Dcm Ltd. Partnership v. Wang

• Decision Date: 06 May 2008
• Docket Number: No. 07-11846.,07-11846.
• Citation: 555 F.Supp.2d 808
• Parties: DCM LIMITED PARTNERSHIP, d/b/a DCM Limited, a British Virgin Islands Limited Partnership, Plaintiff, v. Steve WANG, Midwest Air Technologies, Inc., an Illinois corporation, and Mat Automotive, Inc., an Illinois corporation, Defendants.
• Court: U.S. District Court — Eastern District of Michigan

555 F.Supp.2d 808

DCM LIMITED PARTNERSHIP, d/b/a DCM Limited, a British Virgin Islands Limited Partnership, Plaintiff, v. Steve WANG, Midwest Air Technologies, Inc., an Illinois corporation, and Mat Automotive, Inc., an Illinois corporation, Defendants.

No. 07-11846.

United States District Court, E.D. Michigan, Southern Division.

May 6, 2008.

COPYRIGHT MATERIAL OMITTED

Donald C. Darnell, Nik Lulgjuraj, Darnell & Lulgjuraj, Chelsea, MI, for Plaintiff.

Ryan S. Bewersdorf, Scott T. Seabolt, Foley & Lardner, Detroit, MI, for Defendants.

ORDER

JULIAN ABELE COOK, JR., District Judge.

The Plaintiff, DCM Limited Partnership, d/b/a DCM Limited ("DCM"), filed a complaint in the Washtenaw County Circuit Court of Michigan, in which it asserted a variety of claims (i.e., breach of contract, quantum meruit and unjust enrichment) against the Defendants, Steve Wang, Midwest Air Technologies, Inc. and MAT Automotive, Inc., all of which are based on their alleged failure or refusal to repay a three million dollar promissory note ("Note"). The Defendants removed this matter to federal court on April 27, 2007.

On December 12, 2007, the DCM filed a motion for the entry of a summary judgment on the basis of its breach of contract claim. The Defendants filed a responsive pleading which expressed its opposition to the DCM's application for dispositive relief and, at the same time, submitted its own motion for summary judgment under Fed. R.Civ.P. 56. Both dispositive motions are now under review by the Court for a decision.

I.

DCM is a limited partnership which was chartered in the British Virgin Islands and currently conducts its business in Ann Arbor, Michigan. This limited partnership was formed as a holding company to oversee the liquidation of the D'Long America Corporation ("D'Long America") which ceased to operate as a business entity in 2001. According to the DCM, one of the Defendants, Steve Wang, is an Illinois citizen who served as an agent of the two other Defendants, Midwest Air and MAT Automotive, during all of the times that are relevant to this proceeding. According to the complaint, these two Defendants have been and are now charted as corporate entities by the State of Illinois.

In this case, the DCM asserts that Wang sought to secure a loan from the D'Long America during the later months of 2000 to support the purchase of Eurac Holdings Limited ("Eurac Holding"), a United Kingdom automotive parts manufacturer. The D'Long America confirmed its ability to invest the funds on Wang's behalf by sending a letter of support to a third party on January 15, 2001.¹ On May 24, 2001, the D'Long America (acting on behalf of the DCM) wired three million dollars to its own holding agent, Ever Nice Far East Limited, in Hong Kong, China.

Ultimately, the sought-after loan of three million dollars was apparently transmitted by Ever Nice presumably on the instructions by the Defendants. The transfer of these monies was effectuated through a series of transactions which originated with the D'Long America's account at the Comerica Bank in Michigan and ended with the Ever Nice's accounts with the HSBC Banks in New York and Hong Kong, China.

One week later, Wang, after meeting with several people,² signed a Note for three million dollars at six percent interest plus collection costs. The Note, after being given in exchange "for value received," designated Wang as "the Maker" and the Payee as "DCM Limited, an entity to be formed."³ The Note, which stated that it was "due and payable immediately upon demand," was signed by Tom Shao as a witness.

In the complaint, the DCM asserts that it became the assignee of the Note from the D'Long America in December of 2005. Since that time, the DCM maintains that it has made several demands upon the Defendants to satisfy the principal and interest due under the Note, all of which have been unsuccessful.

In their response, the Defendants deny that Wang ever received any loan from the DCM, the D'Long America or Ever Nice. Rather, it is their joint contention that Wang received the three million dollar loan from Tang Wan Xin, who is currently detained in a Chinese jail and is commonly known in the United States as Peter Tang. Furthermore, it is their collective position that Tang was repaid in full in August of 2005. Defendants' Motion for Summary Judgment at 5.

