Professional Documents
Culture Documents
2
CARLYLE (CARY) w. HALL III (CA Bar No.
POLSINELLI SHUGHART PC
Security Title Plaza
184842; AZ Bar No. 026958) ~ «:» lP r
3636 N. Central Ave., Suite 1200
3 Phoenix, AZ 85012
TEL: (602) 650-2000 / FAX: (602) 264-7033
4 EMAIL: chall@polsinelli.com
FILED
28
Plaintiff Cong Wang, and Plaintiff Seaseng Inc. a/k/a KMD Powersports, by and
2 through counsel undersigned, bring this civil action for damages and equitable and
3 injunctive relief against Defendants, and demanding a trial by jury, complain and allege
4 as follows:
5
6 SUMMARY OF ACTION
7 1. This action arises out of Defendants' fraudulent and unlawful attempts to
8 take over Plaintiffs' business. Defendants fraudulently induced Plaintiffs to enter into
9 distributorship and stock exchange by promises that Defendants had no intention of
10 fulfilling. Defendants then proceeded to steal Plaintiff Seaseng Inc. 's corporate
11 documents, including trade secrets and other confidential information, and falsely
12 declared themselves to be the owners of Seaseng. Defendants have employed a variety of
13 unlawful means, including threats of violence on Plaintiff Wang and his family, and
14 frivolous lawsuits, in an attempt to force Plaintiffs to relinquish control of Seaseng to the
15 Defendants. Plaintiffs bring this action under the Racketeer Influenced and Corrupt
16 Organizations (RICO) Act, and also seek relief for Defendants' violations of the Lanham
17 Act, as well as state law breach of contract and tort claims.
18 JURISDICTION AND VENUE
19 2. This civil action arises under the laws of the United States.
20 3. This complaint seeks civil remedies and is filed pursuant to 18 U.S.C. §
21 1964(c).
22 4. Plaintiffs allege a violation of their rights under Title IX of the Organized
27 case or controversy.
28
2
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 3 of 48 Page ID #:164
7. The Court may also have jurisdiction over the state law claims under 28
2 U.S.C. § 1332 because the amount in controversy exceeds the sum or value of $75,000,
3 and, unlike Plaintiffs, neither Defendant is a resident of the state of California.
12 since 2006.
13 11. Plaintiff Seaseng Inc. ("Seaseng"), also known as KMD Powersports, is a
14 privately held corporation existing under and by virtue of the laws of the State of
15 California, established in May 2006, and registered to do business in California as a
16 motorsport importer.
17 12. On information and belief, Defendant Kandi Technologies Corporation
18 ("Kandi") is a publicly traded corporation existing under and by virtue of the laws of the
19 State of Delaware, incorporated on March 31, 2004, formerly known as Stone Mountain
20 Resources, Inc. On information and belief, Stone Mountain Resources, Inc. changed its
21 name to Kandi Technologies, Corp. ("Kandi"), on August 13,2007.
22 13. On information and belief, Defendant Zhejiang Kandi Vehicles Co., Ltd.
23 ("Kandi China") is a foreign corporation existing under and by virtue of the laws of the
24 People's Republic of China. Defendant Kandi China is a manufacturer of off-road
25 vehicles, which include all terrain vehicles ("ATVs"), utility vehicles ("UTVs") and go
26 carts (collectively, "Kandi product"). On information and belief, Defendant Kandi
27 acquired Defendant Kandi China as its wholly owned subsidiary on or about June 2007.
28
3
On infonnation and belief, Defendant Kandi conducts substantially all of its operation in
2 China through its wholly owned subsidiary Defendant Kandi China.
3 14. Defendant Zhejiang Top ImportlExport Co., Ltd. ("Zhejiang") is a foreign
4 corporation existing under and by virtue of the laws of the People's Republic of China.
5 On information and belief, Zhejiang was a wholly owned subsidiary of Kandi and/or
6 Kandi China. On information and belief, Defendants Kandi and/or Kandi China sold
7 Zhejiang to a third party sometime in May 2008.
8 15. Defendant Zhejiang Mengdeli Electric Co., Ltd. ("Mengdeli") is a foreign
9 corporation existing under and by virtue of the laws of the People's Republic of China.
10 16. On infonnation and belief, Defendant Xiao Ming Hu ("Xiao Ming") is a
11 Chinese citizen and resident who owns 100% of the shares of Kandi China. On
12 information and belief, Defendant Xiao Ming is the CEO, President and Chairman of the
13 Board of Directors of Kandi since March 2002. Defendant Xiao Ming is also the
14 chairman and CEO of Kandi China.
15 17. On infonnation and belief, Defendant Wang Yuan Hu ("Wang Yuan") is
16 Xiao Ming Hu's son, and a Vice President and Director of Kandi China
17 18. Defendant Kandi USA, Inc. ("Kandi USA") is a corporation existing under
18 and by virtue of the laws of California.
19 19. Plaintiffs are informed and believe and based thereon allege that, at all
20 material times, each of the Defendants was acting in a corporate, parent, subsidiary,
21 affiliate, supervisor, agency, associate, employee, employer, proprietor, conspiratorial,
22 and/or other capacity as the parent, subsidiary, agent, supervisor, affiliate, employer,
23 employee, proprietor, co-conspirator, aider and abetter and/or alter ego of the other
24 Defendants and with the permission, consent, knowledge, authorization, ratification and
25 direction of the other Defendants.
