Case 2:09-cv-07145-JFW-JEM Document 20 Filed 11/25/09 Page 1 of 3 Page ID #:228

UNITED STATES DISTRICT COURT PRIORITY SEND

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES -- GENERAL

Case No. CV 09-7145-JFW (JEMx) Date: November 25, 2009

Title: Cong Wang, et al. -v- Zhejiang Kandi Vehicles Co., LTD, et al.

PRESENT:
HONORABLE JOHN F. WALTER, UNITED STATES DISTRICT JUDGE

Shannon Reilly None Present

Courtroom Deputy Court Reporter

ATTORNEYS PRESENT FOR PLAINTIFFS: ATTORNEYS PRESENT FOR DEFENDANTS:

None None

PROCEEDINGS (IN CHAMBERS): ORDER GRANTING IN PART AND DENYING IN PART

DEFENDANTS’ MOTION FOR AN ORDER QUASHING
SERVICE OF PROCESS [filed 10/26/09; Docket No. 13]

On October 26, 2009, Defendants Zheijiang Kandi Vehicle Co., Ltd., a/k/a Kandi
Technologies Corp.; Kandi Technologies Corp., f/k/a Stone Mountain Resources, Inc.; Zheijiang
Yong Kang Top Import and Export Co., Ltd., a/k/a Dingji; Zhehjiang Medgeli Electronic Co., Ltd.;
Xiao Ming Hu; and Wang Yuan Hu (collectively, “Defendants”) filed a Motion for an Order
Quashing Service of Process (“Motion”). On November 16, 2009, Plaintiffs Cong Wang and
Seaseng, Inc., a/k/a KMD Powersports (collectively, “Plaintiffs”) filed their Opposition. On
November 23, 2009, Defendants filed a Reply. Pursuant to Rule 78 of the Federal Rules of Civil
Procedure and Local Rule 7-15, the Court finds that this matter is appropriate for decision without
oral argument. The hearing calendared for November 30, 2009, is hereby vacated and the matter
taken off calendar. After considering the moving, opposing, and reply papers and the arguments
therein, the Court rules as follows:

I. Procedural and Factual Background

On October 1, 2009, Plaintiffs filed this action against Defendants, alleging a variety of
claims for relief, including RICO and Lanham Act claims. On October 5, 2009, Plaintiffs attempted
to serve the summons and Complaint on Defendants by having a messenger, John Salazar,
personally deliver copies of the summons and Complaint to Cindy Zhang of Kandi USA, Inc., at
10955 Arrow Route, Suite 101, Rancho Cucamonga, California 91730. At the time, Kandi USA,
Inc., was not a party to this action, and was not an agent for service of process for any party to this
action. Similarly, Zhang is not a party to this action, and is not an agent for service of process for
any party to this action. Plaintiffs claim that this delivery of copies of the summons and Complaint
to Zhang was followed by the mailing of a copy of the summons and Complaint to Xiao Ming Hu at

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the offices located at 10955 Arrow Route, Suite 101, Rancho Cucamonga, California. Plaintiffs
also claim that another copy of the summons and Complaint was mailed to Wang Yuan Hu at the
same address. Defendants, however, state that no copies of the summons and Complaint were
ever received by mail. Plaintiffs also claim that the personal delivery of the copies of the summons
and Complaint along with the subsequent alleged mailing of those copies constitutes proper
substitute service on Defendants.

On November 16, 2009, Plaintiffs filed a First Amended Complaint, which added Kandi
USA, Inc., a California corporation, as a defendant in this action. On November 24, 2009, Plaintiffs
filed a Proof of Service of Summons, Complaint, Summons on First Amended Compliant, and First
Amended Complaint as to Defendant Kandi Technologies Corp., f/k/a Stone Mountain Resources,
Inc., a Delaware corporation, indicating service by certified mail on Corporate Services Company,
the registered agent for service of process.1

III. Discussion

Federal Rule of Civil Procedure 12(b)(5) allows a defendant to file a motion to dismiss for
“insufficiency of service of process.” When service of process is challenged, “the party on whose
behalf it is made must bear the burden of establishing its validity." Aetna Business Credit, Inc. v.
Universal Decor & Interior Design, Inc., 635 F.2d 434, 435 (5th Cir.1981) (citing Familia de Boom
v. Arosa Mercantil, S. A., 629 F.2d 1134, 1139 (5th Cir.1980)).

