### Joyous JD Ltd. v Yolanda Asset Mgt. Corp. 2024 NY Slip Op 33318(U) September 19, 2024 Supreme Court, New York County Docket Number: Index No. 652028/2023 Judge: Lyle E. Frank Cases posted with a "30000" identifier, i.e., 2013 NY Slip

Op 30001(U), are republished from various New York State and local government sources, including the New

York State Unified Court System's eCourts Service. This opinion is uncorrected and not selected for official publication.NYSCEF DOC. NO. 36 INDEX NO. 652028/2023 RECEIVED NYSCEF: 09/19/2024 

### SUPREME COURT OF THE STATE OF NEW YORK NEWYORK COUNTY PRESENT: HON. LYLE E. FRANK Justice

----------------------------------------------------------------- ----------------X

JOYOUS JD LIMITED, MICROALGO INC.,VIYI ALGORITHM INC. Plaintiff,

- V - YOLANDA ASSET MANAGEMENT CORPORATION, ZHIGUO ZHANG, YANMING LIU, Defendant.

---------------------------------------------------------------------------------X PART 11M
INDEX NO. 652028/2023 MOTION DATE 05/13/2024 MOTION SEQ. NO. 001
DECISION + ORDER ON MOTION

The following e-filed documents, listed by NYSCEF document number (Motion 001) 10, 11, 12, 13, 14, 15, 16, 17, 18, 19,20,21,22,23,24,25,26,27,28,29,30, 31, 32,33, 34,35 were read on this motion to/for Background1 DISMISS


### Plaintiffs, Joyous JD Limited ("Joyous"), MicroAlgo Inc., and VIYI Algorithm Inc., bring this action against Defendants alleging causes ofaction based on several agreements, the
common law, and for Securities Act of 1933 (the "Securities Act") violations. Defendant YolandaManagement Corporation ("Yolanda") is a BVI company incorporated in 2018. Zhiguo Zhang ("Zhang") oversees day-day management ofYolanda. Together, Yolanda and Zhang will be referred to as the "Defendants". Liu, another defendant, did notjoin in the motion to dismiss. On May 14, 2018, Yolanda formed and invested in another company-Venus Acquisition Corporation ("Venus")-ablank check or special purpose acquisition company (colloquially known as a "SPAC"). 

### Some ofthe allegations in this case
concern Venus despite the fact that Venus is not a namedparty.

1 The Court would like to thank Special Master Jason Lowe, Esq. for his assistance in this matter.

652028/2023 JOYOUS JD LIMITED ET AL vs. YOLANDA ASSET MANAGEMENT CORPORATION ET AL Motion No. 001 1 of 7 Page 1 of7 

### [* 1]NYSCEF DOC. NO. 36 INDEX NO. 652028/2023 RECEIVED NYSCEF: 09/19/2024

Defendants brings a motion to dismiss arguing this action mustbe dismissed due to lack ofpersonaljurisdiction, pursuant to theforum non conveniens doctrine, due to resjudicata and/or collateral estoppel, for lack ofstanding, and for failure to state a cause ofaction. The Court analyzes each ofthese grounds below.
Analysis Foreign Language Documents Submitted As Part ofThis Motion Initially, the Courtnotes that the parties submitted foreign language documents as part of this motion. The foreign language documents are not considered bythe Court. CPLR 2101(b) requires all documents submitted to the Court to be in English. Thus, the untranslated documents submittedby Defendant are not considered as they are not in English. With regards to the documents submittedby Plaintiffthat are translated into English, CPLR 2101(b) requires the documents to be "accompaniedby an English translation and an affidavit bythe translator stating his qualifications and that the translation is accurate." In this case, a certification was submitted, which is not an affidavit. In addition, the certification does notpurport to be from the person doing the translation. Therefore, it fails to meet the requirements ofCPLR 2101(b) and cannotbe consideredbythis Court.