26
27
28
4
GENERAL ALLEGATIONS
2 A. The Parties' Agreement Regarding Distributorship.
3 20. Upon information and belief, starting in 2006, Def<:mdants Kandi, Kandi
4 China, Kandi USA, Zhejiang andlor Mengdeli began expanding their presence in the
5 United States, California, by reaching out to various businesses who would be interested
6 in selling Kandi products.
7 21. Plaintiff Seaseng agreed to act as a distributor of Kandi products, in turn,
8 Defendants Kandi, Kandi China, Kandi USA, Zhejiang andlor Mengdeli agreed to give
9 Plaintiff Seaseng exclusive representation rights for Defendants' products in California.
10 Defendants provided an authorization letter to Seaseng confirming that Seaseng had the
11 right to distribute Kandi products.
12 22. Defendants further promised to develop ten (10) new product lines annually
13 for Seaseng' s exclusive distribution.
14 23. Defendants represented that they would cooperate with product quality
15 control measures as well as product adjustments and development. Defendants agreed to
16 provide two-year service warranties and free parts to Seaseng for customer service issues.
17 24. Sometime in early 2007, Defendant Xiao Ming and Plaintiff Wang agreed
18 to swap shares in their respective companies so that Defendants Kandi China and
19 Zhejiang would take ownership interest in Plaintiff Seaseng. Plaintiff Wang would then
20 take 30% ownership interest in Defendants Kandi China and Zhejiang.
21 25. On February 7, 2007, Defendant Zhejiang issued a one-paragraph
22 document titled "Certificate" stating that Plaintiff Wang owns a 30% interest in Zhejiang.
23 26. As part of the agreement, Defendants Kandi and Top agreed to contribute
24 $300,000.00 in working capital to Plaintiff Seaseng on or before June 1, 2007 for
25 purposes of advertising and promotion of Kandi products.
26 27. Defendants Kandi and Top did not remit the $300,000.00 in working
27 capital as promised and thus Plaintiff Seaseng did not issue any share certificates. In the
28
5
end, Defendant Xiao Ming and Plaintiff Wang, did not issue or exchange any actual
2 certificates of shares to document their exchange and agreement.
3 28. Plaintiff Wang assisted Defendant Wang Yuan m obtaining a
14 the goods.
15 33. Plaintiff Seaseng received approximately 7 million dollars worth of Kandi
16 products since June 2007, and was actively marketing Kandi products to various
17 dealerships.
18 B. Defendants' Attempts To Get Rid Of Plaintiff Wang By Taking
19 Control Over His Company, Plaintiff Seaseng.
20 34. Upon information and belief, in December 2007, Defendant Xiao Ming
21 through Defendants Kandi, Kandi China, Kandi USA, andlor Zhejiang began negotiating
22 a stock-exchange agreement to acquire yet another company, SunL Group, Inc. ("SunL"),
23 a distributor of ATVs, UTVs, and go-karts, by exchanging these companies' shares with
24 SunL.
25 35. Defendant Xiao Ming wanted Plaintiff Wang to sell a controlling 51%
26 share to SunL. Defendant Xiao Ming also wanted Plaintiffs Wang and Seaseng to agree
27 to allow SunL to distribute product that was specifically designed and made for Seaseng
28 to distribute.
6
23 certificates.
24 42. During Plaintiff Wang's lengthy meeting with the representatives of SunL
25 and Defendants Kandi, Kandi China, Kandi USA, and/or Zhejiang, Defendant Wang
26 Yuan stole Plaintiff Wang's notebook and Plaintiff Seaseng's corporate documents
27 (including business license, blank shares, customer list, and business minutes) - an event
28 that was captured on a surveillance video tape.
7
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 8 of 48 Page ID #:169
43. Plaintiff Wang discovered that Seaseng's documents were missing in early
2 February 2008 and filed a police report on February 6, 2008.
3 D. Defendants' Threats And Defendant Zhejiang's First Lawsuit.
4 44. In addition to Defendants' theft of Plaintiff Seaseng's corporate
5 documents, in February, 2008, Plaintiff Wang learned that his relatives in China were
6 harassed and threatened by representation of the Defendants.
7 45. Upon information and belief, Defendants Xiao Ming and Wang Yuan
8 caused a warrant to be issued for Plaintiff Wang's arrest in China under the theory that
9 Plaintiff Wang was an employee of Defendants Kandi, Kandi China, Kandi USA, and/or
10 Zhejiang and that Plaintiff Wang misappropriated company documents from the
11 Defendants.
12 46. On or about February 13, 2008, Defendant Zhejiang filed a lawsuit, case
13 number KC052313 ("First Lawsuit"), in the Superior Court of California, County of Los
14 Angeles, against Plaintiff Wang and Plaintiff Seaseng, stating claims for fraud,
15 conversion, breach of fiduciary duty, appointment of receiver, accounting, constructive
16 trust, equitable lien, injunctive and declaratory relief and seeking to take control over
17 Plaintiff Seaseng.
18 47. The First Lawsuit, however, was never served on Plaintiffs.
19 48. Plaintiff Wang did not learn about the First Lawsuit until after it was
20 dismissed with prejudice by the state court for lack of service and lack of appearance by
21 the very party who brought it, i. e., Defendant Zhej iang.
22 E. The Parties' Purported Settlement.
23 49. At approximately midnight on February 27, 2008, Defendant Xiao Ming
24 called Plaintiff Wang's father and threatened Plaintiff Wang's welfare. At approximately
25 4:00 a.m. on February 28, 2008, Defendant Xiao Ming demanded that Plaintiff Wang
26 meet him to sign a promissory note and settlement agreement drafted by Xiao Ming
27 and/or his attorneys.
