United States District Court, District of Columbia
YUEH-LAN WANG, by and through her attorney-in-fact, Winston Wen-Young Wong, Plaintiff,
NEW MIGHTY U.S. TRUST, et al., Defendants.
E. BOASBERG, UNITED STATES DISTRICT JUDGE.
case begins in a Taiwanese rags-to-riches tale. Yung-Ching
(Y.C.) Wang was born in 1917 into a tea-farming family so
poor that he could not afford to attend high school. By his
death in 2008, he was his country's second wealthiest
person - a plastics tycoon worth an estimated $6.8 billion.
is often true on both sides of the Pacific: more money, more
problems. Y.C. died without a known will, and his heirs -
belonging to three “Families” - have since been
locked in an international struggle for his assets. This case
is one chapter of that saga. Winston Wen-Young Wong,
Y.C.'s son from his Second Family, filed this suit in
2010 in the name of Plaintiff Yueh-Lan Wang, Y.C.'s wife
from his First Family. Operating under a power-of-attorney
from Yueh-Lan, who was herself childless, Winston brought her
claims seeking assets held by Defendants as part of her
marital share under Taiwanese law. Yueh-Lan has since died,
and the Executors of her estate now seek to take over and
revise the Complaint. As the Court ultimately concludes that
this is permissible and that some of Defendants'
objections to the contrary should be reserved for later
briefing, it will grant the Executors' Motion to do so.
the core question at this stage is whether the Executors'
proposed Second Amended Complaint could survive a motion to
dismiss, the Court draws its facts from that pleading and
accepts them as true. See Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009); see In re Interbank Funding Corp.
Securities Litigation, 629 F.3d 213, 218 (D.C. Cir.
2010). The Court does not, however, “accept as true a
legal conclusion couched as a factual allegation.”
Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007)).
bride, Yueh-Lan was married to Y.C. for 72 years - about the
average life expectancy of a newborn today. See ECF
No. 37-3 (Proposed Second Amended Complaint), ¶ 1. (As
many individuals in this case share the same last name, the
Court refers to them by their first names for sake of
convenience and not as a mark of disrespect.) Over the course
of their long union, Y.C. founded several companies, most
notably the Formosa Plastics Group, which is “one of
Taiwan's biggest and most profitable manufacturing
conglomerates with annual sales of over $60 billion and
operations in five countries.” Id., ¶ 17.
These ventures made him the second wealthiest person in
Taiwan by 2006 with a conservative estimated net worth of
around $6.8 billion. Id., ¶ 18.
years later, in 2008, Y.C. died in New Jersey without a known
will. Id., ¶ 16. Because he had distributed his
riches around the world, his estate in Taiwan eventually
identified less than $2 billion in assets for disbursement to
his heirs. Id., ¶ 18. Complicating matters
further still, during his long marriage to Yueh-Lan (his
“First Family”), Y.C. created other families by
fathering children with two other women - Wang Yang Chiao and
Pao Chu (P.C.) Lee. Id., ¶ 26. While he and
Yueh-Lan had no offspring, his relationship with Wang Yang
Chiao resulted in the birth of five children known as the
“Second Family, ” and his relationship with P.C.
Lee produced another four known as the “Third
not surprisingly given such fecundity, Y.C.'s intestate
death has spawned a good deal of international litigation
among his three families, this action being one example. It
was first filed on October 14, 2010, by Dr. Winston Wen-Young
Wong, a member of the Second Family and Y.C.'s eldest
son, who asserted that he was acting through a valid
power-of-attorney in bringing the suit on Yueh-Lan's
behalf. See ECF No. 1 (Complaint). Yueh-Lan's
claims sought property allegedly transferred by Y.C. to
Defendants during the five years prior to his death on the
ground that Taiwanese law would entitle her to recover these
assets as part of her 50% spousal share upon his passing.
Wang ex rel. Wong v. New Mighty U.S. Trust (Wang
I), 841 F.Supp.2d 198, 200 (D.D.C. 2012). Defendants are
a trust formed under the laws of the District of Columbia -
New Mighty U.S. Trust - as well as its trustee, Clearbridge,
LLC, and a beneficiary of the trust, New Mighty Foundation.
