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Lifeng Chen v. New Trend Apparel, Inc.

United States District Court, S.D. New York

March 7, 2014

LIFENG CHEN, et al., Plaintiffs,
NEW TREND APPAREL, INC., et al., Defendants. HANA FINANCIAL, INC., Intervenor Plaintiff,
NEW TREND APPAREL, INC., et al., Intervenor/Third-Party Defendants

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For Lifeng Chen, holder of at lest fifty percent of outstanding shares of New Trend Apparel, Inc., Sunning Eagle Holdings Limited, Zhejiang Meibang Textile Co. Ltd., Zhejiang Datang Import & Export Co. Ltd., Plaintiffs, Counter Defendants, Cross Claimant, Counter Claimants: Heng Wang, LEAD ATTORNEY, Heng Wang & Associates, P.C., New York, NY.

SEUNG-JIN YANG, Petitioner, Pro se, Fahy Choi, LLC.

For New Trend Apparel, Inc., Kisum Louie, also known as Tommy K. Loui, Defendants: Samuel Slone Weissman, LEAD ATTORNEY, Samuel Weissman, Esq, New York, NY.

For Byunglim H. Louie, Intervenor Defendant, Cross Defendant: Samuel Slone Weissman, Samuel Weissman, Esq, New York, NY.

For Hana Financial, Inc., ADR Provider: Michael James Sheppeard, LEAD ATTORNEY, Ballon, Stoll, Bader and Nadler, New York, NY.

For LANY Group LLC, ADR Provider: David Laniado, LEAD ATTORNEY, David Laniado, Esq., Cedarhurst, NY.

For New York Clothing Group, Inc., Proposed Defendant New York Clothing Group, Inc., Nina Chang, Proposed Defendant Nina Change, Interested Parties, Cross Claimants, Counter Claimants: Randy M. Kornfeld, LEAD ATTORNEY, Kornfeld & Associates P.C., New York, NY.

For New Trend Apparel, Inc., Counter Claimant, Counter Defendant, Cross Defendant: Samuel Slone Weissman, LEAD ATTORNEY, Samuel Weissman, Esq, New York, NY.

For Kisum Louie, Cross Defendant: Samuel Slone Weissman, LEAD ATTORNEY, Samuel Weissman, Esq, New York, NY.


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Once again this court visits a lawsuit that involves competing claims among the creditors and agents of defendant New Trend Apparel, Inc., a wholesale garment supplier. Currently before the court are motions by plaintiffs and the intervenor plaintiff for summary judgment.

For the reasons discussed below, we recommend that the motion of intervenor plaintiff Hana Financial be granted in part and denied in part. We recommend that the Chen plaintiffs' motion for summary judgment be denied.


The underlying facts in this case are as follows. Where pertinent, we note disputes as to material facts.

The New Trend Defendants

Kisum Louie and his wife, Byunglim Louie, operated New Trend Apparel, Inc. (" New Trend" ), a now-defunct New York corporation that sold wholesale women's apparel imported from China. (Hana 56.1 Statement in Supp. of Summ. J. [docket no. 276], ¶ 1; Chang 56.1 Opp'n to Hana and Chen Mots. (" Chang 56.1 Opp'n" ) [docket no. 296], Resp. 1; Lee Decl. dated Apr. 15, 2013 [docket no. 275], Ex. I ¶ 3). Kisum Louie served as president of the company (Hana 56.1 Statement in Supp. of Summ. J., ¶ 7; Chang 56.1 Opp'n, p. 5 Resp. 7) and Byunglim Louie helped to oversee the bookkeeping and the warehouse. (Lee Decl. dated Apr. 15, 2013, Ex. I; Byunglim Louie Decl. dated Apr. 22, 2013 [docket no. 288], 1). At various times, Byunglim Louie used the titles of secretary, co-owner, and vice-president of New Trend (see Chang Decl. dated May 23, 2013 [docket no. 294], Ex. D; Sheppeard Decl. dated Apr. 16, 2013 [docket no. 277], Ex. 1 at " Signature Card" ; Lee Decl. dated Apr. 15, 2013, Ex. I ¶ 2), but she testified at her deposition that she held no formal title, due to the small size of the company. (Chang Decl. dated May 23, 2013 Ex. A (" Byunglim Louie Dep." ), p. 138). Byunglim Louie also served as the principal of JCM Logistics Inc., New Trend's warehousing company. (Lee Decl. dated Apr. 15, 2013, ¶ 2).

