Moses Choi v. 8th Bridge Capital, Inc.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

ae eee CHRISTINAA. SNYDER

Catherine Jeang Not Present N/A

Deputy Clerk Court Reporter / Recorder Tape No.

Attorneys Present for Plaintiffs: Attorneys Present for Defendants:

Not Present Not Present

Proceedings: (IN CHAMBERS) - PLAINTIFFS’ MOTION FOR PARTIAL

SUMMARY JUDGMENT (Dkt. [| 143 ], filed February 14, 2020)

DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

(Dkt. [ 146 ], filed February 18, 2020)

I. INTRODUCTION

A. Plaintiffs Initiate this Action

Plaintiffs Moses Choi (“Choi”) and Southeast Regional Center, LLC (“SRC”)

(collectively, “plaintiffs”) filed this action on December 13, 2017, against defendants 8th

Bridge Capital, Inc. (“8th Bridge”); 8th Bridge Capital, LLC; Manhattan Real Estate Fund

GP, LLC: Manhattan Real Estate Fund, LP: Manhattan Real Estate Fund IT, LP; Manhattan

Real Estate Equity Fund, LP; Patrick Jongwon Chang (“Chang”); and Young Hun Kim

(“Kim’’) (collectively, “defendants”). Dkt. 1. The gravamen of plaintiffs’ claims is that

Kim and his wholly-owned company, 8th Bridge, breached a joint venture agreement with

Choi and SRC, Choi’s company, regarding the marketing of federally-approved projects to

foreign investors pursuant to the United States Citizen and Immigration Service’s EB-5

immigrant visa program. See generally id.

Plaintiffs filed a first amended complaint against defendants on December 22, 2018.

Dkt. 8 (“FAC”). The FAC asserts the following sixteen claims for relief: (1) declaratory

judgment; (2) breach of joint venture partnership agreement: (3) enforcement of rights

under the Revised Uniform Partnership Act (“RUPA”): (4) breach of fiduciary duty; (5)

fraudulent concealment; (6) constructive fraud; (7) conversion; (8) violation of the Defense

of Trade Secrets Acts; (9) violation of the California Uniform Trade Secrets Act; (10)

judicial dissolution; (11) breach of contract to form joint venture; (12) breach of fiduciary

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

duty: (13) promissory estoppel; (14) violation of California’s Unfair Competition Law

(“UCL”); (15) accounting: and (16) quantum meruit.' See generally FAC.

B. Defendants Assert Counterclaims Against Plaintiffs

Defendants answered on March 2, 2018. Dkts.21—28. Pursuant to a joint stipulation

between the parties, defendants subsequently filed amended answers and amended

counterclaims on March 30, 2018. Dkts. 31-38. Defendants each asserted affirmative

defenses for: (1) statute of limitations; (2) waiver/estoppel; (3) accord and satisfaction; (4)

laches; (5) failure to perform; (6) fraud; (7) offset; and (8) unclean hands. Id. Four of the

individual defendants, 8th Bridge, 8th Bridge Capital, LLC, Kim, and Chang, asserted

counterclaims against Choi; SRC; and additional counter-defendants SRC Ajin Fund I,

LLC; SRC Ajin Fund II, LLC; SRC Ajin Fund TI, LLC; SRC Ajin-Wooshin Fund IV,

LLC; and SRC Ajin-Wooshin Fund V, LLC (collectively, “the Ajin LLCs”). Dkts. □□□□□□

These counterclaims include: (1) intentional interference with contract; (2) intentional

interference with prospective economic advantage; (3) declaratory relief: (4) rescission

based on fraud; (5) breach of oral contract; and (6) promissory estoppel. Id.

C. The Court’s Order on Plaintiffs’ Motion to Strike Portions of

Defendants’ Amended Counterclaims and Affirmative Defenses and

Plaintiffs’ Motion to Dismiss Defendants’ Counterclaims

On April 25, 2018, plaintiffs filed a motion to strike portions of defendants’ amended

counterclaims and affirmative defenses. Dkt. 43. Plaintiffs and the Ajin LLCs also filed a

motion to dismiss defendants’ counterclaims on the grounds that: (1) the Ajin LLCs are

not subject to personal jurisdiction; and (2) defendants failed to state counterclaims for

interference with prospective economic advantage, rescission based on fraud, breach of

oral contract, and promissory estoppel. Dkt. 44.

The Court granted in part and denied in part plaintiffs’ and the Ajin LLC’s motions

on July 16, 2018. Dkt. 50. The Court struck particular allegations in defendants’

counterclaims against Choi as “scandalous,” “immaterial,” and “impertinent.” Id. at 11.

The Court declined to strike defendants’ statute of limitations and fraud affirmative

defenses on the grounds that they were insufficiently pled. Id. at 11-13. Moreover, the

Court denied the Ajin LLC’s motion to dismiss based on lack of personal jurisdiction. Id.

Plaintiffs subsequently dismissed their eighth and ninth claims for violations of the

Defend Trade Secrets Act and California Uniform Trade Secrets Act. Dkt. 76, 77.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

at 15. The Court likewise declined to dismiss defendants’ counterclaims for rescission

based on fraud, breach of oral contract, and promissory estoppel. Dkt. 50 at 21. The Court

dismissed defendants’ counterclaim for intentional interference with prospective economic

advantage without prejudice, however, concluding that defendants had failed to sufficiently

plead an independently wrongful act to serve as the basis for the interference counterclaim.

Id. at 18. The Court noted that “defendants may be able to cure this deficiency by alleging

the substance of the defamatory statement with more specificity or pleading a claim for

unfair business practices in violation of the UCL.” Id. at 18.

Defendants subsequently filed second amended answers and counterclaims on

August 16, 2018. Dkts. 52-59. Neither plaintiffs nor the Ajin LLCs moved to dismiss

defendants’ subsequent second amended answers and counterclaims.

D. The Court’s Order on Chang’s Motion for Judgment on the Pleadings

On September 5, 2019, Chang moved for judgment on the pleadings as to plaintiffs’

claims against Chang for breach of fiduciary duty, fraudulent concealment, and violation

of the UCL. Dkt. 75. The Court denied Chang’s motion on October 7, 2019. Dkt. 88.

The Court noted that “since plaintiffs first filed the operative FAC on December 22, 2017,

there has been substantial progress in this case to date. For example, discovery is already

well underway, and Chang’s deposition was taken on August 15, 2019.” Id. at 4. The

Court therefore concluded that in light of the substantial discovery completed, the

sufficiency of plaintiffs’ claims against Chang “is better decided on a motion for summary

judgment, rather than a motion for judgment on the pleadings.” Id.

E. ‘The Parties’ Cross-Motions for Summary Judgment

On February 14, 2020, plaintiffs filed a motion for partial summary judgment as to

defendants’ counterclaims for intentional interference with contract, intentional

interference with prospective economic advantage, declaratory relief, rescission based on

fraud, breach of contract, and promissory estoppel, as well as on defendants’ affirmative

defenses based on fraud and for offset. Dkt. 143 (“Choi Mot.”). Plaintiffs filed a statement

of uncontroverted facts and conclusions of law. Dkt. 144 (“Choi SUF”). On February 28,

2020, defendants filed an opposition, dkt. 161 (“Choi. Opp.”), and a statement of genuine

disputed facts, dkt. 161-1 (“Choi GDF”). Plaintiffs filed a reply on March 9, 2020. Dkt.

167 (“Choi Reply”).

On February 18, 2020, defendants filed a motion for summary judgment as to

plaintiffs’ claims for declaratory relief, breach of joint venture partnership agreement,

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

enforcement of rights under RUPA, breach of fiduciary duty; fraudulent concealment,

constructive fraud, conversion, judicial dissolution, breach of contract to form a joint

venture, breach of fiduciary duty, promissory estoppel, violation of the UCL, and

accounting claims. Dkt. 146 (“Kim Mot.”). Defendants also filed a statement of

undisputed facts and conclusions of law. Dkt. 146-1 (“Kim SUF”). On February 28, 2020,

plaintiffs filed an opposition, dkt. 162 (“Kim Opp.”), as well as a statement of genuine

disputed facts, dkt. 162-1 (“Kim GDF”). Defendants filed a reply on March 9, 2020. Dkt

168 (“Kim Reply”).

On March 20, 2020, the Court determined that the parties’ motions are suitable for

decision without oral argument and took the motions under submission. Having carefully

considered the parties’ arguments, the Court finds and concludes as follows.

Il. BACKGROUND

A. Choi’s Contentions

1. Choi’s Initial Discussions with Kim Regarding Collaborations

Choi contends that in 2015, he and Kim began discussions regarding potential

opportunities for collaboration between their two respective companies, SRC and 8th

Bridge. Kim SUF No. 37. Choi avers that on August 26, 2015, he and Kim entered into a

“Mutual Non-Disclosure Agreement” for the stated purpose of “exploring a business

opportunity under which each may disclose Confidential Information to the other.” Dkt.

162-2, Declaration of Moses Choi in Support of Opposition to Defendants’ Motion for

Summary Judgment (“Choi Decl.”) § 4.2, According to Choi, collaboration between Choi

and Kim would take the form of their becoming co-owners of a business enterprise which

would use Choi’s operating capital as reasonably necessary, as well as Choi’s and Kim’s

joint efforts, to source foreign investors in real estate projects. Id. 5. Choi contends that

Defendants object to nearly every paragraph of Choi’s declaration using boilerplate

objections such as “hearsay,” “sham declaration,” “vague and ambiguous,” and “best

evidence rule.” Accordingly, “the Court will not scrutinize each objection and give a full

analysis of identical objections raised as to each fact.” Stonefire Grill, Inc. v. FGF Brands,

Inc., 987 F. Supp. 2d 1023, 1033 (C.D. Cal. 2013). The Court therefore OVERRULES

these blanket objections. See Capitol Records, LLC v. BlueBeat, Inc., 765 F. Supp. 2d

1198, 1200 (C.D. Cal. 2010) (“In motions for summary judgment with numerous

objections, it is often unnecessary and impractical for a court to methodically scrutinize

each objection and give a full analysis of each argument raised.”).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

he and Kim decided to proceed initially on a “project basis” with respect to sourcing

investors for the Ace Hotel in Manhattan, New York, and that a formal merger of Kim’s

and Choi’s companies was “never a condition to proceeding with the ‘project-based’

venture focusing on the Ace Hotell.]” Choi Decl. 8. “By October 5, 2015, based on

[his] discussions with Kim, [Choi] believed that there was an agreement in place to work

together on the Ace Hotel Project[.]” Id. 10. According to Choi, that agreement required

Choi and Kim to share equally in the profits that their companies derived from successfully

sourcing foreign investors for the development of the Ace Hotel in Manhattan, New York.

Kim SUF No. 16.

