Genzon Investment Group, Co., Ltd v. Huang

Background

Genzon Investment Group, Co., Ltd. brought several contract-related claims against Bin Huang, Molecon, Inc., HUWAA, LLC, and other defendants. The claims arose from agreements concerning the production of biodegradable greenhouse film and transfers of equity in Molecon Suzhou Novel Materials Co., Ltd., which was not a party to the lawsuit.

Genzon alleged that the materials produced did not meet the required standards and that the defendants failed to perform obligations under the agreements. The agreements included a collaboration agreement, a December 2017 equity transfer agreement, a 2018 equity transfer agreement, and an August 2018 agreement. Genzon alleged that it paid $3.5 million for equity, transferred a 20 percent interest without receiving the promised $100,000, and did not obtain promised materials under the August 2018 agreement.

Defendants’ Motion

The defendants asked the court to dismiss the entire action under the doctrine of forum non conveniens. That doctrine allows a court to dismiss when another country is a more appropriate place to resolve the dispute.

Adequate Alternative Forum

The court first considered whether China was an adequate alternative forum. Huang declared that he was willing to waive any applicable time limit for filing claims, submit to the jurisdiction of a Chinese court, and pay any final judgment issued by that court after appeals. Genzon did not show that it would be unable to obtain any remedy in China. The court therefore found that China was an adequate alternative forum.

Forum-Selection Clauses

The court found that the agreements contained clauses selecting courts in China. The translated collaboration agreement and certain other agreements selected forums in Shenzhen City or Shuyang, China. One translated 2018 agreement appeared to select California, but the defendants’ translator stated that this was an error and that the agreement actually selected the location of “Party A,” which would be Shenzhen, China. Genzon did not challenge that correction in its opposition.

Because the court found that the forum-selection clauses governed the dispute, it treated the parties’ private interests as favoring the selected Chinese forums and did not consider other private-interest factors.

Public-Interest Factors

The court concluded that nearly all public-interest factors favored dismissal. It found that California had little interest in the dispute, that the court had limited familiarity with Chinese contract law, and that resolving the entire case in California would require translation between Chinese and English and between different legal systems. The court also found that litigating the case in California would impose greater burdens than confirming a foreign judgment. Although the parties disputed litigation costs, the court found that translation and travel costs also weighed in favor of dismissal. The opinion states that neither party addressed court congestion.

Disposition

The court held that an adequate alternative forum existed, that all four agreements selected Chinese forums, and that nearly all public-interest factors favored dismissal. Judge Phyllis J. Hamilton therefore granted defendants’ motion to dismiss for forum non conveniens. The order does not state whether the dismissal was with or without prejudice.