Opinion
Case No.: 2:17-bk-21386-SK Adversary No.: 2:19-ap-01383-SK
2022-08-08
IN RE: ZETTA JET USA, INC., Debtor(s), Jonathan D. King, Plaintiff(s), v. Export Development Canada, Glove Assets Investment Limited, Minsheng Business Aviation Limited, Minsheng Financial Leasing Co., Ltd., Li Qi, Truly Great Global Limited, TVPX ARS, Inc., in its capacity as trustee to Zetta MSN 9688 Statutory Trust dated September 20, 2016 (formed as Wyoming statutory trust), Universal Leader Investment Limited, Wells Fargo Bank Northwest, N.A., in its capacity as trustee to Yuntian 3 Trust dated September 20, 2016 (formed and administered in Utah) and its capacity as trustee of Yuntian 4 Trust dated September 20, 2016 (formed and administered in Utah), Yuntian 3 Leasing Company Designated Activity Company, Yuntian 4 Leasing Company Designated Activity Company, Zetta MSN 9606 Statutory Trust dated September 20, 2016 (formed as Wyoming statutory trust), Defendant(s).
Brian K. Condon, Arnold & Porter Kaye Scholer LLP, Los Angeles, CA, for Defendants Glove Assets Investment Limited, Truly Great Global Limited, Universal Leader Investment Limited, Li Qi. Allison B. Hudson, Vedder Price P.C., Chicago, IL, Michael J. Edelman, Vedder Price, New York, NY, for Defendant Export Development Canada. John K. Lyons, DLA Piper LLP (US), Chicago, IL, for Plaintiff. Joshua M. Mester, Jones Day, Los Angeles, CA, for Defendants Yuntian 3 Leasing Company Designated Activity Company, Minsheng Business Aviation Limited. Daniel T. Moss, David S. Torborg, Jones Day, Washington, DC, for Defendant Minsheng Business Aviation Limited, Yuntian 3 Leasing Company Designated Activity Company, Yuntian 4 Leasing Company Designated Activity Company, Minsheng Financial Leasing Co., Ltd. Scott Olson, Vedder Price, San Francisco, CA, for Defendant Export Development Canada. Oscar D. Ramallo, Los Angeles, CA, for Defendant Glove Assets Investment Limited, Truly Great Global Limited, Universal Leader Investment Limited.
Brian K. Condon, Arnold & Porter Kaye Scholer LLP, Los Angeles, CA, for Defendants Glove Assets Investment Limited, Truly Great Global Limited, Universal Leader Investment Limited, Li Qi.
Allison B. Hudson, Vedder Price P.C., Chicago, IL, Michael J. Edelman, Vedder Price, New York, NY, for Defendant Export Development Canada.
John K. Lyons, DLA Piper LLP (US), Chicago, IL, for Plaintiff.
Joshua M. Mester, Jones Day, Los Angeles, CA, for Defendants Yuntian 3 Leasing Company Designated Activity Company, Minsheng Business Aviation Limited.
Daniel T. Moss, David S. Torborg, Jones Day, Washington, DC, for Defendant Minsheng Business Aviation Limited, Yuntian 3 Leasing Company Designated Activity Company, Yuntian 4 Leasing Company Designated Activity Company, Minsheng Financial Leasing Co., Ltd.
Scott Olson, Vedder Price, San Francisco, CA, for Defendant Export Development Canada.
Oscar D. Ramallo, Los Angeles, CA, for Defendant Glove Assets Investment Limited, Truly Great Global Limited, Universal Leader Investment Limited.
COURT'S MEMORANDUM OF DECISION ON "MOTION TO ENJOIN SINGAPORE ACTION," DOCKET #360, FILED BY UNIVERSAL LEADER INVESTMENT LIMITED AND GLOVE ASSETS INVESTMENT LIMITED
Sandra R. Klein, United States Bankruptcy Judge
On 8/3/22 at 9:00 a.m., the Court heard a "Motion to Enjoin Singapore Action," Docket #360, filed by Universal Leader Investment Limited and Glove Assets Investment Limited. Appearances were as noted on the record. All parties were given an opportunity to be heard. At the conclusion of the 8/3/22 hearing, the Court took the Motion under submission.
The Court's Memorandum of Decision regarding the Motion is attached hereto.
Before the Court is a "Motion to Enjoin Singapore Action" filed by Universal Leader Investment Limited (UL) and Glove Assets Investment Limited (GA, and together with UL, UL/GA). AP Docket #360. In support of the Motion, UL/GA filed a "Request for Judicial Notice ..." (UL/GA First RJN). AP Docket #361. Jonathan D. King (King), in his capacity as chapter 7 trustee (Trustee) of Zetta Jet USA, Inc. (Zetta USA) and Zetta Jet PTE (Zetta Singapore, and together with Zetta USA, Debtors), filed an "Opposition to Defendants [UL/GA]’s Motion to Enjoin Singapore Action" (Opposition). AP Docket #363. In support of the Opposition, the Trustee filed a "Request for Judicial Notice ..." (Trustee RJN), AP Docket #364, an "Objection to Request for Judicial Notice ..." (Trustee First RJN Objection), AP Docket #365, and a "Declaration of Meiyen Tan ..." (Tan 5/18/22 Decl.), AP Docket #366. On 5/25/22, UL/GA filed a "Reply in Support of Motion to Enjoin Singapore Action" (Reply), AP Docket #371, a "Declaration of Andrew Chan ..." (Chan 5/25/22 Decl.), AP Docket #371-1, and a "Reply Request for Judicial Notice ..." (UL/GA Second RJN), AP Docket #372. The Trustee filed an "Objection to Reply Request for Judicial Notice ..." (Trustee Second RJN Objection). AP Docket #377.
All references to "Zetta USA Docket" are to the docket in In re Zetta Jet USA, Inc., 17-bk-21386-SK. All references to "Zetta Singapore Docket" are to the docket in In re Zetta Jet PTE Ltd., 17-bk-21387-SK. All references to "AP Docket" are to the docket in Jonathan D. King v. Yuntian 3 Leasing Co. Designated Activity Co. et al., 19-ap-1383-SK (Adversary Proceeding).
On 5/31/22, the Trustee filed a "Notice of Correction," indicating that one of the citations in the Opposition was incorrect. AP Docket #376.
On 8/3/22, the Court held a hearing on the Motion (8/3/22 Hearing), during which counsel for the Trustee and UL/GA appeared and were given an opportunity to be heard. At the conclusion of the hearing, the Court took the Motion under submission. Based on the argument in the pleadings and argument of counsel during the hearing, and for the reasons stated in the analysis below, the Court rules as follows: 1) the Motion is granted in part and the Court issues an anti-suit injunction enjoining the Singapore Action, as defined below, against UL/GA; and 2) the Motion is denied in part regarding the request to enjoin the Singapore Action against Li Qi.
I. Facts
a. Bankruptcy Cases
On 9/15/17 (Petition Date), Zetta USA and Zetta Singapore filed chapter 11 petitions (collectively, Cases). Zetta USA Docket #1; Zetta Singapore Docket #1. King was appointed as the chapter 11 trustee, and after the Cases were converted, he was appointed as the chapter 7 trustee. Zetta USA Docket #s 159, 452, 458.
b. Adversary Proceeding
i. Original Complaint
On 9/13/19, the Trustee filed an adversary complaint (Original Complaint) against: 1) Yuntian 3 Leasing Company Designated Activity Company f/k/a Yuntian 3 Leasing Company Limited (Yuntian 3); 2) Yuntian 4 Leasing Company Designated Activity Company f/k/a Yuntian 4 Leasing Company Limited (Yuntian 4); 3) Minsheng Financial Leasing Co., Ltd. (Minsheng Financial); 4) Minsheng Business Aviation Limited (Minsheng Business, and together with Minsheng Financial, Minsheng); 5) Export Development Canada (EDC); 6) UL; 7) GA; 8) Truly Great Global Limited (TG); and 9) Li Qi (collectively, the Defendants), which alleged that Zetta Singapore was formed and run by a con artist, Geoffrey Cassidy (Cassidy), who, over a two-year period, with the help of the Defendants, obtained $10 million from kickbacks, bribes and embezzlement, while saddling the Debtors with almost $500,000,000 in unsustainable debt incurred by purchasing overpriced aircraft in a down market. AP Docket #1.
Cassidy was the Debtors’ Managing Director and a Director of Zetta Singapore. FAC ¶ 29.
ii. Original UL/GA/TG Motion to Dismiss
The Court granted in part and denied in part a "Motion to Dismiss Counts I, II, IV, V, VIII, XIII, XIV, & XV of Adversary Complaint" filed by UL/GA and TG (Original UL/GA/TG MTD), dismissing the following counts with leave to amend those counts (Original UL/GA/TG MTD Ruling): ?
AP Docket #s 45, 174, 188.
iii. First Amended Complaint
On 3/29/21, the Trustee filed a First Amended Complaint (FAC) and approximately two months later, he filed a redlined FAC, which contained the following counts against UL/GA and Li Qi: ?
AP Docket #s 232, 253.
In the FAC, the Trustee indicated that he intended "to bring all preference claims against the Defendants in Singapore, including the preference claims set forth in Counts III, IV, V, VIII, IX, X, and XII" of the Original Complaint "and additional preference claims available under Singapore law." FAC ¶ 530 n.7. iv. Motions to Dismiss FAC
UL/GA and TG moved to dismiss the FAC (Second UL/GA/TG MTD) and on 8/20/21, the Court dismissed counts 1, 2, 6, 7, 8, 9, and 10 without leave to amend (Second UL/GA/TG MTD Ruling). AP Docket #s 238, 314, 319. Li Qi also moved to dismiss the FAC (Li Qi MTD). AP Docket #239. The Court found that, because Li Qi was named as a defendant in Counts 1, 2, 7, 8, and 9, all of which were dismissed with prejudice, it did not need to address the issues raised in the Li Qi MTD. Second UL/GA/TG MTD Ruling at 2, 42. On 8/20/21, the Court entered a "Final Judgment in Favor of Universal Leader Investment Limited, Glove Assets Investment Limited, Truly Great Global Limited, and Li Qi" (Judgment), which is currently on appeal (Appeal) to the District Court. AP Docket #s 320, 328.
c. Singapore Action
On 2/28/22, the Trustee filed an action in the High Court of the Republic of Singapore (Singapore High Court), In the Matter of Zetta Jet PTE, Ltd.; Zetta Jet PTE, Ltd. v. Li Qi, Universal Leader Investment Limited, and Glove Assets Investment Limited, Case # HC/OS 193/2022 (Singapore Action), which alleges:
1) Unfair preferences under the Companies Act § 329 (CA § 329) and Bankruptcy Act § 99 (BA § 99, and together with CA § 329, the Singapore Claims) against UL/GA and Li Qi; and
2) Breach of fiduciary duties against Li Qi.
UL/GA First RJN Ex. 24 at 2, 5-6; AP Docket #379 ¶¶ 4.a, 4.c, 58-59, 76-78. In support of the Singapore Action, the Trustee filed an "Affidavit of Luke Furler" (Furler 2/28/22 Aff.). AP Docket #379.
II. Arguments and Analysis
a. RJNs
i. Arguments
1. UL/GA First RJN
UL/GA request that the Court take judicial notice of: 1) certain documents filed in the Cases or the Adversary Proceeding; 2) documents filed in the Singapore Action; and 3) copies of Singapore statutes. UL/GA First RJN at 3-4. They assert that federal court records and Singaporean court records are proper subjects of judicial notice. Id. (citing Trigueros v. Adams, 658 F.3d 983, 987 (9th Cir. 2011) ). They also highlight that Federal Rule of Civil Procedure (FRCP) 44.1 allows the Court to take judicial notice of foreign statutes. Id. at 4 (citing G & G Prods. LLC v. Rusic, 902 F.3d 940, 948 (9th Cir. 2018) ).
The Trustee responds that the UL/GA First RJN serves no purpose and is a waste of the Court's time because it seeks judicial notice of numerous pleadings and documents filed in the Cases and Adversary Proceeding and the Court need not take judicial notice of its records to consider their effects. Trstee First RJN Objection at 2-3 (citing Lyles v. Ford Motor Credit Co., 2013 WL 987723, at * 2 (C.D. Cal. Mar. 11, 2013) ; Audionics Sys., Inc. v. AAMP of Fla., Inc., 2014 WL 12580235, at *2 (C.D. Cal. Mar. 24, 2014) ). The Trustee asserts that because of the UL/GA First RJN, he was forced to request that the Court take judicial notice of dozens of documents for no apparent purpose. Id. at 3 n.1.
UL/GA did not reply to the Trustee First RJN Objection.
2. Trustee RJN
The Trustee requests that the Court take judicial notice of: 1) certain documents filed in the Cases or the Adversary Proceeding; and 2) guides and materials addressing foreign law. Trustee RJN at 2-5. UL/GA did not file an opposition to the Trustee RJN.
3. UL/GA Second RJN
UL/GA request that the Court take judicial notice of a Memorandum of Association and Articles of Association for UL and GA respectively (UL/GA MOAs). UL/GA Second RJN at 3. They assert that the UL/GA MOAs are British Virgin Islands (BVI) government records and are appropriate subjects of judicial notice. Id.
The Trustee responds that the UL/GA Second RJN seeks judicial notice of foreign documents, which have not been properly authenticated. Trustee Second RJN Objection at 2. He asserts that judicial notice requires submission of " ‘unimpeached certified copies’ of legal documents." Id. (quoting Pogo Producing Co. v. Moore, 2006 WL 3484279, at *4 (S.D. Tex. Nov. 30, 2006) ; Manges v. Seattle-First Nat'l Bank (In re Manges), 29 F.3d 1034, 1042 (5th Cir. 1994) ). The Trustee claims that the UL/GA MOAs are not self-authenticating and are uncertified foreign records. Id. He asserts that without a certification, the UL/GA MOAs should not be judicially noticed. Id. at 3. The Trustee also contends that UL/GA rely on the UL/GA Second RJN for a new argument they make for the first time in the Reply, and matters raised for the first time in "reply documents" are waived. Id.
UL/GA did not reply to the Trustee Second RJN Objection.
ii. Analysis
Under Federal Rule of Evidence (FRE) 201(b), the Court can take judicial notice of a fact that is not subject to reasonable dispute because it: "(1) is generally known within the trial court's territorial jurisdiction; or (2) can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned." The party requesting that the court take judicial notice has the burden of demonstrating that it is appropriate for the court to do so. Manix Energy, Ltd. v. James (In re James), 300 B.R. 890, 894 (Bankr. W.D. Tex. 2003).
1. Federal and Singaporean Court Records
Here, the Court can take judicial notice of the documents filed in the Cases, the Adversary Proceeding, and the Singapore Action. Tuma v. Firstmark Leasing Corp. (In re Tuma), 916 F.2d 488, 491 (9th Cir. 1990) (noting that a court may take judicial notice of its own docket); Trigueros v. Adams, 658 F.3d 983, 987 (9th Cir. 2011) (quoting United States ex rel. Robinson Rancheria Citizens Council v. Borneo, Inc., 971 F.2d 244, 248 (9th Cir. 1992) ) (explaining that federal courts may take judicial notice of proceedings from outside the federal system if they have a "direct relation to matters at issue"). The Court may not, however, infer the truth of the facts stated in those documents. In re Harmony Holdings, LLC, 393 B.R. 409, 413 (Bankr. D.S.C. 2008) (indicating that bankruptcy judges may take judicial notice of bankruptcy court records but may not "infer the truth of the facts contained in documents, unfettered by rules of evidence or logic, simply because such documents were filed with the court").
2. Foreign Statutes and Commentary on Foreign Law
FRCP 44.1 provides: "[i]n determining foreign law, the court may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination must be treated as a ruling on a question of law." According to the Ninth Circuit, the process of ascertaining foreign law is equivalent to the process of determining domestic law. G & G Prods. LLC v. Rusic, 902 F.3d 940, 948 (9th Cir. 2018) (citing de Fontbrune v. Wofsy, 838 F.3d 992, 997 (9th Cir. 2016) ). Here, the Court can take judicial notice of BA § 99, CA § 329, and Singapore's "Insolvency, Restructuring and Dissolution Act 2018" because each is a Singaporean law. The Court may also take judicial notice of the United Nations Commission on International Trade Law (UNCITRAL) "Model Law on Cross-Border Insolvency" (UNCITRAL Model Law), which has been adopted by Singapore, and the U.N. Commission on International Trade Law (UNCITRAL), UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation (2014), because it is relevant to interpreting the Singapore Model Law.
The Court notes that Singapore adopted certain modifications to the UNCITRAL Model Law. See Insolvency, Restructuring and Dissolution Act 2018, § 252(1), Sch. 3 (Sing.). For the sake of clarity, the Court refers to the modified version of the UNCITRAL Model Law adopted in Singapore as the "Singapore Model Law."
3. UL/GA MOAs
Foreign records may be self-authenticating as either foreign public documents ( FRE 902(3) ), or certified foreign records of regularly conducted activity ( FRE 902(12) ).
Under FRE 902(3), foreign public documents are self-authenticating if they are "accompanied by a final certification that certifies the genuineness of the signature and the official position of the signer or attester—or of any foreign official whose certificate of genuineness relates to the signature or attestation or is in a chain of certificates of genuineness relating to the signature or attestation." If a document is not executed or attested by a person who is acting in an official capacity and who is authorized by the laws of that country to make the attestation or execution, FRE 902(3) ’s requirements are not met. United States v. Perlmuter, 693 F.2d 1290, 1293 (9th Cir. 1982) (holding that, when a document was not accompanied by evidence of the individual's authority or position, FRE 902(3) was not satisfied).
FRE 902(12) provides that certified foreign records of "regularly conducted activity" may also be self-authenticating if they: "(1) meet the requirements of [FRE] 803(6)(A)-(C), (2) [are] certified by the custodian or another qualified person, and, (3) [are] ‘signed in a manner that, if falsely made, would subject the maker to a criminal penalty in the country where the certification is signed.’ " Falkenstein v. Shipco Transp., Inc., 2015 WL 11256774, at *9 (C.D. Cal. Oct. 15, 2015). The party intending to offer evidence under FRE 902(12) must provide sufficient written notice to all adverse parties and make the record available for inspection. HSBC Ins. Ltd. v. Scanwell Container Line Ltd., 2001 WL 1875851, at *2 (C.D. Cal. July 25, 2001).
