Felix Chac Chuo, et al. v. Minghong Investment, Inc., et al.

CASE NO.: 22STCV08770

ON PLAINTIFFS' EQUITABLE CLAIMS FOLLOWING JURY VERDICT I. INTRODUCTION This is a consolidated action concerning the sale and transfer of a farm business in Thermal, California.¿ On May 19, 2026, the jury returned a verdict in favor of plaintiffs and cross-defendants Felix Chac Chuo, Stella Chuo, and Felix Chac Chuo Farm, Inc. (collectively, "Plaintiffs") on twelve causes of action in their Second Amended Complaint ("SAC") against defendant and cross-complainant Minghong Investment, Inc. ("Minghong"), defendant Bin "Billy Yu ("Yu"), B&D Consulting, Corp. ("B&D"), and defendant Chris Yau ("Yau").

The jury also returned a verdict denying Minghong's claims. The only remaining claims to be decided are Plaintiffs' and Minghong's equitable claims. Given the court's independent evaluation of the evidence as well as the jury's verdict in favor of Plaintiffs, the court finds in favor of Plaintiffs and against Minghong on Minghong's equitable claims. [1] The parties have submitted their written arguments. The court begins by setting forth the applicable law. In Section III, the court addresses Plaintiffs' equitable claims against Yau.

In Section III, the court addresses Plaintiffs' equitable claims against Minghong and Yu. [2] II. APPLICABLE LAW UCL claims are equitable in nature and "were intended to be decided by the court rather than a jury." (Nationwide Biweekly Administration, Inc. v. Superior Court (2020) 9 Cal.5th 279, 304.) "The order of trial, in mixed actions with equitable and legal issues, has great significance because the first factfinder may bind the second when determining factual issues common to the equitable and legal issues." (Hoopes v.

Dolan (2008) 168 Cal.App.4th 146, 156-157, citing Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 1993) P. 2:160, p. 2-32.1.) "[W]hen the legal claims are decided first by a jury, i.e., the jury's findings are binding in the trial court's subsequent disposition of the equitable claims." (Rincon EV Realty LLC v. CP III Rincon Towers, Inc. (2019) 43 Cal.App.5th 988, 993.) III. DISCUSSION RE EQUITABLE CLAIMS AGAINST YAU As

discussed above, the jury returned a verdict in Plaintiffs favor and against Yau based, in part, on a finding of fraud. Yau concedes this finding. Plaintiffs now seek restitution against Yau on their seventh cause of action for violation of Business and Professions Code section 17200 (the "UCL") in the sum of $4,000, which represents the amount Plaintiffs paid to Yau. Plaintiffs argue Yau should pay $4,000 in restitution because the funds were paid as part of the same fraudulent scheme. Yau counters that Plaintiffs paid that amount for accounting and consulting services work she performed through Lighthouse Consultants, Inc.

Stated another way, Yau argues the $4,000 was performed separate from the fraudulent scheme. Yau also argues that the evidence does not identify which of the plaintiffs paid Yau for her services. The UCL prohibits business practices that are "unlawful," "unfair," or "fraudulent." (Bus. & Prof. Code Sec.17200.) To prevail under the UCL, a plaintiff must show: (1) economic injury caused by the challenged practice; (2) a practice that fits one of the three statutory categories; and (3) available equitable relief.

Restitution is an available, equitable remedy. (Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310, 322-323.) The court will award Plaintiffs restitution of $4,000 on their UCL claim against Yau. The evidence presented established that Yau performed work for Plaintiffs through Lighthouse Consultants, Inc. as part of Minghong's acquisition of the farm. Further, Yau testified at trial that she received the payments from Plaintiffs. Thus, it does not matter if Plaintiffs did not identify the specific plaintiff who made the payments.

Viewed in conjunction with the jury's fraud finding, restitution is therefore available and awarded in equity against Yau. III. DISCUSSION RE EQUITABLE CLAIMS AGAINST MINGHONG AND YU Plaintiffs' equitable claims against Minghong and B Yu consist of the seventh, fourteenth, sixteenth, seventeenth, eighteenth, nineteenth, and twentieth causes of action. A. UCL Claim (7 th COA) 1. Fraudulent Prong Pursuant to the fraudulent prong of the UCL, Plaintiffs seek restitution of $3,164,279.92 for "guaranteed expenses," that were never actually incurred in whole by Minghong, and injunctive relief in the form of cancellation and reconveyance of the deed of trust and expungement of any related liens for APN 007-010-0811.

Based on the evidence presented, Plaintiffs are entitled to the requested relief. Minghong misunderstands the nature of restitution. It is not duplicative to award restitution, i.e., what Plaintiffs paid to Minghong because of Minghong's fraudulent scheme in addition to the damages awarded by the jury. The damages award and restitution award cover different harms. Further, although there

is no published opinion holding that cancellation and reconveyance of a deed of trust may be ordered in equity, the court concludes that the broad language of the UCL itself warrants such relief in this case. The UCL states, in relevant part, "Any person who engages, has engaged, or proposes to engage in unfair competition may be enjoined in any court of competent jurisdiction. The court may make such orders or judgments, including the appointment of a receiver, as may be necessary to prevent the use or employment by any person of any practice which constitutes unfair competition, as defined in this chapter, or as may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of such unfair competition." (Bus. & Prof.

