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$415 Million Default Judgment Stands—C.A.
By a MetNews Staff Writer
A Chinese company that did not open its mail containing documents relating to an arbitration, and then a court proceeding, stemming from a claim against it for breach of contract—holding to its position that no contract was formed—is entitled to no relief from a judgment against it, confirming a default arbitration award, for nearly $415 million, the Court of Appeal for this district has held.
The unpublished opinion, filed Monday, affirms an order by Los Angeles Superior Court Judge Randolph Hammock denying the motion of Changzhou SinoType Technology Co., Ltd. to set aside the judgment. Presiding Justice Lee Smalley Edmon of Div. Three said the motion could not be granted because the motion was untimely.
The arbitration award—for in the amount of $414,601,200, plus 10 percent interest from Nov. 6, 2013, was confirmed on Oct. 23, 2014. SinoType moved for relief from the judgment on Jan. 29, 2016, more than 15 months later.
In its motion, it argued that when its chairman and general manager, Kejian “Curt” Huang, met in Los Angeles in 2008 with the president of Rockefeller Asia, Faye Huang, and signed a four-page memorandum of understanding (“MOU”), he was led to believe that it was what is known in China as a “bei wang lu,” which recites the status of negotiations, and has no contractual force. Accordingly, it explained, it ignored the arbitration proceedings and brought its motion when, to its surprise, it learned of the ensuing judgment against it.
Too Late
The lateness of the motion, Edmon said, is fatal to it.
“Pursuant to Code of Civil Procedure section 473, a judgment may be set aside more than six months after it was entered only if it is void—that is, if the trial court acted without fundamental authority over the subject matter or a party,” she wrote.
In a June 1, 2018 opinion, Edmon declared that the judgment was void because service of process—by mail—was not in conformity with the Hague Service Convention. However, the California Supreme Court granted review, and on April 2, 2020 reversed the Court of Appeal’s decision, holding that the parties had, in the MOU, agreed to such service, and had the power to include provisions contravening the convention.
In her opinion on remand, Edmon said the parties had submitted “to the jurisdiction of the Federal and State Courts in California,” and “the judgment was not void.”
Allegation of Fraud
Rejecting the contention that the MOU was void because Curt Huang was induced to sign it through fraud, Edmon said:
“In the present case, Curt stated in his declaration that Faye did not give him sufficient time to read the MOU and represented that it was not a binding agreement. Even were we to credit these statements, however, they would not establish fraud in the execution of the agreement to arbitrate. Whatever Faye’s representations about the MOU, the MOU was, on its face, a binding agreement: It stated that upon execution by the parties, it ‘shall be in full force and effect and shall constitute the full understanding of the Parties that shall not be modified by any other agreements, oral or written.’ Curt’s alleged failure to acquaint himself with these terms was unreasonable—and thus these terms are binding on SinoType—absent evidence that Faye ‘took some action or said something to hurry or pressure’ him.”
She continued:
“Curt does not assert that Faye did so: While he says that he had only 10 minutes to review the MOU, he admits this was because he had a flight to catch, not because Faye hurried him. Faye’s statements, therefore, did not deprive Curt of a reasonable opportunity to discover the ‘the character and essential terms of the’ MOU….As a result, the MOU was not void under the doctrine of fraud in the execution, and the trial court therefore did not lack personal jurisdiction over SinoType.”
The case is Rockefeller Technology Investments (Asia) v. Changzhou Sinotype Technology Co., Ltd., B272170.
Representing SinoType were Alhambra attorney Steve Qi and San Marino lawyer Steven L. Sugars of the Law Offices of George L. Young & Associates. Acting for Rockefeller Asia were Thomas P. O’Brien, Katherine F. Murray, and Nicole D. Lueddeke of Paul Hastings and Steven A. Blum and Gary Ho of the downtown Los Angeles firm of Blum Collins LLP.
Copyright 2021, Metropolitan News Company