Chao Fu, Inc. v. Wen Ching Chen

Plaintiff Chao Fu, Inc. (CFI), sued defendant Wen Ching Chen (also known as Dennis Chen) for wrongful foreclosure, quiet title, and related causes of action. The trial court granted Chen’s motion for summary judgment (Code Civ. Proc., § 437c), 1 finding that the claims were barred by the compulsory cross-complaint statute (§ 426.30). We conclude that Chen failed to establish that section 426.30 bars this action as a matter of law. Accordingly, we shall reverse.

*51 I. FACTS

A. The $370,000 Note

CFI is a closely held corporation formed by Chung Mei Kuo, also known as Julia Kuo. One of CFI’s investments was a 25 percent interest in real property located at 852-860 Villa Street in Mountain View (the Villa Street property).

Mali Kuo, Julia Kuo’s sister, is CFI’s secretary and helped manage the company’s investment properties. From 1990 until about 1998, Mali Kuo was involved with Oran Chang in a variety of real estate and gaming investments separate from CFI. Either she or Chang borrowed money from Chen for these investments. When the investments did not pan out, Chen asked for his money back. In December 1997, Chang signed an unsecured promissory note for $370,000 in…