Free Complaint - District Court of California - California

Case 3:08-cv-02031-SC

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Filed 04/18/2008

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EDWARD E. COREY (SB #124900)
COREY 6 COREY 3580 W i l s h i r e B o u l e v a r d 17th Floor Los A n g e l e s , CA 90010 ( 2 1 3 ) 385-7003 ( 2 1 3 ) 385-6908 Fax C o u n s e l f o r SHANGHAI W I N - W I N G E X P . CO, LTD., P l a i n t i f f . IMP.
&

L, .-

I?"

U N I T E D STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

SHANGHAI W I N - W I N G EXP. CO, LTD.,

IMP. &
I

Plaintiff,
VS.

TETSUYA WATANABE, OAKHILLS HARDWOOD FLOORS, I N C . , K&T ASSOCIATES, I N C . Defendants.

) ) ) ) ) ) ) ) )

COMPLAINT

P l a i n t i f f S h a n g h a i Win-Wing Imp. & Exp. Co., L t d . , ( h e r e i n a f t e r "Win-Wing"), f o r i t s Complaint a g a i n s t Defendants

T e t s u y a Watanabe, O a k h i l l s H a r d w o o d F l o o r s , I n c . a n d K & T Associates, a s follows: Inc. ( h e r e i n a f t e r c o l l e c t i v e l y "Defendants") , s t a t e s

INTRODUCTION
T h i s i s a n a c t i o n f o r money owed t o Win-Wing f o r goods

27

1

p u r c h a s e d f r o m Win-Wing a n d s h i p p e d t o D e f e n d a n t K&T A s s o c i a t e s , Inc. ( h e r e a f t e r "KLT") . This i s a l s o an a c t i o n f o r breach of a guaranty of t h e
1 COMPLAINT

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a b o v e - s t a t e d d e b t b y D e f e n d a n t O a k h i l l s Hardwood F l o o r s , I n c . (hereinafter "Oakhills"), a s well as an a c t i o n f o r i n t e n t i o n a l

m i s r e p r e s e n t a t i o n a g a i n s t D e f e n d a n t T e t s u y a Watanabe ( h e r e i n a f t e r
"Mr.

Watanabe")

i n connection with t h a t guaranty.

PARTIES

1.

P l a i n t i f f S h a n g h a i Win-Wing

Imp. & Exp. C o . , L t d . ,

( h e r e i n a f t e r "Win-Wing")

i s a m a n u f a c t u r e r a n d e x p o r t e r o f wood

f l o o r i n g , and i s l o c a t e d i n t h e Peoples Republic of China.

2.

D e f e n d a n t K&T A s s o c i a t e s ,

Inc.

( h e r e a f t e r "K&T")

i s a n i n a c t i v e c o r p o r a t i o n t h a t was r e g i s t e r e d i n t h e S t a t e o f Washington, w i t h i t s p r i n c i p l e p l a c e o f b u s i n e s s a t 8 9 1 1 NE 1 5 1 s t Pl., B o t h e l l , W 98011, i s a n i m p o r t e r a n d s e l l e r o f wood A a n d upon i n f o r m a t i o n a n d

f l o o r i n g , was a c u s t o m e r o f Win-Wing,

b e l i e f was owned a n d o p e r a t e d by D e f e n d a n t T e t s u y a Watanabe. 3. D e f e n d a n t O a k h i l l s Hardwood F l o o r s , I n c . i s an a c t i v e corporation r e g i s t e r e d i n

(hereinafter "Oakhills")

t h e S t a t e of C a l i f o r n i a , with i t s p r i n c i p l e p l a c e of business a t 6650 Goodyear R d . , B e n i c i a , CA 94510, a n d upon i n f o r m a t i o n a n d b e l i e f i s owned a n d o p e r a t e d by D e f e n d a n t T e t s u y a Watanabe.
4.

D e f e n d a n t T e t s u y a Watanabe

(hereinafter "Mr.

