Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-00729/USCOURTS-cand-4_18-cv-00729-3/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 09:201 Petition for Enforcement of Foreign Arbitration Award

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DEPCOM POWER, INC.,

Petitioner,

v.

CSUN SOLAR, INC., et al.,

Respondents.

Case No. 18-cv-00729-JST 

ORDER GRANTING PRELIMINARY 

INJUNCTION AND DENYING 

MOTION TO APPOINT RECEIVER

Re: ECF No. 75

Before the Court is Petitioner DEPCOM Power, Inc.’s motion for a preliminary injunction 

and to appoint a receiver. ECF No. 75. The Court previously granted DEPCOM’s ex parte 

motion for a temporary restraining order (“TRO”). ECF No. 82. For the reasons set forth below, 

the Court will GRANT the motion to issue a preliminary injunction and DENY the motion to 

appoint a receiver. 

I. BACKGROUND

This dispute arises from DEPCOM’s agreements to purchase solar modules from 

Respondent CSUN Solar, Inc., a United States-based subsidiary of Respondent China Electric 

Equipment Group Co. Ltd. (“CEEG”). ECF No. 59 ¶¶ 4-9. On February 21, 2018, the Court 

confirmed an interim arbitration award of replevin in the American Arbitration Association case 

styled as DEPCOM POWER, INC. v. CSUN Solar, Inc. and China Electric Equipment Group Co. 

Ltd., ICDR Case No. 01-18-0000-4150, ECF No. 38, authorizing DEPCOM to take possession of 

21 containers of undelivered solar modules, see ECF No. 58-1 ¶¶ 26-31. On December 6, 2018, 

the arbitrator entered a final award that, among other things, held Respondents jointly and 

severally liable to DEPCOM for $3,3180,398.54 in damages (plus 6.25% simple interest per 

annum). ECF No. 58-4 at 8-9. On February 8, 2019, the Court granted DEPCOM’s unopposed 

Case 4:18-cv-00729-JST Document 91 Filed 05/13/19 Page 1 of 17
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application to confirm the final arbitration award, ECF No. 62, and judgment was subsequently 

issued in that amount, ECF No. 63. 

On March 27, 2019, the Clerk of Court issued to DEPCOM a writ of execution in that 

amount, which included “[a]ll tangible personal property of [Respondents], including but not 

limited to specialized equipment for manufacture of solar panels, modules, and related goods, and 

also such solar panels, modules and related goods located at 4741, 4801 Urbani Avenue, 

McClellan, CA 95652.” ECF No. 67 at 2 (emphasis added).

On April 19, 2019, the U.S. Marshals Service levied the factory at the above address, 

installing Scott Sackett of Fiduciary Management Technologies, Inc. (“FMT”) as keeper over the 

property. ECF No. 75-8 ¶ 4. Sunergy California, LLC immediately contacted DEPCOM’s 

representatives to contest whether the levy was proper, contending that while it owns and operates 

the factory, Sunergy California itself is not owned or operated by either of the Respondents. Id.

¶¶ 10-11; see also ECF No. 69-2 at 21. Sunergy California and DEPCOM continued this dispute 

over the next week, culminating in Sunergy California filing a motion to intervene and an ex parte 

application to quash the writ on April 26, 2019. ECF Nos. 69, 70. DEPCOM responded with a 

notice of non-opposition, indicating that it would instead pursue its own ex parte relief. ECF No. 

71. The Court subsequently granted Sunergy California’s motion for limited intervention and 

quashed the writ as to the property at the Urbani Avenue address. ECF No. 80.

On April 29, 2019, DEPCOM filed a motion to expand the judgment to include Sunergy

California, ECF No. 79, and filed an ex parte motion requesting that, in the interim, the Court 

appoint a receiver and issue a TRO pending a hearing on a motion for preliminary injunction, ECF 

No. 75. On May 1, 2019, the Court granted the motion in part, issuing a TRO enjoining 

Respondents and Sunergy California from taking various actions in relation to the disputed 

property. ECF No. 82 at 5-6. The Court’s order provided that the TRO would remain in place 

until May 15, 2019, or further order of the Court. Id. at 6. Finally, the Court ordered Respondents 

and Sunergy to show cause why the Court should not convert the TRO into a preliminary 

injunction. Id. at 6-7.

Respondents and Sunergy California filed separate oppositions to a preliminary injunction. 

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ECF Nos. 86, 87. DEPCOM filed a reply. ECF No. 88. The Court held a hearing on May 13, 

2019.