FRE 803(6)(A)-(C) provides that a record of regularly conducted activity is not excluded by the rule against hearsay if:
(A) the record was made at or near the time by—or from information transmitted by—someone with knowledge; (B) the record was kept in the course of a regularly conducted activity of a business, organization, occupation, or calling, whether or not for profit; [and] (C) making the record was a regular practice of that activity ....
Here, the UL MOA is signed by Delcena Wheatley as "Authorised Signatory" on behalf of HSBC International Trustee (BVI) Limited. UL/GA Second RJN Ex. 30 at 6, 21. The GA MOA is signed by Rexella D. Hodge as "Authorised Signatory" on behalf of Offshore Incorporations Limited. Id. Ex. 31 at 6, 22. But, neither document contains an attestation or certification of a foreign official as required by FRE 902(3), or a certification that meets the requirements of FRE 902(12). Therefore, the Court cannot take judicial notice of the UL/GA MOAs.
b. Threshold Jurisdictional Issues
As an initial matter, the parties raise three dispositive issues regarding the Court's jurisdiction and authority. Specifically, UL/GA and the Trustee disagree about whether: 1) the Appeal divested the Court of jurisdiction to adjudicate the Motion; 2) the Bankruptcy Code permitted the Trustee to file the Singapore Claims in a US court; and 3) Singapore law or the Singapore High Court prohibited the Trustee from bringing the Singapore Claims in the US.
i. Jurisdiction to Adjudicate Motion
UL/GA recognize that normally a lower court is divested of jurisdiction over matters being appealed, but they contend that this principle is not absolute and the Court has jurisdiction to rule on the Motion. Motion at 34 (citing Oracle Am., Inc. v. Myriad Grp. AG, 2012 WL 146364, at *2 (N.D. Cal. Jan. 17, 2012) ). According to UL/GA, a district court retains jurisdiction while an appeal is pending to preserve the status quo, including by issuing an anti-suit injunction. Id. They highlight that the district court has not withdrawn the reference and this Court's jurisdiction over the Adversary Proceeding is equivalent to a district court's jurisdiction in ordinary litigation. Id. UL/GA argue that as in Mastercard International Inc. v. Fédération Internationale de Football Association, 2007 WL 631312, at *2, *5 (S.D.N.Y. Feb. 28, 2007), the Court should enjoin the Singapore Action because otherwise, there could be inconsistent rulings, even before the Appeal is resolved. Motion at 34-35.
The Trustee responds that UL/GA have not carried their burden of establishing that the Court has jurisdiction to hear and resolve the Motion. Opposition at 21. According to the Trustee, this Court does not have jurisdiction "to grant new relief independent of its prior rulings once the underlying action has been dismissed." Id. at 22 (quoting Tsafaroff v. Taylor (In re Taylor), 884 F.2d 478, 481 (9th Cir. 1989) ). The Trustee contends that the Court lacks ancillary jurisdiction to enter an anti-suit injunction because there is nothing else necessary to satisfy the Judgment. Id. He highlights that here, the Court entered the Judgment, dismissing the FAC with prejudice, and did not retain jurisdiction. Id. He asserts that in similar situations, courts have held that they lacked jurisdiction to issue anti-suit injunctions. Id. at 22-23 (citing Goss Int'l Corp. v. Man Roland Druckmaschinen Aktiengesellschaft, 491 F.3d 355, 365 (8th Cir. 2007) ; Cardiovascular Sys., Inc. v. Shturman, 2009 WL 3164784, at *2-3 (D. Minn. Sept. 28, 2009) ).
The Trustee acknowledges that courts have ancillary jurisdiction to: 1) permit disposition by a single court of factually interdependent claims; or 2) enable a court to vindicate its authority and effectuate its decrees. Opposition at 22 (citing Sea Hawk Seafoods, Inc. v. Alaska (In re Valdez Fisheries Dev. Ass'n), 439 F.3d 545, 549 (9th Cir. 2006) ). He contends that the first basis, which refers to supplemental jurisdiction, is inapplicable here. Id.
The Trustee contends that the cases cited by UL/GA are inapposite because none addressed anti-suit injunctions, but instead involved: 1) courts retaining jurisdiction to enforce permanent injunctions pending appeal; or 2) orders barring a defendant from arbitrating claims, after which the defendant sought to proceed with arbitration. Id. at 23-24. He discounts UL/GA's reference to Kashani v. Fulton (In re Kashani), 190 B.R. 875, 885 (B.A.P. 9th Cir. 1995), noting that the District Court is now presiding over the Appeal and both the District Court and this Court "cannot concurrently preside over the same aspects of the case." Opposition at 25.
UL/GA reply that the Trustee is wrong regarding the Court's jurisdiction to adjudicate the Motion. Reply at 26-27 (citing Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111, 129 (2d Cir. 2007) ; Triton Container Int'l Ltd. v. Di Gregorio Navegacao Ltda., 440 F.3d 1137, 1138 (9th Cir. 2006) ). They highlight that as in Triton, the Trustee fully participated in the Adversary Proceeding, and the Court issued an adverse judgment against the Trustee on all of the FAC's claims. Id. at 27. According to UL/GA, the Trustee now seeks to relitigate the same transactions in Singapore that were at issue in the Adversary Proceeding and he should be enjoined from doing so. Id.
They contend that dismissal of the Adversary Proceeding did not negate the Court's jurisdiction. Id. UL/GA discount the Trustee's reliance on Goss International Corp. v. Man Roland Druckmaschinen Aktiengesellschaft, 491 F.3d 355, 357 (8th Cir. 2007) for three reasons: 1) here, unlike in Goss, Singapore's parliament has not enacted a statute specifically designed to thwart the Judgment; 2) the Trustee could have raised his Singapore law claims in the Adversary Proceeding; and 3) a broad interpretation of that case "would preclude any anti[-]suit injunction designed to protect a final judgment and it may be limited to its peculiar facts." Reply at 27-28 (citing 3 Ved P. Nanda et al., Litigation of International Disputes in U.S. Courts § 16:15 (2022)). They assert that it is unclear why the Trustee mentions Kashani v. Fulton (In re Kashani), 190 B.R. 875, 885 (B.A.P. 9th Cir. 1995), but to the extent that he suggests the District Court should address the Motion, he is mistaken. Reply at 28. UL/GA note that the issue before the District Court is whether the Judgment was correct. Id. In contrast, they allege that the issue raised in the Motion is whether the Trustee can circumvent the Judgment by restarting litigation in Singapore. Id. They conclude that for jurisdictional purposes, these two issues are separate aspects of the case. Id. at 28-29 (citing MasterCard Int'l Inc. v. Fédération Internationale de Football Ass'n, 2007 WL 631312, at *2 (S.D.N.Y. Feb. 28, 2007) ).
When a party files a notice of appeal, as the Trustee did on 8/31/21, AP Docket #328, it confers jurisdiction on the appellate court and divests the trial court of "its control over those aspects of the case involved in the appeal." Marino v. Classic Auto Refinishing, Inc. (In re Marino), 234, B.R. 767, 769 (B.A.P. 9th Cir. 1999). It is equally true, however, that "while an appeal of an order is pending, the trial court retains jurisdiction to implement or enforce the order." Id.
The Trustee highlights that the Court entered the Judgment, which dismissed the FAC with prejudice, did not retain jurisdiction, and the District Court—acting as an appellate court—is now presiding over the Appeal. Opposition at 23. But, he does not cite any authority demonstrating the Court needed to retain jurisdiction to "vindicate its authority and effectuate its decrees." Sea Hawk Seafoods, Inc. v. Alaska (In re Valdez Fisheries Dev. Ass'n), 439 F.3d 545, 549 (9th Cir. 2006) ; Cardiovascular Sys., Inc. v. Shturman, 2009 WL 3164784, at *2 (D. Minn. Sept. 28, 2009). Further, the Trustee's reliance on Cardiovascular Systems is misplaced. In that case, Cardiovascular Systems, Inc. f/k/a Shturman Cardiology Systems, Inc., America (CSI) sued Dr. Leonid Shturman, alleging that he breached his employment agreement with CSI by failing to assign to CSI certain intellectual property and know-how (IP/KH) (District Court Case). Cardiovascular Sys., Inc., 2009 WL 3164784, at *1. A few days before filing the suit, CSI filed a demand for arbitration against Shturman Medical Systems, Inc. (SMS), alleging that SMS breached a stock purchase agreement (SPA) by not transferring the IP/KH developed by Shturman and Dmitir Proudnikov (Proudnikov) to CSI. Id. Shturman answered and counterclaimed against CSI, Proudnikov, and three additional individuals. Id. After the arbitrator issued an award determining that SMS breached the SPA by failing to transfer the IP/KH to CSI, the parties agreed to settle the District Court Case. Id. During a September 2008 hearing, CSI's counsel read into the record the "terms of the settlement." Id. CSI and Shturman executed a stipulation, the district court entered an order dismissing the action with prejudice, excluding counterclaims, and judgment was entered but neither the stipulation nor order referred to the settlement. Id. After being advised that the entire action had been resolved, the court dismissed the District Court Case, including the counterclaims, with prejudice and reserved jurisdiction for 45 days. Id. The 45 days expired without any party moving to reopen or enforce the settlement. Id.
Several months later, CSI brought a claim against Shturman in Switzerland (Switzerland Action), alleging that the SPA and Shturman's employment agreement required Shturman to assign CSI a pending European patent application, which was identified during the September 2008 hearing. Id. Shturman moved to reopen the District Court Case, seeking an injunction to enforce the dismissal order, and barring CSI from relitigating the dismissed claims in Switzerland. Id. The court denied Shturman's motion, noting that federal courts have limited jurisdiction, although they retain ancillary jurisdiction to vindicate their authority and effectuate their decrees. Id. at *2-3. The court acknowledged that courts retain jurisdiction to enforce settlement agreements, but only if "the dismissal order states that the district court is retaining jurisdiction over the agreement or the court incorporated the terms of the settlement agreement into an order." Id. at *2.
Shturman argued that he was not seeking enforcement of the settlement agreement but instead sought a finding that res judicata precluded CSI from pursuing the Switzerland Action. Id. The court noted that Shturman did not appreciate that "the court issued the dismissal orders in response to the settlement of the action and the parties’ stipulations of dismissal." Id. According to the court, res judicata and collateral estoppel provide federal courts with continuing jurisdiction to enjoin parties from litigating issues in non-federal forums that were already decided in federal court. Id. But, when a case is dismissed based on a settlement agreement, the terms of the agreement identify the issues decided. Id. The court concluded that the dismissal orders did not expressly retain jurisdiction beyond 45 days or incorporate the settlement agreement, and it lacked ancillary jurisdiction over the matter. Id. at *3.
Cardiovascular Systems is readily distinguishable from the facts before this Court because it involved a settlement agreement and the terms of such an agreement govern the issues that were decided. Id. at *2. Here, in contrast, there was no settlement agreement. Instead, the Court ruled on the Second UL/GA/TG MTD, dismissing the FAC without leave to amend.
The Trustee's reliance on Goss International Corp. v. Man Roland Druckmaschinen Aktiengesellschaft, 491 F.3d 355, 365 (8th Cir. 2007), is likewise unpersuasive. Goss International Corporation (Goss) and Tokyo Kikai Seisakusho, Ltd. (TKS) both manufactured and supplied newspaper printing presses and press additions. Goss Int'l Corp., 491 F.3d at 357. For more than a century, Goss was the major large printing press manufacturer in the US. Id. In the 1970s, TKS began selling its presses and press additions in the US and it obtained contracts with large US newspapers, including The Wall Street Journal and The Washington Post. Id. Between 1991 and 2000, TKS sold its products at substantially below market value in the US and Goss lost contracts because customers expected it to match TKS's prices. Id.
Goss sued TKS, alleging violations of the 1916 Antidumping Act, 15 U.S.C. § 72 (1916 Act), which made it unlawful for foreigners to sell imported goods within the US at prices substantially below market value or wholesale price, with the intent to destroy or injure a US industry. Goss Int'l Corp., 491 F.3d at 357. A jury awarded Goss more than $10 million in damages, which was statutorily trebled and increased to $35 million with fees and costs. Id. at 357-58. TKS appealed and during the pendency of the appeal, Congress prospectively repealed the 1916 Act, which did not affect Goss's judgment. Id. at 358.
Japan considered the prospective repeal to be inconsistent with the US's obligations under World Trade Organization (WTO) agreements. Id. Shortly thereafter, Japan passed "the Special Measure Law Concerning the Obligation to Return Profits Obtained pursuant to the Antidumping Act of 1916 of the United States, etc.," a "clawback statute," allowing Japanese nationals to sue for recovery of any judgment entered against them under the 1916 Act (Special Measure Act). Id. After the Eighth Circuit affirmed the jury verdict and damages award, and the US Supreme Court denied TKS's petition for writ of certiorari, TKS notified Goss of its intent to file suit in Japan under the Special Measure Act. Id. at 359.
Goss then sought a preliminary and permanent anti-suit injunction to prevent TKS "from usurping the Court's jurisdiction and frustrating the Court's judgment." Id. After the district court issued a preliminary anti-suit injunction enjoining TKS from filing suit under the Special Measure Act, TKS paid the judgment in full. Id. The Eighth Circuit reversed, noting that most cases dealing with foreign anti-suit injunctions involve simultaneous (parallel) litigation in the US and foreign countries. Id. at 363. But, the court noted that the case before it did not fit "within the category of cases in which foreign anti-suit injunctions have been considered." Id. at 364.
It stated that although the All Writs Act, 28 U.S.C. § 1651(a), authorizes federal courts to "issue all writs necessary or appropriate in aid of their respective jurisdictions," it does not create an independent source of jurisdiction. Goss Int'l Corp., 491 F.3d at 364. The Eight Circuit indicated that when the district court entered the preliminary anti-suit injunction, it had jurisdiction over the case and parties under 28 U.S.C. § 1331, because TKS had not paid the judgment, and it had "ancillary enforcement jurisdiction until satisfaction of the judgment." Id. at 365 (emphasis in original). But, the Eight Circuit highlighted that the antidumping litigation had concluded: the verdict in Goss's favor was affirmed on appeal, and the judgment was paid and satisfied. Id. There was no pending litigation in US courts, other than the appeal. Id. As the Eight Circuit noted:
[T]he request for injunctive relief is not for the prevention of interdictory jurisdiction by Japanese courts. Instead, the United States courts are being asked to prevent TKS from seeking a remedy available solely in Japan. Neither the All Writs Acts nor the court's ancillary enforcement jurisdiction provides the district court with a separate source of jurisdiction to enjoin TKS under these circumstances.
Id. The Eight Circuit also determined that res judicata was not an impediment to TKS maintaining the suit in Japan because the issues decided by the district court were different from the issues sought to be litigated in Japan, which was "a cause of action solely available in Japan and not previously litigated in the antidumping litigation." Id. at 366.
This case is easily distinguishable from Goss. There are no allegations that Singapore's parliament enacted a statute to thwart the Court's dismissal of the FAC. Further, as discussed below, in contrast to Goss, the Court finds that the Trustee could have raised the Singapore Claims in the Adversary Proceeding.
Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111, 129 (2d Cir. 2007) is more applicable to the facts here than the cases cited by the Trustee. Karaha Bodas Company, L.L.C. (KBC), a Cayman Islands entity owned by American power companies and other investors, and Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), an oil and gas company owned and controlled by the Republic of Indonesia, entered into a joint venture to explore and develop geothermal energy resources in Indonesia (Project). Karaha Bodas Co., 500 F.3d at 113. They agreed to settle any disputes by binding arbitration in Switzerland, under UNCITRAL's arbitration rules. Id.
Years later, the Indonesian government suspended the Project and KBC initiated arbitration proceedings in Switzerland, contending that it incurred more than $600 million in damages due to the Indonesian government's actions. Id. The arbitral panel awarded KBC more than $261 million in damages, lost profits, costs, and interest (Award). Id. at 114. KBC then initiated a proceeding in the US District Court for the Southern District of Texas, seeking and obtaining confirmation of the Award under the New York Convention. Id. The Fifth Circuit affirmed. Id. at 115. While the appeal was pending, KBC: 1) sought and obtained registration and enforcement of the judgment in the Southern District of New York, where Pertamina had several bank accounts with hundreds of millions of dollars; and 2) immediately began execution proceedings against Pertamina. Id. at 116.
The New York Convention provides that the country in which an arbitration award was made is said to have primary jurisdiction over the award. Karaha Bodas Co., 500 F.3d at 115 n.1.
Heated litigation ensued regarding ownership of the assets in the bank accounts, resulting in an interlocutory appeal and the Second Circuit determining that both Pertamina and the Indonesian government owned the funds in those accounts and KBC could satisfy its judgment out of Pertamina's portion of the funds. Id. Ultimately, the district court ordered Pertamina to turn over roughly $319 million—the entire amount of the Award plus interest. Id. The Second Circuit affirmed and Pertamina petitioned the Supreme Court for a writ of certiorari, which was denied. Id. at 116-18. Almost immediately, KBC received virtually all the money it was owed. Id. at 118.
While the petition for a writ of certiorari was pending, Pertamina filed a new action in the Cayman Islands (Cayman Islands Action), alleging that the Award was procured by fraud, and seeking damages against KBC in the full amount of the Award. Id. at 117. KBC responded by seeking an anti-suit injunction from the New York district court, prohibiting Pertamina from maintaining the Cayman Islands Action or any similar action. Id. at 117-18. The district court issued an injunction, finding that the Cayman Islands Action was intended to undo the Award and had the "obvious purpose of nullifying the judgment[s]" of the Texas and New York federal courts. Id. at 118. According to the district court, it had the "power and indeed the duty to deal with abusive litigation tactics used by a party before it ...." Id.