Watanabe") upon i n f o r m a t i o n a n d b e l i e f i s a r e s i d e n t o f C a l i f o r n i a , w i t h a l a s t known a d d r e s s o f 6650 Goodyear Rd., B e n i c i a , CA 94510, a n d upon i n f o r m a t i o n a n d b e l i e f i s t h e owner a n d o p e r a t o r o f K&T a n d O a k h i l l s , a n d c o n t r o l l e d t h e a s s e t s o f b o t h companies.

JURISDICTION
5. This Court has j u r i s d i c t i o n over t h i s matter § 1 3 3 2 ( a ) ( 2 ) because

p u r s u a n t t o t h e p r o v i s i o n s o f 28 U.S.C.
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complete d i v e r s i t y of c i t i z e n s h i p e x i s t s between t h e p a r t i e s , a s Win-Wing i s a c i t i z e n o f t h e P e o p l e s R e p u b l i c o f C h i n a , a n d a s D e f e n d a n t s O a k h i l l s a n d M r . Watanabe a r e c i t i z e n s o f t h e S t a t e o f C a l i f o r n i a , a n d D e f e n d a n t K & T was a c i t i z e n o f t h e S t a t e o f Washington. 6. The amount i n c o n t r o v e r s y e x c e e d s t h e sum o r v a l u e

o f S e v e n t y F i v e Thousand D o l l a r s a n d n o c e n t s ( $ 7 5 , 0 0 0 . 0 0 ) e x c l u s i v e of c o u r t c o s t s and i n t e r e s t , and i s between a c i t i z e n of t h e Peoples R e p u b l i c of China and c i t i z e n s of t h e S t a t e of C a l i f o r n i a and t h e S t a t e of Washington. 7. Venue i s p r o p e r i n t h i s C o u r t p u r s u a n t t o 28

U . S.C. § I 3 9 1 ( a ) ( I ) ,( 2 ) , a n d ( 3 ) i n t h a t D e f e n d a n t s O a k h i l l s a n d

M r . Watanabe r e s i d e i n C a l i f o r n i a , a s u b s t a n t i a l p o r t i o n o f t h e
activity that is subject t o t h i s action is situated i n t h i s judi-cia1 d i s t r i c t , and a l l Defendants a r e s u b j e c t t o personal jurisdiction i n t h i s judicial district.

8.

Venue i s a l s o p r o p e r i n t h i s C o u r t p u r s u a n t t o 28

USC § 1 3 9 1 ( a ) ( 2 ) b e c a u s e c o m p l e t e d i v e r s i t y o f c i t i z e n s h i p e x i s t s between t h e p a r t i e s a s above mentioned.
FACTUAL BACKGROUND

The U n d e r l v i n a T r a n s a c t i o n
I
I

9.

From J u n e 9, 2006 t o J u n e 27, 2006, K & T i s s u e d

s e v e r a l P u r c h a s e O r d e r s , u n d e r which K & T a g r e e d t o a n d Win-Wing a g r e e d t o s e l l c e r t a i n wood f l o o r i n g p r o d u c t s . 10. From a p p r o x i m a t e l y August 27, 2006 t o

a p p r o x i m a t e l y S e p t e m b e r 1 7 , 2006, Win-Wing s h i p p e d t h e wood f l o o r i n g p r o d u c t s o r d e r e d by K & T from C h i n a t o Long Beach, C a l i f o r n i a , where t h e p r o d u c t was r e c e i v e d b y K & T .
3 COMPLAINT

Win-Wing

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issued corresponding Commercial Invoices contemporaneously with each shipment. 11. Payments were due for the above-shipped products,

pursuant to the Purchase Orders, sixty (60) days after shipment. 12. As of approximately November 17, 2006, an

outstanding balance of $394,995.20 remained due and owing by K&T to Win-Wing under the Purchase Orders, Commercial Invoices and corresponding shipments. The Settlement Agreement by K&T, the Guaranty of Oakhills, and the Misrepresentations by Mr. Watanabe 13. On or about February 2007, Mr. Watanabe executed a

settlement agreement on behalf of K&T and a guaranty on behalf of Oakhills, under which K&T agreed to pay $352,717.15 to Win-Wing pursuant to a payment plan, and under which Oakhill guarantied said payment plan. An authentic duplicate of this settlement

agreement, payment plan and guaranty is attached hereto as Exhibit 1. 14. Pursuant to the terms of said settlement

agreement, K&T agreed to the following payment plan: 1. 2. 3. 4.
5.