II. EVIDENTIARY ISSUES

The Court first addresses the parties’ evidentiary objections. Sunergy California objects to 

various aspects of the declaration of Dr. York Tsuo, DEPCOM’s Chief Technology Officer, 

submitted in support of the motion. ECF No. 87 at 14-16 (objecting to ECF No. 75-1). DEPCOM 

likewise objects to a number of paragraphs in the declaration of Xiaolai “Sally” Zhou, the director 

of Sunergy California. ECF No. 88 at 18 n.8. Each side attacks the other’s declaration as some 

combination of inaccurate, conclusory, or unsupported. Because the gravamen of these challenges 

is to the weight of the declarations, not their admissibility, the Court will not strike the disputed 

paragraphs. See Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510, 1530 n.10 (9th Cir. 

1992), as amended (Jan. 6, 1993) (explaining that fact that statements were not corroborated 

“affects the weight to be given the statements . . . , not their admissibility”); United States v. 

Candoli, 870 F.2d 496, 509 (9th Cir. 1989) (“This conflict in the evidence goes to the weight of 

[the] declaration, not to its admissibility.”).

Sunergy California also contends that Tsuo fails to “specify the basis” for his knowledge, 

ECF No. 87 at 14 (quoting Civil L.R. 7-5(b)), that China Sunergy Co. Ltd. is owned and 

controlled by Respondent CEEG, ECF No. 5-1 ¶ 5, and that the owners of CEEG “are also indirect 

owners of Sunergy California,” id. ¶ 18. This argument is not convincing. A fair reading of those 

paragraphs makes clear that the basis of this knowledge is Tsuo’s “extensive dealings” with China 

Sunergy and CSUN. ECF No. 75-1 ¶ 5. While Tsuo’s declaration could have been more precise 

and specified the particular interactions that gave rise to that belief, the Court doubts that much of 

the content of Sunergy California’s own declarations would survive a similar level of scrutiny. 

The objection is overruled. 

III. MOTION FOR PRELIMINARY INJUNCTION

A. Legal Standard

A plaintiff seeking a preliminary injunction “must establish that he is likely to succeed on 

the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the 

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balance of equities tips in his favor, and that an injunction is in the public interest.” Am. Trucking 

Ass’ns, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting Winter v. Nat. 

Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). Injunctive relief is “an extraordinary remedy that 

may only be awarded upon a clear showing that the plaintiff is entitled to such relief.” Winter, 555 

U.S. at 22. 

To grant preliminary injunctive relief, a court must find that “a certain threshold showing 

[has been] made on each factor.” Leiva-Perez v. Holder, 640 F.3d 962, 966 (9th Cir. 2011) (per 

curiam). Assuming that this threshold has been met, “serious questions going to the merits and a 

balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary 

injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and 

that the injunction is in the public interest.” All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 

1135 (9th Cir. 2011) (internal quotation marks omitted). 

B. Analysis

1. Likelihood of Success on the Merits

DEPCOM asserts two legal theories in support of its motion to expand the judgment: 

(1) alter ego and (2) successor liability. ECF No. 79 at 10.

a. Amending the Judgment

“Under Federal Rule of Civil Procedure 69, district courts enforce money judgments in 

accordance with the procedures of the states where they are located.” Perfect 10, Inc. v. 

Giganews, Inc., 847 F.3d 657, 677 (9th Cir. 2017) (citing Fed. R. Civ. P. 69(a)(1)).1 California 

Code of Civil Procedure section 187, in turn, gives courts “the authority to amend a judgment to 

add additional judgment debtors.” Katzir’s Floor & Home Design, Inc. v. M-MLS.com, 394 F.3d 

1143, 1148 (9th Cir. 2004) (quoting In re Levander, 180 F.3d 1114, 1121 (9th Cir. 1999)).2

 

1 Rule 69(a)(1) provides in relevant part: “The procedure on execution [of a money judgment] 

– and in proceedings supplementary to and in aid of judgment or execution – must accord with the 

procedure of the state where the court is located, but a federal statute governs to the extent it 

applies.”

2 California Code of Civil Procedure section 187 provides in full:

When jurisdiction is, by the Constitution or this Code, or by any other 

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A court may add a nonparty to the judgment based on an alter ego theory “if the new party 

(1) is the alter ego of the old party, and (2) controlled the litigation.” Giganews, Inc., 847 F.3d at 

677. California recognizes an alter ego relationship where “(1) there is such a unity of interest and 

ownership that the individuality, or separateness, of the said person and corporation has ceased, 

and (2) an adherence to the fiction of the separate existence of the corporation . . . would sanction 

a fraud or promote injustice.” Id. (alteration in original) (quoting S.E.C. v. Hickey, 322 F.3d 1123, 

1128 (9th Cir. 2003)).

