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Wang v. Liu

United States District Court, D. Massachusetts

November 21, 2019

YIMING WANG, Plaintiff,



         I. Introduction

         Plaintiff Yiming Wang (“Yiming”) has filed this lawsuit against Defendants Xinyi Liu (“Liu”), Yuanlong Huang (“Huang”), Zhaonan Wang (“Wang”), Bling Entertainment, LLC (“Bling”), Shengxi Tina Tian (“Tian”) and MT Law, LLC (“MT Law”) (collectively, “Defendants”). Against some or all of the Defendants, he alleges breach of fiduciary duty (Count I), civil conspiracy (Count II), fraud (Count III), breach of contract (Count IV), breach of the covenant of good faith and fair dealing (Count V), violation of the Securities Act of 1933, 15 U.S.C. §§ 77a et seq. (Count VI), violation of the Massachusetts Uniform Securities Act (“MUSA”), Mass. Gen. L. c. 110A, §101 (Count VII), demand for accounting (Count VIII), professional malpractice (Count IX), breach of contract (Count X) and unjust enrichment (Count XI). D. 16.

         On March 29, 2017, Bling filed a petition for Chapter 7 bankruptcy, which remains pending. D. 22; D. 26 at 2 n.1; see In re Bling Entertainment, LLC, No. 17-11058 (Bankr. D. Mass.). In accordance with 11 U.S.C. § 362(a), claims against Bling in this suit were automatically stayed pending Bling's Chapter 7 bankruptcy proceedings. See D. 22. Yiming voluntarily dismissed Tian and MT Law from the lawsuit on May 30, 2019. D. 76. Defendants Liu, Huang and Wang (collectively, the “Bling Defendants”) moved to dismiss all counts against them on April 14, 2017. D. 25. The Court granted the motion to dismiss as to Counts VI and VII and denied the motion as to the other claims.[1] D. 41. The Bling Defendants have now moved for summary judgment on the remaining claims against them-breach of fiduciary duty (Count I), civil conspiracy (Count II) and fraud (Count III). For the reasons stated below, the Court ALLOWS the Bling Defendants' motion for summary judgment, D. 78, as to Claims I and II and as to Claim III in its entirety against Defendants Liu and Huang and DENIES the motion as to Count III against Wang, but only to the extent that it relies upon statements about the $5 million in funding.

         II. Standard of Review

         The Court grants summary judgment where there is no genuine dispute as to any material fact and the undisputed facts demonstrate that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). “A fact is material if it carries with it the potential to affect the outcome of the suit under applicable law.” Santiago-Ramos v. Centennial P.R. Wireless Corp., 217 F.3d 46, 52 (1st Cir. 2000). The movant bears the burden of demonstrating the absence of a genuine issue of material fact. Carmona v. Toledo, 215 F.3d 124, 132 (1st Cir. 2000); see Celotex v. Catrett, 477 U.S. 317, 323 (1986). If the movant meets its burden, the non-moving party may not rest on the allegations or denials in its pleadings, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986), but must come forward with specific admissible facts showing that there is a genuine issue for trial. Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010). The Court “view[s] the record in the light most favorable to the nonmovant, drawing reasonable inferences in his favor.” Noonan v. Staples, 556 F.3d 20, 25 (1st Cir. 2009).

         III. Factual Background

         The following facts are drawn from the Bling Defendants' statement of material facts, D. 80, Plaintiff's response to this statement of material facts, D. 83, the Bling Defendants' further response to same, D. 89, and other supporting documents and are undisputed unless otherwise noted.

         A. The Parties

         Yiming, a Chinese citizen residing in Florida, came to the United States in 2008 to attend college. D. 80 ¶ 1; D. 83 ¶ 1. Defendants Huang and Liu are married and Defendant Wang is Huang's cousin. D. 80 ¶¶ 12-13; D. 83 ¶¶ 12-13. Following graduation, Yiming was interested in obtaining legal permanent resident status in the United States for himself and his wife through the United States Customs and Immigration Services' (“USCIS”) EB-5 Program. D. 80 ¶¶ 2-3; D. 83 ¶¶ 2-3. The EB-5 Program offers foreign nationals the opportunity to obtain conditional green cards when, among other things, they invest at least $1 million in an eligible business in the United States. D. 80 ¶ 4; D. 83 ¶ 4.

