud. (Id.)

The court finds that the TAC’s first cause of action is insufficiently pled as to Miller Mayer. As discussed above, the TAC fails to differentiate between which Defendant engaged in which action in furtherance of Defendants’ allegedly fraudulent investment scheme. Instead, the TAC repeatedly alleges that all Defendants were involved in the investment scheme by “provid[ing] material assistance” or “drafting documents and petitions.” As such, the TAC does not allege how, what, where, to whom and by what means Miller Mayer and not the other Defendants made fraudulent representations to the detriment of Plaintiffs.

For these reasons, Miller Mayer’s demurrer to the first cause of action is sustained.

  1. Third Cause of Action: Negligent Misrepresentation

A Plaintiff must prove the following in order to recover on a negligent misrepresentation claim: ‘[M]isrepresentation Rolapp Shamsian

Miller Mayer contends that the TAC insufficiently pleads a cause of action for negligent misrepresentation against it because the TAC completely fails to allege any communication by Miller Mayer with Plaintiffs. (Demurrer, 13.) In opposition, Plaintiffs appear to argue that the TAC’s third cause of action is sufficiently pled as to Miller Mayer because “either defendant knew that the POM was false, or defendant acted with a reckless disregard for the truth.” (Opposition, 14.)

Here, the TAC alleges that “all of the representations in the POM were essentially fraudulent” and that nonetheless, Liu and Wang used “Defendants” to give credibility to the project. (TAC ¶ 73.) Further, “Defendants” continued to give “aid and assistance” to Liu and Wang after the first investments were made “by continuing to maintain the appearance of a legitimate project,” thereby causing Plaintiffs to invest. (TAC ¶ 74.) As a result of Defendants’ actions, Plaintiffs allegedly relied on the POM to their detriment. (TAC ¶¶ 74-77.) Finally, the TAC alleges that Miller Mayer and the other defendants “must have been painfully aware that Liu and Wang were scamming Plaintiffs.” (TAC ¶ 78.)

Given the foregoing, the court finds the TAC’s third cause of action is insufficiently pled as to Miller Mayer. As Miller Mayer contends, the TAC’s third cause of action fails to allege any communication or representation by Miller Mayer to Plaintiffs. Instead, the TAC’s third cause of action appears to repeat the first cause of action’s allegations about all defendants providing aid and assistance to Liu, and about Miller Mayer being “painfully aware” of Liu and Wang’s actions. Such allegations are insufficient to state a cause of action for negligent misrepresentation.

For these reasons, Miller Mayer’s demurrer to the third cause of action is sustained.

  1. Fourth Cause of Action: Penal Code 496(c)

Penal Code section 496, subdivision (a) provides as follows: “Every person who buys or receives any property that has been stolen or that has been obtained in any manner constituting theft or extortion, knowing the property to be so stolen or obtained, or who conceals, sells, withholds, or aids in concealing, selling, or withholding any property from the owner, knowing the property to be so stolen or obtained, shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170.” Further, Penal Code section 496, subdivision (c) provides that any person who has been injured by a violation of subdivision (a) may bring an action for treble damages, attorney’s fees and costs.

Miller Mayer demurrers to the TAC’s fourth cause of action under Penal Code section 496, subdivision (c) for the same reasons as its demurrer to the first and third causes of action. (Demurrer, 13-14.) Specifically, Miller Mayer contends the TAC’s fourth cause of action is insufficiently pled because the TAC completely fails to allege what actions Miller Mayer and not the other Defendants engaged in which were in violation of Penal Code section 496(c). (Id.)

In opposition, Plaintiffs contend that the TAC’s fourth cause of action is sufficiently pled as to Miller Mayer because Miller Mayer “was the primary enabler of that fraud.” (Opposition, 15.)

The court agrees with Miller Mayer. The court has reviewed the TAC’s fourth cause of action and finds that the TAC’s allegations for this cause of action are substantially identical to the TAC’s allegations in support of the first three causes of action. (see TAC, ¶¶ 80-86.) Specifically, the TAC still alleges in support of the fourth cause of action that all “defendants” were involved in providing aid and assistance to Liu and Wang’s alleged scheme and “must have been painfully aware” that Plaintiffs were scammed by Liu and Wang. (Id.) However, such allegations fail to state a cause of action under Penal Code section 496, subdivision (c) against Miller Mayer individually because the TAC fails to describe what actions Miller Mayer and not the other Defendants engaged in.

For these reasons, Miller Mayer’s demurrer to the fourth cause of action is sustained.

  1. Leave to Amend

Finally, Miller Mayer argues that its demurrer to the TAC should be sustained without leave to amend because Plaintiffs’ action against Miller Mayer is incapable of proceeding without disclosure of attorney-client privileged communications. (Demurrer, 14-17.) Miller Mayer appears to argue that Plaintiff’s TAC against it must be dismissed in its entirety because every piece of evidence that Miller Mayer might present is entirely attorney-client privileged. (Demurrer, 16) Miller Mayer relies on General Dynamics Corp. v. Superior Court, (1994) 7 Cal.4th 1164, 1170 for this argument. (General Dynamics).

Miller Mayer’s reliance on General Dynamics is misplaced. The General Dynamics court analyzed whether an in-house attorney was able to pursue claims for damages following an allegedly wrongful termination. (Id. at 1169.) As such, General Dynamics’ holding is not applicable to the instant action, given that Miller Mayer is alleged to be the former attorneys for Liu, a non-party.

Given the foregoing, the court disagrees with Miller Mayer’s argument regarding the TAC as a whole and does not dismiss the TAC on this basis. Having sustained Miller Mayer’s demurrer to the TAC based on the foregoing reasons, the court does not reach the remainder of the parties’ arguments.

Conclusion

Miller Mayer’s demurrer to the TAC is sustained. Plaintiffs are given 20 days leave to amend from this date. Miller Mayer is to give notice.

MOTION TO STRIKE

Having sustained Miller Mayer’s demurrer to the TAC in its entirety, Miller Mayer’s motion to strike is MOOT.