New Trend's Dealings with the Chen Parties

On or about January 11, 2009, New Trend entered into a Letter of Intent with Sunning Eagle Holdings Ltd. (" Sunning Eagle" ), one of plaintiff Lifeng Chen's companies. (Chen 56.1 Statement in Supp. of Summ. J. (" Chen 56.1 Statement" ) [docket no. 284], ¶ 1; New Trend 56.1 Opp'n to Chen Mot. [docket no. 287], Resp. no. 1; Chang 56.1 Opp'n, p. 18 Resp. no. 1; Chen Aff. dated Jan. 17, 2011 [docket no.

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282], Ex. A). Pursuant to the Letter of Intent, Sunning Eagle pledged to purchase fifty percent of the shares in New Trend and to share half of New Trend's expenses and profits. (Chen Aff. dated Jan. 17, 2011, Ex. A ¶ 1). The agreement further provided that Chen's company would supply goods from China, mainly " seamless underwears, socks, shirts, normal underwears and trousers, which are specialized by ZHEJIANG MEIBANG TEXTILE CO., LTD," another of Chen's companies, but the contract allowed that " [b]oth of the two parties have the right to import the goods whose price is lower than [Sunning Eagle's] price." (Id. at ¶ 2). The parties also agreed that the scope of the business would not be limited to goods supplied by Chen's company, stating " [a]ll businesses with profits are allowed, but have to be decided by both parties. In the case of the business decided by one part[y], this party should share the los[s] or profit itself and bear all the relevant expenses." (Id. at ¶ 3). The agreement also proscribed New Trend from unilaterally offering loans or guarantees to others (see id. at ¶ 5), and, somewhat ambiguously, stated that " [i]t is [New Trend] as the artificial person of the company. The two parties operate the business together." (Id. at ¶ 6).

New Trend sold garments under two brand names, " Paris Angel" and " Miss Juli." Around the time of the negotiations between New Trend and Sunning Eagle, New Trend purportedly intended to seek trademark registration of those marks. (See, e.g., Chen 56.1 Statement in Supp. of Summ. J., ¶ 10; New Trend 56.1 Opp'n to Chen Mot., Resp. nos. 10-12; Byunglim Louie Decl. dated Apr. 22, 2013, ¶ ¶ 13-14). Without specific reference to those brand names, the Letter of Intent stated, " [o]n success of trademark registration, its ownership and usufruct are kept by both parties: No party can use or own it unilaterally." (Chen Aff. dated Jan. 17, 2011, Ex. A ¶ 4).

New Trend issued one hundred shares of company stock to Mr. Chen, in his individual capacity, on February 24, 2009 pursuant to a stock-transfer agreement. ( Id. at p. 2; Byunglim Louie Decl. dated Apr. 22, 2013, Ex. A). In return, on February 26, 2009, Sunning Eagle transferred $1 million to New Trend, apparently representing its initial investment in the company. (See Chen Aff. dated Jan. 17, 2011, Ex. B p. 1). The stock-transfer agreement stated: " [t]his agreement embodies the entire understanding between the parties and may only be modified by writing signed by both parties." (Byunglim Louie Decl. dated Apr. 22, 2013, Ex. A ¶ 8).

On or about May 18, 200 9, Sunning Eagle and New Trend entered into a Supplementary Agreement to the Letter of Intent. (See Chen Aff. dated Jan. 17, 2011, Ex. C). In essence, that supplementary agreement provided the terms for the payment and delivery of goods to New Trend from Chen's manufacturing companies in China. (See id.). Among other items, the agreement provided that if the Chen parties failed to deliver goods on schedule, they must " compensate [New Trend] 10% of the total amount as a penalty." (Id. at ¶ 4).

