NEW MING INC. v. ZHUANG

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

NEW MING INC.,

Plaintiff,

v. CIVIL ACTION NO. 22-11020-MPK

ZHONG ZHUANG,

Defendant.

MEMORANDUM AND ORDER

ON DEFENDANT’S MOTION TO DISMISS (#13).

KELLEY, U.S.M.J.

I. Introduction.

This is a dispute involving a grocery store in Boston, Massachusetts called Ming’s

Supermarket (the “Supermarket”). New Ming Inc., a Massachusetts corporation that operated the

Supermarket, sued Zhong Zhuang, a resident of Pennsylvania who managed the Supermarket

through his corporate entity Lotus Foods Boston, LLC, asserting claims of fraud/intentional

misrepresentation (Count I), intentional interference with advantageous business relations (Count

II), and conversion (Count III). (#1).

Zhuang moved to dismiss or, in the alternative, for this court to transfer the case to the

United States District Court for the Western District of Pennsylvania. (#13). On November 17,

2022, the court heard argument and took the motion under advisement. For the reasons set out

below, the court DENIES defendant’s motion.1

II. Background.

A. Factual Background.

Except where otherwise noted, the court takes the following facts from the plaintiff’s

complaint and the documents attached to it. (#1). New Ming is a Massachusetts corporation with

a principal place of business in Boston, Massachusetts. Id. ¶ 5. It operated the Supermarket and

the ancillary parking lots at its location on Washington Street in Boston. Id. ¶ 7.

Between February and July 2021, Zhuang, a Pennsylvania resident, represented to New

Ming that he could “raise $600,000 to loan to New Ming for its operation.” Id. ¶¶ 6, 9. He also

represented, allegedly during the same timeframe,2 that he had “extensive and significant

experience in managing, operating, and maintaining large supermarkets,” (id. ¶ 11), and that he

“possess[ed] college degrees in business management and computer science which, together with

his background, track record, and connections, would enable him to successfully manage and

operate the Supermarket,” (id. ¶ 12). Around July 13, 2021, Zhuang formed Lotus Foods Boston,

LLC, under the laws of Pennsylvania, through which he proposed to manage the Supermarket. Id.

¶¶ 10, 15.

Relying on Zhuang’s statements, on August 3, 2021, New Ming entered into a commercial

loan agreement and a management agreement (together, the “Agreements”) with Lotus Foods, in

which Lotus Foods agreed to (i) loan New Ming $600,000 for the operation of the Supermarket,

1 On August 17, 2022, both parties consented to proceed before a magistrate judge in accordance

with 28 U.S.C. § 636(c) and Fed. R. Civ. P. 73(b). (#17).

2 The complaint is at times unclear regarding dates, but plaintiff’s counsel represented at the

hearing that the paragraphs are in chronological order. (#23).

and (ii) manage the Supermarket on New Ming’s behalf. Id. ¶¶ 16-17; id. at Ex. A (the commercial

loan agreement) and Ex. B (the management agreement). Both agreements were to be governed

by Pennsylvania law, (id. at Ex. A ¶ 18; Ex. B ¶ 7.5), and included the following forum selection

clause:

Each party to this Agreement hereby agrees that the Court of Common Pleas

of Allegheny County, Pennsylvania, or the United States District Court for the

Western District of Pennsylvania, should it have jurisdiction, have exclusive

jurisdiction to hear and determine any claims or disputes between the parties

pertaining directly or indirectly to this Agreement or to any matter arising here

from. To the extent permitted by law, each party hereby expressly submits and

consents in advance to such jurisdiction and any action or proceeding commenced

by the other party, and agrees that service of such summons and complaint or other

process or papers may be made by registered or certified mail addressed to each

party at the address to which notices are to be sent pursuant to this Agreement.

Each of the parties waives any claims that the aforementioned Courts are an

inconvenient forum or an improper forum based on lack of venue. The choice of

forum set forth in this section shall not be deemed to preclude the enforcement of

any judgment obtained in such forum or the taking of any action to enforce the same

in any other appropriate jurisdiction.