Alternatively, section 187 permits a court to expand the judgment under rules of successor 

liability. McClellan v. Northridge Park Townhome Owners Ass’n, Inc., 89 Cal. App. 4th 746, 754 

(2001). “The general rule of successor liability is that a corporation that purchases all of the assets 

of another corporation is not liable for the former corporation’s liabilities unless, among other 

theories, the purchasing corporation is a mere continuation of the selling corporation.” Katzir’s 

Floor & Home Design, 394 F.3d at 1150 (citing Ray v. Alad Corp., 19 Cal. 3d 22, 28 (1977)). 

Under California law, a finding that a corporation is a “mere continuation” of another “require[s] 

evidence of one or both of the following factual elements: (1) a lack of adequate consideration for 

acquisition of the former corporation’s assets to be made available to creditors, or (2) one or more 

persons were officers, directors, or shareholders of both corporations.” Id. (citing Ray, 19 Cal. 3d 

at 29).

b. Alter Ego

The Court first considers DEPCOM’s likelihood of success on its alter ego theory. 

California courts have recognized that “it would be unjust to permit those who control 

companies to treat them as a single or unitary enterprise and then assert their corporate 

separateness in order to commit frauds and other misdeeds with impunity.” Las Palmas Assocs. v. 

Las Palmas Ctr. Assocs., 235 Cal. App. 3d 1220, 1249 (1991). Accordingly, “under the single-

 

statute, conferred on a Court or judicial officer, all the means 

necessary to carry it into effect are also given; and in the exercise of 

this jurisdiction, if the course of proceeding be not specifically 

pointed out by this Code or the statute, any suitable process or mode 

of proceeding may be adopted which may appear most conformable 

to the spirit of this code.

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enterprise rule, [alter ego] liability can be found between sister companies.” Greenspan v. LADT, 

LLC, 191 Cal. App. 4th 486, 512 (2010) (quoting Las Palmas Assocs., 235 Cal. App. 3d at 1249). 

Courts may also impose alter ego liability based on a parent-subsidiary relationship. Id.

“[I]n order to hold one corporation liable for the debts of another affiliated corporation,” a 

court must generally find that “the latter ‘is so organized and controlled, and its affairs are so 

conducted, as to make it merely an instrumentality, agency, conduit, or adjunct of another 

corporation.’” Toho-Towa Co. v. Morgan Creek Prods., Inc., 217 Cal. App. 4th 1096, 1107 

(2013) (quoting Las Palmas Assocs., 235 Cal. App. 3d at 1249). In determining whether a single 

enterprise exists, courts may consider “the commingling of funds and assets of the two entities, 

identical equitable ownership in the two entities, use of the same offices and employees, disregard 

of corporate formalities, identical directors and officers, and use of one as a mere shell or conduit 

for the affairs of the other.” Id. at 1108-09 (quoting Troyk v. Farmers Grp., Inc., 171 Cal. App. 

4th 1305, 1342 (2009)).

DEPCOM’s alter ego theory is that Respondent CSUN and Sunergy California are both 

subsidiaries of China Sunergy Co. Ltd., which is in turn owned and controlled by Respondent 

CEEG. ECF No. 75 at 6-7. DEPCOM contends that all of these entities (as well as others) 

“operate as one enterprise” under the control of a single individual, Tingxiu Lu. Id. at 7. 

As noted in the Court’s prior order granting the ex parte TRO, DEPCOM has produced 

substantial circumstantial evidence in support of this theory. ECF No. 82 at 3. For instance, Tsuo 

states in a declaration that during the DEPCOM’s initial dealings with Respondents, they 

represented to him that CSUN was opening a manufacturing facility in California. ECF No. 75-1 

¶¶ 9, 12. The parties also agree that DEPCOM’s third purchase order provided that the modules 

“will be manufactured in the CSUN’s new California module factory.” ECF No. 88-2 at 11; see 

also ECF No. 86-2 ¶ 11. Tsuo states that CSUN representatives took Tsuo on a tour of the 

disputed factory in November 2017. ECF No. 88-1 ¶ 9. According to Tsuo, when Respondents 

defaulted on their purchase obligations, they then offered ownership in the factory in lieu of 

repayment. ECF No. 75-1 ¶ 16; see also Stewart v. Screen Gems-EMI Music, Inc., 81 F. Supp. 3d 

938, 955 (N.D. Cal. 2015) (“[C]ourts consider evidence that one entity is holding itself out as 

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responsible for the debts of the other entities.”).

In addition to this evidence that “the three entities exploited the same assets,” DEPCOM 

has also produced evidence suggesting that common employees performed the relevant work on 

behalf of the different entities. Toho-Towa Co., 217 Cal. App. 4th at 1109; see also Stewart, 81 F. 