Code, Sec.17203.) Cancellation and reconveyance of the deed of trust is warranted here because Plaintiffs executed the deed of trust as part of the sale transaction with Minghong. Because the jury found in favor of Plaintiffs, including on their claim of fraud in the transaction, Plaintiffs are entitled to the requested injunctive relief. As to Yu, Plaintiffs seek restitution of $300,000 against Yu. The amount represents the commission Plaintiffs paid to Yu in connection to the sale transaction.

Yu argues the request should be denied because Plaintiffs elected to affirm the sale transaction rather than rescind it (i.e., retain the benefits of $6 million paid under the transaction). Yu's argument lacks merit. Yu conflates his role in the fraudulent scheme with the sale transaction. Yu is liable for his own fraudulent conduct. As such, Plaintiffs are entitled to the restitution of $300,000 against Yu.

2. Unlawful Prong Pursuant to the unlawful prong of the UCL, Plaintiffs seek a judgment confirming and incorporating the jury's damages award on Plaintiff's Labor Code claims under the UCL against Minghong and Yu. Plaintiffs point to Trial Exhibit 470 which reflects the jury's Labor Code wage calculations. Because the jury's findings direct the court's ruling on the equitable claims, the court finds that Plaintiffs are entitled to the requested relief. The court further finds that Trial Exhibit 470 provides a sufficient calculation of Plaintiffs' damages in restitution for a four-year period.

B. Failure to Maintain Payroll Records (14 th COA) Plaintiffs seek a total penalty of $1,000. Labor Code section 1174.5 provides for a civil penalty of $500 which, applied to Plaintiffs Felix and Stella Chuo, results in a $1,000 penalty. Minghong and Yu fail to establish this penalty should not be awarded. The court will grant the requested penalties. C. Invalid Farm Labor Contract (16 th COA) This cause of action provides for the same measure of damages and attorney fees that the Chuos have already been

awarded. The court does not discuss this cause of action further. D. Independent Contractor Misclassification (17 th COA) Under Labor Code section 226.8, it is unlawful for any person or employer to misclassify an individual as an independent contractor. Labor Code section 226.8 provides for a civil penalty of up to $15,000 per violation where there has been a willful misclassification, and up to $25,000 per violation where the court finds a pattern or practice of such misconduct. Here, the jury found that Minghong and Yu were employers of the Chuos and willfully misclassified them.

Accordingly, the court will award penalties of $15,000 for each of plaintiffs Felix Chuo and Stella Chuo. E. Civil Penalties Under PAGA (18 th COA) Plaintiffs seek PAGA penalties of $3,500 for Felix Chuo and $7,700 for Stella Chuo. Under Labor Code section 2698, PAGA penalties are established on a per pay period basis, with first violations penalized at $100 and subsequent violations penalized at $200. Based on the briefing, the evidence presented, and the jury's findings on Plaintiffs Labor Code claims, the court finds an award of $2,400 for Felix Chuo and $4,800 for Stella Chuo is warranted.

The reduction is warranted because, as Plaintiffs acknowledge, there is no evidence that the Labor Commissioner previously notified Defendants of their Labor Code violations. Minghong and Yu fail to show the requested penalties should be lowered any further. F. Failure to Compensate for All Hours Worked (19 th COA) There is no dispute that this claim is enforceable through Plaintiffs' PAGA cause of action. The court does not address this cause of action further. G. Conversion (20 th COA) Plaintiffs request that the court order cancellation of the deeds of trust and any related instruments, direct their reconveyance, and expunge any liens arising from the purported loan structure.

Given that the court has awarded this relief in connection to Plaintiffs' UCL claim, the request is DENIED as MOOT. IV. CONCLUSION Plaintiffs are awarded restitution and injunctive relief as indicated herein. Plaintiffs give notice, unless waived. Dated: September 2,

2026 ¿¿ | ¿¿ ¿¿ | ¿¿ | ¿ Brock T. Hammond ¿ Judge of the Superior Court¿¿ | [1] Perhaps in acknowledgment of the jury's verdict, Minghong does not present any substantive argument in support of their equitable claims. [2] The court previously issued a tentative ruling on July 20, 2026. On August 28, 2026, Plaintiffs filed a response to the court's tentative requesting correction of the restitution figure. The court issues this tentative ruling solely to correct that figure. Case Number: 26STCV01514 Hearing Date: September 3, 2026 Dept: 407 Tentative Ruling Judge Brock T. Hammond, Department 31 HEARING DATE: September 3, 2026 TRIAL DATE: Not set CASE: Stephanie Oregel v. Movagar & Yamin, A Professional Law Corporation