ASI, Inc. v. Aquawood, LLC

                 UNITED STATES DISTRICT COURT                          
                    DISTRICT OF MINNESOTA                              

ASI, INC.,                            Civil No. 19-763 (JRT/HB)          

                      Plaintiff,                                       

v.                               MEMORANDUM OPINION AND ORDER            
                              ON DEFENDANTS’ MOTIONS TO DISMISS        
AQUAWOOD, LLC, et al.,                                                   

                    Defendants.                                        

  Keith M. Sorge, ARTHUR, CHAPMAN, KETTERING, SMETAK & PIKALA, PA,     
  81 South Nineth Street, Suite 500, Minneapolis, MN 55402; Shelli L. Calland, 
  Stephen A. Weisbrod, and Tamra Ferguson, WEISBROD MATTEIS & COPLEY   
  PLLC, 1200 North West New Hampshire Avenue, Suite 600, Washington, DC 
  20036, for plaintiff;                                                

  Joseph  H.  Lubben,  Matthew  D.  Callanan,  and  Michael  Reck,  BELIN 
  MCCORMICK, PC, 666 Walnut Street, Suite 2000, Des Moines, IA 50309, for 
  defendants Aquawood, Brian Dubinsky, Peter Magalhaes, and Dollar Empire 
  LLC;                                                                 

  Brandon Underwood, and Devan Rittler-Patton, FREDRIKSON & BYRON,     
  111 East Grand Avenue, Suite 301, Des Moines, IA 50309; Joseph T Dixon, 
  III, FREDRIKSON & BYRON, 200 South Sixth Street, Suite 4000, Minneapolis, 
  MN 55402, for defendants Benzai International Ltd., Chan Ming Yiu, Liu Yi 
  Man, Chan Siu Lun, Park Lane Solutions Ltd., and Toy Quest Ltd.;     

  David  W.  Asp,  Kate  M.  Baxter-Kauf,  and  Robert  D.  Hahn,  LOCKRIDGE 
  GRINDAL  NAUEN  PLLP,  100  Washington  Avenue  South,  Suite  2200, 
  Minneapolis,  MN  55401,  for  defendants  MGS  International,  LLC,  and 
  Richard Toth;                                                        

  Douglas G. Leney and Stephen Michael Packman, ARCHER & GREINER, PC,  
  Three Logan Square, 1717 Arch Street, Suite 3500, Philadelphia, PA 19103; 
  George E. Warner, Jr. WARNER LAW LLC, 1515 Canadian Pacific Plaza, 120 
   South Sixth Street, Minneapolis, MN 55402, for defendants John Robert 
   Lees and Mat Ng.                                                     

   ASI, Inc., formally known as Aviva Sports, Inc., (“Aviva”) brings this action seeking 
to collect on an $8.5 million underlying judgment against Manley Toys, Ltd (“Manley”).  
Aviva alleges that several defendants, working as a RICO enterprise, engaged in a series 
of fraudulent transfers in order to evade paying the judgment Manley owed to Aviva.1  
Additionally, Aviva asserts that an overlapping group of defendants are alter egos of one 
another.  Five separate groups of defendants filed five separate Motions to Dismiss for 

failure to state a claim under Rule 12(b)(6) and for lack of personal jurisdiction under Rule 
12(b)(2).                                                                 
   The Court will grant the 12(b)(6) motions in part and deny them in part.  First, the 
Court will grant the motions and dismiss without prejudice the Fraudulent Transfer Claims 

against Aquawood, LLC (“Aquawood”), Wellmax Trading Ltd. (“Wellmax”), Manley Toy 
Direct (“MTD”), Toy Network, LLC (“Toy Network”), and MGS International, LLC (“MGS”), 
Richard Toth, Robert Lees, and Mat Ng.  Second, the Court will grant the motions and 

dismiss without prejudice the alter ego claims alleging Toy Quest Ltd. (“Toy Quest”), 
Banzai  International  (“Banzai”),  and  Park  Lane  Solutions  (“Park  Lane”),  MTD,  Toy 
Network, MGS, Aquawood, and Manley are alter egos of one another.  Third, the Court 
will dismiss the Aiding and Abetting Fraudulent Transfer Claims because such claims are 


   1 Manley itself has been liquidated and is not a defendant here.  (Am. Compl. ¶ 23, May 
17, 2021, Docket No. 379.)                                                
not cognizable under Minnesota law.  Lastly, the Court will dismiss the claims against 
Robert Lees, and Mat Ng because the Court lacks personal jurisdiction over them.  The 

motions will be denied as to all remaining claims.                        
                         BACKGROUND                                     

I.   THE PARTIES                                                          
   Aviva is a Minnesota corporation with its principal place of business in Minnesota.  
(Am. Compl. ¶ 23, May 17, 2021, Docket No. 284.)                          
   The Principals consist of four natural persons: defendant Chan Ming Yiu, also 

known as Samson Chan (“Samson Chan”), defendant Liu Yi Man, also known as Lisa Liu 
(“Liu”), defendant Brian Dubinsky (“Dubinsky”), and defendant Chan Siu Lun, also known 
as Alan Chan (“Alan Chan”).  (Id. ¶¶ 24-28.)  The Chans and Liu are residents of Hong Kong 
and Dubinsky is a resident of California.  (Id.)                          

