Declaration In OppositionCal. Super. - 6th Dist.February 28, 2018Electronically Filed by Superior Court of CA, County of Santa Clara, on 4/20/2018 10:01 AM Reviewed By: R. Burciaga Case #18CV324132 Envelope: 1433819 COOVON 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Danning Jiang, Esq. (SBN 196985) LAW OFFICES OF DANNING JIANG 271 North First Street ' San Jose, CA 951 13 TCL: (408) 299-0800 Fax: (408) 299-0300 Attorneys for Plaintiff Chia Chen Chen, AKA Chen Chia Chen SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA SAN JOSE, CALIFORNIA [LIMITED JURISDICTION] Chia Chen Chen, AKA Chen Chia Chen CASE NO. 18CV324132 DECLARATION OF DANNING HANG IN SUPPORT OF OPPOSITION TO SCOTTRADE, INC.’S AND DANIEL GONG’S PETITION TO COMPEL ARBITRATION AND TO STAY ACTION Plaintiff, Vs. Scottrade, Inc., Daniel Gong, U.S. Bancorp, AKA US Bank, and Does 1-100 Date: May 3, 2018 Time: 9:00 a.m. Court: Dept. 19 Judge: Hon. Peter H. Kirwan 7 Defendants. Action Filed: February 28, 201 8 Trial Date: N/A vvvvvvvvvvvvvvvvv I, Danning Jiang, do state under penalty ofperjury as follows: 1. I am over the age 0f eighteen and am fully competent to give this declaration. The statements made in this declaration are based upon my own personal knowledge, except as to those matters stated 0n information or belief; however, as to those matters stated 0n DECLARATION OF DANNING JIANG OPPOSING TO PETITION TO ARBITRATE Page I \OOONON 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 information and belief, I believe them to be true. 2. I represent Plaintiff Chia Chen Chen, aka Chen Chia Chen (“Plaintiff”), in this action. Imake this Declaration in support 0f Plaintiff” s Opposition t0 Defendants Scottrade, Inc. (“Scottrade”) and Daniel Gong (“Gong”)’s Petition to Compel Arbitration and t0 Stay Action. 3. Scottrade and Gong, through their attorney Kevin Woods, Esq., requested that Plaintiff agrees t0 arbitrate this matter. When filing this action, I did not know there was an arbitration provision from Scottrade. I came t0 know when Mr. Woods disclosed it to me. It is incorrect for Scottrade t0 assert'in the motion that Plaintiff filed this action knowing there was an arbitration provision. Mr. Woods and I met and conferred through emails and phone calls. I offered to agree to arbitrate the dispute on the condition that Scottrade files the arbitration request to FINRA and pays for FINRA’S fees. Mr. Woods rejeéted my offer and filed this motion. Attached hereto as Exhibit A is a true and correct copy of an email thread between Mr. Woods and I dated March 14-28, 201 8, where I have offered to arbitrate under the conditions listed in page 1. It is not true for Scottrade t0 assert in the motion that my client has refhsed to arbitrate. I declare under penalty 0f perjury under the laws 0f the State 0f California that the foregoing is true and correct. Date: Aprilfl 2018 fig DANNING HANG DECLARATION OF DANNING JIANG OPPOSING TO PETITION TO ARBITRATE Page 2 Exhibit A Banning Jiani From: Danning Jiang Sent: Wednesday, March 28, 2018 12:19 PM To: 'Kevin Woods' Subject: FW: Chia Chen Chen v. Scott Trade Hi Kevin, My client cannot dismiss the action without prejudice. There are other defendants who do not have agreements with my client. My client will litigate the action against them. My client cannot agree to stay the entire discovery either. There is a criminal on loose who stole Scottrade’s check. There is a compelling public interest to expedite the discovery and have the thief arrested. As you know, there is a pending Sheriff’s file on this. My client does not agree the “Brokerage Account Agreement” binds the Cash Accounts. You may want to read the definition part of the 2008 “Brokerage Account Agreement” and see how “Account” is defined. “Account” means “Brokerage Accounts.” In any event, below are terms offered from my client to agree to arbitrate the dispute with Scottrade: 1. Scottrade files the request to FINRA. You may enclose a copy of the Summons and Complaint to demonstrate there is a “Controversy” between the two parties; 2. Scottrade agrees to pay all FINRA’s fees; 3. Scottrade agrees to voluntarily produce to my client, without the need of a discovery request, all communications between Scottrade and US Bank reqardinq this $1 5,000 check. I believe this information is narrow and discoverable in either the court proceeding or the FINRA proceeding. Parties agree to stay action