Chung v. Chung Peng Chih-Mei

Background

Elizabeth Y. Chung sued Chung Peng Chih-Mei and Intertrust (Bahamas) Limited. Chung alleged that, in 2004, David Chung transferred approximately $5 million in marital assets to a trust owned by Chih-Mei to avoid U.S. taxes, and that Chih-Mei was not the rightful owner of those assets. She alleged that Intertrust created two additional trusts under Bahamas law using those assets. David Chung, who was residing in California, was appointed an advisor to the trusts.

After an earlier dismissal of Intertrust for lack of personal jurisdiction, the court allowed Chung to amend her complaint and permitted limited jurisdictional discovery. Chung filed an amended complaint, and both defendants again moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. They also raised arguments about venue, subject-matter jurisdiction, and failure to state a claim, but the court did not reach those arguments.

Personal Jurisdiction Over Chih-Mei

Personal jurisdiction is a court’s authority over a particular defendant. The court explained that due process generally requires the defendant to have sufficient connections, or “minimum contacts,” with the forum state. For specific personal jurisdiction, the plaintiff must show that the defendant purposefully engaged in activities in the state and that the claims arose from or related to those activities.

The court found that Chih-Mei, a Chinese citizen and Taiwanese resident, was not subject to general personal jurisdiction in California. It also concluded that Chung had not shown specific personal jurisdiction. Chung relied on Chih-Mei’s appointment of David Chung as a California-residing trust advisor and on the trusts’ investment in TenX Capital Limited, which owned a California corporation. The court held that Chung’s claims were based on the 2004 creation of the initial trust and alleged transfer of assets. They did not arise from or relate to David Chung’s later advisory activities or the trusts’ later investment in TenX.

Personal Jurisdiction Over Intertrust

The court held that Intertrust, a company based in the Bahamas, was not subject to general personal jurisdiction in California because Chung had not shown contacts that were continuous and systematic enough to make Intertrust essentially at home there.

The court also found no specific personal jurisdiction. It noted that Chih-Mei, not Intertrust, appointed David Chung as advisor. Chung conceded that Intertrust did not direct an investment decision or play a meaningful role in managing the assets, and that Intertrust took instructions while David Chung planned the TenX investment. The court concluded that Chung had not shown that her claims arose from any purposeful business activity by Intertrust in California.

Motions to Seal

Chung filed administrative motions to seal exhibits attached to her opposition briefs. The court applied a strong presumption that court records should be publicly accessible and required specific, compelling reasons for sealing.

The court concluded that Chung and Intertrust had not justified sealing most of the exhibits. Information about David Chung’s California home address and financial transactions did not meet the required standard, particularly because much of the information was already referenced in the publicly filed complaint. The court denied the motions to seal in part. It allowed sealing only for a financial-account number in Exhibit O to the opposition to Intertrust’s motion and the corresponding Exhibit W to the opposition to Chih-Mei’s motion, consistent with the requirement to show only the last four digits.

Disposition

The court granted Chih-Mei’s and Intertrust’s Rule 12(b)(2) motions to dismiss for lack of personal jurisdiction. It denied in part Chung’s administrative motions to seal. The court ordered Chung to file the exhibits on the public docket within seven days, with all but the last four digits of the financial-account number redacted. Because there were no other defendants, the court dismissed the action and ordered the Clerk to close the file.