Chen asserts that additional oral agreements were made between the parties during their negotiations. He asserts, for example, that " [Kisum] Louie would hold the office of the President but he would merely function as a sales person to conduct sales for NTA due to his connections with the garment industry." (Chen Aff. dated Jan. 17, 2011, ¶ 10). Chen also asserts that

Prior to entering into the Letter of Intent, pursuant to an oral agreement, each party was to invest one million dollars capital in NTA in exchange of

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50% of the shares. Louie represented that he was not able to provide cash but had inventory valued at about $300,000 at that time and also his warehouse and office for which he already paid rent for three years. It was agreed that Louie would invest in NTA the sales proceeds for his $300,000 inventory, the office and warehouse, and his share of NTA's future profits. It was further agreed that before Louie invested one million dollars in total, he would not be entitled to any shareholder rights.

(Id. at ¶ 11). The New Trend parties dispute that they entered into any such oral agreements with the Chen parties. (See New Trend Mem. of Law in Opp'n to Chen Mot., 6-7; New Trend 56.1 Opp'n to Chen Mot., 8).

There is no meaningful dispute that on March 3, 2009, New Trend wired $1 million to the Chen parties. (Cai Decl. dated Apr. 12, 2013, ¶ ¶ 15-16; Chen 56.1 Statement in Supp. of Summ. J., ¶ 5; New Trend 56.1 Opp'n to Chen Mot., Resp. no. 5; but see Hana 56.1 Opp'n to Chen Mot., Resp. no. 5 (asserting that " Mr. Chen does not speak or read English and his Affidavit must thus be disregarded," an argument which we reject for reasons set forth below (see infra 101-04)). This payment apparently served as " advanced payments for the orders placed" by New Trend with Chen's manufacturing companies. (Chen 56.1 Statement in Supp. of Summ. J., ¶ 5; New Trend 56.1 Opp'n to Chen Mot., Resp. no. 5). It is also undisputed that Chen's factories shipped goods worth $2,072,184.76 to New Trend over the course of 2009 and 2010. (See Chen 56.1 Statement in Supp. of Summ. J., ¶ 6; New Trend, Hana, and Chang 56.1 Opp'n Statements to Chen Mot. at Resp. no. 6). All of the parties agree that, exclusive of New Trend's March 3, 2009 advance payment of $1 million, New Trend paid the Chen parties $1,256,382.12 for goods during the period between April 2009 and February 2010. (See Chen 56.1 Statement in Supp. of Summ. J., ¶ 8; New Trend, Hana, and Chang 56.1 Opp'n Statements to Chen Mot. at Resp. no. 8).

The Chen parties argue that they are still owed $815,802.64 from New Trend (Chen 56.1 Statement in Supp. of Summ. J., ¶ 9), but Hana and the New Trend parties argue that this amount fails to capture the $1 million advance payment of March 3, 2009. (New Trend and Hana 56.1 Opp'n Statements to Chen Mot., Resp. no. 9). They further argue that the Chen parties' calculations fail to capture other amounts owed by the Chen parties to New Trend, pursuant to the Letter of Intent and Supplementary Agreement, including penalty fees for late shipments and shared expenses. (Id.; Byunglim Louie Decl. dated Apr. 22, 2013, 2-4).

New Trend's Dealings with Hana and the Chang Parties

Byunglim Louie met Nina Chang in 2009 (Lee Decl. dated Apr. 15, 2013, Ex. I ¶ 4; Chang Decl. dated May 23, 2013, ¶ 7), and in early 2 010 New Trend hired Ms. Chang. (See id. at ¶ 5; Hana 56.1 Statement in Supp. of Summ. J., ¶ 9; Chang 56.1 Opp'n, p. 6 Resp. no. 9). Chang's title and the scope of her duties at New Trend are disputed among the parties. (See, e.g., Lee Decl. dated Apr. 15, 2013, ¶ 17). The New Trend parties describe Chang as the company's Chief Financial Officer. (See, e.g., Wang Decl. dated Apr. 16, 2013 [docket no. 279], Ex. F ¶ 6). At a minimum, Chang admits that she " performed various administrative and human resource duties, lia[i]sed with New Trend's factor, attempted to find New Trend a new factor, and looked over records." (Chang Decl. dated May 23, 2013 ¶ 8).