pending FINRA’s proceeding. If the above are agreeable, please prepare a stipulation for my review. Thank you. Danning Jiang, Esq. Law Offices of Danning Jiang 271 North First Street San Jose, California 951 13 Te|.: (408) 299-0800 Fax: (408) 299-0300 E-mail: djiang@iianglawgroug.com This e-mail, and any attachments thereto, is intended only for use by the addressee(s) named herein and may contain legally privileged and/or confidential information. If you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, isA strictly prohibited. If you have received this e-mail in error, please immediately notify Law Offices of Danning Jiang at (408) 299-0800 and permanently delete the original and any copy of any e-mail and any printout thereof. From: Danning Jiang Sent: Tuesday, March 27, 2018 9:24 AM To: 'Kevin Woods' Subject: RE: Chia Chen Chen v. Scott Trade Hello Kevin, If you review the 11/2017 statement, page 2, it indicates the $15k check came from her “Bank Deposit Activity” and “Cash Account Activity.” The money did not come from her Brokerage Account. If you read the fine print at the bottom of page 2, the “Bank Deposit Program” is FDIC insured. The “Bank Deposit Program” is not part of the Brokerage Account, which is not FDIC insured. To compel arbitration, you want to provide the checking account agreement between the parties, where there is an arbitration provision. There is such a checking account agreement. Further, Scottrade was recently acquired by TD Ameritrade. TD Ameritrade has a checking account agreement with customers, where there is not an arbitration provision. The checking account agreement is an independent agreement from the Brokerage Account agreement. FINRA does not accept arbitration for disputed issues unrelated to licensed broker or financial advising. Chen’s claims arose from the missing check, which is a banking issue. She does not i complaint about brokerage or advising services, which is a FINRA issue. If you intend to move for arbitration, please file your arbitration request to FINRA and see if it accepts and proceeds with your ' request. Scottrade can file an arbitration request when there is a controversy between it and a customer. It do not necessarily have to allege an affirmative claim for monetary damage against the customer. Please see the Arbitration provision (Sec. 29) in the Brokerage Account Agreement. The magic word used there is “controversy,” not a “claim.” In the motion to compel, if you file it, we will ask the Court to order Scottrade to pay for all arbitrator fees. If you propose Scottrade pays all FINRA’s fees, | will discuss with my client to arbitrate the dispute with Scottrade. Your email below did not reply to all my questions. Think about this scenario: “A customer went to the bank to withdraw money from her account. She requested for $1 5k in cash from her account. The bank teller had the customer filled out all papewvork, took $15k cash bills, and counted for the customer. While counting the cash bills, the bank was robbed. The robber grabbed the $15k from the teller’s hand and ran away. At the moment of robbery, the teller did not hand the cash bills to the customer yet. Should the bank charge the customer for the $15k withdrawal? The answer is no. It is the bank’s loss.” | hope the above clarify your questions. Please reply to my questions in this email and the answered questions in my email below. | hope the motion is not necessary. Danning Jiang, Esq. Law Offices of Danning Jiang 271 North First Street San Jose, California 951 1 3 Te|.: (408) 299-0800 Fax: (408) 299-0300 E-mail: diiang@iianglawgroug.com This e-mail. and any attachments thereto, is intended only for use by the addressee(s) named herein and may contain legally privileged and/or confidential information. lf you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, is 2 strictly prohibited. If you have received this e-mail in error, please immediately notify Law Offices of Danning Jiang at (408) 299-0800 and permanently delete the original and any copy of any e-mail and any printout thereof. . ‘ From: Kevin Woods fmailto:Kevin.Woods@whiteandwoods.com] Sent: Monday, March 26, 2018 1:35 PM To: Danning Jiang Subject: RE: Chia Chen Chen v. Scott Trade Danning, Please see my comments below regarding the issues you raised in your March 15 email. Also, attached is your client's November 2017 Scottrade brokerage account statement, which