February 2007 - $2,000.00 March 2007 - $20,000.00 April 2007 - $30,000.00 May 2007 - $30,000.00 June 2007 - $30,000.00 July 2007 - $30,000.00 August 2007
-

6. 7.
8.
9.

$42,143.43

September 2007 - $42,143.43 October 2007 - $42,143-43
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10. 11. 15.

November 2007

-

$42,143.43

December 2007 - $42,143.43 Pursuant to the terms of said agreement, Oakhills

contractually agreed to guaranty the above-stated payment plan. 16. Mr. Watanabe signed the settlement agreement and

payment plan on behalf of K&T, and signed the guaranty on behalf of Oakhills. 17. At the time Mr. Watanabe signed the settlement

agreement, payment plan, and guaranty, he knew that neither K&T nor Oakhills would satisfy the agreement. 18. Mr. Watanabe signed the settlement agreement,

payment plan and guaranty to stall legal action against K&T, as a means of delay, and with the purpose and intent of defrauding Win-Wing. 19. K&T and/or Oakhills, through Mr. Watanabe made one

payment of $10,000.00 toward the settlement agreement, payment plan and guaranty, leaving a remaining outstanding unpaid balance of $342,717.15.
COUNT ONE

-

BREACH OF CONTRACT

(Against K&T)

20.

Win-Wing incorporates by reference as though fully

rewritten herein the allegations contained within Paragraphs 1 through 19 above. 21. As a direct and proximate result of K&Tfs breaches

of its contractual obligations under the Purchase Orders, Commercial Invoices and corresponding shipments, Win-Wing has suffered damages in excess of $384,995.20, plus interest, costs and attorney fees.
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22.

The t o t a l amount d u e t o Win-Wing b y K & T u n d e r t h e

P u r c h a s e O r d e r s , Commercial I n v o i c e s a n d c o r r e s p o n d i n g s h i p m e n t s ,

a s o f November 1 7 , 2006, i s $ 3 8 4 , 9 9 5 . 2 0 , t o g e t h e r w i t h i n t e r e s t ,
c o s t s , and a t t o r n e y f e e s i n c u r r e d t h e r e a f t e r .

COUNT TWO

- ACTION

ON ACCOUNT

(Against KCT)
23. Win-Wing i n c o r p o r a t e s by r e f e r e n c e a s t h o u g h f u l l y

r e w r i t t e n h e r e i n t h e a l l e g a t i o n s contained w i t h i n Paragraphs 1 t h r o u g h 22 a b o v e . 24. A t t a c h e d h e r e t o a s E x h i b i t 1, a n d i n c o r p o r a t e d

h e r e i n by r e f e r e n c e , i s a S t a t e m e n t o f Account f o r which K&T i s i n d e b t t o Win-Wing. 25. T h i s Account i s k e p t i n t h e r e g u l a r c o u r s e o f

b u s i n e s s a n d i s a t r u e a n d a c c u r a t e r e f l e c t i o n o f t h e d e b t owed by K&T t o Win-Wing, a n d h a s b e e n acknowledged a n d s i g n e d by M r .

Watanabe, on b e h a l f o f K & T . 26.
A s a d i r e c t and proximate r e s u l t o f K & T f s f a i l u r e

t o p a y t h i s d e b t , Win-Wing h a s b e e n damaged i n t h e amount o f $384,995.20, p l u s i n t e r e s t , c o s t s and a t t o r n e y f e e s .

COUNT THREE

-

UNJUST ENRICHMENT

(Against K&T)
27. Win-Wing i n c o r p o r a t e s b y r e f e r e n c e a s t h o u g h f u l l y

r e w r i t t e n h e r e i n t h e a l l e g a t i o n s contained w i t h i n Paragraphs 1 t h r o u g h 26 a b o v e . 28.
A t a l l r e l e v a n t t i m e s , K&T a n d Win-Wing

contracted

f o r a n d Win-Wing p r o v i d e d t o K&T w i t h c e r t a i n g o o d s .