Supp. 3d at 955 (evaluating “whether the entities use the same offices and employees”). Tsuo 

contends that he met with Zhou – the current director of Sunergy California, ECF No. 87-1 at 2 

− multiple times between November 2017 and January 2018, to discuss issues relating to 

DEPCOM’s purchase orders with Respondents. ECF No. 75-1 ¶ 12; ECF No. 88-1 ¶¶ 8-12. As 

discussed further below, DEPCOM has also raised questions whether the same attorneys have 

acted on behalf of both Sunergy California and Respondents during the period in question. See 

Toho-Towa, 217 Cal. App. 4th at 1109 (citing evidence that employees “negotiated distribution 

deals on behalf of” and “provided legal services to” other entities within the purported enterprise).

Finally, DEPCOM points to the fact that Respondents almost immediately defaulted on 

their contractual obligations and their subsequent duties to repay DEPCOM’s $4.1 million down 

payment. ECF No. 75 at 8-9. Noting that the timing of this default coincided with the launch of 

Sunergy California’s factory, DEPCOM urges the Court to infer that Respondents used this money 

to fund Sunergy California. Id. at 9-10. If true, this would suggest a disregard of corporate 

formalities. See Stewart, 81 F. Supp. 3d at 955 (considering whether “the entity form which 

Plaintiff seeks to recover is inadequately capitalized”). It would also support a “conclusion that it 

would be inequitable to uphold [Sunergy California’s] separate existence under the 

circumstances.” Toho-Towa, 217 Cal. App. 4th at 1109 (“[I]t would be inequitable to permit 

MCP, the alter ego of B.V., to shift liability to B.V. after ensuring that B.V. would have no funds 

to pay its debts.”). 

Respondents and Sunergy California’s rebuttal evidence, which consists almost entirely of 

declarations, is insufficient to dispel the serious questions raised as to DEPCOM’s alter ego 

theory. Zhou’s declaration disputes, among other things, DEPCOM’s account of the respective 

entities’ corporate ownership structure, the source of Sunergy California’s capital, and her own 

employment history and interactions with Tsuo. ECF No. 87-1 ¶¶ 2-4, 9-10, 15-19. Similarly, 

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Fang Bo, the general manager of Respondent CEEG, disagrees with Tsuo’s account of the 

representations that CSUN was opening a “Sacramento” facility, although Bo does not address 

whether those discussions mentioned a California facility more generally. ECF No. 86-2 ¶¶ 7-11. 

Bo also states that Respondents never offered ownership in the factory, id. ¶¶ 14-18.

As a general matter, the Court finds it probable that objective evidence could conclusively 

resolve some of these disputes. Yet, although Respondents and Sunergy California appear 

uniquely positioned to provide this evidence, they have declined to do so. Zhou represents, for 

instance, that Sunergy California is 98 percent owned by Sunergy America LLC, and that China 

Sunergy owns only 20 percent of Sunergy America. Id. ¶¶ 3-4. Zhou also states that the other 

stakeholders of Sunergy America hold “no beneficial interest” in Respondents. Id. ¶ 4. But while 

Sunergy California provides a Sacramento County business license listing Sunergy America as 

Sunergy California’s owner, ECF No. 87-1 at 13, and an unverified diagram titled “Organizational 

Structure,” id. at 10, it provides no other documents in support of these claims. Zhou similarly 

explains that the CSUN-branded modules observed at the factory are attributable to Sunergy 

California’s licensing agreement with China Sunergy, ECF No. 87-1 ¶ 11, but provides no actual 

agreement. In light of DEPCOM’s circumstantial evidence described above, the Court cannot 

uncritically accept these contrary assertions. For similar reasons, the Court accords minimal 

weight to Zhou’s conclusory assertions that Sunergy California observed various corporate 

formalities and received no contributions from Respondents. ECF No. 87 at 24; ECF No. 87-1 

¶¶ 9, 14.

When it comes to other material matters in dispute, the declarations provided are either 

vague or inconsistent on key points. As described above, Zhou’s apparently overlapping duties 

are clearly relevant to DEPCOM’s single-enterprise theory. Zhou states that she “left the employ 

of [Respondent CEEG] in January 2016,” ECF No. 87-1 ¶ 16, but does not specify when she 

began her current position at Sunergy California. This is problematic because DEPCOM has 

presented evidence that Zhou attended various meetings related to the purchase orders with 

Respondents between October 2017 and January 2018. ECF No. 88-1 ¶¶ 7-12. Zhou does not 

address the capacity in which she was acting during those meetings.

