United States District Court, D. Maryland
Xinis United States District Judge.
in this legal malpractice action is Defendants' motion to
dismiss or, in the alternative, for summary judgment (ECF No.
13). The issues are fully briefed and a hearing was held on
Tuesday, July 11, 2017. For the reasons stated below,
Defendants' motion is granted in part and denied in part.
fall of 2012, Plaintiff Che Li (“Plaintiff”) and
her husband Zhang Zhengang (“Zhengang”), both of
whom are Chinese citizens, decided to immigrate to the United
States through the EB-5 Immigrant Investor Program offered by
the United States Citizenship and Immigration Services
(“USCIS”). Under this program, foreign
entrepreneurs are eligible to apply for naturalization if
they invest in a United States based commercial enterprise
which creates or preserves ten permanent full-time jobs for
qualified United States workers. The investment must meet
certain requirements, to include the immigrant investor
placing her investment “at risk” for the purpose
of generating a return.
October 2012, Zhengang traveled from China to Florida to find
a suitable investment for a potential EB-5 petition. While
there, Zhengang met several individuals from Zhengang's
and Plaintiff's native Chinese province of Shandong,
including Qin Yuan (“Qing”), her brother Hongtao
Yuan (“Hongtao”), and their sister Guizhi Yuan
(“Guizhi”) (collectively, “the
Yuans”).The Yuans advised Zhengang that EB-5
projects in the Washington, D.C. area were more lucrative
than those in Florida because they produce higher rates of
return more quickly.
Yuans then invited Zhengang sightseeing in Washington, DC.
Zhengang accepted and so he, along with Qing and Guizhi,
embarked on a journey to the nation's capital. Both
before and during their trip to Washington, Qing and Guizhi
spoke highly of a wealthy D.C. couple, Xiaolan Zhang
(“Xiaolan”) and Peide Yan (“Peide”),
who were operating successful businesses that could
potentially serve as qualifying EB-5 investments. Qing and
Guizhi brought Zhengang to Xiaolan's home in Rockville,
Maryland, where Zhengang stayed for several weeks.
Zhengang's stay with Xiaolan, Xiaolan informed Zhengang
that she owned a lucrative luxury goods store. See
Amend. Compl., ECF No. 6 at 6. In reality, according to
Plaintiff, Xiaolan was not successful at all, but the
mastermind of a fraudulent scheme involving the use of
individuals' credit cards to purchase inventory at
high-end department stores and then resell the purchases at a
discount. Id. at 6-7. Xiaolan allegedly used the
profits for her personal gain and also to repay earlier
victims who were threatening to file criminal charges.
the course of Zhengang's visit with Xiaolan, Xiaolan
convinced Zhengang to invest in another luxury goods store to
be opened in Washington, D.C. as a way for Zhengang and
Plaintiff to satisfy the EB-5 investment requirement.
Accordingly, on November 5, 2012, Zhengang, individually and
on behalf of Plaintiff, incorporated KZDJ in Virginia with
its stated corporate purpose as operating a luxury goods
store. KZDJ Articles of Incorporation, ECF No. 6-1 at 21.
Xiaolan and Guizhi agreed to manage the store while Zhengang
and Plaintiff agreed to fund the enterprise with a $1 million
investment to KZDJ. This capital would satisfy the investment
requirement of the EB-5 petition.
November 7, 2012, Zhengang designated Qing as KZDJ's vice
president and Peide as its secretary. Zhengang then opened a
business checking account with SunTrust Bank (“KZDJ
SunTrust 9485”) by corporate resolution signed by all
three KZDJ officers. See ECF No. 6-1 at 24-27.
Zhengang then returned to China.
about March 10, 2013, Plaintiff asked Zhengang to travel to
the United States to discuss the EB-5 petition with Sam Chang
(“Chang”), an immigration attorney Guizhi and
Xiaolan had recommended to Zhengang during his initial visit
to Washington. See Amend. Compl., ECF No. 6 at 9.
Zhengang obliged and, once again, left for the United States.
On or about March 11, 2013, Xiaolan took Zhengang to
Chang's office at Wasserman, Mancini & Chang, PC
(“WMC”) to discuss the EB-5 petition
requirements. Id. Because Zhengang could not
read, write, or speak English, all discussions were in
speaking with Chang about the EB-5 petition process, and upon
Chang's advice, Zhengang, Plaintiff, Xiaolan, and Guizhi
entered into an investment agreement titled “DC Duty
Free Store” related to the opening of the luxury goods
store. ECF No. 6-2 at 1-4. To assuage Zhengang's and
Plaintiff's concerns regarding the riskiness of the
investment and the amount of money they were being asked to
invest, the parties' agreement states that Xiaolan and
Guizhi would pledge their homes as collateral until KZDJ
could generate a profit equal to Zhengang's and Che's
investment. See ECF No. 6-2 at 3. Neither Zhengang
nor Plaintiff knew that this provision of the investment
agreement would likely violate USCIS's “at
risk” investment requirement. ECF No. 6 at 11. But
Plaintiff was not worried, as she relied on the attorney,
Chang, to review the agreement for compliance with the
immigration laws. Id.
