Chin-Ten Hsu v. New Mighty U.S. Tr.
| Decision Date | 06 February 2020 |
| Docket Number | Civil Action No. 10-1743 (JEB) |
| Court | U.S. District Court — District of Columbia |
| Parties | CHIN-TEH HSU, et al., Plaintiffs, v. NEW MIGHTY U.S. TRUST, et al., Defendants. |
Anna Karenina famously opens: "All happy families are alike; each unhappy family is unhappy in its own way." The intestate death of Taiwanese billionaire and plastics magnate Yung-Ching (Y.C.) Wang, who was involved with three women simultaneously and the father of nine children, has resulted in an unhappy family indeed. This case concerns one of the many disputes amongst his partners and progeny over the proper distribution of his fortune. Specifically, the estate of Y.C.'s first wife Yueh-Lan Wang brings this suit alleging that immediately preceding her husband's death, Y.C. transferred money and property out of his estate and into various trusts controlled by children of another romantic partner in order to prevent Yueh-Lan from claiming her rightful inheritance.
After years of pursuing jurisdictional arguments, Defendant Trusts now move to dismiss Plaintiffs' Second Amended Complaint on the ground that none of the counts therein (most of which are brought under Taiwanese law) state a plausible claim for relief. Depending largely on its parsing of Taiwanese law, the Court finds that while some of Plaintiffs' claims merit dismissal, a select few pass the bar necessary for proceeding to the next stage of litigation. The Court will therefore grant the Motion in part, while letting the core claims of the Complaint proceed.
The Court has previously set forth the "lengthy and colorful history of this case" in its many prior Opinions. See Chin-Ten Hsu v. New Mighty U.S. Tr., 288 F. Supp. 3d 272, 276 (D.D.C. 2018) (Wang III), rev'd sub nom. Shi v. New Mighty U.S. Tr., 918 F.3d 944 (D.C. Cir. 2019) (Wang Appellate Decision II); see also Yueh-Lan Wang ex rel. Wong v. New Mighty U.S. Tr. (Wang I), 841 F. Supp. 2d 198, 200-201 (D.D.C. 2012), rev'd sub nom. Wang by & through Wong v. New Mighty U.S. Tr. (Wang Appellate Decision I), 843 F.3d 487 (D.C. Cir. 2016); Yueh-Lan Wang by & through Winston Wen-Young Wong v. New Mighty U.S. Tr. (Wang II), 322 F.R.D. 11, 15-16 (D.D.C. 2017).
As it must, the Court draws the following facts from the Second Amended Complaint. See ECF No. 45. In 1935, Y.C., a citizen of Taiwan, married Yueh-Lan, also a Taiwanese citizen, who was then sixteen years old. Id., ¶¶ 12, 16, 25. "Perhaps presaging the advice given Dustin Hoffman's eponymous character in the 1967 movie The Graduate, Y.C. went into plastics, founding the Formosa Plastics Group in 1954." Wang Appellate Decision I, 843 F.3d at 488 (footnote omitted). This enterprise proved extraordinarily successful — FPG became one of Taiwan's biggest manufacturing conglomerates with annual sales of over $60 billion. See SAC, ¶ 17. In 2008, the year of Y.C.'s death, Forbes magazine ranked him as the 178th wealthiest person in the world, "with an estimated net worth of up to $6.8 billion." Id., ¶ 18. Plaintiffs suggest that his net worth actually exceeded $9 billion at that time. Id.
Although Y.C. remained married to Yueh-Lan for the entire 72-year period between their nuptials and his death, he also fathered children outside the marriage during that time. Y.C. was responsible for what Plaintiffs refer to as a "Second Family" with Wang Yang Chaio, with whom he had five children, and a "Third Family" with Pao Chu Lee, with whom he had four children. Id., ¶ 26. Yueh-Lan had no biological children. She did, however, assist in raising Dr. Winston Wong, Y.C.'s eldest son (and a member of the Second Family), and she named him as her sole heir. Id., ¶ 14. Weaving yet another thread into this intricate inheritance web, Y.C. died without a will. Id., ¶ 16.
The death of this self-made billionaire and father of nine children has, perhaps predictably, produced a great deal of strife. Related suits have been filed in Taiwan, Bermuda, New Jersey, Hong Kong, and this Court. See Wang III, 288 F. Supp. 3d at 277. Under Taiwanese law, Yueh-Lan was entitled to half of the property acquired by either member of the couple during their marriage. See SAC, ¶ 2. At the time of Y.C.'s death, however, only (a mere) $1.7 billion in assets (the "Taiwan Assets") was identified as belonging to the marital estate. Id., ¶ 34. The Taiwan Assets were distributed to Y.C.'s heirs (including Yueh-Lan) in accordance with Taiwanese law and pursuant to a Tax Settlement Agreement agreed to by the relevant parties. Id., ¶ 36. These funds do not figure in the current dispute.
