Wang v. King

Background

Andrew Wang and Shou-Kung Wang sued Yien-Koo King, Kenneth King, Raymond King, Lynn King, Joseph Shih-Fan King, and unnamed defendants. Shou-Kung Wang is the son of artist and collector Chi-Chuan Wang, and Andrew Wang is Shou-Kung Wang’s son. The plaintiffs sued individually and derivatively on behalf of the Chi-Chuan Wang Revocable Trust.

The plaintiffs alleged a decades-long scheme involving the misappropriation of artwork and assets belonging to Shou-Kung Wang and Chi-Chuan Wang’s estate. Their claims included alleged fraudulent transactions, theft and sales of artwork, theft of bearer-share certificates, falsified evidence in a New York Surrogate’s Court proceeding, and fraud in bankruptcy and related civil litigation.

The plaintiffs previously amended their complaint after the court dismissed their first amended complaint without prejudice. The court had allowed them to seek permission to amend again if they could show how the deficiencies would be cured. They then moved for leave to file a proposed second amended complaint. The proposed pleading reasserted claims under sections 1962(c) and 1962(d) of the Racketeer Influenced and Corrupt Organizations Act, commonly called RICO, and added allegations concerning sales of artwork in violation of a restraining order and evidence used in the probate proceeding.

RICO claims concerning artwork and assets

The court held that the proposed allegations did not establish a new and independent injury within RICO’s four-year limitations period. The plaintiffs argued that the later sale of unique artwork in violation of a restraining order created a new injury because the sales destroyed the estate’s ability to repossess the artwork. The court rejected that argument. It reasoned that the claimed loss of possession and the related right to reclaim the property arose when the artwork was allegedly stolen, and that the later sales concerned the measurement of damages rather than a new RICO injury.

The court also held that the alleged improper sales were dependent on the initial theft, rather than independent injuries. It further explained that a violation of the restraining order was not, by itself, a valid RICO predicate act under the allegations presented. The court therefore found that amendment would be futile as to the claims based on the loss of artwork and assets.

Claims based on the probate proceeding

The plaintiffs alleged that false testimony and a forged settlement document caused the New York Surrogate’s Court jury to invalidate the 2003 Will and caused Andrew Wang to lose his position as the estate’s preliminary executor. The court did not decide whether the proposed complaint adequately pleaded causation for those claims. Instead, it held that it lacked subject-matter jurisdiction under the Rooker-Feldman doctrine.

That doctrine prevents a federal district court from reviewing and rejecting a prior state-court judgment. The court found that the plaintiffs had lost in state court, that the injury they identified resulted from the state-court judgment, that they were asking the federal court to reject that judgment, and that the state-court judgment came before this federal case. The court noted that the state appellate court had rejected the plaintiffs’ challenges concerning the evidence and had affirmed the judgment removing Andrew Wang as preliminary executor. The court dismissed these claims with prejudice and denied the request to amend them further.

Legal expenses and conspiracy

The plaintiffs also sought RICO damages for legal expenses incurred in a related civil action. Because the court found that the underlying RICO theories concerning the artwork and probate proceeding were not actionable, it dismissed the legal-expense claim for the same reasons. It likewise dismissed the RICO conspiracy claim because it relied on the same alleged acts and injuries and did not identify an actionable RICO violation.

State-law claims and disposition

After dismissing the federal claims, the court declined to exercise supplemental jurisdiction over the remaining New York claims for breach of fiduciary duty and conversion. It dismissed those state-law claims without prejudice.

The court denied the plaintiffs’ motion for leave to file the second amended complaint. It dismissed the RICO claims with prejudice, dismissed the state-law claims without prejudice, directed the Clerk to terminate the motion, and closed the case.