Shin Da Enters. v. Wei Xiang Yong

• Decision Date: 27 October 2022
• Docket Number: Civil Action 21-3384
• Parties: SHIN DA ENTERPRISES INC., et al., Plaintiffs, v. WEI XIANG YONG, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

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SHIN DA ENTERPRISES INC., et al., Plaintiffs, v. WEI XIANG YONG, et al., Defendants.

Civil Action No. 21-3384

United States District Court, E.D. Pennsylvania

October 27, 2022

MEMORANDUM

CHAD F. KENNEY, JUDGE.

Plaintiffs Shin Da Enterprises Inc. (“Shin Da”), 446-50 N 6^th Street LLC (“446 LLC”), and Lijian Ren (“Mr. Ren”) assert two Racketeer Influenced and Corrupt Organizations Act (“RICO”) claims against Defendants Wei Xiang Yong a/k/a John Wei (“Mr Wei”), Jian Mei He (“Ms. He”), UIG Construction, LLC (“UIG”), PA Ridge Associates (“PA Ridge”), Wei's Properties, Inc. (“Wei's Properties”)^[1], Redevelopment Consultants LLC^[2] (“Redevelopment Consultants”), Ying Nan Gai (“Mr. Gai”), and G&Y Contractor Inc. (“G&Y Contractor”).^[3] ECF No. 50. Before the Court is Plaintiffs' Motion for Collateral Estoppel which has been fully briefed and argued before the Court. ECF Nos. 124 130, 133. For the reasons set forth below, the Court will deny Plaintiffs' Motion. An appropriate order will follow.

I. Background

In November 2015, PA Ridge purchased real property on 11^th Street in Philadelphia (the “11^th Street Property”) with the purpose of renovating the structure into an approximately 100-unit apartment complex (the “Project”). ECF No. 50 ¶ 25. PA Ridge then entered an $18 million contract with UIG to serve as the general contractor. Id. ¶¶ 27-28. The Project's date of substantial completion was extended several times from November 30, 2017 to June 30, 2018^[4]and, in turn, the contract amount increased to nearly $25 million, which PA Ridge allegedly financed via an $18 million (or more) loan from Parke Bank.^[5] Id. ¶¶ 29-31.

In August 2018, UIG entered into a subcontract with Shin Da, by and through Mr. Ren, for the provision and installation of kitchen and bathroom fixtures in ninety-three apartment units in exchange for $370,000. Id. ¶¶ 33-36. The contract was allegedly orally amended to include additional materials and work performed, such as sinks, cabinet doorknobs, and plumbing materials, for an amended price of $532,258.76. Id. ¶ 37. The payment schedule provided that Shin Da would be paid $20,000 upon the execution of the contract, $30,000 on September 5, 2018, $40,000 upon the completion of every seven floors, and the remaining balance upon completion of the entire subcontract. Id. ¶ 38. As required, Shin Da was paid $20,000 at the time of signing the subcontract. Id. ¶ 42. Shin Da alleges that it quickly provided the materials and completed installation on a number of floors and was soon owed an additional $240,000. Id. ¶ 39. Plaintiffs further allege that the $240,000 payment was never made and that when Shin Da demanded payment, Mr. Wei stated that he did not have any funds to cover the payments. Id. ¶ 42-43.

According to Plaintiffs, rather than pay the $240,000 owed, Mr. Wei offered to sell one of his properties, located on 6^th Street in Philadelphia (the “6^th Street Property”), to Mr. Ren. Id. ¶ 44. Mr. Ren and Mr. Wei agreed that a $240,000 credit would be applied to the $2.5 million purchase price of the 6^th Street Property. Id. Mr. Ren then formed 446 LLC as the intended purchaser of the 6^th Street Property. Id. ¶ 45. Rather than employ a lawyer to draft the Agreement of Sale, and allegedly to save on legal fees, Mr. Wei's spouse (Ms. He) drafted an agreement written entirely in English. Id. ¶¶ 45-48. Although Mr. Ren did not read or speak English, he asserts that he nevertheless signed the Agreement of Sale because he trusted Mr. Wei as a fellow Chinese businessman. Id. ¶¶ 47-48. In furtherance of the sale, Mr. Ren paid a $50,000 deposit on behalf of 446 LLC at the time of signing. Id. ¶ 49.

Also on September 21, 2018, Mr. Ren, on behalf of 446 LLC, and Mr. Wei, on behalf of the purported property owners JBZ Realty LLC (“JBZ Realty”) and Wei's Properties, executed a supplemental agreement which was written in Chinese. Id. ¶ 50-52. Additionally, Mr. Ren signed a Finder's Fee Agreement which was also written in English and drafted by Ms. He. Id. ¶¶ 53-54. Allegedly unbeknownst to Mr. Ren, the Finder's Fee Agreement required that 446 LLC pay a $700,000 fee to Wei's Properties in connection with the sale of the 6^th Street Property. Id. ¶¶ 55-56. Plaintiffs allege that the finder's fee was fraudulent under Pennsylvania law because neither Mr. Wei nor Wei's Properties are licensed or registered as real estate brokers or salespersons, as required for receiving real estate commissions. Id. ¶¶ 57-59.