On appeal, Pertamina challenged the district court's jurisdiction to maintain the injunction, highlighting that it had paid virtually the entire Award. Id. at 127. The Second Circuit disagreed with Pertamina's position, noting that res judicata and collateral estoppel provide federal courts with continuing jurisdiction "to enjoin a party properly before them from relitigating issues in a non-federal forum that were already decided in federal court," which remains "even after a judgment has been satisfied—regardless of whether (1) the judgment is one of dismissal or (2) the font of jurisdiction for such an injunction is characterized as ‘ancillary’ or otherwise." Id. at 129. The Second Circuit concluded that "the District Court retained—and retains—continuing jurisdiction to maintain the anti-foreign-suit injunction" even though the federal judgments against Pertamina were satisfied. Id. It concluded that if it vacated the injunction, Pertamina would be free to engage in vexatious proceedings, which were "intended to undermine or vitiate federal judgments ...." Id. at 129-30.
Karaha Bodas weighs strongly towards the Court exercising jurisdiction. The Court issued the Judgment and dismissed the FAC with prejudice. AP Docket #s 319 at 3, 320 at 3. And, as discussed below, the Trustee now brings claims in Singapore based on issues the Court already decided in the Adversary Proceeding. As Karaha Bodas instructs, the Court retains jurisdiction "to protect the federal judgment from being undermined or vitiated in foreign proceedings by a party before" the Court. Karaha Bodas, 500 F.3d at 129 n.19 (emphasis in original).
Finally, the Ninth Circuit's decision in Triton Container International Ltd. v. Di Gregorio Navegacao Ltda., 440 F.3d 1137, 1138 (9th Cir. 2006) provides guidance regarding the jurisdictional issue. Triton Container International Limited (Triton) sued Di Gregorio Navegacao Ltda., Di Gregorio Tocan Transportes Ltda., Franco Di Gregorio, and Camillo Di Gregorio (collectively Di Gregorio) for breach of contract in US district court. Triton Container Int'l Ltd., 440 F.3d at 1137. The court found in favor of Triton and entered a $4.4 million judgment against Di Gregorio. Id. Seven months later, Di Gregorio filed an action in a Brazilian court, involving the same facts alleged in the US district court action. Id. Triton sought an anti-suit injunction preventing Di Gregorio from further pursuing the Brazilian action. Id. The district court denied the application in the interests of comity. Id. Shortly thereafter, the Brazilian court issued a $1.8 million monetary judgment against Triton. Id. The Ninth Circuit reversed, noting that:
Triton properly stated grounds for a permanent injunction against Di Gregorio relitigating this case in a Brazilian
court. After fully participating in the United States court action and after receiving an adverse judgment, Di Gregorio commenced an action seven months later in Brazil to litigate the same factual issues. Under these circumstances, the district court should have enjoined Di Gregorio from proceeding with the action in Brazil.
Id. at 1137-38. As was the case in Triton, it is undisputed that the Trustee was an active participant in the Adversary Proceeding: he filed the Singapore Action after the Court dismissed the FAC without leave to amend. UL/GA First RJN Ex. 24 at 2. Even though Di Gregorio did not appeal the district court's judgment, an appeal would not have changed the outcome because it is undisputed that trial courts retain "jurisdiction to implement or enforce" orders while appeals are pending. Marino v. Classic Auto Refinishing, Inc. (In re Marino), 234 B.R. 767, 769 (B.A.P. 9th Cir. 1999).
ii. Power Under the Bankruptcy Code
UL/GA assert that nothing prevented the Trustee from raising the Singapore Claims in the Adversary Proceeding because US courts have the capacity to decide foreign law issues. Motion at 26 (citing Republic of the Philippines v. Marcos, 862 F.2d 1355, 1361 (9th Cir. 1988) ; APL Co. Pte. Ltd. v. UK Aerosols Ltd., 582 F.3d 947, 957-58 (9th Cir. 2009) ; In re Air Crash Over Taiwan Straits on May 25, 2002, 331 F. Supp. 2d 1176, 1206 (C.D. Cal. 2004) ; LaMonica v. CEVA Grp. Plc (In re CIL Ltd.), 582 B.R. 46, 124 (Bankr. S.D.N.Y. 2018) ).
The Trustee responds that he had no power to avoid transfers under the CA § 329 in this Court. Opposition at 25-26 (citing Comput. Assocs. Int'l, Inc. v. Altai, Inc., 126 F.3d 365, 370 (2d Cir. 1997) ). He contends that under the Bankruptcy Code, he had authority to file actions: 1) as a successor to the Debtors’ interests which are property of Zetta USA's and Zetta Singapore's estates (Estates); and 2) brought under his avoidance powers. Id. at 26 (citing Sender v. Simon, 84 F.3d 1299, 1304 (10th Cir. 1996) ). The Trustee claims that the first category is inapplicable here because the prepetition Debtors had no right to file the Singapore Claims. Id.
Regarding his avoidance powers, the Trustee argues that they are contained in §§ 544(b), 545, 547, 548, 549, 553, and 724. Id. He contends that courts "must be careful not to expand the scope of these statutory powers beyond what is necessary and consistent with the intent of Congress." Id. at 26-27 (citing CASC Corp. v. Milner (In re Locke), 180 B.R. 245, 260 (Bankr. C.D. Cal. 1995) ). The Trustee claims that no Bankruptcy Code provision allowed him to avoid transfers under CA § 329 or any foreign avoidance statute. Id. at 27. The Trustee argues that Bankruptcy Code § 544(b) is the closest analogue to CA § 329, but it only permits avoidance of transfers that could be avoided by a "holder of an unsecured claim," and does not provide for avoidance of a Singapore unfair preference. Id. (citing Sherwood Partners, Inc. v. Lycos, Inc., 394 F.3d 1198, 1201 (9th Cir. 2005) ).
The Trustee asserts that LaMonica v. CEVA Group Plc (In re CIL Ltd.), 582 B.R. 46, 103 (Bankr. S.D.N.Y. 2018), which was cited by UL/GA, involved an international protocol approved by both the US and Cayman Islands courts, which allowed the US bankruptcy trustee and the Cayman Islands liquidators to jointly agree regarding where to file avoidance suits. Opposition at 28. He contends that there was no similar protocol here, and even if there had been, CIL's holding that a protocol could expand powers beyond what Congress enumerated under the Bankruptcy Code is "inconsistent with this Court's rulings ...." Id. (citing Original UL/GA/TG MTD Ruling at 43). The Trustee contends that the other cases UL/GA cite are irrelevant and did not involve bankruptcy claims. Id. at 28-29. He concludes that here, res judicata is inapplicable because the Court "may very well have declined to exercise jurisdiction" over the Singapore Claims. Id. at 29 (citing Comput. Assocs. Int'l, Inc. v. Altai, Inc., 950 F. Supp. 48, 51-52 (E.D.N.Y. 1996), aff'd, 126 F.3d 365 (2d Cir. 1997) ).
UL/GA reply that the Bankruptcy Code permitted the Trustee, on behalf of the Estates and the bankrupt corporations themselves, to bring any claim before any tribunal with or without court approval. Reply at 10-11 (citing Fed. R. Bankr. P. 6009 ; Smith v. Arthur Andersen LLP, 421 F.3d 989, 1002 (9th Cir. 2005) ; Hilao v. Est. of Marcos, 95 F.3d 848, 852 (9th Cir. 1996) ). They contend that the Trustee had statutory authority to bring the Singapore Claims on behalf of the Estates. Id. at 11 (citing Smith, 421 F.3d at 1002 ). UL/GA assert that the Trustee's admission that he had the ability to file "suits in his capacity ‘as successor to the [D]ebtor[s’] interests included as property of the [E]state[s] under 11 U.S.C. § 541 ’ " is fatal to his argument that the Bankruptcy Code did not permit him to file the Singapore Claims in this Court because a cause of action involves property of the estate. Id. at 11-12. They note that § 541 is not limited to prepetition property and the Singapore Claims are the Estates’ property even if they came into existence postpetition. Id. at 12 (citing 11 U.S.C. § 541(a)(7) ). For this reason, UL/GA contend that the Trustee had the right to bring the Singapore Claims regardless of whether they accrued prepetition or postpetition. Id. They argue that if the Trustee pursued the Singapore Claims before this Court, it would not expand his avoidance powers, but rather give effect to his power to prosecute any action or proceeding on behalf of the Estates. Id. (citing Fed. R. Bankr. P. 6009 ).
During the 8/3/22 Hearing, the Trustee objected to UL/GA's citing 11 U.S.C. § 541(a)(7) for the first time in the Reply. The Trustee's position is not well-taken. UL/GA cited § 541(a)(7) in response to the Trustee's argument that the Bankruptcy Code did not permit him to bring Singapore law avoidance claims. See Opposition at 25-29.
UL/GA assert that Sender v. Simon, 84 F.3d 1299, 1304 (10th Cir. 1996), undermines the Trustee's position because there, the court held that the trustee had standing to bring a state law claim belonging to the debtor. Reply at 13. Similarly, they claim that the Trustee had standing to pursue the Singapore Claims on the Estates’ behalf. Id. They argue that LaMonica v. CEVA Group Plc (In re CIL Ltd.), 582 B.R. 46, 101, 103 (Bankr. S.D.N.Y. 2018), which the Trustee attempts to distinguish, held that a trustee is allowed to bring foreign claims based on "practical concerns," such as the need to avoid "duplicative or parallel proceedings in the Cayman Islands and the United States." Reply at 13.
Section 323(b) of the Bankruptcy Code provides "[t]he trustee in a case under this title has capacity to sue and be sued." Federal Rule of Bankruptcy Procedure (Fed. R. Bankr. P.) 6009 elaborates that "[w]ith or without court approval, the trustee [may] ... commence and prosecute any action or proceeding [on] behalf of the estate before any tribunal." Together, § 323(b) and Fed. R. Bankr. P. 6009 empower a bankruptcy trustee to bring two broad categories of claims: 1) "as successor to the debtor's interests included as property of the estate under 11 U.S.C. § 541"; and 2) "brought under one of the trustee's avoidance powers." Sender, 84 F.3d at 1304.
In the Singapore Action, the Trustee is seeking relief against UL/GA under CA § 329, which provides:
[A]ny transfer ..., payment, execution or other act relating to property made or done by or against a company which, had it been made or done by or against an individual, would in his bankruptcy be void or voidable under section ... 99 ... of the Bankruptcy Act ... shall in the event of the company being wound up be void or voidable in like manner.
BA § 99, which is invoked by CA § 329, provides, in relevant part:
(1) Subject to this section and sections 100 and 102, where an individual is adjudged bankrupt and he has, at the relevant time (as defined in section 100), given an unfair preference to any person, the Official Assignee may apply to the court for an order under this section.
(2) The court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if that individual had not given that unfair preference.
(3) For the purposes of this section and sections 100 and 102, an individual gives an unfair preference to a person if —
(a) that person is one of the individual's creditors or a surety or guarantor for any of his debts or other liabilities; and
(b) the individual does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event of the individual's bankruptcy, will be better than the position he would have been in if that thing had not been done.
The Trustee argues that the Bankruptcy Code did not allow him to pursue claims under CA § 329 and BA § 99 because prepetition, the Debtors had no right to file a Singapore preference application. Opposition at 26. The Trustee conflates what powers the Debtors had (or did not have) prepetition with what powers he, on behalf of the Debtors, had postpetition.
Section 541(a) provides that filing a bankruptcy case creates an estate, which is comprised of "all of the following property, wherever located and by whomever held: (1) ... [A]ll legal or equitable interests of the debtor in property as of the commencement of the case.... (7) Any interest in property that the estate acquires after the commencement of the case." (emphasis added). Bankruptcy courts have held that causes of action—including those seeking avoidance—are property of the estate. Smith v. Arthur Andersen LLP, 421 F.3d 989, 1002 (9th Cir. 2005) ; Sender v. Simon, 84 F.3d 1299, 1304-05 (10th Cir. 1996) ; In re Simply Essentials, LLC, 640 B.R. 922, 927–29 (Bankr. N.D. Iowa 2022). And, causes of action based on prepetition transfers become property of the estate when a debtor files for bankruptcy. Simply Essentials, 640 B.R. at 927–29 ; In re Murray Metallurgical Coal Holdings, LLC, 623 B.R. 444, 512 (Bankr. S.D. Ohio 2021). Therefore, there is no basis for the Court to find that the Bankruptcy Code prohibited the Trustee from pursuing the Singapore Claims in the Adversary Proceeding.
The Trustee also argues that the Bankruptcy Code did not permit him to pursue the Singapore Claims because they were beyond his powers authorized by Congress. Opposition at 26-27. To support his position, the Trustee relies on the following passage from CASC Corp. v. Milner (In re Locke), 180 B.R. 245, 260 (Bankr. C.D. Cal. 1995) :
There are many extraordinary powers provided to trustees and debtors in possession under the Bankruptcy Code. See e.g., powers to avoid transfers of property both before and after commencement of a bankruptcy case, §§ 544, 547, 548 and 549. In each instance, these powers are provided by Congress to insure that the property that constitutes the bankruptcy estate is fairly distributed and that the administration of bankruptcy cases is carried out efficiently. Because these powers are extraordinary, they must be limited to the scope intended by Congress. In construing and applying the statutes that create these powers courts must be careful not to expand the scope of these statutory powers beyond what is necessary and consistent with the intent of Congress.
The Court does not place much stock in this passage from an almost 30-year-old case decided by another bankruptcy court. As an initial matter, the quoted section was dicta: Locke did not decide any issues involving avoidance claims, but instead addressed a chapter 7 trustee's rejection of an executory contract under § 365. Locke, 180 B.R. at 263. Second, the court in Locke cited no authority for the quoted passage. Finally, Locke has not been cited for this proposition by any federal court in the nearly 30 years since it was decided.
UL/GA and the Trustee advance competing arguments regarding the applicability of LaMonica v. CEVA Group Plc (In re CIL Ltd.), 582 B.R. 46 (Bankr. S.D.N.Y. 2018). Motion at 26; Opposition at 27-28; Reply at 13. In CIL, CIL Limited (CIL), a Cayman Islands entity, transferred an equity interest in CEVA Group Plc (CEVA Group), a UK entity, to CEVA Holdings LLC (CEVA Holdings), a Marshall Islands entity. CIL, 582 B.R. at 56, 68. CIL filed a petition commencing provisional liquidation proceedings in the Grand Court of the Cayman Islands, and shortly thereafter, an involuntary chapter 7 petition was filed against it in the Southern District of New York bankruptcy court. Id. at 56. Salvatore LaMonica (LaMonica), CIL's chapter 7 trustee, filed a complaint against CEVA Logistics Finance B.V. (CEVA Finance), CEVA Group, and CEVA Holdings (together with CEVA Finance and CEVA Group, CEVA Entities), to avoid and recover the equity interest transfer under §§ 544, 548, 550, and 551. Id. at 56, 68. The CEVA Entities moved to dismiss the avoidance claims based on principles of comity, which they asserted mandated that the claims be decided under Cayman Islands law in a Cayman Islands court. Id. at 82-83, 98. LaMonica countered that a US court was the only suitable forum for bringing his fraudulent transfer claims and US or UK law should apply. Id. at 83, 98.
The court explained that US courts defer to foreign bankruptcy proceedings, "so long as the foreign proceedings are procedurally fair and ... do not contravene the laws or public policy of the [US]." Id. at 98-99. The court noted that it had approved an "International Protocol Respecting the Administration of the Debtor's Estate" (IP), which provided a process for LaMonica to coordinate with his counterpart in the Cayman Islands, but it did not specify which claims would be brought in the US and Cayman Islands. Id. at 66, 99-100. The court observed that "practical concerns" such as the Cayman Islands court's suitability as a forum, the existence of duplicative or parallel proceedings, and the court's desire to foster cooperation between countries suggested that LaMonica's claims should proceed in a US court. Id. at 100-01. The court also noted that the Cayman Islands law's avoidance provisions were narrower than those of the Bankruptcy Code, underscoring that Cayman Islands law should apply. Id. at 103. The court dismissed LaMonica's avoidance claims under the Bankruptcy Code, and permitted him to replead an intentional fraudulent transfer claim under Cayman Islands law. Id.
Contrary to the Trustee's arguments, the court in CIL did not rely solely on the IP to determine the proper forum for LaMonica's claims, but it weighed a variety of factors—including the existence of duplicative or parallel proceedings—before deciding that LaMonica's claims should proceed in the US. Id. at 100-01. Further, the court in CIL permitted LaMonica to plead a foreign avoidance claim in a US court. Id. at 103. Based on CIL, the Court finds that the Bankruptcy Code did not limit the Trustee's avoidance powers and he could have pled and litigated the Singapore Claims in the Adversary Proceeding before this Court.
iii. Singapore Law and the Singapore High Court's Recognition Order
UL/GA assert that although the Singapore Action involves Singapore law, that is not a bar to an anti-suit injunction or res judicata. Motion at 25 (citing E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 991 (9th Cir. 2006) ; W. Sys., Inc. v. Ulloa, 958 F.2d 864, 871 (9th Cir. 1992) ; Suchodolski Assocs., Inc. v. Cardell Fin. Corp., 2006 WL 10886, at *3 (S.D.N.Y. Jan. 3, 2006) ). UL/GA claim that the Trustee is forum shopping, and he made a tactical choice to hold back Singapore preference and breach of fiduciary duties claims to get a "second bite of the apple in Singapore." Id. at 10, 26.
The Trustee responds that a 3/29/19 Singapore High Court order entrusting him with administering the Debtors’ property and assets in Singapore (Recognition Order) and CA § 329 did not allow him to bring an application to avoid an unfair preference in the US. Opposition at 29 (citing Zetta USA Docket #930 Ex. A). The Trustee claims that by issuing the Recognition Order, the Singapore High Court required him to: 1) file applications to avoid unfair preferences and litigate in that court to comply with the Companies Act and to protect the interests of Singapore creditors; and 2) repatriate proceeds to the US only with its permission. Id. at 29-30. The Trustee asserts that the Companies Act contains no provisions that entitle a foreign court to adjudicate avoidance claims. Id. at 30-31.