   The Executives consist of two natural persons: Richard Toth and Michael Wu.  (Id. 
¶¶ 29-31.)  Toth is a resident of Iowa and Wu is a resident of California.  (Id.) 
   The Liquidators consist of two natural persons: Robert Lees and Mat Ng.   (Id. ¶¶ 

32–34.)  They are both residents of Hong Kong and are sued in their official capacity as 
liquidators of and successors to Manley.  (Id.)                           
   The final natural person named as a defendant is Peter Magalhaes (“Magalhaes”), 
who is a resident of California, and is not referred to as an Executive or Principal in the 

Complaint.  (Id. ¶ 47.)                                                   
   The remaining defendants are United States or Hong Kong corporations.  Manley 
was a Hong Kong corporation.  (Id. ¶ 35.)  Toy Quest, Banzai, and Park Lane are Hong Kong 

corporations with their principal places of business in Hong Kong.  (Id. ¶¶ 36–38.) Toy 
Quest, Banzai, and Park Lane are collectively referred to as the “Hong Kong Entities.”  (Id. 
¶ 39.)                                                                    
   MTD, Toy Network, and MGS are Iowa corporations with their principal places of 

business in Iowa.  (Id. ¶ 40–42.)  MTD, Toy Network, and MGS are collectively referred to 
as the “Iowa Entities.”  (Id. ¶ 43.)                                      
   Finally, Aquawood is a California limited liability corporation with its principal place 

of business in California.  (Id. ¶ 44.)  Dollar Empire LLC (“Dollar Empire”) is a California 
corporation with its principal place of business in California.  (Id. ¶ 45.) 
   The  Principals,  the  Executives,  the  Hong  Kong  Entities,  the  Iowa  Entities, 
Aquawood,  Dollar  Empire,  Wellmax,  Magalhaes,  Manley,  and  the  Liquidators  are 

collectively referred to as the “Fraudulent Transfer Defendants” because Count VII alleges 
they engaged in fraudulent transfers.  (Id. ¶¶ 54, 957–87.)               
   The Principals, the Hong Kong Entities, the Iowa Entities, Aquawood, Dollar Empire, 
Manley, and the Liquidators are collectively referred to as the “Alter Ego Defendants” 

because Count VI alleges they are alter egos of one another.  (Id. ¶¶ 53, 924–56.) 
II.  FACTUAL AND PROCEDURAL BACKGROUND                                    
   The Court summarizes the background as alleged by Aviva and supported by the 

record below.  Additional alleged facts will be discussed as necessary in the specific 
sections analyzing the arguments.                                         
A. The Minnesota Judgment                                               

   Defendants are an allegedly interconnected group of individuals and corporations, 
primarily based in Hong Kong, that sell toys and electronics in the United States.  (Am. 
Compl. ¶ 6–7.)  Aviva alleges that the companies are run by the Principals who use the 
corporations  interchangeably  and  shift  resources  among  them  to  obfuscate  legal 

proceedings.  (Id. ¶¶ 56–57, 66, 82.)                                     
   On August 21, 2013, Aviva won a judgment of $8,588,931.59 against Manley in an 
action in the United States District Court for the District of Minnesota.  (See Aviva Sports, 
Inc. v. Fingerhut Direct Mktg., No. 09-1091 (JNE/TNL), Judgment, Aug. 21, 2013, Docket 

No. 827.)  Aviva reports that Manley has paid only a small fraction of that award.  (See 
Aviva Sports, Inc. v. Fingerhut Direct Mktg., No. 09-1091 (JNE/TNL), Order, Mar. 21, 2019, 
Docket No. 1087.)                                                         
B.  The Bankruptcy and Liquidation Proceedings                          

   In 2016, Manley initiated proceedings in Hong Kong to liquidate its assets (the 
“Hong Kong Proceeding”).  (Am. Compl. ¶¶ 558–59.)  Shortly thereafter, the Liquidators 
filed a Chapter 15 Petition for Recognition of a Foreign Proceeding in the United States 
Bankruptcy Court for the District of New Jersey (the “N.J. Bankruptcy Proceeding”).  In re 
Manley Toys Ltd., No. 16-15374 (Bankr. D.N.J.); (Am. Compl. at ¶ 589–90.).  Pending a 

decision on the question of recognition of the Hong Kong Proceeding, the New Jersey 
Bankruptcy Court granted a provisional stay of any litigation against Manley or the 
Liquidators.  (Decl. James Schoeberl Supp. Mot. Stay, Ex. 5, Sep. 6, 2019, Doc. No. 74.)  
   In February 2018, the Bankruptcy Court recognized the Hong Kong Proceeding as 

a “foreign main proceeding.”2  In re Manley Toys Ltd., 

 (Bankr. D.N.J. 2018).  
That decision was affirmed by the District Court for the District of New Jersey.  In re 
Manley Toys Ltd., 

 (D.N.J. 2019).                             