28
8
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 9 of 48 Page ID #:170
50. On February 28, 2008, Plaintiff Wang met with Defendant Xiao Ming who
2 purported to represent the interests of Defendants Kandi, Kandi China, Kandi USA,
3 Zhejiang and Mengdeli. Plaintiff Wang sought to address any miscommunications,
4 restore control over his company Plaintiff Seaseng, and to settle any disputes with
5 Defendants.
6 51. The parties entered into a Settlement Agreement, consisting of
7 Memorandum (Exhibit A), Payment Plan (Exhibit B), Declaration of Defendants Kandi
8 China and Zhejiang (Exhibit C), and Declaration of Plaintiff Wang (Exhibit D).
9 52. In the Memorandum, Plaintiff Seaseng acknowledged the receipt of Kandi
10 products and promised to return some of the products. With respect to the remaining
11 Kandi inventory (labeled with Plaintiff Seaseng's trademark), the parties agreed that
12 Plaintiff Seaseng would pay for these goods according to the terms of the Payment Plan.
13 53. As part of the settlement, Defendants Kandi China and Zhejiang
14 acknowledged that they own no shares of Plaintiff Seaseng, and Plaintiff Wang
15 acknowledged that he likewise owns no shares in Defendants Kandi China or Zhej iang.
16 54. Following the Settlement Agreement, Plaintiff Seaseng made the following
17 payments to Defendants, timely and consistently with the Payment Plan:
24 Settlement Plan.
25 F. Defendants' Breach of Settlement Agreement, Second Lawsuit and
Plaintiff Wang and Plaintiff Seaseng, case number CIVRS 806472 ("The Second
2 Lawsuit") in the Superior Court of California, County of San Bernardino, making
3 essentially the same allegations as in its First Lawsuit, including stating that Plaintiff
4 Wang was a salaried employee of Defendants Kandi, Kandi China and/or Zhejiang, and
5 that he had a fiduciary duty to make Seaseng the wholly-owned subsidiary of Defendant
6 Zhejiang, and claiming that the Settlement Agreement should be declared void and
7 rescinded.
8 57. Plaintiffs Seaseng and Wang had to hire an attorney to defend the Second
9 Lawsuit and incurred substantial attorneys' fees and costs.
10 58. On or about November 24, 2008, Defendant Zhejiang withdrew its Second
11 Lawsuit, dismissing it without prejudice.
12 59. Because Defendant Zhejiang denied the validity of the Settlement
13 Agreement when it filed the Second Lawsuit in July 2008, Plaintiff Seaseng suspended
14 his August payment to Defendants Kandi China and Zhejiang under the Payment Plan.
15 60. On or about October 30, 2008, Plaintiffs Seaseng and Wang received a
16 letter from the California DMV stating that their distributor license was canceled; and
17 that these Plaintiffs were not unauthorized to sell Kandi vehicles as of September 2008.
18 61. Around the same time, Plaintiffs Seaseng and Wang began receiving
19 numerous complaints from the ultimate purchasers of Kandi products regarding their
20 poor quality and performance, missing parts and defects who were seeking Plaintiff
21 Seaseng's assistance with obtaining new parts or receiving refunds.
22 62. Throughout 2008-2009, Plaintiffs Seaseng and Wang continued to
23 forward/relate these requests for assistance to Defendants Kandi, Kandi China, Kandi
24 USA, and/or Zhejiang made in accordance with Defendants' warranties - all to no avail.
25 Defendants refused to send replacement parts to Plaintiff Seaseng and Wang, interfering
26 with Plaintiffs' ability to conduct business.
27 63. Without a valid dealership license as of September 2008 and unable to
28 service the Kandi products, Plaintiff Seaseng's reputation began to suffer.
10
64. Plaintiff Seaseng faced increasing storage costs and a slew of customer
2 complaints, which the company was without authority or power to address.
3 65. Defendants remained unresponsive to PlaintiffSeaseng's concerns.
4 66. Plaintiff Seaseng had no choice but to liquidate the Kandi products to
5 distributors in Mexico at heavy losses.
6 G. Defendants' Final Threats and Harassment of Plaintiff Wang.
7 67. On or about December 23,2008, Hong Feng Zhu ("Zhu"), a bodyguard and
8 driver for Defendant Xiao Ming, appeared at Plaintiff Seaseng's place of business to
9 threaten Plaintiff Wang.
10 68. Mr. Zhu first met with Neng Da Hu, Plaintiff Wang's friend, and told him
11 that he was "warning" Plaintiff Wang, and that Defendant Xiao Ming had already made a
12 deposit with someone to "take care of Mr. Wang."
13 69. Plaintiff Wang was out of the office when this happened but when he came
14 back to the office, Mr. Zhu was still at this office and relayed the same message
15 personally to Plaintiff Wang.
16 70. On or about December 24, 2008, Plaintiff Wang filed a police report
"
j CIVIL RICO
8 73. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao
9 Ming and Wang Yuan have been engaging in the following activities affecting interstate
10 and foreign commerce, to wit: the manufacture, marketing, sale and service of Chinese
11 made ATYs, UTYs, and go-karts within the United States.