In the summer of 2010, Ms. Chang approached Hana Financial, Inc. to obtain

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business financing for New Trend. (Lee Decl. dated Apr. 15, 2013, ¶ 2; Lee Dep. 10). At that time, New Trend was factored by Sterling Factors Corp. (" Sterling" ), and New Trend sought to replace Sterling with Hana as its factor. (Lee Decl. ¶ 2).

On July 27, 2010, Hana and New Trend entered into a factoring and loan agreement. (Id. at Ex. App. 1-15). Among other things, the factoring agreement gave Hana a security interest in New Trend's " (i) Accounts; (ii) general intangibles including payment intangibles; ... (v) all inventory, machinery, equipment, furniture and fixtures and[] (vi) proceeds of any of the foregoing property." (Id. at Ex. A § 8). The agreement defined New Trend's obligations to Hana to include " [a]ll loans, advances, debts, liabilities, obligations, covenants and duties owing by [New Trend] to Hana, direct or indirect, absolute or contingent, due or to become due... including, without limitations, Ledger Debt and indebtedness arising under any guaranty made by [New Trend] for Hana's benefit." (Id. at Ex. A § 13). Kisum Louie and Byunglim Louie each executed personal guarantees on New Trend's debts to Hana. (Id. at Ex. A). Hana then perfected its security interest in the New Trend collateral by filing a UCC-1 financing statement. (Id. at Ex. B).

On August 5, 2010, Hana also agreed to provide a short-term loan of $500,000.00 to JCM Logistics. (Id. at Exs. C, D). The loan was secured by a second-position perfected interest, behind Sterling, in New Trend's assets and a first perfected security interest in the assets of JCM Logistics, including receivables from New Trend. (Id. at ¶ 4 & Exs. C, D).

In late 2010, Byunglim Louie apparently became sick with cancer and, as a result, the New Trend parties advised Hana that their business operations would be negatively impacted. (Id. at ¶ 11). In February 2011, Hana advised JCM Logistics that it had defaulted on its Promissory Note, demanding full repayment by February 20, 2011. (Id. at ¶ 12, Ex. E). It advised that, after that date, Hana would " exercise all of our rights and remedies under the Note, any guaranty thereof, any collateral securing that guaranty and any and all rights and remedies granted to us by applicable law, without further notice to you or any guarantor." (Id. at Ex. E).

In or about October 2010, Nina Chang started New York Clothing Group (" NYCG" ), a wholesale company specializing in women's apparel. (Id. at Ex. J; Hana 56.1 Statement in Supp. of Summ. J., ¶ 4; Chang 56.1 Opp'n, p. 4 Resp. no. 4; Chang Decl. dated May 23, 2013, ¶ 13). The role of Chang and NYCG in disposing of certain New Trend inventory has been a matter of ongoing controversy in this case. Byunglim Louie has testified that Chang proposed using her new company to spirit away from New Trend some of the inventory that was subject to Hana's lien and a court freeze order. According to Mrs. Louie, consistent with that proposal, New Trend made a series of conveyances to NYCG without consideration, at a time when New Trend had insufficient capital to meet its matured debts. (Lee Decl. dated Apr. 15, 2013, Ex. I ¶ ¶ 1, 12, 16). She further asserted that the conveyances left New Trend insolvent. (Id.). More specifically, in a December 21, 2011 affidavit, Byunglim Louie reported that, " [i]n October 2010, Nina Chang proposed to move New Trend Apparel inventory to another location. She indicated that Hana Financial would place a lien on inventory if the Hana Financial loan to New Trend was not paid." (Id. at ¶ 10). According to Mrs. Louie, Chang

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said that if New Trend Apparel inventory was transferred to [New York Clothing Group], [Chang] could use that inventory to secure a very large loan, and with that money, the creditors of New Trend Apparel could be satisfied. Nina Chang stated that her intent was to assign New York Clothing Group to New Trend Apparel after two years.