translated the investment agreement from Chinese,
see ECF No. 6-2 at 1-2, to English, see Id.
at 4, which was then executed by both parties. See
ECF No. 6 at 10. According to Plaintiff, the translated
document, titled “Business Agreement, ” is
materially different than the original contract-differences
that neither Zhengang nor Plaintiff noticed because they
cannot read English. For example, Xiaolan's English
translation states that Xiaolan and Guizhi “will
cooperate with the immigration lawyer [Chang], ” while
the original agreement makes no mention of an immigration
lawyer. Compare ECF No. 6-2 at 3, with Id.
April 26, 2013, Zhengang and Plaintiff wired $1, 020, 000
into KZDJ SunTrust 9485. One million dollars was the
Plaintiff's EB-5 investment itself, and the remaining
$20, 000 was Chang's retainer fee. On the same day, Peide
withdrew from the KZDJ SunTrust 9485 account roughly $1
million and used those funds to open another SunTrust
checking account for KZDJ ending in 9337 (“KZDJ
SunTrust 9337”). See ECF No. 6 at 12; ECF No.
6-2 at 6-10. Neither Zhengang nor Plaintiff knew about
12, 2013, Plaintiff sent to Defendants the couple's
personal information, bank records, resumes, work histories,
and declarations in furtherance of her EB-5 petition.
See ECF No. 6 at 12-13. Included in Plaintiff's
declaration was a statement which reads: “Following the
receipt of funds in my Standard Chartered Bank account, I
applied to transfer the investment capital of $1 million to
the SunTrust Bank account [ending in 9485] on April 24, 2013,
and [the SunTrust Bank account ending in 9485] received my
investment capital on April 26, 2013.” See ECF
No. 6-2 at 13. Two weeks later, Peide wrote a $500, 000 check
to himself from SunTrust KZDJ 9337 and then transferred the
funds into a separate SunTrust checking account related to
the Yuan's Virginia corporation, ZYD, Inc., and on which
Peide was also a signatory. ECF No. 6 at 13. Peide and
Xiaolan then purportedly took what was left of
Plaintiff's investment for themselves. Plaintiff had no
knowledge of these transfers.
14 and 15, 2013, Xiaolan visited Chang at WMC's D.C.
office. Neither Zhengang nor Plaintiff was in the United
States at that time. According to Chang's handwritten
notes, Xiaolan told Chang that Plaintiff's $1 million
investment would fund two separate businesses for Peide and
Xiaolan: (1) a duty-free gift shop and (2) a pan-Asian
restaurant. Both the restaurant's and the gift shop's
employees would be considered in combination for the ten
full-time employees needed for Plaintiff's EB-5 petition.
Neither Plaintiff nor Zhengang authorized or even knew about
Xiaolan's representations to Chang. See ECF No.
6 at 13-14.
before the June 14 and 15 meetings between Xiaolan and Chang,
Taher Albeitawi, a Florida businessman, registered an entity
called “American Luxury Boutique”
(“ALB”). ECF No. 6 at 16; ECF No. 6-3 at 12-14.
Taher incorporated ALB based upon a business proposal drafted
by Chawky Jabaly, who had emailed the same business proposal
to Xiaolan on April 3, 2013. ECF No. 6 at 16; ECF No. 6-3 at
15. On August 1, 2013, Peide wired from the KZDJ SunTrust
9485 account $3, 000 to the Jabaly Law Trust Account. ECF No.
6-3 at 16. Taher, Xialoan, and the property management
company of 800 17th Street NW, Washington, D.C. then
allegedly executed a commercial lease in furtherance of the
new ALB enterprise. It is unclear whether Plaintiff was aware
of these transactions. See ECF No. 6 at 16.
17, 2013, Chang emailed Xiaolan a retainer agreement for
Plaintiff and requested an initial payment of $3, 000 to WMC.
See ECF No. 6 at 14-15; ECF No. 6-3 at 8-9. The
email also included questions for Plaintiff and requested
further documentation regarding Plaintiff's and
Zhengang's business tax returns. On June 27, 2013,
Plaintiff responded to Chang's June 17 email to Xiaolan
through a translation service, Bright Life China
(“BLC”). Plaintiff designated Lydia from BLC as
Plaintiff's agent and translator, and copied on the email
was Lydia from BLC, Xiaolan, Zhengang, and another employee
of BLC, Jerry. See ECF No. 6-3 at 10-11. Lydia sent
two more emails on July 1 and 8, 2013 to Chang asking him
whether he received the June 27 email and asking him to call
her. ECF No. 6 at 17.