   Aviva, as a creditor, moved for relief from the stay, and the Bankruptcy Court 
granted the motion in part, permitting Aviva to pursue claims other than alter ego and 
fraudulent transfer claims against entities and persons related to Manley.  ((See Schoeberl 
Decl. Ex. 6); In re Manley Toys Ltd., 

, at *1–2 (Bankr. D.N.J. Feb. 23, 

2018).  The Bankruptcy Court denied relief from the stay insofar as it pertained to 
fraudulent transfer and alter ego claims against Manley affiliates because, under Hong 
Kong law, such claims “belong exclusively to the liquidators.”  In re Manley Toys Ltd., 

, at *1–2.3  With limited exceptions, the Bankruptcy Court denied Aviva’s 


   2 Pursuant to 

 and 1520, the provisional stay is converted to an automatic 
stay upon recognition of the proceeding as a “foreign main proceeding.”   

   3 AVIVA appealed that ruling to the District Court for the District of New Jersey, which 
remanded the matter to the Bankruptcy Court to consider additional arguments and evidence on 
two issues: “whether Aviva may seek injunctive sanctions against Manley for violating the 
motion for relief from the stay insofar as it pertained to actions against Manley or the 
Liquidators.  (Schoeberl Decl. Ex. 6; see also March 21, 2019 Order, Aviva Sports, Inc. v. 

Fingerhut Direct Mktg., No. 09-1091 (JNE/TNL), Order, Mar. 21, 2019, Docket No. 1087.)   
   On June 7, 2019, Aviva filed a new motion for relief from the bankruptcy stay 
seeking leave (1) to assert alter ego and fraudulent transfer claims against Manley’s 
principals and affiliates, (2) to obtain court orders requiring Manley to preserve evidence, 

and  (3)  to  pursue  injunctive  sanctions  against  Manley  for  violating  post-judgment 
discovery orders in connection with the Minnesota judgment.  (Schoeberl Decl., Ex. 8, at 
34–35.)  The Bankruptcy Court granted Aviva’s request for relief from the bankruptcy stay.  

(Decl. Matthew Callanan Supp. Mot. Dismiss, Ex. A, at ¶ 6, Aug. 09, 2021, Docket No. 364.) 
C.  The Instant Case                                                    

   Following the lift of the bankruptcy stay, Aviva filed the Amended Complaint 
adding three additional counts as well as the Liquidators as defendants.  The additional 
counts allege that, (1) the Principals, the Hong Kong Entities, Aquawood, the Iowa Entities, 
the Liquidators, and Manley were alter-egos of one another, (2) the Principals, the 
Executives, the Hong Kong Entities, Aquawood, Wellmax, the Iowa Entities, Dollar Empire, 
the Liquidators, and Manley engaged in fraudulent transfers intended to prevent Aviva 


Minnesota Federal Court’s post-judgment discovery orders or to compel compliance with such 
orders,” and “whether the Liquidators are estopped from arguing that this Chapter 15 proceeding 
or the Hong Kong ‘liquidation’ prohibit, limit, or otherwise affect such alter ego claims.” In re 
Manley Toys, Ltd., 

, at *3 (D.N.J. May 6, 2019).  The Bankruptcy Court affirmed 
its prior holding.  In re Manley Toys Ltd., 

, at *15 (Bankr. D.N.J. Mar. 31, 2020) 
from obtaining its judgement from Manley, and (3) to the extent that the Fraudulent 
Transfer Defendants were not directly involved in the fraudulent transfers, they aided and 

abetted the fraudulent transfers.  (Am. Compl. at ¶¶ 924–97.)             
   Defendants filed five separate motions to dismiss.  First, four groups of Defendants 
filed motions to dismiss the fraudulent transfer claims, aiding and abetting fraudulent 
transfer claims, and alter ego claims under Rule 12(b)(6).  (Mots. to Dismiss, Aug. 9, 2021, 

Docket Nos. 343, 350, 356, 361.)  In addition to joining the other defendants’ motions, 
the Liquidators filed a Rule 12(b)(2) motion to dismiss.  (Mot. to Dismiss, Aug. 10, 2021, 
Docket No. 371.)4                                                         

                          DISCUSSION                                    
I.  STANDARD OF REVIEW                                                    

   In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the 
Court considers all facts alleged in the complaint as true to determine if the complaint 
states a “claim to relief that is plausible on its face.”  Braden v. Wal-Mart Stores, Inc., 

 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 

 (2009)).  “A claim 

has facial plausibility when the plaintiff pleads factual content that allows the court to 
draw the reasonable inference that the defendant is liable for the misconduct alleged.”  
Iqbal, 

.  The Court construes the complaint in the light most favorable to 


   4 The Liquidators initially filed a 12(b)(2) motion to dismiss on August 9, 2021 but 
subsequently amended their motion.  (Mot. to Dismiss, Aug. 9, 2021, Docket No. 342.) 
the plaintiff, drawing all inferences in plaintiff’s favor.  Ashley Cnty. v. Pfizer, Inc., 

 (8th Cir. 2009).  Although the Court accepts the complaint's factual allegations as 

true and construes the complaint in a light most favorable to the plaintiff, it is “not bound 
to accept as true a legal conclusion couched as a factual allegation.”  Papasan v. Allain, 

 (1986).  In other words, a complaint “does not need detailed factual 
allegations”  but  must  include  more  “than  labels  and  conclusions,  and  a  formulaic 

recitation of the elements” to meet the plausibility standard.  Bell Atl. Corp. v. Twombly, 

 (2007).                                                 

   In reviewing a motion to dismiss, the Court may consider the allegations in the 
complaint as well as “those materials that are necessarily embraced by the pleadings.”  
Schriener v. Quicken Loans, Inc., 

 (8th Cir. 2014).  Documents embraced 
by the pleadings include those “whose contents are alleged in a complaint and whose 

authenticity no party questions, but which are not physically attached to the pleading.”  
Kushner v. Beverly Enters., Inc., 

, 831 (8th Cir. 2003).      
   Claims that sound in fraud are subject to Rule 9(b)’s heightened pleading standard.  