2. Choi Expends Time and Resources Towards the Ace Hotel Project

Choi asserts that he expended considerable time and resources towards his alleged

joint venture with Kim regarding the Ace Hotel. For example, between October 13, 2015,

and January 17, 2017, Choi made twelve wire transfers to Kim, through SRC, totaling

$305,000.00. Choi Decl. § 12. Moreover, between October 2015 and 2017, Choi “made

at least 16 trips separate to Asia to market EB-5 projects, . . . often together with Kim” and

that “[mlJost of the|se] efforts during this time were directed at promoting the Ace Hotel

Project.” Id. § 13. In addition, Choi assigned Chang, an SRC employee, to work with 8th

Bridge, allowing Chang to move to Los Angeles, California to work in office space that

SRC leased and maintained. Id. § 14.

According to Choi, “Kim treated [Choi] and SRC as his marketing partners,

assigning [Choi] and [Chang] business cards and ‘8thbrigecap.com’ email addresses, and

including [Choi and Chang] in his communications with third parties.” Choi Decl. § 16.

Moreover, Kim “authorized [Choi] to sign commission agreements with foreign agents as

the ‘Manager’ of Manhattan Real Estate GP, LLC, which was the general partner on the

Ace Hotel Project,” and Kim “introduced [Choi] to his most valued business associates in

the U.S. and abroad, including prominent members of the Asian-American Los Angeles

business community.” Id.

3. Choi’s Relationship with Kim Breaks Down

By December 2016, however, Choi asserts that his business relationship with Kim

began to break down. In late December 2016, Choi asked Kim “to send [Choi] financial

statements for the Ace Hotel Project.” Choi Decl. § 30. By January 3, 2017, Kim

forwarded an income statement for 8th Bridge as of October 31, 2016, advising that he

would send an updated statement to Choi. Id. Ultimately, however, “Kim did not send

[Choi] any updated financial statements.” Id. Nonetheless, “SRC continued marketing the

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

Ace Hotel Project until at least early March 2017, and possibly later.” Choi Decl. § 32.

By March 2017, though, Choi “suspected based on [his] understanding of the success

[Choi] had seen in marketing the Ace Hotel Project that 8th Bridge had already disbursed

funds and received substantial revenue, even though Kim still was not sharing his financial

records.” Id. | 34. When Choi advised Kim that Choi needed to draw down on Choi’s

share of the profits to pay for a down payment on a house, Kim referred to this payment to

Choi as a “repayment of your funding to” 8th Bridge. Id.

On April 17, 2017, Kim informed Choi by email that Kim was “‘sincerely sorry that

we couldn’t work together,’ that [Kim] had decided to ‘stop putting [his] effort to find a

resolution to our prolonged cooperation terms,” and that “[Choi and Kim] needed to discuss

how to ‘handle the LA office space and some of the matters related with [Chang] ASAP.””

Choi Decl. 37. Choi “realized at that point that Kim had betrayed our relationship, and

[Choi] again asked [Kim] for financial records.” Id. Choi “also asked [Kim] to make

[Choi] a proposal to buy out [Choi’s interest] in the Ace Hotel Project based on [their]

agreement, but [Kim] never did.” Id.

B. _Kim’s Contentions

1. Choi and Kim Fail to Come to Terms Regarding a Partnership

Kim disputes that he, Choi, and their respective companies, 8th Bridge and SRC,

ever finalized a joint venture agreement. Dkt. 161-3, Declaration of Young Kim in Support

of Opposition to Plaintiffs’ Motion for Summary Judgment (“Kim Decl ISO Choi Opp.”)

According to Kim, Kim sent Choi a “Draft Term Sheet” on October 6, 2015, and Kim

emailed Choi on October 13, 2015, asking Choi for his comments on the Draft Term Sheet.

Kim SUF Nos. Nos. 12, 16. Kim followed up with an additional email to Choi on October

18, 2015, “asking Choi to review the Draft Term Sheet and give his thoughts. Choi wrote

back the next day and stated that the goal was to finalize the agreement by the end of the

month.” Id. No. 17. On December 2, 2015, Kim sent another email to Choi “reminding

and alerting him [that Kim and Choi] still needed to agree on how to share profits and how

to organize the proposed new company, stating specifically “besides the profit sharing,

which you hate most to be discussed, we need to organize the company structure among

entities and employees.’” Id. No. 18. On March 9, 2016, Kim against sent an email to

Choi stating “‘you and I need to finalize our over-due partnership agreement. I'd like to

suggest we go back to the outlines I’ve sent you previously.’” Id. No. 20. According to

Kim, “Choi never wrote back.” Id.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

2. Kim Pauses Partnership Negotiations with Choi on March 15,

2016, and Kim Invites Choi to Serve as “Master Distributor”

On March 15, 2016, Kim sent an email to Choi notifying Choi that Kim had “given

a lot of thoughts [sic] about our partnership and [would] rather stop now before it’s too

late.” Dkt. 146-3, Exh. F (“Mar. 15, 2016 Email”) at EBC0360067. That email further

communicated that Kim would “like to put a hold on our ‘company merger’ and just

concentrate on the Ace Hotel EB-5 raise[.]” Id. To that end, Kim further advised that

we have already launched Ace Hotel, I am thinking we could probably assign

Moses Investment . . . as a master distributor in China and Korea and [Moses Investment]

...can engage with .. . any other agents as its sub-agents. Please let know if this works

for you, then I will send an agreement.” Id. at EBC0360067-68.

3. Kim Makes Further Attempts to Finalize a Partnership Agreement

with Choi

On January 25, 2017, Kim sent Choi an email asking to “give another crack at

organizing our relationship once and for all.” Dkt. 146-3, Exh. G (“Jan. 25, 2017 Email’)

at EBC0015522. In that email, Kim advised Choi that he was “unclear about what you’d

like to do” and that Choi should “not hesitate to let me know if you have different

thoughts.” Id. On January 30, 2017, Choi responded that he was “trying to fly over to LA

later this week or beginning of next week. Let’s discuss and finalize in person.” Id.

On March 21, 2017, Kim again emailed Choi, indicating that “[a]s to our partnership

terms, many of the below and previous questions are still remained to be unanswered [sic].

Let me know if you would like to discuss them.” Dkt. 146-3, Exh. H (“Mar. 21, 2017

Email”) at EBC00036524. According to Kim, “Choi never wrote me back to either discuss

and try to resolve the unanswered questions or to tell me he disagreed with my assessment

and that he believed formalized and finalized deal terms had in fact been agreed to.” Dkt.

146-3, Declaration of Young Kim in Support of Defendants’ Motion for Summary

Judgment (“Kim Decl.”) § 11.

4. Kim Repays Choi $200,000.00 on March 21, 2017, and Kim

Terminates Partnership Negotiations on April 17, 2017

On March 21, 2017, Kim notified Choi by email that Kim was “going to wire you

$200K all at once.” Dkt. 146-3, Exh. M (Mar. 21, 2017 Wire Transfer Email”) at

EBC0036524. In that email, Kim indicated that what he would “like to do is apply my

payment to you as for the repayment of your funding to |8th Bridge] that were made from

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

Oct. 2015 to Jan. 2017, which comes out to $248K in total.” Mar. 21, 2017 Wire Transfer

Email at EBC0036524.

On April 17, 2017 Kim wrote to Choi stating that “I’ve given deep thoughts to our

working relationship and I’m sorry to say that I’d like to stop putting my effort to find a

resolution on our prolonged cooperation terms.” Dkt. 146-3, Exh. N (“Apr. 17, 2017

Email”) at EBC0036498—99. Kim communicated that “I was never comfortable receiving

your money from the first place . . . without having any concrete plans or terms on papers.”

Id at EBC0036499.

According to Kim, in May 2017, “Choi stated . . . that he believed he should get a

portion of the Ace profits. Kim Decl 43. Kim “responded by telling [Choi] that we never

formalized or finalized the partnership agreement so [Choi] wasn’t entitled to any profits,

but if [Choi] were insistent on acting as if the joint venture or partnership agreement had

somehow been finalized, [Choi] would be responsible for paying some portion of the Ajin

profits back to [Kim] because that is what was always contemplated. Choi disagreed and

refused to pay any Ajin profits.” Id.

Il. LEGAL STANDARD

Summary judgment is appropriate where “there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.

56(a). The moving party bears the initial burden of identifying relevant portions of the

record that demonstrate the absence of a fact or facts necessary for one or more essential

elements of each claim upon which the moving party seeks judgment. See Celotex Corp.

v. Catrett, 477 U.S. 317, 323 (1986).

If the moving party meets its initial burden, the opposing party must then set out

“specific facts showing a genuine issue for trial” in order to defeat the motion. Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986): see also Fed. R. Civ. P. 56(c), (e). The

nonmoving party must not simply rely on the pleadings and must do more than make

“conclusory allegations [in] an affidavit.” Lujan v. Nat’] Wildlife Fed’n, 497 U.S. 871,

888 (1990): see also Celotex, 477 U.S. at 324. Summary judgment must be granted for the

moving party if the nonmoving party “fails to make a showing sufficient to establish the

existence of an element essential to that party’s case, and on which that party will bear the

burden of proof at trial.” Id. at 322: see also Abromson v. Am. Pac. Corp., 114 F.3d 898,

902 (9th Cir. 1997).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

In light of the facts presented by the nonmoving party, along with any undisputed

facts, the Court must decide whether the moving party is entitled to judgment as a matter

of law. See T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 631 &

n.3 (9th Cir. 1987). When deciding a motion for summary judgment, “the inferences to be

drawn from the underlying facts . .. must be viewed in the light most favorable to the party

opposing the motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986) (citation omitted); Valley Nat’] Bank of Ariz. v. AE. Rouse & Co., 121 F.3d

1332, 1335 (9th Cir. 1997). Summary judgment for the moving party is proper when a

rational trier of fact would not be able to find for the nonmoving party on the claims at

issue. See Matsushita, 475 U.S. at 587.

IV. DISCUSSION

A. Plaintiffs’ RUPA, Constructive Fraud, Judicial Dissolution, Accounting,

and Declaratory Relief Claims

In connection with their motion for summary judgment on defendants’

counterclaims and defendants’ affirmative defenses, plaintiffs contend that they have

elected “their remedy of monetary damages” and accordingly request that the Court dismiss

plaintiffs’ “alternative-pled claims” as follows: (1) plaintiffs’ third claim for enforcement

of rights under RUPA: (2) plaintiffs’ sixth claim for constructive fraud; (3) plaintiffs’ tenth

claim for judicial dissolution; and (4) plaintiffs’ fifteenth claim for accounting. Choi Mot.

at 2-3. Accordingly, the Court DISMISSES these claims. To the extent that defendants

seek summary judgment on these claims, the Court DENIES defendants’ motion for

summary judgment as moot.

The parties dispute whether plaintiffs’ election of a monetary damages remedy and

plaintiffs’ voluntary dismissal of plaintiffs’ RUPA, constructive fraud, judicial dissolution,

and accounting claims necessarily requires dismissal of plaintiffs’ first claim for

declaratory relief. For example, on March 16, 2020, after both parties had filed their

respective replies, and without leave of Court, plaintiffs’ counsel filed a supplemental

declaration “relating to several substantive misstatements of the record contained in

Defendants’ Reply brief,” disputing defendants’ representation in defendants’ reply brief

that plaintiffs had dismissed their declaratory relief claim in electing a damages remedy.