The Trustee contends that insolvency laws, like intellectual property laws, are country-specific and provide separate and independent powers and rights. Id. at 31 (citing Subafilms, Ltd. v. MGM-Pathe Commc'ns Co., 24 F.3d 1088, 1093 (9th Cir. 1994) (en banc)). He argues that in intellectual property cases, US courts have denied anti-suit injunctions that would deprive plaintiffs of the foreign law's protection, which is true for Singapore insolvency law as well. Id. at 32. The Trustee argues that enjoining his avoidance powers in the Singapore High Court, under whose authority his powers are derived and which retained jurisdiction under the Recognition Order, is improper. Id. at 31-32 (citing Zynga, Inc. v. Vostu USA, Inc., 816 F. Supp. 2d 824, 829 (N.D. Cal. 2011) ; Seven Arts Filmed Ent. Ltd. v. Content Media Corp., 2011 WL 13220422, at *5 (C.D. Cal. Oct. 27, 2011) ). According to the Trustee, using Singapore avoidance powers outside of Singapore would offend international comity, lead to inconsistent results, and require this Court to act as a "super-court" applying the laws of other countries as it sees fit, disregarding the text of foreign law, independence of foreign courts, and foreign courts’ inherent power. Id. at 34 (citing MF Glob. Holdings Ltd. v. Allied World Assurance Co. (In re MF Glob. Holdings Ltd.), 562 B.R. 55, 63 (Bankr. S.D.N.Y. 2017) ).
The Trustee indicated in the "Notice of Correction" that this citation should have been to Medtronic, Inc. v. Catalyst Rsch. Corp., 518 F. Supp. 946, 955 (D. Minn. 1981), aff'd, 664 F.2d 660 (8th Cir. 1981). AP Docket #376 at 2.
The Trustee highlights that the UNCITRAL Model Law, on which the Companies Act is based, confirms Singapore courts’ ability to adjudicate Singapore officeholders’ statutory powers. Id. at 32. He claims that the UNCITRAL Model Law's plain language and commentary demonstrate that local courts retain control over the powers and remedies available to trustees, liquidators, or similar insolvency professionals under local law. Id. at 33 (citing U.N. Comm'n on Int'l Trade Law (UNCITRAL), UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation, Arts. 20-23, Commentary ¶¶ 176-203 (2014)). The Trustee contends that Singapore has adopted the Singapore Model Law, which provides that he must "make an application to the [Singapore High] Court for an order" granting approval to assert statutory insolvency avoidance powers. Id. at 33-34 (citing Singapore Model Law Art. 23(1)).
The Trustee contends that a finding in his favor is consistent with this Court's prior rulings—that his §§ 547 and 548 avoidance powers could not be invoked extraterritorially. Id. at 34-35. He argues that enjoining the Singapore Action would prejudice the Estates and their creditors because he is now seeking recovery of over $42 million under Singapore law. Id. at 35.
The Trustee denies that he is forum shopping, highlighting that the cross-border protocol he proposed provided this Court and the Singapore High Court "exclusive jurisdiction" to adjudicate issues arising under each court's respective avoidance statutes. Id. (citing Zetta USA Docket #897-3 ¶¶ 2, 6, 10). He notes that during a 4/10/19 hearing, he represented to the Court that he was likely to file two actions—one in the US and one in Singapore—and proposed a protocol to coordinate discovery and hearings before courts in both countries. Id. at 35-36 (citing Zetta USA Docket #1848). He asserts that the Court rejected the proposed protocol based on concerns that it would require cross-border communication between courts outside public hearings and was unnecessary or premature. Id. at 36 (citing Zetta USA Docket #1848).
UL/GA reply that foreign law does not determine a US court's subject matter jurisdiction and Singapore law does not and cannot limit a US bankruptcy court's jurisdiction. Reply at 14 (citing Seismic Reservoir 2020, Inc. v. Paulsson, 785 F.3d 330, 335 (9th Cir. 2015) ). UL/GA contend that bankruptcy courts have jurisdiction to hear claims "related to" cases under title 11 and the Singapore Claims are "related to" the Cases because they could alter the Debtors’ rights and they arose as part of the same case or controversy. Id. at 14-15 (citing Hosking v. TPG Cap. Mgmt., L.P. (In re Hellas Telecommunications (Lux.) II SCA), 535 B.R. 543, 565 (Bankr. S.D.N.Y. 2015) ; Fietz v. Great W. Sav. (In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988) ; Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984) ; Sasson v. Sokoloff (In re Sasson), 424 F.3d 864, 869 (9th Cir. 2005) ; Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d 1281, 1288 (9th Cir. 2013) ). UL/GA contend that the Court is capable of providing the remedies sought in the Singapore Action—declaring that the challenged transfers are void and granting a monetary award against the defendants. Id. at 16.
During the 8/3/22 Hearing, the Trustee objected to UL/GA's citing Hosking v. TPG Capital Management, L.P. (In re Hellas Telecommunications (Luxembourg) II SCA), 535 B.R. 543 (Bankr. S.D.N.Y. 2015) for the first time in the Reply. His argument is unavailing. UL/GA's citation to Hellas Telecommunications was directly responsive to the Trustee's argument that Singapore law did not permit him to bring claims under BA § 329 outside of Singapore. See Opposition at 29-36. The Court also notes that the Trustee did not object to UL/GA's citing Seismic Reservoir 2020, Inc. v. Paulsson, 785 F.3d 330 (9th Cir. 2015) for the first time in the Reply, which UL/GA relied on for the same legal proposition as Hellas Telecommunications.
UL/GA argue that Singapore law did not prohibit the Trustee from bringing claims outside of Singapore and the Court could have heard the Singapore Claims if they had been included in the Adversary Proceeding. Id. at 16, 23. They argue that BA § 99 provides that the Trustee " ‘may apply to the court,’ not must," and does not limit the Trustee to only seeking relief in Singapore. Id. at 17 (citing Chan 5/25/22 Decl. ¶ 18). They note that courts treat more strongly worded statutes as procedural and not "as part of the substantive law to be applied." Id. (citing Randall v. Arabian Am. Oil Co., 778 F.2d 1146, 1151 (5th Cir. 1985) ; Hosking v. TPG Cap. Mgmt., L.P. (In re Hellas Telecommunications (Lux.) II SCA), 535 B.R. 543, 566-67 (Bankr. S.D.N.Y. 2015) ). For this reason, UL/GA contend that US law (rather than Singapore law) governs whether venue for an action in federal court is proper, and the Trustee conceded that venue before this Court was appropriate by filing the Adversary Proceeding. Id.
UL/GA highlight that Singapore adopted the Singapore Model Law, which permits a Singapore court to "appoint the foreign representative to act in the US to commence an undue preference claim under Singapore law in the US courts." Id. at 18 (citing Singapore Model Law Art. 5(2); U.N. Comm'n on Int'l Trade Law (UNCITRAL), UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation, Art. 5(a) (2014); Chan 5/25/22 Decl. ¶ 26). They claim that the Trustee was appointed as a "foreign representative" by the Singapore High Court, the Trustee possessed all the powers available to a liquidator under Singapore law, and he was permitted to commence clawback claims in a US court. Id. (citing Chan 5/25/22 Decl. ¶ 29). They note that Hosking v. TPG Capital Management, L.P. (In re Hellas Telecommunications (Luxembourg) II SCA, 535 B.R. 543, 568-69 (Bankr. S.D.N.Y. 2015) explains that the purpose of UNCITRAL Model Law Art. 5—which authorizes the person reorganizing an estate under domestic law to use their powers abroad—is to permit those with the powers of an officeholder to raise foreign law claims in the US. Id. at 18-19.
UL/GA argue that the Singapore High Court did not limit which claims the Trustee could file in the US. Id. at 20. They note that the Recognition Order only governed the Trustee's conduct in Singapore but it contained no language prohibiting the Trustee from filing lawsuits in this country. Id. UL/GA assert that the Trustee highlights an inapplicable provision of the Recognition Order, which governs repatriating assets outside of Singapore without leave of the Court, which is not an issue here because UL/GA are BVI companies with Chinese ownership and no assets in Singapore. Id. They assert that if the Trustee's interpretation of the Recognition Order were correct, the US claims the Trustee brought against UL/GA would violate the Recognition Order. Id. at 21. UL/GA assert that the Recognition Order granted the Trustee standing to make applications in the Singapore High Court, but it did not require him to do so, nor did it prohibit him from doing anything else in another court. Id.
UL/GA assert that the Trustee's analogy to intellectual property law is unpersuasive because bankruptcy courts have more expansive jurisdiction than district courts hearing intellectual property cases. Id. at 22 (citing 28 U.S.C. §§ 1331, 1334(b), 1338 ). They contend that when US courts have supplemental or diversity jurisdiction over foreign intellectual property claim, they hear them. Id. at 22-23 (citing Creative Tech., Ltd. v. Aztech Sys. Pte., Ltd., 61 F.3d 696, 702 (9th Cir. 1995) ; New Name, Inc. v. Walt Disney Co., 2007 WL 5061697, at *5 (C.D. Cal. Dec. 3, 2007) ).
UL/GA contend that the Trustee misconstrues the Singapore Model Law: rather than reflecting "sovereign independence of Singapore courts," it defers to the "main proceeding," which is before this Court. Id. at 23 (citing Tan 5/18/22 Decl. Ex. 3 ¶ 126). They assert that none of the UNCITRAL Model Law provisions cited by the Trustee are applicable, the Singapore High Court imposed conditions on his authority to protect Singaporean creditors, and filing the Singapore Claims in the US would not have harmed Singapore creditors’ interests. Id. UL/GA argue that MF Global Holdings Ltd. v. Allied World Assurance Co. (In re MF Global Holdings Ltd.), 562 B.R. 55, 63 (Bankr. S.D.N.Y. 2017) is unhelpful to the Trustee because it shows that a foreign injunction would have been ineffective against the Court. Reply at 24. They describe as baseless the Trustee's contention about the Court acting as a "super-court," because res judicata merely requires litigants to bring available causes of action together in a single proceeding. Id. (citing Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Plan. Agency, 322 F.3d 1064, 1078 (9th Cir. 2003) ). Finally, UL/GA highlight statements made by the Court expressing concern about the possibility of the Trustee splitting claims between the US and Singapore. Id. at 25 (citing Zetta USA Docket #1848).
Although the Trustee asserts that he could not have brought the Singapore Claims here because the Recognition Order and CA § 329 required him to bring those claims in Singapore, he misinterprets this Court's jurisdiction. "Only the Constitution and the laws of the United States can dictate what cases or controversies our federal courts may hear." Seismic Reservoir 2020, Inc. v. Paulsson, 785 F.3d 330, 334 (9th Cir. 2015) (quoting Randall v. Arabian Am. Oil Co., 778 F.2d 1146, 1150 (5th Cir. 1985) ). Foreign courts and exclusive jurisdiction provisions in foreign laws cannot divest this Court of its jurisdiction. Id.; Hosking v. TPG Cap. Mgmt., L.P. (In re Hellas Telecommunications (Lux.) II SCA), 535 B.R. 543, 565 (Bankr. S.D.N.Y. 2015) ("Whether a [US] federal court has subject matter jurisdiction is a question of federal law, even where the applicable substantive law at issue is foreign."); see also Kontrick v. Ryan, 540 U.S. 443, 452, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004) (explaining that only Congress may determine a lower federal court's subject-matter jurisdiction).
Seismic Reservoir 2020, Inc. v. Paulsson, 785 F.3d 330 (9th Cir. 2015) illustrates this point. Seismic Reservoir 2020, Inc. (Seismic), a California company, brought claims against Björn Paulsson (Paulsson) in US district court for violating the Lanham Act and breaching his fiduciary duty. Seismic Reservoir 2020, Inc., 785 F.3d at 332. Paulsson responded with a counterclaim against two of Seismic's Canadian directors for breach of fiduciary duty under Alberta Business Corporations Act § 242 (Alberta Act), which vested exclusive jurisdiction in the Court of the Queen's Bench of Alberta. Id. at 332-33. The district court dismissed Paulsson's counterclaim under FRCP 12(b)(1), concluding that it lacked subject matter jurisdiction. Id. at 333.
The Ninth Circuit held that the district court erred in dismissing Paulsson's Alberta Act counterclaim for lack of subject matter jurisdiction, explaining that the court had diversity jurisdiction over the Alberta Act claim under 28 U.S.C. § 1332(a)(2). Seismic Reservoir 2020, Inc., 785 F.3d at 333-34. According to the Ninth Circuit, the Alberta Act's exclusive jurisdiction provision could not deprive a federal court of subject matter jurisdiction conferred by a federal statute. Id. at 334-35 (quoting Randall v. Arabian Am. Oil Co., 778 F.2d 1146, 1150 (5th Cir. 1985) ). The Ninth Circuit, however, affirmed the district court's dismissal under FRCP 12(b)(6) because a remedy for violating the Alberta Act was only available through the Queen's Bench of Alberta and Paulsson could not obtain any relief in the district court.
Neither the Trustee nor Meiyen Tan (Tan) cite any authority or argue that the Singapore High Court alone could craft a remedy under CA § 329. Therefore, the Court need not address that issue.
Hosking v. TPG Capital Management, L.P. (In re Hellas Telecommunications (Luxembourg) II SCA), 535 B.R. 543 (Bankr. S.D.N.Y. 2015) provides similar guidance. Investment funds formed by TPG Capital (TPG) and Apax Partners (Apax) acquired TIM Hellas Communications S.A., a Greek telecommunications company, and they used Hellas Telecommunications (Luxembourg) II SCA (Hellas II) to complete the transaction. Hellas Telecommunications, 535 B.R. at 553-54. Over the course of several months, Hellas II took on substantial debt, became overleveraged, and was unable to cover its debt obligations. Id. at 554-55.
Because the underlying facts of this case were extremely complex, the Court only mentions those facts that are relevant to understanding the issues before this Court.
The High Court of Justice of England and Wales (HCJ) approved placing Hellas II into administration in England, ruled that it should be wound-up through compulsory liquidation, and appointed Andrew Lawrence Hosking and Bruce Mackay as joint compulsory liquidators (Liquidators). Id. Hellas II then filed a chapter 15 petition in the U.S. Bankruptcy Court for the Southern District of New York for recognition of its foreign proceeding and filed an adversary proceeding seeking to avoid and recover a €1.57 billion initial transfer and €973.7 million of subsequent transfers. Id. at 551, 555-56. The bankruptcy court granted in part and denied in part numerous defendants’ motions to dismiss. Id. at 551. The Liquidators then moved to file a first amended complaint, which added an actual fraudulent transfer claim against TPG and another entity, TCW Asset Management (TCW), under § 423 of the UK's Insolvency Act 1986 (Insolvency Act), among other claims. Id. at 552, 556-57.
TPG and TCW opposed the motion, highlighting that the Insolvency Act provided that only the HCJ or another court with jurisdiction to wind up the debtor could grant relief and the US bankruptcy court lacked subject matter jurisdiction over the Insolvency Act claim. Id. at 562, 564. The bankruptcy court disagreed, finding that US law determines whether a US court has jurisdiction over a foreign claim, and noting that 28 U.S.C. § 1334(b) provided it with jurisdiction over the Insolvency Act claim. Id. at 565-66. According to the court, 1) courts are bound to apply foreign substantive, but not procedural law and an exclusive jurisdiction statute is procedural; and 2) neither TPG nor TCW had shown that the Insolvency Act was in fact jurisdictional. Id. at 566-67. Finally, as relevant here, the court noted that the defendants had not identified any English decision indicating that § 423(4) of the Insolvency Act was an exclusive jurisdiction provision. Id. at 567. The court indicated, however, that even if § 423(4) were an exclusive jurisdiction provision, it would not be "bound to enforce it." Id.
During the 8/3/22 Hearing, the Trustee attempted to distinguish Hellas Telecommunications from the facts here, highlighting that: 1) Hellas Telecommunications was a chapter 15 case and the Liquidators were empowered to recover the funds under § 1521(a)(5) of the Bankruptcy Code ; 2) the funds to be recovered were located in the US; and 3) a US judgment would be enforced in the HCJ. None of these distinctions, however, matter. The issue here is whether this Court, a US court, can hear claims brought under CA § 329. Under Seismic Reservoir and Hellas Telecommunications, CA § 329 cannot restrict this Court's jurisdiction to hear the Singapore Claims. For the same reason, the Recognition Order does not dictate the Court's jurisdiction. Further, neither the Trustee nor Tan cited any authority to the contrary.
The Court's jurisdiction is governed by 28 U.S.C. § 1334(b), which provides that the district courts have "original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." Title 28 U.S.C. § 157(a) provides that the district courts may refer all proceedings "arising under title 11 or arising in or related to a case under title 11" to the bankruptcy judges for the district. The Central District of California has a general order referring all such cases to the bankruptcy judges of this district. C.D. Cal. Gen. Order No. 13-05 § 1. Thus, if the district court had jurisdiction under 28 U.S.C. § 1334(b), this Court would likewise have jurisdiction. Harkey v. Grobstein (In re Point Ctr. Fin., Inc.), 957 F.3d 990, 997 (9th Cir. 2020) (explaining that § 1334(b) affords the bankruptcy court, by reference under § 157(a), jurisdiction over matters "arising under" the Bankruptcy Code).
A proceeding is "related to" a bankruptcy case if "the outcome could alter the debtor's rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate." Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189, 1193 (9th Cir. 2005) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984) ). The Court's "related to" jurisdiction is "very broad, ‘including nearly every matter directly or indirectly related to the bankruptcy.’ " Sasson v. Sokoloff (In re Sasson), 424 F.3d 864, 869 (9th Cir. 2005).
By way of the Singapore Claims, the Trustee seeks to avoid and recover over $42 million of preference payments from UL/GA and Li Qi. UL/GA First RJN Ex. 24; Furler 2/28/22 Aff. ¶¶ 4.a, 4.b, 58-59. Success on the Singapore Claims would bear directly on administration of the Estates because it would enhance the Estates’ recovery. Pegasus Gold Corp., 394 F.3d at 1193 ; Sasson, 424 F.3d at 869. Therefore, this Court finds that it had jurisdiction under 28 U.S.C. § 1334(b) to adjudicate the Singapore Claims.