See SAC, ¶¶ 19-21. (Both the Foundation
and Clearbridge, it should be noted, are linked to children
of the Third Family. See ECF No. 38-29 (Declaration
of Susan Wang), ¶ 1; ECF No. 38-30 (Declaration of
William Wong), ¶ 5.)
moved to dismiss these claims on numerous grounds, and this
Court granted that entreaty. Wang I, 841 F.Supp.2d
at 208; see Wang ex rel. Wong v. New Mighty U.S.
Trust (Wang II), 843 F.3d 487, 488 (D.C. Cir.
2016). While recognizing the question was “close”
and one of first impression, it held that a traditional trust
like New Mighty assumed the citizenship of all of its
beneficiaries for the purposes of diversity jurisdiction and,
accordingly, diversity was lacking in this case. Wang
I, 841 F.Supp.2d at 203.
appealed this ruling, but Yueh-Lan died shortly thereafter.
Wang II, 843 F.3d at ¶ 489. The D.C. Circuit
thus had to hold the case in abeyance for years while the
Taiwanese courts determined who should act as the executors
of her will because Yueh-Lan had named Winston as her sole
heir but failed to appoint an executor. Id.;
see SAC, ¶ 14. Eventually, Chen-Teh Shu,
Dong-Xung Dai, and Robert Shi were chosen by the courts, and
the three men moved to substitute themselves as
Yueh-Lan's personal representatives under the appropriate
Federal Rule of Appellate Procedure while the case was still
pending at the D.C. Circuit. Wang II, 843 F.3d at
¶ 489. Before ruling on that motion, though, the D.C.
Circuit again stayed the case after the Supreme Court granted
certiorari in Americold Realty Trust v. ConAgra Foods,
Inc., 136 S.Ct. 1012 (2016), which addressed the
appropriate citizenship test for a real-estate trust.
Wang, 843 F.3d at 489 n.6.
on the decision in Americold, the D.C. Circuit
eventually reversed this Court's dismissal of
Yueh-Lan's complaint after holding that the citizenship
of a traditional trust like New Mighty Trust depends only on
the trustee's citizenship, not the beneficiaries', as
this Court had ruled. Id. at 489-96. As a result,
diversity was not lacking. Id. The Circuit, at the
same time, also granted the Executors' substitution
motion “without prejudice to the defendants'
ability to renew in district court those arguments they ha[d]
pressed before” it about Winston's potentially
defective POA and the consequences flowing therefrom.
Id. at 496.
back in this Court, Plaintiff Executors filed the current
Motion for Leave to File a Second Amended Complaint and for
Other Relief. See ECF No. 37. Defendants have
opposed, contending that the proposed new Complaint remains
defective for myriad reasons. The matter is now ripe.
plaintiff may amend her complaint once as a matter of course
within 21 days of serving it or within 21 days of the filing
of a responsive pleading. See Fed.R.Civ.P. 15(a)(1).
Otherwise, she must seek consent from the defendant or leave
from the court. The latter permission “should [be]
freely give[n] . . . when justice so requires.”
Fed.R.Civ.P. 15(a)(2). In deciding whether to grant leave to
file an amended complaint, courts may consider “undue
delay, bad faith or dilatory motive on the part of the
movant, repeated failure to cure deficiencies by amendments
previously allowed, undue prejudice to the opposing party by
virtue of allowance of the amendment, futility of amendment,
etc.” Foman v. Davis, 371 U.S. 178, 182
(1962). In this Circuit, “it is an abuse of discretion
to deny leave to amend unless there is sufficient
reason.” Firestone v. Firestone, 76 F.3d 1205,
1208 (D.C. Cir. 1996). “The defendant bears the burden
of demonstrating that a plaintiff's motion to file an
amended complaint should be denied.” Clayton v.