(Id. at ¶ 11). Mrs. Louie stated that she and Chang " agreed to create invoices that purported to show a sale of New Trend Apparel stock [i.e., inventory] to New York Clothing Group Inc," asserting that the " quantity of merchandise shown on the invoices is correct but the Unit Price was fabricated and far below actual value." (Id. at ¶ 12). Mrs. Louie also indicated that a document that she signed for Ms. Chang on August 17, 2011 " contained false and inaccurate information" concerning inventory purportedly sold by New Trend to NYCG. (Id. at ¶ 17).

In contrast, Ms. Chang asserts that Mrs. Louie has entirely fabricated the story of fraud. (Chang Decl. dated May 23, 2013, ¶ ¶ 20-24). She insists that she paid for the inventory that she purchased from New Trend and that the invoices are accurate (Chang Decl. dated May 23, 2013, ¶ ¶ 24, 92, 96-97, 99), although she admits that she paid in cash only a small portion of the documented price for the goods. (Chang Decl. dated May 23, 2013 Ex. C (" Chang Dep." ) pp. 137-40). Chang asserts that Mrs. Louie insisted on being paid in cash, rather than by check. (Chang Decl. dated May 23, 2013, ¶ ¶ 18, 100).

Mrs. Louie has produced tapes of conversations that she secretly recorded between herself and Ms. Chang, purportedly concerning these transactions and their aftermath. (See Chang Supplemental Decl. dated Mar. 7, 2012 [docket no. 160] Exs. 1-6; Sheppeard Decl. dated Apr. 16, 2013 Exs. 14, 17, 19, 21, 29). Ms. Chang complains that the recordings may be incomplete and " might have been stopped and restarted" (Chang Decl. dated May 23, 2013, ¶ 41), thus failing to accurately capture the entirety of the women's conversations, but she does not contest that the available portions of their conversations actually took place or that her voice is one of the two heard on the tapes. (See, e.g., id.). Hana and the Chang parties have produced competing translations of the original Korean-language recordings. (See, e.g., Sheppeard Decl. dated Apr. 16, 2013, Exs. 14, 17, 19, 21, 29; Chang Supplemental Decl. dated Mar. 7, 2012 Exs. 1-6).


As the court will recall,[1] this lawsuit was initiated by plaintiff Lifeng Chen and a number of corporate entities that he owned or controlled (collectively, " the Chen plaintiffs" ). These plaintiffs originally sued New Trend and its principal, Kisum Louie, on January 18, 2011. (Compl. [docket no. 1]). In substance, the Chen plaintiffs complained that they had paid $1 million for a fifty-percent share of an anticipated joint business venture with defendants New Trend and Mr. Louie, that the venture had never gone forward, and that defendants had nonetheless failed to return their money. (See Compl. ¶ ¶ 14-22, 43-45, 49-51). The Chen plaintiffs also asserted that they had delivered goods from China to New Trend for which the defendants had never paid. (Id. ¶ ¶ 38-40).

