Jia v. Boardwalk Fresh Burgers & Fries, Inc.
| Decision Date | 09 August 2021 |
| Docket Number | 8:19-cv-2527-VMC-CPT |
| Court | U.S. District Court — Middle District of Florida |
| Parties | CHUNHONG JIA, NAIHAN LI, NAIRUO LI, SHULEI WANG, LIZHONG YAO, WEIWEI ZHANG, and CHONG ZHAO, Plaintiffs, v. BOARDWALK FRESH BURGERS & FRIES, INC., and DAVID DIFERDINANDO, Defendants and Third-Party Plaintiffs, v. MIN WANG a/k/a LILI WANG, YANNAN WANG, NEW CITY ADVISORS, LLC, NEW CITY CAPITAL, LLC, GARY CHAN, ARCHWAY PARTNERS, LLC, JARDIN HILL, LLC, and CLEARWATER HOSPITALITY GROUP, LLC, Third-Party Defendants. |
This matter comes before the Court upon consideration of Third-Party Defendants Min Wang a/k/a Lili Wang, Yannan Wang New City Advisors, LLC, and New City Capital, LLC's (collectively, the “New City Defendants'”) Motion for Summary Judgment (Doc. # 170), Defendants and Third-Party Plaintiffs' Boardwalk Fresh Burgers & Fries, Inc., and David DiFerdinando's (collectively, the “Boardwalk Defendants'”) Motion for Summary Judgment (Doc. # 171), the New City Defendants' Motion for Determination of Choice of Law (Doc. # 169), and the Boardwalk Defendants' Memorandum of Law Regarding Choice of Law Issues (Doc. # 172), all filed on June 1, 2021. The parties have responded (Doc. ## 177; 183; 184) and replied to the applicable Motions. (Doc. ## 198; 199). For the reasons below, the Boardwalk Defendants' Motion is granted and the New City Defendants' Motions are denied.
Plaintiffs Chunhong Jia, Naihan Li, Nairuo Li, Shulei Wang, Lizhong Yao, Weiwei Zhang, and Chong Zhao are Chinese citizens who sought lawful residency status in the United States through the EB-5 immigrant investor program. (Doc. # 117 at ¶ 1-3; Doc. # 201 at 17:24-18:6; Doc. # 202 at 9:21-23, 11:9-10; Doc. # 203 at 9:1-3, 12:1-7; Doc. # 204 at 7:4-5; Doc. # 205 at 7:18-19, 10:4-7; Doc. # 206 at 6:25-7:1, 8:5-12; Doc. # 207 at 7:1-4, 10:18-12:6; Doc. # 208 at 6:22-24). Boardwalk Fresh is “a franchisor of fast casual restaurants in the United States and worldwide.” (Doc. # 171 at ¶ 1; Doc. # 171-2 at ¶ 5). DiFerdinando is the president and chief executive officer of Boardwalk Fresh. (Doc. # 171 at ¶ 1; Doc. # 171-2 at ¶ 3). In 2013, Boardwalk Fresh began discussions with Terry, Gary, and Jacqueline Chan about marketing their franchises to Chinese investors hoping to participate in the EB-5 program. (Doc. # 171 at ¶ 2; Doc. # 213 at ¶ 2; Doc. # 171-2 at ¶ 7). Boardwalk Fresh “did not have any prior experience with the EB-5 program, ” and so the Chans agreed to “handle the EB-5 aspects” of the venture. (Doc. # 213 at ¶ 3; Doc. # 117-2 at ¶¶ 7-8). After these discussions, Boardwalk Fresh and Jardin Hill, LLC - the Chans' company - entered into a joint development agreement. (Doc. # 200 at 34:7-35:5; Doc. # 170 at ¶ 6). According to DiFerdinando, the agreement included the sale of the rights to develop Boardwalk Fresh franchises in parts of Ohio and Pennsylvania for $330, 000. (Doc. # 200 at 34:11-35:1).
