Pacific Wealth Solutions, LLC vs. Cameron Shank

Opposition

Cal. Super. - 4th Dist.February 21, 2018

~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 Kenneth W. Chung, Bar No. 167872 kchung @kringandchung.com Carol J. Knoblow, Bar No. 151458 cknoblow @kringandchung.com ELECTRONICALLY FILED Superior Court of Califarnia, IAICIEN 2b Seyno day, Jar No. 214899 County of Orange RING & CHONG ILE — 08/07/2018 at 05:15:00 PM 38 Corporate Park Clerk of the Superior Court Irvine, CA 92606-5105 By e Clerk. Deputy Clerk Telephone: (949) 261-7700 Facsimile: (949) 261-8800 Attorneys for Plaintiffs PACIFIC WEALTH SOLUTIONS, LLC.; YIFANG PACIFIC CO., LTD.; AND TA LEE SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF ORANGE, CENTRAL JUSTICE CENTER PACIFIC WEALTH SOLUTIONS, LLC; Case No. 30-2018-00974922-CU-CO-CJC YIFANG PACIFIC CO., LTD; AND TA LEE, Date: August 20, 2018 Time: 1:30 p.m. Dept: C31 Plaintiff, VS. OPPOSITION TO MICHAEL SHANK'S CAMERON SHANK, an individual; MICHAEL DEMURRER TO PLAINTIFFES' FIRST SHANK, an individual; SHANK AMENDED COMPLAINT; ENTERPRISES, LLC; an entity form unknown; MEMORANDUM OF POINTS AND BELLBROOK INSURANCE SERVICES, LLC, AUTHORITIES a California limited liability company; KRISTIN GULSVIG, an Individual; NEW FIRST FINANCIAL RESOURCES, LLC., a Delaware limited liability company; NEW YORK LIFE INSURANCE COMPANY, a Delaware corporation; and DOES 1 through 100, inclusive, Assigned for All Purposes To: Judge: Hon. Geoffrey T. Glass Dept: C-31 Action Filed: February 21, 2018 Defendants. AND RELATED CROSS-ACTION. N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N e N N Plaintiffs PACIFIC WEALTH SOLUTIONS, LLC, YIFANG PACIFIC CO., LTD, and TA LEE (hereinafter "PLAINTIFFS") hereby oppose the Demurrer filed by Defendant MICHAEL SHANK (hereinafter "M. SHANK") to PLAINTIFFS’ First Amended Complaint ("FAC"). 1 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 MEMORANDUM OF POINTS AND AUTHORITIES L INTRODUCTION This case is, and has been pleaded as, a textbook example of fraud which resulted in the occurrence of multiple other torts, as well as a breach of an express contract. Defendant CAMERON SHANK (“C. SHANK”) was the mastermind of a massive effort to misappropriate company funds, steal clients, usurp the company’s business opportunities, and divert commissions for the personal gain of himself, the other defendants, and multiple other DOES. MICHAEL SHANK (“M. SHANK”) was, and is, C. SHANK ’s father. Prior to the opening of PLAINTIFFS’ business entities, M. SHANK did not have the appropriate licenses to sell life insurance. However, after C. SHANK began working with Plaintiff TA LEE (“LEE”) and running the business entities, M. SHANK obtained a license and became the “producer” on the First Financial Resources (“FFR”) account. As explained below, the FFR account is an account through which multiple insurance companies write policies, and more importantly, pay commissions. M. SHANK did not pay for any portion of the $25,000 fee for the FFR account, but he reaped numerous monetary rewards simply by having his name on the account. More importantly, he would direct the commission directly into his son, C. SHANK's account, rather into the joint account of LEE and C. SHANK. PLAINTIFFS request that M. SHANK’s demurrer be denied in its entirety. However, if, for any reason, the demurrer or any part thereof is granted, PLAINTIFFS request leave to amend. II. FACTS RELEVANT TO THE DEMURRER A. RELEVANT BACKGROUND In order to understand M. SHANK’s involvement, a background of the facts must be established. C. SHANK met LEE while they were selling life insurance at a financial services company. (FAC (14). LEE formed YIFANG PACIFIC, LLC (“YPC”) as a holding company. (FAC { 15). In November 2016, LEE offered, and C. SHANK accepted, an offer to purchase an 8.6% share in YPC for $420,000. C. SHANK would ultimately never pay a penny. (FAC 16). Regardless, while the sale was pending, C. SHANK was given the title of “Managing Partner.” (FAC 17). YPC elected to form a subsidiary, PACIFIC WEALTH SOLUTIONS, LLC (“PWS”) 2 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 to handle its life insurance business in the United States. (FAC 