[1] Moving Defendant submits the declaration of its attorney, Jennifer E. Newcomb (“Newcomb”) to demonstrate that it has complied with its statutory meet and confer obligations pursuant to Code of Civil Procedure sections 430.41 and 435.5 prior to filing the instant demurrer and motion to strike. Newcomb attests that after the Court of Appeal ruled on Plaintiff’s appeal to Miller Mayer’s anti-SLAPP motion, the parties agreed that Miller Mayer would have 30 days from the date of service of the TAC to file a responsive pleading. (Newcomb Decl. ¶ 2, Exhibit A.) Thereafter and according to Newcomb, the parties met and conferred by email regarding the issues addressed in Miller Mayer’s demurrer and motion to strike but were unable to come to an agreement. (Newcomb Decl. ¶¶ 3-8, Exhibits B-F.) Although the court ordinarily expects the parties to meet and confer in person or by telephone, the court finds that in this instance, the Newcomb Declaration is sufficient for purposes of Code of Civil Procedure sections 430.41 and 435.5.

Case Number: BC662775    Hearing Date: February 25, 2020    Dept: 23

HEARING DATE: February 25, 2020

CASE NUMBER: BC662775

CASE NAME: Zhao Hui Shi, et al. v. Rachel H. Lew, et al.

MOVING PARTY: Defendant, Wolfsdorf Rosenthal, LLP

RESPONDING PARTY: Plaintiffs, Zhao Hui Shi and Jun Lu

TRIAL DATE: September 29, 2020

PROOF OF SERVICE: OK

MOTION: Wolfsdorf Rosenthal, LLP’s Motion for Attorney’s Fees on Appeal

OPPOSITION: February 10, 2020

REPLY: February 18, 2020

TENTATIVE: Wolfsdorf Rosenthal’s motion for attorney’s fees is granted in part. The court awards Wolfsdorf Rosenthal a total of $78,263.00. Wolfsdorf Rosenthal is to provide notice.

BACKGROUND

This action arises out of an alleged conspiracy by Defendants to defraud investors in connection with an investment visa program under the United States Government’s EB-5 investment visa program. Plaintiffs Zhao Hui Shi (“Shi”) and Jun Lu (“Lu”) seek to bring a class action on behalf of themselves and others similarly situated against Defendants who allegedly assisted nonparties Charles C. Liu (“Liu”) and Lisa Wang (“Wang”) in operating a fraudulent investment visa program (the “program”). Plaintiffs bring this action against Defendants Rachel H. Lew (“Lew”), John P. Thropay (“Thropay”), Wolfsdorf Rosenthal LLP (“Wolfsdorf Rosenthal,” erroneously sued as Wolfsdorf Rosenthal LLP), Miller Mayer, LLP (“Miller Mayer”), David Gerald Derrico (”Derrico”), and U.S. Regional Economic Development Authority, LLC (“USREDA”).

Plaintiffs filed the First Amended Complaint (“FAC”) on December 19, 2017, asserting four causes of action for: (1) fraud; (2) legal malpractice; (3) negligent misrepresentation; and (4) violation of Penal Code, section 496, subdivision (c), which relates to receipt of stolen property.

Wolfsdorf Rosenthal brought a Special Motion to Strike (“anti-SLAPP”) to Plaintiff’s First Amended Complaint, which was granted on April 17, 2018 other than as to Plaintiff’s legal malpractice cause of action. Plaintiff appealed the April 27, 2018 ruling on June 15, 2018.

On September 27, 2018, the court granted Wolfsdorf Rosenthal’s motion for attorney’s fees and awarded attorney’s fees in the amount of $34,541.35.

On July 15, 2019, Plaintiffs filed a Third Amended Complaint (“TAC”), alleging only legal malpractice against Wolfsdorf Rosenthal. On October 29, 2019, the Court of Appeal issued its opinion Plaintiff’s June 15, 2018 appeal. The Court of Appeal affirmed the April 27, 2018 ruling granting Wolfsdorf Rosenthal’s anti-SLAPP motion, finding that Wolfsdorf Rosenthal made a prima facie showing that prosecution of visa petitions with the United States Citizenship and Immigration Services (“USCIS”) is a protected activity. Further, the Court of Appeal concluded that Plaintiffs cannot meet their burden of establishing that their claims against Wolfsdorf Rosenthal have minimal merit, as Plaintiff’s pleadings and accompanying evidence did not tie Wolfsdorf Rosenthal to the wrongdoing alleged in the FAC as to the causes of action alleged other than legal malpractice. (see Court of Appeal Opinion of October 29, 2019, 2-3.) The Court of Appeal further concluded that Wolfsdorf Rosenthal was to recover its costs on appeal “relating to plaintiffs’ claims against it.” (Id. at 23.)

On November 6, 2019, Wolfsdorf Rosenthal’s demurrer to the TAC came on for hearing. The court sustained Wolfsdorf Rosenthal’s demurrer without leave to amend.

Wolfsdorf Rosenthal now moves to recover its attorney’s fees on appeal pursuant to the Court of Appeal’s October 29, 2019 opinion. Plaintiff opposes the motion.

DISCUSSION

  1. Legal Standard

Code of Civil Procedure, section 425.16, subdivision (c)(1) provides in relevant part: “[A] prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs.” (Code Civ. Proc. § 425.16, subd. (c)(1).)[1] The fee-shifting provision is mandatory, and it is a mechanism intended to promote the policy underlying the anti-SLAPP statute generally—namely, to discourage SLAPP suits brought to chill the valid exercise of the constitutional rights of free speech and petition for the redress of grievances. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131 (Ketchum).)

The prevailing party may only recover the attorney fees incurred in connection with the special motion to strike, not the action as a whole. (See, e.g., Lafayette Morehouse, Inc. v. Chronicle Publ’g Co. (1995) 39 Cal.App.4th 1379, 1383 [“the Legislature intended that a prevailing defendant on a motion to strike be allowed to recover attorney fees and costs only on the motion to strike, not the entire suit”]; S.B. Beach Properties v. Berti (2006) 39 Cal.4th 374, 381 [“the fee ‘provision applies only to the motion to strike, and not to the entire action’ ”]; City of Industry v. City of Fillmore (2011) 198 Cal.App.4th 191, 218 [“The defendant can recover only its fees and costs in connection with the motion, not the entire action.”] (City of Industry).)

  1. Analysis

The court’s objective is to award a fee at the fair market value for the particular action. (Ketchum, supra, 24 Cal.4th at p. 1132.) The analysis generally begins with the lodestar figure—i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate. (Id. at pp. 1131-1132.) The lodestar is the basic fee for comparable legal services in the community. (Id. at p. 1132.) The court may then adjust the lodestar to arrive at the fair market value of the legal services provided. In adjusting the lodestar, the court considers factors including (1) the contingent nature of the fee award, (2) the novelty and difficulty of the questions involved, (3) the skill displayed in presenting them, and (4) the extent to which the nature of the litigation precluded other employment by the attorneys. (Ibid.)