Id. at Ex. A ¶ 19(i); Ex. B ¶ 7.6(a) (substantially similar)). Zhuang was not a signatory to either

agreement, but signed both on Lotus Foods’ behalf as its manager. Id. at Ex. A, p. 10; Ex. B, p. 7.

Soon after signing the papers, the parties’ relationship deteriorated. In September 2021,

New Ming learned that Zhuang, without New Ming’s permission, had started an online grocery

shopping service under the name of “Lotus Food” using the Supermarket’s physical address. (#1

¶ 18). New Ming asked Zhuang to terminate the online grocery business and focus on managing

the Supermarket’s physical store, but Zhuang refused to do so. Id. ¶¶ 20-21. Over the next month

or two, New Ming observed Zhuang’s operation of the Supermarket and concluded that, contrary

to his previous assertions, he had little or no experience managing a large supermarket. Id. ¶ 22.

As a result, the Supermarket began to fail. Id. ¶ 23.

On top of this, and unknown to New Ming at the time, Zhuang stopped making payments

to New Ming’s vendors, suppliers, landlords, and other third parties beginning in November 2021.

Id. ¶ 28. Then, in December, Zhuang informed New Ming that he would not manage the

Supermarket after the Chinese Lunar New Year, which that year fell on February 1, 2022. Id. ¶ 29.

When New Ming took over the Supermarket’s management, New Ming found that Zhuang had

left without appropriately transitioning the business’s operations, financial records, and business

records. Id. ¶ 30. Zhuang also took with him New Ming’s files and payment records related to

the Supermarket’s operation (all of which he has yet to return). Id. ¶¶ 31-33, 51. By then, New

Ming’s debts to third parties had reached $2,130,000. Id. ¶ 35. New Ming promptly paid out

$1,030,000 to begin clearing the mess. Id. ¶ 36.

After leaving the Supermarket (so, after February 1, 2022), Zhuang informed New Ming’s

bank, Rockland Bank, that New Ming had lost its checkbooks. (#1 ¶ 37). On March 16, Zhuang

again contacted Rockland Bank and stopped New Ming’s checks numbered 2,000-5,000. Id. ¶ 38.

The next month, Zhuang called Rockland Bank once more, this time stopping all checks, including

those newly ordered by New Ming. Id. ¶ 39. As a result of Zhuang’s stop orders, New Ming could

make no further payments to its venders, suppliers, and other third parties; and those same third

parties were unable to deposit any outstanding checks from New Ming. Id. ¶¶ 40-41. Amid the

chaos, Zhuang (falsely) represented to those same third parties that New Ming was in “financial

distress” and unable to keep its contractual obligations. Id. ¶¶ 42-43, 66-67.

During this same time, around February 2022, Zhuang transferred, without New Ming’s

permission, approximately $100,000 from a Lotus Food bank account established for the benefit

of New Ming to a different, unknown account. (#1 ¶ 45). In April, Zhuang took another $9,000

from New Ming’s Rockland Bank Account, again without permission. Id. ¶ 46. Then, he took

New Ming’s business records from its offices in Boston, once again without authorization. Id.

¶ 48. Despite repeated requests, Zhuang has not returned the records. Id. ¶¶ 50-51.

By May 2022, New Ming’s business reputation had been “greatly damaged,” and its

contracts with vendors and suppliers had been terminated. (#1 ¶ 53). On June 9, 2022, New Ming

stopped operating the Supermarket.3 Id. ¶ 54.

B. The Other Pending Lawsuits.

a. The Pennsylvania Action

On February 25, 2022, Lotus Foods issued a Notice of Default on the $600,000 loan to

New Ming, and shortly thereafter filed a Complaint in Confession of Judgment in the Court of

Common Pleas of Allegheny County, Pennsylvania. (#15-1 at Ex. 1). On April 4, New Ming filed

a Petition to Strike or, in the Alternative, Petition to Open Confessed Judgment, contesting the

judgment. Id. at Ex. 2. Then, on September 20, New Ming filed an Answer with New Matter and

Counterclaims, asserting six counterclaims against Lotus Foods, including fraud (Count II),

conversion (Count III), and tortious interference with current and prospective contractual relations

(Count VI). (#24-1).4 Trial is set for June 2023. (#24-2). Zhuang is not a party to this action.

