Beijing Da De Chao Rui Commerce etc. v. Tao Yun Capital CA2/8 ( 2024 )

Filed 9/13/24 Beijing Da De Chao Rui Commerce etc. v. Tao Yun Capital CA2/8
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
BEIJING DA DE CHAO RUI B327159
COMMERCE AND TRADE CO.,
LTD. et al.,
Los Angeles County
Plaintiffs and Appellants, Super. Ct. No. 21STCV30449
v.
TAO YUN CAPITAL CO., LTD.,
Defendant and Respondent.
APPEAL from an order of the Superior Court of Los
Angeles County. Richard J. Fruin, Jr., Judge. Affirmed.
Van Etten Sipprelle and Keith A. Sipprelle for Plaintiffs
and Appellants.
No appearance for Defendant and Respondent.
___________________________________________
This appeal arises from an action filed pursuant to Code of
Civil Procedure section 1718, subdivision (a) for recognition of
several purported judgments from the People’s Republic of China
(PRC) against defendant Tao Yun Capital Co., Ltd. We affirm
the trial court’s order quashing service of process because
plaintiffs failed below, and fail here, to establish the existence of
property owned by defendant in California.
BACKGROUND
Plaintiffs obtained what they refer to as seven “consent
judgments” against defendant in the PRC. Before the trial court,
defendant characterized these differently, calling them “Civil
Mediation Statements.” Each offered declarations concerning the
effect of PRC law in support of their respective characterizations.
We will refer to the documents as “consent judgments” for
convenience only.
In 2021, plaintiffs filed in the trial court their complaint for
recognition of the consent judgments against defendant, three
other PRC corporations, and a PRC individual. This appeal
pertains only to defendant, so we disregard the other defendants
below in our recitation of the facts.
In response to the complaint, defendant filed a motion to
quash service of process for lack of personal jurisdiction. In
support of its motion, defendant argued its contacts with
California did not establish jurisdiction under a traditional
minimum contacts personal jurisdiction analysis.
In opposition, plaintiffs argued the traditional
jurisdictional analysis was inapplicable because the proceeding
was only to recognize a foreign-country money judgment under
California’s enactment of the Uniform Foreign-Country
Judgments Recognition Act (UFCMJRA; Code Civ. Proc.,
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§§ 1713–1725), not to determine defendant’s substantive rights.
Under these circumstances, plaintiffs explained, the mere
presence of defendant’s assets in California would be sufficient to
support the exercise of quasi in rem jurisdiction. In arguing the
existence of such jurisdiction, plaintiffs pointed to defendant’s
beneficial interests in a liquidating trust established pursuant to
the chapter 11 plan of reorganization for Jia Yueting, an
individual, confirmed by the United States Bankruptcy Court for
the Central District of California.
The bankruptcy liquidating trust is a Delaware trust. Its
trustee is a partner of the law firm Lowenstein Sandler LLP with
a business address in New Jersey. The trust was funded with a
basket of assets, including equity in a Delaware limited liability
company a warrant granted by a British Virgin Islands company;
all of Yueting’s accounts, securities, and real property, wherever
located, including any remaining following the conclusion of
enforcement actions in the PRC; Yueting’s interest in another
British Virgin Islands company; and cash.
In reply, defendant argued its beneficial interest in the
bankruptcy liquidating trust was not a California asset but
rather a Delaware asset because the trust is a Delaware trust. In
surreply, plaintiffs argued the trial court could exercise
jurisdiction over the beneficial interest because the trust’s
administration was under “ultimate supervisory jurisdiction” of
the bankruptcy court in California, and the trustee’s law firm has
an office in California.
The trial court granted the motion to quash and dismissed
defendant from the action.
Plaintiffs appealed and filed an opening brief to which
defendant did not respond.
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DISCUSSION
Plaintiffs submit that we review the trial court’s order
independently because the underlying facts on which it was
based are not in dispute. Be that as it may, we presume the
court’s order is correct, and it is plaintiffs’ burden, as the
appellants, to show error. (See Virtanen v. O’Connell (2006)
140 Cal.App.4th 688, 709–710.) Defendant’s failure to file a
responsive brief does not relieve plaintiffs of this burden. (Smith
v. Smith (2012) 208 Cal.App.4th 1074, 1078.) We conclude
plaintiffs failed to carry their burden on appeal because they
failed to show defendant has assets in California—a showing they
acknowledge they had to make.
The UFCMJRA sets forth the process for, and
circumstances under which, California courts may recognize
money judgments of courts in other countries. Generally, they
must recognize a foreign-country money judgment unless one of
the exceptions for mandatory nonrecognition (§ 1716, subd. (a)) or
discretionary nonrecognition (§ 1716, subd. (b)) is present. “The
[UFCMJRA] allocates the burden of proof for establishing
whether a foreign-country money judgment is within [its] scope
. . . and whether there is any ground for not recognizing the
existence of the judgment. [Citations.] The party seeking
recognition of a foreign-country money judgment has the burden
to establish entitlement to recognition under the [UFCMJRA],
while the party resisting recognition has the burden of
establishing a specified ground for nonrecognition.” (Hyundai
Securities Co., Ltd. v. Lee (2015) 232 Cal.App.4th 1379, 1386.)