  1. Reasonableness of the Hourly Rates

“The reasonable hourly rate is that prevailing in the community for similar work.” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) “The experienced trial judge is the best judge of the value of professional services rendered in his court.” (Ibid.) The Court “need not simply award the sum requested. To the contrary, ascertaining the fee amount is left to the trial court's sound discretion.” (Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1321 (Christian).) “The basis for the trial court’s calculation must be the actual hours counsel has devoted to the case, less those that result from inefficient or duplicative use of time.” (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 395.) “The law is clear, however, that an award of attorney fees may be based on counsel’s declarations, without production of detailed time records. (Raining Data Corp. v. Barrenechea (2009) 175 Cal.App.4th 1363, 1375.)

Wolfsdorf Rosenthal requests attorney’s fees and costs in the amount of $105,041.68 in connection with handling Plaintiff’s appeal of the April 27, 2018 as well as $16,978.49 in connection with the instant motion plus a $60.00 filing fee, for a total of $122,080.17. Wolsdorf Rosenthal submits declarations from Robert M. Shaughnessy (“Shaughnessy”), Valerie A. Moore (“Moore”) and Jennifer Saunders (“Saunders”) in support of its fee request.

First, Shaughnessy attests that he is a shareholder with the law firm Klinedinst PC, former attorneys of record for Wolsdorf Rosenthal. (Shaughnessy Decl. ¶ 1.) Shaughnessy attests that he has more than 25 years of experience researching, drafting, evaluating and arguing complex matters, including anti-SLAPP motion sat both the trial and appellate court levels. (Shaughnessy Decl. ¶ 4.) Shaughnessy attests that he is also a founding member of the San Diego Appellate Inns of Court. (Id.) Shaughnessy attests that while Klinedinst PC’s rates were $425-$450 in 2018 and 2019 for shareholders, Klinedinst PC billed shareholders at $250 per hour for this matter. (Shaughnessy Decl. ¶¶ 6-7.)

Second, Moore attests that she is a partner with the law firm Haight Brown & Bonesteel, LLP (“HBB”), counsel of record for Wolsdorf Rosenthal. (Moore Decl. ¶ 1.) Moore attests that she has been practicing for 36 years and has handled multiple appeals taken from trial court’s granting of anti-SLAPP motions. (Moore Decl. ¶ 3.) Moore also served as Chair of the Appellate Practice Group at HBB at the time she handled this appeal. (Id.) According to Moore, HBB’s usual rate for appellate work by partners in 2019 was $450. (Moore Decl. ¶ 9.) However, according to Moore, Wolsdorf Rosenthal was charged $245 per hour in this matter. (Moore Decl. ¶ 10.)

Third, Saunders attests that she is also a partner with HBB. (Saunders Decl. ¶ 1.) According to Saunders, she has practiced with HBB for her entire 34-year career and have focused on “defending professionals” at both the state and federal courts at the trial level. (Saunders Decl. ¶ 3.) Saunders also attests to frequently speaking on issue of professional liability and ethics, and to serving as an arbitrator on attorney-client fee disputes for over ten years. (Id.) According to Saunders, HBB billed its paralegals at $100 per hour for this matter. (Saunders Decl. ¶ 8.)

Notwithstanding each of Moore and Saunders’ declarations regarding HBB’s usual rates and the rates each billed under for this matter, Wolfsdorf Rosenthal requests a rate of $625.87 pursuant to the 2019 Laffey matrix for the work performed by Moore and Saunders. (Motion, 11.) They argue that in determining the reasonable hourly rate, the hourly rate actually charged to the applicant is not controlling and "do[es] not compel any particular award." (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1096; Nemecek & Cole v. Horn (2012) 208 Ca1.App.4th 641, 652 [hourly rate billed by insurance defense counsel did not represent the maximum hourly rate reasonably recoverable as fees). Where the attorney's actual charges to the client are less than the amount of a reasonable hourly rate, the court generally may increase the rate actually charged to the reasonable rate. (PLCM Group, 22 Ca1.4th at p. 1095 ["The reasonable hourly rate is that prevailing in the community for similar work. The lodestar figure may . . . be adjusted . . . to fix the fee at the fair market value for the legal services provided."]; Chacon v. Litke (2010) 181 Ca1.App.4th 1234, 1259 [lodestar method appropriate for calculating fee award and affirmed award exceeding actual hourly rate under fee agreement].

Plaintiffs contend that Wolfsdorf Rosenthal’s request for a rate of approximately $625 per hour in accordance with the Laffey index is excessive and that $250 should be deemed the appropriate rate. (Opposition, 4-7.) Plaintiffs point to each declaration, which indicates that Wolsdorf Rosenthal was actually billed at $250, for the proposition that the reasonable rate is $250 given that the declarations allegedly do not state any basis to conclude that Wolsdorf Rosenthal was getting a below-market rate. (Opposition, 5.) Further, Plaintiff contends generally that the anti-SLAPP and appeal were not complex and that a high rate for Wolfsdorf Rosenthal’s attorneys is thus not warranted. (Opposition, 4-7.)

The court notes that there is a range of “reasonable” billing rates in the community. While some courts have used the Laffey index as a reasonable rate, it certainly is not the only reasonable rate and is not compelled to be awarded in a specific case. The court’s obligation is to establish a reasonable rate for this case. Unfortunately, this court did not handle the underlying litigation or the appeal, so it does not have personal experience with the attorneys’ performance in this case. Plaintiff’s proposed rate of $250 is somewhat below the usual rates in this community for appeals, particularly appeals of anti-SLAPP rulings. It is an area where numerous new published opinions are being issued every month. As in Nemecek it may be appropriate to award a reasonable rate that exceeds the rate billed to the client. The court finds that the normal hourly rate charged by the Haight firm for partners for appellate work, $450 per hour, is an appropriate hourly rate for its partners on this matter. As Shaughnessy only requests 250 per hour, that amount will be awarded to him.

