United States District Court, S.D. New York
YIEN-KOO KING, NORTHWICH INVESTMENTS, LTD., and SOON HUAT, INC., Plaintiffs,
ANDREW WANG, SHOU-KUNG WANG, BAO WU TANG, JIAN BAO GALLERY, ANTHONY CHOU, CHEN-MEI-LIN, WEI ZHENG, YE YONG-QING, YUE DA-JIN, and JOHN DOES 1-9, Defendants.
PLAINTIFFS YIEN-KOO King, NORTHWICH INVESTMENTS, LTD., and
SOON HUAT, INC.: Sam P. Israel Timothy Savitsky
DEFENDANTS ANDREW WANG, SHOU-KUNG WANG, BAO WU TANG, and JIAN
BAO GALLERY: Carolyn J. Shields Ying Liu
OPINION & ORDER
F. KEENAN, United States District Judge:
the Court is a motion by Andrew Wang (“A. Wang”),
individually and doing business as Bao Wu Tang, and Shou-Kung
Wang (“S.K. Wang”), individually and formerly
doing business as the Jian Bao Gallery (hereinafter, the
“Wang Defendants”), to dismiss the First Amended
Complaint (the “amended complaint”) filed by
Plaintiffs Yien-Koo King (“Y.K. King”), Northwich
Investments, Ltd. (“Northwich”), and Soon Huat,
Inc. (“Soon Huat”) (hereinafter,
“Plaintiffs”). For the reasons discussed below,
Defendants' motion is granted and the amended complaint
following facts are taken from the allegations in the amended
complaint and are accepted as true only for purposes of this
motion to dismiss. This action concerns the estate of artist
and collector, Chi-Chuan Wang (“C.C. Wang”).
(Amended Complaint ¶ 2, ECF No. 36 (filed September 27,
2016).) Plaintiff Y.K. King, a New York City resident, is the
daughter of C.C. Wang; she brings this action-together with
Northwich and Soon Huat, corporations she and her husband,
Kenneth King, own- to recover works of fine art formerly
belonging to C.C. Wang's estate (the
“Estate”) or to Northwich and Soon Huat.
(Id. ¶¶ 2, 12.)
S.K. Wang, a resident of Queens, New York, is the son of C.C.
Wang. (Id. ¶ 16.) S.K. Wang is alleged to be
the sole owner of Defendant Jian Bao Gallery, an art gallery
conducting business in New York. (Id. ¶ 23.)
Defendant A. Wang, a New York City resident, is the grandson
of C.C. Wang and the son of S.K. Wang. (Id.
¶¶ 15-16.) A. Wang is alleged to be the sole owner
of Defendant Bao Wu Tang, an art gallery conducting business
in China. (Id. ¶ 22.) Defendant Anthony Chou is
a resident of Beijing, China. (Id. ¶ 17.)
Defendant Chen Mei-Lin is a resident of Shanghai, China.
(Id. ¶ 18.) Defendant Wei Zheng is a resident
of Rego Park, New York. (Id. ¶ 19.) Defendant
Ye Yong-Qing is a resident of Shanghai, China. (Id.
¶ 20.) Defendant Yue Da-Jin is a resident of Nanjing,
China. (Id. ¶ 21.) The amended complaint also
asserts claims against John Does 1-9, who are identified as
natural persons serving as agents of the Wang Defendants.
(Id. ¶ 24.) As of the date of this order, only
A. Wang and S.K. Wang, individually and on behalf of Bao Tu
Wang and Jian Bao Gallery-their respective businesses-have
appeared in this action, although a copy of the summons and
complaint was purportedly served on Defendant Wei Zheng on
October 14, 2014. (See Affidavit of Service, ECF No.
6 (filed Oct. 23, 2014).)
Wang was a renowned Chinese-American artist and art collector
who amassed over 400 fine and rare Chinese paintings,
sculptures, and antiquities during his lifetime, valued at a
total of $60 million. (Am. Compl. ¶¶ 25-26, 32.)
C.C. Wang died in 2003, but the Wang Defendants' alleged
misconduct began in the 1980s and 1990s when S.K. Wang,
working as his father's bookkeeper and assistant,
embezzled 160 paintings from his father's collection.
(Id. ¶¶ 34-35, 39.) In 1997, when C.C.
Wang discovered S.K. Wang's wrongdoing, he fired S.K.
Wang and hired Y.K. King to run his affairs. (Id.
¶ 29.) As part of her management role, Y.K. King
established CY Art Ltd. to facilitate management of C.C.
Wang's artwork and collection. (Id. ¶ 30.)
CY Art Ltd. owned a safe deposit box that contained artwork
belonging to C.C. Wang, Northwich, and Soon Huat.
(Id. ¶ 31.)
Wang's health began to deteriorate in or about January
2003 and he was hospitalized in March 2003. (Id.
¶¶ 40-41.) In April 2003, his doctors reportedly
determined that he lacked the mental capacity to execute his
own medical forms. (Id. ¶ 41.) Sometime later
in the spring of 2003, the Wang Defendants secretly moved
C.C. Wang to S.K. Wang's Queens, New York home to prevent
further contact between C.C. Wang and Y.K. King.