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29.

Win-Wing has performed all of its duties and

obligations under the terms and conditions of the partiesf contractual relationship. 30. Win-Wing has contacted K&T regarding overdue

invoices for the above aforementioned goods, and requested payment. K&T has refused to pay the amount due and owing to Win-

Wing for said goods. 31. As a direct and proximate result of K&Tfs failure

to pay for the goods provided by Win-Wing, K&T has been unjustly enriched, and Win-Wing correspondingly damaged, in the amount of $384,995.20, plus interest, costs and attorney fees.
COUNT FOUR

-

BREACH OF SETTLEMENT AGREEMENT

(Against K&T)

32.

Win-Wing incorporates by reference as though fully

rewritten herein the allegations contained within Paragraphs 1 through 31 above. 33. On or about February 2007, Mr. Watanabe executed a

settlement agreement on behalf of K&T, under which K&T agreed to pay $352,717.15 to Win-Wing pursuant to a payment plan. An

authentic duplicate of this settlement agreement and payment plan is attached hereto as Exhibit 1. 34. K&T and/or Oakhills, through Mr. Watanabe made one

payment of $10,000.00 toward the settlement agreement and payment plan and guaranty, leaving a remaining outstanding unpaid balance of $342,717.15. 35. K&T contractually agreed to resolve any disputes

between the parties, arising under the above-referenced Purchase Orders, Commercial Invoices, and corresponding shipments,
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pursuant to the terms of the settlement agreement and payment plan set forth in Exhibit 1. 36. The settlement agreement and payment plan offered

by K&T, and accepted by Win-Wing, is a binding and contractually enforceable settlement agreement. 37. K&T has breached the settlement agreement and

payment plan, by failing to make payment of $342,717.15, which is past due under said settlement agreement and payment plan.
38.

The settlement agreement and payment plan also

provided that K&T pay to Win-Wing contractual interest from February 2006, as well as any exchange rate charge. 39. As a direct and proximate result of K&Trs breaches

of its contractual obligations under the settlement agreement and payment plan, Win-Wing has suffered damages in excess of $342-,717.15,plus interest, costs and attorney fees.
COUNT FIVE

-

BREACH OF GUARANTY

(Against Oakhills)

40.

Win-Wing incorporates by reference as though fully

rewritten herein the allegations contained within Paragraphs 1 through 39 above. 41. On or about February 2007, Mr. Watanabe executed a

guaranty on behalf of Oakhills, under which Oakhill guarantied K&Tfs payment of $352,717.15, plus contractual interest from February 2006 and any exchange rate charge, pursuant to a settlement agreement and payment plan agreed to by K&T. An

authentic duplicate of this guaranty is attached hereto as Exhibit 1.

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COMPLAINT

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42.

K&T and/or Oakhills, through Mr. Watanabe made one

payment of $10,000.00 toward the settlement agreement, payment plan and guaranty, leaving a remaining outstanding unpaid balance of $342,717.15 plus interest. 43. Oakhills contractually agreed to guaranty payment

of $342,717.15 plus interest to Win-Wing, pursuant to the terms of the guaranty set forth in Exhibit 1. 44. The guaranty offered by Oakhills, and accepted by

Win-Wing, is a binding and contractually enforceable agreement. 45. Oakhills has breached the guaranty, by failing to

make payment of $342,717.15 plus interest, which is now past due under said guaranty. 46. As a direct and proximate result of Oakhills'

breaches of its contractual obligations under the guaranty, WinWing has suffered damages in excess of $342,717.15, plus interest, costs and attorney fees.
COUNT SIX

-

FRAUDULENT AND INTENTION MISREPRESENTATION
(against Mr. Watanabe)

47.