On September 28, 2018, Mr. Ren paid Mr. Wei $200,000 allegedly intended as a second payment towards the purchase price of the 6^th Street Property. Id. ¶¶ 60-63. It was subsequently revealed, however, that neither Mr. Wei nor Wei's Properties had an ownership interest in the 6^thStreet Property; rather, it was owned by JBZ Realty, an entity owned by Mr. Wei's brother, Xiang Feng Wei.^[6] Id. ¶¶ 61-62. JBZ Realty, the true owner of the 6^th Street Property, contends that it never received the $200,000, or any other funds, from Mr. Wei on Mr. Ren's behalf. Id. ¶ 63. In turn, Mr. Wei and Wei's Properties assert that the $200,000 was payment towards the finder's fee rather than towards the purchase price. Id. ¶ 64.

Before this discrepancy was revealed, 446 LLC applied for financing through Mr. Wei's preferred lender-Paramount Mortgage Resources, Inc. (“Paramount”)^[7]-in November 2018. Id. ¶¶ 65-67. Paramount's owner, Wang Xiaoning, subsequently informed Mr. Ren that 446 LLC had been approved for a loan from Parke Bank. Id. ¶ 68-69. Accordingly, Wang Xiaoning indicated that the property sale would close in early January 2019. Id. ¶ 68.

Prior to closing, Ms. He, allegedly acting at the direction of Mr. Wei and Wei's Properties, emailed Wang Xiaoning instructing him to include the $500,000 finder's fee allegedly due to Mr. Wei in the closing materials. Id. ¶ 70-72. Wang Xiaoning then refused to disburse the loan to 446 LLC unless 446 LLC paid Mr. Wei the purportedly outstanding $500,000. Id. ¶¶ 73, 75. 446 LLC refused to pay the finder's fee and, as a result, was unable to purchase the 6^th Street Property. Id.

Following 446 LLC's refusal to pay the $500,000, Mr. Wei allegedly removed Shin Da from the Project, did not allow Shin Da to finish its work, and did not pay Shin Da for the materials obtained and labor provided. Id. ¶ 75. Subsequently, in January 2019, Mr. Ren sought to recover tools left behind at the 11^th Street Property. Id. ¶ 78. When Mr. Ren arrived at the 11^thStreet Property, Mr. Gai, who was visiting Mr. Wei from out-of-state, allegedly threatened to beat Mr. Ren with a metal pole. Id. ¶ 78. Mr. Ren alleges that the tools and materials he stored at the 11^th Street Property were never recovered or returned. Id. ¶ 80. However, at least some of the cabinets and countertops that Shin Da obtained and left at the 11^th Street Property were allegedly installed at the property, despite Shin Da never receiving payment for such materials. Id. ¶ 81. Mr. Wei allegedly maintains that such payment was not necessary because 446 LLC did not pay the purported finder's fee. Id. ¶ 83.

In approximately January 2019, Mr. Wei allegedly threatened Mr. Ren, ordering him not to seek help from authorities or file any civil action to recover any funds related to the 11^th Street or 6^th Street Properties. Id. ¶ 84. Allegedly, Mr. Wei has friends who are building inspectors and would, at Mr. Wei's direction, draft fraudulent documents asserting that Shin Da's work at the 11^th Street Property was deficient. Id. UIG would then sue Shin Da asserting deficiently performed work for thousands, or even millions, of dollars. Id. Indeed, Defendants maintain that Shin Da failed to perform on the contract and that the work was so deficient that other contractors were used to demolish, remove, rebuild, and redo the work performed by Shin Da. ECF No. 32 at 4.

Additionally, Mr. Wei and Ms. He allegedly submitted fabricated invoices to Parke Bank representing that work actually performed by Shin Da had been performed by Wei's Properties or Redevelopment Consultants throughout 2018 and 2019. ECF No. 50 ¶¶ 147-169. As a result of these representations and on-site inspections performed by construction monitoring company ConTech Services, Inc. (“ConTech”), Parke Bank disbursed loans to Mr. Wei to pay for the work purportedly performed by Shin Da. Id. ¶¶ 152-159. However, Plaintiffs assert that rather than paying Shin Da, Mr. Wei directed the funds to Wei's Properties and Redevelopment Consultants. Id. ¶ 160.

Additionally throughout 2019 and in connection with state court litigation, Defendants UIG, PA Ridge, and Mr. Wei allegedly emailed Shin Da invoices from LN Flooring Corp. (“LN Flooring”) and G&Y Contractor for which UIG sought to recoup damages from Shin Da. Id. ¶ 100. However, the invoices which purport to reflect work done by LN Flooring and G&Y Contractor to fix Shin Da's deficiently performed work, are at least partially duplicative of one another. Id. Moreover, Mr. Gai testified that the G&Y Contractor's invoices did not reflect work actually performed but were instead fabricated to justify payments made by UIG to G&Y Contractor for $110,000 for other unrelated work performed at the Project. Id. ¶ 103-06. Plaintiffs allege that the fabricated invoices were an attempt to shift the $110,000 expense for work performed by G&Y Contractor from Mr. Wei to Shin Da. Id. ¶ 105. Also, in support of state court litigation, Construction Monitors, Inc. (“Construction Monitors”) conducted an inspection of the work performed by Shin Da and summarized alleged deficiencies in an “Inspection Report” which Defendants electronically transmitted to Shin Da. ECF No. 50 ¶¶ 8990. Plaintiffs allege that the report contains fraudulent statements and...