In Re: Huang, 00-57056

• Decision Date: 14 January 2002
• Docket Number: No. 00-57056,00-57056
• Citation: 275 F.3d 1173
• Parties: (9th Cir. 2002) IN RE: AIPING HUANG, DEBTOR, THE BANK OF CHINA, APPELLANT, v. AIPING HUANG, APPELLEE
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1173

275 F.3d 1173 (9th Cir. 2002)

IN RE: AIPING HUANG, DEBTOR,

THE BANK OF CHINA, APPELLANT, v. AIPING HUANG, APPELLEE.

No. 00-57056

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted December 6, 2001

Filed January 14, 2002

John A. Blue, Los Angeles, California, for the appellee.

Joshua D. Wayser, Santa Monica, California, for the appellant.

Appeal from the United States District Court for the Central District of California Terry J. Hatter, Chief District Judge, Presiding D.C. No. CV-00-02533-TJH

Before: John T. Noonan, Kim McLane Wardlaw, Circuit Judges and William W Schwarzer^** Senior District Judge.

Noonan, Circuit Judge

Bank of China (the Bank) appeals the judgment of the district court reversing the summary judgment of the bankruptcy court in the Bank's favor in its suit against Aiping Huang (Huang). Holding that Huang is not collaterally estopped by her settlement with the Bank from denying the Bank's allegations of fraud, we affirm the judgment of the district court.

PRIOR PROCEEDINGS

On October 21, 1996, the Bank brought suit in the district court against SV International, Inc. (SV), ZP Tech Inc. (ZP), Ruigao Trading Inc., Jiannan Zhang, Aiping Huang, and Lianping Pan. The Bank noted that it was wholly owned by the government of China and that its principal place of business was Beijing. The defendants were alleged to be California corporations or permanent residents of California. Pan and Huang were said to be husband and wife and the sole directors of SV, identified as the parent of a wholly-owned Chinese subsidiary, Nantong Starvest Data Company, Ltd. Pan and Huang were also said to be the only directors of Ruigao. Pan and Zhang, Huang's first cousin, were alleged to be the sole owners of ZP. The Bank further alleged that Pan, Huang, and Zhang together controlled SV, ZP, Ruigao, and Nantong Starvest. They also were alleged to control another Chinese company, Nantong Hong Yang Industries Co.

According to the Bank's complaint in its 1996 suit, Nantong Starvest in 1992 and 1993 obtained approximately $11,910,000 in term loans from the Bank, and $10,786,785 and 506,743,360 Japanese yen in letters of credit from the Bank. In addition, the Bank guaranteed a loan of $10,000,000 by the Arab Bank to Nantong Starvest. Over $110 million of computer diskettes were alleged to have been shipped to SV and ZP by Nantong Starvest at artificial and concealed prices, with the alleged intention of avoiding repayment of the credit extended by the Bank.

On the basis of these and other related allegations, the Bank's complaint against the six defendants alleged twelve causes of action, as follows: (1) breach of a written contract in failing to repay the loans; (2) money lent and received; (3) money had and received; (4) fraud; (5) breach of the covenant of good faith; (6) fraudulent conveyance; (7) intentional interference with the Bank's contractual relations with Nantong Starvest; (8) constructive trust; (9) injunctions; (10) accounting; (11) violation of 18 U.S.C. §§ 1962(c) (Racketeer Influenced Corrupt Organizations Act or RICO), charged against Pan, Huang, and Zhang; and (12) violations of subsection (d) of the same act, charged against the same three individuals.

The suit, styled Bank of China v. SV International, Inc., was met by the defendants' denial of all claims. The defendants were represented by Manatt, Phelps & Phillips (MPP); the Bank by Stern, Neubauer, Greenwald & Pauly of Santa Monica and by Hollyer Brady Smith Troxell Barrett Rockett Hines & Mone of New York City. Between December 1996 and February 1997, MPP moved to strike portions of the complaint; to dismiss for failure to state a cause of action; and to stay discovery. The defendants lost these motions. Eventually settlement negotiations began and were actively pursued during May. On June 5, 1997, the Bank and the defendants entered into what was denominated a "Settlement Agreement, Security Agreement, and General Release" (the Settlement Agreement), a detailed document 18 pages in length.

In the Settlement Agreement the six defendants admitted that they, jointly and severally, owed the Bank $42,740,813.03 and 572,911,136 Japanese yen plus interest from October 24, 1996. They stipulated to entry of judgment in the Bank's favor in the amount of $47,733,937.79, plus interest of 8% from October 24, 1996. The Settlement Agreement set out a schedule of payments with an initial payment in December, 1997, and quarterly payments to be made beginning on March 31, 1998 and ending on December 31, 2006. The Bank was given a security interest in all personal property and certain identified real estate of the individuals. The Bank was given complete access to "all information and documents concerning Defendants," including the income tax returns of the three individuals. The compensation of these individuals from businesses in which they had an interest was limited to a total of $100,000. The following provisions of particular pertinence here were also part of the settlement:

3. A. Judgment Final and Binding. The Bank and the Defendants agree that the Judgment shall constitute a binding and final adjudication of the parties' rights and liabilities in the Action, except that the Bank shall retain all further rights stated in this Agreement. The Bank and the Defendants hereby fully and forever waive any right to appeal, to bring post-trial motions, or to bring any other challenges to the Judgment. The Defendants acknowledge that the Judgment is final, valid and in full force and effect.

3. B. Judgment and Debt Not Dischargeable in Bankruptcy. Defendants are familiar with the law concerning the dischargeability of debts in bankruptcy. Defendants are also familiar with the facts, including their actions with respect to the Bank. Accordingly, and on this basis, Defendants understand, represent and promise to the Bank that the Judgment and the Debt, and all other amounts owing to the Bank, are not dischargeable in any bankruptcy or bankruptcies filed by any of the Individual Defendants; and Defendants shall not, and represent that they have no factual or legal basis to, challenge or otherwise dispute the Bank's request for an order in any bankruptcy court to establish the nondischargeability of such obligations, and Defendants accordingly agree that such an order (and judgment thereon, if requested by the Bank) shall be issued by any bankruptcy court. Defendants further acknowledge and agree that the understandings, promises and representations set forth above, are essential to this Agreement and that, without such understandings, promises and representations, the Bank would not have entered into this Agreement, having done so based upon these understandings, promises and representations, without which the Bank would have proceeded with this Action . . . .

15. B. Bankruptcy. Defendants hereby agree that, in consideration of the mutual covenants contained herein and for other good and valuable consideration (the receipt and sufficiency of which is hereby acknowledged): (a) Defendants shall not (i) file any voluntary petition under any Chapter of the Bankruptcy Code, Title 11, U.S.C.A. (hereinafter referred to as the "Bankruptcy Code") or in any manner to seek relief, protection, reorganization,...