3 At the hearing, plaintiff’s counsel indicated that, since filing this lawsuit in June 2022, the

Supermarket has indeed opened once more under New Ming’s management. (#15 at 2, n.1; #23).

Either way, the court’s decision does not rest on whether the Supermarket is open or closed.

4 On November 17, approximately an hour before the remote hearing, defendant’s counsel emailed

two exhibits to the court and to opposing counsel. See #24-1 and #24-2, attached. Both exhibits

reflect public records in the Pennsylvania Action, of which this court may take judicial notice.

Giragosian v. Ryan, 547 F.3d 59, 66 (1st Cir. 2008) (“A court may consider matters of public

record in resolving a Rule 12(b)(6) motion to dismiss.”).

b. The Massachusetts Action

On March 24, 2022, Lotus Foods commenced an action in Suffolk County Superior Court

to enforce the judgment in the Pennsylvania Action, captioned Lotus Foods Boston LLC v. New

Ming Inc., Case. No. 2284-cv-000643. Zhuang is not a party to this action.

C. This Lawsuit.

Before filing counterclaims in the Pennsylvania Action, on June 19, 2022, New Ming filed

this lawsuit against Zhuang in his individual capacity asserting claims for three common law torts:

fraud/intentional misrepresentation (Count I), intentional interference with advantageous business

relations (Count II), and conversion (Count III). (#1). New Ming did not join Lotus Foods. Id.

On August 18, Zhuang filed this motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) and

12(b)(7) for failure to state a claim and failure to join a necessary party pursuant to Fed. R. Civ. P.

19. (#13). Zhuang claimed, first, that New Ming failed to allege that Zhuang could be held liable

for what he contends to have been the actions of Lotus Foods, and therefore failed to state a claim

under Fed. R. Civ. P. 12(b)(6). (#15 at 3-5). Second, he claimed that Lotus Foods is a necessary

and indispensable party under Fed. R. Civ. P. 19, but cannot be joined to this lawsuit due to the

forum selection clauses in the Agreements, and so, the case must be dismissed under Fed. R. Civ.

P. 12(b)(7). (#15 at 6-9). In the alternative, Zhuang asks the court to transfer the matter to the

Western District of Pennsylvania in accordance with the forum selection clauses. (#15 at 9-11).

New Ming opposed, (#20), and the court heard argument on November 17, 2022.

III. Analysis.

A. Failure to State a Claim - Rule 12(b)(6)

a. Standard of Review

To decide a motion for failure to state a claim under Rule 12(b)(6), “‘we accept as true all

well-pleaded facts alleged in the complaint and draw all reasonable inferences therefrom in the

pleader’s favor.’” Rodriguez-Reyes v. Molina-Rodriguez, 711 F.3d 49, 52-53 (1st Cir. 2013)

(quoting Santiago v. Puerto Rico, 655 F.3d 61, 72 (1st Cir. 2011)). The court “‘may augment

these facts and inferences with data points gleaned from documents incorporated by reference into

the complaint, matters of public record, and facts susceptible to judicial notice.’” Id. at 53 (quoting

Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011)). To survive, the complaint must “‘contain

sufficient factual matter . . . to ‘state a claim to relief that is plausible on its face.’’” Ríos-Campbell

v. U.S. Dep’t of Commerce, 927 F.3d 21, 24 (1st Cir. 2019) (quoting Haley, 657 F.3d at 46). A

claim achieves facial plausibility if the complaint’s allegations, all together, “allow[] the court to

draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v.

Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)); see

Garayalde-Rijos v. Mun. of Carolina, 747 F.3d 15, 24 (1st Cir. 2014) (“[N]o single allegation need

[establish] . . . some necessary element [of the cause of action], provided that, in sum, the

allegations of the complaint make the claim as a whole at least plausible.” (internal quotes and

citations omitted)).

b. Discussion

Zhuang claims that any actions he allegedly took were within the scope of his role as

manager of Lotus Foods, and that G.L. c. 156C, § 225 shields him from liability for such actions

taken on Lotus Foods’ behalf. (#15 at 4-5). He argues that he cannot be held individually liable

for those actions because New Ming failed to adequately allege facts to pierce the corporate veil.