According to Plaintiffs, however, the Taiwan Assets represented "only a portion of the property that should have been accounted for and distributed." Id. The relevant chain of events dates back to 1978, when Y.C. directed a business associate to form two Liberian companies (Creative Holding Corporation and Creative Corporation) for the purpose of holding Y.C.'s equity in Formosa Plastics Corporation (FPC), USA. Id., ¶¶ 40-41. Y.C. retained beneficial ownership over these two corporations, which held hundreds of thousands of shares of FPC USAstock. Id., ¶ 41. Next, in 1991, Y.C. directed his associate to form yet another Liberian company (Sound International Investment Corporation) to hold Y.C.'s equity (about 64,000 shares) in a corporation called Inteplast. Id., ¶¶ 42-43. The plot now thickens. Members of Y.C.'s Third Family served on the boards of all three of these corporations. Id., ¶¶ 41, 44. In 2005, however, the three Liberian corporations were redomiciled in the British Virgin Islands. Id., ¶ 46. Once redomiciled, Y.C. allegedly orchestrated the transfer of the assets held by those companies to Defendant New Mighty U.S. Trust, with Defendant Clearbridge, LLC acting as trustee. Id., ¶¶ 45-51. This transfer of assets into the New Mighty U.S. Trust allegedly extinguished Y.C.'s beneficial ownership of those assets, resulting "in the purported reduction of Yueh-Lan's share of the Marital Estate." Id., ¶¶ 52-53. Clearbridge subsequently authorized the distribution of hundreds of millions of dollars from New Mighty U.S. Trust to Defendant New Mighty Foundation. Id., ¶ 57. Both Clearbridge and the Foundation are linked to members of the Third Family. See Wang III, 288 F. Supp. 3d at 277.
In sum, before his death, Y.C. allegedly transferred marital assets to various entities controlled by the "Third Family," depriving Yueh-Lan (and now her estate) of her rightful 50% spousal share. Such a maneuver — the deliberate sheltering of marital assets in order to withhold property from an inheriting spouse — is prohibited by Taiwanese law. Although Plaintiffs cannot ascertain the exact value of what they deem to be the "actual" marital estate, they assert that it is "greater than double the value" of the Taiwan Assets. See SAC, ¶ 5.
Dr. Winston Wong (by way of reminder, technically of the Second Family but with legal and emotional connections to the First) brought this suit in October 2010 in his capacity as Yueh-Lan's attorney-in-fact and legal guardian. Id., ¶ 13. Defendants are New Mighty U.S. Trust(declared under the laws of and with its principal place of business in D.C.); its trustee, Clearbridge (same); and the beneficiary of the trust, New Mighty Foundation (formed under the laws of Delaware and with its principal place of business in D.C.). See SAC, ¶¶ 19-21, 53.
The case has taken "many twists and turns" before reaching the present stage. See Wang III, 288 F. Supp. 3d at 275. First, Defendants moved to dismiss, and this Court granted that motion on the ground that it lacked jurisdiction because the parties were not diverse. See Wang I, 841 F. Supp. 2d at 206-08. In 2015, while the case was on appeal, Yueh-Lan died, and the D.C. Circuit held the appeal in abeyance pending the outcome of Taiwanese death and probate proceedings. See Wang Appellate Decision I, 843 F.3d at 489. Ultimately, the Taiwan Supreme Court appointed Chin-Teh Hsu, Tong-Schung Tai, and Robert Shi as joint executors of Yueh-Lan's will. See SAC, ¶ 15. Next, the Circuit yet again held the appeal in abeyance pending a Supreme Court decision that concerned the citizenship test for a real-estate trust, an issue critical to this Court's determination on the question of diversity jurisdiction. See Wang Appellate Decision I, 843 F.3d at 489 n.6 (citing Americold Realty Trust v. ConAgra Foods, Inc., 136 S. Ct. 1012 (2016)). The D.C. Circuit ultimately reversed this Court's jurisdictional determination, relying on Americold in holding that complete diversity of citizenship existed among the parties. Id. at 495-96. In doing so, the Circuit granted the executors' motion to substitute themselves in place of Yueh-Lan as Plaintiffs. Id. at 496.
With their case resuscitated by the Court of Appeals, Plaintiff Executors filed a Motion for Leave to File a Second Amended Complaint in this Court, which was granted. See Wang II, 322 F.R.D. at 32. Defendants then again moved to dismiss. The Court granted that motion on forum non conveniens grounds, holding that D.C. was an inappropriate forum for the suit given that, inter alia, the dispute presented substantial issues of Taiwanese law and the District had arelatively weak interest in it. Wang III, 288 F. Supp. 3d at 281-93. The D.C. Circuit disagreed, holding that this Court had abused its discretion in dismissing the case. See Wang Appellate Decision II, 918 F.3d at 948-53. In so doing, the Circuit explained that "the District of Columbia's interest in this litigation is not weak" because "Y.C. Wang and his associates are alleged to have reached into the District of Columbia to establish the Trusts, transferring assets to the Trusts and thereby availing themselves of the benefits of District of Columbia law on trusts." Id. at 952.
The Second Amended Complaint continues to serve as the operative pleading. The nine counts asserted therein implicate trusts, shell...
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