The Trustee attempts to analogize intellectual property laws with bankruptcy laws, arguing that courts "uniformly conclude[ ] that [anti-suit] injunctions are improper" in the intellectual property context. Opposition at 31-32 (citing Zynga, Inc. v. Vostu USA, Inc., 816 F. Supp. 2d 824, 829 (N.D. Cal. 2011) ). But the Trustee cited no authority to substantiate this analogy. And, the broad jurisdiction of 28 U.S.C. § 1334(b) provides the Court with expansive latitude to adjudicate the Singapore Claims, whereas federal courts’ jurisdiction over foreign intellectual property claims is more limited. Compare 28 U.S.C. § 1334(b) (granting jurisdiction to adjudicate proceedings arising under, arising in or related to cases "under title 11"), with § 1331 (providing original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States"), and § 1338(a) (granting original jurisdiction over "any civil action arising under any Act of Congress relating to patents, plant variety protection, copyrights and trademarks").
The Trustee also argues that the Court ruled that his avoidance powers could not be invoked extraterritorially, so he was "compelled" by the Court's prior ruling to file the Singapore Action. Opposition at 34-35. This is incorrect. The Court previously found that the transfers the Trustee sought to avoid and recover under 11 U.S.C. §§ 548 and 550 in the Adversary Proceeding were extraterritorial, and beyond the reach of US bankruptcy law. Second UL/GA/TG MTD Ruling at 15-36, 41. The Court did not address, nor did it issue any ruling, regarding avoidance and recovery under Singapore law. Further, the Court did not require the Trustee to bring the Singapore Claims separately from his US law claims, nor did it order the Trustee to pursue those claims in Singapore. In fact, this Court expressed skepticism regarding the Trustee filing parallel proceedings in different forums. See Zetta USA Docket #1848 at 6.
Finally, the Trustee's assertion that Singapore Model Law Art. 23(1) required him to " ‘make an application to the [Singapore High] Court for an order’ granting approval to assert statutory insolvency avoidance powers" is unpersuasive. Opposition at 33-34. The Singapore Model Law contains no such requirement. Instead, the Trustee appears to be relying on a provision contained in the Recognition Order, which provides:
In addition to the briefs submitted by the parties, the Trustee filed a declaration of Tan and UL/GA filed a declaration of Andrew Chan (Chan), who advanced competing positions regarding whether the Trustee could bring the Singapore Claims in a court outside of Singapore. See Tan 5/18/22 Decl. ¶¶ 20-46; Chan 5/25/22 Decl. ¶¶ 17-44. Tan highlights CA § 329, which provides that "the Official Assignee may apply to the court for an order under this section" and she indicates that in the context of that statute, " ‘court’ means any court of competent jurisdiction in Singapore" under the Interpretation Act 1965, § 2(1) (Sing.). Tan 5/18/22 Decl. ¶ 21 (emphasis in original). For this reason, she explains that claims under CA § 329 can only be brought in Singapore. Id. ¶ 22. Tan acknowledges that Art. 5(1) of the Singapore Model Law provides that "[a] Singapore insolvency officeholder is authorised to act in a foreign State on behalf of a proceeding under Singapore insolvency law, as permitted by the applicable foreign law." Id. ¶ 23. But, she asserts that this provision is inapplicable because it only empowered the Trustee to seek assistance of a foreign court regarding proceedings already commenced in Singapore. Id. ¶¶ 24-30.
Chan asserts that BA § 99 is an enabling provision, which makes clear that the "insolvency practitioner may have [a BA § 99] claim heard in the Singapore High Court" without requiring an application to the Singapore High Court. Chan 5/25/22 Decl. ¶ 18 (emphasis in original). Chan notes that a Singapore insolvency officeholder is permitted to "act in a foreign State on behalf of a proceeding under Singapore insolvency law," including by commencing an action under CA § 329. Id. ¶¶ 25-27 (citing Singapore Model Law, Art. 5(1)). Chan highlights that the Companies Act and Bankruptcy Act define "court" as the Singapore High Court "only unless the context requires otherwise," and "if clawback claims are required to be brought in a foreign court, the definition of ‘Court’ may in this context refer to such a foreign court." Id. ¶ 36(1)(c) (emphasis in original). He indicates that the Singapore Model Law's definition of "court" underscores this reading because Art. 23(6)(b) refers to the Court in which that proceeding is pending, including a court in a foreign state. Id. ¶ 36(2)(c).
The Court finds that Chan's analysis of Singapore law is more persuasive. The Interpretation Act, which Tan cites for the definition of "court," fills gaps where Singapore statutes do not define a term. See Interpretation Act 1965, § 2(1) (Sing.) (defining terms in statutes unless their definition "is therein otherwise expressly provided"). But, both the Companies Act and the Bankruptcy Act define a "court" as: 1) the court having jurisdiction in bankruptcy "unless the context otherwise requires," Bankruptcy Act, § 2(1) (Sing.); and 2) the High Court of Singapore "unless the contrary intention appears," Companies Act, § 4(1) (Sing.). Neither the Bankruptcy Act nor the Companies Act required that the Singapore Claims be brought in Singapore.
More importantly, the Singapore Model Law contains express authorization for the Trustee to file claims outside of Singapore. Singapore Model Law Art. 5(1) provides: "[a] Singapore insolvency officeholder is authorised to act in a foreign State on behalf of a proceeding under Singapore insolvency law ...." Both Tan and Chan agree that the Trustee is a "Singapore officeholder," which is defined as "a person acting as a liquidator" under the Companies Act. Singapore Model Law Art. 2(l); Tan 5/18/22 Decl. ¶ 23; Chan 5/25/22 Decl. ¶ 31. Although Tan cites commentary in the U.N. Commission on International Trade Law (UNCITRAL), UNCITRAL Model Law on Cross-Border Insolvency with Guide to Enactment and Interpretation (2014) and a U.N. Commission on International Trade Law (UNCITRAL), Report of the Working Group on Insolvency Law on the Work of Its Nineteenth Session, U.N. Doc. A/CN 9/422, ¶¶ 71-73 (1996) to support a narrower reading of Singapore Model Law Art. 5, those secondary sources are not binding law in Singapore. Insolvency, Restructuring and Dissolution Act 2018, § 252(2) (Sing.) (explaining that the Singapore Model Law has the "force of law" and the UNCITRAL Enactment Guide and reports are "relevant documents"). As a result, Tan's reliance on these materials cannot overcome the plain language of the Singapore Model Law, which empowered the Trustee to pursue Singapore law claims outside of Singapore, given his position as the Debtors’ foreign representative. Singapore Model Law Art. 2(i) (defining a foreign representative as a person "authorized in a foreign proceeding to administer the reorganisation or the liquidation of the debtor's property or affairs"); Recognition Order § 2 (recognizing the Trustee as the Debtors’ foreign representative).
1) The Cases are recognized by the Singapore Courts and in Singapore as a foreign main proceeding within the meaning of Singapore Model Law Art. 2(f). Recognition Order § 1.
2) The Trustee is recognized by the Singapore Courts and in Singapore as a foreign representative within the meaning of Singapore Model Law Art. 2(i). Id. § 2.
3) The Trustee is entrusted with the administration and realization of "all or any part of the property and assets" of the Debtors located in Singapore, except that "such assets shall only be repatriated to locations outside of Singapore with leave of the [Singapore High] Court." Id. § 5.
4) The Trustee has:
a. "[S]tanding to make an application to the Court under Article 23(1) of the [Singapore] Model Law for orders or relief under or in connection with section[ ] ... 329 ... of the Companies Act ...." Id. § 6(a).
b. The "like powers" regarding the Debtors’ property and assets (and any proceeds thereof) as are available to a liquidator under Singapore insolvency law. Id. § 6(b)(i).
c. "[S]tanding to make applications to the Court for orders or reliefs pursuant" to CA § 329 regarding any preference or other transaction entered into before 5/23/17 ...." Id. § 6(b)(ii).
At most, the Recognition Order authorized the Trustee to make an unfair preferences application to the Singapore High Court. Id. § 6(a). But permitting the Trustee to make an application to the Singapore High Court is not the same as requiring him to do so. The Court finds that nothing in the Recognition Order limited the Trustee's ability to file the Singapore Claims outside of Singapore.
c. Foreign Anti-Suit Injunction
To issue a foreign anti-suit injunction, the Court must consider whether: 1) the parties are the same in both the domestic and foreign actions; 2) the issues are the same and the first action is dispositive of the action to be enjoined; 3) at least one of the factors from Zapata Off-Shore Co. v. M/S Bremen (In re Unterweser Reederei, GMBH), 428 F.2d 888, 896 (5th Cir. 1970), aff'd on reh'g, 446 F.2d 907 (5th Cir. 1971) (en banc), rev'd on other grounds sub nom., M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) applies; and 4) an injunction's impact on comity is tolerable. Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 881 (9th Cir. 2012) (citing E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 991 (9th Cir. 2006) ).
i. UL/GA
1. Whether Parties are the Same
UL/GA assert that the Singapore Action and Adversary Proceeding were brought against the same parties: UL/GA and Li Qi. Motion at 22. They contend that the "removal of [TG] from the Singapore Action" is not relevant to the outcome of the Motion. Id. Neither the Trustee in the Opposition nor UL/GA in the Reply address whether the parties are the same.
To issue an anti-suit injunction, a perfect match between the parties in a foreign and domestic suit is not required. Zynga, Inc. v. Vostu USA, Inc., 816 F. Supp. 2d 824, 828 (N.D. Cal. 2011). Rather, "it suffices that the parties be affiliated in such a way that their interests coincide." Id.
The FAC asserted claims against UL/GA and Li Qi and the Singapore Action asserts claims against the same entities and individual:
?
FAC at 2; Furler 2/28/22 Aff. at 1. Therefore, the Court finds that the first element necessary for issuing an anti-suit injunction is met.
2. Whether the Issues are the Same
UL/GA assert that res judicata applies because the Adversary Proceeding and Singapore Action involve the same claims, and the Court issued the Judgment in the Adversary Proceeding. Motion at 23-24 (quoting Media Rts. Techs., Inc. v. Microsoft Corp., 922 F.3d 1014, 1020-21 (9th Cir. 2019) ).
They argue that the Singapore Action addresses the same nucleus of facts as the Adversary Proceeding did because it involves the same 2015 leases, the same 2016 sale/leasebacks, and the same 2016 loan payments. Id. at 24-25. They assert that "the events underlying the two actions occurred at the same time, in the same place, for the same motivations, and could have been tried conveniently in a single trial." Id. at 25. UL/GA highlight that the Trustee explicitly withheld preference claims from the FAC, which were pled in the Original Complaint, and stated that he intended to bring those claims in Singapore under Singapore law. Id. at 31 (citing FAC ¶ 530 n.7). They contend that the Trustee abandoned his preference claims by not raising them in the FAC and he should not be allowed to reassert them in a different forum. Id. at 27. UL/GA argue that the common nucleus of facts in the Singapore Action and Adversary Proceeding is "outcome determinative," and bars the Singapore Action. Id. at 26.
UL/GA conclude that even if an appeal is pending, dismissal with prejudice is a final judgment on the merits for res judicata purposes. Id. at 27 (citing Beard v. Sheet Metal Workers Union, Loc. 150, 908 F.2d 474, 477 n.3 (9th Cir. 1990) ).
The Trustee does not address this issue in the Opposition.
In the Reply, UL/GA reiterate their arguments from the Motion and assert that res judicata mandates that the Judgment is determinative of the Singapore Action. Reply at 29 (citing Media Rts. Techs., Inc. v. Microsoft Corp., 922 F.3d 1014, 1020 (9th Cir. 2019) ; Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Plan. Agency, 322 F.3d 1064, 1078 (9th Cir. 2003) ). They claim that well-established precedent supports an anti-suit injunction to prevent duplicative litigation, protect the integrity of the Judgment, and prevent evasion and re-litigation. Id. at 30-31 (citing Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926-27 (D.C. Cir. 1984) ; Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 654 (2d Cir. 2004) ; Younis Bros. & Co. v. CIGNA Worldwide Ins., 167 F. Supp. 2d 743, 746-47 (E.D. Pa. 2001) ; Silva Run Worldwide Ltd. v. Gaming Lottery Corp., 2002 WL 975623, at *9-10 (S.D.N.Y. May 9, 2002) ). They conclude that the Trustee cites no authority endorsing his approach where he "chose the forum, proceeded to an adverse judgment, and then relitigated duplicative claims in another forum." Id. at 31.
The issues in a foreign and domestic suit are the same "to the extent the domestic action is capable of disposing of all the issues in the foreign action ...." Applied Med. Distrib. Corp. v. Surgical Co. BV, 587 F.3d 909, 915 (9th Cir. 2009). This is a functional inquiry: the issues need not be identical, as the "verbal form of laws in different countries will inevitably differ." Id.
Courts may issue anti-suit injunctions if res judicata would bar subsequent foreign suits. See Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info. Techs., Inc., 369 F.3d 645, 654 (2d Cir. 2004) (explaining that an anti-suit injunction may be necessary because "a foreign court might not give res judicata effect to a United States judgment"); Younis Bros. & Co. v. CIGNA Worldwide Ins., 167 F. Supp. 2d 743, 746-47 (E.D. Pa. 2001) (granting an anti-suit injunction based on res judicata, which is a "rule of fundamental and substantial justice" and strongly favored by public policy). For this reason, courts may use a res judicata analysis to determine whether the "issues are the same." See E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 991 (9th Cir. 2006) (concluding that the "issues" were the same because claims arising from actions in California and Ecuador were the same).
Res judicata encompasses both "claim preclusion" and "issue preclusion." United States v. Bhatia, 545 F.3d 757, 759 n.2 (9th Cir. 2008) (citing Taylor v. Sturgell, 553 U.S. 880, 892, 128 S.Ct. 2161, 171 L.Ed.2d 155 (2008) ). Claim preclusion forecloses "successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit." Taylor, 553 U.S. at 892, 128 S.Ct. 2161 (quoting New Hampshire v. Maine, 532 U.S. 742, 748, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) ). "Issue preclusion" bars " ‘successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment,’ even if the issue recurs in the context of a different claim." Id. (quoting New Hampshire v. Maine, 532 U.S. 742, 748, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) ). Although the Court uses the umbrella term of res judicata, it applies the test for claim preclusion here.
a. Res Judicata
According to the Supreme Court, "res judicata serves vital public interests .... ‘[P]ublic policy dictates that there be an end of litigation; that those who have contested an issue shall be bound by the result of the contest, and that matters once tried shall be considered forever settled as between the parties.’ " Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 401, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981) (quoting Baldwin v. Iowa State Traveling Men's Ass'n, 283 U.S. 522, 525, 51 S.Ct. 517, 75 L.Ed. 1244 (1931) ). In the Ninth Circuit, the party seeking to apply res judicata must prove three elements:
1) The suits involved identical parties or privies;
2) The first lawsuit involved the same "claim" or cause of action as the second suit; and
3) The first suit was resolved by a final judgment on the merits.
Media Rts. Techs., Inc. v. Microsoft Corp., 922 F.3d 1014, 1020-21 (9th Cir. 2019). Importantly, res judicata "bars relitigation of all grounds of recovery that were asserted, or could have been asserted, in a previous action between the parties, where the previous action was resolved on the merits." Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Plan. Agency, 322 F.3d 1064, 1078 (9th Cir. 2003) (emphasis added) (quoting United States ex rel. Barajas v. Northrop Corp., 147 F.3d 905, 909 (9th Cir.1998) ).
i. Same Parties
As analyzed above, the Adversary Proceeding and Singapore Action involved the same parties: UL/GA and Li Qi.
ii. Same Claims
As shown below, the claims addressed in the Adversary Proceeding and the Singapore Action are functionally the same. In the Singapore Action, the Trustee seeks avoidance and recovery of five categories of transfers:
1) Lease payments (Plane 6 Lease Payments) Zetta Singapore made to GA under a "Master Aircraft Finance Lease" regarding Plane 6 (Plane 6 Lease);
2) Lease payments (Plane 7 Lease Payments, and together with the Plane 6 Lease Payments, Lease Payments) Zetta Singapore made to UL under a "Master Aircraft Finance Lease" regarding Plane 7 (Plane 7 Lease);
3) Loan payments (Plane 6 Loan Payments) Zetta Singapore made to UL under a supplemental agreement (Supplemental Agreement) to an "Aircraft Sale and Purchase Agreement" between UL and Zetta Singapore (Plane 6 Purchase Agreement);
4) A payment Zetta Singapore made to UL to terminate the Plane 7 Lease (Termination Payment); and
5) Interest payments (Interest Payments) Zetta Singapore paid to UL under two February 2016 loans (First and Second Loans).
1) Lease Payments Under the Plane 6 and Plane 7 Leases
Although, in the Singapore Action, the Trustee separately requests avoidance and recovery of the Plane 6 Lease Payments and Plane 7 Lease Payments, documents attached to the Furler 2/28/22 Aff. show that the payments for the two planes were made together. Furler 2/28/22 Aff. Tab 19.
In the Singapore Action, the Trustee seeks to avoid and recover $4.94 million in Plane 6 Lease Payments and $4.94 million in Plane 7 Lease Payments, which Zetta Singapore paid UL between 2/29/16 and 7/7/16. Furler 2/28/22 Aff. ¶¶ 33, 59, Tab 19. In Count 1 of the FAC, the Trustee sought to avoid six Lease Payments Zetta Singapore made to UL between 1/28/16 and 7/7/16, totaling $11.9 million. FAC ¶¶ 451-54, Sch. A.
In the Singapore Action, the Trustee seeks to avoid and recover a total of $9.88 million in Lease Payments. Furler 2/28/22 Aff. ¶ 59, Tab 19.
Although the time frames do not match exactly, documents attached to the FAC and the Furler 2/28/22 Aff. show that the Lease Payments at issue in the Adversary Proceeding and Singapore Action are identical. Apart from the Trustee not seeking recovery of a 1/28/16, $2,006,779.66 transfer in the Singapore Action, which was asserted in FAC Count 1, and a $30,000 discrepancy between the amount of the 6/2/16 transfer, which appears to have been caused by transposing a 6 for a 9, the two actions involved identical transfers.
?
Furler 2/28/22 Aff. Tab 19; FAC Sch. A.
