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Shao v. Beta Pharma, Inc.

United States District Court, D. Connecticut

November 1, 2017

SHANSHAN SHAO, HONGLIANG CHU, QIAN LIU, SONG LU, AND XINSHAN KANG, Plaintiffs,
v.
BETA PHARMA, INC., AND DON ZHANG, Defendants.

          ORDER ON DEFENDANTS' MOTION TO DISMISS PLAINTIFF SONG LU'S CLAIMS IN PART

          CHARLES S. HAIGHT, JR. Senior United States District Judge

         Following oral argument on Defendants' Motion to Dismiss Plaintiff Song Lu's Claims in Part [Doc. 168], this Order resolves that Motion.

         I. BACKGROUND

         This matter is a contract dispute between the five individual Plaintiffs, investors in a "privately owned organization" (Plaintiffs' phrase) under the laws of the People's Republic of China called Zhejiang Beta Pharma Co., Ltd. ("Zhejiang" or "ZBP"). ZBP is affiliated with the corporate Defendant in this case, Beta Pharma, Inc. ("Beta" or "BP"). The individual Defendant, Don Zhang, is alleged to be the majority stockholder and president of BP, and the vice-president and a director of ZBP. Plaintiffs assert claims for breach of contract and tort against both Defendants.

         Following the Court's prior Omnibus Ruling [Doc. 163], which resolved questions of subject matter jurisdiction and the scope of discovery, Defendants filed both an Answer [Doc. 167] and the instant Motion to Dismiss Plaintiff Song Lu's Claims in Part [Doc. 168]. Defendants argue that Plaintiff Song Lu ("Lu, " or "Plaintiff) is not entitled to bring claims for the full amount of stock he purchased: "The problem for Lu is that his stock purchase agreement states that four other people (the 'Other Purchasers') allegedly purchased portions of the 105, 620 shares; Lu's portion was only 17, 735 shares. . . . [T]he Other Purchasers are necessary parties to this lawsuit, and without them, Lu's claims are subject to dismissal." PI. Br. 1.

         Defendants' Motion relies on the "Sub-Agreement and Memo" ("the Sub-Agreement") included on the final page of the November 2010 Stock Purchase Agreement (" SPA") signed by Don Zhang and Song Lu. The SPA amended and superceded a prior purchase agreement between Lu and Zhang, executed on March 16, 2010. The March agreement was for 90, 620 shares, for which Lu paid $312, 320 in U.S. currency. PI. Br. 2. At the time of re-executing the purchase agreement, via the November 2010 SPA, Plaintiff Lu increased his purchase by an additional 15, 000 shares, for which he paid 150, 000 RMB in Chinese currency. Id. at 2-3. The November 2010 SPA, unlike the March agreement, included a" Sub-Agreement and Memo, " on a final page after the signature block.

         The Sub-Agreement reads, in its entirety:

The total share of 1, 056, 200 of stock (representing 0.2331% stock shares in the Company) at price often RMB per share is purchased and owned by 1. Song Lu (177, 305 RMB, and Own 17, 735 share at price of 10 at purchased date)
2. Baoying Lu (270, 000RMB, and Own 27, 000 share at price of 10 RMB at purchased date)
3. Zhisheng Kan. (203, 895RMB, and Own 20, 389.5 share at price of 10 at purchased date)
4. Daqing Zhang (270, 000RMB and own 27, 000 share at price of 10 at purchase date)
5. BochunLu 135, 000RMB, and Own 13, 500 share at price of 10 at purchased date)
Owner's right:
1. Ownership right without voting right
2, Beta should authorize the final ...

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