Vanguard International, Inc. v. Guangdong Fully, Ltd.

• Decision Date: 14 January 2008
• Docket Number: 57396-9-I
• Parties: VANGUARD INTERNATIONAL, INC., a Washington corporation; and MARKETING SERVICES, LLC, a foreign limited liability company, Respondents, v. GUANGDONG FULLY, LTD., a former corporation, Defendant, VINCENT WU, an individual; LAI FONG YIP, an individual; and the marital community of VINCENT WU and LAI FONG YIP, Appellants.
• Court: Washington Court of Appeals

VANGUARD INTERNATIONAL, INC., a Washington corporation; and MARKETING SERVICES, LLC, a foreign limited liability company, Respondents,
v.
GUANGDONG FULLY, LTD., a former corporation, Defendant,

VINCENT WU, an individual; LAI FONG YIP, an individual; and the marital community of VINCENT WU and LAI FONG YIP, Appellants.

No. 57396-9-I

Court of Appeals of Washington, Division 1

January 14, 2008

UNPUBLISHED

OPINION

GROSSE, J.

It is the quality and nature of the acts in Washington that determine whether specific jurisdiction lies over nonresident defendants. Here, Vincent Wu's solicitation and continuing placement of business orders with Vanguard, a Washington based company, are of such a nature that specific jurisdiction exists over these non-residents who had committed fraud against the company. The trial court is affirmed.

FACTS

Vanguard International, Inc. and Vanguard Marketing Services, LLC (collectively Vanguard) are headquartered in Issaquah, Washington. Vanguard is engaged in the buying, exporting and selling of fresh fruits and vegetables.

Vanguard normally sells its product to buyers on short-term credit.

In 1998, Tim Lee of Guangdong Fully Ltd. (GD Fully), a company located in Hong Kong, contacted Vanguard, requesting it supply fruit to the company for sale in China. GD Fully filed a customer information and credit application which was signed by Vincent Wu as the owner of GD Fully. Wu also executed a Claim Policy and Instructions Form identifying himself as managing director. A market brochure supplied by GD Fully indicated that "GD Fully Ltd. is a trading firm in Hong Kong, was formed in 1996 by Mr. Vincent Wu and Mr. Lee Pui."

From March 1998 through early 2000, Vanguard sold product to GD Fully. GD Fully routinely contacted Vanguard in Washington and placed orders for fruit via facsimile, telephone or e-mail. Vanguard delivered the fruit to GD Fully and Wu in Hong Kong. It was sold on short-term credit and the product was usually paid for within a month of delivery. GD Fully had paid Vanguard over $22 million in sales.

Vanguard's President and Founder, Craig Stauffer, and Vanguard's Global Sales Manager, William Mehrten, traveled to Hong Kong and southern China to meet Lee and Wu. At that meeting, and on numerous other occasions between the spring of 1998 and the fall of 2000, Wu represented himself to be and acted as the person in control of GD Fully and Lee's supervisor. At these meetings Wu spoke in Chinese and Lee translated.

In the summer of 2000, GD Fully's payments to Vanguard began to slow down. On several occasions, Wu guaranteed and personally assured Stauffer and Vanguard that Wu personally controlled the money of GD Fully and that money had been set aside to pay Vanguard. Payments were purportedly tied up at this point because of an audit in China that had nothing to do with the transactions with Vanguard. Assured that there was no risk involved, Vanguard continued to ship fruit to GD Fully.

In September 2000, GD Fully stopped making payments to Vanguard. Vanguard ceased shipping anything and was left with a debt owing of over $2.6 million. Stauffer tried to meet with Wu in early October 2000. GD Fully requested that more fruit be shipped. Stauffer demanded payment as owed to no avail.

In late October 2000, Wu and all of the assets of GD Fully had vanished. When Stauffer finally reached one of GD Fully's employees, Stauffer was told that Wu had transferred all the money from GD Fully to Wu's personal account. Vanguard hired international private investigators to locate GD Fully and its assets. Four years later in 2004, Wu was finally located in California where he was living with his wife, Lai Fong Yip. Vanguard commenced litigation in both California and Washington courts.

Vanguard obtained a temporary restraining order for a prejudgment attachment against the house in California. Wu filed a declaration denying that he was an owner or manager of GD Fully and denying that he had any meetings or conversations with Stauffer. Yip filed a declaration that she had only married Wu in 2003. While the temporary restraining order was in effect, Wu and Yip tried to encumber the California house with over $300,000 of liens. At the same time, Wu and Yip emptied over $1 million from a Merrill Lynch account, moving it to an offshore account. The California commissioner denied the prejudgment attachment. Vanguard dismissed the California action without prejudice and continued to pursue the action here in Washington.

Wu and Yip filed a CR 12 motion to dismiss for personal jurisdiction and forum non conveniens. As the CR 12 motion was based upon declarations from the California action, the motion was considered under CR 56. Vanguard contested the dismissal disputing all of Wu's facts alleged in his declaration. Vanguard also argued that a dismissal was improper because the relevant discovery was not yet complete. The motion was argued before Judge Nicole MacInnes while written discovery was still ongoing. At that point in time, Wu had already been sanctioned twice for failing to produce discovery. Judge MacInnes denied the motion in separate orders as to both Wu and Yip. In denying Yip's motion, the court held it was without prejudice and permitted Yip to assert it again at the conclusion of discovery. The matter was sent to trial.

A bench trial was held and the court entered a judgment of over $4 million in favor of Vanguard. Wu and Yip subsequently left the country and are now living in China. The trial court issued contempt orders to aid in the execution of the judgment. Wu and Yip appeal the judgment.^[1]

ANALYSIS

Before addressing whether the trial court properly found jurisdiction over Wu and Yip, we must first consider whether Wu's appeal derives solely from the trial court's findings of fact and conclusions of law, which are reviewed for substantial evidence, or whether Wu may also appeal the denial of his motion to dismiss for lack of personal jurisdiction. Such motions are reviewed de novo under the same standard that applies to summary judgment motions when evidence outside of the pleadings has been filed.^[2] Ordinarily, a decision denying summary judgment on the basis of disputed material facts is not reviewable on appeal.^[3] But when a motion is denied as a matter of law, this court has declined to hold that the trial court's decision is not reviewable.^[4]

The trial court did not err in its assumption of jurisdiction. Washington's long-arm statute^[5] provides for specific personal jurisdiction over nonresident defendants in certain circumstances. To determine whether specific personal jurisdiction exists, "the court...