2) Plane 6 Loan Payments
In the Singapore Action, the Trustee seeks to avoid and recover $10.15 million in Loan Payments Zetta Singapore made to UL between 8/1/16 and 7/31/17. Furler 2/28/22 Aff. ¶¶ 54, 59, Tab 30. In Count 2 of the FAC, the Trustee sought to avoid and recover $10.15 million the Debtors paid UL between 8/1/16 and 7/31/17 in "Plane 6 Loan Transfers." FAC ¶¶ 466, 469, Sch. B. As shown below, the FAC and Singapore Action seek to avoid and recover the exact same transfers.
| Date | Singapore Action Loan Payments | FAC Loan Payments |
|---|---|---|
| 8/1/16 | $780,671.00 | $780,671.00 |
| 8/30/16 | $780,671.00 | $780,671.00 |
| 10/3/16 | $780,671.00 | $780,671.00 |
| 10/31/16 | $780,671.00 | $780,671.00 |
| 11/30/16 | $780,671.00 | $780,671.00 |
| 1/6/17 | $780,671.00 | $780,671.00 |
| 2/2/17 | $780,671.00 | $780,671.00 |
| 3/7/17 | $780,671.00 | $780,671.00 |
| 4/11/17 | $780,671.00 | $780,671.00 |
| 5/2/17 | $780,671.00 | $780,671.00 |
| 6/2/17 | $780,671.00 | $780,671.00 |
| 7/3/17 | $780,671.00 | $780,671.00 |
| 7/31/17 | $780,671.00 | $780,671.00 |
Furler 2/28/22 Aff. Tab 30; FAC Sch. B.
3) Termination Payment Regarding Plane 7 Lease
In the Singapore Action, the Trustee seeks to avoid and recover a 9/21/16, $19.3 million Termination Payment Zetta Singapore made to UL regarding the Plane 7 Lease. Furler 2/28/22 Aff. ¶ 59. The Furler 2/28/22 Aff. explains that Zetta Singapore terminated the Plane 7 Lease as part of refinancing Planes 6 and 7, which was completed by: 1) terminating the Plane 6 and 7 Leases with UL and GA and incurring a $10.5 million prepayment penalty; 2) entering sale leaseback agreements with Minsheng; 3) paying UL the amount due under the Plane 7 Lease; and 4) converting the amount owed under the Plane 6 Lease to an unsecured debt that Zetta Singapore owed GA. Id. ¶ 43. This series of transactions resulted in a complex web of payments. Id. ¶¶ 44, 52, Tab 28.
In Count 1 of the FAC, the Trustee sought to avoid and recover $55 million the Debtors paid UL on 9/21/16 under the Plane 7 Lease. FAC ¶¶ 235, 249, 455-57. The FAC described the same factual circumstances leading to Zetta Singapore making this $55 million transfer as the Furler 2/28/22 Aff., including: 1) terminating the Plane 6 and 7 Leases with UL and GA and incurring a $10.5 million prepayment penalty; 2) entering sale leaseback agreements; 3) paying UL the amount due under the Plane 7 Lease; and 4) converting the amount owed under the Plane 6 Lease to an unsecured debt Zetta Singapore owed GA. FAC ¶¶ 235, 249, 253, 264-65, 273.
UL/GA claim that the $19.3 million Termination Payment Zetta Singapore made to UL was part of the $55 million payment that the Trustee sought to avoid in FAC Count 1. Motion at 19 n.11. The Furler 2/28/22 Aff. is less than clear regarding the $19.3 payment Zetta Singapore made to UL, but it appears to have been a subset of two $27.5 million transfers ($55 million in total) Zetta Singapore made to UL. Furler 2/28/22 Aff. ¶¶ 46.a, 50, Tab 28. And, in the Opposition, the Trustee did not address UL/GA's claim that the $19.3 million he seeks to recover in the Singapore Action is a subset of the $55 million he sought recovery of in Count 1 of the FAC. The Court may treat the Trustee's failure to address UL's argument as conceding that point. Hendricks v. Costco Wholesale Corp., 2020 WL 7251453, at *4 (C.D. Cal. Aug. 4, 2020) (citing Bancoult v. McNamara, 227 F. Supp. 2d 144, 149 (D.D.C. 2002) ).
The Furler 2/28/22 Aff. is inconsistent regarding the date of the transfers to UL, which occurred on either 9/20/16 or 9/21/16. Furler 2/28/22 Aff. ¶¶ 46.a, 50-52, Tab 28.
The Court concludes that, because the $19.3 million Zetta Singapore paid UL to terminate the Plane 7 Lease was part of the $55 million payment that the Trustee sought to avoid in FAC Count 1, the Singapore Action seeks to avoid the same Termination Payment as did the FAC.
4) Interest Payments Under the First and Second Loans
In the Singapore Action, the Trustee seeks to avoid and recover $2.83 million in Interest Payments Zetta Singapore made to UL based on two loans from Li Qi (through UL). Furler 2/28/22 Aff. ¶¶ 34-40, Tabs 20-23. Specifically, the Furler 2/28/22 Aff. indicates that:
1) In February 2016, Li Qi caused UL to make an unsecured $10 million loan to Zetta Singapore pursuant to a one-page letter agreement (First Loan). Id. ¶ 34.
2) On 7/19/16, Li Qi caused UL to make another unsecured $10 million to Zetta Singapore pursuant to a one-page loan term sheet (Second Loan). Id. ¶ 37. The key terms of the Second Loan were:
a. UL loaned Zetta Singapore $10 million at 10% for three months. Id. ¶ 38.a, Tab 22 at 1.
b. In addition to interest, UL and Cassidy were to each receive half of the first 10% of Zetta Singapore's 2016, 2017, and 2018 profits. Id. ¶ 38.b, Tab 22 at 1.
c. If the First or Second Loans were not timely repaid, the amount of Zetta Singapore's profits to be split between Cassidy and UL would increase by 1% per month. Id. ¶ 38.c, Tab 22 at 1.
3) Between 3/16/16 and 8/15/17, Zetta Singapore paid UL $2.83 million in Interest Payments under the First and Second Loans (as shown in the chart below). Id. ¶¶ 40, 59.
Although the Furler 2/28/22 Aff. indicates that UL and Zetta Singapore paid a 20% interest rate, documents attached to the Furler 2/28/22 Aff. show that the agreed-upon interest rate was 10%. Furler 2/28/22 Aff. Tab 22 at 1.
In the FAC, the Trustee did not seek to avoid the Interest Payments under the First and Second Loans. But, when considering whether res judicata applies, the Court must determine not whether the FAC sought to avoid the Interest Payments but whether the FAC could have sought to avoid those payments. Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg'l Plan. Agency, 322 F.3d 1064, 1078 (9th Cir. 2003). In Count VIII of the Original Complaint, the Trustee sought to avoid and recover twelve interest payments Zetta Singapore made to UL on the First and Second Loans as preferences under 11 U.S.C. §§ 547 and 550. Original Complaint ¶¶ 143, 257-69. As shown below, those twelve payments are identical to the 9/19/16 to 8/15/17 payments that the Trustee seeks to avoid in the Singapore Action:
Under § 547(b)(4)(B), the Trustee was limited to avoiding any interest of the Debtors in property made within one year before the Petition Date if the creditor was an insider. Between February 2016 and December 2017, Li Qi was a Director and insider of Zetta Singapore and he used UL, a company he owned and controlled, to "manage his relationship" with Zetta Singapore. FAC ¶¶ 35-36, 41. As a result, under US law, the Trustee could only seek to recover payments Zetta Singapore made to UL during the year before the Petition Date (between 9/15/16 and 9/15/17). In contrast, the payments Zetta Singapore made to UL between 3/16/16 and 8/15/16 were recoverable under Singapore law because the Bankruptcy Act permits the Trustee to recover unfair preferences made during the two years before the bankruptcy application. Bankruptcy Act, § 100(b) (Sing.).
| Date | Singapore Action Interest Payments | Original Complaint Interest Payments | FAC Interest Payments |
|---|---|---|---|
| 3/16/16 | $83,333.00 | N/A | N/A |
| 4/15/16 | $83,333.00 | N/A | N/A |
| 5/16/16 | $83,333.00 | N/A | N/A |
| 6/15/16 | $83,333.00 | N/A | N/A |
| 7/15/16 | $83,333.00 | N/A | N/A |
| 8/15/16 | $83,333.00 | N/A | N/A |
| 9/19/16 | $83,333.00 | $83,333.00 | N/A |
| 10/14/16 | $583,333.00 | $583,333.00 | N/A |
| 11/15/16 | $83,333.00 | $83,333.00 | N/A |
| 12/28/16 | $83,333.00 | $83,333.00 | N/A |
| 1/19/17 | $83,333.00 | $83,333.00 | N/A |
| 2/17/17 | $583,333.00 | $583,333.00 | N/A |
| 3/16/17 | $83,333.00 | $83,333.00 | N/A |
| 4/20/17 | $83,333.00 | $83,333.00 | N/A |
| 5/19/17 | $166,666.00 | $166,666.00 | N/A |
| 6/16/17 | $166,666.00 | $166,666.00 | N/A |
| 7/17/17 | $166,666.00 | $166,666.00 | N/A |
| 8/15/17 | $166,666.00 | $166,666.00 | N/A |
Furler 2/28/22 Aff. Tab 23; Original Complaint Sch. D.
When the Trustee filed the FAC, he removed the preference claims seeking recovery of the Interest Payments. But, the FAC still contained nearly all of the same factual allegations regarding the First and Second Loans as does the Furler 2/28/22 Aff.:
1) In February 2016, Li Qi, through UL, made the $10 million First Loan to Zetta Singapore. FAC ¶ 224.
2) On 7/19/16, Li Qi, through UL, made the $10 million Second Loan to Zetta Singapore. Id. ¶ 247. The terms of the Second Loan were:
a. UL loaned Zetta Singapore $10 million at 10% for three months. Id.
b. Separate from interest, UL and Cassidy had a "priority profit share" in Zetta Singapore, which provided each with half of the first 10% of Zetta Singapore's 2016, 2017, and 2018 profits. Id.
c. If the First Loan or the Second Loan were not timely repaid, the amount of Zetta Singapore's profits to be split between Cassidy and UL would increase by 1% per month. Id.
3) Li Qi received $2.3 million in above-market Interest Payments on "the loans." Id. ¶ 138.
The FAC did not otherwise identify the "loans," but the Court infers that it was referencing the First and Second Loans because the Original Complaint sought avoidance of the same $2.3 million. Original Complaint ¶¶ 257-69, Sch. D.
Because the Trustee sought to avoid the Interest Payments Zetta Singapore made to UL in the Original Complaint, and the FAC contained all of the underlying factual allegations involving those Interest Payments, the Court finds that he could have brought Singapore law avoidance claims related to those transfers in the FAC.
iii. Final Judgement
The Court notes that it dismissed the FAC without leave to amend and entered the Judgment. AP Docket #s 314 at 42, 319 at 3, 320 at 3. Even if an appeal is pending, a dismissal with prejudice can be treated as a final judgment on the merits for res judicata purposes. Beard v. Sheet Metal Workers Union, Loc. 150, 908 F.2d 474, 477 n.3 (9th Cir. 1990).
iv. Res Judicata Conclusion
The Court finds that the Singapore Action involves the same parties and issues as this Adversary Proceeding. Further, the Court's dismissal of the Adversary Proceeding with prejudice was a final adjudication on the merits. Therefore, the Court finds that res judicata bars the Trustee from pursuing the Singapore Claims in the Singapore Action.
3. Unterweser Factors
UL/GA argue that at least three of the factors from Zapata Off-Shore Co. v. M/S Bremen (In re Unterweser Reederei, GMBH), 428 F.2d 888, 896 (5th Cir. 1970), aff'd on reh'g, 446 F.2d 907 (1971) (en banc), rev'd on other grounds sub nom., M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) support issuing an anti-suit injunction. Motion at 29. The Trustee responds that the Unterweser factors favor him and UL/GA's analysis relies on a mistaken assumption that he could have brought the Singapore Claims in the Adversary Proceeding. Opposition at 36. UL/GA reply that multiple Unterweser factors are present here, even though only one is necessary to support an anti-suit injunction. Reply at 32.
In the Ninth Circuit, courts consider a disjunctive list of factors to determine whether to enjoin a foreign action. E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 989-90 (9th Cir. 2006) (citing Zapata Off-Shore Co. v. M/S Bremen (In re Unterweser Reederei, GMBH), 428 F.2d 888, 896 (5th Cir. 1970), aff'd on reh'g, 446 F.2d 907 (1971) (en banc), rev'd on other grounds sub nom., M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972) ). "[F]oreign litigation may be enjoined when it would (1) frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; (3) threaten the issuing court's in rem or quasi in rem jurisdiction; or (4) where the proceedings prejudice other equitable considerations." Id. at 990 (citing Seattle Totems Hockey Club, Inc. v. Nat'l Hockey League, 652 F.2d 852, 855 (9th Cir. 1981) ). If any of these four Unterweser factors are present, the foreign action may be enjoined. Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 881 (9th Cir. 2012) ; E. & J. Gallo Winery, 446 F.3d at 990.
UL/GA and the Trustee disagree regarding whether the Singapore Action: 1) frustrates a US policy; 2) is vexatious or oppressive; or 3) "prejudice[s] other equitable considerations."
a. Frustrates a Policy of the Forum
UL/GA assert that the Singapore Action thwarts application of res judicata, which is a rule of fundamental and substantial justice. Motion at 29-30 (citing Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 401, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981) ). They contend that the Trustee could have brought his Singapore Claims in the Adversary Proceeding, but chose to bring the Singapore Action after two years of litigation while the Appeal is pending. Id. at 30. UL/GA allege that US public policy "dictates that there be an end of litigation" and protects parties and courts from the burden of litigating iterations of claims in perpetuity. Id. (citing Federated Dep't Stores, 452 U.S. at 401, 101 S.Ct. 2424 ; W. Radio Servs. Co. v. Glickman, 123 F.3d 1189, 1192 (9th Cir. 1997) ).
The Trustee responds that res judicata does not apply here and an anti-suit injunction would flout Ninth Circuit precedent by allowing the Court to give its own decision preclusive effect. Opposition at 36-37 (citing Ruiz v. Snohomish Cnty. Pub. Util. Dist. No. 1, 824 F.3d 1161, 1168 (9th Cir. 2016) ; Medellín v. Texas, 552 U.S. 491, 513 n.9, 128 S.Ct. 1346, 170 L.Ed.2d 190 (2008) ; Battle Ground Plaza, LLC v. Ray (In re Ray), 624 F.3d 1124, 1135 (9th Cir. 2010) ; MK Hillside Partners v. Comm'r, 826 F.3d 1200, 1207 n.7 (9th Cir. 2016) ; Donovan v. City of Dallas, 377 U.S. 408, 411-12, 84 S.Ct. 1579, 12 L.Ed.2d 409 (1964) ). He asserts that res judicata would be particularly inappropriate because it would "send a message to [Singapore] that this Court has so little confidence in the courts in [Singapore] to adjudicate this dispute fairly and efficiently that it is unwilling to even allow the possibility." Id. at 37 (citing Kismet Acquisition, LLC v. Icenhower (In re Icenhower), 398 B.R. 902, 915-16 (Bankr. S.D. Cal. 2008) ).
UL/GA reply that the Singapore Action eviscerates the policy underlying res judicata, which allows parties to rely on adjudication and exists to prevent duplicative lawsuits. Reply at 32-33 (citing Marin v. HEW, Health Care Fin. Agency, 769 F.2d 590, 594 (9th Cir. 1985) ; Allen v. McCurry, 449 U.S. 90, 94, 101 S.Ct. 411, 66 L.Ed.2d 308 (1980) ). They claim that by filing the Singapore Action, the Trustee flouts res judicata and burdens the Court and the administratively insolvent Estates. Id. at 32. UL/GA assert that they are not asking the Court to predetermine the res judicata effects of its ruling in the Adversary Proceeding because there has already been a final judgment. Id. They claim that the cases on which the Trustee relies are inapposite because none involved a litigant with an adverse judgment seeking to relitigate in a foreign jurisdiction. Id. at 32-33 (citing Ruiz v. Snohomish Cnty. Pub. Util. Dist. No. 1, 824 F.3d 1161, 1168 (9th Cir. 2016) ; Medellín v. Texas, 552 U.S. 491, 513 n.9, 128 S.Ct. 1346, 170 L.Ed.2d 190 (2008) ; Battle Ground Plaza, LLC v. Ray (In re Ray), 624 F.3d 1124, 1135 (9th Cir. 2010) ; MK Hillside Partners v. Comm'r, 826 F.3d 1200, 1207 n.7 (9th Cir. 2016) ; Donovan v. City of Dallas, 377 U.S. 408, 411-12, 84 S.Ct. 1579, 12 L.Ed.2d 409 (1964) ). UL/GA conclude that the Court is being asked to apply well-established precedent to protect the integrity of the Judgment and prevent relitigation by the Trustee in Singapore. Id. at 33.
As noted above, res judicata serves a vital public policy of ensuring that there is an end to litigation and parties are bound by lawsuits’ results. Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 401, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981). Courts apply res judicata to enjoin parties from relitigating issues abroad that were already decided in US courts. See Triton Container Int'l Ltd. v. Di Gregorio Navegacao Ltda., 440 F.3d 1137, 1137-38 (9th Cir. 2006) (enjoining the losing party in a US case from subsequently filing an action in Brazil to litigate the same factual issues after receiving an adverse judgment); MasterCard Int'l Inc. v. Fédération Internationale de Football Ass'n, 2007 WL 631312, at *9 (S.D.N.Y. Feb. 28, 2007) (enjoining an attempt to use foreign arbitration to relitigate the same issues that were already decided in federal district court).
