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China Max Inc. v. South Hills CN LLC

United States District Court, Western District of Pennsylvania

May 27, 2015

CHINA MAX, INC., and DE DONG ZHENG, Plaintiffs,


Cathy Bissoon United States District Judge


For the reasons that follow, Magic Wok Mall LLC and David Wu’s Motion to Dismiss and Motion to Strike (Doc. 16) will be granted in part and denied in part.


China Max, Inc. and De Dong Zheng (“Plaintiffs”) seek injunctive relief, declaratory relief, replevin and money damages against South Hills CN LLC, Ross Park CC LLC, Jing Zhu and Magic Wok Mall LLC for identity theft; invasion of privacy by misappropriation of name; tortious interference with contract; breach of contract; breach of fiduciary duty; breach of implied duty of good faith and fair dealing; civil conspiracy; unfair competition; and unjust enrichment arising from Defendants’ alleged misappropriation of Plaintiff’s name and signature as the guarantor of two commercial leases. Am. Compl. (Doc. 15) at ¶ 16. Defendants Magic Wok Mall LLC and David Wu (“Defendants”) filed a Motion to Dismiss and Motion to Strike Plaintiffs’ First Amended Complaint. Def.’s Mot. (Doc. 16). As the Court writes primarily for the parties, we will review only the facts most significant to Defendants’ pending Motion.

Plaintiffs allege that around August or September of 2009, they enlisted the assistance of Defendants in the negotiation of a franchise and lease agreement with South Hills Village Associates, L.P. Am. Compl. at ¶ 47. Plaintiffs sought to use the China Max name for a restaurant in South Hills Village Mall. Id. at ¶ 48. In the course of negotiations, Plaintiff Zheng shared his personal information with Defendant Wu; Plaintiff Zheng additionally signed an application form. Id. at ¶ 49. Plaintiffs paid Defendants a deposit of $80, 000 to facilitate the negotiation. Id. at ¶ 51. In May, 2010, Defendant Wu informed Plaintiffs that he failed to secure a franchise agreement on their behalf, and the $80, 000 deposit was returned. Id. at ¶¶ 56-57.

Plaintiffs allege that Defendants used Plaintiff Zheng’s personal information and forged his signature in order to name him as the guarantor on two leases – the “Ross Park Lease Agreement” and the “South Hills Lease Agreement, ” both executed in December of 2009. Id. at ¶¶ 20-46, Exs. B, C.[1] The leases allegedly were executed without Plaintiffs’ knowledge or consent. Id. at ¶¶ 20-46. The latter of those two leases pertained to the rental of the very location in South Hills Village Mall that Plaintiffs were attempting to lease in order to open a China Max restaurant. Id. at ¶ 60. Plaintiffs further allege that Defendants’ fraudulent activities interfered with the prospective contractual relationship between Plaintiffs and South Hills Village Mall, and breached the contract executed between Plaintiffs and Defendants in which Defendants agreed to assist Plaintiffs in securing a franchise and lease agreement. Id. at ¶ 93-107.

Plaintiffs also allege that prior to discovery of the fraud, they engaged in extensive due diligence in order to determine who was causing their injury.[2] See Pl.’s Br. in Opp’n (Doc. 20) at 4-6. Plaintiffs allege that nothing concerning their direct interactions with Defendants, seeking a China Max franchise agreement, appeared fraudulent. Pl.’s Br. in Opp’n at 3-4. Plaintiff Zheng was not successful in securing a China Max franchise in the South Hill Village Mall, but Defendant Wu returned his deposit in May of 2010, and communicated that he simply was not successful; this raised no red flags for Mr. Zheng. Id. at 4. In March of 2012, two years after the return of the deposit, Plaintiff became aware that he was a guarantor to the Ross Park Lease Agreement when he was named in a lawsuit. Am. Compl. at ¶ 20. Plaintiff then retained an attorney and began to investigate the provenance of said lease agreement. Pl.’s Br. in Opp’n at 5. The signature of the signee on behalf of Ross Park CC LLC was illegible. Id. at ¶ 33. Further, Plaintiff investigated and discovered that Ross Park CC LLC was a sham corporation not registered in any state. Id. at ¶ 32. Plaintiff Zheng traveled from his home in Virginia, to New York and Pennsylvania, in order to investigate this lease. Pl.’s Br. in Opp’n at 5. He contacted police departments and attorney general offices, but was unable to determine who perpetrated the alleged fraud. Id. Through his investigations, Mr. Zheng learned that he was also named as a guarantor on the South Hills Lease Agreement, without his knowledge or consent. Am. Compl. at ¶ 34-35. The signature on behalf of South Hills CN LLC was illegible, and South Hills CN LLC appeared to be a sham corporation as well. Id. at ¶ 43; Pl.’s Br. in Opp’n at 6.

Plaintiffs argue that “Zheng did not discover and had no reason to discover his injury and the cause of his injury at least until August 2013”. Id. at 16. Plaintiffs contend that it was not until after Plaintiff Zheng contacted Defendant Wu, in July or August of 2013, in order to question him about the Ross Park and South Hills Lease Agreements, that Mr. Zheng discovered the fraud. Id. at 15-16; see also Am. Compl. at ¶¶ 62-75. After being questioned about the improper naming of Mr. Zheng as a guarantor, Defendant Wu allegedly sent Plaintiff Zheng a “Revised South Hills Lease Agreement, ” which contained indicia of further fraud. Compl. at ¶¶ 62-75. It was only after receiving this Revised South Hills Lease Agreement that Plaintiff Zheng discovered that Defendants were responsible for his injuries, allegedly by way of fraudulent acts which began in December of 2009. Id. Plaintiffs allege that this discovery occurred in August of 2013 at the earliest. Pls’ Br. in Opp’n at 16. Plaintiffs filed the instant suit on August 11, 2014. Defendants filed a Motion to Dismiss and Motion to Strike Plaintiffs’ Complaint.


Motion to Dismiss

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). When faced with a motion to dismiss, a court “must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009).

Defendants move to dismiss Counts II – IX[3] on the basis that they are time-barred. Def.’s Mot. at ¶¶ 23-52. In the Third Circuit, a limitations defense may be raised in a 12(b)(6) motion to dismiss, “but only if ‘the time alleged in the statement of a claim shows that the cause of action has not been brought within the statute of limitations.’ ‘If the bar is not apparent on the face of the complaint, then it may not afford the basis for a dismissal of the complaint under Rule 12(b)(6).’” Robinson v. Johnson, 313 F.3d 128 (3d Cir. 2002) (quoting Bethel v. Jendoco Constr. Corp., 570 F.2d 1168, 1174 (3d Cir. 1978), Hanna v. U.S. Veterans’ Admin. Hosp., 514 F.2d 1092, 1094 (3d Cir.1975)).

Defendants move to dismiss the challenged counts under statutes of limitations ranging from one to four years. Def.’s Br. in Support (Doc. 17) at 5-11. A cause of action accrues when a plaintiff could have first maintained the action to a successful conclusion. Kapil v. Ass’n of Pa. State Coll. and Univ. Faculties, 470 A.2d 482 (Pa. 1983). However, “state tolling principles are generally to be used by a federal court when it is applying a state limitations period.” Vernau v. Vic’s Market, Inc., 896 F.2d 43, 45 (3d Cir. 1990). Plaintiffs argue that the statute of limitations period ...

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