In this case, Plaintiffs have failed to demonstrate that their attempted service complied with
the rules governing service of process.2 See, Fed. R. Civ. Proc. 4(e), (f), and (h); California Code
of Civil Procedure §§ 415.20, 416.10, and 416.90. Plaintiffs attempted to serve Defendants by
personally delivering copies of the summons and Complaint to the Rancho Cucamonga location of
Kandi USA, Inc. – at the time, a non-party to this action and not a registered agent for service of
process of any of Defendants – and then subsequently mailing copies to that same address.
However, Plaintiffs make no attempt in their Opposition to explain how this attempted service
complies with the rules governing service of process. For example, with respect to Zheijiang Kandi
Vehicle Co., Ltd., a/k/a Kandi Technologies Corp.; Zheijiang Yong Kang Top Import and Export
Co., Ltd., a/k/a Dingji; and Zhehjiang Medgeli Electronic Co., Ltd., Plaintiffs argue that service was

1
Because Plaintiffs appear to have now properly served Defendant Kandi Technologies
Corp., f/k/a Stone Mountain Resources, Inc., Defendants’ Motion is DENIED as moot as to this
Defendant. If Defendant Kandi Technologies Corp., f/k/a Stone Mountain Resources, Inc., has
reason to believe that this subsequent attempt at service is insufficient, it may address those
issues in a separate motion.
2
Plaintiffs allege in their Complaint and First Amended Complaint that Zheijiang Kandi
Vehicle Co., Ltd., a/k/a Kandi Technologies Corp.; Zheijiang Yong Kang Top Import and Export
Co., Ltd., a/k/a Dingji; and Zhehjiang Medgeli Electronic Co., Ltd. are foreign corporations “existing
under and by virtue of the laws of the People’s Republic of China.” See, e.g., Complaint, ¶¶ 13-15,
and First Amended Complaint, ¶¶ 13-15. In addition, Plaintiffs allege that Defendant Xiao Ming Hu
“is a Chinese citizen and resident.” Complaint, ¶ 16, and First Amended Complaint, ¶ 16. There
are no allegations in the Complaint or First Amended Complaint as to the citizenship or residency
of Defendant Wang Yuan Hu.

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proper because Zhang did not say that these corporations “were companies that did not operate
out of that location or anything else that implied that the location was an improper place to serve
these companies.” Opposition, 5:18-20. However, it is Plaintiffs’ burden, and not Zhang’s, to
serve Defendants at an appropriate location and otherwise comply with the rules governing service
of process.

In addition, even assuming arguendo that Plaintiffs complied with the requirements for
substitute service, Plaintiffs have failed to demonstrate that prior to resorting to substitute service,
they exercised “reasonable diligence” in attempting to personally serve Defendant Xiao Ming Hu
and Defendant Wang Yuan Hu. See, California Code of Civil Procedure § 415.20(b). "Ordinarily,
... two or three attempts at personal service at a proper place should fully satisfy the requirement of
reasonable diligence and allow substituted service to be made." Bein v. Brechtel-Jochim Group,
Inc., 6 Cal.App.4th 1387, 1391-1392 (1992) (citation omitted). However, Plaintiffs present no
evidence of any effort, beyond Salazar’s visits to the Rancho Cucamonga location of Kandi USA,
Inc. – at the time, a non-party to this action and not a registered agent for service of process of any
of Defendants – to locate or personally serve Defendant Xiao Ming Hu and Defendant Wang Yuan
Hu. In addition, while Salazar states in his declaration that he went to the Rancho Cucamonga
location of Kandi USA, Inc., and spoke to Zhang on four different occasions, Zhang states in her
declaration that she spoke to Salazar only twice, and that the other two dates on which Salazar
states he spoke to her – October 3 and 4, 2009 – were a Saturday and Sunday, when the office
was closed and she was not present. Moreover, Salazar and Zhang’s declarations differ wildly on
what was discussed during these conversations. For example, Zhang states – in contradiction to
Salazar’s declaration – that she never told Salazar that she was in charge or that she would or
could accept service on behalf of either Defendant Xiao Ming Hu or Defendant Wang Yuan Hu.

As a result, there is no credible evidence before the Court that Defendants were properly
served.

III. Conclusion

For all the foregoing reasons, the Court GRANTS in part Plaintiffs’ Motion, and QUASHES
the service of process as to Defendants Zheijiang Kandi Vehicle Co., Ltd., a/k/a Kandi
Technologies Corp.; Zheijiang Yong Kang Top Import and Export Co., Ltd., a/k/a Dingji; Zhehjiang
Medgeli Electroni Co., Ltd.; Xiao Ming Hu; and Wang Yuan Hu . The Court DENIES as moot
Plaintiffs’ Motion as to Defendant Kandi Technologies Corp., f/k/a Stone Mountain Resources, Inc.
IT IS SO ORDERED.

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