See Abels v. Farmers Commodities Corp., 

 (8th Cir. 2001).  Claims subject 
to Rule 9(b) require pleading with particularity, “enabling the defendant to respond 
specifically, at an early stage of the case, to potentially damaging allegations of immoral 
and criminal conduct.” 

  To meet this particularity requirement, the “plaintiff must 

specifically allege the circumstances constituting fraud . . . including such matters as the 
time, place and contents of false representations[.]”  

 (cleaned up).  In other words, 
“the complaint must identify the ‘who, what, where, when, and how’ of the alleged 

fraud.”  United States ex rel. Joshi v. St. Luke's Hosp., Inc., 

 (8th Cir. 2006).  
“Where multiple defendants are asked to respond to allegations of fraud, the complaint 
should inform each defendant of the nature of his alleged participation in the fraud.”  
Streambend Props. II, LLC v. Ivy Tower Minneapolis, LLC, 

 (8th Cir. 

2015).                                                                    

II.  FRAUDULENT TRANSFER CLAIMS                                           

A. Relevant Factual Background                                          

   The Amended Complaint is lengthy, convoluted, and confusing.  In no particular 
order,  Aviva  alleges  several  waves  of  fraudulent  transfers  involving  many  different 
groupings of defendants.  These fraudulent transfers were allegedly intended to block 
Aviva and other claimants from recovering judgments from Manley.  Aviva claims that the 
Principals caused Manley to fraudulently transfer its employees, documents, intellectual 
property, product inventory, good will, and accounts to other defendants.  (Am. Compl. 
¶¶ 12, 77–82.)  These transactions were not singular but carried out by several parties 
and in several waves.  (See e.g., 

 ¶ 377–80.)                          
   First, beginning in 2013, the Principals reduced the use of Manley’s name in sales 
and replaced it with Toy Quest, thereby transferring Manley’s business presence to Toy 

Quest.  (Id. ¶¶ 384–87.)  The Principals later created a new entity, Park Lane, and moved 
nearly all of Manley’s employees to identical positions there.  (Id. ¶¶ 390–91.)  Toy Quest 
and Park Lane assumed many of Manley’s accounts and documents, draining Manley of 

its assets without providing any consideration.  (Id. ¶¶ 389, 392, 396–97.)  That practice 
apparently continued for several years.  (Id. ¶ 396.)  All along the Principals, the Hong 
Kong Entitles, Magalhaes, Toy Quest, and Aquawood sent invoices to Manley customers 
demanding that payment be made to Toy Quest instead of Manley.  (Id. ¶¶ 474, 638.)  

Moreover, “[a]ll of the Defendants repeatedly lied to retailers” about which company sold 
products to them, leading retailers, creditors and Manley’s Liquidators to believe that 
millions of dollars actually owing to Manley were instead due to Toy Quest.  (Id. ¶ 457–

59.)  In a second wave of fraudulent transfers, Toy Quest’s assets were sold to Benzai at 
a mere fraction of their worth.  (Id. ¶¶ 399–400.)5                       
   Defendants’ unscrupulous actions have not gone unnoticed.  Aviva cites to several 
district court opinions from this District and from the Southern District of Iowa criticizing 

the Defendants for dishonest actions and disruption of the litigation progress.  (See e.g., 

 ¶¶ 329–41.)                                                           


B.  Statute of Limitations                                              


   5 The Amended Complaint also contains pages of facts describing how the Principals 
caused one of their corporations to shut down one day and open the next as defendant 
Aquawood to avoid a judgment in California, and how the Principals and Toft transferred 
defendant MTD’s assets to Toy Network and then MGS to avoid judgments in Iowa.  Those actions 
do not pertain to fraudulent transfers that harmed Aviva because it was not a creditor in those 
situations.                                                               
   The Defendants request that the Court dismiss Aviva’s fraudulent transfer claims 
as time barred.  The parties dispute whether Minnesota or Hong Kong’s statute of 

limitations should apply to the fraudulent transfer claim.  However, this issue cannot be 
resolved on the face of the Amended Complaint.  As such, the Court will not rule on the 
statute of limitations issue at this stage.                               
   Generally, statute of limitations defense must be raised affirmatively in an answer, 

rather than by a rule 12(b)(6) motion to dismiss.  Varner v. Peterson Farms, 

 (8th Cir. 2004); Joyce v. Armstrong Teasdale, LLP, 

 (8th Cir. 2011).  
Nonetheless, a court can dismiss a claim where the complaint on its face establishes a 

statute-of-limitations defense.  Joyce, 

.  The determination of when a 
fraudulent transfer was discovered, and thereby whether the limitations period has run, 
is a fact intensive decision to be made by a jury unless “the evidence leaves no room for 
reasonable minds to differ on the issue[.]”  Ahlgren v. Muller, 

, at *5 (D. 