Dkt. 173 at 2. On March 17, 2020, without leave of Court, defendants’ counsel filed a

supplemental declaration in response, contending that “whether or not Plaintiffs have taken

the ministerial step of dismissing the First Claim for Declaratory Judgment, by representing

that they .. . are permanently eschewing any of the relief that claim could provide . . . they

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘oO’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOI AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

have effectively already dismissed that claim or otherwise made it defective as a matter of

law.” Dkt. 174 at 3-4. Ina second supplemental declaration that plaintiffs’ counsel filed

without leave of Court on March 18, 2020, plaintiffs contend that they “have not foregone

the right to seek declaratory relief in addition to damages, but instead have elected not to

enforce rights and remedies that are predicated upon holding a continuing partnership

interest (i.e., appointment of a receiver, dissolution, and an accounting).” Dkt. 176 at 3.

Accordingly, the Court declines to dismiss plaintiffs’ declaratory relief claim on this basis.

B. Plaintiffs’ Non-Quantum Meruit Claims

The parties appear to agree that defendants’ motion for summary judgment largely

rises and falls with the question of whether an enforceable joint venture exists between

Choi, Kim, SRC and 8th Bridge. See Kim Mot. at 7 (“Except for their quantum meruit

claim, all of [p]laintiffs’ remaining claims against the 8th Bridge [d]efendants (all

Defendants except Patrick Chang) necessarily require proof of the existence of the alleged

joint venture agreement between” Choi and Kim.); Kim Opp. at 1 (“At minimum, there are

genuine issues of material fact as formation, and [d]efendants’ motion should thus be

denied.”). Accordingly, the Court proceeds to determine whether plaintiffs have raised

triable issues regarding the formation of a joint venture.

“A joint venture is an undertaking by two or more persons jointly to carry out a

single business enterprise for profit.» Goodworth Holdings Inc. v. Suh, 239 F. Supp. 2d

947, 956 (N.D. Cal. 2002). “A joint venture can be created orally.” Id. (emphasis in

original). Similarly, a “joint venture can be formed by an agreement implied by the parties’

conduct.” Fields v. Wise Media, LLC, No. 12-cv-05160-WHA, 2013 WL 5340490, at *4

(N.D. Cal. Sept. 24, 2013). “Whether a joint venture exists is a question of fact.” Fed.

Indus. Inc. v. Cameron Techs. US Inc., No. 2:07-cv-01098-VBF-CT, 2009 WL 10670395,

at *6 (C.D. Cal. Jan. 30, 2009). “The elements necessary to create a joint venture are: (1)

joint interest in a common business; (2) with an understanding to share profits and losses;

and (3) a right to joint control.” Pepper, N.A. v. Expandi, Inc., No. 15-cv-04066-NC, 2016

WL 1611039, at *2 (N.D. Cal. Apr. 22, 2016) (internal citation and quotation marks

omitted). The Court addresses these elements in turn.

1. Joint Interest in a Common Business

Defendants contend that “it is irrefutably clear that the two plaintiffs, Moses Choi

on the one hand and SRC on the other hand, are in disagreement about what the ‘common

business understanding’ of the joint venture actually was.” Kim Mot. at 12. Defendants

therefore argue that “because [p|laintiffs are unable to describe the purported joint venture

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘oO’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOI AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

in anything other than directly conflicting terms, there is no possibility they can establish

that a joint venture was created with Kim.” Kim Mot. at 12 (internal emphasis omitted).

Put differently, “[p|lamtiffs have not, and cannot, establish the existence of such a joint

venture agreement because . . . Kim and Choi never had the requisite meeting of the minds

about the basic “common business undertaking’ of the alleged joint venture[.]” Id. at 7.

Defendants point to several pieces of evidence in support of this argument. For

example, defendants contend that plaintiffs have consistently maintained that the alleged

joint venture was project-specific, concerning only the Ace Hotel project in Manhattan.

Kim Mot. at 11. Indeed, Choi attests that “based on [his] discussions with Kim,” Choi

“believed that there was an agreement in place to work together on the Ace Hotel

Project|.|” Choi Decl. { 10. In contrast, Kim attests that “to be clear [sic] Choi and I never

agreed in September 2015 to a joint venture that would on/y include sharing in the profits

of only the Ace Hotel.” Kim Decl. § 4 (emphases added). That is because “[i]n [Kim’s]

mind, it only made sense for [Kim] to share the Ace profits if Choi was also going to share

the Ajin profits with [Kim].” Id. § 17. In addition, defendants point to the deposition

testimony of Thomas Choi, the brother of plaintiff Moses Choi and a one-time in-house

attorney for SRC. See Kim Mot. at 11. Indeed, Thomas Choi appears to have testified that

one of the Ajin LLCs, “Fund 5 would be considered part of the partnership.” Dkt. 161-2,

Exh. H (“T. Choi Dep. Tr.”) at 123:9-14.

Notwithstanding these purported differences in understanding between Choi and

Kim regarding whether the parties’ purported joint venture would include only the Ace

Hotel or both the Ace Hotel and some or all of the Ajin LLCs, the disputed record contains

ample evidence from which the finder of fact could reasonably conclude that both Kim and

Choi acted consistent with the notion that there was a common understanding as to the

undertaking(s) that form the basis for the parties’ joint venture.? For example, in a May

3 Defendants rely heavily on Bustamante v. Intuit, Inc., 141 Cal. App. 4th 199 (2006).

There, the California Court of Appeal affirmed the grant of summary judgment to a

software company on the plaintiff's claim for breach of contract to establish a joint venture.

See generally id. The Court of Appeal concluded “that the undisputed facts here show no

meeting of the minds as to the essential structure and operation of the alleged joint venture,

even if there was agreement on some of the terms.” Id. at 215. The Court of Appeal

reasoned that “[e]ven though a joint venture can be created with little formality, here the

undisputed facts . . . provide[] no basis for determining the existence of a breach and for

giving an appropriate remedy” and the software company was “entitled to adjudication on

the contract cause of action.” Id. (emphasis added). Where, as here, the purported joint

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

10, 2016 email exchange between Moses Choi, Thomas Choi, and SRC employee Amber

Yang in response to a request for information from Kim, Thomas Choi instructed Yang

that Yang should report information regarding one of the Ajin LLCs, “Fund V,” to Kim.

See Dkt. 146-2, Ex. G. If credited by the finder of fact, this email would tend to establish

that at least several of SRC employees understood that there was an arrangement between

Choi, Kim, SRC, and 8th Bridge and that arrangement included at least one of the Ajin

LLCs.

On the other hand, however, Kim testified during deposition that, as an alternative

to completely merging SRC and 8th Bridge, Kim “counter proposed” working on “initial

projects” including the Ace Hotel, with a proposed “ownership-revenue stream” consisting

of “50 percent to Moses Choi (SRC & Moses Investment)” and the remaining “50 percent

to Young Kim, [8th Bridge].” Dkt. 162-5, Exh. 1 (“Kim Dep. Tr.”) at 147:4-148:5. When

asked by plaintiffs’ counsel why his early proposals to Choi did not mention Ajin, Kim

testified “I don’t see why I would mention Ajin, . . . I don’t know.” Id. at 147:16—22.

Moreover, Kim acknowledged that SRC provided, and 8th Bridge accepted, some

$254,000.00 in funding in 2016. See Jan. 25, 2017 Email at EBC0015522. Based on 8th

Bridge’s accepting funds from SRC, the finder of fact could reasonably determine that

there was a meeting of the minds between Kim and Choi regarding the “common

undertaking” that would serve as the basis for their contemplated joint venture. And,

because Kim testified that he did not “see why [he] would mention Ajin” in negotiations

with Choi, the fact finder could also reasonably conclude that that undertaking did not

include Ajin.

The Court finds instructive Am. Med. Response, Inc. v. City of Stockton, No. 05-

cv-1316-DFL-PAN, 2006 WL 768816 (E.D. Cal. Mar. 27, 2006). In that case, a county

announced plans to solicit requests for proposals from emergency service providers to earn

the exclusive right to provide emergency services within particular geographic areas. Id.

at An ambulance service provider and a municipality, which itself provided emergency

services through its fire department, engaged in discussions to collaborate on a joint bid

proposal to respond to the county’s request for proposal. Id. After the ambulance service

venturers have advanced beyond mere negotiations and have actually begun collaboration,

Bustamante, which involved a breach of a contract to form a joint venture, 1s

distinguishable. See Interserve, Inc. v. Fusion Garage PTE. LTD., No. 09-cv-05812-RS-

PVT, 2010 WL 3339520, at *6 (N.D. Cal. Aug. 24, 2010) (distinguishing Bustamante on

grounds as case where parties had not “in any otherway actually begun the business the

proposed collaboration was intended to undertake.”’).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

provider and municipality “continued to meet and discuss the terms of a bid and of their

business relationship, . . . the relationship . . . began to break down.” Am. Med. Response,

2006 WL 768816, at *2. Ultimately, the ambulance service provider submitted its own

bid, and the county announced that the ambulance service provider “was the successful

bidder.” Id. at *2, *2 n.3.

On the parties’ cross-motions for summary judgment, the court noted that the

ambulance service provider and the municipality “dispute whether the parties had a joint

interest in a common business.” Am. Med. Response, 2006 WL 768816, at *3. The

municipality “argue|d]| that the venture’s common business purpose was to submit a joint

bid in response to the RFP.” Id. “By contrast,” the ambulance service provider argued that

“Tb]ecause the parties never reached an agreement as to how the joint bidding entity would

function, . . . they never formed a joint venture.” Id, The court determined that “[o]n this

record, the proper characterization of [the parties’ ] working relationship is uncertain.” Id.

at *4. That is because, on the one hand, “a trier of fact could infer the creation of a joint

venture to bid and then, if successful, to form an operating company. On the other hand, a

trier of fact could also conclude that the lack of specificity . . . prevented the formation of

a legitimate joint venture.” Id.

Here, similar genuine disputes of material fact preclude the grant of summary

judgment to defendants. A trier of fact could determine that Kim and Choi agreed to form

a “project-specific” joint venture concerning only the Ace Hotel project. A finder of fact

might also determine that Kim and Choi agreed to form a more-encompassing joint venture

that included both the Ace Hotel project and at least one of the Ajin LLCs. Or, a fact finder

might conclude that Kim and Choi’s discussions never advanced beyond an enforceable

“agreement to agree.” See City Sols., Inc. v. Clear Channel Comme’ns, Inc., 201 F. Supp.

2d 1035, 1045 (N.D. Cal. 2001) (granting defendant’s motion for summary judgment

where “the parties reached, at most, an unenforceable agreement to agree in the future.”).

2. Sharing of Profits and Losses

Defendants next contend that summary judgment on plaintiffs’ non-quantum meruit

claims is appropriate because “absent an agreement as to how much money Choi was going

to contribute and the amount of the resulting profit distribution to which he would be

entitled, the agreement is entirely too uncertain to enforceable.” Kim Mot. at 15. The

Court does not find defendants’ arguments availing.