19). LEE and C. SHANK discussed the fact that PWS would be a wholly owned subsidiary of YPC. (FAC { 19). Although PWS was then and is now a wholly owned subsidiary of YPC, to further his plans of embezzlement and misappropriation of PWS, C. SHANK prepared and filed with the United States Department of Treasury (the IRS) documents identifying himself as the “sole member” of PWS. ({FAC 21). This information was withheld from PLAINTIFFS. (FAC (21). In addition, C. SHANK and his girlfriend, Defendant KRISTIN GULSVIG (“GULSVIG”), represented to third parties at the time, including at least one law firm, that C. SHANK was the sole owner of PWS. (FAC q21). This provided C. SHANK with the prestige to obtain clients whom he would later steal from PLAINTIFFS. Despite the fact that YPC capitalized PWS with $549,964, and C. SHANK'’s representations to PLAINTIFFS that he properly formed PWS, C. SHANK did not coordinate the preparation or signing of PWS’s formation documents, including the Operating Agreement, in a fashion to promote PLAINTIFFS. Rather, C. SHANK manipulated the formation documents to further his interest and the interest of the other Defendants to embezzle PLAINTIFFS’ funds and usurp PLAINTIFFS’ clients. (FAC 23). Ultimately, C. SHANK had an operating agreement drafted wherein he claimed to be the sole owner based on a contribution of $1.00, despite his knowledge that YPC capitalized the company with a payment of $549,964. (FAC (27). The Operating Agreement was drafted in such a fashion that even if C. SHANK transferred ownership, C. SHANK would still receive compensation as the Managing Member of PWS, even if he no longer worked for PWS. (FAC 928). This was clearly not in the interest of YPC, to which he was the Managing Partner, or PWS. Instead, it was only in the interest of C. SHANK. Regardless, C. SHANK started to use PWS and the $549,964 as his own personal piggy bank. Examples of this include in April of 2017, C. SHANK secretly used $10,000 of PLAINTIFFS’ funds for the purpose of obtaining legal advice for a competing business, Pacific One. He did this in order to provide himself a further means of stealing commissions which should have gone to LEE and PWS, and then ultimately YPC. (FAC 24). Over the next several months, C. SHANK, GULSVIG and others covertly cultivated Pacific One, Defendant BELLBROOK 3 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 INSURANCE SERVICES, LLC (“BIS”) and their other interests while using PLAINTIFFS’ e-mail accounts, funds, office space and employees. At this time C. SHANK was holding himself out as the CEO of PWS. (FAC {25). Far worse, C. SHANK and the other Defendants were using PLAINTIFFS’ e-mail accounts, funding, unwitting employees, and office space to usurp commissions from PLAINTIFFS’ clients as well as outright steal clients from PLAINTIFFS. (FAC (26). While the e-mails to the clients were coming from C. SHANK and others using their YPC and PWS accounts, and naming C. SHANK as the Managing Partner, the commissions were being taken by C. SHANK individually. (FAC q 26). While LEE was busy working on YPC’s China ventures, C. SHANK was primarily running PWS. Therefore, C. SHANK hired and managed the initial employees of PWS. In breach of his fiduciary duties, he directed the employees to work on business opportunities that he intended to, and did in fact, usurp for his own benefit and personal gain. These business opportunities were never presented to PWS. (FAC (36). C. SHANK and the other Defendants sold these life insurance policies using PWS’s resources, employees and business connections. The commissions for the sale of the policies was diverted to C. SHANK and the other Defendants, including M. SHANK. (FAC {37). B. M. SHANK’S INVOLVEMENT C. SHANK stole the commissions through various means including, but certainly not limited to, obtaining a First Financial Resources account using PLAITNIFFS’ funds and having his father, M. SHANK, work as the producer to that account. (FAC {{ 42-45). Essentially, C. SHANK was having his father accept the money, keep some of it, and then send the rest to C. SHANK. The importance of the FFR account is that when life insurance policies are sold, commissions