shows the $15,000 check coming out of your client’s brokerage account after it was swept into the brokerage account from the cash account. Please reconsider your client’s position. The dispute against Scottrade should have been filed in FINRA arbitration. Please confirm if you will agree to stipulate to stay the state court case pending the outcome of an arbitration. We will file a motion to compel arbitration if you will not so agree. We think litigating a motion to compel arbitration is not a good use of either side’s resources but Scottrade will not agree to litigate a matter in court that is clearly subject to the arbitration provision. Let me know if you want to discuss anything. Thanks, Kevin J Woods 235 Montgomery Street, Suite 1120 I San Francisco, CA 94104 Direct: 41 5-231-571 1 Main: 41 5-231-5709 Fax: 41 5-231-571 8 kevin.woods whiteandwoods.corn whiteandwoods. corn This e-mail contains information that may be confidential and privileged. Unless you are the addressee (or authorized to receive messages for the addressee), you may not use, copy or disclose this message, or any information contained herein. Ifyou have received this message in error, please advise the sender by reply e-mail and delete this message. Nothing in this message should be interpreted as a digital or electronic signature that can be used to authenticate a contract or legal document. Unauthorized use of this information in any manner is prohibited. From: Danning Jiang Sent: Thursday, March 15, 2018 10:36 AM To: Kevin Woods Subject: RE: Chia Chen Chen v. Scott Trade Good morning Kevin, Thank you for sending the application and account agreement. This agreement is for the brokerage account. See both cover page and page 1. Chen has ‘a brokerage account and two other cash accounts (held at US Bank and TD Bank USA). The $15,000 check alleged in her Complaint was issued from her cash account deposited in US Bank. Please see page 2 of her 11/2017 account statement. The brokerage account agreement does not apply to her cash account or the disputed $1 5,000 check. Can you send me the agreement for her cash or bank account? RESPONSE: The brokerage account agreement applies to the cash account because the cash account is a feature of the brokerage account. Further, the cash accounts are there to hold access cash from the brokerage account. But note that the funds to cover the check were swept from the cash account t_o the brokerage account to cover the check written: 11/16/17 BDP SWEEP -- SWEEP T0 BROKERAGE. The arbitration provision undoubtedly Covers this dispute for the simple reason that it is a dispute between your client and Scottrade. The arbitration provision is broad and covers m disputes between your client and Scottrade. ”You agree to arbitrate any controversy between you and us arising out of or relating in any way to our relationship, your Account, any Account that you may cause to be opened with us in the future, or any service provided by us." Because your client has sued Scottrade there exists a controversy and ”any controversy” between your client and Scottrade is covered by the agreement. Secondly, assuming the brokerage account agreement applies to her cash account, which l do not agree, the Arbitration provision (Sec. 28 & 29) does not state the customer must file the arbitration proceeding first. It merely states the customer agree to participate in arbitration. That means if Scottrade wants to arbitrate, it must initiate the proceeding based on the dispute. The provision also does not state who pays for the arbitrator. Between a large and wealthy brokerage firm and a poor customer, | assume the brokerage firm will have to pay all arbitrator’s fees. RESPONSE: Scottrade is not alleging any claims against your client so it cannot initiate an arbitration. Arbitrations are initiated by claimants bringing claims just like they are by plaintiffs bringing claims. Further, the agreement does not specify who pays for the arbitration fees but FlNRA’s Rule 12902 specifies that the Panel must assess the fees as it sees fit. Thirdly, you have proposed to arbitrate before FINRA. FINRA is the regulating authority overseeing brokers and financial advisors. FINRA accepts matters relating to security or investment activities. Here, the $15,000 check is a banking issue, not a security or investment activity. FINRA does not . accept a dispute over a check fraud matter. | have research