As a preliminary matter, defendants rely heavily on the Draft Term Sheet that Kim

sent to Choi on October 6, 2015. The Draft Term Sheet provides “a strategic framework

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

to achieve the stated objectives expressed by the Parties” including “their intention to

collaborate on a variety of activities . . . in connection with the EB-5 program.” Dkt. 146-

3, Exh. B (“Draft Term Sheet”) at 1. Notably, the Draft Term Sheet sets forth a number of

key terms, including an “Initial Capital Contribution” from Choi which the Draft Term

Sheet leaves blank. Id. at 2. The Draft Term Sheet also indicates that “[t]he distribution

of profits will be determined by [Kim] for up to 50% of the Company.” Id, On repeated

occasions, Kim asked Choi to provide his thoughts on the Draft Term Sheet, indicating that

Choi had not yet executed it. For example, in an October 18, 2015 email to Choi regarding

“open items,” Kim writes, with respect to the Draft Term Sheet, “Can you please review

and let me know?” Dkt. 146-3, Exh. C (“Oct. 18, 2015 Email”) at P-0033800. Moreover,

Kim attests that as of January 25, 2017, “Choi and I still had not agreed to any of [the] open

deal points from the Draft Term Sheet|.|” Kim Decl. § 7.

Choi’s purported failure to sign the Draft Term Sheet does not foreclose the

possibility that the parties reached an agreement to share in any profits or losses with a

respect to a joint venture concerning only the Ace Hotel. Indeed, plaintiffs’ position

appears to be that in addition to the parties’ alleged project-specific joint venture

concerning the Ace Hotel, the parties were simultaneously discussing a merger of the

parties’ respective companies. See, e.g., Kim Opp. at 21. Moreover, the Draft Term

Sheet’s language appears to contemplate some arrangement between Choi and Kim beyond

the “project-specific” joint venture that plaintiffs aver is the subject of their claims against

defendants. Indeed, the Draft Term Sheet contemplates “initial projects” including the

“SRC Ajin-Wooshin Fund,” the Ace Hotel, “Green Land Metropolis,” and “Shenlong

Group’s Grand Residency,” in addition to undefined “future projects.” Draft Term Sheet

at 2. Accordingly, the Court cannot say that the fact that the Term Sheet, which Choi did

not sign, left open terms including Choi’s required initial capital contribution or Choi’s

distribution of the profits necessarily means that the parties failed to agree that the parties

would share in any profits or losses with respect to a more narrow project-specific joint

venture.

Here, Choi attests that “Kim expressly confirmed to me his understanding that [8th

Bridge’s]| profits from the Ace Hotel Project would be shared with SRC when we met in

Malibu on or about February 7, 2016.” Choi Decl. § 17. Moreover, in a draft email that

Kim intended for Choi, Kim acknowledges that “[p]|rofits from Ace gets [sic] shared with

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

you.” Dkt. 162-5, Plaintiffs’ Exhibit No. 468.4 According to Choi, Choi and Kim “orally

agreed to an effective 50-50 split [of profits] through their controlled entities SRC and 8th

Bridge[.|” Kim USUF No. 37. That is sufficient to raise a genuine dispute regarding

whether Choi and Kim agreed to share in any profits or losses realized from a project-

specific joint venture involving the Ace Hotel.*

3. Right to Joint Control

“An essential element of a partnership or joint venture is the right of joint

participation in the management and control of the business. Absent such right, the mere

fact that one party 1s to receive benefits in consideration of services rendered or for capital

contribution does not, as a matter of law, make him a partner or joint venturer.” Pepper,

2016 WL 1611039, at *2. “[I]t is a well-established principal that there may be joint

participation in the management and control of a joint venture where the contributions of

the respective parties to the enterprise are unequal and not of the same character|.|”

Gartner, 2008 WL 4601025, at *10 (anternal citation omitted). Here, the disputed record

raises genuine disputes regarding whether Choi was able to exercise a degree of control

4 Kim testified during deposition that he sent this email to himself, rather than Choi,

and that Kim regularly sent himself emails as part of his drafting process to “jot down some

of my thoughts that are disorganized” and to “correct it.” Kim Dep. Tr. at 281:9-282:3.

Defendants concede that “a party can prove a joint venture without a specific

agreement as to profit sharing|.]” Kim Mot. at 14 n.6. Nevertheless, notwithstanding

Choi’s testimony that he and Kim agreed to equally split profits derived from the Ace

Hotel, defendants contend that “as evidenced from the Draft Term Sheet and email

correspondence, the parties never agreed on profit sharing amounts or equity ownership

percentages.” Id. Assuming arguendo that the parties failed to agree on a specific

numerical method for sharing profits, that does not necessarily otherwise invalidate an

otherwise valid joint venture between the parties. See, e.g., Gartner, Inc. v. Parikh, No.

2:07-cv-02039-PSG, 2008 WL 4601025, at *9 (C_D. Cal. Oct. 14, 2008) (noting that “[i]n

recent years, however, courts have emphasized only the [common undertaking] and [right

to joint control] elements.”); see also Farhang v. Indian Inst. of Tech., Kharagpur, No. 08-

cv-02658-RMW, 2010 WL 3504897, at *4 (N.D. Cal. Sept. 7, 2010) (“A joint venture

agreement need not be formal or definite in every detail relating to the respective rights

and duties of the parties but may be implied as a reasonable deduction from their acts and

declarations.”) (internal citation and quotation marks omitted).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘oO’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOI AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

over 8th Bridge, the entity that the parties agree “always owned” the funds derived from

the Ace Hotel. See Kim SUF No. 42.

For example, Kim proposed to Choi on September 30, 2015, that “[i]nstead of

forming a new company, . . . | can amend the existing [operating agreement] to have you

become a share holder {sic| of [8th Bridge] 1f you are OK.” Dkt. 146-3, Exh. K at P-

048057 (emphasis added). Kim testified during deposition that this proposal was “serious.”

Kim Dep. Tr. at 202:19. In addition, a January 25, 2016 email conversation between Choi,

Kim, and a third-party includes prepared “bios” of individuals associated with 8th Bridge.

See Dkt. 162-5, Plaintiffs’ Exh. No. 452. The “bio” document lists Choi as “a Managing

Director at 8th Bridge Capital” that is “responsible for overseeing all of the funds’ activities

and the projects for 8BC.” Id. at EBC0354082 (emphasis added). Similarly, as recently

as January 1, 2017, 8th Bridge’s website described Choi as a “Managing Director” that “is

responsible for overseeing the company and fundraising efforts.” Dkt. 162-5, Plaintiffs’

Exh. 454 (emphasis added). Furthermore, Choi attests that Kim provided Choi business

cards and an email address associated with 8th Bridge. Choi Decl. ¥ 16.

Based on this evidence, a jury could reasonably conclude that 8th Bridge was subject

to the joint control of Choi. See Kahn Creative Partners, Inc. v. Nth Degree, Inc., No. 2:10-

cv-00932-JLS-FFM, 2011 WL 1195680, at *9 (C.D. Cal. Mar. 29, 2011) (finding that

“organizational chart” which listed employees of both plaintiff and defendant as part of

“the ‘team’ that would be handling the conference” raised triable issues regarding whether

plaintiff and defendant were engaged in joint venture with respect to conference); accord

Pepper, 2016 WL 1611039, at *3 (finding that plaintiff's authority to review “power point

presentation slides” used in connection with pitch for marketing project raised triable issue

as to whether plaintiff “had a right to control the joint venture.”). Accordingly, genuine

disputes of material fact regarding Choi’s ability to exercise joint control of 8th Bridge

preclude the grant of summary judgment to defendants on this basis.

4. Defendants’ Additional Miscellaneous Arguments

Defendants make a number of additional arguments which defendants contend

require the Court to grant summary judgment to defendants on plaintiffs’ non-quantum

meruit claims. The Court addresses these arguments in turn.

a. Failure to Reduce Agreement to Writing

First, defendants argue that “[t]he Draft Term Sheet and follow-up emails . . . from

Kim make explicitly clear that [Kim] was not willing to be bound until the parties agreed

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

to the material terms, including profit sharing, membership interests and the amount of

Choi’s capital contribution, in writing.” Kim Mot. at 23 (emphasis added). According to

defendants then, “[t|he failure of the parties to agree in writing to any of the open ended

material terms .. . in the Draft Term Sheet means that under the law, no enforceable

contract was formed.” Id.

“TW hen it is clear that both parties contemplate that acceptance of a contract’s terms

would be signified in writing, the failure to sign the agreement means that no binding

contract is created.” Goodworth, 239 F. Supp. 2d at 958 (internal citation omitted).

“Whether it was the parties’ mutual intention that their oral agreement to the terms

contained in a proposed written agreement should be binding immediately upon the oral

agreement is to be determined by the surrounding facts and circumstances.” Id.

Here, Kim attests that he “expected and requested that the material terms in the Draft

Term Sheet be negotiated and agreed to in writing” and that he “was not willing . . . [to] be

contractually bound to Choi or SRC without us first having agreed upon the highlighted

terms in the Draft Term Sheet in writing.” Kim Decl. § 4. Even assuming arguendo that

Choi’s signing of the Draft Term Sheet constituted a condition precedent to the formation

of a project-specific joint venture concerning the Ace Hotel, evidence in the record

indicates that despite Choi’s failure to agree in writing to the Draft Term Sheet, Kim

nonetheless proceeded to engage with Choi in marketing the Ace Hotel. See, e.g., Dkt.

162-5, Plaintiffs’ Exh. 460 (March 14, 2016 email from Kim to Choi indicating that Kim

would “like to put a hold on our ‘company merger’ and just concentrate on the Ace Hotel

raise with you.”). Moreover, Kim provided Choi with business cards and an email

address associated with 8th Bridge, and 8th Bridge’s website and marketing materials

described Choi as a “Managing Director.”

Accordingly, the Court cannot say that there is no dispute as to whether Choi’s

failure to agree to the Draft Term Sheet in writing necessarily means that no joint venture

was formed between Choi and Kim. See Moreno v. SEX Entm’t, Inc., No. 2:14-cv-00880-

RSWL-CW, 2015 WL 4573226, at *5 (C.D. Cal. July 29, 2015) (finding genuine dispute

existed as to whether a joint venture was formed and rejecting defendants’ argument “that

the parties reserved final agreement until formal documents were signed” because “the

Court does not find any indisputable statements that expressly reserve final agreement until

formal documents are signed.”’).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

b. Condition Precedents of Forming a New Company or

Combining 8th Bridge and SRC

Defendants next contend that “[t]he Draft Term Sheet, by its own plain language,

sets forth a possible business relationship whereby Choi and Kim will form a New Holding

Co, LLC. . . to hold all the assets of [8th Bridge] and SRC with Choi and Kim as owners

in a to-be-determined percentage.” Kim Mot. at 24 (internal alterations and quotations

omitted). According to defendants, “Choi and Kim never formed a new company nor

combined their assets into a unified one” and “[c]Jourts are clear that where the formation

of a new company is a material term to a proposed joint venture, the failure to do [so] is

grounds for summary judgment that no joint venture was ever formed.” Id. (emphasis in

original).