(Id. ¶ 44.)
on January 31, 2003, Y.K. King took inventory of CY Art
Ltd.'s safe deposit box and discovered that twenty-one
paintings were missing-nine of these paintings are owned by
Northwich, one is owned by Soon Huat, and the remaining
eleven are owned by the Estate. (Id. ¶¶
48-50.) A. Wang returned five of these paintings to Y.K. King
many years later; the remaining sixteen have not been
recovered by Plaintiffs or the Estate. (Id. ¶
50.) Also on January 31, 2003, Y.K. King checked her
father's apartment and discovered that an additional four
paintings were missing-three of these paintings are owned by
Northwich and one is owned by the Estate. (Id.
¶¶ 51-53.) During a sworn deposition in 2005, A.
Wang admitted to taking the paintings from the safe deposit
box, allegedly with the help of 96-year-old C.C. Wang, but he
has since recanted his statements. (Id. ¶¶
Wang died on July 3, 2003. (Id. ¶ 70.)
Thereafter, Y.K. King submitted to New York County
Surrogate's Court a June 13, 2000 will and July 10, 2002
codicil that named her the executor and a principle
beneficiary of the Estate, and entitled both Y.K. King and
S.K. Wang to thirty-five percent shares of the Estate.
(Id. ¶ 71.) Contemporaneously, the Wang
Defendants produced a second will allegedly executed by C.C.
Wang on February 18, 2003 (the “2003 will”), four
months before his death. (Id. ¶ 72.) The 2003
will purports to disinherit Y.K. King, designate A. Wang as
executor, and name A. Wang, S.K. Wang, and Stephen Wang (A.
Wang's brother) as chief beneficiaries. (Id.
¶¶ 74-75.) In July 2003, Y.K. King initiated
Surrogate's Court proceedings to contest the 2003 will.
(Id. ¶ 82.) On August 4, 2003, the
Surrogate's Court issued temporary letters of
administration to the Public Administrator and preliminary
testamentary letters to A. Wang. (Id. ¶ 83.) A.
Wang assumed the role of Estate fiduciary and exercised
dominion and control over Estate assets. (Id. ¶
85.) The proceedings in Surrogate's Court regarding the
Estate remain ongoing. (Id. ¶ 64; see
also Pls.' Mem. of L. in Opp. to Mot. to Dismiss at
assert that A. Wang exploited his temporary status as Estate
fiduciary to orchestrate a scheme by which the Wang
Defendants used their galleries to sell the Estate's
artwork to five “straw men”-the other Defendants
in this action- in order to acquire the works for A. Wang
himself at deflated prices (the “Straw Men
Scheme”). (Id. ¶¶ 85, 105-107.) To
orchestrate this scheme, Plaintiffs allege that the Wang
Defendants reinvested the funds derived from the sale of the
twenty-five artworks stolen in 2003 to fraudulently purchase
Estate assets through straw men at artificially low prices.
(Id. ¶ 103.) Between 2005 and 2009, A. Wang
sold ninety-eight Estate-owned paintings to five straw men
who then resold the paintings for “astronomical resale
values, ” with A. Wang pocketing the proceeds.
(Id. ¶¶ 105, 111, 141.) According to
Plaintiffs, the Estate received approximately $4 million from
the Straw Men Scheme “even though the true value of the
sold works exceeds $40 million.” (Id. ¶
298.) Plaintiffs did not discover until 2013 that many of
these ninety-eight artworks had been resold at Chinese
auctions in 2008 and 2009 for as much as 2, 000 percent of
the straw men's purchase price. (Id.
¶¶ 290, 292, 299.)
amended complaint asserts eleven causes of action relating to
the corporation- and Estate-owned artwork, including four
claims under federal law for violations of the Racketeer
Influence and Corrupt Organizations Act (“RICO”)
and seven claims under New York law seeking to impose a
constructive trust upon any property within A. Wang's
control, as well as for conversion, common law fraud and
conspiracy to defraud, breach of fiduciary duty and aiding
and abetting breach of fiduciary duty, replevin, and
violations of New York State Debtor and Creditor Law section
270. (See id. ¶¶ 249-379.) Two of the RICO
claims are asserted by all Plaintiffs against all Defendants
and two are asserted by Y.K. King on behalf of the Estate
against each of the Wang Defendants. (See id.
filed their original complaint in this action on September
23, 2014. (See Complaint, ECF No. 1 (filed Sept. 23,
2014).) Only Y.K. King and her husband, Kenneth King
(“K. King” and together “the Kings”),
were named as plaintiffs in the original complaint. (See
id.) The same Defendants are named in both the original
and amended complaints. On November 21, 2014, Defendants
moved to dismiss the complaint on several grounds, including:
(1) the Kings lacked standing to recover for all of their
claims, (2) the Kings' claims fell within the probate
exception to federal jurisdiction, and (3) the Kings failed
to properly allege a federal cause of action. (See
Defs.' Mot. to Dismiss, ECF No. 15 (filed January 12,
2015).) On July 13, 2015, the Court granted Defendants'
motion and dismissed the original complaint in its entirety
for failure to state a claim under Rule 12(b)(6).
(See Op. & Order, ECF No. 27 (filed July 13,
2015).) The Court found that the Kings lacked standing to sue
on claims related to their personal artwork because they were
not the real parties in interest under Federal Rule of Civil
Procedure 17 because corporations, and not the Kings, owned
the artwork. (Id. at 10.) While Rule 17 typically
permits a plaintiff to amend the complaint to allow the real
party in interest to ratify, join, or be substituted into the
action, the Court denied this request because the complaint
failed to adequately plead closed-ended continuity as
required by the RICO statute. (Id. at 10, 15-16.)
The Court also ruled that the probate exception did not strip
federal jurisdiction from ...