In November 2013, Boardwalk Fries Opportunities, LP, was created. (Doc. # 171-4). BWF MGMT, LLC, which was also created in November 2013, was the general partner of Boardwalk Fries Opportunities. (Doc. # 117-6 at 29; Doc. # 171-6). Boardwalk Fries, LLC, which was created in November 2015, was the managing member of BWF MGMT. (Doc. # 117-6 at 29; Doc. # 117-7). Archway Partners, LLC - one of the Chans' companies - was also a member of BWF MGMT. (Doc. # 117-5 at 29). The Boardwalk Defendants contend that Gary Chan created all of these entities, citing their corporate certificates filed with the State of Ohio - which all include his name alone. (Doc. # 171 at ¶ 9; Doc. # 117-4 at 2; Doc. # 117-6 at 2; Doc. # 117-7 at 2). According to DiFerdinando's sworn declaration, neither he nor Boardwalk Fresh had “any involvement in the creation or management of [these entities], ” “owned any interest in [these entities], ” or “held any position with [these entities].” (Doc. # 171-2 at ¶¶ 14-18). Without a contradictory citation, Plaintiffs deny that Gary Chan created these entities. (Doc. # 213 at ¶¶ 9-12). Plaintiffs do cite to a Maryland entity also named Boardwalk Fries, LLC, that appears to have existed as early as March 2013. (Doc. # 213 at ¶ 11; Doc. # 213-1). Plaintiffs provide no information as to the members of the Maryland LLC. (Doc. ## 183; 210).
Boardwalk Fries Opportunities' corporate structure was memorialized in a business plan developed by the Chans:
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(Doc. # 117-6 at 29). This business plan, which also describes the proposed venture, stipulated that “[t]welve EB-5 immigrant investors [would] invest a total of $6 million in Boardwalk Fries Opportunities, . . . and become limited partners in [the] new commercial enterprise.” (Id. at 8). BWF MGMT, in turn, would contribute $3 million to the partnership. (Id. at 6-7). The business plan further noted that the partnership would endeavor to build ten restaurants in Cincinnati and Dayton, Ohio. (Id. at 7). According to DiFerdinando's sworn declaration, neither he nor Boardwalk Fresh “had any role in the creation of the [b]usiness [p]lan.” (Doc. # 171-2 at ¶ 12). Still, in 2014, DiFerdinando signed and had notarized an affidavit (“the Affidavit”) providing:
David DiFerdinando, in conjunction with, by and/or through Boardwalk Fresh Burgers & Fries, Boardwalk Fries, D's Inc. or other affiliated companies and partners, commit to contributing the sum of USD Three Million ($3, 000, 000) to Boardwalk Fries Opportunities, L.P. via BWF MGMT, LLC, its General Partner.
(Doc. # 117-7 at 4). According to DiFerdinando, Boardwalk Fresh never intended to contribute $3 million in cash, but instead planned to “raise the $3 million through tenant allowances [via] landlords.” (Doc. # 200 at 54:7-19).
In early 2014, the Chans contacted New City Advisors to obtain assistance in attracting Chinese investors to their venture. (Doc. # 171 at ¶ 17; Doc. # 213 at ¶ 17; Doc. # 171-12). Thereafter, New City Advisors “recruit[ed] and identif[ied] Chinese nationals interested in investing in the Chans' Boardwalk Fries Opportunities.” (Doc. # 171 at ¶ 23; Doc. # 213 at ¶ 23; Doc. # 171-21). This led to each Plaintiff investing $500, 000 in Boardwalk Fries Opportunities. (Doc. ## 117-9; 117-10; 117-11; 117-12; 117-13; 117-14; 117-15). Plaintiffs' funds were sent to U.S. Bank escrow accounts. (Doc. # 117 at ¶ 115).