Minn. Aug. 16, 2021) (citing, Jane Doe 43C v. Diocese of New Ulm, 

, 684–
85 (Minn Ct. App. 2010)).                                                 
   Minnesota applies a six-year statute of limitations for claims of ‘actual fraud’ 
fraudulent transfers, as opposed to constructive fraud.  Finn v. Alliance Bank, 

, 657–58 (Minn. 2015).  Hong Kong, on the other hand, has a one-year statute of 
limitations.  Transfer of Businesses (Protection of Creditor) Ordinance., (2019) Cap. 49, § 
9 (H.K.), available at www.elegislation.gov.hk/hk/cap49.  Minnesota follows "the almost 
universal  rule  that  matters  of  procedure  [are]  governed  by  the  law  of  the  forum 
state." Davis v. Furlong, 

 (Minn. 1983).  Minnesota courts, and 

federal  courts  interpreting  Minnesota  law,  have  routinely  found  that  statutes  of 
limitations are procedural so far as choice of law is concerned.  Fleeger v. Wyeth, 

 (Minn. 2009); Grewe v. S.W. Co., 

, at *3 (D. Minn. July 
5, 2005).                                                                 

   The Minnesota Court of Appeals has recognized, however, an exception to the 
general rule.  Where a statute of limitations applies to a statutorily created right, as 
opposed to a common law right, the statutes of limitations are considered substantive 

because it is a condition of the right itself rather a limitation on the remedy.  Christian v. 
Birch, 

 (Minn. Ct. App. 2009); Fredin v. Sharp, 

, 308–09 
(D. Minn. 1997) (stating that a statutory “statute of limitations does not merely bar the 
remedy for the violation of a right, but limits or conditions the right itself.”).  

   The Minnesota Supreme Court has stated that, “fraudulent-transfer claims based 
on an actual intent to hinder, delay, or defraud creditors existed at common law as early 
as 1868 . . . the fact that the Legislature has codified fraudulent-transfer liability does not 
change the underlying “gist and essence” of fraudulent-transfer law.”  Finn, 860 N.W. at 

657–58.  As such, the fraudulent transfer claims here are not statutorily created and the 
limitations period is procedural.  Thus, the statute of limitations of the forum state likely 
applies.                                                                  
   Defendants  argue  that  the  procedural  nature  of  the  Minnesota  statute  of 
limitations is irrelevant here because the fraudulent transfer claims are governed by the 

Minnesota Uniform Voidable Transaction Act (“MUVTA”).  MUVTA requires courts to 
apply the substantive law “of the jurisdiction in which the debtor is located when the 
transfer is made or the obligation is incurred.”  

(b).  The Hong Kong 
defendants assert that the one-year Hong Kong statute of limitations is substantive 

because it is statutorily created rather than a common law right.         
   In support of this assertion, the Hong Kong defendants cite a case from a Hong 
Kong court, however, this case undermines their argument.  The Hong Kong court stated 

that the Hong Kong limitations period “is no more than a procedural time-bar, which 
serves to bar the remedy whilst leaving the claim extant, and does not serve to extinguish 
the transferee’s liability per se . . .” OTC International AG v. Perfect Recovery Ltd., [2009] 
3 HKLRD 13, ¶ 58 (C.F.I.).                                                

   Nonetheless, regardless of which statute applies, reasonable minds could differ as 
to when Aviva should have discovered the fraudulent transfers because the defendants’ 
convoluted scheme was intended to disguise their moves.  Moreover, the Amended 
Complaint alleges that the transfer and distribution of Manley’s assets could be ongoing 

even now, and so would not be time barred under either statute of limitations.  As such, 
the Court will not dismiss the fraudulent transfer claim as time barred.  
C.  Sufficient Pleading                                                 
   Fraudulent transfer claims brought under Minnesota state law must comport with 
Rule 9(b)'s particularity requirements.  SEC v. Brown, 

 (D. Minn. 

2009); see Russo v. NCS Pearson, Inc., 

 (D. Minn. 2006) ("In cases 
brought in federal court, Rule 9(b) applies to both common law and statutory fraud claims 
made under Minnesota law where the gravamen of the complaint is fraud."). 
   MUVTA provides, in part: “[a] transfer made or obligation incurred by a debtor is 

voidable as to a creditor . . . if the debtor made the transfer or incurred the obligation: (1) 
with actual intent to hinder, delay, or defraud any creditor of the debtor[.]” 

; Bartholomew v. Avalon Cap. Grp, Inc., 

 (D. Minn. 2009).  

A transfer is defined broadly as “every mode, direct or indirect, absolute or conditional, 
voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, 
and  includes  payment  of  money,  release,  lease,  and  creation  of  a  lien  or  other 
encumbrance.”  

(16).  A fraudulent transfer claim must be made 

against the first transferee, the person for whose benefit the transfer was made, or an 
immediate or mediate transferee of the first transferee who did not take in good faith.  

.    Finally, fraudulent intent may be inferred from the presence of 
one or, preferably, several factors or “badges of fraud” laid out in statute.  Citizens State 

Bank Norwood Young Am. v. Brown, 

 (Minn. 2014).6         

   6 The “badges of fraud” include: (1) the transfer or obligation was to an insider; (2) the 
debtor retained possession or control of the property transferred after the transfer; (3) the 
transfer or obligation was disclosed or concealed; (4) before the transfer was made or obligation 
was incurred, the debtor had been sued or threatened with suit; (5) the transfer was of 
   Defendants  assert  that  Aviva  failed  to  plead  facts  pertaining  to  particular 
fraudulent transfers, but instead plead fraudulent schemes wherein transfers took place.  