District of Columbia, 999 F.Supp.2d 178, 183 (D.D.C.
clear, however, that amendment should not be permitted if it
would be futile. Foman, 371 U.S. at 182 (noting
“futility of amendment” is permissible reason to
deny Rule 15(a) motion). In other words, if the new causes of
action would still be deficient notwithstanding the proposed
amendment, courts need not grant leave. Interbank
Funding, 629 F.3d at 218 (“[A] district court may
properly deny a motion to amend if the amended pleading would
not survive a motion to dismiss.”); James Madison
Ltd. v. Ludwig, 82 F.3d 1085, 1099 (D.C. Cir. 1996)
(“Courts may deny a motion to amend a complaint as
futile . . . if the proposed claim would not survive a motion
oppose Plaintiff Executors' Second Amended Complaint on a
congeries of grounds that primarily fall under the rubric of
either futility or bad faith. The Court addresses the
futility-related arguments first and then turns to the much
easier question of whether the Executors have demonstrated
any bad faith in seeking amendment here. It next considers
whether the SAC, having survived these arguments, relates
back to the date of the filing of the original Complaint or
is instead barred by statutes of limitations. Finally, the
Court takes up Defendants' more focused arguments that
New Mighty Foundation (a beneficiary of the trust) and New
Mighty Trust should be dismissed from any surviving action
for reasons particular to them.
Defendants' objections to the SAC are in essence futility
arguments. In other words, they contend that the pleading
“would not survive a motion to dismiss, ” and
thus leave to file should not be granted. Interbank
Funding, 629 F.3d at 218. They advance four such
arguments, which the Court weighs in turn: 1) this action was
a legal nullity from its inception because Winston's
Power of Attorney was defective; 2) required persons are
absent from the suit and cannot be joined; 3) this is not the
proper forum for this litigation; and 4) the SAC fails to
state a claim. The Court rejects the first three and
concludes that the last should be at least partially reserved
for later briefing.
Ratification by Executors
loose most of their arrows on a single target: the Power of
Attorney that Winston used to initiate this action on
Yueh-Lan's behalf back in 2010. According to them, the
POA did not authorize him to commence a legal action in her
name because the mandate had facial defects, it lacked an
express authorization to bring suit in her name, and Yueh-Lan
became incompetent prior to this action's filing.
See Opp. at 12-13. Defendants claim that the Court,
as a result, lacks jurisdiction to hear a case that was a
legal nullity since its inception. Id. at 14-15.
Because the Federal Rules of Civil Procedure cannot expand
this Court's jurisdiction, moreover, Defendants further
contend that this Court cannot swap in the Executors under
those Rules to cure that defect now. Id. The Court
disagrees. Any alleged problem with Winston's POA did not
present an insurmountable jurisdictional hurdle.
outset of its analysis, the Court sets aside two issues.
First, it need not rule on the lengthy affidavits on
Taiwanese law that each party submits about the POA's
scope and validity. It instead assumes for purposes of this
Motion that Defendants are correct that the POA was
ineffective. Second, the Court does not rehash whether, if
the case survives, the Executors are Yueh-Lan's proper
substitutes under Federal Rule of Civil Procedure 25.
See Fed.R.Civ.P. 25(a)(1) (“If a party dies
and the claim is not extinguished, the court may order
substitution of the proper party.”). The D.C. Circuit
has already found that the Executors would be the parties in
a proper action under the appellate version of this rule.
That ship has rightly sailed.
Circuit nevertheless expressly reserved the nub of the
parties' dispute on this score for this Court's
consideration on remand. Wang II, 843 F.3d at 496.
That question asks: If Winston's POA was ineffective, was
this suit a legal nullity from its inception, which Plaintiff
Executors' substitution could not revive and thus should
be dismissed? Id.
Court now concludes that it was not. Federal courts have long
been reluctant to allow a party to be trapped into forfeiting
a potentially legitimate claim based on the sort of honest
defect or incidental mistake that Defendants seek to exploit
here. Federal Rule of Civil Procedure 17(a), in fact, was
amended in 1966 to reflect this modern trend toward leniency
when an honest and reasonable mistake as to the personal
representative has been made at the outset of a case.