The record contains evidence from which the finder of fact could reasonably

conclude that neither the formation of a new company nor a formal combination of 8th

Bridge and SRC constituted conditions precedent to the forming of a joint venture between

Kim and Choi. For example, in a September 30, 2015 email to Choi, Kim expressly asks

“li|nstead of forming a new company, can we keep . . . 8th Bridge Capital?” Dkt. 162-5,

Plaintiffs’ Exh. 440. Similarly, in a March 14, 2016 email, Kim indicated to Choi that Kim

would “like to put a hold on our ‘company merger’ and just concentrate on the Ace Hotel

EB-S raise with you.” Dkt. 162-5, Plaintiffs’ Exh. 460. And, as discussed above, the fact

finder could determine, based on the continued communications between Kim and Choi,

that Kim and Choi, through 8th Bridge and SRC, collaborated on the Ace Hotel project

even after the parties failed to form a new company or merge 8th Bridge and SRC. Indeed,

the parties do not dispute that between March 28, 2016 and April 5, 2016, Choi and Kim

traveled together in Asia with their respective staffs, at SRC’s expense, participating in

marketing seminars with potential investors. See Dkt. 162-1, Plaintiffs’ Statement of

Additional Undisputed Material Facts (“Choi SAUMF’”) No. 76.

Cc. Choi’s Accepting Repayment from Kim

On March 21, 2017, Kim agreed to wire Choi $200,000.00. See Mar. 21, 2017 Wire

Transfer Email at EBC0036524. The parties dispute the significance of this payment. Choi

contends that he “needed funds for a downpayment [sic] on a house, and [Choi] told Kim

that [he] wanted to draw $200,000 from the profits [of the Ace Hotel] for that purpose.”

Choi Decl. | 34. Defendants, on the other hand, contend that Choi’s accepting Kim’s

transfer “constituted a novation . . . that extinguished whatever earlier obligation Kim owed

to Choi under any earlier implicit parentship agreement.” Kim Mot. at 30.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

Pursuant to California law, “[n]ovation is the substitution of a new obligation for an

existing one.” Cal. Civ. Code § 1530. “Whereas a modification of a term or a provision

of a contract alters only certain portions of the contract, novation wholly extinguishes the

earlier contract.” Fanucchi & Limi Farms v. United Agri Prod., 414 F.3d 1075, 1081 (9th

Cir. 2005). “The intention of the parties to extinguish the prior obligation and to substitute

a new agreement in its place must clearly appear.” Hunt v. Smyth, 25 Cal. App. 3d 807,

818 (1972). “In deciding whether an agreement was meant to extinguish the old obligation

and to substitute a new one, California courts seek to determine the parties’ intent.”

Fanucchi, 414 F.3d at 1082. “Determining the parties’ intent is a highly fact-specific

inquiry” and “|s}Juch inquiries are not generally suitable for disposition on summary

judgment.” Id.

Here, in his March 21, 2017 email to Choi agreeing to wire Choi $200,000.00, Kim

indicated that “[w]hat I'd like to do is to apply my payment to you as for the repayment of

your funding to [8th Bridge] that were [sic] made from Oct. 2015 to Jan. 2017, which

comes out to $284K in total.” Mar. 21, 2017 Email at EBC0036524. In a subsequent email

to Choi on May 1, 2017, following up on Kim’s prior April 17, 2017 email, Kim stated

that, with respect to the issue of “[r|epayment,” “[y]ou have made direct payments to me

from Oct. 2015 to Jan. 2017. With my previous $200K payment to you, I can pay you back

another $84K to come to the total of $284K. For others [sic] expenses like travel expenses,

office furniture and expense to agents please let me know your thoughts.” Apr. 17, 2017

Email at EBC0036498.

The Court does not find defendants’ novation argument persuasive. First,

determining whether the parties have entered into a novation “is a highly fact-specific

inquiry, with the weight and sufficiency of the evidence being matters for the determination

of the trier of facts.” Glob. Trim Sales, Inc. v. Checkpoint Sys. UK Ltd., No. 8:12-cv-

01314-JLS-RNB, 2014 WL 12690629, at *3 (C.D. Cal. Sept. 17, 2014). That is why the

question of whether the parties have entered into a novation “is not generally suitable for

disposition on summary judgment.” Id. Moreover, given Kim was still proposing further

repayments to Choi of “another $84K” and additional undefined amounts “[f]or expenses

like travel expenses, officer furniture and expense to agents” as recently as May 1, 2017, it

does not follow that Choi’s previously accepting $200,000.00 from Kim in March 2017

“extinguished whatever earlier obligation Kim owed to Choi under any earlier implicit

partnership agreement.” Kim. Mot. at 30.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

C. Plaintiffs’ Motion for Summary Judgment

Plaintiffs seek summary judgment on defendants’ intentional interference with

contract, intentional interference with prospective economic advantage, declaratory relief,

rescission based on fraud, breach of contract, and promissory estoppel counterclaims as

well as on defendants’ affirmative defenses for fraud and for offset. See generally Choi

Mot. The Court addresses these counterclaims and affirmative defenses in turn.

1. Intentional Interference with Contract and _ Intentional

Interference with Prospective Economic Advantage

In their second amended answers and counterclaims, Kim, Chang, and 8th Bridge

assert counterclaims for intentional interference with contract and intentional interference

with prospective economic advantage. See, e.g.. Dkt. 52 (“Countercl.”) 51-65. The

gravamen of defendants’ intentional interference counterclaims is that in July 2017, 8th

Bridge entered into a “US Investment Management Service Agreement” (“IMM Service

Agreement”) with Tony Van Tinh and Tinh’s company IMM Group PTE LTD (“IMM”):

that Choi, upset from his dealings with Kim, “began telling Tinh falsehoods about his

business relationship with Kim”; and that by December 20, 2017, “Tinh terminated

communications with Kim and thereby repudiated the IMM Service Agreement with 8th

Bridge[.]” Id. Plaintiffs seek summary judgment on defendants’ intentional interference

counterclaims on the grounds that “[d]efendants have no admissible evidence to prove the

required elements.” Choi Mot. at 3.

“Under California law, the elements for the tort of intentional interference with

contractual relations are (1) a valid contract between plaintiff and a third party: (2)

defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce

a breach or disruption of the contractual relationship; (4) actual breach or disruption of the

contractual relationship; and (5) resulting damage.” United Nat. Maint., Inc. v. San Diego

Convention Ctr., Inc., 766 F.3d 1002, 1006 (9th Cir. 2014) (internal citation and quotation

marks omitted). “The elements for intentional interference with prospective economic

advantage are essentially the same, just substituting an economic relationship with a

contract.” Curtis v. Shinsachi Pharm. Inc., 45 F. Supp. 3d 1190, 1202 (C.D. Cal. 2014)

(internal citation omitted). “But in the latter type of claim, the interference must be

“independently wrongful,’ that is, it must be proscribed by some constitutional, statutory,

regulatory, common law, or other determinable legal standard.” Id, (internal citation and

quotation marks omitted).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

a. Hearsay and Litigation Privilege

Plaintiffs first seek summary judgment on defendants’ intentional interference

counterclaims on the basis that “there is no admissible evidence to prove [defendants’ |

allegation that, “in or around mid-late 2017, Choi reached out to Tinh and deliberately told

him misinformation about Kim and [8th Bridge] to diminish their reputation and poison

the business relationship.” Choi Mot. at 4 (citing Counterl. § 50). According to plaintiffs,

only evidence Counterclaimants have identified to support this claim is a purported

hearsay statement made to Kim by a person named Chor Gee.” Choi Mot. at 4. Indeed,

Kim testified during deposition that: (1) Chor Gee, IMM’s other founding partner, told

Kim that Choi forwarded Tinh a news article detailing the allegations in this lawsuit; and

(2) that Tinh “got scared by that article,” ultimately deciding not to work with defendants

or perform the IMM Service Agreement. Kim Dep. Tr. at 295:1—297:10.

In response, defendants assert that Kim’s testimony regarding Chor Ghee’s

statements are not inadmissible hearsay “given the recent amendments to the Federal Rule

of Evidence 807, otherwise known as the Residual Exception.” Choi Opp. at 13. “The

residual exception provides that a hearsay statement that does not qualify for the exceptions

provided by Rule 803 or 804 may nonetheless be admissible if: (1) supported by sufficient

guarantees of trustworthiness—after considering the totality of circumstances under which

it was made and evidence, if any, corroborating the statement; and (2) it is more probative

on the point for which it is offered than any other evidence that the proponent can obtain

through reasonable efforts.” Sandhu v. United States, No. 2:05-cr-00449-KJM, 2020 WL

417542, at *6 (E.D. Cal. Jan. 27, 2020) (citing Fed. R. Evid. 807(a)). Defendants contend

that the residual exception’s first prong is satisfied because “Chor Ghee is the co-owner of

IMM and thus would be in as good a position as anyone to know why IMM decided to stop

working with Kim and 8th Bridge.” Choi Opp. at 13. Defendants likewise assert that the

residual exception’s second prong is satisfied because IMM is a Vietnamese company,

Tinh and Ghee are Vietnamese residents, Vietnam is not party to the Hague Convention,

and “foreign attorneys are not permitted to take depositions of willing witnesses without

the involvement of the Vietnamese government, which according to the U.S. government,

is a process that ‘may take a year or more.’” Id.

Assuming arguendo that Kim’s testimony that Tinh repudiated Tinh’s business

relationship with Kim in part because Choi sent Tinh an article detailing the allegations in

this lawsuit is admissible, plaintiffs aver that the litigation privilege bars defendants’

intentional interference counterclaims because “[t|he article recounting [p|laintiffs’

allegations was a ‘fair and true report’ of [p]laintiffs’ allegations in a judicial

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

proceeding[.]” Choi Mot. at 8. California’s litigation privilege is not so broad. Pursuant

to California’s litigation privilege, “press releases merely informing a third party of the

pendency of the litigation” are privileged.” Adobe Sys. Inc. v. Christenson, 891 F. Supp.

2d 1194, 1210 (D. Nev. 2012) (emphasis in original) (internal alteration, citation, and

quotation marks omitted). At this juncture, the Court cannot say that the article, which

includes the headline “LA-based firm allegedly swindled regional center out of EB-5

spoils,” Dkt. 144-1, Exh. 108, is covered by the litigation privilege. Cf. Adobe, 891 F.

Supp. 2d at 1210 (nothing that “the press release at issue did announce the filing and subject

matter of the lawsuit filed against Defendants” but determining that California’s litigation

privilege did not apply because press release “plainly went beyond merely reporting on the

lawsuit and its allegations by directly accusing Defendants of “swindling|.|’”); accord

Rothman v. Jackson, 49 Cal. App. 4th 1134, 1142 (1996) (noting that California’s litigation

privilege does not necessarily attach to “a press release trumpeting one party’s version of

a legal dispute”). Moreover, “|t]he privilege does not extend . . . to statements regarding

the litigation made to non-participants in the action which are thus actionable unless

privileged on some other basis.” TSMC N. Am. v. Semiconductor Mfg. Internat. Corp.,

161 Cal. App. 4th 581, 599 (2008). Accordingly, if, in sending the article to Tinh, a non-

party to this action, Choi offered additional commentary such as making further statements

about Kim’s candor or business ethics, those statements would not necessarily be protected

by the litigation privilege.®

Ultimately, however, the Court need not determine, at this juncture, whether Kim’s

testimony regarding the article constitutes hearsay or whether allegations premised on

Choi’s alleged sending of the article to Tinh are subject to California’s litigation privilege.