12 74. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao
13 Ming and Wang Yuan combined their efforts as one partnership, association or enterprise
14 ("RICO enterprise") for purposes of:
15 a) Increasing their share in the market for ATYs, UIYs, and go-karts in
16 the United States through expansion of their operations in the United States; and
17 b) Acquiring, by means of fraud, securities fraud, extortion and
18 harassment, the United States companies who would store, market, distribute, service and
19 be otherwise responsible for Kandi products.
20 75. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao
21 Ming and Wang Yuan engaged in racketeering activity when they:
28
12
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 13 of 48 Page ID #:174
76. The following are some of the predicate criminal acts which constitute a
4 or Mengdeli, Defendants Xiao Ming and/or Wang Yuan stole corporate documents and/or
7 or Mengdeli, Defendants Xiao Ming and/or Wang Yuan made and/or directed death
8 threats and threats of bodily harm to Plaintiff Wang and/or his relatives, which are
11 USA, Zhejiang, Mengdeli, Xiao Ming and Wang Yuan have sufficient continuity so as to
14 one another, constitute a pattern of racketeering activity within the meaning of 18 U.S.C.
15 § 1961(5).
16 79. Plaintiffs Seaseng and Wang were injured in their business and property by
17 reason of this violation of 18 U.S.C.A. § 1962, in that, as a direct and proximate result of
21 Zhejiang, Mengdeli, Xiao Ming and Wang Yuan, Plaintiffs Seaseng and Wang's business
22 reputation and trade name were tarnished; Plaintiffs Seaseng and Wang lost their
28 Ming and Wang Yuan are liable pursuant to the provisions of the Racketeer Influenced
13
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 14 of 48 Page ID #:175
and Corrupt Organizations Act (RICO), alleging a violation of Title 18 U.S.C. § 1962(a),
2 (b), (c) or (d).
3 82. By reason of the Defendants' violation of 18 U.S.C. § 1962, Plaintiffs are
4 entitled, pursuant to 18 U.S.C. § 1964(c), to threefold the damages sustained, with
5 interest thereof at 10% per annum, and a reasonable attorney's fee in connection
6 herewith.
7 A. Violation of 18 V.S.C.A. § 1962(A).
8 83. It is unlawful for any person who has received any income derived, directly
21 commerce.
22 B. Violation of 18 V.S.C.A. § 1962(8).
23 86. It is unlawful for any person through a pattern of racketeering activity or
9 § 1962(c).
10 89. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao
11 Ming and Wang Yuan, as persons within the meaning of 18 U.S.C.A. § 1961(3) and as
12 persons associated with one enterprise, conducted and participated, directly and
13 indirectly, in the conduct of the affairs of the said enterprise through a pattern
14 racketeering activity in violation of 18 U.S.C.A. § 1962(c).
15 D. Violation of 18 V.S.C.A. § 1962(d).
16 90. It shall be unlawful for any person to conspire to violate any of the
25 herein.
26 93. Defendants Kandi, Kandi China, and/or Zhejiang entered into a
28
15
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 16 of 48 Page ID #:177
of the Defendants' goods, thereby making it impossible for Plaintiffs to perform their
11 106. Defendant Xiao Ming promised to transfer 30% of his ownership interest in
12 Defendants Kandi, Kandi China, and/or Zhejiang in exchange for Plaintiff Wang's
13 promise to transfer his ownership interest in Plaintiff Seaseng to Defendant Xiao Ming.
14 107. As part of the agreement, Defendants Kandi and Top agreed to contribute
15 $300,000.00 in working capital to Plaintiff Seaseng on or before June 1, 2007 for
23 Seaseng.
24 111. Defendants Kandi, Kandi China, Zhejiang, and Xiao Ming, however, failed
25 to deliver stock certificates to Plaintiff Wang or otherwise recognize his ownership
27
28
17
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 18 of 48 Page ID #:179
112. Because Defendants Kandi, Kandi China, Zhejiang and Xiao Ming
2 breached their agreement, and no stock was exchanged, Plaintiff Seaseng remains a
3 company solely owned by Plaintiff Wang.
4 113. Plaintiffs sustained damages as a result of Defendants' conduct.
5 FOURTH CAUSE OF ACTION
6 FRAUD
9 herein.
10 115. Defendants Kandi, Kandi China, Zhejiang and Xiao Ming agreed that
11 Plaintiffs Seaseng and Wang would distribute the Kandi products in California and would
12 receive the resulting profits from the sale of Kandi products in California.
13 116. In or about February 2007 Defendants Xiao Ming and Wang Yuan
14 represented to Plaintiff Wang that Plaintiff Wang would own 30% interest in Defendants
15 Kandi, Kandi China, or Zhejiang, in exchange for shares of Plaintiff Seaseng.
16 117. Defendants Kandi, Kandi China, Zhejiang and Xiao Ming subsequently
17 breached their promises and misrepresentations when, upon information and belief,
18 Defendant Xiao Ming and other officers of Defendants Kandi, Kandi China, Zhejiang
19 declared that Plaintiff Wang was merely an employee of Defendants Kandi, Kandi China,
20 Kandi USA, Zhejiang, who was entitled to no more than a salary, and who had no
21 ownership interest in Plaintiff Seaseng or any of the Defendants.
22 118. In reliance on Defendant Xiao Ming's promises, Plaintiff Wang expended
23 substantial time and efforts in assisting Defendants Kandi, Kandi China, Zhejiang and
24 Xiao Ming to establish their presence in California and in using his company Plaintiff
25 Seaseng to effectuate the sale of Kandi products.
26 119. Defendants Kandi, Kandi China, Zhejiang and Xiao Ming never intended to
27 perform them when they excluded Plaintiff Wang from distributorship and ownership
28
18
2 company.
