Tonglin Wang v. Lightspeed Envtl., Inc.

• Decision Date: 03 January 2014
• Docket Number: Case No. 12-14283
• Court: U.S. District Court — Eastern District of Michigan
• Parties: Tonglin Wang, Plaintiff, v. Lightspeed Environmental, Inc., et al., Defendants.

Tonglin Wang, Plaintiff, v. Lightspeed Environmental, Inc., et al., Defendants.

Case No. 12-14283

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

Dated: January 3, 2014

Sean F. Cox

United States District Court Judge

OPINION & ORDER

Plaintiff brought this action against multiple Defendants, following a million-dollar investment he made in a company, asserting security-law and tort claims. Several motions are currently pending before the Court. The Court concludes that oral argument would not aid the decisional process as to the pending motions and orders that they shall be decided without further oral argument. As explained below, the Court shall:

1) DENY Plaintiff's Motion to Compel Limited Discovery (D.E. No. 53);

2) DENY Plaintiff's "Motion To Strike Notice Of Joinder And Application For Entry Of Default And Default Judgment" (D.E. No. 50);

3) GRANT IN PART AND DENY IN PART Defendants' Motions that raise substantive challenges (D.E. Nos. 18 & 54), and shall:

a) Dismiss Plaintiff's Section 12(a)(2) claims in Count IV because he does not allege that this was a public offering, that a prospectus existed, or that there were any oral communications regarding a prospectus;

b) Dismiss Count V, which asserts control person liability under Section 12(a)(2)c) Deny the motion as to the challenges asserted as to Plaintiff's 10(b) and 17(a) Claims in Count II, because Plaintiff has sufficiently alleged specific misrepresentations, justifiable reliance, and scienter;

d) Deny the motion as to the challenge to the control person liability claim under Section 10(b) and Rule 10(b)(5);

e) Deny the motion as to Plaintiff's common law fraud and negligent misrepresentations claims in Counts VII & VIII;

f) Dismiss Plaintiff's breach of fiduciary duty claims asserted in Count IX; and

g) Deny the motion as to Plaintiff's civil conspiracy claims asserted in Count I.

4) GRANT Defendant Martin's Motion to Dismiss for Lack of Personal Jurisdiction (D.E. No. 16);

5) DENY Defendant Unicell B.C.I.'s Motion To Dismiss for Lack of Personal Jurisdiction (raised in D.E. No. 18); and

5) DENY Defendant LightSpeed E.I.'s Motion For Security Of Costs (D.E. No. 32).

Thus, the Court is dismissing Counts IV, V, and IX and all other Counts shall proceed to discovery. The Court shall hold a Scheduling Conference in this matter on January 21, 2013, so that it can issue a Scheduling Order in this case.

BACKGROUND

A. Procedural History

Plaintiff Tonglin Wang ("Plaintiff" or "Wang") filed this action on September 26, 2012, asserting both diversity and federal-question jurisdiction.

On November 13, 2012, Defendants Lightspeed Environmental Ltd., Unicell Limited, and Martin filed a Motion to Dismiss for Lack of Personal Jurisdiction. (D.E. No. 16).

On November 21, 2012, Defendants Lightspeed Environmental, Inc., Automotive Support Group, LLC, Tarrant, King, and Miller filed a Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b), combined with a motion to dismiss for lack of personal jurisdiction over Unicell Body Company, Inc. (D.E. No. 18).

On December 5, 2012, Plaintiff filed a First Amended Complaint ("FAC"). (D.E. No. 20). Plaintiff's Amended Complaint asserts claims against the following Defendants: 1) Lightspeed Environmental, Inc. ("LightSpeed E.I.)"; 2) Lightspeed Environmental Ltd. ("LightSpeed E.L."); 3) Unicell Body Company, Inc. ("Unicell B.C.I."); 4) Unicell Limited ("Unicell Ltd."); 5) Automotive Support Group, LLC d/b/a ASG Renaissance ("A.S.G."); 6) David Tarrant ("Tarrant"); 7) Roger J. Martin ("Martin"); 8) Kim King ("King"); and 9) Hong Miller ("Miller" or "Hong"¹). The FAC states that "[t]he claims in this case flow from a concerted conspiracy among Defendants to defraud Mr. Wang into making a $1,000,000 U.S. Dollar investment in LightSpeed, Inc., a worthless shell company registered in Delaware and represented, owned, and/or controlled by Defendants." (FAC at ¶ 19). The FAC contains the following counts:

• "Civil Conspiracy; All Defendants" (Count I);

• "Violation of Sections 10(b) and Rule 10B-5 of the 1934 Securities Exchange Act, 15 U.S.C. § 78j(I), et seq.; All Defendants" (Count II);

• "Violation of Section 20(a) of the 1934 Securities Exchange Act; 15 U.S.C. § 78t(a); Control Person Liability; Defendants Martin, Tarrant and King" (Count III);

• "Violation of Section 12(a)(2) of the Securities Act of 1933, 15 U.S.C.§771(2); All Defendants" (Count IV);

• "Violation of Section 15 of the Securities Act of 1933, 15 U.S.C. § 770; Control Person Liability; Defendants Martin, Tarrant and King" (Count V);

• "Violation of Section 17(A) of the Securities Act of 1933, 15 U.S.C. § 77q(A); All Defendants" (Count VI);

• "Fraud; All Defendants" (Count VII);

• "Negligent Misrepresentation; All Defendants" (Count VIII); and

• "Breach of Fiduciary Duty; Defendants Martin, Tarrant and King" (Count IX).