Defendants’ argue that because Aviva does not allege any specific transfers that were 
received  by  any  of  the  Defendants  they  have  failed  to  satisfy  Rule  9(b)’s  pleading 
requirement.                                                              
   In certain situations, courts have relaxed the Rule 9(b) pleading standard.  Bastien 

v. R. Rowland & Co., No. 82-950, 

, at *2 (E.D. Mo. Feb. 25, 1983) (“[When] 
allegations concern matters which are peculiarly within the defendants’ knowledge, the 
pleading standards are relaxed.”); Abels v. Farmers Commodities Corp., 

 

(8th Cir. 2001) (“[A] court cannot reasonably expect highly specific allegations before 
allowing at least a brief discovery period . . .  [because the] facts that would have to be 
alleged are known to the defendants, but the plaintiffs have not yet had a chance to find 
them out.”).  Relaxing the rule, however, does not mean disregarding it entirely.  In 

Bastien, the court stated that the plaintiffs informed defendants of the occasions of fraud, 
the  specific  entities  involved  in  the  fraud,  and  the  specific  material  omissions, 
misstatements, and half-truths made by defendants that caused harm to the plaintiffs.  


substantially all the debtor's assets; (6) the debtor absconded; (7) the debtor removed or 
concealed assets; (8)the value of the consideration received by the debtor was reasonably 
equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) the 
debtor was insolvent or became insolvent shortly after the transfer was made or the obligation 
was incurred; (10) the transfer occurred shortly before or shortly after a substantial debt was 
incurred; and (11) the debtor transferred the essential assets of the business to a lienor that 
transferred the assets to an insider of the debtor.  

(b). 
Bastian, 

, at *3.  Likewise, in Abels, the Eighth Circuit found that the 
plaintiffs indicated items that were mailed to support their mail and wire fraud claims.  

Abels, 

.                                                   
   Here the Fraudulent Transfer Defendants allegedly function as a closely connected 
group of entities and all of the fraudulent transfers took place between and among them.  
It follows that the specific facts of the transfers are “known to the defendants, but the 

plaintiffs have not yet had a chance to find them out.”  

              
   Aviva alleged specific fraudulent transfers bearing several badges of fraud by 
indicating  the  parties  involved,  the  general  timeframes,  and  the  general  assets 

transferred.  Namely it alleged that Principals directed the use of Manley’s name to be 
reduced, demanded money that was actually owed to Manley to be paid to Toy Quest, 
and transferred Manley’s employees to Park Lane.  It also alleged that Wu directed Dollar 
Empire to pay more than three million dollars to Toy Quest while knowing it was owed to 

Manley.  It additionally pled facts indicating transfers bearing the badges of fraud from 
Toy Quest to Benzai.  Finally, by pleading that the Principals were the real and beneficial 
owners of Manley and the other corporate Defendants, and that all the fraudulent 
transfers  were  made  among  and  between  those  corporations,  Aviva  pled  that  the 

Principals were the beneficiaries of the fraudulent transfers.  Read liberally, the Amended 
Complaint adequately alleges fraudulent transfers against those Defendants.   
   However, the Amended Complaint does not allege with any degree of specificity 
that Aquawood, Wellmax, the Iowa Entities, Toth, or the Liquidators were involved in 

making or receiving fraudulent transfers or that they were the beneficiaries of any 
fraudulent transfers.  As such, Aviva has failed at this time to state a fraudulent transfer 
claim against those Defendants.                                           
   The Court will deny the motions to dismiss the fraudulent transfer claims against 

the Principals, the Hong Kong Entities, and Dollar Empire.  The Court will grant the 
motions to dismiss the fraudulent transfer claims against Aquawood, Wellmax, the Iowa 
Entities, Toth, and the Liquidators.  To the extent that the Court dismisses the fraudulent 

transfer claims, it does so without prejudice to enable further development of the claims. 
III. AIDING AND ABETTING FRAUDULENT TRANSFER CLAIMS                       

   Aviva alternatively alleges aiding and abetting fraudulent transfer claims against 
the Fraudulent Transfer Defendants.  The Minnesota Supreme Court has not addressed 
whether aiding and abetting fraudulent transfer is a cognizable claim.  “When there is no 
state supreme court case directly on point, our role is to predict how the state supreme 

court would rule if faced with the same issue before us.”  Blankenship v. USA Truck, Inc., 

 (8th Cir. 2010).                                        
   To date, only one Minnesota court has recognized aiding and abetting fraudulent 
transfer claims.  Janssen v. Lommen, Abdo, Cole, King & Stageberg, P.A., No. A14-452, 

, at *6 (Minn. Ct. App. Dec. 22, 2014).  That holding rested on limited 
reasoning.  The Janssen opinion does not address whether aiding and abetting fraudulent 
transfer is a cognizable claim, or what element of the law supports an aiding and abetting 

claim.  It merely overturns a trial court's decision to grant a motion to dismiss several 
claims, one of which was an aiding and abetting fraudulent transfer claim.  Id. at *7.  
Moreover, Jansson is not binding on this Court.  Badrawi v. Wells Fargo Home Mortg., 
Inc., 