The Court notes that in an August 21, 2018 email exchange between Choi and Tinh, shortly

after the Court ruled on Choi’s motion to strike or dismiss portions of defendants’ answers

and counterclaims, Choi wrote to Tinh that:

If you read full docs, judge dismissed most of his counter claims. Kim also wanted

to fake claim to get Ajin involved to make it more intentionally complicated...

Young needs to make up lies to fight this lawsuit. These are baseless counterclaims

6 Indeed, defendants make clear that they “are not relying at all on the fact that Choi

forwarded a copy of an online ‘Real Deal’ article that listed certain allegations from the

complaint.” Choi Opp. at 12 n.5. Instead, defendants’ theory is that Choi “did more than

merely forward the article” and made additional statements that Kim was “unethical” and

a “bad business man.” Id. at 12, 12 n.5.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

but I can’t stop him from making up these false claims. You need not worry about

these...

Dkt. 161-2, Exh. E (“Aug. 21, 2018 Email”) (emphases added).’ At this juncture, the Court

cannot determine Choi’s intent in sending this email and commenting on this litigation to

Tinh. For example, the finder of fact could reasonably determine, based on this email

exchange, that Choi had made previous representations to Tinh, Kim’s business associate,

regarding Kim’s ethics and that Choi was using developments in this action to justify or

reaffirm those previous representations.

For the foregoing reasons, the Court declines to grant summary judgment to

plaintiffs on defendants’ intentional interference counterclaims on hearsay and litigation

privilege grounds.

b. Independent Wrong Requirement for Interference with

Prospective Economic Advantage Claim

With respect to defendants’ tortious interference with prospective economic

advantage counterclaim, plaintiffs contend that defendants “cannot prove that . . . Choi’s

interference was wrongful by some measure beyond the fact of the interference itself.”

Choi Mot. at 8 (internal citation and quotation marks omitted). According to plaintiffs,

“there is no admissible evidence of statements made by Choi that would support a

defamation claim” and defendants “have not alleged and cannot prove a ‘contemporaneous

and derivative UCL violation’ as might serve as the predicate for a prospective economic

advantage claim.” Id. at 9.

7 The Court OVERRULES plaintiffs’ authentication and relevancy objections to this

email. See Dkt. 167-2 (“Choi Opp. Evidentiary Objection”) No. 6. First, the email is

marked with document identifier number “P-093 136,” which is consistent with the labeling

that plaintiffs have used when producing other documents in this litigation, indicating that

plaintiffs produced this email See McQueeney v. Wilmington Tr. Co., 779 F.2d 916, 929

(3d Cir. 1985) (determining that plaintiff's production of documents was “probative” on

issue of authentication). Second, the Court cannot say that Choi’s description of

defendants’ counterclaims as “false,” “baseless,” and “lies” is so irrelevant to defendants’

intentional interference counterclaims, based on allegations that Choi defamed Kim, so as

to require exclusion. See United States Equal Employment Opportunity Comm’n v. Placer

ARC, 147 F. Supp. 3d 1053, 1062 (E.D. Cal. 2015) (“Relevance . . . is typically quote a

low bar to the admissibility of evidence.”).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

The Court previously dismissed, at the pleading stage, defendants’ counterclaim for

intentional interference with prospective economic advantage without prejudice. See Dkt.

50 at 16-18. The Court noted that “defendants’ counterclaim merely alleges that “Choi

intentionally told Tinh misinformation about his and Kim’s business relationship’ that

‘effectively amounted to defamatory statements relating to Kim’s trustworthiness and

business ethics.” Id, at 17. Accordingly, the Court concluded that “defendants’

allegations are insufficiently specific regarding the substance of Choi’s statements to

constitute actionable defamation.” Id. The Court likewise rejected defendants’ argument

that defendants’ “substantive allegations support a claim for both intentional interference

with contract and unfair business practices in violation of the UCL, which could supply the

“independently wrongful’ conduct required to state a claim for intentional interference with

prospective economic advantage.” Id. at 18. That is because although defendants asserted

a counterclaim for tortious interference with contract, defendants did not assert an

independent UCL claim against plaintiffs. Cf. CRST Van Expedited, Inc. v. Werner

Enterprises, Inc., 479 F.3d 1099, 1111 (9th Cir. 2007) (determining that plaintiff had

successfully stated a claim for tortious interference with prospective economic advantage

where plaintiff asserted claims for tortious interference with contract, violation of the UCL,

and tortious interference with prospective economic advantage because “the allegations of

interference with existing contract do triple duty: first as a basis for tort, then as a basis for

a statutory violation, then again as the basis for another tort because of the allegation of a

statutory violation, because of the tort first alleged.”) (emphases in original); see_also

California Expanded Metal Prod. Co. v. Clark Western Dietrich Bldg. Sys. LLC, No. 2:12-

cv-10791-DDP-MRW, 2015 WL 12746230, at *6 (C.D. Cal. Oct. 2, 2015) (granting

summary judgment with respect to intentional interference with prospective advantage

claim notwithstanding intentional interference with contract claim because plaintiff did not

assert UCL claim).

Defendants do not again advance their unpled UCL violation argument here.

Defendants do, however, argue that Choi’s alleged statements to Tinh that “Kim was

‘unethical’ and a ‘bad business man’ would undeniably support a claim for tortious

interference with prospective economic advantage because they are clear example[s]| of

defamation and/or slander, which are sufficient to satisfy the “independent wrongful act’

requirement.” Choi Opp. at 12. Here, the Court has already determined that the August

21, 2018 email exchange between Choi and Tinh wherein Choi stated that “Kim also

wanted to fake claim,” that Kim “needs to make up lies to fight this lawsuit,” and that Choi

“can’t stop [Kim] from making up these false claims” is admissible. Aug. 21, 2018 Email.

If credited by the finder of fact, this email could support a defamation claim. See Huitron

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

v. US. Foods, Inc., No. 2:14-cv-05482-MMM-PLA, 2014 WL 4215656, at *4 (C.D. Cal.

Aug. 25, 2014) (“Under California law, it is well settled that “calling someone a liar can

convey a factual imputation of specific dishonest conduct capable of being proved false,

and may be actionable depending on the tenor and context of the statement.’”). Moreover,

the Court has likewise concluded that the finder of fact could determine, based on this

email exchange, that Choi had previously made prior statements to Tinh regarding Kim’s

candor that could have caused Tinh to repudiate the IMM Service Agreement with Kim.

Accordingly, the Court declines to grant summary judgment to plaintiffs on

defendants’ intentional interference with prospective economic advantage claim based on

the “independent wrong” requirement.

2. Declaratory Relief

Defendants assert a counterclaim for declaratory relief against plaintiffs. See

Countercl. 66-71. According to defendants, Kim and 8th Bridge “contend that there

was never any meeting of the minds sufficient to find the existence of any contract

(partnership agreement or joint venture), whether implied or oral, between them and Choi

and SRC.” Id. § 68. Defendants assert, however, that “[i]n the alternative, if the Court

were somehow to find that a partnership or joint venture agreement did exist (and Kim and

[8th Bridge] strongly deny that any such agreement does exist), Kim and [8th Bridge] are

entitled to a declaratory judgment that if such agreement entitles Choi and SRC to a portion

of Kim’s and [8th Bridge’s] profits from the Ace Hotel, . . . such agreement must

necessarily also entitle Kim and 8th Bridge to an equal portion of Choi’s and SRC’s profits

from its projects, including Ajin[.|” Id. § 71. In that case, defendants contend that “Kim

should be entitled to an accounting, access to the books and records, and collection of

profits of and from those entities] Id.

Plaintiffs argue that defendants’ declaratory relief counterclaim “fails as a matter of

law because, as the parties who repudiated the joint venture, Kim and [8th Bridge] are

barred from seeking a profit accounting or other mghts under the venture, assuming

[p|laintiffs elect to pursue a damages remedy.” Choi Mot. at 13-14. Because plaintiffs

have elected a remedy for monetary damages, they contend that “|d]efendants cannot

override the effect of [p|laintiffs’ election by way of their counterclaim.” Id. at 16.

Plaintiffs rely heavily on the California Court of Appeal’s opinion in Gherman v,

Colburn, 72 Cal. App. 3d 544 (1977). In that case, plaintiffs asserted claims against

defendants related to the defendants’ alleged repudiation of a joint venture to purchase a

parcel of land. Id. at 554. After the sale closed and the defendants took title to the property,

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

the defendants denied the existence of a joint venture and denied that the plaintiffs had any

interest in the property. Id. at 555. The plaintiffs asserted claims for: (1) damages for

tortious exclusion of joint venture and punitive damages; (2) dissolution of joint venture,

accounting, and a receiver: (3) declaratory relief: and (4) fraud. Id. at 553. Before trial,

plaintiffs filed a request for partial dismissal requesting the dismissal of plaintiffs’ claims

for: (1) dissolution of joint venture, accounting, and a receiver; and (2) declaratory relief.

Id. On the first day of trial, the defendants filed a motion for leave to file a cross-complaint

seeking a judicial dissolution and accounting, which the trial court denied. Id. The trial

entered a verdict in favor of the plaintiffs, and the defendants timely appealed, challenging

the trial court’s denial of the defendants’ motion to file a cross-complaint for judicial

dissolution and accounting. Id. at 554.

On appeal, the Court of Appeal noted that “[1]t is clear that an action for damages 1s

maintainable here without an action for judicial dissolution and an accounting.” Gherman,

72 Cal. App. 3d at 563. Thus, “[w]hen plaintiffs here dismissed the action for judicial

dissolution and an accounting, plaintiffs made an election of remedies to sue for damages

(either in tort or for breach of contract) and thereby removed accounting as a possible issue

in the case.” Id. at 565. The Court of Appeal affirmed the trial court’s denial of the

defendants’ motion for leave to file a cross-complaint because the “[d]efendants cannot

complain of the failure to order an accounting of a partnership or joint venture which they

say 1s nonexistent where the nonexistence 1s attributable solely to their wrongful conduct.”

Id. |The] [d]efendants should not be permitted to say . . . we repudiate the contract, but

then if we do not get away with it, we repudiate our repudiation and demand an

accounting.” Id. The Court of Appeal acknowledged that while a defendant may “plead

inconsistent defenses, . . . the election of remedies is with plaintiffs and once they elected

not to assert any partnership rights and to stand solely on the cause of action arising out of

the repudiation, then as between the parties the cause of action for judicial dissolution and

an accounting in equity become moot.” Gherman, 72 Cal. App. 3d at 563.