(FAC, D.E. No. 30). Plaintiff made a jury demand.

On January 24, 2013, all Defendants filed a Motion for Security Costs. (D.E. No. 32).

On May 16, 2013, this Court held a hearing on D.E. Nos. 16, 18, and 32. On May 20, 2013, this Court issued an "Order Granting Limited Discovery Re: Alter-Ego Theory of Personal Jurisdiction." (D.E. No. 40). That order noted that Plaintiff had "requested limited discovery to address his alter-ego theory of personal jurisdiction with regard to Defendants Unicell Limited and LightSpeed Environmental Ltd." (Id.) (emphasis added). The order directed the parties to appear for a status conference to discuss discovery regarding Plaintiff's alter-ego theory of personal jurisdiction and ordered Plaintiff to file his proposed written discovery requests and proposed deposition notices.

On May 22, 2013, this Court issued an order requiring supplemental briefs by the parties, ordering them to address several issues. (D.E. No. 41).

On May 27, 2013, Plaintiff filed a Statement regarding his proposed discovery regarding alter-ego personal jurisdiction. (D.E. No. 42).

On June 16, 2013, the parties filed a stipulation wherein the November 13, 2012 Motion to Dismiss (D.E. No. 16) was withdrawn as to Defendants LightSpeed E.L and Unicell Ltd. (D.E. No. 45). That stipulation and order states that LightSpeed E.L. and Unicell Ltd. consent to personal jurisdiction. It did not address Martin, the individual Canadian Defendant.

On June 26, 2013, a filing titled "Joinder Of Defendants Lightspeed Environmental, Ltd. And Unicell, Ltd. To Defendants Motion To Dismiss For Failure To State A Claim" that states that those two Defendants join in, and adopt by reference, the November 21, 2012 Motion to Dismiss (D.E. No. 18) that had been filed by other Defendants. (D.E. No. 48). On July 16, 2013, Plaintiff requested a Clerk's Entry of Default (D.E. No. 49) as to Defendants LightSpeed Environmental, Ltd. and Unicell Ltd. On that same date, Plaintiff filed a "Motion To Strike Notice Of Joinder And Application For Entry Of Default Judgment." (D.E. No. 50). That motion challenges as improper LightSpeed E.L. and Unicell Ltd.'s having joined in a pending motion to dismiss and not having filed an answer.

On July 17, 2013, Defendants LightSpeed E.L. and Unicell Ltd. filed an Answer. (D.E. No. 51).

On that same date, July 17, 2013, the Clerk's Office issued a "Notice Of Denial Of Request For Clerk's Entry Of Default" (D.E. No. 52) that states that it denied the request for Clerk's Entry of Default due to the notice of joinder, and the answer, that those Defendants had filed.

On July 18, 2013, Plaintiff filed a "Motion To Compel Production Of Limited Discovery" (D.E. No. 53), wherein Plaintiff asks the Court to compel the "corporate defendants" to produce documents responsive to Plaintiff's First Set of Interrogatories and First Request for Productionof Documents.

On July 26, 2013, Defendants LightSpeed E.L. and Unicell Ltd. filed a Motion to Dismiss Pursuant To Rule 12(c) for Failure to State a Claim. (D.E. No. 54).

Accordingly, the following Motions have been fully briefed by the parties and are pending before the Court: 1) the Motion to Dismiss filed by Defendants A.S.G., LightSpeed E.I., Miller, Tarrant, and Unicell B.C.I. (D.E. No. 18); 2) Defendants' Motion for Security of Costs (D.E. No. 32); 3) Plaintiff's Motion to Strike (D.E. No. 50); 4) Plaintiff's Motion to Compel (D.E. No. 53); and 5) a Motion to Dismiss filed by Defendants LightSpeed E.I. and Unicell Ltd. (D.E. No. 54).

The Court previously held a hearing regarding the first and second motions. The Court has not held a hearing regarding the remaining three motions and it concludes that additional oral argument would not aid the decisional process.

B. Allegations In Plaintiff's FAC

Plaintiff's FAC asserts that the "claims in this case flow from a concerted civil conspiracy among Defendants to defraud [him] into making a $1,000,000.00 U.S. Dollar Investment in [LightSpeed E.I.], a worthless shell company registered in Delaware and represented, owned, and/or controlled by Defendants." (FAC at 19). Plaintiff's FAC includes the following allegations.

Plaintiff alleges that Martin is a resident of Canada and that he is an: 1) officer and chairman of the board of LightSpeed E.I. and LightSpeed E.L.; 2) officer, president, and chief executive officer and chairman of the board of Unicell B.C.I.; 3) officer and president of Unicell Ltd.; and 4) officer of A.S.G. (Id. at ¶ 7.)

Tarrant is an: 1) officer and chief executive officer of LightSpeed E.I. and LightSpeed E.L.; and 2) agent of Unicell B.C.I., Unicell Ltd., and A.S.G. (Id. at ¶ 8.)

King is an: 1) officer and general counsel of LightSpeed E.I. and LightSpeed E.L.; and 2) agent of Unicell B.C.I. Unicell Ltd., and A.S.G. (Id. at ¶ 9.)

Defendant Hong Miller is a representative of LightSpeed E. I., LightSpeed E.L., Unicell B.C.I., Unicell Ltd., and A.S.G. (Id. at ¶ 10.). Hong is "educated and speaks and reads Mandarin Chinese and English." (Id. at ¶ 36).

According to the website of LightSpeed E.I and LightSpeed E.L., those entities are...