Vector Fabrication, Inc. v. Hieu Minh Nguyen

1

VECTOR FABRICATION, INC. et al Plaintiffs and Respondents, v. HIEU MINH NGUYEN et al., Defendants and Appellants.

H051452

California Court of Appeals, Sixth District

December 10, 2024

NOT TO BE PUBLISHED

Santa Clara County Super. Ct. No. 18CV334671

Danner, J.

Hieu Minh Nguyen (Nguyen), together with his wife and sister (defendants), seek reversal of the trial court's denial of their motion to set aside a judgment issued against them following discovery sanctions and summary adjudication.

Nguyen contends the trial court abused its discretion in denying the motion to set aside the judgment. Nguyen maintains the evidence shows the underlying summary adjudication and sanction orders (imposed after the court found defendants failed to respond to discovery requests or participate in the litigation) occurred while he was detained and held a "virtual prisoner" in Vietnam, with no meaningful way to communicate with his California counsel or family members. He asserts extrinsic fraud or mistake in the judgment and contends he and his codefendants should be given an opportunity to defend themselves on the merits.

Having carefully considered the record on appeal and the trial court's ruling, we conclude there was no abuse of discretion and affirm the judgment.

I. FACTS AND PROCEDURAL BACKGROUND

The instant appeal involves one of several lawsuits between Quang Luong (Luong) and Nguyen arising from business deals in Vietnam and California. At least three of these lawsuits resulted variously in defaults, sanctions, and summary adjudications during the time Nguyen was detained in Vietnam.

After Nguyen's return to California, in March 2022, Nguyen filed a "motion to set aside default, default judgment summary adjudications, charging orders, and discovery sanctions" in the three parallel cases (set aside motion). (Capitalization omitted.) The trial court ultimately denied the set aside motion in a written order (set aside order), giving rise in the instant action to the judgment at issue on appeal.

To understand the issues raised in this appeal, it is necessary to briefly describe the legal actions addressed in the set aside motion and set aside order. Our recitation of facts pertaining to the cases not currently before this court on appeal is for the purpose of providing background and context only and does not reach the merits of the legal issues involved.^[1]

A. Earlier Filed Actions

1. QTV Action

The earliest filed action, QTV Enterprise, LLC v. Hieu Minh Nguyen (Super. Ct. Santa Clara County, 2017, No. 17CV310864) (QTV action), alleged breach of a loan agreement related to a business transaction between Nguyen and QTV Enterprise, LLC (QTV), an entity controlled by Luong.

As summarized in the trial court's set aside order, a $2.75 million loan from Luong to Nguyen in December 2012 allowed Nguyen to avoid foreclosure on the development of a shopping mall located in Sacramento, California. By 2017, after further transactions between Luong and Nguyen and modifications to the loan, QTV considered Nguyen to be in default and filed the complaint in this action. In November 2017, Nguyen filed a cross-complaint against QTV, Luong, Little Saigon Plaza Sacramento, LLC (Little Saigon), and additional entities allegedly controlled by Luong. Nguyen's cross-complaint asserted 11 causes of action including for accounting, breach of fiduciary duty, breach of contract, fraud, and conversion.

In a second amended cross-complaint following the sustaining of an earlier demurrer with leave to amend, filed in December 2017, Nguyen alleged that he was the sole manager and member of Little Saigon and that Luong had improperly transferred ownership interest in the shopping mall to himself. Luong responded by filing a crosscomplaint in March 2019, asserting claims pertaining to the alleged breach of a business settlement agreement between Luong and Nguyen, dated September 15, 2016 (2016 settlement agreement).

In 2018,^[2] while the QTV action was pending, Nguyen traveled to Vietnam and remained there until October 2021. We describe Nguyen's detention in Vietnam in more detail post (pt. I.C.1.).

During Nguyen's absence, QTV moved for summary adjudication of the complaint's second cause of action for breach of a promissory note in the amount of $4,268,744.54. Nguyen did not file opposition, though his counsel, Geoffrey William Steele (Steele), filed a notice of unavailability stating that Nguyen was in Vietnam and their communications were severely restricted. In August 2020, the trial court granted QTV's unopposed motion for summary adjudication. In November 2020, the trial court granted Steele's motion to be relieved as counsel of record. In March 2021, the trial court granted an unopposed motion by cross-defendant Little Saigon for monetary sanctions and for discovery sanctions to deem admitted requests for admission.