are comprised of first-year commission and annual overrides which are paid to the generating agent (producer). C. SHANK used money from PLAINTIFFS in order to become a member of FFR, which cost $25,000 as an initial fee. (FAC 43). Neither C. SHANK nor his father ever paid a penny for joining this group. Membership in FFR provides an insurance agent 4 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 with the opportunity of using a Brokerage General Agent (“BGA”) to access a life insurance carrier. Many insurance carriers will not work directly with the brokers and instead require them to work through the BGA. (FAC {43). In joining FFR, the member agent is able to access the carrier through FFR, and the agent is permitted to keep the commissions that would typically be paid to the BGA. (FAC 43). C. SHANK also set up the account with New York Life Insurance (“NYL”) under his father’s name. (FAC 47). C. SHANK was able to have LEE agree to use his father by claiming that LEE would be breaching an agreement with his former employer, Guardian Life Insurance Company if LEE obtained the FFR membership directly. C. SHANK knew this was false when he told LEE, and LEE relied on C. SHANK. (FAC 44). M. SHANK was aware of these discussions and their falsity. (FAC 79). He concealed this information from PLAINTIFFS despite taking the money from clients generated by PLAINTIFFS and being responsible for its transmission to the appropriate parties. (FAC 79). The true facts were that M. SHANK and C. SHANK never intended to provide the FFR and NYL payments to LEE as C. SHANK had represented. (FAC 79). This was concealed from PLAINTIFFS. (FAC {79) Therefore, when a commission was generated C. SHANK and/or his father, M. SHANK, determined where the commission was paid. (FAC {{ 42-45). To give one such example. LEE generated a client. As the client only speaks Mandarin and was procured by LEE, it was clear that LEE was the procuring agent for this client. (FAC 47). LEE and C. SHANK agreed that all of the commissions and overrides, from both FFR and NYL, would be deposited directly into a joint checking account held by LEE and C. SHANK, with the money going to LEE. Instead, via M. SHANK, the initial money from FFR was deposited into C. SHANK'’s personal account. (FAC 48). C. SHANK said it was a mistake. However, he claimed he could not repay the money because he already spent it. (FAC 48). However, later, this was proven to not be a mistake as, similarly, renewal commissions from NYL were deposited into C. SHANK’s personal account. When confronted with the issue, both M. SHANK and C. SHANK, despite not paying for the FFR account or generating the client, 5 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 claimed that the entire accounts, the FFR account, the commission and overrides were owned exclusively by them. (FAC {51). Pursuant to M. SHANK’s agreement to open, maintain, and operate the producer accounts for the benefit of PLAINTIFFS, M. SHANK maintained a duty to properly manage and safeguard the commission payment for the benefit of PLAINTIFFS. (FAC { 134). M. SHANK interfered with the financial and business relationship between PLAINTIFFS, on the one hand, and NYL and FFR, on the other, by inter alia retaining funds paid into the producer accounts for his own benefit and that of his son. (FAC 134). Finally, M. SHANK participated in converting clients that belonged to PWS for his own benefit. (FAC { 31). III. STANDARD OF REVIEW "A demurrer challenges only the legal sufficiency of the complaint, not the truth of its factual allegations or the plaintiff's ability to prove those allegations. The complaint must be liberally construed and given a reasonable interpretation, with a view to substantial justice between the parties. We treat as true not only the complaint's material factual allegations, but also facts which may be implied or inferred from those expressly alleged." Granquist v. Sandberg (1990) 219 Cal.App.3d 181, 183-84 (internal citations omitted). IV. LEGAL ANALYSIS A. YPC’S CLAIMS M. SHANK maintains that all of YPC’s claims fail because YPC has no standing to bring a suit in California under Corporations Code. The argument is that YPC is