3 120. Plaintiff Wang would not have agreed to work for or with Defendants
4 Kandi, Kandi China, Zhejiang and Xiao Ming and devote his time and efforts to market
5 and sell their products in California if he knew they only intended to breach their
6 promises.
7 121. Through false promises of a long-term distributorship and co-ownership
8 agreements between Defendants Kandi, Kandi China, Zhejiang and Plaintiff Seascng,
9 Defendant Xiao Ming fraudulently induced Plaintiff Wang to work for Defendants Kandi,
10 Kandi China, Zhejiang, and/or Mengdeli.
11 122. In reality, Defendant Xiao Ming planned to breach all of his promises when
12 convenient after he and his son Defendant Wang Yuan had an opportunity to steal all of
13 Plaintiff Seaseng's customers and information and after they no longer needed Plaintiff
14 Wang's services.
15 123. Defendants Kandi, Kandi China, Zhejiang and Xiao Mings's actions
23 herein.
24 126. At all times relevant hereto, Defendants Xiao Ming and Wang Yuan acted
25 as officers or directors of Defendants Kandi, Kandi China, Kandi USA, and/or Zhejiang.
26 127. Defendants Xiao Ming and Wang Yuan acted in breach of their fiduciary
27 duties and contrary to the interests of their companies and exceeded the scope of their
28 authority when they made promises to Plaintiffs Seaseng and Wang that they did not
19
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 20 of 48 Page ID #:181
intend to fulfill, when they made threats to Plaintiff Wang and his relatives, and when
2 they misappropriated Plaintiff Seaseng's trade secrets and sanctioned the filing of
3 frivolous lawsuits against Plaintiffs Seaseng and Wang.
4 128. Acting out of their self interest, Defendants Xiao Ming and Wang Yuan
5 thereby interfered with the existing contractual agreements between Plaintiff Seaseng and
6 Defendants Kandi, Kandi China, Kandi USA, Zhejiang, causing Defendants Kandi,
7 Kandi China, Kandi USA, Zhejiang to wrongfully terminate the distributorship
8 agreement with Plaintiff Seaseng.
9 129. By stealing Plaintiff Seaseng's corporate documents and, upon information
10 and belief, by soliciting Plaintiff Seaseng's customers, Defendants Xiao Ming and/or
1] Wang Yuan impeded the existing contractual relationships between Plaintiff Seaseng and
12 its customers.
13 SIXTH CAUSE OF ACTION
14 INTERFERENCE WITH PROSPECTIVE BUSINESS OPPORTUNITIES AND
15 CUSTOMER RELATIONS
16 (Defendants Xiao Ming, Wang Yuan)
17 130. Plaintiffs incorporate each of the foregoing allegations as if fully set forth
18 herein.
19 131. At all times relevant hereto, Defendants Xiao Ming and Wang Yuan acted
20 as officers or directors of Defendants Kandi, Kandi China, Kandi USA, and/or Zhejiang.
21 132. By wrongfully terminating Plaintiff Seaseng as a distributor, Defendants
22 Xiao Ming and Wang Yuan also interfered with Plaintiff Seaseng's prospective business
23 opportunities.
24 133. By directing the Defendant companies to not supply replacement parts,
25 Defendants Xiao Ming's and Wang Yuan's actions caused substantial loss of business to
26 Plaintiffs.
27
28
20
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 21 of 48 Page ID #:182
134. Defendants Xiao Ming's and Wang Yuan's actions amount to interference
2 with existing contractual relationship between Defendants Kandi, Kandi China, Kandi
3 USA, Zhejiang and Plaintiff Seaseng
4 135. Defendants Xiao Ming's and Wang Yuan's actions also amount to
5 interference with prospective contractual relationships of Plaintiff Seaseng with its
6 customers.
7 136. Plaintiff Seaseng sustained damages as a direct and proximate result of the
8 Defendants Xiao Ming's and Wang Yuan's interference.
9 SEVENTH CAUSE OF ACTION
10 WRONGFUL INSTITUTION OF CIVIL PROCEEDINGS AND/OR ABUSE OF
11 PROCESS
12 (Defendants Kandi, Kandi China, Zhejiang)
13 137. Plaintiffs incorporate each of the foregoing allegations as if fully set forth
14 herein.
15 138. Defendants Kandi, Kandi China, and/or Zhejiang instituted frivolous civil
27 attorneys' fees.
28
21
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 22 of 48 Page ID #:183
5 herein.
6 145. Defendants have made false and misleading representations of fact
7 regarding the affiliation, connection, and association of Defendants with Plaintiff
8 Seaseng, including but not limited to false representations that Plaintiff Seaseng is a
9 subsidiary of or otherwise owned or controlled by Defendants.
10 146. Defendants have also made false and misleading representations of fact as
11 to the origin, sponsorship, or approval of Plaintiff Seaseng,s goods and services.
12 147. Plaintiff Seaseng sustained damages as a direct and proximate result of
13 Defendants' false and misleading statements.
14 NINTH CAUSE OF ACTION
15 TRADE SECRET MISAPPROPRIATION/INVASION OF PRIVACY
16 (Defendants Wang Yuan, Xiao Ming)
17 148. Plaintiffs incorporate each of the foregoing allegations as if fully set forth
18 herein.