PersonalJurisdiction Defendants Zhang and Yolandamove to dismiss due to lack ofpersonaljurisdiction. Mr. Zhang notes he is the actual controller ofYolanda and then asserts that Yolanda has no business offices in New York. However, Venus lists an address in New York as its principal office in filings with the SEC. One ofthe SEC filings states " Yolanda Management Corporation

652028/2023 JOYOUS JD LIMITED ET AL vs. YOLANDA ASSET MANAGEMENT CORPORATION ET AL Motion No. 001 2 of 7 Page 2 of7 

### [* 2]NYSCEF DOC. NO. 36 INDEX NO. 652028/2023 RECEIVED NYSCEF: 09/19/2024
("Yolanda") is the founder/sponsor of [Venus] and does not conduct other business activity." NYSCEF #26 at page 4. Further, the SEC filings state that "Mr. Liu is the sole director and shareholder of Yolanda with sole right and power vote and dispose ofthe securities ofthe Issuerheld by Yolanda." That same SEC filing shows that Mr. Liumaintains an office in New York. Thus, Mr. Zhang's statements that Yolanda does not do any business in New York seem to beundercutbythe idea that Yolanda's only business was being the founder/sponsor ofa company whose principal office is in New York and that there was a time when Yolanda's sole shareholder and director maintained an office in New York at the same address where Venus maintained its principal office. In addition, Plaintiffs allege causes ofaction related to an initial public offering for
a SPAC in New York along with a de-SPAC that allegedly occurred in New York. To defeat a motion for summaryjudgmentpursuant to CPLR 321 l(a)(8) a plaintiffneed only establish,prima facie, that the defendant was subject to the personaljurisdiction ofthe Supreme Court. (PC-16Doe vHillRegional CareerHigh Sch., 223 AD3d 518,518 [1st Dept 2024][On this pre-answermotion to dismiss, plaintiffhas made prima facie showing that defendants are subject to personaljurisdiction]; Weitz v Weitz, 85 AD3d 1153 [2nd Dept. 2011]). The above is sufficient to establish,prima facie, that Yolanda is subject to personaljurisdiction in New York. With respect to Mr. Zhang, Plaintiffs argue that the Court has personaljurisdiction over Mr. Zhang due to himbeing a controlling person ofYolanda. Forthe Court to have personal jurisdiction over a controlling person due to a corporation's activities the controlling person must have benefited from the transaction and exercised some degree ofcontrol over the corporation in

652028/2023 JOYOUS JD LIMITED ET AL vs. YOLANDA ASSET MANAGEMENT CORPORATION ET AL Motion No. 001 3 of 7 Page 3 of7 

### [* 3]NYSCEF DOC. NO. 36 INDEX NO. 652028/2023 RECEIVED NYSCEF: 09/19/2024

relation to the transaction. (Kreutter v. McFadden Oil Corp., 71 N.Y.2d 460,467, 527 N.Y.S.2d 195, 199 [1988]). The allegations that Mr. Zhang was Yolanda's principal shareholder, in charge ofthe day-to-day management, and controlling director along with the allegations that Mr. Zhang was compensated for being the promoter for Venus are sufficient to make outprima facie showing ofpersonaljurisdiction for Mr. Zhang as a controlling person ofYolanda. Therefore, Defendants' motion to dismiss for lack ofpersonaljurisdiction is denied.

Forum Non Conveniens Defendants argue that this case should be dismissed pursuant to theforum non conveniens doctrine. A court may dismiss an action on forum non conveniens grounds "where it is determined that the action, althoughjurisdictionally sound, would bebetter adjudicated elsewhere." (Islamic Republic v. Pahlavi, 62 N.Y.2d 474, 478-79 [1984]). "Among the factors to be considered are the burden on the New York courts, the potential hardship to the defendant, and the unavailability ofan alternative forum in which plaintiffmaybring suit." Id. at 479 (citation omitted). Further, a "courtmay also consider thatboth parties to the action are nonresidents." Id. Prior to this action being filed, Yolanda filed an action against Microalgo, Inc., one ofthe plaintiffs in this case. See YOLANDAMANAGEMENT CORPORATION v. MICROALGO, INC. et al; Index Number 650956/2024. The subject ofthat lawsuitwas related to the subject matter ofthis lawsuit. Thus, the hardship factor balances against dismissal. Similarly, Plaintiffs argue that they could notbring many ofthe causes ofaction in an alternative forum. Defendants do not argue that a majority ofthe claims could bebrought in an alternative forum. This factor, therefore, also weighs against dismissal on forum non conveniens

652028/2023 JOYOUS JD LIMITED ET AL vs. YOLANDA ASSET MANAGEMENT CORPORATION ET AL Motion No. 001 4 of 7 Page 4 of7 

### [* 4]NYSCEF DOC. NO. 36 INDEX NO. 652028/2023 RECEIVED NYSCEF: 09/19/2024
grounds. Further, this factor is the mostimportant factor in a forum non conveniens analysis. (Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474,479 [1984]). Therefore, though the parties are both out ofstate, which weighs in favor ofdismissal, the other factors weigh against dismissal and thus the Court denies the motion to dismiss pursuant to the forum non conveniens doctrine.