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At the outset, plaintiffs sought and obtained from the District Court an ex parte preliminary injunction that, in effect, froze the assets of New Trend (see Order to Show Cause (" OSC" ) dated Jan. 18, 2011 [docket no. 4]) -- injunctive relief that the District Court adhered to despite the subsequent insistence of the New Trend defendants that Mr. Chen had taken his money back, causing the joint-venture deal to collapse, and that he had sent the New Trend defendants defective goods and had stolen business opportunities from those same defendants. (See Sheppeard Decl. dated Feb. 10, 2012 [docket no. 142] Ex. 3 (Kisum Louie Aff.), ¶ ¶ 5-11, 15-22; New Trend Mem. of Law in Opp'n to Pls.' OSC Appl., dated Feb. 8, 2011 [docket no. 9], 3-4; Order dated Feb. 17, 2011 [docket no. 14] (granting preliminary injunction)). The complaint was amended several times, expanding the list of defendants, all of whom are said have been related in one way or another to the original New Trend defendants, with the current operative pleading being the Third Amended Complaint. (See Wang Decl. dated Jan. 11, 2012 [docket no. 123] Ex. 5 (3d Am. Compl.) ; Aff. of Service dated Mar. 8, 2012). The additional defendants include Kisum Louie's wife, Byunglim Louie, and a variety of corporate entities that Mr. and Mrs. Louie allegedly set up in conjunction with their New Trend business, including JCM Logistics.

In May 2011, Hana Financial intervened as a plaintiff to enforce its claims to New Trend's assets, premised on New Trend's guarantee of the defaulted August 2010 loan to JCM Logistics. (See Sheppeard Decl. dated Dec. 28, 2011 Ex. 3 (Lee Decl. dated May 10, 2011), ¶ ¶ 4-6, 9-19). The intervention by Hana eventually led to an agreement among the parties to permit Hana and the Chen plaintiffs to attempt to sell some New Trend inventory that had been located at the outset of the lawsuit, but that was apparently of rapidly diminishing value. (Sheppeard Decl. dated Dec. 28, 2011 ¶ 11 & Ex. 6). The proceeds of that sale are now held in escrow by Hana's counsel. (Apr. 11, 2012 Conf. Tr . 26).

In late December 2011, while discovery was still ongoing, Hana moved to amend its intervenor complaint to add two new defendants, NYCG and Nina Chang (collectively, " the Chang parties" or " the Chang defendants" ). Hana alleged that in October 2010 Ms. Chang, while still with New Trend, had arranged with Mrs. Louie to defeat Hana's security interest in New Trend's assets by forming NYCG and transferring to it, from New Trend, a substantial amount of inventory, some wholesale orders, and cash. (See Hana's Mem. of Law in Supp. of OSC, dated Dec. 28, 2011, 1-2). At the same time that it sought leave to amend, Hana moved by order to show cause for a temporary restraining order and preliminary injunction to freeze the assets of the Chang parties (see Hana's OSC Appl.; Hana's Mem. of Law in Supp. of OSC, dated Dec. 28, 2011, 1), an application undergirded by the affidavit from Mrs. Louie admitting her role in the purportedly fraudulent transfer. (See Byunglim Louie Aff. dated Dec. 21, 2011, ¶ 1; see also Byunglim Louie Aff. dated Feb. 15, 2012 ¶ 15).

We signed the order to show cause, with its temporary-restraining-order (" TRO" ) provision, and set a schedule for additional briefing. (See OSC & TRO dated Dec. 28, 2011). The Chen plaintiffs, in response to the TRO, filed a motion for a preliminary injunction to freeze the assets of Byunglim Louie and JCM Logistics. (See Pls.' PI Cross-Mot. dated Jan. 11, 2012; 1st Wang Decl. dated Jan. 11, 2012, ¶ ¶ 4-9; 2nd Wang Decl. dated Jan. 11, 2012, ¶ ¶ 16-23). In the same application, the Chen plaintiffs asked for leave to amend their complaint once more, to add claims against NYCG

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and Ms. Chang. (See 1st Wang Decl. dated Jan. 11, 2012, ¶ ¶ 10-19). We granted the motions of Hana and the Chen plaintiffs to amend their respective complaints to add NYCG and Ms. Chang as defendants. (See Mem. & Order and Report & Recommendation dated Feb. 23, 2012 [docket no. 154], 6, 8).