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Bo’s declaration suffers from similar issues. For instance, Bo disclaims Respondent 

CEEG’s ownership or control over China Sunergy. ECF No. 86-2 ¶ 6. Yet California Sunergy 

appears to concede in its opposition that there was a discussion in which DEPCOM was offered 

“some portion of a twenty per[cent] share ownership” to satisfy Respondents’ debt, ECF No. 87 at 

15 – which corresponds precisely to China Sunergy’s asserted ownership stake, ECF No. 87-1 ¶ 4. 

The Court sees no alternative explanation other than that China Sunergy has some relationship 

with Respondents, and the parties have not identified one. Bo also repeatedly asserts that CSUN 

never represented that it would open a facility in Sacramento. ECF No. 86-2 ¶¶ 7-13. Although 

Respondents emphasize this detail, it appears doubtful in light of the purchase order’s express 

reference to “CSUN’s new California module factory,” ECF No. 88-2 at 11, and Tsuo’s 

undisputed visits to the facility in Sacramento. 

Sunergy California next argues that DEPCOM’s claims fail at the second element of an 

alter ego finding because respecting the corporate formalities would not promote injustice. ECF 

No. 87 at 25-26. Sunergy California posits that it did not cause any of DEPCOM’s damages, 

stressing that the factory was not responsible for the first two purchase orders and that DEPCOM 

received other guarantees as protection that did not include Sunergy California assets. Id. This 

argument misses the point. The question is not whether Sunergy California, as an individual 

entity, is liable to DEPCOM for some independent wrongdoing. Rather, the question is whether 

Sunergy California is part of a single undifferentiated enterprise that is liable to DEPCOM based 

on Respondents’ wrongdoing. See Greenspan, 191 Cal. App. 4th at 507 (“To add [a non-party] as 

a judgment debtor would be based, not on a finding he breached the agreement, but on his control 

of the Shy Trust and its companies to such an extent that his failure to satisfy the judgment would 

promote injustice.”). 

For the reasons described above, DEPCOM has identified serious questions whether 

Respondents and Sunergy California operated as a single common enterprise. To the extent that 

Sunergy received Respondents’ assets, particularly those related to its default on its contracts with 

DEPCOM, it would be inequitable to shield those assets from DEPCOM’s reach. See Toho-Towa, 

217 Cal. App. 4th at 1109. Certainly, the circumstances of Respondents’ default on their 

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obligations, combined with unrefuted allegations of Respondents’ insolvency, raises serious 

questions whether Respondents were “so undercapitalized that [they were] unable to meet debts 

that may reasonably be expected to arise in the normal course of business.” Giganews, Inc., 847 

F.3d at 677.

Finally, Sunergy California and Respondents3argue that DEPCOM cannot prevail on its 

alter ego theory because DEPCOM did not control the litigation and related arbitration. ECF No. 

86 at 2-6; ECF No. 87 at 12-13, 22. To demonstrate the requisite control, DEPCOM first relies on 

evidence that the attorney currently representing Sunergy California in this matter, Thomas 

Rosenberg, represented Respondents in the arbitration and appeared at the final arbitration 

hearing. ECF No. 75-1 ¶ 17; ECF No. 88-5 ¶ 4. Sunergy California urges the Court to give this 

evidence no weight, asserting that “Rosenberg, in ten months of litigation, attended only a hearing 

as non-litigator.” ECF No. 87 at 22 (emphasis added). Sunergy further contends that “Rosenberg 

is not a litigator.” Id. In his declaration, Rosenberg also asserts that his “presence at the 

arbitration was simply as a subject matter consultant to legal counsel Arturo Santana” related to 

solar industry issues. ECF No. 87-2 ¶ 4. These representations are contradicted by the record. 

Most obviously, Rosenberg is now acting as Sunergy’s lead counsel in this litigation, as evidence 

by the papers on file with the Court, including Sunergy’s opposition to this motion. ECF No. 87. 

Rosenberg also appears with Santana on the caption of the only papers Respondents filed on the 

docket prior to this post-judgment dispute. ECF No. 51 at 1. Rosenberg likewise appears on the 

caption of a number of briefs filed on behalf of Respondents during arbitration. ECF No. 88-6 at 

2, 11. Rosenberg’s own law firm web page lists “commercial litigation” and “domestic and 

international arbitration” as two of his specialties. ECF No. 88-10 at 7 (attaching a printout of 

https://www.rkjglobal.com/thomasrosenberg) The Court therefore does not credit Rosenberg’s 

account either of his specialty or of his participation in the arbitration. 

