Facts

Plaintiff Ping Pan, a Chinese business owner, sued, as an individual, AC International Corp., a California corporation, claiming he was owed for goods received by ACI.

ACI imports and sells digital scales manufactured in China, including products manufactured by Shanghai Heng Cheng Electronics Co. Ltd., a Chinese company owned by Pan.

PLAINTIFF'S CONTENTIONS:
Plaintiff claimed ACI directly and indirectly ordered a number of digital scales from Shanghai Heng Cheng through an alleged sham and now defunct corporation. Digital scales totaling $922,0810 were shipped to ACI, however plaintiff claimed the defendant only paid $100,000 in invoices. As a result of ACI's failure to pay the debt of $822,081, Shanghai Heng Cheng had insufficient funds to continue the production of digital scales and manufacturing ceased in November 2010.

Plaintiff argued that purchase orders showed that goods by Shanghai Heng Cheng that were purchased, and shipped by licensed exporter ZiJiang, also showed receipt of goods by ACI. Plaintiff also argued that ACI's ordering and payment pathway was convoluted, and that ACI made indirect purchases that involved a sham company in Hong Kong created to disguise the contractual relationship between ACI and Heng Cheng and thereby avoid taxes. Plaintiff claimed that ACI's payments made via wire transfers from a Hong Kong company, actually traced back to himself and his family.

Heng Cheng did not have a direct contract with ACI. Plaintiffs contract was with a defunct corporation in Hong Kong, therefore Pan was required sue under an equitable theory of unjust enrichment.

DEFENDANT'S CONTENTIONS:
ACI claimed it paid for the scales through a company based in Hong Kong and that it was the Hong Kong company that actually owed Shanghai Heng Cheng the outstanding $822,081.

Result

The court determined that ACI had created a sham company in Hong Kong to avoid financial responsibility and was unjustly enriched by its receipt of goods and failing to pay for them. A judgment was entered in favor of Ping Pan in the amount of $822,081, plus interest in the amount of $323,965 and costs, for a total judgment of $1,146,046.

Other Information

Plaintiff transferred the rights and interests of his business, and its licensed exporter, to himself as an individual allowing him to seek recovery in the California courts. FILING DATE: Feb. 9, 2012.

Length

three days