Id. With no individual liability, and no Lotus Foods against which to assert corporate liability,

Zhuang asserts that New Ming’s whole case fails as a matter of law. Id.

Following some discovery, Zhuang’s contentions may prove correct; but we are not there

yet. At this stage we must take New Ming’s allegations as true, and New Ming has alleged enough

to pursue Zhuang individually. As a threshold matter, there is no dispute that New Ming alleges

that Zhuang himself, not Lotus Foods, engaged in tortious activity. See, e.g., #1 ¶ 11

(“Zhuang . . . represented to New Ming’s officer’s, shareholders, or authorized representatives

that he had extensive and significant experience in managing, operating, and maintaining large

supermarkets . . .”); ¶ 16 (“[R]elying on Zhuang’s representation, New Ming entered into a

commercial loan agreement with Lotus.”); ¶ 45 (“In or about February 2022, Zhuang transferred

the funds, approximately $100,000, from the bank accounts [established for the benefit of New

Ming] to a different account . . . .”) (all emphases added). In other words, plaintiff does not allege

that Lotus Foods engaged in bad acts and that Zhuang should be held liable as its officer—plaintiff

5 G.L. c. 156C, § 22 provides: “Except as otherwise provided by this chapter, the debts, obligations

and liabilities of a limited liability company, whether arising in contract, tort or otherwise, shall

be solely the debts, obligations and liabilities of the limited liability company; and no member or

manager of a limited liability company shall be personally liable, directly or indirectly, including,

without limitation, by way of indemnification, contribution, assessment or otherwise, for any such

debt, obligation or liability of the limited liability company solely by reason of being a member or

acting as a manager of the limited liability company.”

makes its tortious allegations against Zhuang alone.6 JFF Cecilia LLC v. Weiner Ventures, LLC,

et al., No. 1984-cv-03317-BLS2, 2020 WL 4464584, at *8-9 (Mass. Super Ct. July 30, 2020)

(“Plaintiffs are not seeking to pierce the corporate veil that protects the LLC members and

managers, or trying in some other way to shift liability from [the corporate defendant] to

individuals. Instead, Plaintiffs claim that [the individual defendants] personally committed

unlawful acts for which they may be held liable.”). Plaintiff thus does not need to pierce the

corporate veil to get to Zhuang.7

The timing, too, works in New Ming’s favor: the actions underlying New Ming’s fraud

claim—namely, Zhuang’s allegedly fraudulent statements that induced New Ming to enter into the

Agreements—predate Lotus Foods’ formation in July 2021 (#1 ¶¶ 11-12, 15-17); the actions

original to plaintiff’s intentional interference and conversion claims—respectively, Zhuang’s

alleged false statements to Rockland Bank and other third-parties, and his alleged conversion of

6 Defendant interprets the complaint as establishing that “Mr. Zhuang ‘acted in a business

context,’” and therefore all his actions must be attributed to Lotus Foods. (#15 at 5 (quoting #1

¶ 8)). The court disagrees. Paragraph 8 reads in full, “Zhuang acted in a business context,

recruiting investors, raising funds, and operating a variety of businesses.” (#1 ¶ 8). In context,

New Ming alleges only that Zhuang was a businessman, and businessmen are not categorically

immune from suit under Massachusetts law.

7 Even if plaintiff did style its complaint that way, Zhuang overstates the breadth of G.L. c. 156C,

§ 22’s protection. Although Massachusetts law will not hold an officer personally liable for an

LLC’s tort “solely by reason of being a member or acting as a manager of the limited liability

company,” it will recognize an officer’s individual liability “for tortious activity in which they

personally participate, even if they were acting on behalf of the corporation.” Chandra v.

DeCaprio, et al., No. 1884-cv-00336-BLS2, 2022 WL 6299574, at *8 (Mass. Super. Ct. Apr. 19,

2022). (“That one is not personally liable in contract or tort ‘solely by reason of being a member

or acting as a manager of the limited liability company’ does not mean . . . that personal liability

may never attach for activities undertaken on the LLC’s behalf.” (internal quotes and citations

omitted)). The complaint clearly alleges, at the very least, that Zhuang “personally participate[d]”

in the alleged bad acts, which is enough to keep the case against him alive on a motion to dismiss.