DEPCOM also cites evidence of the inverse relationship, namely, Santana’s affiliation 

with Sunergy California. ECF No. 88 at 11-12. In her declaration, DEPCOM’s counsel, Jennifer 

 

3 Respondents’ opposition focuses solely on this element. 

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Hayes, states that Santana called the factory during the attempted levy and threatened to shut down 

production at the factory. ECF No. 75-8 ¶ 10. Sackett, the keeper, offers the same version of 

events. ECF No. 88-3 ¶ 6(f). Sackett also declares that, during the attempted levy, a factory 

employee brought him a note stating, “Can you urgently call our Santani [sic] attorney.” ECF No. 

88-4 at 8; see also ECF NO. 88-3 ¶ 6(f). In his declaration, Santana gives a conflicting account, 

stating that he made the call solely in his capacity as “attorney for Respondents (not an attorney 

for Sunergy)” to inquire about the execution of the writ and did not claim the authority to halt 

production. ECF No. 86-1 ¶¶ 23-24. Santana’s declaration also disclaims in great detail 

Rosenberg’s involvement with the arbitration. Id. ¶¶ 13-16. For the same reasons, the Court finds 

Santana’s account not credible.

Moreover, DEPCOM’s theory is that Lu “viewed and treated all entities as a unitary 

enterprise.” Greenspan, 191 Cal. App. 4th at 510. In that case, “he would not have considered 

their ‘distinct’ interests during the arbitration because, as far as he was concerned, their interests 

were identical to his own.” Id. In other words, DEPCOM contends that Respondents, on behalf 

on a single enterprise of which Sunergy California is a part, “retained counsel, consulted with 

counsel on strategy, supervised the arbitration, and paid the legal fees.” Toho-Towa Co., 217 Cal. 

App. 4th at 1110. Under this theory, Sunergy California itself need not “technically [have been] 

given the opportunity to convince the arbitrator they should have prevailed in the arbitration.” 

Greenspan, 191 Cal. App. 4th at 509 (alteration in original) (internal quotation marks and citation 

omitted). This is particularly so where Sunergy California has made no suggestion that it could 

have offered additional evidence or arguments that would have excused Respondents’ default or 

otherwise led to a different result. See id. (holding that it would be sufficient to show that a group 

of putative defendants controlled the underlying litigation where they were “in effect” identical to 

the defendants who had appeared, “the action was fully and fairly tried,” and “‘nothing appears in 

the record to show that [the proposed judgment debtors] could have produced a scintilla of 

evidence that would have in any way affected the results of the [arbitration]’”) (quoting NEC 

Elecs. Inc. v. Hurt, 208 Cal. App. 3d 772, 780 (1989) (brackets in original)). Serious questions 

thus remain as to this prong as well.

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In sum, the record on this element of alter ego liability is both contentious and incomplete. 

Based on this record, the Court concludes that DEPCOM has raised serious questions that support 

preliminary relief pending further exploration. As discussed at the hearing, the Court will set an 

accelerated discovery period of 90 days in which DEPCOM can gather evidence to further support 

its allegations. 

c. Successor Liability

Because the Court concludes that DEPCOM’s alter ego theory supports preliminary 

injunctive relief, it does not reach a preliminary evaluation of successor liability.

2. Irreparable Harm

The Court previously found that DEPCOM had shown a sufficient likelihood of irreparable 

harm based on the risk of dissipation of the factory’s assets. ECF No. 82 at 4; see also Consumer 

Opinion LLC v. Frankfort News Corp., No. 16-CV-05100-BLF, 2016 WL 6804607, at *5 (N.D. 

Cal. Nov. 17, 2016) (“A defendant’s secretion or dissipation of assets may establish a likelihood 

of irreparable harm warranting injunctive relief.” (citing In re Estate of Ferdinand Marcos, 

Human Rights Litig., 25 F.3d 1467, 1480 (9th Cir. 1994)).

Sunergy California argues that this risk is minimal, given that the most valuable assets “are 

mostly bolted to the ground in the form of factory plant equipment.” ECF No. 87 at 26 (citing 

ECF No. 87-1 ¶ 28). Even if true, this does not alter the Court’s prior conclusion. As DEPCOM 

reasonably explains, the equipment may still be removed, and any of the factory’s assets –

including the factory itself – may be sold in exchange for sale proceeds that can easily be 

dissipated. ECF No. 88 at 19.

Sunergy California also faults DEPCOM for having “sat on its hands for a year.” ECF No. 

87 at 26. The Court disagrees. The Court confirmed the arbitration award on February 8, 2019. 

ECF No. 62. DEPCOM obtained a writ of execution on March 27, 2019, ECF Nos. 67, 68, and 

filed its application for TRO on April 29, 2019, ECF No. 75.