Win-Wing incorporates by reference as though fully

rewritten herein the allegations contained within Paragraphs 1 through 46 above. 48. On or about February 2007, Mr. Watanabe executed a

settlement agreement on behalf of K&T and a guaranty on behalf of Oakhills, under which K&T agreed to pay $352,717.15 plus interest to Win-Wing pursuant to a payment plan, and under which Oakhills guarantied said payment plan. 49. At the time Mr. Watanabe signed the settlement

agreement, payment plan and guaranty, he knew that neither K&T
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COMPLAINT

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nor Oakhills would satisfy the agreement. 50. Mr. Watanabe signed the settlement agreement,

payment plan and guaranty to stall legal action against K&T, as a means of delay, and with the purpose and intent of defrauding Win-Wing . 51. K&T and/or Oakhills, through Mr. Watanabe made one

payment of $10,000.00 toward the settlement agreement, payment plan and guaranty, leaving a remaining outstanding unpaid balance of $342,717.15 plus interest 52. In executing the settlement agreement, payment

plan and guaranty, Mr. Watanabe represented to the Win-Wing that it would be paid $352,717.15 plus interest. This was an

important fact which Mr. Watanabe represented to be true; however, said representation was false, and Mr. Watanabe knew that- the representation was false when he made it, or he made the representation recklessly and without regard for its veracit. 53. Mr. Watanabe intended that Win-Wing rely on the

representation, and Win-Wing reasonably relied on the representation. As a result, Win-Wing was harmed, and its reliance on the Mr. Watanabe's representation was a substantial factor in causing that harm to Win-Wing. 54. As a direct and proximate result of Mr. Watanabe's

intentional misrepresentations, Win-Wing has suffered damages in excess of $342,717.15, plus interest, costs and attorney fees.
55.

In making such fraudulent and intentional

misrepresentations, Mr. Watanabe has acted with malice, conscious indifference to the rights of Win-Wing, or reckless disregard of such rights, and Mr. Watanabe's misrepresentations were so
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willful and wanton as to support a claim for punitive damages. 56. Mr. Watanabe's fraudulent and intentional

misrepresentations support an award of punitive damages, as his conduct was sufficiently aggravated to satisfy the standard for an award of punitive damages. 57. Mr. Watanabe's fraudulent and intentional

misrepresentations support an award of at least two times the estimated actual damages, and therefore Win-Wing is entitled to punitive damages likely in excess of $685,434.30, plus interest, costs, and attorney fees to the extent permitted by law. WHEREFORE, Plaintiff Shanghai Win-Wing Imp.
&

Exp. Co.,

Ltd. requests this Court enter Judgment in its favor and against Defendant K&T Associates, Inc. in the amount of $384,995.20, plus interest, costs and attorney fees as to Counts One, Two, and Thre.e of this Complaint; and such further relief as is just and equitable. FURTHER, Plaintiff Shanghai Win-Wing Imp. Ltd., prays as follows: 1. For Judgment in its favor and against Defendants K&T Associates, Inc., Oakhills Hardwood Floors, Inc. and Tetsuya Watanabe in the amount of $342,717.15, plus interest, costs and attorney fees as to Counts Four, Five and Six of this Complaint; and 2. For such further relief as is just and equitable.
&

&

Exp. Co.,

FURTHER, Plaintiff Shanghai Win-Wing Imp. Ltd., prays as follows: 1.

Exp. Co.,

For Judgment in its favor and against Defendant

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Tetsuya Watanabe

in the amount of $685,434.30 in

punitive damages, plus interest, costs and attorney fees as to Count Six of this Complaint; and For such further relief as is just and equitable.

April

COREY

&

COREY

Shanghai Win-Wing Imp. Co., Ltd.

&

Exp.

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P.O. Box 5906, Concord, CA 94524

A u W Drccrntrsr M , 4 4 pa month 21.3

-

Ptnishcd pay W k Wm-Whg Total AmmmtSfn,717.lylhk mrmy B WI~Wing's case d n d y *duct w commllrrl~o) wd 2007 pat. by
Bcspusc d dclpyed poymcn5 aU &a t n w and exrhragc mie chlupp. oc~unrd duri~glboPesrhatlosnIpmad oftime will & r y t o o w K & T ~

-

IF KBhT J~EWWW b d a i~ not So gwd, Ckkltms Naniwbod Floorsmun hc,'s u m instrad of IC&T &mcimo r a m sbovbmentbedtht moneyto. Wln-Wbg.