Gao v. Sinova Specialties, Inc.
| Citation | 2018 NCBC 72 |
| Decision Date | 16 July 2018 |
| Docket Number | 16 CVS 6709 |
| Parties | JIANXUN "BILL" GAO, individually, and derivatively on behalf of Sinova Specialties, Inc., Plaintiff, v. SINOVA SPECIALTIES, INC., a North Carolina Corporation; JOHANNES HECKMANN; YAN "ELLEN" LIU; NEW SHORE, INC., a North Carolina Corporation, Defendants, SINOVA SPECIALTIES, INC., a North Carolina Corporation, Nominal Defendant. |
| Court | Superior Courts of Law and Equity of North Carolina |
Brooks, Pierce, McLendon, Humphrey & Leonard, L.L.P., by Jeffrey E. Oleynik, Jessica Thaller-Moran, and Ryan C Fairchild, and Greenberg Traurig, LLP, by Gabriel Aizenberg Andrew J. Enschedé, and Lucia Marker-Moore, for Plaintiff
Erwin Bishop, Capitano & Moss, P.A., by Joseph W. Moss, Jr., for Defendant/Nominal-Defendant Sinova Specialties, Inc.
Essex Richards, PA, by Marc E. Gustafson, for Defendants Johannes Heckmann and New Shore, Inc.
Higgins & Owens, PLLC, by Sara W. Higgins, for Defendant Yan "Ellen" Liu.
ORDER AND OPINION ON PLAINTIFF'S MOTIONS TO DISMISS PURSUANT TO RULE 12(B)(6)
1. THIS MATTER is before the Court on Plaintiff's motions to dismiss the counterclaims of Defendant/Nominal-Defendant Sinova Specialties, Inc. ("Sinova US"), Defendant Johannes Heckmann ("Heckmann"), and Defendant Yan "Ellen" Liu ("Liu") (collectively, the "Counterclaimants") pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure ("Rule(s)"). Having considered the motions, the briefs, and the arguments of counsel at a hearing on the motions[1], the Court GRANTS in part and DENIES in part the motions.
2. The Court does not make findings of fact on the motions; rather, the Court recites the following factual allegations of the counterclaims that are relevant and necessary to the Court's determination of the motions.
3. Sinova US, a North Carolina corporation, was formed in 2009. (Heckmann's Am. Countercls. ¶¶ 3, 8, ECF No. 267; Liu's Am. Countercls. ¶¶ 3, 8, ECF No. 268; Sinova US's Second Am. Countercls. ¶¶ 1, 8, ECF No. 266.) Sinova U.S. develops and sells chemical compounds. (Heckmann's Am. Countercls. ¶¶ 9-11; Liu's Am. Countercls. ¶¶ 9-11; Sinova US's Second Am. Countercls. ¶¶ 9-11.)
4. Plaintiff Jianxun "Bill" Gao ("Gao"), Heckmann, and Liu are the sole shareholders, directors, and officers of Sinova US. (See Heckmann's Am. Countercls. ¶ 85; Liu's Am. Countercls. ¶ 85; Sinova US's Second Am. Countercls. ¶ 86; Verified Am. Compl. Ex. C, ECF No. 56.)
5. In 2011, Feng Sujin, Zhang Lanjun, and Wang Shufen, Gao's mother-in-law, formed Sinova Chemicals Limited ("Sinova HK"), a Hong Kong corporation. (Heckmann's Am. Countercls. ¶ 3; Heckmann's Am. Answer, Affirmative Defenses & Countercls. ¶ 14, ECF No. 221 ["Heckmann's Answer"]; Liu's Am. Countercls. ¶ 3; Liu's Am. Answer, Affirmative Defenses & Countercls. ¶ 14, ECF No. 215 ["Liu's Answer"]; Sinova US's Second Am. Countercls. ¶ 3; Sinova US's Answer to Am. Compl. ¶ 14, ECF No. 195 ["Sinova US's Answer"].)
6. In 2012, Gao, Liu, and Feng Sujin formed Sinova Specialties, Inc. (Beijing) ("Sinova Beijing"), a Chinese corporation. (Heckmann's Am. Countercls. ¶ 3; Heckmann's Answer ¶ 15; Liu's Am. Countercls. ¶ 3; Liu's Answer ¶ 15; Sinova US's Second Am. Countercls. ¶ 3; Sinova US's Answer ¶ 15.)
7. Sinova US, Sinova Beijing, and Sinova HK are collectively referred to herein as the "Sinova Companies."
8. Xin Yong Zhong Da Chemicals ("XYZD") is a Chinese corporation indirectly controlled by Heckmann, Liu, and Gao through Liu's mother, Gao's mother-in-law, and a third party. (Heckmann's Am. Countercls. ¶ 4; Liu's Am. Countercls. ¶ 4; Sinova US's Second Am. Countercls. ¶ 4.) In 2012, XYZD exported chemical compounds on behalf of Sinova U.S. before Sinova Beijing was formed. (Heckmann's Am. Countercls. ¶ 4; Liu's Am. Countercls. ¶ 4; Sinova US's Second Am. Countercls. ¶ 4.)
