Facts

Marc Del Piero, bankruptcy trustee for the Estate of Hai & Lieng Truong, substituted-in for Hai Truong shortly before trial began. Truong's claims belonged to his bankruptcy estate. The Trustee alleged Lap Tang and Ha Ly, principals of TWN Investment Group LLC, owed $2 million plus prejudgment interest to Hai Truong because they signed guarantees with United Commercial Bank that they would refund buyer deposits for units not built at Vietnam Town on Story Road in San Jose. Truong had put down a $2 million deposit in 2006. TWN entered bankruptcy in 2012.

PLAINTIFF'S CONTENTIONS:
Truong is a third party beneficiary of Tang and Ly's promise to the bank to repay buyer deposits. The bank was worried that buyer deposits may be liens with priority to the bank's construction loan. Del Piero also alleged that Lap Tang is the alter ego of TWN. TWN's only creditors in bankruptcy were Vietnamese people who had put down deposits to buy the 210 commercial condos TWN was building on Story Road in San Jose on an old HP site.

DEFENDANT'S CONTENTIONS:
That Truong was just an incidental beneficiary, not a creditor beneficiary, to Tang and Ly's promise to the bank to repay buyer deposits. Tang contended TWN was adequately funded.

Settlement Discussions

At the first settlement conference, defendants made no offer. At the second settlement conference, defendants made a settlement offer of $275,000 (collectively), which plaintiff accepted, but then defendants refused to sign.

Damages

Truong's loss of his $2 million deposit.

Result

The court found the buyers were intended beneficiaries of Tang and Ly's promise to repay buyer deposits, as such it found no need to pierce the corporate veil.

Other Information

The judgment proceeds will pay Hai Truong's creditors 100 percent and pay the trustee's statutory fee, but most of it will be distributed to Hai Truong and his wife. FILING DATE: Oct. 16, 2013.