In November 2021, shortly after Nguyen's return to the United States, Luong and related parties filed a motion for summary adjudication as to the first cause of action in Luong's cross-complaint for breach of contract, for summary adjudication as to all 10 causes of action in Nguyen's second amended cross-complaint, and for" 'entry of final judgment in favor of moving parties in this action.'" (Capitalization omitted.) In March 2022, Nguyen filed opposition to the summary adjudication motion, and the moving parties filed their reply. Shortly before the hearing on the motion, Nguyen filed his set aside motion in the QTV, SSC, and instant actions. At a hearing on March 24, 2022, the trial court denied summary adjudication as to entry of final judgment in favor of Luong and the moving parties but deferred consideration of the other summary adjudication issues until after resolution of the set aside motion. Ultimately, upon denying the set aside motion (discussed in detail post (pt. I.C.3.)), the trial court granted Luong's motion for summary adjudication as to the first cause of action in the cross-complaint and as to all 10 causes of action in Nguyen's second amended cross-complaint in the QTV action.

2. SSC Action

Quong Luong v. Hieu Minh Nguyen (Super. Ct. Santa Clara County, 2018, No. 18CV326638) (SSC action) arises from the 2016 settlement agreement. Luong alleged breach of the agreement, which Luong and Nguyen negotiated in 2016 to purportedly resolve various disputes concerning their business transactions in California and Vietnam.

Nguyen answered the complaint in the SSC action but failed to respond to discovery requests, which Luong propounded during Nguyen's detention in Vietnam. In March 2020, the trial court granted Luong's unopposed motion to compel and for monetary sanctions. Nguyen continued to be nonresponsive in the action, and on December 8, 2020, the court granted terminating sanctions against Nguyen, striking his answer. The court entered a default on September 28, 2021. In March 2022, Nguyen filed the set aside motion. As of the set aside order, judgment had not yet been entered in the SSC action.

B. The Instant Action (Vector Action)

1. Operative Complaint

The action presently on appeal, Vector Fabrication, et al. v. Hieu Minh Nguyen, et al. (Super. Ct. Santa Clara County, 2018, No. 18CV334671) (Vector action), arises from Nguyen's alleged default on a promissory note for a loan on an apartment building project in Ho Chi Minh City, Vietnam. Plaintiffs Vector Fabrication, Inc. (Vector) and Luong (together, plaintiffs) initially alleged breach of written contract and common count-money had and received-against Nguyen, related to Nguyen's alleged default on the note.

In June 2019, plaintiffs amended the complaint to add Nguyen's wife Quy Ngoc Thi Nguyen (Quy) and sister Nguyen Thi Thu Thao (Thao), the latter in her capacity as trustee of Nguyen's and Quy's insurance trust.^[3] The amended complaint (hereafter, complaint) also added three causes of action for avoidance of fraudulent transfer related to the alleged, improper conveyance of defendants' residential property located in Granite Bay, California (see Civ. Code, §§ 3439.04, subds. (a), (b), 3439.05).

The complaint alleged that in 2014, Nguyen, who is a real estate developer, procured a loan of $1.85 million from plaintiffs to finance the development and construction of the Ho Chi Minh City apartment building project known as the" '116 118 Bai Say Property.'" The loan was evidenced by a promissory note in the principal amount of $1.85 million in favor of plaintiffs, payable in installments between January and July 2015, and named the 116-118 Bai Say Property as security. The complaint alleged that despite plaintiffs' performance under the agreement and note, Nguyen failed to perform and refused to pay in accordance with the terms. It further alleged that the security for the note was valueless because Nguyen had "lost any ownership interest in the 116-118 Bai Say Property." Asserting breach of promissory note and common count, plaintiffs sought repayment of the $1.85 million promissory note, plus interest, attorney fees, and costs.

Plaintiffs further alleged, as to the causes of action for avoidance of fraudulent transfer, that Nguyen and Quy acquired title in September 2016 to residential real property in Granite Bay (the Granite Bay property, or property) as community property. After transferring title of the property from their insurance trust and back to themselves as community property, Nguyen and Quy allegedly executed a grant deed in December 2016 to transfer their ownership of the Granite Bay property to Nguyen's sister, Thao, as trustee, for no consideration.

Plaintiffs alleged that the transfer to Thao was voidable pursuant to Civil Code section 3439.04, subdivisions (a) and (b), because Nguyen and Quy made the...