  1. Reasonableness of the Fees Request

“A defendant need not succeed in striking every challenged claim to be considered a prevailing defendant entitled to recover attorney fees and costs under the statute. Instead, a defendant is entitled to recover fees and costs in connection with a partially successful motion, unless the results obtained are insignificant and of no practical benefit to the defendant. [Citation.] A court awarding fees to the prevailing defendant on a partially successful special motion to strike must exercise its discretion in determining the amount of fees and costs to award in light of the defendant's relative success in achieving its litigation objectives. [Citations.]” (City of Industry, supra, 198 Cal.App.4th at p. 218.) “The fees awarded should include services for all proceedings, including discovery initiated by the opposing party pursuant to section 425.16, subdivision (g), directly related to the special motion to strike.” (Jackson v. Yarbray (2009) 179 Cal.App.4th 75, 92 (Jackson).) Furthermore, the statute is “broadly construed so as to effectuate the legislative purpose of reimbursing the prevailing defendant for expenses incurred in extricating herself from a baseless lawsuit.” (Id. at p. 93, citing Wilkerson v. Sullivan (2002) 99 Cal.App.4th 443, 446.)

Shaughnessy requests fees in connection with 21.20 hours of work on the anti-SLAPP appeal. (Shaughnessy Decl. ¶ 11.) Moore requests fees in connection with 133.3 hours of work on the anti-SLAPP appeal. (Moore Decl. ¶ 6.) Finally, Saunders requests fees in connection with 27 hours of attorney work on the anti-SLAPP appeal, as well as 9.3 hours of paralegal work. (Saunders Decl. ¶ 12.) In total, Wolfsdorf Rosenthal requests fees for 181.5 hours of attorney time and 9.3 hours of paralegal time.

Finally, Wolfsdorf Rosenthal requests $16,978.49 in connection with the instant motion for attorney’s fees. Wolfsdorf Rosenthal contends that this amount represents attorney hours “in excess of 27 hours” to prepare the instant motion, including preparing for and attending the hearing on same.

In opposition, Plaintiff contends that the fees requested for the anti-SLAPP appeal are generally inflated and represent requests for fees already received on September 27, 2018 in connection with the original anti-SLAPP motion. (Opposition, 3-4.) Plaintiff contends that the amount billed for legal research was excessive because “most of that research was already done for the initial anti-SLAPP motion.” (Id.) Further, Plaintiff also specifically contends that 54.1 hours billed for drafting the brief was excessive when compared with the length of the brief. (Id.)

Given the foregoing, the court finds that the neither Wolfsdorf Rosenthal’s total amount of hours spent on legal research nor its hours spent on drafting the appellate brief was excessive. Although the court has not been provided a copy of either brief to review, the court finds that in an appeal taken from an anti-SLAPP motion, Plaintiff’s contention is incorrect that “most of the research was already done for the initial anti-SLAPP motion.” An appeal necessarily involves additional legal research, including, by way of example, research on the issues of appealability and jurisdiction. Further, the court disagrees with Plaintiff’s argument that 54.1 hours is necessarily excessive for a 36-page appellate brief. Plaintiff has provided no further explanation or authority for their argument, other than their statements to the effect that the time spent is necessarily excessive. The court is not persuaded.

Accordingly, the court is inclined to award Wolfsdorf Rosenthal fees for the total amount of attorney and paralegal time its attorneys attest to having incurred. The amounts awarded are as follows:

Moore: $450 x 133.3 = $59,985

Saunders: $450 x 27 = $12,150

Paralegal: $100 x 9.3 = $930

Shaughnessy: = $5,198, as requested

Total: $78,263.00.

Conclusion

Wolfsdorf Rosenthal’s motion for attorney’s fees is granted in part. The court awards Wolfsdorf Rosenthal a total of $78,263.00. Wolfsdorf Rosenthal is to provide notice.


[1] All subsequent statutory references will be to the Code of Civil Procedure, unless otherwise specified.

Case Number: BC662775    Hearing Date: November 06, 2019    Dept: 37

HEARING DATE: November 6, 2019

CASE NUMBER: BC662775

TRIAL DATE: September 29, 2020

CASE NAME: Zhao Hui Shi, et al., v. Rachel H. Lew, et al.

SUBJECT: Demurrer to Plaintiffs’ Class Action Third Amended Complaint and Motion to Strike

MOVING PARTY: Defendant, Wolfsdorf Rosenthal LLP[1]

OPPOSING PARTY: Plaintiffs, Zhao Hui Shi and Jun Lu

TENTATIVE: The court SUSTAINS Wolfsdorf Rosenthal’s demurrer possibly with 30 days leave to amend. At the hearing, the parties should be prepared to discuss whether a reasonable possibility exists that the TAC can be amended to sufficiently state a cause of action against Wolfsdorf Rosenthal. Counsel for Wolfsdorf Rosenthal to give notice.

BACKGROUND

This action arises out of an alleged conspiracy by Defendants to defraud investors in connection with an investment visa program under the United States Government’s EB-5 investment visa program. Plaintiffs Zhao Hui Shi (“Shi”) and Jun Lu (“Lu”) seek to bring a class action on behalf of themselves and others similarly situated against Defendants who allegedly assisted nonparties Charles C. Liu (“Liu”) and Lisa Wang (“Wang”) in operating a fraudulent investment visa program (the “program”). Plaintiffs bring this action against Defendants Rachel H. Lew (“Lew”), John P. Thropay (“Thropay”), Wolfsdorf Rosenthal LLP (“Wolfsdorf Rosenthal,” erroneously sued as Wolfsdorf Rotenthal LLP), Miller Mayer, LLP (“Miller Mayer”), David Gerald Derrico (”Derrico”), and U.S. Regional Economic Development Authority, LLC (“USREDA”).

Plaintiffs filed the First Amended Complaint (“FAC”) on December 19, 2017, asserting four causes of action for: (1) fraud; (2) legal malpractice; (3) negligent misrepresentation; and (4) violation of Penal Code, section 496, subdivision (c), which relates to receipt of stolen property. On April 17, 2018, the court granted Defendant Wolfsdorf Rosenthal’s special motion to strike (“anti-SLAPP motion”) in-part as to the first, third and fourth causes of action. The court denied the anti-SLAPP motion as to the second cause of action for legal malpractice on the grounds that Defendant had not met its burden to demonstrate that the claim arose from protected conduct. Plaintiffs filed the Second Amended Complaint (“SAC”) on May 25, 2018 asserting the same four causes of action. Plaintiffs only assert the second cause of action for legal malpractice against Wolfsdorf Rosenthal, and Wofsdorf Rosenthal filed its demurrer to the SAC on June 29, 2018, as well as a motion for sanctions pursuant to Code of Civil Procedure section 128.7

On August 28, 2018, the court sustained Wolfsdorf Rosenthal’s demurrer to the SAC with leave to amend. The court denied Wolfsdorf Rosenthal’s motion for sanctions. At the hearing, the court ruled that Plaintiffs may conduct “some precertification discovery”

On July 15, 2019, Plaintiffs filed a Third Amended Complaint (“TAC”), alleging the same four causes of action as the SAC. On August 16, 2019, Wolfsdorf Rosenthal filed the instant demurrer and motion to strike.

