Opinion
No. 57396-9-I.
January 14, 2008.
Appeal from a judgment of the Superior Court for King County, No. 04-2-08337-1, Steven C. Gonzalez, J., entered November 29, 2005.
Affirmed by unpublished opinion per Grosse, J., concurred in by Schindler, A.C.J., and Coleman, J.
It is the quality and nature of the acts in Washington that determine whether specific jurisdiction lies over nonresident defendants. Here, Vincent Wu's solicitation and continuing placement of business orders with Vanguard, a Washington based company, are of such a nature that specific jurisdiction exists over these non-residents who had committed fraud against the company. The trial court is affirmed.
FACTS
Vanguard International, Inc. and Vanguard Marketing Services, LLC (collectively Vanguard) are headquartered in Issaquah, Washington. Vanguard is engaged in the buying, exporting and selling of fresh fruits and vegetables. Vanguard normally sells its product to buyers on short-term credit.
In 1998, Tim Lee of Guangdong Fully Ltd. (GD Fully), a company located in Hong Kong, contacted Vanguard, requesting it supply fruit to the company for sale in China. GD Fully filed a customer information and credit application which was signed by Vincent Wu as the owner of GD Fully. Wu also executed a Claim Policy and Instructions Form identifying himself as managing director. A market brochure supplied by GD Fully indicated that "GD Fully Ltd. is a trading firm in Hong Kong, was formed in 1996 by Mr. Vincent Wu and Mr. Lee Pui."
From March 1998 through early 2000, Vanguard sold product to GD Fully. GD Fully routinely contacted Vanguard in Washington and placed orders for fruit via facsimile, telephone or e-mail. Vanguard delivered the fruit to GD Fully and Wu in Hong Kong. It was sold on short-term credit and the product was usually paid for within a month of delivery. GD Fully had paid Vanguard over $22 million in sales.
Vanguard's President and Founder, Craig Stauffer, and Vanguard's Global Sales Manager, William Mehrten, traveled to Hong Kong and southern China to meet Lee and Wu. At that meeting, and on numerous other occasions between the spring of 1998 and the fall of 2000, Wu represented himself to be and acted as the person in control of GD Fully and Lee's supervisor. At these meetings Wu spoke in Chinese and Lee translated.
In the summer of 2000, GD Fully's payments to Vanguard began to slow down. On several occasions, Wu guaranteed and personally assured Stauffer and Vanguard that Wu personally controlled the money of GD Fully and that money had been set aside to pay Vanguard. Payments were purportedly tied up at this point because of an audit in China that had nothing to do with the transactions with Vanguard. Assured that there was no risk involved, Vanguard continued to ship fruit to GD Fully.
In September 2000, GD Fully stopped making payments to Vanguard. Vanguard ceased shipping anything and was left with a debt owing of over $2.6 million. Stauffer tried to meet with Wu in early October 2000. GD Fully requested that more fruit be shipped. Stauffer demanded payment as owed to no avail.
In late October 2000, Wu and all of the assets of GD Fully had vanished. When Stauffer finally reached one of GD Fully's employees, Stauffer was told that Wu had transferred all the money from GD Fully to Wu's personal account. Vanguard hired international private investigators to locate GD Fully and its assets. Four years later in 2004, Wu was finally located in California where he was living with his wife, Lai Fong Yip. Vanguard commenced litigation in both California and Washington courts.
Vanguard obtained a temporary restraining order for a prejudgment attachment against the house in California. Wu filed a declaration denying that he was an owner or manager of GD Fully and denying that he had any meetings or conversations with Stauffer. Yip filed a declaration that she had only married Wu in 2003. While the temporary restraining order was in effect, Wu and Yip tried to encumber the California house with over $300,000 of liens. At the same time, Wu and Yip emptied over $1 million from a Merrill Lynch account, moving it to an offshore account. The California commissioner denied the prejudgment attachment. Vanguard dismissed the California action without prejudice and continued to pursue the action here in Washington.
Wu and Yip filed a CR 12 motion to dismiss for personal jurisdiction and forum non conveniens. As the CR 12 motion was based upon declarations from the California action, the motion was considered under CR 56. Vanguard contested the dismissal disputing all of Wu's facts alleged in his declaration. Vanguard also argued that a dismissal was improper because the relevant discovery was not yet complete. The motion was argued before Judge Nicole MacInnes while written discovery was still ongoing. At that point in time, Wu had already been sanctioned twice for failing to produce discovery. Judge MacInnes denied the motion in separate orders as to both Wu and Yip. In denying Yip's motion, the court held it was without prejudice and permitted Yip to assert it again at the conclusion of discovery. The matter was sent to trial.