CollateralEstoppel/Res Judicata Defendants argue that this action mustbe dismissed pursuant to resjudicata, collateral estoppel, and/or comity. This argument is based on an interpretation ofwhat claims were litigated in China. As is discussed above, the records from the Chinese proceeding are not properlybefore this Court as they are either submitted in a foreign language or do notproperly follow the CPLRfor the submission offoreign language documents. Therefore, this Courthas an inadequate record to analyze or determine whether dismissal is warrantedpursuant to res judicata, collateral estoppel, and/or comity. The motion to dismiss on these grounds is therefore denied.

Lack ofStanding and Failure to State a Claim Defendants argue that the cause ofaction pursuant to Section 11 ofthe Securities Act mustbe dismissedbecause PlaintiffJoyous has notpresented evidence to establish that the shares it purchased are directly traceable to the IPO stock thatbegan trading on February 11, 2021. At the motion to dismiss stage, aparty is notrequired to present evidence to prove the allegations in theirpleading. Therefore, Defendants' motion to dismiss the Section 11 claim is denied.

652028/2023 JOYOUS JD LIMITED ET AL vs. YOLANDA ASSET MANAGEMENT CORPORATION ET AL Motion No. 001 5 of 7 Page 5 of7 

### [* 5]NYSCEF DOC. NO. 36 INDEX NO. 652028/2023 RECEIVED NYSCEF: 09/19/2024

Defendants argue that pursuantto Section 12(a)(2) ofthe Securities Act, only offers or sales ofsecurities made bymeans ofa prospectus or oral communication are actionable. Defendants argue that aftermarket securities sales do not qualifyunder this standard. This is incorrect. Some aftermarket securities sales maybe actionable pursuantto Section 12(a)(2). (In
re GiantInteractive Group, Inc. Sec. Litig., 643 F Supp 2d 562, 574 [SDNY 2009]["To the extent that shares ofGiantwere purchased in the aftermarket from the Underwriter Defendants acting as dealers who had an obligation to distribute a prospectus, Section 12(a)(2) liability could attach[.]"]) Finally, Defendants movedto dismiss pursuant to LimitedLiability Company Law (LLCL) § 808(a) which bars unregistered foreign LLCs from maintaining any action in this state without a certificate ofauthority. However, since none ofthe Plaintiffs are limited liability companies, LLCL § 808(a) does notprovide any basis for dismissing this action. Accordingly, itis hereby ADJUDGED that Defendant YolandaManagement Corporation and Zhiguo Zhang's motion to dismiss is denied; anditis further ORDERED that Defendants YolandaManagement Corporation and Zhiguo Zhang shall file an answerwithin 20 days ofthis orderbeing filed bythe Court on NYSCEF; anditis further ORDERED that the parties shall meet and conferregarding a preliminary conference order. Ifthe parties cannot agree on a preliminary conference orderby October 18, 2024, the parties shall email the part clerk to seek a conference.

652028/2023 JOYOUS JD LIMITED ET AL vs. YOLANDA ASSET MANAGEMENT CORPORATION ET AL Motion No. 001 6 of 7 Page 6 of7 

### [* 6]NYSCEF DOC. NO. 36

9/19/2024

DATE CHECK ONE:

# ~ CASE DISPOSED GRANTED 

# 0 DENIED APPLICATION: SETTLE ORDER CHECK IF APPROPRIATE: INCLUDES TRANSFER/REASSIGN

# ~ INDEX NO. 652028/2023 RECEIVED NYSCEF: 09/19/2024

LYLE E. FRANK, J.S.C. NON-FINAL DISPOSITION GRANTED IN PART

# □ OTHER SUBMIT ORDER FIDUCIARY APPOINTMENT

# □ REFERENCE

652028/2023 JOYOUS JD LIMITED ET AL vs. YOLANDAASSET MANAGEMENT CORPORATION ET AL Page 7 of 7 Motion No. 001 7 of 7 

### [* 7]