REQUEST FOR JUDICIAL NOTICE

Wolfsdorf Rosenthal requests that the court take judicial notice of the following pursuant to Evidence Code section 451, subdivision (a):

  1. The Privacy Act of 1974 (5 U.S.C. §§ 552, 552(a))

  2. The Immigration Act of 1990, providing for a United States EB-5 visa,

The court takes judicial notice as requested.

Wolfsdorf Rosenthal further requests that the court judicial notice of the following, pursuant to Evidence Code section 452(a):

  1. The fact that USCIS administers the EB-5 program (see www.uscis.gov/working-united-states/permanent-workers/employment-based-immmigration-fifth-preference-eb-5/about-eb-5-visa-classification

  2. USCIS’s definition of EB-5

  3. Requirements for USCIS approval of the EB-5 (8 C.F.R. 204.6(m).)

  4. Requirements for EB-5 centers to continue to receive approval

  5. USCIS’s May 30, 2013 Policy Memorandum

    The court does not take judicial notice of items 1 and 2 above. The court takes judicial notice of items 3, 4 and 5. As to items 3, 4 and 5, their existence and legal effect are judicially noticeable. (Evid. Code, § 452, subds. (a), (c).) As to the remaining items, a review of the hyperlink Wolfsdorf Rosenthal includes in their Request indicates that the link Wolfsdorf Rosenthal submits does not exist as of the date of this ruling.

    Finally, Wolfsdorf Rosenthal also requests that the court take judicial notice of the following, pursuant to Evidence Code section 452, subdivisions, (d) and (g)-(h)”:

  1. The Court of Appeal Opinion, dated October 29, 2019 in this matter;

  2. The August 28, 2018 minute order with respect to Defendants’ demurrers to the SAC.

    The existence and legal effect of these documents are judicially noticeable. (Evid. Code, §§ 452, subd (d).)

DEMURRER

I. Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3 (Mahan), citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.)

  1. Analysis

Defendant Wolfsdorf Rosenthal demurs to the TAC on the grounds that Plaintiffs lack standing to bring this suit against Wolfsdorf Rosenthal, and on the grounds that Plaintiffs did not materially amend the TAC sufficient to state a legal malpractice cause of action against Wolfsdorf Rosenthal.

  1. Standing

A class action is a procedural mechanism and may not be used to achieve standing. (Philips v. Crocker-Citizens Nat. Bank (1974) 38 Cal.App.3d 901, 907 (Philips).) The Phillips court further held that a named plaintiff may not represent a class with claims against multiple defendants unless the named plaintiff has actually been injured by each of these defendants. (Id. at 908.)

Further, the United States Supreme Court has held that “if none of the named plaintiffs purporting to represent a class establishes the requisite of a case or controversy with the defendants, none may seek relief on behalf of himself or any other member of the class.” (O’Shea v. Littleton (1974) 414 U.S. 488, 494.)

Wolfsdorf Rosenthal contends that Plaintiffs have still not alleged sufficient facts to establish standing. According to the TAC, Plaintiff Shi was represented by Defendant Rachel H. Lew, not Defendant Wolfsdorf Rosenthal. (TAC ¶ 10.) Plaintiff Lu allegedly paid a portion of the money invested by Shi; Lu was not represented by any named Defendant. (TAC ¶ 5.) Plaintiffs do not allege that Wolfsdorf Rosenthal represented them or owed them any legal duty. (See TAC ¶ 19.) Instead, Plaintiffs assert that the court ordered them to designate “subclassifications” at August 28, 2018 hearing and that, as ordered, they designated subclassifications in the TAC and thereby remedied the deficiencies in the TAC by separating out Wolfsdorf Rosenthal’s clients into their own subclassification. (Dem. Opp., 1-2.) Plaintiffs also assert that the court allowed them to conduct precertification discovery as to Wolfsdorf Rosenthal, and that they do not yet have information sufficient to assert standing against Wolfsdorf Rosenthal due to its noncompliance with discovery. (Dem. Opp., 2.) Further, Plaintiffs renew their arguments that all of the class members suffered the same $500,000 in the same manner. (Dem. Opp. 3-4.)

Plaintiffs’ arguments are not sufficient to establish that the named Plaintiffs have standing as to Defendant Wolfsdorf Rosenthal. The named Plaintiffs have not alleged any new facts sufficient to establish that Wolfsdorf Rosenthal owe them any duties or that Wolfsdorf Rosenthal represented them at any point during their immigration application. While Plaintiffs cite Wolfsdorf Rosenthal’s failure to comply with discovery for their failure to allege new facts, named Plaintiffs admit that this discovery relates to names and contact information of Wolfsdorf Rosenthal’s clients that may have invested in the EB-5 project. (Dem. Opp. 1-2.) However, such information does not and cannot aid named Plaintiffs themselves in establishing standing to sue Wolfsdorf Rosenthal.

Further, the named Plaintiffs’ designation of subclassifications do not establish standing against Wolfsdorf Rosenthal. Plaintiffs’ TAC still alleges that Plaintiff Shi was represented by Defendant Lew, not Wolfsdorf Rosenthal. (TAC ¶ 10.) Although Plaintiffs appear to have added additional language to emphasize that all alleged class members’ representation was exactly the same, this is insufficient and does not constitute new facts. Because Plaintiffs have not pled new facts sufficient to establish standing, the demurrer is hereby sustained.

Accordingly, the court SUSTAINS the demurrer to the TAC, as named Plaintiffs Shi and Lu do not have standing to bring an action against Wolfsdorf Rosenthal. For the sake of completeness, the court will address Defendant’s arguments regarding Plaintiffs’ ability to establish class treatment for their claims.

  1. Class Treatment and Commonality

The Supreme Court has recognized that courts may dispose of class actions on demurrer. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 440; see Tucker v. Pacific Bell Mobile Servs. (2012) 208 Cal.App.4th 201, 215 (Tucker) [“Where a complaint, on its face, fails to allege facts sufficient to establish a community of interest as to the elements of the class claims, it would be a waste of time and judicial resources to require a full evidentiary hearing when the matter can properly be disposed of by demurrer.”].)