A bench trial was held and the court entered a judgment of over $4 million in favor of Vanguard. Wu and Yip subsequently left the country and are now living in China. The trial court issued contempt orders to aid in the execution of the judgment. Wu and Yip appeal the judgment.
Vanguard filed a motion to supplement the record with clerk's papers referred to in its briefs. The motion is granted.
ANALYSIS
Before addressing whether the trial court properly found jurisdiction over Wu and Yip, we must first consider whether Wu's appeal derives solely from the trial court's findings of fact and conclusions of law, which are reviewed for substantial evidence, or whether Wu may also appeal the denial of his motion to dismiss for lack of personal jurisdiction. Such motions are reviewed de novo under the same standard that applies to summary judgment motions when evidence outside of the pleadings has been filed. Ordinarily, a decision denying summary judgment on the basis of disputed material facts is not reviewable on appeal. But when a motion is denied as a matter of law, this court has declined to hold that the trial court's decision is not reviewable.
See Puget Sound Bulb Exch. v. Metal Bldgs., 9 Wn. App. 284, 289, 513 P.2d 102 (1973) (motion to dismiss under CR 12(b)(2) for lack of personal jurisdiction is treated as one for summary judgment when evidence outside the pleadings is filed).
Johnson v. Rothstein, 52 Wn. App. 303, 304, 759 P.2d 471 (1988).
See Johnson, 52 Wn. App. at 305 n. 4 (noting that discretionary review is available under RAP 2.3, the court declined to decide whether summary judgment denial based upon a substantive legal issue can be appealed).
The trial court did not err in its assumption of jurisdiction. Washington's long-arm statute provides for specific personal jurisdiction over nonresident defendants in certain circumstances. To determine whether specific personal jurisdiction exists, "the court must determine whether (1) the defendant made a purposeful act toward the forum state, (2) the defendant's contact with the forum state caused the injury, and (3) exercising jurisdiction over the defendant violates fundamental notions of fairness." The claim for relief sought here was based upon substantial purposeful Washington acts of Wu, such that the conduct constituted transaction of business within the state under the long-arm statute. Jurisdiction can be founded solely on one purposeful contact with Washington, as long as the cause of action arose from that contact and the assertion of jurisdiction would be reasonable.
RCW 4.28.185.
Shaffer v. McFadden, 125 Wn. App. 364, 104 P.3d 742 (2005) (citing Raymond v. Robinson, 104 Wn. App. 627, 637, 15 P.3d 697 (2001)).
Helicopteros Nacionales de Columbia v. Hall, 466 U.S. 408, 414, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984); Doe v. American Nat'l Red Cross, 112 F.3d 1048, 1051 n. 6 (9th Cir. 1997).
The evidence presented at trial was sufficient to support jurisdiction under both the "transaction of any business" and "tortious act" provisions of the long-arm statute. GD Fully initiated contact with Vanguard in Washington, solicited Vanguard in Washington to start the business relationship, and orchestrated and carried out multiple transactions in Washington totaling over $22 million over several years.
RCW 4.28.185 (1)(a), (b).
The United States Supreme Court held that a forum seeking to assert specific jurisdiction over a nonconsensual out-of-state defendant satisfies the due process requirement if the defendant has "`purposefully directed'" his activities at residents of the forum state. The credibility of witnesses and the weighing of evidence is an issue for the trier of fact. Here, there was ample testimony from both Stauffer and Mehrten regarding numerous conversations they had with Wu in which he stated he was the owner of GD Fully. GD Fully submitted a credit application that had Wu's signature which he subsequently identified in court as being his. Additionally, the handwritten organization chart which was created at the first face-to-face meeting demonstrated that Wu was GD Fully's director.
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985) (quoting Keeton v. Hustler Mag., Inc., 465 U.S. 770, 774, 104 S. Ct. 1473, 79 L. Ed. 2d 790 (1984)).