Id.

New Ming’s $109,000—post-date Zhuang’s operation and management of the Supermarket, for

which Lotus Foods was allegedly incorporated. Id. ¶¶ 10, 29-30, 42-43, 45-46. Taking all

reasonable inferences in New Ming’s favor, Rodriguez-Reyes, 711 F.3d at 52-53, Zhuang was

acting in his own right during this time because, as alleged, Lotus Foods was not acting at all. See

Trust Safe Pay, LLC v. Dynamic Diet, LLC, No. 17-10166-MPK, 2017 WL 3974949, at *3, n. 8

(D. Mass. Sept. 8, 2017) (noting court could discern when allegations were levied against

individual defendants because “the [bad conduct] occurred before [the corporate defendant]

existed”). While discovery may show this was not the case, the court at this juncture must allow

New Ming’s claims to proceed at least into discovery.

B. Failure to Join a Necessary Party – Rule 12(b)(7)

c. Standard of Review

Under Rule 12(b)(7), “a defendant may move to dismiss a claim when a plaintiff fails to

join a required party” under Rule 19. J & J Sports Productions Inc. v. Cela, 139 F. Supp. 3d 495,

499 (D. Mass. 2015) (internal quotes and citations omitted). Although the court must accept the

factual allegations in the complaint as true, it is “‘not limited to the pleadings and may consider

other relevant extra-pleading evidence.’” Phoenix Ins. Co. v. Delangis, No. 12-10689-GAO, 2015

WL 1137819, at *2 (D. Mass. Mar. 13, 2015) (quoting Axis Ins. Co. v. Hall, 287 F.R.D. 110, 113

(D. Me. 2012). Ultimately, the moving party shoulders the burden to show why the absent party

should be joined. J & J Sports, 139 F. Supp. 3d at 499 (citing Raytheon Co. v. Cont’l Cas. Co.,

123 F. Supp. 2d 22, 32 (D. Mass. 2000)).

“Rule 19 is geared toward circumstances ‘where a lawsuit is proceeding without a party

whose interests are central to the suit.’” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Flanders-

Borden, 11 F.4th 12, 17 (1st Cir. 2021) (quoting Bacardí Int’l Ltd. v. V. Suárez & Co., Inc., 719

F.3d 1, 9 (1st Cir. 2013), cert. denied 571 U.S. 1024 (2013)). The rule “provides for joinder of

required parties when feasible, Fed. R. Civ. P. 19(a), and for dismissal of suits when joinder of a

required party is not feasible and that party is indispensable, Fed. R. Civ. P. 19(b).” Bacardí, 719

F.3d at 9. The decision is a “pragmatic, practical” one that is “heavily influenced by the facts of

each case.” Id. (citations omitted).

The first step in a Rule 19(a) analysis is to determine whether the absent party is a “required

party” by the following standards:

(1) A person who is subject to service of process and whose joinder will not deprive

the court of subject-matter jurisdiction must be joined as a party if:

(A) in that person’s absence, the court cannot accord complete relief among

existing parties; or

(B) that person claims an interest relating to the subject of the action and is

so situated that disposing of the action in the person’s absence may:

(i) as a practical matter impair or impede the person’s

ability to protect the interest; or

(ii) leave an existing party subject to a substantial risk of

incurring double, multiple, or otherwise inconsistent

obligations because of the interest.

Fed. R. Civ. P. 19(a)(1). If the party is required and joinder is not feasible, the court must then

determine whether the party is indispensable under Fed. R. Civ. P. 19(b). Bacardí, 719 F.3d at 9.

d. Discussion

Zhuang’s Rule 19(a) argument revolves around his concern that New Ming will use

evidence and factual findings procured in this lawsuit to later sue (or, as it happens, concurrently

sue8) Lotus Foods for the same claims. (#15 at 7-8). He claims that Lotus Foods will not be able

8 At the hearing, defense counsel argued that New Ming’s claims against Lotus Foods in the

Pennsylvania Action are nearly identical to the claims against Zhuang here. (#38; #24-1).

to adequately protect its interests in this lawsuit, which will prejudice it in the other. Id.; see Fed.