See Fed.R.Civ.P. 17 advisory committee notes on 1966
amendment (mentioning “action may be filed in the name
of John Doe (a fictitious person), as personal
representative” of another, “in the hope that at
a later time . . . the real name of the real personal
representative” is substituted); see also
Fed.R.Civ.P. 9(a)(1)(B) (setting pleading requirements for
“a party's authority to sue or be sued in a
representative capacity”). This is especially true
where, as in this action, the proper party in interest -
Yueh-Lan and her Executors - seeks to cure such an innocent
defect by later ratifying the action and where the mistake
caused no prejudice to Defendants. See, e.g.,
Link Aviation, Inc. v. Downs, 325 F.2d 613, 614-15
(D.C. Cir. 1963) (rejecting argument that suit improperly
brought in name of insured, rather than real party in
interest - the insurance company - was a legal nullity and
allowing substitution as well as relation back to avoid
running of statute of limitations). This is the wisest and
most appropriate outcome in a case such as this one.
to Defendants' contention, there is no jurisdictional
obstacle to this course of action. The matter of a
person's capacity or authority to sue
on behalf of someone else who indisputably has standing to
bring the asserted claims does not raise a jurisdictional
problem at all. See Davis v. Lifetime Capital, Inc.,
560 F.App'x 477, 478 (6th Cir. 2014) (“Generally,
capacity is considered an affirmative defense, not a
jurisdictional issue.”); see also 5A Charles
Alan Wright, Arthur R. Miller, et al., Federal
Practice & Procedure § 1294 (3d ed. 2014)
(treating “specific denial as to a party's
capacity, authority, or legal existence required by Rule
9(a)” as “an affirmative defense”).
recent case out of the Fifth Circuit illustrates why. In
Rideau v. Keller Independent School District, 819
F.3d 155 (5th Cir. 2016), parents of a severely disabled
child successfully sued, as their son's next friend, the
school district where he had suffered abuse. Four days after
the verdict, the district brought additional arguments
“relating to whether the Rideaus had Article III
‘standing'” to bring the suit on their
child's behalf. Id. at 159-60. In considering
these claims on appeal, the Circuit first rejected the school
district's “attempt to shoehorn all of its
post-trial arguments into the doctrine of constitutional
standing” because the question of who could properly
sue on the child's behalf was merely one of
“capacity.” Id. at 161. Instead,
“[i]t recognized that the question of who could pursue
those damages on [another's] behalf is a
capacity problem, not a standing
problem.” Id. (emphases added). While it
ultimately agreed that the Rideaus lacked capacity to bring
the child's claims under Texas estates law, it concluded
that the district court had abused its discretion by not
allowing the child's trustee (the legal guardian of his
assets) to ratify the suit under Rule 17(a). Id.
courts have likewise distinguished authority-to-sue issues
from questions of jurisdictional standing. See,
e.g., Esposito v. United States., 368 F.3d
1271, 1277 (10th Cir. 2004) (rejecting argument that case
should be dismissed as “nullity” and forfeited
due to running of statute of limitations simply because suit
was mistakenly brought in name of decedent who lacked
“capacity to sue”); De Saracho v. Custom Food
Mach., Inc., 206 F.3d 874, 878 n.4 (9th Cir. 2000)
(“Even if defendants are correct that [a corporation]
lacked authorization to sue, this court does not lack subject
matter jurisdiction in the sense that it would if plaintiffs
lacked standing to sue under the ‘case or
controversy' requirement of Article III of the
Constitution.”); cf. CFPB v. Gordon, 819 F.3d
1179, 1187-90 (9th Cir. 2016) (rejecting notion that CFPB
director's lack of authority to bring suit given his
improper recess appointment deprived him of standing to
initiate suit). To the extent, moreover, that other courts to
confront such issues have spoken in terms of standing, they
have indicated that issues of capacity and authority are a
prudential, rather than constitutional, aspect of that
doctrine. See, e.g., Zanowick v. Baxter
Healthcare Corp., 850 F.3d 1090, 1096 n.11 (9th Cir.