9. The Sinova Companies and XYZD are collectively referred to herein as the "Sinova Group."
10. The responsibilities of Sinova U.S. were shared by Heckmann, Liu, and Gao. (Heckmann's Am. Countercls. ¶ 7; Liu's Am. Countercls. ¶ 7; Sinova US's Second Am. Countercls. ¶ 7.) Heckmann was primarily responsible for sales, Liu was primarily responsible for operations, and Gao was primarily responsible for the chemistry and technical aspects of the business. (Heckmann's Am. Countercls. ¶ 7; Liu's Am. Countercls. ¶ 7; Sinova US's Second Am. Countercls. ¶ 7.)
11. From 2009 to 2012, Sinova US's operations consisted of assisting Sinomax Solutions Inc. ("SMBJ"), a separate Chinese company in which neither Heckmann, Liu, nor Gao owned an interest, with its sales of the chemical compounds "PP," "BFA," and "TSS" in the United States and Europe. (Heckmann's Am. Countercls. ¶ 9; Liu's Am. Countercls. ¶ 9; Sinova US's Second Am. Countercls. ¶ 9.) In 2012, the Sinova Companies purchased SMBJ's business, including SMBJ's customer lists and the licensing rights to PP, BFA, and TSS, and Sinova U.S. began selling chemical compounds in the United States and Europe on behalf of the Sinova Companies. (Heckmann's Am. Countercls. ¶ 10; Liu's Am. Countercls. ¶ 10; Sinova US's Second Am. Countercls. ¶ 10.) As a result, the Sinova Companies needed their own lab in order to do research and development, testing, and quality control for their products. (Heckmann's Am. Countercls. ¶ 11; Liu's Am. Countercls. ¶ 11; Sinova US's Second Am. Countercls. ¶ 11.)
12. From May 2012 through early 2014, Gao operated a lab in Beijing that was to be used for the benefit of the Sinova Group and for the purpose of creating products for sale by the Sinova Companies. (Heckmann's Am. Countercls. ¶ 12; Liu's Am. Countercls. ¶ 12; Sinova US's Second Am. Countercls. ¶ 12.) The Sinova Group paid all the costs of the lab, which included the cost of an office lease, equipment, supplies, reagents, testing, and salaries of approximately eleven employees. (Heckmann's Am. Countercls. ¶ 13; Liu's Am. Countercls. ¶ 13; Sinova US's Second Am. Countercls. ¶ 13.)
13. On or about September 16, 2012, the Sinova Group, Heckmann, Liu, and Gao entered into a "CDA and Non-Compete Agreement" (the "CDA").[2] The CDA provides that "[t]he three persons in this agreement" are Heckmann, Liu, and Gao, and that "[t]he company in this agreement is Sinova Specialties Inc. (Beijing) and its related company [sic] in USA, HK and China." (Am. Compl. Ex. A, at 1.) The CDA imposes an obligation on each of the individual parties to the agreement to "keep the secrecy of the company" and to "not leak the market, technology and operation secrecy to any third party directly or indirectly at any time." (Am. Compl. Ex. A, at 2.) The CDA further provides that (Am. Compl. Ex. A, at 3-4.) The CDA is signed by Sinova Beijing, Heckmann, Liu, and Gao. (Am. Compl. Ex. A, at 4.)
14. Also on or about September 16, 2012, Heckmann, Liu, and Gao entered into a board agreement (the "2012 Board Agreement"). The 2012 Board Agreement states that the shareholders of Sinova U.S. and Sinova Beijing (Am. Compl. Ex. B, at 1.)
15. In the middle of 2013, Heckmann, Liu, and Gao were negotiating the separation of their business interests. (Heckmann's Am. Countercls. ¶ 26; Liu's Am. Countercls. ¶ 26; Sinova US's Second Am. Countercls. ¶ 26.) The parties extensively negotiated which chemical products would continue to be manufactured and sold by the Sinova Group (the "Common Projects"). (Heckmann's Am. Countercls. ¶ 27; Liu's Am. Countercls. ¶ 27; Sinova US's Second Am. Countercls. ¶ 27.) Over the course of its business, the Sinova Group had attempted to develop many products that never came to fruition. (Heckmann's Am. Countercls. ¶ 30; Liu's Am. Countercls. ¶ 30; Sinova US's Second Am. Countercls. ¶ 30.) As a result, Heckmann, Liu, and Gao agreed that the Common Projects would include the Sinova Group's marketable and profitable chemical compounds and those chemical compounds that were still under development with a potential upside as of January 2014. (Heckmann's Am. Countercls. ¶¶ 28-29; Liu's Am. Countercls. ¶¶ 28-29; Sinova US's Second Am. Countercls. ¶¶ 28-29.)
16. To determine which projects should be designated as Common Projects, Heckmann and Liu asked Gao to identify all the projects that had been run or developed in the lab. (Heckmann's Am. Countercls. ¶ 33; Liu's Am. Countercls. ¶ 33; Sinova US's Second Am. Countercls. ¶ 33.) Counterclaimants allege that, over several months beginning in mid-2013 through early 2014, Heckmann, Liu, and Gao discussed what Heckmann and Liu were led by Gao to believe were all of the projects being worked on in the lab. (Heckmann's Am. Countercls. ¶ 32; Liu's Am. Countercls. ¶ 32; Sinova US's Second Am. Countercls. ¶ 32.)
17. On July 11, 2013, Heckmann sent an e-mail to Gao and Liu stating: ...
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