not registered or qualified to do business in California, with M. SHANK’s counsel claiming that he could not find any records on file with the California Secretary of State indicating that YPC is registered to do business in California. However, YPC does in fact have standing. California Corporations Code section 17708.07(a) states: “A foreign limited liability company transacting intrastate business in this state shall not maintain an action or proceeding in this state unless it has a certificate of registration to transact intrastate business in this state.” (emphasis added). This means that nonqualified foreign LLCs do not lack capacity to sue. The failure to qualify is a matter of abatement, the same as with foreign corporations. M. SHANK may 6 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 raise as a defense that a LLC lacks capacity to “maintain” the action, and if this is shown, an action commenced before qualification must be abated until the LLC qualifies. See United Med. Mgmt. Ltd. v. Gatto, 49 CA4th 1732, 1740 (discussing abatement in the context of foreign corporations). However, abatement is not necessary here, as YPC has subsequently qualified to do business in the state of California. As of July 16, 2018, YPC has been registered with the California Secretary of State to transact intrastate business in California. A true and correct copy of YPC’s Certificate of Registration and filed application to Register a Foreign Limited Liability Company are attached hereto as Exhibit “A.” B. FIRST CAUSE OF ACTION — FRAUD & DECEIT M. SHANK correctly points out that, as alleged against him only, the fraud is one of deceit or concealment. Therefore, PLAINTIFFS must allege that he had a duty to inform them of the deceit. PLAINTIFFS contend that the duty was formed when PLAINTIFFS provided him as the “operating principal” for FFR, as well as his knowledge that he was handling PLAINTIFFS’ commissions for the entire company as much of the business running through the FFR and NYL accounts. A duty to disclose can be based on a fiduciary relationship such as a business relationship. See Wolf v. Superior Court (2003) 106 Cal. App.4™ 625. Alternatively, absent a fiduciary relationship, “[o]ur Supreme Court has described the necessary relationship giving rise to a duty to disclose as a “transaction” between Plaintiff and Defendant. Bigler v. Berg Inc. (2017) 7 Cal.App.5th 276, 311. Pursuant to M. SHANK’s agreement to open, maintain, and operate the producer accounts for the benefit of PLAINTIFFS, M. SHANK maintained a duty to properly manage and safeguard the commission payment for the benefit of PLAINTIFFS. In this context, M. SHANK holding the membership on behalf of PLAINTIFFS makes him owe a fiduciary relationship as well as being involved in a business transaction. “A fiduciary relationship is any relation existing between parties to a good faith for the benefit of the other party. Such a relationship ordinarily arises where a confidence is reposed by one person in the integrity of another, and in such a relationship that party in whom the confidence ins reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the 7 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 interest of the other party without the latter’s knowledge of consent.” Wolf, supra, 107 Cal.App.4th at 29. Clearly, by becoming the operating principal of FFR on behalf of PLAINTIFFS and accepting PLAINTIFFS’ money, M. SHANK owed PLAINTIFFS a fiduciary duty. In fact, M. SHANK does not even argue that a fiduciary duty was not owed in his demurrer and allows that cause of action to stand. Next, C. SHANK indicates that PLAINTIFFS failed to show that the deceit caused PLAINTIFFS’ injury. PLAINTIFFS have pleaded this element. No argument is made in regard to the who, where, what and when, as that is pleaded in spades. After providing all of the facts surrounding M SHANK'’s fraud, PLANTIFFS pleaded their damages amount of at least $1,500,000. PLAINTIFFS have connected the dots to show how SHANK proximately caused PLAINTIFFS harm. M. SHANK is merely avoiding connecting the dots. C. M. SHANK MAKES NO ARGUMENTS AS TO THE THIRD, FOURTH, SIXTH, AND SEVENTH CAUSES OF ACTION Neither