2017) (noting defendants could waive “prudential
standing” issues of wife's failure to “file a
successor-in-interest declaration”); Brown v.
Keller, 274 F.2d 779, 780 (6th Cir. 1960) (“This
is not strictly a question of jurisdiction, but lack of
capacity on the part of the plaintiffs to sue is a bar to the
action.”). As a result, they are subject to the same
principles of waiver or cure that govern other such
procedural defects. See 5A Wright & Miller,
is similarly no jurisdictional wall to scale here. Just as in
Rideau, it is undisputed that the named plaintiff -
i.e., Yueh-Lan - had standing to bring her
spousal-related claims. After all, “economic
harm” is the “bread-and-butter injury for
private-law causes of action in which constitutional standing
is rarely an issue.” Rideau, 819 F.3d at 163.
Defendants do not even bother to argue otherwise. They
instead hope to muddy the waters of this standing analysis,
as did the school district in Rideau, by focusing on
whether Winston had his own standing to bring
claims. As the Fifth Circuit explained, however, that is a
matter of capacity to bring suit on Yueh-Lan's
behalf, not one of standing to do so. Winston, after all, is
not a party. This Court will not turn that legal issue into a
matter of jurisdictional proportions when it could at best be
one of prudential standing. Cf. United States v. Kwai Fun
Wong, 135 S.Ct. 1625, 1632 (2015) (collecting recent
cases “repeatedly” holding “high bar”
exists to establish procedural rules as jurisdictional);
Montes v. Janitorial Partners, Inc, 859 F.3d 1079,
1083-84 (D.C. Cir. 2017) (holding individual's procedural
failure to opt in to collective action was
moreover, point to no case holding that a defective
power-of-attorney creates an incurable jurisdictional problem
when the plaintiff, who indisputably did have standing, later
ratified the action. Rather, even where a case has been
brought in the name of a corporate debtor without proper
authorization, federal bankruptcy courts routinely deny
efforts by these debtors to dismiss such suits where the
person with proper authorization has later taken actions to
ratify it. See, e.g., Hager v. Gibson, 108
F.3d 35, 40 (4th Cir. 1997) (“[T]he unauthorized filing
of a voluntary petition in bankruptcy [o]n behalf of a
corporation might be ratified in appropriate circumstances by
ensuing conduct of persons with power to have authorized it
originally.”). Instead, they often force those
plaintiffs to prosecute the action, despite such initial
defects. Id. If Defendants were correct that courts
lacked jurisdiction over these cases or the ability to revive
them, this common federal-court practice could not stand.
rather, rely on cases readily distinguishable from the
scenario presented by this case. See, e.g., Opp. at
16 (citing Zurich Ins. Co. v. Logitrans, Inc., 297
F.3d 528, 531 (6th Cir. 2002) (holding named
plaintiff who “had no standing to bring th[e]
action” also lacked “standing to make a motion to
substitute the real party in interest”)). For example,
they cite Meredith v. Ionian Trader, 279 F.2d 471
(2d Cir. 1960), to establish that “[a] suit initiated
without authority from the party named as plaintiff is a
nullity and any judgment obtained in such a suit is
void.” Opp. at 13. But that case made no mention of
standing at all and involved an insurance underwriter's
bringing the claim, without the insured's permission or
later ratification, in the name of the insured. See
id. (also incorrectly citing Cortlandt St. Recovery
Corp. v. Hellas Telecomms., 790 F.3d 411, 423 (2d Cir.
2015), which declined to “resolve” the alleged
critically, the D.C. Circuit eschewed Ionian
Trader's overly rigid approach three years later in
Link Aviation, 325 F.2d at 615 (adopting Tenth
Circuit's approach to substitution under Federal Rules of
Civil Procedure). That holding is still binding law in this
Circuit. See Empire Lofts Condo. Ass'n v. A.C.&R.