II

In support of its motion, the DCM urges the Court to grant a summary judgment in its favor on the breach of contract claim because Wang (1) has acknowledged his receipt of the monies that were referenced in the Note; (2) has not disputed the validity of his signature on the Note; and (3) now refuses to satisfy his contractual obligations. The Defendants respond by arguing that (1) the Note is unenforceable because it is ambiguous in its language, and (2) the DCM's limited partnership did not exist at the time when Wang allegedly received the loan.

In the Defendants' summary judgment motion, they allege that all three of the claims by the DCM should fail as a matter of law for several reasons. Initially, they submit that the DCM's breach of contract action cannot survive because the Note (1) is not supported by adequate consideration, and (2) was fully satisfied when full payment of the obligation was made to Tang. Next, the Defendants argue that the currently pending claims by the DCM for quantum meruit and unjust enrichment must fail because no services of any value were ever provided to Wang. Finally, it is their contention that the DCM cannot proceed against the corporate defendants because none of them incurred any obligations under the Note.

III.

In 1986, the Supreme Court opined that "[o]ne of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupportable claims or defenses...." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). At the same time, the language within Federal Rule of Civil Procedure 56(c) indicates that a motion for a summary judgment should be granted only if a party "show[s] that there is no genuine issue as to any material fact and that [it] is entitled to a judgment as a matter of law" The burden is on the movant to demonstrate the absence of a genuine issue of a material fact. See, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In assessing a summary judgment motion, the Court must examine any pleadings, depositions, answers to interrogatories, admissions, and affidavits in a light that is most favorable to the non-moving party. Fed.R.Civ.P. 56(c); see, United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962); Boyd v. Ford Motor Co., 948 F.2d 283, 285 (6th Cir.1991); Bender v. Southland Corp., 749 F.2d 1205, 1210-11 (6th Cir.1984). Thus, it is the responsibility of the Court to determine "whether ... there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson, 477 U.S. at 250, 106 S.Ct. 2505.

A dispute is genuine only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248, 106 S.Ct. 2505. Hence, a summary judgment must be entered if (1) the submitted evidence in support of the dispositive motion clearly suggests that the contested matter is "so one-sided that [the proponent] must prevail as a matter of law," id. at 252, 106 S.Ct. 2505, or (2) the opponent fails to present evidence that is "sufficient to establish the existence of an element essential to its case, and on which it will bear the burden of proof at trial." Celotex Corp., 477 U.S. at 322, 106 S.Ct. 2548. Upon such a showing, the non-moving party must act affirmatively in order to avoid the entry of a summary judgment. Fed.R.Civ.P. 56(e). Importantly, it should be noted that the mere presentation of a scintilla of supporting evidence is insufficient to offset an otherwise sufficiently submitted request for dispositive relief. See Anderson, 477 U.S. at 252, 106 S.Ct. 2505, quoted in Street v. J.C Bradford & Co., 886 F.2d 1472, 1477 (6th Cir.1989). Indeed, "[i]f the evidence is merely colorable or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505 (citations omitted).

An aggrieved party in those cases which involve negotiable instruments need not prove all of the essential elements of a breach of contract. Resolution Trust Corp. v. Starkey, 41 F.3d 1018, 1023 (5th Cir.1995). Rather, it is only necessary for such a party to "establish the note in question, that the non-movant signed the note, that the [moving party] was the legal owner and holder thereof, and that a certain balance was due and owing on the note." Id.

IV.

The dispute in this case arises out of the efficacy, if any, of a promissory note between the parties. Promissory notes are negotiable instruments which are governed in this case by Article 3 of the Uniform Commercial Code ("UCC").⁴ See also UCC § 3-102(a), UCC § 3-104(a)(e), 810 ILCS § 5/3-102(a); 810 ILCS § 5/3-104(a) and (e).

According to § 3-412 of the UCC, a person who signs a promissory note must satisfy his financial obligation "according to its terms at the time it was issued." The maker owes the indebtedness "to a person entitled to enforce the instrument," who, according to UCC § 3-301, is "(I) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to § 3-309 or 3-418(d)."

UCC § 3-308(b)⁵ instructs its reader that once the authenticity of the maker's signature has been established, a plaintiff who produces producing a note has a right to recover if he can establish his entitlement to enforce the instrument, subject to any valid defenses. See also, Tuttle v. Rose, 102 Ill.App.3d 865,...