Contrary to plaintiffs’ argument, however, defendants’ declaratory relief

counterclaim is consistent with Gherman. Here, plaintiffs agree that they “have

consistently denied that the alleged joint venture they are suing under called for the sharing

of any of their Ajin profits with Kim or 8th Bridge.” Kim GDF No. 1. Accordingly, the

joint venture that plaintiffs “are suing under” is project-specific, concerning only the Ace

Hotel. See, e.g., Kim Opp. at 17 (“By agreeing (orally or impliedly) to pursue, on a

“project-basis,’ the Ace Hotel EB-5 project, Choi and Kim formed a joint venture.”). In

contrast, while defendants have repudiated the existence of a partnership or joint venture

agreement between Choi and Kim that concerns only the Ace Hotel, defendants argue, in

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

the alternative, that if a joint venture does exist, “it gave rise to joint venture agreement

that obligated SRC and [8th Bridge] to share profits related to both the Ace and Ajin

Projects.” Choi Opp. at 6. Accordingly, Gherman is inapt here because a jury could find

that while no project-specific joint venture existed between Choi and Kim concerning only

the Ace Hotel, a joint venture did exist which included both the Ace Hotel and Ajin. Cf.

Gherman, 72 Cal. App. 3d at 560 (“[P|laintiffs elected to seek on/y damages rather than

establish an interest in a going partnership. If plaintiffs failed in that effort, then there

would be an adjudication that there was no joint venture and therefore no right to or need

for an accounting.”) (emphasis in original). In other words, an adjudication that no Ace

Hotel-only joint venture existed does not necessarily foreclose a determination that a joint

venture involving both the Ace Hotel and one or more of the Ajin LLCs existed.

Accordingly, the Court DENIES plaintiffs’ motion for summary judgment on

defendants’ declaratory relief counterclaim.

3. Defendants’ Rescission Counterclaim and Fraud Affirmative

Defense

Defendants assert a counterclaim against plaintiffs for rescission based on fraud. See

Countercl. {| 72-75. According to defendants, “the only reason Kim even entertained

Choi’s overtures to collaborate together and the only reasons Kim prepared the Draft Term

Sheet was because Choi misrepresented (1) his knowledge of, and experience in, the

Chinese market; (2) the sophistication and experience of his foreign agents in sourcing

investors for EB-5 transactions; and (3) the qualifications and expertise of his advisor,

Morrie Berez.”’® Countercl. § 74. “Thus, to the extent that this Court determines that] an

agreement was somehow reached between Kim and [8th Bridge], and Choi and SRC, Kim

and [8th Bridge] hereby assert their right to rescind that agreement have it voided due to

the fraud in its inception[.]” Id. § 75. Defendants also assert, based on these allegations,

an affirmative defense for fraud. See Dkt. 53 (“Answ.”) § 6. Plaintiffs seek summary

judgment on defendants’ rescission counterclaim and on defendants’ fraud defense.

8 In a March 4, 2020 email to plaintiffs’ counsel, defendants’ counsel indicated that

defendants “aren’t relying on Morrie issues as part of the fraud counterclaim and defense

for other reasons.” Dkt. 167-1, Exh. 3.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

a. Failure to Include “Restitution” in Prayer for Relief

First, plaintiffs argue that “|t]here 1s no cause of action for rescission; rather, the

equitable action for rescission was abolished in 1961, and the remedy is now a legal action

for restitution based on a completed unilateral rescission.” Choi Mot. at 17 (internal

citation and quotation marks omitted). According to plaintiffs, then, because defendants

“have not alleged a mght to restitution, nor included a prayer for restitution in their

pleadings,” defendants “have alleged a non-existent claim under California law.” Id. at

17-18. In response, defendants “acknowledge that they failed to include their request for

rescission in the prayer for relief” but contend “that was an inadvertent mistake and given

the clear nature of the Counterclaim, there can be no argument that Choi and SRC were not

given proper notice of [defendants’] intent to rescind the joint venture if it was in fact

entered into.” Choi Opp. at 16 n.7. Accordingly, defendants “hereby request . . . leave to

amend for the sole purpose of adding the rescission prayer for relief to the Counterclaims.”

Id.

“Rescission 1s not a cause of action, but a common-law remedy on the contract.”

Microsoft Corp. v. Hon Hai Precision Indus. Co., No. 19-cv-01279-LHK, 2020 WL

836712, at *6 (N.D. Cal. Feb. 20, 2020). Accordingly, “California courts no longer ‘grant’

rescission, but merely recognize that the underlying facts have been established and grant

consistent relief.” Id. However, “[w]hen notice of rescission has not otherwise been given

or an offer to restore the benefits received under the contract has not otherwise been made,

the service of a pleading in an action or proceeding that seeks relief based on rescission

shall be deemed to be such notice or offer or both.” In re Ford Motor Co. DPS6 Powershift

Transmission Prod. Liaiblity Litig., No. 18-ML-02814-AB-FFM, 2019 WL 7171546, at *4

Cal. Dec. 2, 2019) (citing Cal. Civ. Code § 1691).

To the extent that plaintiffs seek summary judgment on defendants’ rescission

counterclaim on the basis that rescission is “not a cause of action” and defendants have not

specifically requested restitution in defendants’ prayer for relief, plaintiffs elevate form

over substance. See Duarte v. Pac. Specialty Ins. Co., 13 Cal. App. 5th 45, 55 (2017)

(finding that insurer’s pleading of rescission defense in its answer was sufficient to allow

trial court to justify award of summary judgment allowing insurer to rescind policy that

insurer issued to insured because insurer adequately identified insurer’s misrepresentations

which allowed rescission and landlord waived any pleading defects by addressing

rescission defense on the merits). Indeed, plaintiffs address here the merits of defendants’

request for rescission. See Choi Mot. at 18-21: Choi Reply at 9-12.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

Accordingly, the Court declines to enter summary judgment on defendants’

rescission counterclaim in favor of plaintiffs on this hyper-technical basis. To the extent

necessary, the Court GRANTS defendants’ request for leave to amend to include a prayer

for restitution with respect to defendants’ rescission counterclaim.

b. Choi’s Alleged Misrepresentations

In addition, plaintiffs seek summary judgment on defendants’ rescission

counterclaim and on defendants’ fraud defense on the grounds that “[d]efendants have not

shown with admissible evidence that Choi misrepresented to Kim ‘his knowledge of, and

experience in, the Chinese market’ or “the sophistication and experience of his foreign

agents in sourcing investors for EB-5 transactions.” Choi Reply at 9. According to

plaintiffs, defendants “cannot rely on any of the three pieces of evidence they offer to raise

a genuine issue of fact as to whether Choi made such representations.” Id.

Defendants first rely on a November 19, 2015 email from Amber Jenkins, an SRC

employee. In the email, which includes “China Trip Summary” as the subject line, Jenkins

writes to Choi and Thomas Choi: “Current: We don’t have an appropriate person in charge

[of] our marketing in China. But we made a connection with a small team in Qingdao who

have agreed to promote SRC projects . . . and are willing to set up a[n] independent

company after the business starts rolling.” Dkt. 161-2, Exh. M (“Nov. 19, 2015 Email’) at

P-004595. Jenkins further advises that “[a]fter almost one month in China I think we

urgently need a marketing person to maintain and promote our relations with all the agents

and other selling channels that directly sell a project.” Id. According to defendants, this

email indicates that “SRC lacked an appropriate marketing person in China” which, “[a]t

minimum, .. . creates a triable issue of material fact as to whether Choi misrepresented

SRC’s marketing experience in China as of 2015.” Choi Opp. at 17.

In response, plaintiffs contend that Jenkins’ November 19, 2015 email “does nothing

to establish that Choi represented to Kim anything about Choi’s own past experience in

China.” Choi Reply at 9 (emphasis added). Drawing all inferences in favor of defendants,

° The Court OVERRULES plaintiffs’ authentication and hearsay objections to this

email. See Choi Opp. Evidentiary Objection No. 9. As to authenticity, the email is marked

consistent with the document labeling that plaintiffs have used when producing other

documents in this litigation, indicating that plaintiffs produced this email, which is

probative of its authenticity. Moreover, the email is not hearsay because it was written by

Jenkins, plaintiffs’ employee, and is being offered against plaintiffs. See Iorio v. Allianz

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘oO’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOI AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

however, the Court cannot say that no finder of fact could determine that, based on SRC’s

nascence in China, and as confirmed by Jenkins’ November 19, 2015 email, Choi

personally lacked knowledge and experience in the Chinese market. See T.W. Elec. Serv.,

809 F.2d at 631 (“if a rational trier of fact might resolve the issue in favor of the nonmoving

party, summary judgment must be denied.”) (emphasis added). For example, Jenkins

testified during deposition that SRC initially hired her because Choi “need[ed] somebody

who speaks Chinese and to help him to manage the office and to . . . build some kind of tie

with the Chinese agents.”!° Dkt. 161-2, Exh. L (“Jenkins Dep. Tr.”) at 30:25-31:8

(emphasis added). A jury could reasonably conclude that because Choi hired Jenkins to

assist SRC to “build some kind of tie with the Chinese agents,” SRC, and in turn Choi,

lacked experience in that regard. Indeed, in the November 19, 2015 email, Jenkins advised

that SRC retain “a marketing person” in China and opined that “this marketing person

should really understand Moses’s perspective, and positively build a bridge between Moses

and agents, and be able to find common ground when Moses & Agent [sic] have different

opinions.” Nov. 19, 2015 Email at P-004595. That is “[b]ecause Chinese culture is very

different with US, so if this person can understand what Moses wants eventually, and use

Chinese way to complete it[,] [that] is the best scenario.” Id. Accordingly, because Jenkins

suggested the hiring of “a marketing person” to “build a bridge” between Choi and agents

in China, a jury could conclude that Choi lacked the knowledge or experience of the

Chinese market necessary to accomplish Choi’s objectives.

In support of their argument that Choi made misrepresentations to Kim, defendants

point to additional pieces of evidence including: (1) a July 26, 2015 email exchange

between Choi and Kim wherein Choi shares a list of fifty-nine “major” SRC agents with

whom SRC transacts with in China; (2) plaintiffs’ purportedly contradictory interrogatory

response, which defendants contend establishes that plaintiffs engaged with far fewer

foreign agents in China; and (3) Choi’s own deposition testimony, wherein Choi

purportedly acknowledged that he misrepresented his own EB-5 experience when he

acquired SRC from SRC’s previous owner. Choi Opp. at 17-19. Because the Court has

Life Ins. Co. of N. Am., No. 05-cv-00633-JLS-CAB, 2010 WL 11508761, at *11 (S.D.

Cal. Jan. 27, 2010) (“The e-mail chain between Defendant’s employees, however, are

admissions of the party-opponent and therefore are not hearsay under FRE 801(d).”).

10 The Court OVERRULES plaintiffs’ objection to Jenkins’ deposition testimony

based on lack of personal knowledge. See Choi Opp. Evidentiary Objection No. 8. Jenkins

may testify regarding her understanding of why Choi and SRC hired her.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

already concluded that Jenkin’s deposition testimony and November 19, 2015 email raise

triable issues regarding whether Choi misrepresented his experience and knowledge of the

Chinese market in his preliminary dealings with Kim, the Court need not address these

additional pieces of evidence.

For the foregoing reasons, the Court DENIES plaintiffs’ motion for summary

judgment on defendants’ rescission counterclaim and on defendants’ fraud affirmative

defense.

4. Chang’s Breach of Contract and Promissory Estoppel

Counterclaims

Chang asserts counterclaims against Choi for breach of oral contract and for

promissory estoppel. Countercl. §§{ 76-84. The gravamen of Chang’s counterclaims is

that: in November 2015, Chang advised Choi that Chang was considering leaving SRC to

attend graduate school; that Choi promised that if Chang continued working for SRC for

an additional year, Choi would pay for Chang’s graduate education; that Chang relied on

Choi’s representation and forewent graduate school during this period, moving to Los

Angeles at Choi’s direction to begin working with Kim and 8th Bridge; and that Choi

demanded Chang return to Georgia after Choi’s relationship with Kim broke down if

Chang wished for Choi to pay for Chang’s graduate education. Id. Plaintiffs move for

summary judgment on Chang’s counterclaims on two bases.

a. Promise to Pay for Law School Rather than Business School

First, plaintiffs contend “that Choi’s promise, if any, was to pay for Jaw school,”

rather than business school, and Chang is seeking damages in the form of his business

school tuition. Choi Mot. at 22 (emphases added). The Court does not find plaintiffs’

argument availing.

Here, the disputed records precludes the Court from determining, as a matter of law,

whether Choi made an enforceable oral promise to Chang to pay for Chang’s graduate

school tuition; whether any promise by Choi to Chang was specifically limited to law

school tuition; and whether Choi subsequently modified any promise to cover business

school tuition instead. For example, Chang testified during deposition that in around

September 2015, Choi told Chang, “I want you to work for me for another year and then

...1f you work for me for another year, I'll pay for your /aw school then and then you can

go and do what you want to do.” Dkt. 144-1, Exh. 7 (“Chang Dep. Tr.”) at 193:2—15

(emphasis added). Chang further testified that he decided to continue working for Choi

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘oO’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOI AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

based on Choi’s representation. Id. at 201:5—8. On the other hand, Thomas Choi testified

during deposition that “|w]e never agreed to pay any tuition[.]” T. Choi Dep. Tr. at 215:12.

In addition, Chang testified that Choi began urging Chang to consider “going to business

school instead” and that Choi agreed to “pay for that as well.” Id. at 193:23-194:3. Choi

appeared to corroborate during deposition that he agreed to pay for Chang’s graduate

school. See Dkt. 161-2, Exh. I (“Choi Dep. Tr.”) at 341:3-10. Similarly, Thomas Choi

testified that “we did mention to [Chang] that we would be willing to consider paying for

his education needs[.]” T. Choi Dep. Tr. at 215:12—14. And, in a 2017 email to Chang,

Thomas Choi wrote that “[w]e wanted you to succeed as a person and professional and

... were willing to go to the distance, like paying for your education and personal needs.”

Id. at 215:6—9 (emphasis added).

b. Statute of Frauds

Plaintiffs contend that Chang’s breach of contract counterclaim “is barred by the

statute of frauds.” Choi Mot. at 22. That is because, according to plaintiffs, “Choi’s alleged

promise could not be possibly performed within one year because . . . there was simply no

way Chang might have completed the requirements to attend either law school or business

school by late 2016, thereby triggering Choi’s alleged obligation to pay tuition.” Id.

The Court previously considered—and rejected—plaintiffs’ argument based on the

Statute of Frauds in denying plaintiffs’ motion to dismiss Chang’s breach of contract and

promissory estoppel counterclaims. Dkt. 50 at 20. The Court determined that Chang’s

breach of contract counterclaim did not necessarily come within the statute because “Chang

could have fulfilled his end of the bargain by working for exactly one additional year.” Id.

(emphasis added). The Court also noted that “defendants allege that Chang fully performed

under the oral contract by remaining at SRC for an additional year,” and that “where the

contract 1s unilateral, or, though originally bilateral, has been fully performed by one party,

the remaining promise 1s taken out of the statute, and the party who performed may enforce

it against the other.” Dkt. 50 at 20 (citing Secrest v. Sec. Nat’] Mortg. Loan Tr. 2002-2.

167 Cal. App. 4th 544, 556 (2008)).

Plaintiffs argue that Choi’s promise necessarily could not have been performed

within one year because Choi’s obligation to pay Chang’s graduate school tuition was

contingent on Chang’s applying—and being accepted to—graduate school. See Choi Mot.

at 22. However, “California’s one year provision is interpreted literally and narrowly.”

Rosenthal v. Fonda, 862 F.2d 1398, 1401 (9th Cir. 1988). Thus, “[i]t is well-established

in California that an oral contract is invalid. . . only w{here] by its very terms it cannot be

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

performed within a year from the date it is made.” Eisenberg v. Ins. Co. of N. Am., 815

F.2d 1285, 1291 n.6 (9th Cir. 1987) (emphasis in original). Accordingly, if the terms of

the alleged oral agreement do not preclude performance within once year, then the Statute

of Frauds is not a bar, “even where performance is contemplated by the parties to be

completed over a course of years.” MS Int’L, Inc. v. Luxury Stone Imports, Inc., No. 8:11-

cv-01700-JVS-JPR, 2012 WL 12894179, at *2 (C.D. Cal. May 10, 2012). Here, a genuine

dispute exists that the terms of Choi’s alleged promise provided only that if Chang worked

for SRC for an additional year, Choi would pay for Chang’s graduate school tuition. It is

immaterial that the parties contemplated that it would be more than a year before Choi’s

first tuition payment became due because Chang would necessarily first have had to

applied—and been accepted to—graduate school.

Even assuming arguendo that Choi’s oral contract could not be performed within

one year, “[u|nder California law, full performance by the party seeking enforcement of an

oral contract removes the contract from the statute of frauds.”!! Griffin v. Green Tree

Servicing, LLC, No. 2:14-cv-09408-MMM-VBK, 2015 WL 10059081, at *8 (C.D. Cal.

Oct. 1, 2015). The Court has already concluded that triable issues exist regarding whether,

in November 2015, Choi made Chang an oral promise to pay for Chang’s graduate school

tuition if Chang agreed to continue working at SRC for an additional year. Plaintiffs

acknowledge that Chang continued working at SRC through until at least June 2017. See

Choi Mot. at 23. Accordingly, to the extent that Chang worked at SRC for an additional

year based on Choi’s oral promise, it appears that Chang fully performed, taking Choi’s

oral promise outside the statute.

5. Defendants’ Offset Affirmative Defense

Defendants assert an affirmative defense against plaintiffs for offset. See Answ.

(“Seventh Affirmative Defense”). According to defendants, “‘[1]f the Court should find that

Plaintiffs argue that “an estoppel to plead the statute of frauds requires that Chang

“show unconscionable injury or unjust enrichment if the promise 1s not enforced,’ including

that he detrimentally relied upon Choi’s conduct.” Choi Mot. at 23 (internal citation

omitted). Plaintiffs conflate the concepts of complete performance and equitable estoppel

within the context of the Statute of Frauds. In other words, “|t|he statute of frauds has no

application to an executed agreement.” Dean v. Davis, 73 Cal. App. 2d 166, 168 (1946)

(emphasis added). With respect to equitable estoppel, however, “part performance . . . has

no effect: the rights of the defrauded party are based upon his or her change of position in

reliance upon the representations.” Witkin, Summary 11th Contracts § 407 (2019).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES —- GENERAL ‘O’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOLET AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

[plaintiffs are] entitled to recovery against [defendants], then such recovery, if any, should

be offset and reduced by any sums previously paid to [plaintiffs by defendants],” and that

[defendants] ha[ve] valid and enforceable claims for money against [plaintiffs] . . . and

which [defendants] are entitled to set off against [plaintiffs’] claimed damages, if any

should be found to exist.” Id.

Plaintiffs contend that “[a]part from pursuing their existing counterclaims and

seeking a credit for amounts paid to Choi, [d]efendants cannot seek affirmative relief

against [p|laintiffs, and [p|laintiffs are thus entitled to judgment as a matter of law on the

‘Offset’ counterclaim to that extent.” Choi Mot. at 25. In response, defendants contend

that, “[t]o be totally candid, [djefendants do not understand what summary judgment

[p|laintiffs are seeking with respect to their affirmative defense for Offset.”” Choi Opp. at

19. Defendants assert that “[t]o the extent [p|laintiffs are asking for confirmation that the

defense of setoff only affords 8th Bridge the best case scenario of reducing [p|laintiffs’

damages to zero, rather than calling for an award of net damages owed by [p]laintiffs to

[d]jefendants, [d]efendants agree that is all that is allowed under the law.” Id.

“Two parties who are liable to each other in the same suit are generally entitled to a

setoff of any recovery owed by the other party.” Enodis Corp. v. Employers Ins. Co. of

Wausau, No. 2:03-cv-00866-CAS-PIW, 2004 WL 5642006, at *2 (C.D. Cal. May 18,

2004). “Normally, a court should first determine whether a party will prevail on his claim

and, if so, how much he will recover.” Aqui es Texcoco, Inc. v. Lopez, No. 12-cv-01215-

BEN-WVG, 2014 WL 714862, at *4 (S.D. Cal. Feb. 21, 2014). “Only after that lability

is established is it appropriate to evaluate defensive setoffs.” Id. Accordingly, “[c]ourts

have denied summary judgment as premature where a party asked that the court determine

the offset.” Id.

At this preliminary stage, the Court declines to determine what offset, if any,

defendants may or may not be entitled to. To the extent necessary, the Court may consider

the issue of offset if, and when, damages are determined. See Acqui, 2014 WL 714862, at

*5 (“[G]iven the many uncertainties surrounding an equitable situation that may never

arise, this Court will not determine as a matter of law that an offset affirmative defense

cannot succeed. If necessary, this Court will consider the matter when damages are

determined.”’).

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES — GENERAL ‘oO’

Case No. 2:17-cv-08958-CAS(AFMx) Date March 25, 2020

Title MOSES CHOI AL. v. 8TH BRIDGE CAPITAL, INC. ET AL.

V. CONCLUSION

In accordance with the foregoing, the Court order as follows:

1. Pursuant to plaintiffs’ election of remedies, the Court DISMISSES plaintiffs’

third claim for enforcement of rights under the Revised Uniform Partnership

Act, plaintiffs’ sixth claim for constructive fraud, plaintiffs’ tenth claim for

judicial dissolution, and plaintiffs’ fifteenth claim for accounting:

2. The Court OVERRULES the parties’ evidentiary objections:

3. The Court DENIES defendants’ motion for summary judgment as to

plaintiffs’ non-quantum meruit claims; and

4. The Court DENIES plaintiffs’ motion for summary judgment as to

defendants’ intentional interference with contract, intentional interference

with prospective economic advantage, rescission, breach of contract, and

promissory estoppel counterclaims.'* The Court also DENIES plaintiffs’

motion for summary judgment as to defendants’ fraud and offset affirmative

defenses.

IT IS SO ORDERED.

00

Initials of Preparer CM)

To the extent necessary, the Court GRANTS defendants’ request for leave to amend

to include a prayer for restitution with respect to defendants’ rescission counterclaim.