Although the Trustee argues that if the Court were to issue an anti-suit injunction, it would be giving its own decision preclusive effect, his position is not persuasive. Opposition at 36-37. First, the Court is not being asked to predetermine the preclusive effect of the Judgment, or whether the Judgment was correct. Instead, it must determine whether res judicata bars the Trustee from bringing the Singapore Claims in Singapore. Second, the cases on which the Trustee relies are easily distinguishable because none involved a foreign anti-suit injunction. See Ruiz v. Snohomish Cnty. Pub. Util. Dist. No. 1, 824 F.3d 1161, 1168 (9th Cir. 2016) (holding that, where a court dismissed a suit with prejudice for lack of personal jurisdiction, which is not a judgment on the merits, it could not predetermine the res judicata effect of its dismissal); Medellín v. Texas, 552 U.S. 491, 513 n.9, 128 S.Ct. 1346, 170 L.Ed.2d 190 (2008) (explaining that, although US courts consider the views of the International Court of Justice (ICJ) when interpreting the US's treaty obligations, the ICJ cannot dictate the preclusive effects or enforceability of its judgments in US courts); Battle Ground Plaza, LLC v. Ray (In re Ray), 624 F.3d 1124, 1135 (9th Cir. 2010) (explaining that a bankruptcy court did not retain jurisdiction over a breach of contract claim arising from its sale order); MK Hillside Partners v. Comm'r, 826 F.3d 1200, 1202-03, 1207 n.7 (9th Cir. 2016) (affirming tax court's rejection of partner's assertion that the limitations period had run regarding the IRS’ adjustment of a partnership's tax return but not predicting whether the tax court's findings would have preclusive effect in the individual partner's deficiency proceeding); Donovan v. City of Dallas, 377 U.S. 408, 411-13, 84 S.Ct. 1579, 12 L.Ed.2d 409 (1964) (holding that a state court could not enjoin unsuccessful plaintiffs from prosecuting a similar action in federal court). Finally, the law in the Ninth Circuit is clear: courts can issue anti-suit injunctions preventing relitigation of issues in a foreign forum, which were decided (or could have been decided) in a US court. See Triton Container Int'l Ltd. v. Di Gregorio Navegacao Ltda., 440 F.3d 1137, 1137-38 (9th Cir. 2006) (holding that a district court abused its discretion by denying an anti-suit injunction after a party attempted to relitigate factual issues abroad that had been decided in a US court).
The Trustee also contends that an anti-suit injunction would signal that the Court lacks confidence that the Singapore Claims would be adjudicated fairly and efficiently in Singapore. Opposition at 37 (citing Kismet Acquisition, LLC v. Icenhower (In re Icenhower), 398 B.R. 902, 915-16 (Bankr. S.D. Cal. 2008) ). But, the Trustee's argument is unavailing and his reliance on Icenhower, which arose under dramatically different circumstances, does not alter that conclusion.
In Icenhower, Jerry and Donna Icenhower (Icenhowers) bought a beneficial interest in a trust that owned a Mexican villa (Villa). Icenhower, 398 B.R. at 906. A few years later, they secretly transferred their trust interest to a wholly-owned corporation, Howell & Gardner Investors, Inc. (H&G) for no consideration. Id. Then, the Icenhowers filed for bankruptcy. Id. While the Icenhowers were in bankruptcy, H&G sold its interest in the Villa to Alejandro Diaz-Barba and Martha Barba de la Torre (Diazes). Id. The chapter 7 trustee, Gerald Davis (Davis), filed avoidance and recovery actions, alleging that H&G was the Icenhowers’ alter ego and the Villa's sale to the Diazes was an unauthorized postpetition transfer. Id. at 906-07. Shortly thereafter, Kismet Acquisition, LLC (Kismet) bought the estate's assets and was substituted for Davis in the avoidance actions. Id. at 907. After trial, the bankruptcy court found that the transfer of H&G's interest in the Villa to the Diazes was an avoidable postpetition transfer, and Kismet could recover the Villa or its value from the Diazes. Id. The bankruptcy court entered a judgment (US Judgment) ordering the Diazes to reconvey the property to Kismet. Id. at 906-08. When the Diazes refused and filed a series of actions in Mexico (Mexico Litigation), Kismet filed a motion in bankruptcy court to enjoin the Mexico Litigation. Id. at 908-10.
The bankruptcy court denied Kismet's request for an anti-suit injunction, explaining that when it issued the US Judgment, it did not rule on: 1) whether the US Judgment was enforceable in Mexico; or 2) who had title to the Villa under Mexican law. Id. at 913-14. Because both issues were central to the Mexico Litigation, the court found that res judicata was inapplicable. Id. at 914. The bankruptcy court concluded that, although the Mexico Litigation was vexatious and oppressive, it would not issue an anti-suit injunction enjoining the Mexico Litigation, which involved Mexican nationals, a Mexican property, and issues of Mexico law that it had not addressed or decided. Id. at 915-16.
In contrast to Icenhower, as analyzed above, res judicata bars the Trustee from pursuing the Singapore Claims in the Singapore Action. The Trustee filed the Singapore Action "[a]fter fully participating in the [Adversary Proceeding] and after receiving an adverse judgment." Triton Container Int'l Ltd. v. Di Gregorio Navegacao Ltda., 440 F.3d 1137, 1138 (9th Cir. 2006). Under these circumstances, the fundamental policy that "matters once tried shall be considered forever settled as between the parties" would be frustrated by permitting the Singapore Action to proceed. Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 401, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981) (quoting Baldwin v. Iowa State Traveling Men's Ass'n, 283 U.S. 522, 525, 51 S.Ct. 517, 75 L.Ed. 1244 (1931) ).
b. Vexatious or Oppressive
UL/GA assert that the Singapore action is "vexatious" and without probable cause or excuse because the Trustee is attempting to evade the rightful authority of this Court. Motion at 30-31 (citing Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 886 (9th Cir. 2012) ; Applied Med. Distrib. Corp. v. Surgical Co. BV, 587 F.3d 909, 921 (9th Cir. 2009) ; MasterCard Int'l Inc. v. Fédération Internationale de Football Ass'n, 2007 WL 631312, at *9 (S.D.N.Y. Feb. 28, 2007) ). They claim that the Trustee's forum shopping is "readily apparent," and he asserted in a FAC footnote that UL/GA violated Singapore preference laws. Id. at 31 (citing FAC ¶ 530 n.7). UL/GA argue that the Trustee could have pleaded the Singapore Claims in the Adversary Proceeding, but instead attempted to reserve them and brought the Singapore Action only after the Judgment was entered against him. Id.
The Trustee responds that the Singapore Action is not vexatious or oppressive because he could not have brought the Singapore Claims in a US court. Opposition at 37. He argues that he has consistently indicated his plan to bring the Singapore Claims in Singapore and there was a legitimate reason to file suit in Singapore. Id. (citing 1st Source Bank v. Neto, 861 F.3d 607, 614 (7th Cir. 2017) ). The Trustee asserts that Applied Medical Distribution Corp. v. Surgical Co. BV, 587 F.3d 909, 914 (9th Cir. 2009) and Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 885 (9th Cir. 2012) are inapposite because they involved attempts to make end-runs around binding forum selection clauses and private contractual rights. Opposition at 37. He highlights that MasterCard International Inc. v. Fédération Internationale de Football Association, 2007 WL 631312, at *6 (S.D.N.Y. Feb. 28, 2007) involved relitigating the same issues that were litigated in a US court in a Swiss arbitration proceeding. Opposition at 37-38. According to the Trustee, the Adversary Proceeding and Singapore Action are not two-party contractual disputes, but rather actions involving a court-appointed trustee implicating hundreds of creditors in many jurisdictions. Id. at 38.
UL/GA reply that the Singapore Action is vexatious because it was filed after the Judgement was entered and is an attempt to evade the Court's authority. Reply at 33. They highlight numerous statements, which were contained in the FAC and made during hearings, when the Trustee indicated that he may later choose to bring claims in Singapore under Singapore law. Id. at 33-34 (citing FAC ¶ 530 n.7; AP Docket #225 at 4-5, 19, 24). UL/GA note that the Trustee previously framed his decision as an "election" rather than arguing that Singapore had exclusive jurisdiction over the Singapore Claims. Id. at 34.
Litigation is "vexatious" when it is "without reasonable or probable cause or excuse," "harassing," or "annoying." Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 886 (9th Cir. 2012) (quoting Vexatious, Black's Law Dictionary (9th ed. 2009)). The Ninth Circuit has held that forum shopping and other litigation tactics such as harassing procedural maneuvers are "vexatious." Id. Where a foreign action is brought to relitigate issues already decided by a US court or to interfere with US litigation, it raises forum shopping concerns. Id.; Applied Med. Distrib. Corp. v. Surgical Co. BV, 587 F.3d 909, 921 (9th Cir. 2009) ; see also MasterCard Int'l Inc. v. Fédération Internationale de Football Ass'n, 2007 WL 631312, at *9 (S.D.N.Y. Feb. 28, 2007) (finding that it was vexatious to relitigate a case decided by a US court before an international arbitrator).
The Trustee attempts to distinguish Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 885 (9th Cir. 2012) and Applied Medical Distribution Corp. v. Surgical Co. BV, 587 F.3d 909, 914 (9th Cir. 2009), arguing that they involved forum selection clauses or private contractual rights. Opposition at 37. His position is unavailing because the contracts in those cases had little to do with why the courts found foreign litigation vexatious.
In Microsoft, Motorola, Inc. (Motorola) submitted declarations to the International Telecommunications Union (ITU), a standard-setting organization that establishes technical specifications ensuring that different manufacturers products are compatible with each other. Microsoft, 696 F.3d at 875-76. Motorola's declarations provided that it would license certain standard-essential patents (SEPs) it owned to all-comers on a reasonable and non-discriminatory basis (RAND). Id. at 876. Motorola sent Microsoft Corp. (Microsoft) a letter offering to license its US and international SEPs in return for royalties of 2.25% per unit based on the price of the end product. Id. at 877-78.
Microsoft sued Motorola in US District Court for the Western District of Washington (Washington Action), claiming that Motorola's proposed royalty terms were unreasonable and breached its contractual RAND obligations to the ITU, to which Microsoft was a third-party beneficiary. Id. at 878. The district court granted partial summary judgment for Microsoft on its contract claims and set the remaining issues for trial. Id. at 878-79. While the Washington Action was pending, Motorola sued Microsoft for infringing two of its German SEPs in Germany (Germany Action) and obtained an injunction prohibiting Microsoft from selling infringing products in Germany (German Injunction). Id. at 879. Microsoft moved for an anti-suit injunction in the Washington Action, seeking to prevent Motorola from enforcing the German Injunction. Id. at 880.
The district court issued an anti-suit injunction, noting that even though the Washington Action was ongoing and involved issues regarding an international portfolio of approximately 100 Motorola SEPs, Motorola initiated the Germany Action to enforce just two German SEPs, a small subset of the SEPs at issue in the Washington Action, which raised forum shopping concerns. Id. at 880-81, 886. The Ninth Circuit affirmed and held that the district court did not abuse its discretion in finding that the threat of enforcing the German Injunction was "vexatious or oppressive." Id. at 886. According to the Ninth Circuit, the German Action could have compromised the district court's ability to reach a just result in the Washington Action, given the external pressure on Microsoft to settle before litigation was complete. Id.
Applied Medical Distribution Corp. v. Surgical Co. BV, 587 F.3d 909 (9th Cir. 2009) is similarly instructive. There, Applied Medical Distribution Corporation (Applied) agreed to sell Surgical Company BV (Surgical) surgical supplies to distribute in Belgium, the Netherlands, and Luxembourg. Applied Med. Distrib. Co., 587 F.3d at 911. Applied and Surgical executed a distribution agreement (Agreement), which provided that federal and state courts in California "shall have exclusive jurisdiction to adjudicate any dispute arising out of this Agreement." Id. A year later, Applied notified Surgical that it would not be renewing the Agreement and Surgical replied that that it was entitled to compensation under Belgian law. Id. at 912. Applied sued Surgical in US district court seeking: 1) to enjoin Surgical from legal action in non-California forums; 2) a declaration that the Agreement terminated on 12/31/07; 3) a declaration that Surgical would take nothing due to termination of the Agreement; and 4) an award of its costs, expenses, and attorney fees. Id. Surgical then sued Applied in Belgium for damages under a Belgian statute based on the termination of the Agreement (Belgium Action). Id. at 911-12. The district court found that California was the appropriate forum for adjudicating the parties’ disputes over the Agreement, California law applied, and Surgical was not entitled to damages under California law. Id. at 912. The district court declined to issue an anti-suit injunction enjoining Surgical from pursuing the Belgium Action because it found that Surgical's claims under Belgian law were "potentially broader" than those at issue in the US. Id. at 913.
The Ninth Circuit reversed and remanded for the district court to issue an anti-suit injunction. Id. at 921. Importantly, the Ninth Circuit explained that the district court had ruled that Surgical was not entitled to a substantial portion of the damages it sought in the Belgium Action. Id. According to the Ninth Circuit, Surgical proceeded with its damages claims in the Belgium Action even though its entitlement to those damages had already been litigated in the US. Id. This, the Ninth Circuit held, underscored concerns that Surgical was attempting to evade the rightful authority of a US court and "effectively abrogate" a judgment adverse to Surgical's interests. Id. Like Microsoft and Applied Medical, the Singapore Action strongly suggests that the Trustee engaged in forum shopping to thwart this Court's Judgment. As early as 4/10/19, the Trustee explained that he was considering bringing avoidance claims in Singapore under Singapore law. Zetta USA Docket #1848 at 6-7. But, the Trustee did not bring any of the Singapore Claims in Singapore at that time, nor did he include the Singapore Claims in the Original Complaint, which was filed in September 2019. AP Docket #1. The Original Complaint's preference and avoidance claims were dismissed because the Court found that they involved extraterritorial application of the Bankruptcy Code. Original UL/GA/TG MTD Ruling at 8-44. The Trustee again noted during a 2/17/21 status conference that he was "considering ... refiling [some of his claims] in Singapore" and he planned to file claims in Singapore. AP Docket #225 at 4-5, 24. Then, in the FAC, which was filed on 3/29/21, the Trustee explained that he "intend[ed] to bring all preference claims ... in Singapore," including claims he previously brought in the Adversary Proceeding, as well as new claims under Singapore law. FAC ¶ 530 n.7. But, before the FAC was dismissed with prejudice in August 2021, the Trustee did not take any action to pursue the Singapore Claims in Singapore. Second UL/GA/TG MTD Ruling at 42; AP Docket #s 319 at 3.
Nearly two and one-half years after the Trustee filed the Adversary Proceeding, approximately three years after he mentioned he might bring the Singapore Claims, and most importantly, only after the Court dismissed the FAC without leave to amend, did the Trustee file the Singapore Action. As analyzed above, the Singapore Claims involve the same claims and issues as were raised in, and finally ruled on, in the Adversary Proceeding. The facts indicate that the Trustee strategically withheld the Singapore Claims until after the Court issued the Judgment in the Adversary Proceeding, and he then filed the Singapore Action to evade its outcome. This is the type of gamesmanship and strategy Microsoft and Applied Medical sought to prevent with anti-suit injunctions.
c. Other Equitable Considerations
UL/GA contend that the Singapore Action "prejudice[s] other equitable considerations," causing substantial inconvenience, unnecessary expense, duplication of efforts, and potentially inconsistent judgments. Motion at 31-32 (quoting Seattle Totems Hockey Club, Inc. v. Nat'l Hockey League, 652 F.2d 852, 855 (9th Cir. 1981) ). They claim that the Singapore Action will cause them and the Estates to incur significant additional expense. Id. at 32. UL/GA highlight that the Estates have already spent substantial funds on the Singapore Action even though they are administratively insolvent. Id. According to UL/GA, there is a risk that the Singapore Action might produce an inconsistent ruling with the Judgment. Id.
The Trustee responds that the Singapore Action would not prejudice equitable considerations because TG initiated a suit in Singapore related to this dispute, which "militate[s] against a finding that litigating a foreign action amounts to an inequitable hardship." Id. at 38-39 (quoting Commercializadora Portimex, S.A. de CV v. Zen-Noh Grain Corp., 373 F. Supp. 2d 645, 649-50 (E.D. La. 2005) ) (citing Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357, 368 (5th Cir. 2003) ). The Trustee argues that UL/GA's contentions regarding the Estates’ administrative insolvency fail because they "rehash" arguments addressed by the Court and he claims that the Estates are not administratively insolvent. Id. at 39. Finally, he argues that there is no risk of inconsistent judgments because he could not have litigated the Singapore Claims in the US. Id.
UL/GA reply that allowing the Trustee to pursue the Singapore Action would cause substantial inconvenience, unnecessary expense, duplication of effort, and may lead to inconsistent results. Reply at 34-35 (citing Seattle Totems Hockey Club, Inc. v. Nat'l Hockey League, 652 F.2d 852, 855-56 (9th Cir. 1981) ; Mastronardi Int'l Ltd. v. SunSelect Produce (Cal.), Inc., 437 F. Supp. 3d 772, 783-84 (E.D. Cal. 2020) ). They highlight that in the Second UL/GA/TG MTD Ruling, the Court considered the burden and inconvenience entailed by the Trustee's litigation approach and found that "any further amendment would be futile and would be prejudicial to UL/GA/TG." Id. at 35 (citing Second UL/GA/TG MTD Ruling at 41). UL/GA claim that the Trustee "elected" not to assert the Singapore Claims in the FAC, which they assert was inequitable, and forced them to spend time and money responding to the Trustee's tactics. Id. (citing FAC ¶ 530 n.7).
UL/GA assert that an injunction TG obtained from a Singaporean court in 2017, which was later dissolved by consent, does not now disqualify them from seeking an injunction here, given that the Trustee litigated this case to a final judgment. Id. at 36. Additionally, UL/GA contend that the Debtors’ Estates are administratively insolvent, despite the Trustee's assertions to the contrary, and the Singapore Action would compound the Estates’ administrative insolvency. Id. Finally, they argue that the Trustee ignores the burden of the Singapore Action on UL/GA. Id.
To determine whether a foreign action "prejudice[s] other equitable considerations," courts in the Ninth Circuit analyze the "convenience to the parties and witnesses, the interest of the courts in promoting the efficient administration of justice, and the potential prejudice to one party or the other ...." Seattle Totems Hockey Club, Inc. v. Nat'l Hockey League, 652 F.2d 852, 856 (9th Cir. 1981).
