Baliga v. Link Motion Inc.

Background

Wayne Baliga sued Link Motion Inc., Vincent Wenyong Shi, Roland Wu, and Zemin Xu. The court had appointed Robert W. Seiden as a temporary receiver for Link Motion in February 2019. After Baliga abandoned his shareholder-derivative claims and pursued only direct claims, the court determined that the receivership should end after a complete accounting.

The accounting proceedings were referred to Magistrate Judge Valerie Figueredo. Her August 2023 and November 2024 Reports and Recommendations addressed the Receiver’s expenses, Lilin “Francis” Guo’s expenses and compensation as the Receiver’s agent in China, whether Shi should be personally responsible for certain expenses, and whether Felicello Law, P.C. could represent Link Motion in seeking partial dismissal of Baliga’s Third Amended Complaint. Shi and the Receiver filed objections.

Rulings on the Receiver’s accounting

The court adopted in part the August Report. It approved the Receiver’s accounting for $2,669,901.95 in expenses incurred between February 1, 2019, and October 5, 2020, to be borne by Link Motion. It also approved $552,331.52 in expenses incurred between October 5, 2020, and November 16, 2022, also to be borne by Link Motion.

The court denied Shi’s objections to those approved recommendations. It sustained Shi’s objections to specific time entries that clearly related to drafting Baliga’s Second Amended Complaint rather than work for Link Motion. The court disapproved $9,440 of those expenses and ordered that the Receiver bear them. The court overruled Shi’s remaining objections concerning alleged conflicts of interest, Link Motion’s assets in China, the Hong Kong arbitration, Link Motion’s application accounts, and post-October 5, 2020 expenses.

Guo’s expenses and compensation

The court adopted in part the November Report and approved $1,042,985 in Guo’s expenses. It also rejected the recommendation disapproving certain payments to legal vendors and approved $45,597 in those expenses. The court found that the record sufficiently established the necessity of services involving KLC Corporate Advisory and Recovery Limited, W.K. TO & Co. Solicitors & Notaries, Epiq Hong Kong Limited, and KSG Attorneys Limited.

The Receiver had requested approval of Guo’s $15,000 monthly compensation, totaling $345,000. Because Guo had not been paid hourly and had not submitted time records, the court could not fully evaluate the requested amount. Rather than deny compensation entirely, the court reduced the request by 40 percent and awarded Guo a total salary of $207,000.

Other rulings and final order

The court adopted without objection the recommendations denying the request to hold Shi personally responsible for the Receiver’s expenses, denying the Receiver’s request for monetary sanctions, and allowing Felicello Law to represent Shi and Link Motion for the limited purpose of moving to partially dismiss the Third Amended Complaint.

The court discharged and released the Receiver from his duties and responsibilities. It also protected the Receiver and his attorneys, accountants, consultants, and other professionals from liability for good-faith compliance with court orders, applicable law, and their receivership duties, except when the court finds bad faith, gross negligence, or reckless disregard of their duties. Other interested parties were barred from seeking to impose such liability without first obtaining relief from the court. Judge Marrero retained jurisdiction over matters arising from or related to implementing the order.