On January 18, 2012, while the December 28, 2011 order to show cause was pending and awaiting full briefing, counsel for Hana submitted to the court a stipulation -- signed on behalf of Hana and the Chang defendants -- that required NYCG and Ms. Chang to deposit a specified sum of money in escrow and subjected the financing and business operations of NYCG to continuing scrutiny, in exchange for which NYCG would be permitted to continue in business while the lawsuit was pending. (See Stip. dated Jan. 18, 2012,[2] ¶ ¶ 3, 5-6, 9). The stipulation further specified that the TRO would remain in effect until NYCG and Ms. Chang had satisfied their obligations under the agreement. (Id. at ¶ 10). The Chen plaintiffs, rather than directly opposing the stipulation, moved by order to show cause for a preliminary injunction against Ms. Chang and NYCG that would freeze their assets. (See Pls.' OSC Appl. dated Jan. 27, 2012).

With these applications pending, Ms. Chang and NYCG sought through new counsel to repudiate the agreement embodied in their stipulation with Hana. (See Kornfeld Decl. dated Apr. 2, 2012 [docket no. 182], Ex. C). The court subsequently deemed the Chang defendants bound by the terms of the January 18, 2012 stipulation and denied the Chen plaintiffs' application for a preliminary injunction. (See Mem. & Order dated Nov. 19, 2012 [docket no. 253], 4-9; see also Report & Recommendation dated Apr. 20, 2012).

Discovery has been completed, and the court is called upon to consider the summary-judgment motions of Hana and the Chen plaintiffs. Hana seeks a declaratory judgment holding that it has a superior interest in the New Trend collateral over the other parties and granting it an immediate right to possession of the assets held in escrow from the sale of the collateral. (Hana Summ. J. Mem. at 3-4). It also seeks summary judgment on its claims for breach of contract against New Trend, the Louies, and JCM (id. at 10-12), and at 13), and on its claims of conversion and fraudulent conveyance against Nina Chang and NYCG. (Id. at 14-15).

The Chen plaintiffs seek summary judgment on their breach-of-contract claims against the New Trend defendants, on their unjust-enrichment claims against the New Trend defendants and the Chang defendants, on their fraudulent-conveyance claims against the New Trend defendants and the Chang defendants, and on their conversion claim against the Chang defendants. (Chen Summ. J. Mem. of Law, 3-7). They also seek an award of attorney's fees. (Id. at 7-8).


I. Summary Judgment Standards

Summary judgment will be granted when " the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). " An issue of fact is 'material' for these purposes if it 'might affect the outcome of the suit under the governing law [while] [a]n issue of fact is 'genuine' if 'the evidence is such that a reasonable jury

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could return a verdict for the nonmoving party.'" Shade v. Hous. Auth. of the City of New Haven, 251 F.3d 307, 314 (2d Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). It is axiomatic that the responsibility of the court in deciding a summary-judgment motion " is not to resolve disputed issues of fact but to assess whether there are any factual issues to be tried, while resolving ambiguities and drawing reasonable inferences against the moving party." Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir. 1986); see, e.g., Anderson, 477 U.S. at 255; Howley v. Town of Stratford, 217 F.3d 141, 150-51 (2d Cir. 2000).

The movant bears the initial burden of informing the court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, that demonstrate the absence of a genuine issue of material fact. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the non-moving party has the burden of proof on a specific issue, the movant may satisfy its initial burden by demonstrating the absence of evidence in support of an essential element of the non-moving party's claim. See, e.g., Celotex, 477 U.S. at 322-23, 325; PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101, 105 (2d Cir. 2002); Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995).

The court must view all evidence in the light most favorable to the non-moving party, Overton v. N.Y. State Div. of Military & Naval Affairs, 373 F.3d 83, 89 (2d Cir. 2004), and must " resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Sec. Ins. Co. of Hartford v. Old Dominion Freight Line, Inc., 391 F.3d 77, 83 (2d Cir. 2004). " [A]ll doubts as to the existence of a genuine issue for trial should be resolved against the moving party," Brady v. Town of Colchester, 863 F.2d 205, 210 (2d Cir. 1988) (citing Celotex, 477 U.S. at 330 n. 2), but " [o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment[; ] [f]actual disputes that are irrelevant or unnecessary will not be counted." Anderson, 447 U.S. at 248.