Though one of the grounds for nonrecognition is lack of
personal jurisdiction over the judgment debtor in the foreign
country, the UFCMJRA says nothing about the requirements
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that must be met for a California court to assert jurisdiction over
a foreign judgment debtor. Plaintiffs cite no California authority,
and we are aware of none, addressing what jurisdiction a court in
California must have over the judgment debtor and/or its
property to support an UFCMJRA recognition action.
Looking to courts elsewhere, we find some disagreement
over what is necessary. (Compare Abu Dhabi Commercial Bank
PJSC v. Saad Trading (N.Y.App.Div. 2014) 117 A.D.3d 609, 611,
612 [holding no jurisdictional nexus is required, including local
property, to support recognition of foreign judgment not contested
by judgment debtor]; and AlbaniaBEG Ambient Sh.p.k v. Enel
S.p.A. (N.Y.App.Div. 2018) 160 A.D.3d 93, 104, fn. 12, 108
[holding jurisdictional nexus is required where grounds for
dispute over recognition exist; local property necessary to support
exercise of in rem jurisdiction].) We need not resolve what is
necessary to support UFCMJRA jurisdiction because plaintiffs
fail to establish that which they accept must be shown.
Plaintiffs contend quasi in rem jurisdiction is sufficient to
support recognition under oft-cited dicta in Shaffer v. Heitner
(1977) 433 U.S. 186: “Once it has been determined by a court of
competent jurisdiction that the defendant is a debtor of the
plaintiff, there would seem to be no unfairness in allowing an
action to realize on that debt in a State where the defendant has
property, whether or not that State would have jurisdiction to
determine the existence of the debt as an original matter.” (Id. at
p. 210, fn. 36.) Consistent with Shaffer’s approval of recognition
actions “in a State where the defendant has property” (ibid.,
italics added), the Ninth Circuit in Glencore Grain Rotterdam
B.V. v. Shivnath Rai Harnarain Co. (9th Cir. 2002) 284 F.3d 1114held “the sine qua non of basing jurisdiction on a defendant’s
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assets in the forum is the identification of some [local] asset.”
(Id. at p. 1127.)
The trial court here granted defendant’s motion to quash in
part because it found defendant had no assets in California.
Here, as they did below, plaintiffs argue the local asset
requirement is satisfied by defendant’s beneficial interest in the
bankruptcy liquidating trust. However, they fail to show that
defendant’s interest in the trust is located in California. Plaintiffs
contend: “The Trust is under the ultimate supervisory control of
[a] United States Bankruptcy Judge . . . , who sits in the Central
District of California. Effectively, therefore, the Trust assets are
located in California because the ultimate authority over the
Trust and its assets resides with a California judge.” Plaintiffs
offer no authority for the proposition that “ultimate supervisory
control” over a trust by a federal bankruptcy court in California
causes the trust’s assets—which include equity in a British
Virgin Islands corporation and perhaps real property in the
PRC—to be “located” in California. More importantly, plaintiffs
also fail to explain how the location of trust assets determines the
location of defendant’s beneficial interest in the trust.
Next, plaintiffs contend: “Under California law,
jurisdiction over a trust may be exercised if the Court has
personal jurisdiction over the trustee of the trust, regardless of
the location of the trust property. [Citations.] Here, the trustee
of the Trust is a partner . . . at the law firm of Lowenstein
Sandler. [Citations.] Lowenstein Sandler can be served with
process in California. . . . Because the trustee of the Trust is
subject to personal jurisdiction in California, the Trust’s assets
(including Tao Yun’s beneficiary interest in the Trust) are subject
to the Trial Court’s quasi in rem jurisdiction.” Again, plaintiffs
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fail to address that the particular property at issue is defendant’s
beneficial interest in the trust, not the trust or its assets.
Although they assert defendant’s “beneficiary interest in the
Trust” is itself a trust asset, they offer no authority or any other
support for this assertion, and it seems to defy common sense—
an interest in a trust belongs to the interest holder, not the trust
itself.
To be clear, we do not decide that defendant’s beneficial
interest in the bankruptcy liquidating trust is not a California
asset. We simply conclude plaintiffs’ arguments fail to establish
that it is, either by citation to authority or by reasoned argument.
(See United Grand Corp. v. Malibu Hillbillies, LLC (2019)
36 Cal.App.5th 142, 153 [“We may and do ‘disregard conclusory
arguments that are not supported by pertinent legal authority or
fail to disclose the reasoning by which the appellant reached the
conclusions he wants us to adopt.’ ”].) Plaintiffs have therefore
failed to carry their burden to show reversible error and we
affirm.
DISPOSITION
We affirm the trial court’s order granting defendant’s
motion to quash service of summons. No costs are awarded.
GRIMES, J.
WE CONCUR:
STRATTON, P. J. WILEY, J.
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