Code of Civil Procedure section 382 authorizes class actions ‘when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . .’ The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members. [Citations.] The ‘community of interest’ requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citation.]

(Sav-On Drug Stores, Inc. v. Sup. Ct. (2004) 34 Cal.4th 319, 326.) “Class actions will not be permitted, for example, where there are diverse factual issues to be resolved, even though there may be many common questions of law.” (Brown v. Regents of Univ. of Cal. (1984) 151 Cal.App.3d 982, 988-989 (Brown).) A sufficient community of interests does not exist where claims involve factual questions that can only be resolved by individual proof, such as whether a particular class member relied upon an allegedly fraudulent representation. (Brown, id. at p. 989.)

Defendant Wolfsdorf Rosenthal contends that Plaintiffs’ causes of action are not appropriate for class treatment. (Dem. 13.) Defendant argues that Plaintiff’s legal malpractice claim requires an individualized inquiry into the representations made to each Plaintiff and the degree to which each Plaintiff relied on that representation. (Dem. 13-14.) According to Defendant, the proposed class Plaintiffs were represented by at least three different immigration attorneys: Lew, Wolfsdorf Rosenthal, and Derrico. (Dem. 13) Wolfsdorf Rosenthal argues that Plaintiffs cannot assert that each potential class member lost $500,000 in exactly the same fashion, as the reason that each invested in the EB-5 project is not the same. (Dem. 13-14.) For example, Wolfsdorf Rosenthal asserts that the named Plaintiffs do not have the same motivation, as Plaintiff Shi would have been looking to immigrate and obtain permanent residency, while Plaintiff Lu apparently hoped to obtain a profit on investment. (Dem., 14, fn. 2.) Accordingly, Wolfsdorf Rosenthal asserts that the factual issues between each of the purported plaintiffs and each of the defendants are “extraordinarily diverse.” (Dem., 14.)

Plaintiffs’ Opposition renews their factual argument that all class plaintiffs relied upon the same Private Offering Memorandum (“POM”) and, therefore, have nearly identical claims. (Dem. Opp., 9-10.) Plaintiffs do not cite any cases in support of their proposition, but instead assert that it is self-evident that the POM was fake. Plaintiffs further argue that because the POM was obviously fake, additional representations from the individual attorneys do not matter for purposes of determining commonality, as the allegedly fake POM and lack of “meaningful escrow” are sufficient by themselves to establish both fraud and commonality. (Id.)

Plaintiffs’ claims against Wolfsdorf Rosenthal involve factual questions that can only be resolved by individual proof, and the TAC thus fails to plead sufficient facts to establish the existence of a community of interests. (See Brown, supra, 151 Cal.App.3d at pp. 988-989.) Plaintiffs’ Opposition also does not cite any case law in support of their proposition that the allegedly fake POM, by itself, is sufficient to establish commonality. This constitutes additional grounds to sustain the demurrer.

Accordingly, the court hereby SUSTAINS Wolfsdorf Rosenthal’s demurrer, possibly with 30 days leave to amend. At the hearing, the parties should be prepared to discuss whether a reasonable possibility exists that the TAC can be amended to sufficiently state a cause of action against Wolfsdorf Rosenthal.

MOTION TO STRIKE

Having sustained the demurrer, the court finds that the motion to strike is MOOT.


[1] Jennifer K. Saunders, counsel for Defendant Wolfsdorf Rosenthal, attests that she spoke with plaintiffs’ counsel on August 9, 2019 to meet and confer regarding the TAC. (Declaration of Jennifer K. Saunders.) According to Ms. Saunders, it was clear based on the conversation that Plaintiffs’ counsel would not be able to resolve any of the issues raised in Defendant’s demurrer without court intervention. This declaration is sufficient to meet the statutory requirements. (See Code Civ. Proc., §§ 430.41, subd. (a); 435.5, subd. (a).)

*************************************

HEARING DATE: November 6, 2019

CASE NUMBER: BC662775

TRIAL DATE: September 29, 2020

CASE NAME: Zhao Hui Shi, et al., v. Rachel H. Lew, et al.

SUBJECT: Demurrer to Plaintiffs’ Class Action Third Amended Complaint and Motion to Strike

MOVING PARTY: Defendant, Rachel H. Lew[1]

OPPOSING PARTY: Plaintiffs, Zhao Hui Shi and Jun Lu

TENTATIVE: The court SUSTAINS Rachel Lew’s demurrer with 30 days leave to amend. At the hearing, the parties should be prepared to discuss whether a reasonable possibility exists that the TAC can be amended to state class action claims against Defendant Rachel H. Lew. The motion to strike is MOOT. Counsel for Defendant Lew to give notice.

BACKGROUND

This action arises out of an alleged conspiracy by Defendants to defraud investors in connection with an investment visa program under the United States Government’s EB-5 investment visa program. Plaintiffs Zhao Hui Shi (“Shi”) and Jun Lu (“Lu”) seek to bring a class action on behalf of themselves and others similarly situated against Defendants who allegedly assisted nonparties Charles C. Liu (“Liu”) and Lisa Wang (“Wang”) in operating a fraudulent investment visa program (the “program”). Plaintiffs bring this action against Defendants Rachel H. Lew (“Lew”), John P. Thropay (“Thropay”), Wolfsdorf Rosenthal LLP (“Wolfsdorf Rosenthal,” erroneously sued as Wolfsdorf Rothenthal LLP), Miller Mayer, LLP (“Miller Mayer”), David Gerald Derrico (”Derrico”), and U.S. Regional Economic Development Authority, LLC (“USREDA”).

Plaintiffs filed the First Amended Complaint (“FAC”) on December 19, 2017, asserting four causes of action for: (1) fraud; (2) legal malpractice; (3) negligent misrepresentation; and (4) violation of Penal Code, section 496, subdivision (c), which relates to receipt of stolen property. Defendant Lew’s demurrer to the FAC and motion to strike came to hearing on May 2, 2018, at which time the court sustained the demurrer with leave to amend. Plaintiffs filed the Second Amended Complaint (“SAC”) on May 25, 2018 asserting the same four causes of action against Defendant Lew. Defendant Lew demurred to the SAC and on August 28, 2018, the court sustained defendant Lew’s demurrer to the SAC with leave to amend.

On July 15, 2019, Plaintiffs filed a Third Amended Complaint (“TAC”), alleging the same four causes of action against Defendant Lew. On August 20, 2019, Rachel H. Lew filed the instant demurrer and motion to strike.