Wu's conduct and contacts with Vanguard meet the minimal contacts prerequisite to Washington's ability to exercise its judicial authority over both Wu and Yip. Wu argues that jurisdiction does not lie here because all meetings occurred in either Hong Kong or China. The test, however, is not whether there are more contacts in another place, but rather, the quality and nature of the activity that occurred in Washington. The standard was set out in International Shoe Co. v. Washington, wherein the court held that "`due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and justice."'"
326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945).
McGee v. International Life Ins. Co., 355 U.S. 220, 222-23, 78 S. Ct. 199, 2 L. Ed. 2d (1957) (quoting International Shoe Co., 326 U.S. at 316).
Wu's reliance upon Oliver v. American Motors Corp. is misplaced. The case is factually distinguishable. In Oliver, plaintiffs, several Washington residents, sued an Oregon automobile dealer as well as American Motors Corporation for manufacturing and distributing a defective automobile. The court upheld the dismissal of the dealer because his sale of the car did not contemplate its tortious use in another state and "nothing further appears by way of a purposeful act on his part or possession of information, which would in any way charge the retailer with knowledge that his transaction might have out-of-state consequences." In Oliver, the only contact the defendant had with Washington was the fortuitous fact that the place of injury occurred there as the sale was made in Oregon and both plaintiffs and defendants were Oregon citizens. Here, the contacts are far greater and of a continuous nature.
70 Wn.2d 875, 425 P.2d 467 (1967).
Oliver, 70 Wn.2d at 889.
Jurisdiction over Yip
In November 2004, Judge MacInnes denied without prejudice the motion to dismiss for lack of personal jurisdiction as to Yip. Because of the difficulties Vanguard encountered in obtaining discovery from Wu and Yip regarding their finances and activities, the court refused to dismiss Yip. The court permitted Yip to resubmit her motion after further discovery was accomplished. Yip, however, failed to do so.
Yip was married to Wu two separate times. In 2000, at the time of the fraudulent transfer, Yip was not married to Wu. In between his marriages to Yip, Wu married Denny Wu obtaining United States citizenship through this marriage. However, these marriages and divorces were all evidence of Wu's and Yip's efforts to hide fraudulent assets. Many of Wu's assets were held in Yip's name alone. In fact, Yip and Wu still maintained a relationship even when they were not married to each other. Denny Wu quitclaimed the house she and Wu had lived in to Yip.
They were married in Hong Kong in 1983, divorced in 1989, and remarried in 2003.
Evidence presented at trial demonstrated that Yip intentionally concealed assets during the course of the lawsuit. Both Wu and Yip perjured themselves to hide money they held in a Merrill Lynch account. That account was discovered only through exhaustive research upon the part of Vanguard. By back-tracing bank accounts, investigators discovered a brokerage account at Merrill Lynch which at one time had contained over $1 million. The account existed at the time the California suit was brought. Yip testified that she was holding the money in that account for her sister and had simply transferred the money back. She further testified that Wu never had any authority with regard to this money. However, at trial, Vanguard introduced a durable power of attorney which was executed by Yip in favor of Wu and was in effect at the start of the litigation.
Also, Yip was listed as an owner of Full Bulion, a company associated with GD Fully. Further, Yip testified that Wu had never given her any money. However, in March 2003, when Yip was not married to Wu, she deposited $2.5 million Hong Kong dollars to forestall a bankruptcy action against Wu.
Approximately $400,000 United States dollars.
The evidence presented at trial clearly adduced a pattern or practice of activity upon the part of Yip to help Wu defraud Vanguard. It was clear that Yip lied on multiple responses to interrogatories regarding the couples' assets and that Yip aided and abetted Wu in his fraud of Vanguard.
The general rule is well settled "that a person who knowingly assists another in the commission of a tort, or who knowingly assists another in violating his fiduciary or trust obligation, is liable for losses proximately caused thereby." A person is liable as an aider and abettor, under both civil and criminal law, if they knowingly assist in attempting to conceal a wrongful act, conceal evidence of a wrongful act, or conceal assets that were wrongfully taken.
LaHue v. Keystone Inv. Co., 6 Wn. App. 765, 783, 496 P.2d 343 (1972).
