Xiangkai Xu v. China Sunergy (US) Clean Tech Inc. et al

Filing 54

Order by Judge Howard R. Lloyd denying 45 , 46 , 47 , 48 , 49 , 50 , and 51 , applications to examine third persons without prejudice. (hrllc3S, COURT STAFF) (Filed on 6/2/2017)

E-filed 6/2/2017

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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XIANGKAI XU,
Plaintiff,

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v.

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CHINA SUNERGY (US) CLEAN TECH
INC., et al.,

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United States District Court
Northern District of California

Case No.15-cv-04823-HRL
ORDER DENYING APPLICATIONS
FOR EXAMINATIONS OF THIRD
PERSONS WITHOUT PREJUDICE

Defendants.

Re: Dkt. Nos. 45-51

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Plaintiff Xiangkai Xu (“Xu”) applies for orders permitting the post-judgment examinations

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of respondent and judgment debtor China Sunergy (US) Clean Tech, Inc. and seven third persons:

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Sunergy America, LLC; Sunergy California, LLC (DE); Sunergy California, LLC (CA); Golden

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State Sunergy, LLC; McClellan Business Park, LLC; Xiaoli Zhou; and Lu Chen. Dkt. Nos. 44-51.

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In a separate order, the court granted Xu’s application to examine judgment debtor China Sunergy

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(US) Clean Tech, Inc. Dkt. No. 53. For the reasons explained below, the court denies the

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applications to examine all seven third persons without prejudice.

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Before the court approves an application for an examination of a third person, the

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judgment creditor must submit “proof . . . by affidavit or otherwise to the satisfaction of the proper

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court that a third person has possession or control of property in which the judgment debtor has an

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interest or is indebted to the judgment debtor in an amount exceeding [$250] . . . .” Cal. Civ. Proc.

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Code § 708.120(a). “The affidavit . . . may be based on the affiant’s information and belief.” Id.

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Section 708.120(a) limits examinations to situations in which the third person “has possession or

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control” of the debtor’s property. See Fox Johns Lazar Perkin & Wexler APC v. Superior Court,

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219 Cal. App. 4th 1210, 1220-21 (2013).

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Xu submitted an affidavit stating, on information and belief, that the judgment debtors

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“hold or control a majority or all of the equity ownership” of third persons Sunergy America,

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LLC, Sunergy California, LLC (DE), Sunergy California, LLC (CA), and Golden State Sunergy

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(“the four affiliates”). Dkt. No. 52, Packquing Decl., ¶ 9. Xu further asserts that all four of these

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entities were created “with the intention [of evading] the pending enforcement of the [Arbitration]

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Award,” since they were created after the date of that award. Id., ¶ 15.

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Xu asserts that the four affiliates are owned or controlled by the judgment debtors. Even if

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this is the case, however, this does not mean that the four affiliates possess or control the debtors’

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property. Cf. United States v. Bennett, 621 F.3d 1131, 1136-37 (9th Cir. 2010) (“Today, it almost

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goes without saying that a parent corporation does not own the assets of its wholly-owned
subsidiary by virtue of that relationship alone.”). Xu would have the court conclude that more

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United States District Court
Northern District of California

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than mere ownership is present here: he asserts that the affiliates were created to evade the

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arbitration award. But Xu has not offered sufficient proof that the affiliates possess or control the

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debtors’ property, and, in any event, the court is not persuaded that such a conclusion (similar to

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piercing the corporate veil) would be appropriate in this context. The court therefore denies Xu’s

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application to examine the four affiliate third persons, without prejudice to Xu renewing his

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applications with additional proof and supportive authority.

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Xu’s affidavit states that third person McClellan Business Park, LLC, has leased a

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building to debtors’ affiliate Sunergy America, LLC. Dkt. No. 52, Pacquing Decl., ¶ 11. This is

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not sufficient to prove that McClellan has possession or control of the debtors’ property. The

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court denies Xu’s application to examine McClellan without prejudice.

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Finally, Xu’s affidavit asserts that third person Xiaoli Zhou is the Chairwoman of Sunergy

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America, LLC, and third person Lu Chen is the Finance Minister of judgment debtor China

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Sunergy Co., Ltd. Id., ¶¶ 17, 18. Xu asserts that both women are “likely to be familiar with the

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extent of Judgment Debtors’ assets in California.” Id.

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Xu has not offered proof that Zhou or Chen possess or control the property of the judgment

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debtors. Instead, he only claims that they have information relevant to finding the debtors’ assets.

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The court is not persuaded that an examination pursuant to California Code of Civil Procedure

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Section 708.120(a) is the appropriate vehicle for obtaining information from a third person who
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does not have possession or control over the property of a judgment debtor. See Fox Johns Lazar

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Pekin & Wexler APC v. Superior Court, 219 Cal. App. 4th 1210, 1220-21 (2013); see also Cal.

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Civ. Proc. Code §§ 708.130, 187. The court denies Xu’s applications to examine Zhou and Chen

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without prejudice.

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IT IS SO ORDERED.
Dated: 6/2/2017

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HOWARD R. LLOYD
United States Magistrate Judge

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United States District Court
Northern District of California

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