China-based corporation withdraws lawsuit

Jilin International Economic and Technical Group, a China-based corporation, has voluntarily dismissed its lawsuit against its alleged employee that it accused of embezzling $6.2 million in corporate profits earned from his management of a company on Saipan.

Following Jilin International’s voluntary dismissal, U.S. District Court for the NMI Chief Judge Ramona V. Manglona yesterday vacated her previous order directing the corporation to show cause why its lawsuit should not be dismissed for lack of subject matter jurisdiction.

Attorney Samuel Mok, counsel for Jilin International, informed the court on Wednesday that the corporation intended its notice of voluntary dismissal to serve as its response to the court’s order to show cause.

However, Mok pointed out, in an abundance of caution, Jilin International is filing the non-opposition to the order to show cause for the sake of clarity.

In her order to show cause issued on Monday, Manglona ordered Mok, counsel for Jilin International, to appear before the court yesterday for the show cause hearing.

The judge noted that because Jilin International and defendant Wanzhong Yu are both aliens, they do not appear to be diverse for federal jurisdictional purposes.

Manglona said Jilin International seeks a temporary restraining order and preliminary injunction against Yu preventing him from using funds belonging to Universal Group Development Inc. (Saipan), which Jilin International claims to own.

In filing the lawsuit, Mok asserts that the federal court has subject matter jurisdiction over this lawsuit pursuant to a statute, which governs diversity jurisdiction.

However, Manglona noted, Jilin International is a Chinese corporation and Yu is a “foreign alien resident of the CNMI.”

“Because it appears that the parties are not diverse, the court will order JIC (Jilin) to show cause why this case should not be dismissed for lack of federal jurisdiction,” Manglona said.

Jilin International claims that Yu, who alleged that he was detained in China for 22 months caused by political influence exerted by his former business partners on Saipan, was only its employee and was indeed indicted in China for embezzling $6.2 million in corporate profits earned from his management of Universal Group.

Jilin International sued Yu for declaratory and injunctive relief, embezzlement, conversion and constructive trust, and breach of fiduciary duty.

Jilin International asked the federal court to issue a declaration that Yu is not a legitimate shareholder, director or officer of Universal Group Development.

Mok requested the court to declare that Jilin International is the true owner and corporate parent of Universal Group Development.

Mok asked the court, among other things, to preliminarily and permanently enjoin Yu from taking any actions as the purported holder, director or officer of Universal Group, including accessing $225,000 currently deposited into the federal court’s trust account representing the contents of a business savings held by Universal Group.

Last March, Manglona issued a default judgment in favor of Yu and against businessmen Mingnan Jin and Jinwei Guo in connection with a separate but related lawsuit. Yu was awarded $125,699.60 in damages.