See, e.g., Stump v. Gates, 211 F.3d 527, 537 (10th Cir. 2000) (city liable if city's policy maker in police activities tampered with evidence or assisted in concealing evidence of homicide); Drake v. Kemp, 762 F.2d 1449, 1456 (11th Cir. 1985) (person is criminally liable for crime if he or she is "either directly or indirectly involved in it or aids or abets or does anything to conceal it."); United State v. Guiliano, 644 F.2d 85, 87 (2d Cir. 1981) (defendant guilty of bankruptcy fraud if he "aided and abetted the concealment of the cash receipts from the bankruptcy trustee"); United States v. Andreen, 628 F.2d 1236, 1246 (9th Cir. 1980) (trial judge justified in inferring acted to aid and abet violation when he counseled the trustees and concealed their actions from outside inquirers).
Forum Non Conveniens
Wu and Yip asserted forum non conveniens, suggesting that the better forum would be Hong Kong or China. But at the time this motion was made, Wu and Yip were California residents. Indeed, Wu had recently obtained United States citizenship. Wu argues that witnesses from China were not able to be present and thus the forum was not appropriate. "The doctrine of forum non conveniens contemplates the discretionary declination of jurisdiction where, in the court's view, the difficulties of litigation militate for the dismissal of the action subject to a stipulation that the defendant submit to jurisdiction in a more convenient forum." The initial question in the forum non conveniens analysis is whether an appropriate alternative forum for the dispute exists. Because the essential subject matter here can be litigated under American law, both private and public factors favor the United States as the appropriate forum. The trial court's decision to retain jurisdiction was not "manifestly unfair, unreasonable, or untenable."
Werner v. Werner, 84 Wn.2d 360, 370, 526 P.2d 370 (1974).
Myers v. Boeing Co., 115 Wn.2d 123, 128, 794 P.2d 1272 (1990) (quoting General Tel. Co. v. Utilities Trans. Comm'n, 104 Wn.2d 460, 474, 706 P.2d 625 (1985)).
Statute of Limitations
There was substantial evidence demonstrating that Wu and Yip concealed themselves. Private Investigator Neil Wood testified by deposition of the steps taken by his company to locate Wu and the assets of GD Fully. Robin Johnson of Purveryors and Geoff Hagarty of AFPC, two companies that were also defrauded by Wu, testified that they too searched extensively for Wu.
The cases cited by Wu are inapposite. In Rodriguez v. James-Jackson, the court found that there was no direct or circumstantial evidence that the defendant left with the intent to defraud, and further that the plaintiffs did not make an "honest and reasonable effort" to locate the defendant. Further, in Summerrise v. Stephens, the plaintiff knew where the defendant was and had every right to proceed against him under the long-arm jurisdiction of the state, but failed to do so in a timely manner. And finally, Muncie v. Westcraft Corp. dealt with a plaintiff's failure to strictly comply with the statute regarding service of process. The Muncie court noted that a defendant could not defeat the statute by evading process but held that there was no evidence of evasion of process presented. Here, however, there was strong circumstantial evidence showing evasion of process. Circumstantial evidence is accorded no less weight than direct evidence.
127 Wn. App. 139, 111 P.3d 271 (2005).
Rodriguez, 127 Wn. App. at 145.
75 Wn.2d 808, 454 P.2d 224 (1969).
58 Wn.2d 36, 360 P.2d 744 (1961) (such strict construction is no longer used); see Sheldon v. Fettig, 129 Wn.2d 601, 919 P.2d 1209 (1996).
State v. Bottrell, 103 Wn. App. 706, 720, 14 P.3d 172 (2000).
Translator
Wu asserts that Lee did not act as his interpreter and thus the information testified to is nothing more than hearsay. "An agency relationship may exist, either expressly or by implication, when one party acts at the instance of and, in some material degree, under the direction and control of another." Agency presents a question of fact. Stauffer and Mehrten testified at length about their personal first-hand observations of Wu and Lee. It was clear from the beginning that Lee acted under the authority of Wu. They met in Wu's office and it was Wu who gave a completed tour of the market and its facilities. Wu walked with Stauffer and Lee with Mehrten when they visited the market. As Wu pointed to things in the market and spoke, Lee would translate. Lee opened doors for Wu, and when they sat down to meet, Lee fetched and served tea. When Lee was asked questions directly, Lee translated and then Wu spoke and then Lee translated. In one instance, GD Fully wanted an adjustment and when Vanguard approached Lee with an offer to settle, Lee said he would have to take it to Wu before it could be accepted.