M. SHANK's notice of motion, nor the body, contain anything in regard to the Third Cause of Action for Conversion, as he apparently concedes that point. Moreover, while they do appear in the notice, there is nothing in the points and authorities as to the Fourth Cause of Action for Negligence, the Sixth Cause of Action as to Fiduciary Duty, and the Seventh Cause of Action as to Unjust Enrichment. Therefore, apparently, after preparing the notice, M. SHANK realized that he could not overcome these causes of action. In any event, he makes no argument in their regard, so there is no demurrer pending as to those causes of action. D. EIGHTH CAUSE OF ACTION — INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE The FAC alleges that M. SHANK was involved of the theft of clients and commissions from PLAINTIFFS for his and others’ personal gain. More importantly, pursuant to M. SHANK’s agreement to open, maintain, and operate the producer accounts for the benefit of PLAINTIFFS, M. SHANK maintained a duty to properly manage and safeguard commission payments for the benefit of PLAINTIFFS. M. SHANK interfered with the financial and business relationship 8 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 between PLAINTIFFS, on the one hand, and NYL and FFR, on the other, by inter alia retaining funds paid into the producer accounts for his own benefit and that of his son. “The tort of interference with prospective economic advantage protects the same interest in stable economic relationship as does the tort of interference with contract, though interference with contract, though interference with prospective advantage does not require proof of a legally binding contract. The chief practical distinction between interference with contract and interference with prospective economic advantage is that a broader range of privilege to interfere is recognized when the relationship or economic advantage interfered with is only prospective. Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126. E. NINTH CAUSE OF ACTION — CONSTRUCTIVE TRUST M. SHANK demurs to the constructive trust claim first on the ground that constructive trust is not a substantive claim. However, it is. A cause of action for a constructive trust in California is governed by Civil Code sections 2223 and 2224. Civil Code section 2223 states that, “One who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner.” Civil Code section 2224 states that, “One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it.” Second, M. SHANK demurs on the ground that the constructive trust claim, if it is a substantive claim, fails to allege sufficient facts to state a cause of action. But PLAINTIFES have indeed pleaded that pursuant to fraudulent representations and conduct, incorporated by reference, M. SHANK, with the other defendants, obtained significant funds for personal gain. F. CAUSE OF ACTION — ACCOUNTING M SHANK demurs to the accounting claim on the ground that it fails to allege sufficient facts to state a cause of action. First, M. SHANK claims facts establishing the required relationship to request an accounting are missing. Yet, PLAINTIFFS have pleaded that M. SHANK has an obligation and duty to care for and protect in all particulars the financial interests and property in connection with the operations of PWS and YPC and etc. because as incorporated by reference, he 9 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 agreed to open, maintain, and operate the FFR and NYL producer accounts for the benefit of PLAINTIFFS. M. SHANK maintained a duty to properly manage and safeguard commission payments for the benefit of PLAINTIFFS. In addition, M. SHANK claims that facts explaining what balance is due from M. SHANK are missing. PLAINTIFFS have pleaded that there is an unknown amount of money owed from Defendants, including M. SHANK, that cannot be ascertained without an accounting because the values are from a mix of tangible property, receipts, and disbursements of money and property to which Defendants had access. G. TWELFTH CAUSE OF ACTION — CONSPIRACY M. SHANK demurs to the conspiracy claim on the ground that it fails to allege sufficient facts to state a cause of action. Nevertheless, PLAINTIFFS