19 149. Plaintiff Seaseng's corporate documents, including but not limited to its
20 customer list, know-how information and corporate minutes, constitute trade secrets that
21 Plaintiff Seaseng guarded from disclosures and kept confidential.
22 150. Without Plaintiff Seaseng's or Wang's permission or authority to do so,
23 Defendant Wang Yuan stole the confidential trade secrets of Plaintiff Seaseng.
24 151. Upon information and belief, Defendant Wang Yuan acted at the direction
25 of or in agreement with Defendant Xiao Ming.
26 152. Plaintiff Seaseng sustained damages as a direct and proximate result of the
27 Defendants Xiao Mings's and Wang Yuan's misappropriation of its trade secrets and
28 invasion of Plaintiff s confidences.
22
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 23 of 48 Page ID #:184
3 (Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming,
4 Wang Yuan)
5 153. Plaintiffs incorporate each of the foregoing allegations as if fully set forth
6 herein.
7 154. Unfair competition occurs when a person engages in any unlawful, unfair
8 or fraudulent business act or practice. Cal.Bus. & Prof.Code § 17200.
9 155. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli
10 unlawfully stole confidential trade secrets from Plaintiffs and then used these trade
11 secrets for their own gain.
12 156. Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdelie
13 subsequently started a business located within a five mile radius of Plaintiffs' location of
21 .
INFLICTION OF EMOTIONAL DISTRESS
24 herein.
25 160. On more than one occasions, Defendants Wang Yuan and Xiao Ming
26 threatened Plaintiff Wang and his relatives.
27
28
23
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 24 of 48 Page ID #:185
161. Defendants' threats are severe in that they are death threats and, upon
2 information and belief, included actual beatings of employees who work for Plaintiff
12 boundaries of permissible.
13 165. Defendants' threats are serious in that they threaten commission of bodily
14 harm to Plaintiff Wang and his family, and threaten criminal prosecution in China.
15 Defendants have demonstrated their use of civil process in the United States for an
16 improper purpose.
17 166. Defendants Wang Yuan and Xiao Ming resorted to these illegal threats in
18 order to collect an unlawful debt/monies that neither Plaintiff Wang nor Plaintiff Seaseng
27
28
24
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 25 of 48 Page ID #:186
19 herein.
20 175. Plaintiffs seek to enJom Defendants Kandi, Kandi China, Kandi USA,
21 Zhejiang, Mengdeli, Xiao Ming, and Wang Yuan from harassing Plaintiff Wang or his
22 family members with extortionate threats, from any further attempts to illegally take over
23 ownership of Plaintiff Seaseng, and from any other racketeering activities intended to
24 collect an unlawful debt.
25 III
26 III
27 III
28 III
25
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 26 of 48 Page ID #:187
2 QUANTUM MERUIT
3 (Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming, Wang
4 Yuan)
5 176. Plaintiffs incorporate each of the foregoing allegations as if fully set forth
6 herein.
7 177. On information and belief, Defendants Kandi, Kandi China, Kandi USA,
8 Zhejiang and Xiao Ming have been enriched by the realization of a significant increase in
9 the value of their companies as a result of Plaintiffs Seaseng's and Wang's services.
10 178. Plaintiffs Seaseng and Wang have been impoverished by actions of
11 Defendants Kandi, Kandi China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming and Wang
12 Yuan and/or their repudiation of contractual duties under the distributorship, stock
13 exchange or settlement agreements.
14 179. It would be inequitable to allow Defendants Kandi, Kandi China, Kandi
15 USA, Zhejiang, Mengdeli, Xiao Ming and Wang Yuan to retain the benefits conferred
16 upon them by Plaintiffs Seaseng's and Wang's performance.
17 180. Plaintiffs sustained damages as a result of Defendants' conduct.
18 181. Defendants should disgorge an amount sufficient to compensate Plaintiffs
19 Seaseng and Wang for their services performed for Defendants Kandi, Kandi China,
20 Kandi USA, Zhejiang, Mengdeli, Xiao Ming and Wang Yuan, including but not limited
21 to processing, customs handling, storage, marketing, advertising, sales, training and other
22 administrative work.
23 WHEREFORE, Plaintiff prays for judgment against Defendants, Kandi, Kandi
24 China, Kandi USA, Zhejiang, Mengdeli, Xiao Ming, Wang Yuan, and each of them, as
25 follows:
26 1. For actual, compensatory and consequential damages in an amount to be
27 determined at trial, but in no event less than one million dollars.
28
26
FIRST AMENDED COMPLAINT
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 27 of 48 Page ID #:188
2. For threefold the damages actually sustained and the costs of suit, in a sum
2
not less than $3,000,000, including reasonable attorneys' fees, pursuant to 18 U.S.C.A. §
3
1964(c) with interest thereon at the legal rate of 10 percent ( %) per annum.
4
3. For such other and further relief as the Court may deem appropriate
6
4. For pre- and post judgment interest at the highest rate allowed by law.
7
5. For costs and attorneys' fees incurred as a result of Defendants' actions.
8
6. For declaration that Defendants have no ownership interest in Plaintiff
9
Seaseng and that Plaintiffs do not owe any monies to Defendants.