3. Remaining Factors

In finding that the balance of equities weighed in DEPCOM’s favor, the Court reasoned

that the conditions of the TRO would minimize the harm to Sunergy California, as they would 

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allow it “to continue normal operations, accompanied by appropriate recordkeeping.” ECF No. 82 

at 4. Sunergy California’s opposition and supporting declarations do not address or contradict that 

finding. Rather, Zhou’s declaration primarily focuses on harm traceable to DEPCOM’s initial 

levy or the potential appointment of a receiver. ECF No. 87-1 ¶¶ 20-26. Putting aside that these 

assertions are vague and speculative, Sunergy California makes no effort to connect the posited 

harms to the terms of the injunction. Rather, Sunergy California cursorily asserts that an 

injunction would have a similar effect. ECF No. 87-1 ¶ 25. 

The Court acknowledges Sunergy California’s contention that it might suffer competitive 

harm simply from the publicity associated with this litigation. Id. The only coverage Sunergy 

California’s counsel could identify at the hearing was in the legal press. Also, there has been no 

actual competitive harm to date from the pendency of the litigation. However, in recognition of 

the potential for such harm, the Court will provide a relatively brief period of concentrated 

discovery and an opportunity for Sunergy California to file a motion to dissolve the injunction. 

Thus, should a more fully-developed factual record not support DEPCOM’s position, the harms of 

the injunction – whatever they might be – will have been relatively short in duration. 

To invoke the public interest, Sunergy California contends that “the public has an interest 

in seeing that the separate legal identities of separate corporations be respected.” ECF No. 87 at 

28. This argument merely assumes its own conclusion. DEPCOM’s reliance on a public interest 

in preventing fraud does so as well. See ECF No. 82 at 4-5. Because whether either interest is 

served turns on the outcome of the merits, the public interest factor is effectively neutral.

4. Conclusion

For the foregoing reasons, the Court will issue a preliminary injunction. The terms of that 

injunction are set forth in detail at the conclusion of this Order.

IV. MOTION TO APPOINT RECEIVER

DEPCOM also requests that the Court appoint Scott Sackett as receiver for the factory. 

ECF No. 75 at 15-18.

A. Legal Standard

California law, as made applicable through Federal Rule of Civil Procedure 69(a), also 

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authorizes a court to appoint a receiver “[a]fter judgment, to carry the judgment into effect.” Cal. 

Code Civ. Proc. § 564(b)(3). In particular, a “court may appoint a receiver to enforce the 

judgment where the judgment creditor shows that, considering the interests of both the judgment 

creditor and the judgment debtor, the appointment of a receiver is a reasonable method to obtain 

the fair and orderly satisfaction of the judgment.” Id. § 708.620; see also Yufa v. TSI Inc., No. 

4:09-cv-01315-KAW, 2018 WL 3956489, at *3 (N.D. Cal. Aug. 17, 2018).

This power “is a delicate one, and is to be exercised with caution lest injury be done to the 

parties and their properties.” Mentor Capital, Inc. v. Bhang Chocolate Co., Inc., No. 14-cv03630-LB, 2017 WL 3335767, at *2 (N.D. Cal. Aug. 4, 2017) (quoting Cohen v. Herbert, 186 

Cal. App. 2d 488, 495 (1960)). Courts have emphasized that “[t]he remedy is an extraordinary 

and harsh one, to be allowed cautiously and only where less onerous remedies would be 

inadequate or unavailable.” Cohen, 186 Cal. App. 2d at 495. While “the availability of other 

remedies does not, in and of itself, preclude the use of a receivership,” a court “must consider the 

availability and efficacy of other remedies in determining whether to employ the extraordinary 

remedy of a receivership.” City & County of San Francisco v. Daley, 16 Cal. App. 4th 734, 745 

(1993).

B. Analysis

The Court previously concluded that a TRO provided adequate interim relief in this case, 

such that appointing a receiver was unnecessary. ECF No. 82 at 5 n.1; see also Daley, 16 Cal. 

App. 4th at 745. Subsequent developments further reinforce the Court’s conclusion. First, as 

noted above, DEPCOM has raised serious questions regarding its alter ego theory, but there are 

significant factual disputes that must be resolved before DEPCOM can show that it is entitled to 

enforce the judgment against Sunergy California. Until DEPCOM has made a more conclusive 

showing, the Court finds it more prudent to avoid imposing that “extraordinary and harsh” 

remedy. Cohen, 186 Cal. App. 2d at 495. Second, DEPCOM announced that it was abandoning 

its initial levy on April 28, 2019, ECF No. 71, and the Court’s TRO has been in place since May 1, 

2019, ECF No. 82. DEPCOM has provided no evidence that the TRO has been inadequate to 

prevent the harms that DEPCOM fears. Nor has DEPCOM pointed to any particular imminent 

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dissipation. 