REQUEST FOR JUDICIAL NOTICE

The court “may take judicial notice of the fact of a document’s recordation, the date the document was recorded and executed, the parties to the transaction reflected in a recorded document, and the document’s legally operative language. . . . From this, the court may deduce and rely upon the legal effect of the recorded document, when that effect is clear from its face.” (Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256, 265, disapproved on other grounds by Yvanova v. New Century Mortg. Corp. (2016) 62 Cal.4th 919, 939.)

Defendant Rachel H. Lew requests the court take judicial notice of the complaint and orders filed in the case titled Securities and Exchange Commission v. Liu, et al., United States District Court, Central District of California Case No. 8:16-cv-00974 The existence and legal effect of these documents are judicially noticeable. (Evid. Code, §§ 452, subds. (c), (d).)

DEMURRER

I. Legal Standard

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (Code Civ. Proc., § 430.30, subd. (a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) The purpose of a demurrer is to challenge the sufficiency of a pleading “by raising questions of law.” (Postley v. Harvey (1984) 153 Cal.App.3d 280, 286.) The court “treat[s] the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law. . . .” (Berkley v. Dowds (2007) 152 Cal.App.4th 518, 525 (Berkley).) “In the construction of a pleading, for the purpose of determining its effect, its allegations must be liberally construed, with a view to substantial justice between the parties.” (Code Civ. Proc., § 452; see also Stevens v. Sup. Ct. (1999) 75 Cal.App.4th 594, 601.) “When a court evaluates a complaint, the plaintiff is entitled to reasonable inferences from the facts pled.” (Duval v. Board of Trustees (2001) 93 Cal.App.4th 902, 906.)

The general rule is that the plaintiff need only allege ultimate facts, not evidentiary facts. (Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 550.) “All that is required of a plaintiff, as a matter of pleading, even as against a special demurrer, is that his complaint set forth the essential facts of the case with reasonable precision and with sufficient particularity to acquaint the defendant with the nature, source and extent of his cause of action.” (Rannard v. Lockheed Aircraft Corp. (1945) 26 Cal.2d 149, 156-157.) “[D]emurrers for uncertainty are disfavored, and are granted only if the pleading is so incomprehensible that a defendant cannot reasonably respond.” (Mahan v. Charles W. Chan Ins. Agency, Inc. (2017) 14 Cal.App.5th 841, 848, fn. 3 (Mahan), citing Lickiss v. Fin. Indus. Regulatory Auth. (2012) 208 Cal.App.4th 1125, 1135.) In addition, even where a complaint is in some respects uncertain, courts strictly construe a demurrer for uncertainty “because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.)

Demurrers do not lie as to only parts of causes of action where some valid claim is alleged but “must dispose of an entire cause of action to be sustained.” (Poizner v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 119.) “Generally it is an abuse of discretion to sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment.” (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349.)

  1. Analysis

Defendant Lew demurs to the TAC on the grounds that there is no reasonable possibility that Plaintiffs can demonstrate a community of interest for class treatment. (Dem 4.) The Supreme Court has recognized that courts may dispose of class actions on demurrer. (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 440; see Tucker v. Pacific Bell Mobile Servs. (2012) 208 Cal.App.4th 201, 215 (Tucker) [“Where a complaint, on its face, fails to allege facts sufficient to establish a community of interest as to the elements of the class claims, it would be a waste of time and judicial resources to require a full evidentiary hearing when the matter can properly be disposed of by demurrer.”].)

Code of Civil Procedure section 382 authorizes class actions ‘when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . .’ The party seeking certification has the burden to establish the existence of both an ascertainable class and a well-defined community of interest among class members. [Citations.] The ‘community of interest’ requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class. [Citation.]

(Sav-On Drug Stores, Inc. v. Sup. Ct. (2004) 34 Cal.4th 319, 326.) “Class actions will not be permitted, for example, where there are diverse factual issues to be resolved, even though there may be many common questions of law.” (Brown v. Regents of Univ. of Cal. (1984) 151 Cal.App.3d 982, 988-989 (Brown).) A sufficient community of interests does not exist where claims involve factual questions that can only be resolved by individual proof, such as whether a particular class member relied upon an allegedly fraudulent representation. (Brown, id. at p. 989.)

Lew contends that class treatment is not warranted for the class allegations of the TAC because Plaintiffs are unable to plead the factors required to state class action claims. (Dem. 4-5.)

A. Commonality

First, Lew argues that Plaintiffs cannot plead that common questions of law and fact predominate over individualized questions. (Dem. 4-5, citing Brown, supra, 151 Cal.App.3d 982.) In Brown, the plaintiffs alleged the defendants engaged in common law fraud, among other claims, by making representations regarding the level of medical care at a medical center and the medical center’s failure to provide adequate coronary care. (Id. at pp. 986.) The Brown plaintiffs argued that the case had commonality because each plaintiff or their family was induced to receive coronary care at the medical center by certain misrepresentations. (Id. at pp. 989.) However, the Court of Appeal recognized that factual differences in the means by which the purported misrepresentations were communicated and the proximate cause of any plaintiff’s damage to their reliance on the misrepresentations presents a “quagmire of tough factual questions which can only be resolved by individual proof.” (Id.) For example, the Court of Appeal noted that each potential class member’s medical condition and method treatment must be examined to determine whether and to what extent the damage they claimed to have suffered is related to the misrepresentations allegedly communicated. (Id.)

Here, the TAC alleges that Shi is a Chinese national who, like dozens of other individuals, were solicited by Defendants or their agents to pay money to participate in an allegedly fraudulent investment visa program. (TAC ¶ 2, 4.) The other named Plaintiff, Lu, is alleged to be a resident of California who paid a portion of the money that was allegedly stolen by Liu. (TAC ¶ 4.) The TAC further alleges that non-parties Liu and Wang “met with investors and personally encouraged them to invest in the Pacific Proton EB-5 project” and engaged several marketing firms a number of which they allegedly controlled. (TAC ¶ 32.) Wang and Liu allegedly promoted the Pacific Proton offering through a website in which they made several affirmative representations including that the offering was a “secure and reliable investment project” which had advantages over other EB-5 projects. (Ibid.) According to the TAC, the proposed class plaintiffs were represented by different Defendant attorneys, and they relied upon the participation of these professionals in deciding to invest in the project.[2] (TAC ¶ 34.)