this. See Roldan v. Callahan & Blaine (2013) 219 Cal.App.4‘h 87, 96, 161 Ca|.Rptr.3d 493, 499. RESPONSE: FINRA accepts matters relating to any disputes between broker-dealers and their customers, regardless of whether those disputes involve securities or investment activities. See FINRA Rule 12200. Further, as noted above, the scope of the arbitration agreement is broad and clearly covers this dispute. The Complaint alleges that Plaintiff ”requested Scottrade to send the check to her home address...." Yo’ur client requested Scottrade to send her a check, which is a request to perform a service pertaining to her account. She contacted her Scottrade broker to do this. There is a dispute about how that service was performed, which dispute is covered by the arbitration agreement. Finally, if the $15,000 check is merely a banking issue then you should not have sued a broker-dealer. Lastiy, in substance, this is a check fraud matter. The $15,000 check, issued by Scottrade from funds held in the US Bank, was forged an endorsement and cashed in a US Bank account. Chen 4 contributed no fault in the transactions. If Scottrade did not deliver the fund to Chen, how could it deduct the fund from her account? ' | had a similar check fraud incident happened to myself many years ago. A crook forged a check drawn in my bank account in Washington Mutual (now acquired by Chase). After | notified Washington Mutual and filled out an affidavit of fraud form in the branch, Washington Mutual reversed the charge within 3 business days. Here, Scottrade and US Bank are partners in managing her cash accounts. It takes 1-2 emails between the two to figure out the check fraud and get the funds reversed. She has reported the check fraud to the County Sheriff and the Sheriff has communicated with both Scottrade and US Bank. She has also given her Affidavit of Check Fraud to Scottrade. I cannot see there is a slight chance of defense by either Scottrade or US Bank. I do not think Chen should be forced to retain counsel and file a lawsuit in a check fraud. The banks should have reversed the charge two months ago. This is routine with many banks. Unfortunately, it is not with Scottrade. You may want to discuss this again with your client. US Bank has also been served. You may want to discuss with US Bank’s counsel as well. P.S. In the motion to compel arbitration, you cannot request for sanctions as you have indicated. This is not an authority to award sanCtions in this type of motions. Danning Jiang, Esq. Law Offices of Danning Jiang 271 North First Street San Jose, California 951 13 Te|.: (408) 299-0800 Fax: (408) 299-0300 E-mail: diiang@iianglawgroug.com This e-mail, and any attachments thereto, is intended only for use by the addressee(s) named herein and may contain legally privileged and/or confidential information. If you are not the intended recipient of this e-mail, you are hereby notified that any dissemination, distribution or copying of this e-mail, and any attachments thereto, is strictly prohibited. If you have received this e-mail in error, please immediately notify Law Offices of Danning Jiang at (408) 299-0800 and permanently delete the original and any copy of any e-mail and any printout thereof. From: Kevin Woods [mailto:Kevin.Woods@whiteandwoods.com1 Sent: Wednesday, March 14, 2018 11:00 AM To: Danning Jiang Subject: Chia Chen Chen v. Scott Trade Danning, Attached is the account application. See the reference to the arbitration agreement above your client’s signature. The referenced account agreement is also attached. See paragraphs 28 and 29. I’H follow-up with you in a day or so. Please confirm your receipt of this email. Thanks, Kevin J. Woods 235 Montgomery Street, Suite 1120 | San Francisco, CA 941 04 Direct: 415-231-5711 Main: 415-231-5709 Fax: 415-231-5718 kevirwvoods whiteandwoods.com Whiteandwoods.com This e-mail contains information that may be confidential and privileged. Unless you are the addressee (or authorized to receive messages for the addressee), you may not use, copy or disclose this message, or any information contained herein. Ifyou have received this message in error, please advise the sender by reply e-mail and delete this message. Nothing in this message should be interpreted as a digital or electronic signature that can be used to authenticate a contract or legal document. Unauthorized use of this information in any manner is prohibited.