have properly pleaded the elements of civil conspiracy. As shown throughout the fact section, M. SHANK was necessarily working with others, and was in fact working with others, in carrying out the fraud. C. SHANK was the mastermind, but he could not have pulled off the heist without his partners, including M. SHANK. In addition, paragraphs 152-153 of the FAC allege (1) that Defendants conspired to defraud PLAINTIFFS, and paragraphs 151-152, 154 allege (2) that Defendants carried out the object of the conspiracy, thereby damaging PLAINTIFFS. Incorporated by reference is the allegation that M. SHANK engaged in a conspiracy with the rest of the Defendants to embezzle and otherwise misappropriate PLAINTIFFS’ funds and convert client that belonged to PWS to be routed to Defendants. V. REQUEST FOR LEAVE TO AMEND The same liberal policy re amendment of pleadings applies as on sustaining demurrers. Therefore, as long as the defect is correctible, an amended pleading will usually be allowed. Grieves v. Sup.Ct. (Fox) (1984) 157 CA3d 159, 168 —relying on C.C.P. § 576 which authorizes court to allow amendment of pleadings at any time “in furtherance of justice”; Price v. Dames & Moore (2001) 92 CA4th 355, 360. If for any reason the demurrer, or any part thereof, is granted, then PLAINTIFFS request leave to amend. Leave to amend is liberally granted. This is especially true in a complex case of 10 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 this nature wherein there are tens of thousands, if not over hundred thousand documents, to review. This will be the first time leave to amend has been granted which is nearly always given as a matter of right. VI. CONCLUSION Based on the foregoing, PLAINTIFFS respectfully request this Court overrule M. SHANK''s Demurrer as to all issues, or in the alternative, grant PLAINTIFFS leave to amend the FAC to conform with the facts as set forth herein. Dated: August 7, 2018 KRING & CHUNG, LLP By: He {5 Kenneth W. Chung Carol J. Knoblow Matthew A. Reynolds Attorneys for Plaintiffs PACIFIC WEALTH SOLUTIONS, LLC; YIFANG PACIFIC CO., LTD.; AND TA LEE 11 OPPOSITION TO MICHAEL SHANK'S DEMURRER F:\60014\0001\cf\Demurrer\FAC\Opp\Opp to Demurrer - M. SHANK docx EXHIBIT A State of California Secretary of State CERTIFICATE OF REGISTRATION I, ALEX PADILLA, Secretary of State of the State of California, hereby certify: That on the 16 TH day of JULY, 2018, YIFANG PACIFIC LLC, complied with the requirements of California law in effect on that date for the purpose of registering to transact intrastate business in the State of California; and further purports to be a limited liability company organized and existing under the laws of CAYMAN ISLANDS as YIFANG PACIFIC and that as of said date said limited liability company became and now is duly registered and authorized to transact intrastate business in the State of California, subject, however, to any licensing requirements otherwise imposed by the laws of this State. IN WITNESS WHEREOF, | execute this certificate and affix the Great Seal of the State of California this day of July 19, 2018. ALEX PADILLA Secretary of State DYY NP-25 (REV 03/2018) pase Secretary of State | LLC-5 20182001006 8 \ Application to Register a Foreign Limited Liability Company (LLC) FILED »VY Secretary of State IMPORTANT — Read Instructions before completing this form. State of California Must be submitted with a current Certificate of Good Standing issued by the ; government agency where the LLC was formed. See Instructions. JUL 1 6 2018 Wr Filing Fee -~ $70.00 Copy Fees — First page $1.00; each attachment page $0.50; Certification Fee - $5.00 Note: Registered LLCs in California may have to pay minimum $800 tax to the i California Franchise Tax Board each year. For more information, go to CC https://www.ftb.ca.gov. This Space For Office Use Only 1a. LLC Name (Enter the exact name of the LLC as listed on your attached Certificate of Good Standing.) YIFANG PACIFIC 1b. California Alternate Name, If Required (See Instructions — Only enter an alternate name if the LLC name in 1a not available in California.) TYIFANG PACIFIC LLC 2. LLC History (See Instructions — Ensure that the formation date and jurisdiction match the attached Certificate of Good Standing.) a. Date LLC was formed in home jurisdiction (MM/DD/YYYY) | b, Jurisdiction (State, foreign country or place where this LLC is formed.) 