As with Brown, the wide array of alleged means by which the individual Plaintiffs were contacted and different factual circumstances involved with each proposed class member along with the varying allegations against the Defendant law firms demonstrate on the face of the TAC that there is a lack of commonality of issues to support class treatment of the claims. (See Brown, supra, 151 Cal.App.3d 982 at pp. 989.) For example, individual class plaintiffs appear to have been contacted and to have seen or relied upon different advertisements and different materials from different sources and in making their decision to invest in the Pacific Proton project. (See TAC ¶¶ 33-34.) Furthermore, the TAC alleges that the Defendant Lew only alleged to have represented ten of the proposed class members and is not alleged to have represented or provided any representations to those represented by other Defendants such as Wolfsdorf Rosenthal. (TAC, ¶¶ 45-47.)

Plaintiffs’ Opposition argues that the court ordered them to designate “subclassifications” at August 28, 2018 hearing and that, as ordered, they designated subclassifications in the TAC and thereby remedied the TAC’s deficiencies. (Dem. Opp., 1-2.) Further, Plaintiffs renew their arguments that all of the class members suffered the same $500,000 loss in the same manner. (Dem. Opp. 7-8.) Specifically, Plaintiffs argue that since the Private Offering Memorandum (“POM”) and lack of proper escrow made the EB-5’s fraudulent nature self-evident, that any more information about what each of the class plaintiffs would have been told is irrelevant for purposes of establishing commonality. (Id.)

Plaintiff’s arguments are insufficient because they do not address Brown or present any legal authority in support of their arguments concerning class commonality. (See Dem. Opp. 8-9.) Instead, Plaintiffs contend that Defendant Lew can be held liable for the entire alleged conspiracy based on her alleged conduct in willingly cooperating with a fraudulent plan. (Opp. 2-5, citing e.g., Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 785.) Plaintiffs’ cited cases did not arise on class action and did not involve consideration of the standards required for class certification or commonality, and Plaintiffs’ cited cases are inapposite to the issue at hand. Plaintiffs likewise do not present any legal authority for the proposition that allegations of a conspiracy or Defendants’ conduct in aiding or abetting a conspiracy are alone sufficient to establish commonality and allow a class action. The court is not aware of any such legal authority. Accordingly, Plaintiffs’ argument fails.

The court finds that the individual issues concerning conduct by the non-parties who dealt with the individual class members and Defendants and awareness and reliance by the proposed class Plaintiffs demonstrate that the proposed class members present a “quagmire of tough factual questions which can only be resolved by individual proof.” (See Brown, supra, 151 Cal.App.3d 982 a p. 989.) Accordingly, the court finds that the TAC fails to meet the commonality requirement to plead a class action even if limited to the 10-person sub-class of individuals represented by Lew. The court therefore SUSTAINS the demurrer to the TAC. For the sake of completeness, the court will address the other two requirements to plead class action claims.

B. Typicality

“Under California’s class action statute, when a class action is brought against multiple defendants, the ‘action may only be maintained against defendants as to whom the class representative has a cause of action. Without such a personal cause of action, the prerequisite that the claims of the representative party be typical of the class cannot be met. If the plaintiff class representative only has a personal cause of action against one defendant and never had any claim of any kind against the remaining defendants, his claim is not typical of the class. . . . Th[is] . . . requirement is . . . not fulfilled merely because the plaintiffs allege that they suffered injuries similar to those of other parties at the hands of other defendants.’ ” (Hart v. County of Alameda (1999) 76 Cal.App.4th 766, 775-776.) “An exception to this rule applies where the plaintiff alleges the defendants acted under a conspiracy or the defendants are jointly responsible for the plaintiffs' injuries.” (Id. at p. 776.)

Here, the TAC alleges that Shi and nine others hired Lew to prosecute their immigration petition. (TAC ¶¶ 6(b), 10.) Shi does not allege that she retained Defendants Wolfsdorf Rosenthal or Derrico, nor does the TAC allege that Lu retained any Defendant attorney. However, the TAC alleges that Defendants conspired with each other in a common scheme to jointly defraud Plaintiffs by their actions. (TAC ¶¶ 5, 42.) At this stage of the proceedings, the court treats the allegations of the pleading as admitted. (See Berkley, supra, 152 Cal.App.4th at p. 525.) Viewing the allegations of the TAC liberally and in context, these allegations are sufficient for Plaintiffs Shi and Lu to plead that their claims are typical of the class. (See Hart, supra, 76 Cal.App.4th at pp. 775-776.) Accordingly, the court will not sustain demurrer to the class action complaint on this basis.

C. Conclusion

In sum, Defendant Lew meets her burden to demonstrate that Plaintiff’s class allegations are defective for lack of commonality. The court therefore SUSTAINS the demurrer to the TAC for failure to plead facts that would demonstrate commonality of the proposed class Plaintiffs’ claims. Having sustained the demurrer on this basis, the court need not address the parties’ arguments regarding the merits of Plaintiffs’ claims. At the hearing, the parties should be prepared to discuss whether a reasonable possibility exists that the identified defect can be corrected on amendment.

MOTION TO STRIKE

Having sustained the demurrer, the court finds that the motion to strike is MOOT.


[1] Rachel H. Lew attests that she attempted to meet and confer with plaintiffs’ counsel on August 6 and 13, 2019, but that plaintiffs’ counsel failed to meet and confer in good faith. (Declaration of Rachel H. Lew.) This declaration is sufficient to meet the statutory requirements. (See Code Civ. Proc., §§ 430.41, subd. (a); 435.5, subd. (a).)

[2] The TAC does not allege that Lu retained any of the named attorney Defendants.

Case Number: BC662775    Hearing Date: October 28, 2019    Dept: 37

HEARING DATE: October 28, 2019

CASE NUMBER: BC662775

CASE NAME: Zhao Hui Shi, et al. v. Rachel H. Lew, et al.

MOVING PARTY: Defendant Rachel H. Lew

OPPOSING PARTY: Plaintiffs Zhao Hui Shi and Jun Lu

TRIAL DATE: September 29, 2020

PROOF OF SERVICE: OK by mail on August 16, 2019

PROCEEDING: Demurrer to Class Action Third-Amended Complaint and Motion to Strike

OPPOSITION: Timely filed October 15, 2019

REPLY: Timely filed October 17, 2019

TENTATIVE: Defendant Lew’s demurrer is CONTINUED to November 6, 2019 to be heard with the demurrer filed by Defendant Wolfsdorf Rosenthal LLP.