9, 2013, Chang sent an email to Xiaolan and Cindy at BLC,
We have enclosed for your further handling the retainer
agreement for the EB5 case. Please review, sign and return to
our office with the retainer fee. Once we receive the
documentation, we will finalize the review of your
ECF No. 6-3 at 19-20. On July 12, 2013, Xiaolan sent WMC the
retainer agreement and a check for $3, 000 drawn from KZDJ
SunTrust 9485, but the retainer agreement was signed by
Peide, not Plaintiff. See ECF No. 6-4 at 3-6. Chang
accepted the retainer agreement without calling or emailing
Plaintiff. WMC allegedly deposited the $3, 000 check sent by
Peide on July 14, 2013.
15, Xiolan sent an email to Chang which contained attachments
of KZDJ's incorporation papers. Oddly, the email copies a
person named Debbie Chang. Defendant Chang never inquired as
to Debbie Chang's relationship, if any, to Plaintiff. ECF
No. 6 at 18.
next day, Defendant Chang sent another email directly to
Xiaolan without copying Plaintiff or Cindy at BLC, with the
We are resending the retainer agreement for Che Li's
case. The retainer agreement must be signed by Ms.
Li. Please have her review, sign and return to our office at
her earliest convenience. When returning the retainer
agreement, Ms. Li should provide us with direct contact
information including an email address.
ECF No. 6 at 18-19; ECF No. 6-4 at 8. Chang then sent another
email on July 18, 2013 only to Xiaolan requesting Plaintiff
produce documentation regarding her investment and business
venture. ECF No. 6-4 at 11.
24, 2013, Plaintiff, through Lydia at BLC, sent Chang a
signed retainer agreement. See ECF No. 6-4 at 12-15.
The retainer agreement provides that WMC would provide the
One (Form I-526/Form I-485 or IV Consulate Processing)
a) $3, 000 to provide fee based consulting on questions and
issues as the first step.
b) $12, 000 when you retain us to start an EB5 case; we
will assist you in the feasibility period including advising
you about the availability of the business entities to invest
in. When you decide to go forward with the investment and the
EB5 application, we will review the investment agreement and
advise you about the issues and documents involved. Finally,
we will prepare and file the I-526 application package to
Id. at 12.
31, 2013, Chang sent two emails to Xiaolan, again requesting
Xiaolan provide Chang with Plaintiff's email address even
though Chang had already received several communications from
Lydia at BLC acknowledging that Lydia is Plaintiff's
representative. See ECF No. 6-4 at 18; ECF No. 6 at
21, as Lydia was the person who sent Plaintiff's signed
retainer agreement to Chang earlier that week.
August 5, 2013, Xiaolan emailed WMC photographs depicting an
April 2013 SunTrust Bank statement allegedly showing that
Plaintiff had deposited $1, 020, 000 into KZDJ SuntTrust 9485
on April 26, 2013. ECF No. 6 at 24. The bank statement also
shows that at least $1, 000, 000 of her investment had been
transferred to KZDJ SunTrust 9337. Also included in the email
are photographs of an allegedly falsified signature card
dated March 11, 2013, which purports to add Xiaolan and
Guizhi to KZDJ SunTrust 9485. Neither Plaintiff nor Zhengang
were copied on this email and Chang did not attempt to verify
these documents with Plaintiff, Zhengang, or BLC.
August, 2013, Peide and Xiaolan allegedly used
Plaintiff's investment for their own personal expenses,
and Chang and Xiaolan continued to communicate with one
another without involving Plaintiff or Zhengang. See
ECF No. 6 at 25-27. Plaintiff's complaint also alleges
that Xiaolan discussed with Chang two properties that Xialoan
intended to rent using Plaintiff's investment. One was a
restaurant called the “Zhan Restaurant, ” a
business unrelated to Plaintiff's investment.
See ECF No. 6 at 29. Although this lease was
unrelated to the EB-5 petition, Chang attached a copy of the
restaurant lease to Plaintiff's EB-5 petition. Chang did
not provide the restaurant lease to Plaintiff, Zhengang, or
BLC until March 2015. See ECF No. 6 at 32.
apparently received another lease from Xiaolan, executed on
behalf of KZDJ, for the luxury store ALB. Plaintiff alleges
that “[a]t no point before or after receiving the
Restaurant Lease and ALB Lease did Chang contact either [her]
or ZZhang [sic] or otherwise inform them of: (a) the
fictitious owners listed on the leases; (b) the missing $1,
000, 000 investment; and (c) the [sic] Peide wrote in the
amount of $170, 193.33 . . . from KZDJ SunTrust 9485 to
secure the leases.” ECF No. 6 at 32.
October 7, 2013, Zhengang met with Chang. Chang told Zhengang
that everything was going well with the EB-5 petition and
that Chang would contact him if Chang had any concerns. Chang
further represented that Plaintiff could expect her
conditional EB-5 visa within 45 days after the filing of the
EB-5 petition. ECF No. 6 at 33. At this point, both Plaintiff
and Zhengang still trusted Xiaolan and Peide. Accordingly,
based on Chang's assurance that Plaintiff's
application would be reviewed soon, Plaintiff, Zhengang, and
Peide entered into another business venture for a multiuse