The Court therefore denies without prejudice DEPCOM’s motion to appoint a receiver.

CONCLUSION

For the foregoing reasons, DEPCOM’s motion for preliminary injunction is GRANTED 

and its motion to appoint a receiver is DENIED. 

DEPCOM, Respondents, and Sunergy California may conduct discovery concerning the 

issues raised by DEPCOM’s Motion to Add Sunergy California LLC to the Judgment Against 

CSUN Solar, Inc. and CEEG, ECF No. 79, commencing immediately. The parties are ordered to 

file a joint or competing discovery plan not later than May 15, 2019 at 5:00 p.m. PDT. If the 

parties file competing plans or identify disagreements requiring the Court’s intervention, they 

must appear in person Thursday, May 16, 2019 at 9:30 a.m.; if the parties submit a joint proposal 

and identify no disagreements, the May 16 hearing will be vacated. The parties’ plan(s) will 

represent a good-faith effort to identify the discovery that needs to be conducted within the next 90 

days and by definition will require amendment or adjustment as that discovery proceeds. 

At any time on or after August 16, 2019, Sunergy California may file a motion to dissolve 

the injunction. 

On the Court’s own motion, the hearing on the foregoing motion to add Sunergy California 

to the judgment is CONTINUED to Wednesday, October 23, 2019 at 2:00 p.m. DEPCOM is 

ordered to re-file that motion to incorporate the evidence it obtains during discovery not later than 

September 13, 2019. Sunergy California’s obligation to respond to DEPCOM’s original motion is 

suspended. 

Counsel are urged to meet-and-confer regarding the coordination of these two motions. 

PRELIMINARY INJUNCTION

Respondents and Sunergy California, and their officers, directors, members, partners, 

owners, managers, employees, agents, representatives and all other persons or entities acting by or 

on their behalf (collectively, the “Enjoined Parties”) are hereby enjoined and restrained from 

removing, concealing, transferring, damaging, or otherwise disposing of any property or assets 

(including all proceeds therefrom) associated with or located at or within a one-kilometer radius of 

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the real property commonly known as 4741, 4801 Urbani Avenue, McClellan, CA 95652 (the 

“Factory”), without further order of the Court; provided, however, that, Sunergy California: 

(1) may continue operations and production at the Factory in the ordinary course of 

business; 

(2) may continue to take and fulfill purchase orders in the ordinary course of business, 

including purchase orders for the sale of solar modules, provided that: 

(a) sales and shipments of inventory, including shipments of solar modules, are 

paid for in full (in good funds) prior to shipment; and 

(b) sales and shipments of inventory, including shipments of solar modules, are 

only to third parties unaffiliated with the Enjoined Parties or any of their 

affiliates, subsidiaries, parents, or holding companies; and 

(c) Sunergy California retains sufficient documentation (e.g., purchase orders, 

invoices, and receipts) to establish that such sales are market-rate sales to third 

parties unaffiliated with the Enjoined Parties;

(3) may continue to pay operating expenses of the Factory, including but not limited to, 

payroll, utilities, rent, insurance, raw materials, taxes, and the like; provided, however, 

(a) Sunergy California shall keep receipts and payment ledgers accurately reflecting 

all paid operating expenses; and

(b) within fifteen days of the last day of each month, file with the Court (i) a profit 

and loss statement (or a similar cash flow statement and accounting) setting 

forth the funds received by or on behalf of Sunergy California for the prior 

month, and the expenses incurred or paid by Sunergy California for that month, 

and (ii) an inventory listing all property and inventory at the Factory. 

B. Notwithstanding anything to the contrary herein, Sunergy California shall not make 

any payments to members, affiliates, or insiders of the Enjoined Parties during the duration of this 

injunction, including but not limited to payment of distributions, payment of dividends, repayment 

of loans, or investment(s). All revenue and income not otherwise spent on allowed operating 

expenses as provided for herein shall be maintained in a federally-insured bank account, with 

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monthly statements to be provided upon the Court’s request.

C. For the avoidance of doubt, the Enjoined Parties shall not destroy, conceal, transfer 

or fail to preserve any books, records, statements, contracts or other documents relating to the 

Factory during the duration of this order.

This preliminary injunction shall take effect immediately and shall remain in effect 

pending resolution of this action on the merits or further order of this Court.

IT IS SO ORDERED.

Dated: May 13, 2019

______________________________________

JON S. TIGAR

United States District Judge

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