R. Civ. P. 19(a)(1)(B)(ii).

But Lotus Foods’ interests in this case are “aligned closely enough” to Zhuang’s that the

company’s interests elsewhere will be adequately protected by Zhuang’s positions here. Merrill

Lynch, 11 F.4th at 17 (“We have explained that where the interests of an absent party are aligned

closely enough with the interests of an existing party, and where the existing party pursues those

interests in the course of the litigation, the absent party is not required under Rule 19.”); see Pujol

v. Shearson Am. Express, Inc., 877 F.2d 132, 135-36 (1st Cir. 1989) (“The mere fact . . . that Party

A, in a suit against Party B, intends to introduce evidence that will indicate that a non-party, C,

behaved improperly does not, by itself, make C a necessary party.”). Although Zhuang bears the

burden to show that Lotus Foods should be joined, he fails to demonstrate why his own defense—

ostensibly, that he did not commit fraud, intentionally interfere with New Ming’s business

relations, or convert New Ming’s funds—will not protect Lotus Foods’ interests as well. Roy v.

FedEx Ground Package System, Inc., No. 3:17-30116-KAR, 2020 WL 3799203, at *6-7 (D. Mass.

July 7, 2020) (“‘[A]n absent party’s interests cannot be harmed or impaired if they are identical to

those of a present party.’” (quoting Bacardí, 719 F.3d at 11) (internal alternations omitted)).

Presumably, the two would want to prove the same things. None of the cases defendant cites

demonstrate that a corporate entity must be joined if one of its officers or directors is sued

individually for tortious conduct. Cf. Rivera Rojas v. Loewen Group Intern., Inc., 178 F.R.D. 356,

361-62 (D.P.R. 1998) (finding subsidiary necessary party in contract dispute against parent

company); Urquhart v. Wertheimer, 646 F. Supp. 2d 210, 213 (D. Mass. 2009) (finding partnership

necessary and indispensable party where (i) plaintiff’s claims were derivative, and (ii) the general

partner’s and the partnership’s interests were not aligned). Taking New Ming’s allegations as true,

Lotus Foods is not necessary under Rule 19(a), and the court need not address Rule 19(b) at this

time.

C. Transfer – 28. U.S.C. § 1404(a)

“Although a forum selection clause does not render venue in a court ‘wrong’ or ‘improper’

within the meaning of § 1406(a) or Rule 12(b)(3), the clause may be enforced through a motion to

transfer under § 1404(a).”9 Alt. Marine Const. Co, Inc. v. U.S. Dist. Ct. for the Western Dist. of

Texas, 571 U.S. 49, 59 (2013). A forum selection clause should be “given controlling weight in

all but the most exceptional cases,” id. at 59-60, so the issue here is whether the forum selection

clauses apply at all where defendant is a non-party to the Agreements.

Although “a non-party to a forum selection clause may be bound if it is closely related to

the dispute such that it becomes foreseeable that it will be bound,” Europa Eye Wear Corp. v.

Kaizen Advisors, LLC, 390 F. Supp. 3d 228, 231 (D. Mass. 2019) (internal quotes and citations

omitted), plaintiff’s tort claims, as pled, are not dependent upon the Agreements. Cf. id. at 231-32

(“[C]ourts have also held that tort claims against a non-signatory are within the scope of a forum-

selection clause if the tort claims ultimately depend on the existence of a contractual relationship

between the signatory parties, or if resolution of the claims relates to interpretation of the contract.”

(internal quotes and citations omitted)). For all the reasons discussed supra, Sections A-B, plaintiff

cabined its allegations to Zhuang’s individual conduct, separate from Lotus Foods’ actions and

separate from Lotus Foods’ contractual relationship with New Ming. Therefore, the forum

selection clauses do not apply to Zhuang here and the case need not be transferred.

9 § 1404(a) allows a district court to transfer any civil action to any other district or division where

it might have been brought “[f]or the convenience of parties and witnesses, in the interest of

justice[.]”

IV. Conclusion.

For the reasons stated, defendant’s motion to dismiss (#13) is DENIED.

November 23, 2022 /s/ M. Page Kelley

M. PAGE KELLEY

United States Magistrate Judge