11
8. For punitive damages.
12
9. For such other and further relief as the Court may deem proper and just.
13
-and
15
POLSINELLI SHUGHART PC
16
17
18
By: hi
Carlyle (Cary) HaHllI
19
Attorneys for Plaintiffs
20
21
22
23
24
25
26
27
28
27
7
By: lSI
8
Attorneys for Plaintiff
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
28
EXHIBIT A
Z1i:~.~~I51lf}~
~~*~~~~M'~Z~s~~~"m~~~~~~ZM~~
i5ij~jcitm~l:fjD1i~~lij~.ft~pg1.f.JlJij
Seaseng,
~*lJWftt.il!!*~m1}~~f:t1fw.m~~~.·
~~(~18~ffi~ff~fS~~iC) . 1Urmt~[ZJj~Jpq/j]§j
D*€irEf311ffi1O 435,OOO(.ta"~;8Hfiff)~~ , ~j;tl~~
7,524,642(~{Ejffirg.lt • •1f§fE~h:1Jtt)~ti .
1
,' ,",
, I
:
-'"
J'
;' J
"
, I
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 31 of 48 Page ID #:192
fflUE-~_ .iCff:t)\mffi.1€t~)~~
¥~nc=1J~~i¥JfI~ft1Jl~3.038.669(~fi3~-~~mgff~ftil¥.l
m/~f'tt~D1[11~[Z.:n~pt1i] .
4· iIHi&RJt{1 9O,919(~iit~~fJ§jft€tJ;.).(fu~~m 3 t!trplJl
2,842,951(ltffl~Jmt • •ltff-f{faffitft.)~~WJID,[Z1J.fO~
1J]ii~*tJi~1tErS']~~.J4~f5X9tJ-~.ffl&1fJ~1~~
· Mntl
Efl Jj?~~~EH1:a:~[z.Jj~~1Jlat.JDJ.M!t1IfD~ .
~.M[Z:1.i;fDflfjj]1JJf3t~p=F. _~rJI1$r~®Jtm [b [Z
:nmlJ];ij(ta. tLD~ 1:f11J:f~-@j~~F1k~ , [Z 15fDp;jn]
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 32 of 48 Page ID #:193
~1¥J~WF~mfIJ •
8· [6 )j*1JP9JJJjji:ilf~D*aEf£ 15 1'-T{$ BXp:j~~~mJ&Pffli~
ttt~~~W. EfJ1i]JrtiJ[Zjjf[]~1jJL&JflZ~Mi.ffl •
D· rm*-_*JIJAnW l08,312(tEt~m~ff~m~fftlt)~~®~C
')
!/7/ /
/
/
2008if.2.F.1288 /
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 33 of 48 Page ID #:194
MEMO
Mr. Xiaoming Hu is the lawful representative of Party B Zhejiang Kandi Vehicles Co.,
Ltd. and has the authority to handle all company matters and to execute all company
documents. In addition, Mr. Hu and Zhejiang Kandi Vehicles Co., Ltd. have bcen fully
authorized by the Zhejiang Yongkang Top Imparl & Export Co., Ltd. to handle all issue~
with SEASENG, INC. and to execute all relevant documents on behalfofPartyC. Mr.
Hu and Zhejiang Kandi Vehicles Co., Ltd. guarantee that they indeed have the above
power of attorney.
2. As of February 28, 2008, Party A has paid to [Parties Band C] US$l ,885,588
(one million eight hundred eighty five thousand five hundred and eighty eight)
and returned products in the amount of US$957,363 (nine hundred fifty seven
thousand three hundred and sixty three), with the total ofUS$2,842.95 I (two
million eight hundred forty two thousand nine hundred and fifty one).
All English words appeared in the source document are represented in capital.
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 34 of 48 Page ID #:195
~
Translation by Penny Kole, Court Certified Interpreter CA 301015
price list). Party A shall tmdert3.ke and complete the process relating to shipping
the return products. For one of the accounts payable, in the amount of
US$J 01,022 (one hundred and one thousand and twenty two), prior to March 15
2008 Party A may pay 90% (at 10% discount/waived amount) to [Parties B and
CJ·
4. After returning the products and making lIdditional payment of90,919 (ninety
thousand nine hundred and nineteen) (the amount referred in paragraph 3 which is
90% 0[US$101,022 (one hundred and one thousand and twenty two), Party A
will still owe [Parties B and CJ USS 1,542,000 (one million five hundred forty two
thousand). Party A is requirel.l to pay the total amount within one year in
installments and the attached payment plan describes the detailed payment
method.
5. [Parties B and C] is required to be liable for all expense borne by Party A relating
to the legal action (case nwnber: CASE NO.: EDCV07-807-VAP) between SUNl
company and SEASENG, INC. 00 February 28, 2008 [Parties B and CJ makes a
payment of U$$20,ooo (twenty thousand) to Party A as attorney fee, and this
amount was already included in the US$2,842,951 (two million eight hundred
forty two thousand nine hundred and fifty one) as already paid. [Parties B and C]
is further required to be liable for all future expenses and judgment of this legal
action, and Party A shall, on its own, deduct the amount based on receipts or
documents from the account payable to [Parties B and C].
(,. As previously requested by [Parties Band q, Party A has already made the
payment of US$42,OOO to EPA for [Parties B and C] as application fee of models
150cc, 250cc, and 800ec. Party A promises to help [Parties B and C] handle the
name transfer process. [Parties Band C] shall be liable for the relating expenses.
In the event Party A fails to accommodate and caused the transfer failure, [Parties
Band C] may not be held liable for the EPA application fee of the three models.