As an initial matter, the Court places little weight on the Trustee's argument about TG's earlier litigation in Singapore. While "voluntary invocation of a foreign forum" weighs against finding that litigating a foreign action is an inequitable hardship, the Trustee has not presented evidence that UL/GA, the moving parties here, were a part of that dispute. Commercializadora Portimex, S.A. de CV v. Zen-Noh Grain Corp., 373 F. Supp. 2d 645, 649-50 (E.D. La. 2005). TG is not a party to the Singapore Action and is not moving for an anti-suit injunction here. See Furler 2/28/22 Aff. at 1 (listing Li Qi, UL, and GA as the defendants).
Approximately two years after the Adversary Proceeding was filed and after the Court issued detailed rulings on two hotly contested motions to dismiss, the FAC was dismissed with prejudice. Second UL/GA/TG MTD Ruling at 41. The Trustee then filed the Singapore Action, based on claims that could have been brought in the Adversary Proceeding. In short, the Trustee seeks to continue expensive and burdensome litigation in another forum, which was conclusively resolved in the Adversary Proceeding. In addition to the burden on UL/GA, the Court notes that the Singapore Action would burden the Estates at a time when their expenses exceed the Trustee's recoveries by approximately $23 million. Zetta USA Docket #1933 at 58-59, 94.
The Court finds that the Singapore Action prejudices equitable considerations: adjudicating the same claims in a new forum would substantially inconvenience the parties at a considerable expense and be the antithesis of efficient administration of justice.
d. Unterweser Factors Conclusion
The Court finds that three of the Unterweser factors—frustration of a forum policy, vexatious or oppressive litigation, and prejudice to other equitable considerations—are present and weigh in favor of issuing an anti-suit injunction.
4. International Comity
UL/GA assert that an anti-suit injunction would have no impact on comity between Singapore and the US. Motion at 33. They highlight that in the context of an anti-suit injunction analysis, the Ninth Circuit employs a liberal approach which defines comity narrowly and assigns it little weight. Id. UL/GA contend that under this liberal standard, comity is only implicated when an injunction would affect foreign relations, involve government litigants, or impact international law, none of which are at issue here. Id. (citing Microsoft Corp. v. Motorola, Inc., 696 F.3d. 872, 887 (9th Cir. 2012) ). UL/GA conclude that an anti-suit injunction would not disrespect Singaporean laws or courts because the Trustee could have brought the Singapore Claims in the Adversary Proceeding but he chose not to do so. Id.
The Trustee responds that there is an "unquestioned public interest" in bankruptcy proceedings, which increases the importance of comity here. Opposition at 39 (citing Maxicare Health Plans, Inc. v. Centinela Mammoth Hosp. (In re Family Health Servs., Inc.), 105 B.R. 937, 945 (Bankr. C.D. Cal. 1989) ). He argues that an anti-suit injunction would frustrate the Singapore High Court's ability to regulate foreign representatives and enforce the Companies Act. Id. at 40.
The Trustee also contends that UL/GA are judicially estopped from pursuing an anti-suit injunction. Id. He asserts that UL/GA previously argued that Singapore was the appropriate forum for a preference suit. Id. at 40-41 (citing AP Docket #s 32 at 20-21, 45 at 13). The Trustee claims that, to gain a litigation advantage, UL/GA are now arguing that Singapore is not an appropriate forum. Id. at 41.
UL/GA reply that the Court has presided over so much of the Cases that it is absurd to suggest that Singapore, which has invested little in the management of the Debtors’ bankruptcies, would be offended by an anti-suit injunction. Reply at 37. They emphasize that an anti-suit injunction would enjoin the Trustee, rather than the Singapore High Court. Id. at 37-38. UL/GA assert that the Trustee has not identified any relevant facts implicating an effect on international comity. Id. at 38. They claim that the Trustee's allegation that Singapore has exclusive jurisdiction over the Singapore Claims is the only basis for his international comity arguments. Id.
UL/GA contend that they have not taken inconsistent positions and are not judicially estopped from seeking an anti-suit injunction. Id. They argue that their previous position—that the Trustee or the Court should have dismissed the Adversary Proceeding so that the Trustee's claims could be litigated in a more appropriate forum—was not adopted by the Court and no longer matters because the Court dismissed the FAC with prejudice. Id. at 22, 38-39. UL/GA conclude that they cannot be judicially estopped because they did not successfully persuade the Court to accept their earlier position, seeking to have the claims against them litigated outside the US. Id. at 39 (citing New Hampshire v. Maine, 532 U.S. 742, 750-51, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) ).
"Comity" refers to a nation's recognition of the "legislative, executive, or judicial acts of another nation within its own territory. ..." E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984 (9th Cir. 2006). In determining whether an anti-suit injunction is appropriate, the Ninth Circuit takes a "liberal approach," which places only modest emphasis on international comity. Goss Int'l Corp. v. Man Roland Druckmaschinen Aktiengesellschaft, 491 F.3d 355, 360 (8th Cir. 2007). Courts in the Ninth Circuit will deny a motion for an anti-suit injunction if the injunction's impact on comity is so great that it is intolerable. Microsoft Corp. v. Motorola, Inc., 696 F.3d. 872, 886 (9th Cir. 2012). This is not a precise measurement, and the Court is given discretion in this "flexible" and fact-specific inquiry because comity is neither an absolute obligation nor a matter of courtesy and good will. Id. Courts have held that international comity is less likely to be threatened by private contractual disputes than disputes regarding international law, government litigants, or foreign relations. Id. at 887.
Although the Trustee argues that bankruptcy proceedings involve an "unquestioned public interest" and increase concerns that the impact on comity would be intolerable, the case the Trustee cites is inapposite because it involved a chapter 11, where "the public interest lies in promoting successful reorganization." Maxicare Health Plans, Inc. v. Centinela Mammoth Hosp. (In re Family Health Servs., Inc.), 105 B.R. 937, 945 (Bankr. C.D. Cal. 1989). The Cases, however, were converted to chapter 7 more than four years ago. Zetta USA Docket #452 at 1. In a chapter 7 case, there is an amplified public interest in the "expeditious resolution of litigation." In re Szanto, 2019 WL 126195, at *3 (Bankr. D. Or. Jan. 7, 2019) ; see also In re Cal. Palms Addiction Recovery Campus, Inc., 2022 WL 2116643, at *22 (Bankr. N.D. Ohio June 10, 2022) (noting that in a chapter 7, the "public interest, as expressed by Congress in several ways in the Bankruptcy Code, favors the prompt administration of bankruptcy cases"); Samson v. W. Cap. Partners LLC (In re Blixseth), 509 B.R. 701, 707 (Bankr. D. Mont. 2017) (finding that there is a public interest in moving a chapter 7 bankruptcy case forward). Rather than advancing the public interest, the Singapore Action subverts it by revisiting and extending litigation already completed in the US.
The Singapore High Court does not appear to have had any involvement in administering the Debtors’ Estates. Apart from 2017 litigation between the Trustee and TG—which is not party to the Singapore Action—it does not appear that the Singapore High Court has adjudicated any disputes involving the Debtors. The Court recognizes that the Trustee filed the Singapore Action in February 2022 and UL/GA filed a response, asserting that they would seek a stay. Motion at 20. The most recent information that the Court has is that the Singapore Action was adjourned to 6/23/22, and it is unknown whether the Singapore High Court has issued any rulings since then. AP Docket #374 at 3.
In contrast, the Adversary Proceeding was filed almost three years ago and the Trustee has engaged in extensive litigation with UL/GA, both before this Court and before the District Court in the Appeal. US courts have invested significant time and resources resolving disputes between UL/GA and the Trustee.
The Trustee asserts that UL/GA previously argued that the Trustee's claims must be brought in Singapore and they are judicially estopped from seeking an anti-suit injunction. Opposition at 40-41. Judicial estoppel is an equitable doctrine that precludes a party from gaining an advantage by asserting one position, and then later taking a clearly inconsistent position. Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001). The purpose of the doctrine is to "protect the integrity of the judicial process by prohibiting parties from deliberately changing positions according to the exigencies of the moment." Ah Quin v. Cty. of Kauai Dep't of Transp., 733 F.3d 267, 270 (9th Cir. 2013) (quoting New Hampshire v. Maine, 532 U.S. 742, 749-50, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) ). Courts consider three factors when determining if judicial estoppel applies, whether: 1) the party's later position is clearly inconsistent with its earlier position; 2) the party succeeded in persuading the court to accept its earlier position; and 3) the party seeking to assert an inconsistent position would derive an unfair advantage if not estopped. Garza v. Ford Motor Co., 2020 WL 2490088, at *3 (C.D. Cal. May 14, 2020) (quoting New Hampshire v. Maine, 532 U.S. 742, 750, 121 S.Ct. 1808, 149 L.Ed.2d 968 (2001) ). The Ninth Circuit has limited application of judicial estoppel to cases where the court "relied on or accepted the party's previous inconsistent position." Hamilton, 270 F.3d at 783.
There are two reasons why UL/GA are not judicially estopped from seeking an anti-suit injunction. First, their request to issue an anti-suit injunction is not clearly inconsistent with their earlier position. In a brief UL/GA filed more than two years ago, they argued that the Original Complaint should be dismissed because it would be inconsistent with international comity to apply US law, and there were alternative foreign forums available. See Original UL/GA/TG MTD at 24 (filed on 12/20/19); AP Docket #32 at 27-32 (filed on 12/9/19). Now, UL/GA seek an anti-suit injunction based on res judicata. Second, UL/GA did not succeed in persuading the Court to accept its earlier position, and the Adversary Proceeding was litigated to final judgment.
In addition to filing the Original UL/GA/TG MTD, UL/GA joined a portion of the "Motion to Dismiss Counts II, III, VI, VII, IX, X, XI, XII, and XV of Adversary Complaint," AP Docket #32, filed by Yuntian 3 and Yuntian 4, which addressed international comity. AP Docket #45 at 24 n.11.
Here, there are no government litigants, issues of foreign relations, or concerns involving international law. The Court finds that under the Ninth Circuit's "liberal standard," issuing an anti-suit injunction would not have an intolerable impact on international comity. Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 886-87 (9th Cir. 2012).
5. UL/GA Anti-Suit Injunction Conclusion
UL/GA have shown that: 1) the same parties are involved in the Singapore Action and the Adversary Proceeding; 2) the Singapore Action and the Adversary Proceeding involve the same claims and res judicata bars the Singapore Action; 3) three of the Unterweser factors weigh in favor of issuing an anti-suit injunction; and 4) an anti-suit injunction would have a tolerable impact on comity. Therefore, the Court concludes that it is appropriate to issue an anti-suit injunction prohibiting the Trustee from pursuing the Singapore Action against UL/GA.
ii. Li Qi
UL/GA request that the Court issue an anti-suit injunction prohibiting the Trustee from proceeding in the Singapore Action not only against them, but also against Li Qi. Motion at 35. They note that Li Qi is not a moving party here because the Trustee has not served him. Id. at 11 n.3.
The Trustee responds that it would be inappropriate for the Court to enjoin him from bringing claims in Singapore against Li Qi because Li Qi is not a moving party. Opposition at 41-42. He claims that Li Qi has asserted that the Court does not have personal jurisdiction over him. Id. at 42. The Trustee contends that until Li Qi submits himself to the Court's jurisdiction, the Court should deny UL/GA's request for injunctive relief on Li Qi's behalf. Id. (citing Kriegman v. Cooper (In re LLS Am., LLC), 2012 WL 11860945, at *7 (Bankr. E.D. Wash. July 2, 2012) ). Otherwise, he claims, Li Qi would benefit from the Motion without "properly coming before" the Court. Id. at 42 n.10. Finally, the Trustee argues that the breach of fiduciary duties claim against Li Qi is fundamentally different from the Singapore Claims because it is only against Li Qi, who was a Director of Zetta Singapore. Id. at 42-43.
UL/GA reply that the Trustee has no legal right to determine the scope of an injunction. Reply at 39. They challenge the Trustee's assertion—that Li Qi must waive a fundamental jurisdictional defense—which they assert illustrates the Trustee's "harassment strategy," and bolsters the need for injunctive relief. Id. UL/GA highlight that the Court entered the Judgment in Li Qi's favor and did not need to determine personal jurisdiction. Id. at 40 (citing Ony, Inc. v. Cornerstone Therapeutics, Inc., 720 F.3d 490, 498 n.6 (2nd Cir. 2013) ).
UL/GA assert that there are several reasons why Li Qi did not need to be a movant. Id. First, they claim that Li Qi has not been served in Singapore, so a separate motion to enjoin the Singapore Action is not ripe. Id. Second, UL/GA highlight that the FAC asserted that Li Qi breached his fiduciary duties, but it did not include a breach of fiduciary duties claim. Id. (citing FAC ¶¶ 12-14, 19, 40, 42, 133-38, 231-37, 242-43, 248). As a result, they argue that the Trustee's breach of fiduciary duties claim in the Singapore Action is barred by res judicata and can be protected by an anti-suit injunction. Id. Third, UL/GA contend that the Trustee does not assert that Singapore law or the Recognition Order barred the Trustee from pursuing his breach of fiduciary duties claim against Li Qi in a US court. Id. at 41. Fourth, UL/GA assert that the UL/GA MOAs require them to indemnify Li Qi in lawsuits, which gives them standing to protect the Judgment on his behalf. Id. (citing UL/GA Second RJN Exs. 30 §§ 15.1-15.3, 31 §§ 15.1-15.3). They argue that they have been forced to spend money defending lawsuits against Li Qi, and have standing to seek an injunction to prevent the Trustee from injuring them. Id. (citing Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 971 (9th Cir. 2018) )
Although UL/GA seek injunctive relief on Li Qi's behalf, they lack standing to request an anti-suit injunction for Li Qi. Article III of the Constitution limits federal court jurisdiction to live cases or controversies. Clark v. City of Seattle, 899 F.3d 802, 808 (9th Cir. 2018) (quoting Thomas v. Anchorage Equal Rts. Comm'n, 220 F.3d 1134, 1138 (9th Cir. 2000) ). Federal courts have an obligation to ensure that litigants have standing under Article III. Frank v. Gaos, ––– U.S. ––––, 139 S. Ct. 1041, 1046, 203 L.Ed.2d 404 (2019) (quoting DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 340, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006) ); see also 13B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3531.15 (3d ed. 2022) ("At least as a matter of formal doctrine, issues of standing that are attributed to Article III are treated as jurisdictional, and must be raised by the court at trial or even on appeal."). Regardless of whether parties raise the issue, "[f]ederal courts are required sua sponte to examine jurisdictional issues such as standing." Downtown Soup Kitchen v. Municipality of Anchorage, 406 F. Supp. 3d 776, 791 n.102 (D. Alaska 2019) (emphasis in original) (quoting D'Lil v. Best W. Encina Lodge & Suites, 538 F.3d 1031, 1035 (9th Cir. 2008) ; see also Bernhardt v. County of Los Angeles, 279 F.3d 862, 868 (9th Cir. 2002) (holding that a district court has "both the power and the duty to raise the adequacy of ... standing sua sponte").
For a litigant to have standing, they must show that: 1) they suffered "a concrete and particularized injury"; 2) the injury was "fairly traceable to the challenged conduct"; and 3) the injury is "likely to be redressed by a favorable judicial decision." Va. House of Delegates v. Bethune-Hill, ––– U.S. ––––, 139 S. Ct. 1945, 1950, 204 L.Ed.2d 305 (2019) (citing Hollingsworth v. Perry, 570 U.S. 693, 704, 133 S.Ct. 2652, 186 L.Ed.2d 768 (2013) ; Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ). These requirements ensure that federal courts do not adjudicate hypothetical or abstract disputes. TransUnion LLC v. Ramirez, ––– U.S. ––––, 141 S. Ct. 2190, 2203, 210 L.Ed.2d 568 (2021). Although the issue of standing usually arises in the context of a plaintiff's standing to sue, the standing doctrine also applies to defendants. Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255, 1265 (11th Cir. 2015) (citing Arizonans for Off. English v. Arizona, 520 U.S. 43, 64, 117 S.Ct. 1055, 137 L.Ed.2d 170 (1997) ; 13A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3531 (3d ed. 2014) ). Standing regarding one claim "does not suffice for all claims arising from the same ‘nucleus of operative fact’ ": a party seeking an injunction must demonstrate standing for each claim. California v. Azar, 911 F.3d 558, 570 (9th Cir. 2018) (citing DaimlerChrysler, 547 U.S. at 352, 126 S.Ct. 1854 ).
There is no evidence that UL/GA would suffer "a concrete and particularized injury" if the Trustee's claims against Li Qi in Singapore are not enjoined. Bethune-Hill, 139 S. Ct. at 1950. UL/GA claim that they have a legal duty to indemnify Li Qi in lawsuits and they have spent money defending him in the Adversary Proceeding and would have to spend more to defend him in Singapore. Reply at 41. But, they have presented no admissible evidence to substantiating this assertion: as noted above, the Court cannot take judicial notice of the UL/GA MOAs. Even if the Court were to consider the UL/GA MOAs, an indemnification provision without more is not sufficient to show that they have spent, or would necessarily spend, any resources defending Li Qi in the Singapore Action. By UL/GA's own admission, Li Qi may not be served, so they may never be required to pay for Li Qi's litigation fees. Reply at 40.
Because the Court finds that UL/GA do not have standing to seek injunctive relief on Li Qi's behalf, UL/GA's request that the Court issue an anti-suit injunction prohibiting the Trustee's claims against Li Qi in Singapore is denied. As a result, the Court need not address the applicability of res judicata to the claims against Li Qi in the Singapore Action or the other issues UL/GA raise regarding Li Qi.
III. Conclusion
The Motion is granted in part, and the Court issues an anti-suit injunction prohibiting the Trustee from pursuing the Singapore Action against UL/GA. The Motion is denied in part regarding UL/GA's request that the Court issue an anti-suit injunction prohibiting the Trustee from pursuing the Singapore Action against Li Qi. Pursuant to LBR 9021-1(b)(1)(B), UL/GA must serve and lodge a proposed order via LOU within 7 days of the filing of this memorandum of decision. This ruling resolves the Motion. Appearances are waived for the continued hearing scheduled on 8/10/22 at 9:00 a.m. (PST), which is taken off calendar.