If the movant fails to meet its initial burden, the motion will fail even if the opponent does not submit any evidentiary materials to establish a genuine factual issue for trial. See, e.g., Adickes v. S.H. Kress & Co., 398 U.S. 144, 160, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Giannullo, 322 F.3d at 140-41. If, on the other hand, the moving party carries its initial burden, the opposing party must then shoulder the burden of demonstrating a genuine issue of material fact on any such challenged element of its claim or defense. See, e.g., Beard v. Banks, 548 U.S. 521, 529, 126 S.Ct. 2572, 165 L.Ed.2d 697 (2006); Celotex, 477 U.S. at 323-24; Santos v. Murdock, 243 F.3d 681, 683 (2d Cir. 2001). In doing so, the opposing party may not rest " merely on allegations or denials" of the factual assertions of the movant, Fed. R. Civ. Pro. 56(e); see, also, e.g., Goldstein v. Hutton, Ingram, Yuzek, Gainen, Carroll & Bertolotti, 374 F.3d 56, 59-60 (2d Cir. 2004), nor may it rely on its pleadings or on merely conclusory factual allegations. See, e.g., Weinstock v. Columbia Univ., 224 F.3d 33, 41 (2d Cir. 2000). It must also " do more than simply show that there is some metaphysical doubt as to the material facts."

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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); see also Woodman v. WWOR-TV, Inc., 411 F.3d 69, 75 (2d Cir. 2005). Rather, it must present specific evidence in support of its contention that there is a genuine dispute as to the material facts. See, e.g., Celotex, 477 U.S. at 324; Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998); Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 526 (2d Cir. 1994).

If both sides move for summary judgment, the court must separately assess the adequacy of each motion. Thus, if neither movant satisfies its Rule 56 burden, the court must deny both motions. E.g., Marvel Entm't, Inc. v. Kellytoy (USA), Inc., 769 F.Supp.2d 520, 524 (S.D.N.Y. 2011) (citing Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993)).

Finally, even if the court does not grant summary judgment co-extensive with the relief sought by either movant, it may provide partial relief. That relief may be as limited as a declaration that one or more material facts are " not genuinely in dispute" and that those facts are deemed " established in the case." Fed.R.Civ.P. 56(g).

II. Hana's Motion

In Hana's motion, it seeks summary judgment against the New Trend defendants and the Chang defendants on its first, second, third, fourth, sixth, seventh and eighth claims. (Hana's Notice of Motion). In its first cause of action, Hana seeks a declaration " (1) finding that no party has a superior interest to Hana in the Collateral; (2) finding that Hana is entitled to immediate possession of the Collateral held by New Trend and the Chang Parties; (3) ordering the New Trend Parties and Chang Parties to turnover [sic] the Collateral to Hana; and (4) permitting immediate possession of the cash collateral account as well as monies held in escrow from the sale of Inventory." (Hana Summ. J. Mem. at 3-4; 1st Am. Intervenor Compl. [docket no. 212-8] 10). Hana's second and third causes of action assert breach of contract by JCM and New Trend. (1st Am. Intervenor Compl. 10-11). Similarly, Hana's fourth cause of action asserts that New Trend and Mr. and Mrs. Louie breached their guarantee agreements. (Id. at 11-12). The sixth cause of action asserts a right of replevin against all parties, though Hana presses this claim in its motion only as against the Chang defendants. (Id. at 13). Hana's seventh and eighth causes of action assert claims against Nina Chang and NYCG for conversion and fraudulent conveyance. (Id. at 14-15).

In substance, Hana argues that subsequent to entering into the factoring and loan agreements with the New Trend defendants, Hana perfected its security interest in New Trend's assets, giving it a first-priority interest in the company's inventory as of February 5, 2010, when JCM Logistics defaulted on its loan. Hana argues that it is entitled to summary judgment on its breach-of-contract claims against New Trend, JCM Logistics, and the Louies premised on their defaults on the factoring and loan-guarantee agreements. It further argues that its first-priority interest in New Trend inventory entitles it to a right of replevin, ...

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