         B. Yiming Considers Investing in Bling

         Yiming learned through a friend that a project to build a high-end karaoke bar in Massachusetts could provide him with an investment opportunity to obtain a green card through the EB-5 Program. D. 80 ¶¶ 3, 10; D. 83 ¶¶ 3, 10. Yiming first contacted Wang, a minority member in Bling, about the project in May 2014. D. 80 ¶¶ 8-9; D. 83 ¶¶ 8-9. Yiming flew to Massachusetts and met with Wang on May 21, 2014. D. 80 ¶¶ 11-12; D. 83 ¶¶ 11-12. Yiming and Wang met in a conference room in Huang's office. D. 80 ¶ 12; D. 83 ¶ 12. At the time of the meeting, Huang was neither a member nor manager of Bling, although Yiming alleges that Huang was acting as a de facto manager at the time. D. 80 ¶ 13, D. 83 ¶ 13. Huang did not participate in the meeting between Wang and Yiming. D. 80 ¶ 14; D. 83 ¶ 14. Yiming alleges that Wang had a business plan for Bling with him at the meeting, but that he did not allow Yiming to review it and told Yiming that he could see the business plan only after investing in Bling. D. 80 ¶¶ 16-17; D. 83 ¶¶ 16-17. Yiming claims that Wang showed him slides about Bling, but that he could not recall the exact terms of financial projections in those slides. D. 80 ¶¶ 18-23; D. 83 ¶¶ 18-23. Yiming alleges that Wang told him during the meeting that Bling had already received $5 million in investments, including $1 million each from two other EB-5 investors. D. 80 ¶ 25; D. 83 ¶ 25. Yiming also alleges that Wang told him Bling was a “no risk” investment and that the karaoke bar would open in December 2014. D. 80 ¶¶ 26-27; D. 83 ¶¶ 26-27. Wang informed Yiming that attorney Tian of MT Law was representing the other two EB-5 investors. D. 80 ¶ 28; D. 83 ¶ 28.

         After leaving his meeting with Wang, Yiming was undecided about whether to invest in Bling. D. 80 ¶ 31; D. 83 ¶ 31. Yiming wanted to speak with Tian to confirm that MT Law was representing the other EB-5 investors and to confirm that an investment in Bling was a “good” investment. D. 80 ¶ 32; D. 83 ¶ 32. Yiming called Tian, who confirmed her representation of the other EB-5 investors and that each of them had already invested $1 million. D. 80 ¶ 34; D. 85 ¶ 34. Although not disputing that $1 million was deposited into Bling by each of the other two EB-5 investors, Yiming argues that their contributions were not equity investments, but were loans. D. 80 ¶¶ 36-37; D. 83 ¶¶ 36-37. It is undisputed, however, that each of the other two EB- 5 investors deposited $1 million with Bling and that neither have sought a return of their investment. D. 80 ¶ 37; D. 83 ¶ 37; D. 88 at 13, n.9. After Tian confirmed that the investment was “good, ” Yiming decided to invest. D. 80 ¶¶ 39-40; D. 83 ¶¶ 39-40.

         C. Yiming Invests in Bling

         In June 2014, Yiming engaged the same attorney, Tian, as his immigration counsel. D. 80 ¶ 42; D. 83 ¶ 42. On or around June 30, 2014, Yiming executed a Subscription Agreement, an Escrow Agreement to invest in Bling. D. 80 ¶ 45; D. 83 ¶ 45. The Escrow Agreement included a provision that states, in relevant part:

Subject to Section 7.5 of the Operating Agreement, the Company [Bling] agrees to return the Escrow Property U.S. $1, 000, 000 . . . upon written notification that either of the Investors' I-526 Petition is denied by the USCIS . . . The return of the Subscription Price shall be governed by the terms and provisions of the Subscription Agreement and the Operating Agreement.

D. 80 ¶ 51; D. 83 ¶ 51. There are varying versions of the Operating Agreement and the parties dispute which version controls. D. 80 ¶¶ 45-46; D. 83 ¶¶ 45-46. The Bling Defendants argue that section 7.5 of the Operating Agreement signed by Yiming states:

If an EB-5 Investor receives a Denial Notice [from USCIS], such an EB-5 Investor shall promptly send a copy of such Denial Notice to the Company [Bling]. Upon receipt of the Denial Notice, the Company shall have the option to purchase the entire Interest of such EB-5 Investor . . . the Company shall exercise such right by sending notice . . . to such EB-5 Investor that the Company intends to purchase such EB-5 Investor's Interest.

D. 80 ¶ 52 & Ex. C; D. 83 ¶ 52. Yiming argues that he did not sign the version of the Operating Agreement that includes the language cited above and that a prior version of the Operating Agreement, stating that “[u]pon receipt of the Denial Notice, the Company shall purchase the entire Interest of such EB-5 Investor . . . at a purchase price equal to such EB-5 Investor's Unreturned Capital Contribution, less an administration fee up to $10, 000” controls. D. 83 ¶ 52. Yiming's father wired him the ...

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