Prior to their investments, “Plaintiffs communicated exclusively with [New City Advisors] and its agents.” (Doc. # 171 at ¶ 25; Doc. # 213 at ¶ 25). All information furnished to Plaintiffs regarding the partnership was provided through New City Advisors. (Doc. # 171 at ¶ 28; Doc. # 213 at ¶ 28; Doc. # 171-2 at ¶¶ 19-22). Indeed, “Plaintiffs never communicated [or met] with DiFerdinando.” (Doc. # 171 at ¶ 26; Doc. # 213 at ¶ 26; Doc. # 202 at 14:22-15:2; Doc. # 203 at 23:2-3; Doc. # 204 at 11:4-7, 15:23-16:2; Doc. # 205 at 13:23-14:2; Doc. # 206 at 19:14-15; Doc. # 207 at 19:2-3; Doc. # 208 at 15:2-7; Doc. # 171-2 at ¶ 19). Nor did Plaintiffs ever communicate with any agent or employee of Boardwalk Fresh, aside from Lizhong Yao who chatted with a staff member of a Boardwalk Fresh restaurant while on a trip to Washington, D.C., in 2014. (Doc. # 205 at 14:3-12; Doc. # 206 at 19:16-18; Doc. # 207 at 19:4-9; Doc. # 208 at 15:8-13; Doc. # 171-2 at ¶ 20). And, Plaintiffs did not recall ever seeing DiFerdinando's Affidavit prior to investing in Boardwalk Fries Opportunities. (Doc. # 202 at 52:19-5; Doc. # 204 at 64:5-16; Doc. # 205 at 36:20-25; Doc. # 206 at 46:15-47:3; Doc. # 207 at 23:19-24:4; Doc. # 208 at 48:24-49:6).
Following Plaintiffs' investments in 2014, however, the Boardwalk Fresh restaurants were not built in Ohio. (Doc. # 200 at 68:2-4; Doc. # 117-9 at 5; Doc. # 117-10 at 5; Doc. # 117-11 at 5; Doc. # 117-12 at 5; Doc. # 117-13 at 5; Doc. # 117-14 at 5; Doc. # 117-15 at 5). Instead, the focus shifted to Florida after Terry Chan moved there from Ohio. (Doc. # 200 at 68:6-8, 75:1-7). By 2017, Plaintiffs were concerned with the progress of the venture in Florida. (Doc. # 200 at 59:10-13; Doc. # 202 at 35:1-4). This concern came in part from the restaurants not yet being open and how that would impact their ability to obtain lawful permanent residency through the EB-5 program. (Doc. # 204 at 12:7-15).
Then, in February 2018, Plaintiffs initiated a lawsuit against Gary Chan, Terry Chan, Jacquelyn Chan, Boardwalk Fries Opportunities, BWF MGMT, Boardwalk Fries, LLC, and various other entities related to the Chans, in the Southern District of Ohio. (Doc. # 171-9). Plaintiffs alleged that the Chans misappropriated their investment funds, among other torts. (Id. at ¶¶ 84-92). According to Plaintiffs, the Boardwalk Fries Opportunities' accounts as well. (Doc. # 184 at ¶ 18; Doc. # 171 at ¶ 38).
Sometime prior to these transfers, Boardwalk Fries Opportunities and BWF MGMT signed a letter authorizing Gary Chan to access the funds in escrow. (Doc. # 117-16). DiFerdinando signed this document on behalf of both entities as the “authorized signer.” (Id.). According to DiFerdinando, he did not learn about this diversion until 2018. (Doc. # 171-2 at ¶¶ 23-24). Later in 2015, Gary Chan transferred $330, 000 to Boardwalk Fresh. (Doc. # 22-17 at 2-3).
Separately, in Ohio state court, Plaintiffs obtained a default judgment in the amount of $3.5 million against BWF MGMT on July 29, 2019. (Doc. # 171-28).
Plaintiffs initiated this action on October 11, 2019. (Doc. # 1)....
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