 (8th Cir. 2013) (“A decision of an intermediate state appellate court 

is not binding on a federal court that seeks to determine state law . . . . We will only follow 
the decisions of the state's intermediate courts when they are the best evidence of what 
the state's law is.").                                                    

   Interpreting  the  Minnesota  Uniform  Fraudulent  Transfer  Act7,  the  Minnesota 
Supreme Court stated “uniform laws are interpreted to effect their general purpose to 
make uniform the laws of those states that enact them . . . Accordingly, we give great 
weight to other states' interpretations of a uniform law."  Citizens State Bank Norwood 

Young Am.,, 

.  A significant number of cases from across the country 
have held that aiding and abetting fraudulent transfer claims are not cognizable under 
various states’ “uniform” fraudulent transfer acts.8  The consensus among courts is that 


   7 In 2015, the Minnesota Uniform Fraudulent Transfer Act was amended to the Minnesota 
Uniform Voidable Transactions Act.  See 

-.51.        
   8 Mann v. GTCR Golder Rauner, L.L.C., 

, 918–19 (D. Ariz. 2007) (holding 
that  “courts  have  uniformly  rejected”  a  claim  that  the  catch-all  provision  of  the  uniform 
fraudulent transfer act allows for aiding and abetting liability); Edgewater Growth Cap. Partners, 
L.P. v. H.I.G. Cap., Inc., No. 3601-VCS, 

, at *3 (Del. Ch. Mar. 3, 2010) (refusing to 
find aiding and abetting liability because “the text of the [Uniform] Act does not provide for an 
aiding and abetting claim,” “the General Assembly is free to do so itself,” and “such an innovation 
a fraudulent transfer claim is a claim of equity that cannot support third party liability 
such as an aiding and abetting claim.  See e.g. Cadle Co., 345 P.3d 1052–53 (finding aiding 

and abetting liability improper due to the equitable nature of relief provided by the 
uniform  act,  as  creditors  find  recourse  by  being  “returned  to  their  pre-transfer 
position[.]”).                                                            
   Moreover, the MUVTA does not create the right to pursue fraudulent transfer 

claims but instead recognizes the long existing Minnesota common law cause of action.  
Finn, 860 N.W. at 658.  Minnesota courts from well over a century ago recognized that 
fraudulent transfer claims are based in equity.  See Banning v. Armstrong, 

, 44 


would thereby render [the Uniform Act] non-uniform.”); Magten Asset Mgmt. Corp. v. Paul 
Hastings Jaofsky & Walker LLP, No. 04-1256-JJF, 

, at *2-3 (D. Del. Jan. 12, 2007) 
(finding non-transferees cannot be liable under Montana law under an aiding and abetting theory 
in part by comparing the uniform act to bankruptcy provisions); Freeman v. First Union Nat’l 
Bank, 

 (Fla. 2004) (“There simply is no language in FUFTA that suggests the 
creation of a distinct cause of action for aiding-abetting claims against non-transferees.  Rather, 
it appears that FUFTA was intended to codify an existing but imprecise system whereby transfers 
that were intended to defraud creditors could be set aside.”); GATX Corp. v. Addington, 

 (E.D. Ky. 2012) (denying aiding and abetting liability primarily based on its 
review of other states’ laws and the bankruptcy code and holding that to add such a claim “would 
be writing a remedy into a statute by judicial construction[.]”); Kruse v. Repp, No. 4:19-cv-00106, 

, at *13-16 (S.D. Iowa Mar. 20, 2020) (rejecting aiding and abetting liability 
under Iowa law because fraudulent transfer claims are “equitable in nature” and not tort-based 
damage claims); F.D.I.C. v. S. Prawer & Co., 

, 455–57 (D. Me. 1993) (holding no 
accessory liability lays for a violation of the Maine Uniform Fraudulent Transfers Act because it is 
an equitable remedy rather than a tort); Cadle Co. v. Woods & Erickson, LLP, 

, 1052–
53 (Nev. 2015) (finding aiding and abetting liability improper due to the equitable nature of relief 
provided by the uniform act, as creditors find recourse by being “returned to their pre-transfer 
position”); F.D.I.C. v. Porco, 

 (N.Y. 1990) (rejecting an argument that the 
uniform statute “create[d] a creditor’s remedy for money damages against parties who . . . were 
neither transferees of the assets nor beneficiaries of the conveyance.”); Rohm & Haas Co. v. 
Capuano, 

 (D.R.I. 2004) (finding a mere participant “cannot be sued” 
under the Rhode Island Uniform Transfer Act).                             
(1862) (holding that a plaintiff who brings an action “to cancel a fraudulent assignment” 
is “entitled to relief in equity”); In re Wencl, 

 (Bankr. D. Minn. 1987) 

(“Under Minnesota law, an action to set aside a fraudulent conveyance has been classified 
as a proceeding in equity virtually since statehood.”); Brill v. W.B. Foshay Co., 

 (8th Cir. 1933) (referring to the court as a “court of equity” after discussing actual and 
constructive fraud fraudulent transfers.)                                 