8. [Parties B and C] promises that Party A may charge warehouse storage expense to
[Parties 8 and C] if [Parties Band C] fails 10 have arrangements to receive all
return products with fifteen working days.
All English words appeared in the source document are represented in capital.
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 35 of 48 Page ID #:196
9. An amount 0[U8$108,3"12 (one hundred and eight thousand three hundred and
twelve) for parts was not included in the above caJculation pending price
verification by Party A. All parties agree that the matter will be handled within 20
days after the price is re-negotiated. In the event negotiation fails, Party A shall
{translator's note: in the original there arc words have the right to crossed out, al\(I
a signature above the cross line} return all of them.
Representative
{signature}
Party B: Zhejiang Kandi Vehicles Co., Ltd. (ZHEJIANG KANDI VEHICLES CO. LTD)
Representative
{signature}
Party C: Zhejiang Yongkang Top Jmport & Expolt Co., Ltd. (ZHEJIANG YONGKANG
Representative
{signature}
{signatun:}
All nnglish words appeared in the source document are represented in capital.
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 36 of 48 Page ID #:197
DECLARATION OF INTERPRETERITRANSLATOR
I, Penny Kole, say; I am a Court Certified interpreter for the State of California; I
am familiar with the English and Mandarin Chinese language; I have translated
the attached Memo from Chinese to English. The foregoing is a true and correct
translation of said document.
I certify under penalty of perjury that the foregoing is true and correct.
EXHIBITB
~h~~i
r-t ~i1-~f~e-vjl
1>~ ~ (ll~)
11'\c.
\tl~)
~t-
~ ~'t~'/~ ",-f/' Ii
-rtl~f}¥U
. / ,'
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 39 of 48 Page ID #:200
---_. __._---------
~W,C,c~~1N
The undersigned, being duly sworn, depose and say: thot J amfamiliar and competent with
both the Chinese language and the English languoge; that I have read and translated the
attached documents, and certify that the translation of said document into English is a
<:(mlp/ete and accurate translation to the best a/my knowledge,
Description of Document(s): Payment Plan between Zhejiang Kandi Vehicles Co., Ltd.
and Seaseng Inc,
.' :7
__ :~~,3.-...::L:::........:.~.
STATE OF CALIFORNIA )
Payment Plan
Seaseng Inc. owes Zhejiang Kandi Vehicles Co., Ltd. the payment for goods in the
amount of 1.542 million US dollars (One million five hundred fifty-two thousand US
dollars) of whkh 200,000 US dollars shall be paid nack before the end of May of 2008,
300,000 US dollars shaH be paid back before the end of August. 400,000 US dollars shall
be paid back before the end of November of 2008 and 600,000 US dollars shall be paid
back before the end of February of2009. The amowlt ofUSS42,OOO shall be used to help
Kandi to transfer the ownership ofthree EPA certificates to Zhejiang Kandi Vehicles Co.,
Ltd. (China) and after the transfer is completed. the amount of USS42,OOO will be
lAln(,;clled.
If any of the above payments is not made on time, 1% interest per month will be imposed
for the first three months of delinquency. After the payment is delinquent for more than
Ihrec months, a penalty of 10% per day will be imposed.
<signature>
Guarantor. <signature>
EXHIBITC
1:tftITg~{)j.~tt.~.
2008~2 f3 28 8
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 43 of 48 Page ID #:204
Declaration
r:ong Wang hereby declares: Cong Wang definitely does not own any share
i)f Zhejiang YongKang Import & Export COOt Ltd.
'"00 • • , .......
SOPl1IA VA'
OI'nl1'1l$$(on t !.
j',Jry A.JbIc • C
los t\l1(')eJQll C<
:orm,. !:1p!~l>.
;1~;-:--~.,
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 44 of 48 Page ID #:205
".
..'" ,,:' 'f
~~.~~~
~~tatc
ofCalifomia )
r:ounty of Los Angeles ) SS.
'rM undersigned, being duly sworn, depose and .~ay: that I amfamiliar and compeJent with
,wth the Chinese language and the English languag(f: that I have read and translated the
Ilttached documents, and certify that the. translation ofsaid dr,cument into Englf.sh iti a
.:omplete and accurale translation to the best 0/ my Irnow/edge.
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) S8.
EXHIBITD
.'
'~.Ul:
WISfidi• •1fIt{1}i!fJ
(Zhejiang Kandi Vehicles Co., LID.)
.§IYj.ti~~A.~~·
2008 ~ 2 .F.I 28 8
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 47 of 48 Page ID #:208
.'
Declaration
Zhejiang YongKang Top Import & Export Co., Ltd. (China) and ZhejiangKandi
Vehicles Co., Ltd. (China) absolutely do not own my share in Seaseng Inc. (USA). This
declaration is hereby made.
..,.,t..~
SOPHIA Y.
C"omrnl:;:llon "
Notary Pubiic •
Los ,\ngeIElS
t.1-/Comm. E.'q:lifas
to q
Case 2:09-cv-07145-JFW-JEM Document 16 Filed 11/16/09 Page 48 of 48 Page ID #:209
,.
~~C,o~~
State of California )
County ofLos Angeles ) SSe
The undersigned, beingduly sworn. depose andsay: that I am/amiliar andcompetent with
both the Chinese language and the English language,' that I have read and translated the
attached documents, and certify that the translation of said document into English is a
complete and accurate translation to the best ofmy knowledge.
" ....il'"
~:'. . --?/L-~--
Translator: Chung M. Lin
STATE OF CALIFORNIA )