Hewson Constr. v. Reintree Corp., 101 Wn.2d 819, 823, 685 P.2d 1062 (1984) (citing Matsumura v. Eilert, 74 Wn.2d 362, 444 P.2d 806 (1968)).
Kelsy Ln. Homeowners v. Kelsey Ln. Co., 125 Wn. App. 227, 236, 103 P.3d 1256 (2005).
Additional evidence that Wu was the "boss" of everyone at GD Fully came from the evidence put forth by witnesses from an Australian company that was also defrauded by Wu. These witnesses testified at length by deposition about their personal, first hand observations of Wu and Lee.
Wu's reliance upon three cases in which interpreters were found to not be the agent of the speakers is misplaced. The factual scenarios in those cases are easily distinguishable. In State v. Huynh, the court held the statements made to an officer through an interpreter were inadmissible. The interpreter was not an agent of the defendant and, moreover, because the interpreter was related to the victim of the crime the defendant was charged with, her interpretation was questionable. Further, in State v. Lopez, there was no agency relationship between the translator and the speaker. And finally, in State v. Garcia-Trujillo, the court upheld the trial court's finding that a border patrol agent was not the immigrant defendant's agent. Moreover, the Garcia-Trujillo court noted that "under Washington law, the pertinent question in determining whether a translated statement is hearsay is whether the interpreter is an agent of the declarant or authorized by the declarant to speak on his behalf." Here, the facts clearly demonstrate that such an agency relationship existed.
49 Wn. App. 192, 742 P.2d 160 (1987).
89 Wn. App. 203, 948 P.2d 390 (1997).
Garcia-Trujillo, 89 Wn. App. at 206 n1.
Alter Ego
Washington recognizes the "alter ego" doctrine which provides:
"Where a private person so dominates and controls a corporation that such corporation is his alter ego, a court is justified in piercing the veil of corporate entity and holding that the corporation and private person are one and the same."
Standard Fire Ins. Co. v. Blakeslee, 54 Wn. App. 1, 771 P.2d 1172 (1989) (quoting Pohlman Inv. Co. v. Virginia City Gold Mining Co., 184 Wash. 273, 283, 51 P.2d 363 (1935)) (alternation in original).
And as noted in Northern Laminate Sales, Inc. v. Matthews:
Although a corporation is treated as a separate legal entity and its liabilities are not attributable to its owners and officers, the corporate separateness that shields an owner from liability may be disregarded under certain conditions. Scully Signal Co. v. Joyal, 881 F. Supp. 727, 736 (D.R.I. 1995). The result of this corporate disregard is that if the corporation is found liable or subject to the jurisdiction of the court, the owner is likewise subject to liability and personal jurisdiction. Id. Thus, the forum-state contacts of a corporation may be attributed to an individual who is an officer, director, or shareholder of the corporation when evidence is presented that shows that the corporation is the alter ego of the individual, or where other circumstances permit the court to pierce the corporate veil.
249 F. Supp. 2d 130, 139 (D.N.H. 2003).
The trial court found that Wu removed the assets of GD Fully to avoid paying the funds owed to Vanguard. Further, the court found that Vanguard proved by "clear, cogent, and convincing evidence" that Wu controlled the money and assets of GD Fully, had the money to pay Vanguard and further that Wu had personally assured Vanguard that it would be paid the monies owed by GD Fully.
This evidence was adduced from the testimony of both Stauffer and Mehrten who testified as to numerous conversations in which Wu stated that he was GD Fully's owner. This testimony along with the GD Fully documents (credit application and handwritten organizational chart), and the testimony of the Australians who also identified Wu as the owner of GD Fully, formed the basis of the court's conclusion. The only evidence contrary to this conclusion was put forth by Wu himself in his testimony in which he denied being the owner or major shareholder of GD Fully and further denied ever having conversations or meetings with the parties. The court clearly found this testimony not credible.
Wu also makes the argument that no action lies against him because Vanguard did not bring an action against GD Fully. This court has already held that a plaintiff need not submit themselves to the "circuitous and more expensive remedy" of suing a shell corporation where a liable corporation has been "gutted" and left without funds to avoid liability. The trial court is affirmed.
Morgan v. Burks, 93 Wn.2d 580, 584, 611 P.2d 751 (1980) (citing Harrison v. Puga, 4 Wn. App. 52, 64, 480 P.2d 247 (1971)).
WE CONCUR: