Moses Choi v. 8th Bridge Capital, Inc.

Opinion

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL

eee CHRISTINA A-SNYDER Catherine Jeang Laura Elias N/A Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiffs: Attorneys Present for Defendants: Greg Rapoport Russell Selmont Attorneys Present for Objectors: Howard Fredman Yasin Almadani

Proceedings: PLAINTIFFS’ MOTION TO MODIFY THE SCHEDULING ORDER AND FOR LEAVE TO FILE SECOND AMENDED COMPLAINT (Dkt. [182], filed June 5, 2020) I. INTRODUCTION AND BACKGROUND The Court previously set out the factual and procedural background of this case in its prior orders. For that reason, the Court only sets forth those facts necessary to resolve plaintiffs’ present motion to modify the scheduling order and for leave to file a second amended complaint. 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 Capital, LLC; Manhattan Real Estate Fund GP, LLC; Manhattan Real Estate Fund, LP: Manhattan Real Estate Fund II, LP: Manhattan Real Estate Equity Fund, LP; Patrick Jongwon Chang (“Chang”); and Young Hun Kim (“Kim’’) (collectively, “defendants”). Dkt. 1. The gravamen of plaintiffs’ claim is that Kim and his 8th Bridge companies 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 subsequently filed a first amended complaint against defendants on December 22, 2017, see dkt. 8 (“FAC”), and defendants later filed their operative second amended answers and counterclaims against plaintiffs on August 6, 2018. Dkts. 52-59.

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL

Deadline to File Amended Pleadings or | June 28, 2019 Add New Parties Fact Discovery Cut-Off January 6, 2020 Fact Discovery Cut-Off Regarding | August 14, 2020 Financial Issues Fact Discovery Cut-Off Regarding Non- | August 14, 2020 Party UCMK & Associates Exchange of Expert Reports August 31, 2020

Pretrial Conference and Hearing on| October 19, 2020 Motions in Limine Jury Trial November 3, 2020!

During the hearing, the Court denied the parties’ request to continue the November 3, 2020 trial date. To the extent that federal, state, and local elections are set to occur on November 3, 2020, the Court indicated that it would not empanel jurors or conduct voir dire until November 4, 2020. With respect to the parties’ concerns regarding the ongoing COVID-19 pandemic, the Court explained that should circumstances regarding the

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL Federal Rules of Civil Procedure. See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992). Rule 16(b)(4) provides that a scheduling order may be modified “only for good cause and with the judge’s consent.” Fed. R. Civ. P. 16(b)(4). This requirement “primarily considers the diligence of the party seeking the amendment.” Johnson, 975 F.2d at 609. The scheduling order may be modified only “1f it cannot reasonably be met despite the diligence of the party seeking the extension.” Id. “Although the existence or degree of prejudice to the party opposing the modification might supply additional reasons to deny a motion, the focus of the inquiry is upon the moving party’s reasons for seeking modification. If that party was not diligent, the inquiry should end.” Id. If the moving party shows good cause under Rule 16(b), the court applies Rule 15(a)’s liberal standards in determining whether to grant leave to amend. Johnson, 975 F.2d at 608. Rule 15(a) provides that “leave [to amend] shall be freely given when justice so requires.” Fed. R. Civ. P. 15(a)(2). Generally, leave to amend is “denied only upon showing of bad faith, undue delay, futility, or undue prejudice to the opposing party.” Chudacoff v. Univ. Med. Ctr. of S. Nevada, 649 F.3d 1143, 1152 (9th Cir. 2011) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Rule 15(a) “is to be applied with extreme liberality,’ Morongo Band of Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990), and whether to permit amendment is a decision “entrusted to the sound discretion of the trial court.” Jordan v. County of Los Angeles, 669 F.2d 1311, 1324 (9th Cir. 1982).

pandemic not improve before November 3, 2020, the Court would consider continuing the trial date sua sponte.

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL

Plaintiffs’ operative first amended complaint previously sought an accounting “by [djefendants of all financial transactions relating to the business of the joint venture, including the operation and financial transactions of 8th Bridge., 8th Bridge LLC, MRE Fund GP, MRE Fund LP, MRE Fund II LP, and MRE Equity Fund, and any EB-5 investment projects of these entities since September 2015.” FAC 4§ 188-89. Plaintiffs’ motion for summary judgment, however, indicated that plaintiffs “elected their remedy of monetary damages and request{ed]” that the Court dismiss plaintiffs’ “alternatively-pled claims” for equitable relief, including, inter alia, plaintiffs’ request for an accounting. Dkt. 143 at 2-3. Pursuant to plaintiffs’ request, the Court thereafter dismissed plaintiffs’ request for an accounting. Dkt. 179 at 9.

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL

3 In a separate order, the court “award[ed] monetary sanctions jointly against Ningbo Sunny” and its then-counsel, based on counsel’s failure “to ensure that Ningbo Sunny fully complies with Orion’s post-judgment document requests.” Optronic Techs., Inc. v. Ningbo Sunny Elec. Co., No. 16-cv-06370-EJD-VKD, 2020 WL 2838806, at *7—8 (N.D. Cal. June 1, 2020).

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES — GENERAL ‘Oo’ No. 2:17-cv-08958-CAS(AFMx) Date July 13, 2020 Title MOSES CHOI AL. v. 8TH BRIDGE CAPITAL, INC. ET AL. In sum, the Court has a multitude of readily available tools that would allow the Court to adequately safeguard plaintiffs’ ability to recover from defendants should plaintiffs hypothetically prevail at trial. These include, but are not limited to, the Court’s authority to: (1) require defendants to satisfy any judgment: (2) enjoin defendants from transferring assets; (3) sanction defendants should they, in bad faith, frustrate plaintiffs’ hypothetical recovery; and (4) sanction defendants’ counsel should counsel fail to adequately supervise defendants’ hypothetical post-trial obligations. To be clear, the Court makes no determination as to whether plaintiffs are likely to prevail at trial; whether defendants have been, are currently, or will engage in conduct that would frustrate plaintiffs’ hypothetical recovery; or whether the Court may need to employ any or all of these tools after trial. Instead, the Court simply observes that the availability of these tools renders plaintiffs’ proposed additional claims—which plaintiffs acknowledge would serve the sole function of protecting plaintiffs’ post-trial interests—superfluous at this late stage of litigation. That 1s particularly true in light of the prejudice that defendants would likely suffer were the Court to modify its scheduling order and allow plaintiffs to add their proposed new claims and parties. See Robinson v. Twin Falls Highway Dist., 233 F.R.D. 670, 672 (D. Idaho 2006) (“Any prejudice to the opposing party can be an additional reason to deny a motion” to modify a scheduling order pursuant to Rule 16(b)); see also Monterey Bay Military Hous., LLC v. Pinnacle Monterey LLC, No. 14-cv-03953-BLF, 2015 WL 1737691, at *2 (N.D. Cal. Apr. 13, 2015) (denying Rule 15(d) motion for leave to file a supplemental pleading “to introduce additional claims and allegations based on [djefendants’ alleged fraudulent transfer of assets that occurred after the filing of this lawsuit” where “[f]act discovery is closed, save for limited clean up agreed to by the parties” and less than four months remained until trial, explaining that “adding [fraudulent transfer] claims at this stage in litigation would severely prejudice the existing defendants.”’). “District courts have broad discretion to manage discovery and to control the course of litigation under Federal Rule of Civil Procedure 16.” Hunt v. Cty. of Orange, 672 F.3d 606, 616 (9th Cir. 2012) (internal citation and quotation marks omitted). In exercise of that discretion, and because plaintiffs fail to establish the requisite good cause under Rule 16, the Court declines to modify the scheduling order. For that reason, the Court does not reach the question of whether plaintiffs’ proposed second amended complaint, which would add additional claims and new parties, satisfies Rule 15. See Urrutia v. Chipotle Mexican Grill, Inc., No. 2:16-cv-02065-BRO-MRW, 2017 WL 2901717, at *10 (C.D. Cal. June 16, 2017) (“Here, the Court need not reach Plaintiff's arguments under the Rule 15 standard because Plaintiff has failed to show good cause under the Rule 16 inquiry.”).

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA CIVIL MINUTES —- GENERAL