9 / 30 / 2016 CAYMAN ISLANDS ¢. Authority Statement (Do not alter Authority Statement) This LLC currently has powers and privileges to conduct business in the state, foreign country or place entered in Item 2b. 3. Business Addresses (Enter the complete business addresses. items 3a and 3b cannot be a P.O. Box or "in care of" an individual or entity.) a. Street Address of Principal Executive Office - Do not enter a P.O. Box City (no abbreviations) State | Zip Code 4 Park Plaza, Suite 120 Irvine CA [92614 b. Street Address of Principal Office in California, if any - Do not enter a P.O. Box | City (no abbreviations) State | Zip Code 4 Park Plaza, Suite 120 Irvine CA [92614 c. Mailing Address of Principal Executive Office, if different than item 3a City (no abbreviations) State | Zip Code 4. Service of Process (Must provide either Individual OR Corporation.) INDIVIDUAL — Complete items 4a and 4b only. Must include agent's full name and California street address. a, California Agent's First Name (if agent is not a corporation) Middle Name Last Name Suffix b. Street Address (if agent is not a corporation) - Do not enter a P.O. Box City (no abbreviations) . State | Zip Code CA CORPORATION — Complete item 4c only. Oniy include the name of the registered agent Corporation. ¢. California Registered Corporate Agent's Name (if agent is a corporation) — Do not complete item 4a or 4b PARACORP INCORPORATED 5. Read and Sign Below (See Instructions. Title not required.) | am authorized to sign on behalf of the foreign LLC. TA LEE Type or Print Name eT Signature LLC-5 (REV 01/2017) 2017 California Secretary of State www.sos.ca.govibusiness/be OI-315844 Certificate Of Good Standing TO WHOM IT MAY CONCERN 1 DO HEREBY CERTIFY that : XiFang Eaeifle a company duly organized and exishid under and by virtue of the Laws of The Cayman Islands is at the date of this certifi cate:in Good Standing with the office ce, and duly authorized to exercise therein all the powers. vested i in the ‘company. \ “ < “am Given under #1 hand and Seal at George Town in the Island of Grand Cayman this 29th day of June Two Thousand Eighteen SonSd An Authorised Officer, Registry of Companies, Cayman Islands. Authorisation Code : 934649609906 www. verify.gov.ky 28 June 2018 201820010068 | hersby carlify that ihe foregoing transept of 5 page(s) 2) is a full, true and correct copy of the 5// original record in the custody of the California Secretary of State's office. JUL 20 2018 Date: __ ALEX E ADILLA. Secretary of State Tr ~N O N wn BA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 21 28 PROOF OF SERVICE STATE OF CALIFORNIA, COUNTY OF ORANGE I, the undersigned, am employed in the County of Orange, State of California. I am over the age of eighteen (18) years and not a party to the within action. My business address is 38 Corporate Park, Irvine, CA 92606-5105. My email is eyi @kringandchung.com On August 7, 2018, I served true copies of the foregoing document(s) described as OPPOSITION TO MICHAEL SHANK'S DEMURRER TO PLAINTIFFS' FIRST AMENDED COMPLAINT; MEMORANDUM OF POINTS AND AUTHORITIES on the interested parties in this action, addressed as follows: Counsel of Record Phone / Fax Nos. Party(ies) Represented J. Scott Souders T: (949) 718-3574 Attorneys for Defendant & Cross- J. SCOTT SOUDERS, P.C. F: (949) 718-3582 Complainant NEW FFR INSURANCE 13 Corporate Plaza, Suite 200 scott @scottsouders.com SERVICES, INC. erroneously sued Newport Beach, CA 92660 herein as NEW FIRST FINANCIAL RESOURCES, LLC Alexander L. Conti T: (949) 791-8555 Attorney for Defendants CAMERON CONTI LAW F: (949) 791-8556 SHANK; KRISTIN GULSVIG; 23 Corporate Plaza, Suite 150 aconti @conti-law.com MICHAEL SHANK; SHANK Newport Beach, CA 92660 ENTERPRISES, LLC; BELLBROOK INSURANCE SERVICES, LLC BY E-MAIL: By transmitting a true copy of the foregoing document(s) to the e-mail addresses set forth on the attached mailing list. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on August 7, 2018, at Irvine, California. EUNICE YI