Foam Insulators, LLC, No. 15-792, 2016 WL 81222, at *1
(D.D.C. Jan. 7, 2016) (citing Link Aviation
favorably). Three years after Link Aviation, Rule
17(a)(3), too, was amended to reflect this modern lenient
approach. See 6A Wright & Miller § 1555;
see also 5A Wright & Miller § 1295
(“Although there is a nexus between capacity,
authority, or legal existence and subject matter jurisdiction
in some contexts, that is not always the case as some early
cases had suggested. In the majority of cases the party
status issue is not significant.”) (footnote omitted).
Even the Second Circuit, in fact, has been reluctant to
transform substitution issues into standing ones. See
Cortlandt St., 790 F.3d at 423; id. at 425-27
(Sack, J., concurring) (approving of Link
Aviation's pragmatic approach). Put simply, the
Court finds no support for Defendants' contention that
any of the issues they identify with Winston's POA caused
this case to be a legal nullity, which defect could not later
then, of its jurisdiction, this Court is also satisfied that
Plaintiff Executors should now be allowed to ratify this
action. Under Rule 17(a)(3), a court “may not dismiss
an action for failure to prosecute in the name of the real
party in interest until, after an objection, a reasonable
time has been allowed for the real party in interest to
ratify, join, or be substituted into the action.” This
Rule “reflects the general policy of the drafters of
the federal rules that the choice of a party at the pleading
stage ought not have to be made at the risk of a final
dismissal of the action should it later appear that there had
been an error.” 6A Wright & Miller, § 1555.
Ratification by the correct party is thus justified where
necessary “as the result of an understandable
mistake.” Wieburg v. GTE Sw. Inc., 272 F.3d
302, 308 (5th Cir. 2001) (collecting cases). Classic examples
include situations where complex legal issues hinder the
identification of the correct person with the capacity to sue
or there exists a mistaken “belief, not wholly
unfounded” about a party's competency at the
commencement of the suit. See Magallon v.
Livingston, 453 F.3d 268, 273 (5th Cir. 2006) (holding
district court abused its discretion in refusing substitution
where Consul General of Mexico had believed named plaintiff
was incompetent); Rideau, 819 F.3d at 166 (finding
district court abused its discretion by not allowing trustee
to ratify where determining the “property party to sue
is difficult” and when there had been a
“good-faith, nonfrivolous mistake of law”).
case falls squarely within these exemplars. Both parties
provide lengthy affidavits by prominent Taiwanese law experts
opining on the validity or invalidity of Winston's POA.
See ECF No. 38-25 (Declaration of Yeong-Chin Su);
ECF No. 39-1 (Declaration of Tsung-Fu Chen). This Court,
after reviewing these, would be hard pressed to choose a
clear winner in that debate. Likewise, there was no court
ruling that Yueh-Lan was incompetent in 2010 when this case
was brought or that Winston's POA was thus no longer
ratification by her Executors now that the statute of
limitations has run on these claims, as a result, amply
serves “Rule 17(a)(3)'s intended purpose: the
avoid[ance of] forfeiture and injustice when an
understandable mistake has been made.” Rideau,
819 F.3d at 165-66 (quoting 6A Wright & Miller, §
1555). The Court further finds no evidence that Winston's
reasonable mistake as to the scope of the POA - assuming one
was even made - was not an honest one. See Scheuffler v.
Gen. Host Corp., 126 F.3d 1261, 1270 (10th Cir. 1997)
(permitting joinder when failure to include real parties in
interest “was the result of a mistake as to the legal
effectiveness of documents”); Link Aviation,
325 F.2d at 615 (rejecting reading of Rule 17(a) that is
“highly technical without meaningful purpose”).
Nor does it find any reason to believe that Defendants are
prejudiced by this swapping in of the Executors, as the
essential nature of the claims and their posture remain
unchanged. Adv. Magnetics, Inc. v. Bayfront Partners,
Inc., 106 F.3d 11, 21 (2d Cir. 1997) (indicating
prejudice to defendants should be considered).
Court will therefore deny Defendants' effort to vitiate
the filing of the SAC on the ground that the original suit
was a legal nullity.