   The Court is aware of only two cases in this district that discuss fraudulent transfer 
claims as legal claims that can support aiding and abetting liability for third parties not 
directly involved in making or benefiting from a fraudulent transfer.  First, in Zayed v. 

Buysse the Court stated that the plaintiff could pursue a “legal claim under the [Minnesota 
Uniform Fraudulent Transfer Act.]”  No. 11-cv-1042, 

, at *35 (D. Minn. 
Sep. 27, 2012).  But in Zayad, there was no reasoning discussed in support of the 
conclusion.                                                               

   In Cedar Rapids Lodge & Suites, LLC v. Seibert, the Court held that the underlying 
fraudulent transfer claims could support a conspiracy to commit fraudulent transfer 
claim.  No. 14-cv-04839, 

, at *18 (D. Minn. Feb. 7, 2018).  The Court stated 
it would be “truly anomalous if common-law civil fraud can serve as the underlying tort 

for a conspiracy claim, but a similar statutory allegation of [actual-fraud fraudulent 
transfer] cannot.”  

                                                   
   However, the Cedar Rapids decision is not helpful to this case for three reasons.  
First, it is not binding on this Court.  Second, the Court did not address the litany of cases 

interpreting uniform fraudulent transfer statutes across the country or examine the 
history of fraudulent transfers in this state.  And finally, the  Court was not dealing with 
an aiding and abetting claim, but a conspiracy to commit fraudulent transfers between 
two parties, one of whom fraudulently transferred assets to the other.  Id. at *15.  Thus, 

Cedar Rapids is distinguishable from this case.                           
   The Court interprets  Minnesota’s fraudulent transfer law consistent with the 
interpretations of other uniform fraudulent transfer acts throughout the country.  This 

interpretation  is  in  line  with  the  history  of  fraudulent  transfer  law  in  Minnesota.  
Therefore, the Court finds that aiding and abetting fraudulent transfer claims are not 
cognizable under MUVTA, and will grant the Defendants’ Motions to Dismiss those claims. 

IV. ALTER EGO CLAIMS                                                      
   Aviva  alleges  that  the  Principals  disregarded  the  corporate  form  of  Manley, 
Aquawood, the Hong Kong Entities, and the Iowa Entities to avoid paying the judgments 

Manley incurred.  Aviva asks that the Court pierce those corporations’ corporate veils and 
treat the Principals as their alter egos, and treat each corporation as the alter ego of the 
other corporations.9                                                      


   9 Aviva alleges “alter ego claims.” However, the Eighth Circuit has stated that piercing the 
corporate veil under an alter ego theory is best thought of as a remedy to enforce a substantive 
right and not as an independent cause of action.  Tamko Roofing Prods. v. Smith Eng'g Co., 450 
   A. Relevant Factual Background                                       

   The Amended Complaint contains pages detailing how Manley shifted its business 
to Toy Quest and Park Lane at the direction of the Principals.  (Am. Compl. ¶¶ 386–97.)  
Manley received no compensation for the business or assets it transferred.  (Id. ¶ 397.)  
Moreover, the Principals directed Manley to transfer its business in order to avoid liability 
Manley had incurred.  (Id. ¶ 384).  Thereafter, the Principals continued to order the 

transfer of everything from Manley’s assets to its goodwill through a maze of corporations 
including the Hong Kong entities and the Iowa entities.  (Id. ¶¶ 398–431.)  Often the lines 
between which corporation was engaging in what business were blurred.  (Id.)   

   Throughout the convoluted process all roads led back to the Principals.  The 
Principals oversaw the transfer of Manley’s assets from one Hong Kong entity to another. 
(Id. ¶¶ 386, 398, 419.)  The Iowa entities took directives from someone named Herman 
Haas who referred to one of the Principals, Samson Chan, as his boss.  (Id. ¶¶ 306–07.) 

Two of the Principals, Samson Chan and Dubinsky, played “key roles” in the management 
Aquawood.  (Id. ¶ 333.)  And the Principals owned Aquawood.  (Id. ¶ 435.)  Finally, the 
Amended Complaint alleges that the Principals explicitly stated their use of numerous 
corporations was meant to ensure that they could “always stay ‘one step ahead’ of 

creditors.”  (Id. ¶ 442.)                                                 


F.3d 822, 826 n.2 (8th Cir. 2006).  Nonetheless, the Court will use Aviva’s “claim” terminology in 
its analysis of Aviva’s request for veil piercing relief.                 
   B. Choice of Law                                                     

   The parties disagree on which law the Court should apply to the alter ego claims.  
Aviva asserts that there is no conflict between the laws of the relevant jurisdictions so the 
law of the forum state governs.  The Defendants contend that the internal affairs doctrine 
applies, and the Court must apply the law of each corporate defendants’ incorporation.  
The Court finds that there is a genuine conflict of laws here and that the internal affairs 

doctrine  necessitates  that  it  apply  the  law  of  the  corporations’  jurisdiction  of 
incorporation.                                                            
        1. False Conflict                                               

   Aviva argues that there is no genuine conflict between Minnesota’s alter ego law 
and  the  other  relevant  jurisdictions’  alter  ego  laws.    Where  the  laws  of  separate 
jurisdictions would produce the same result on the particular issue presented, there is a 
“false conflict,” and courts should avoid choice-of-law questions.  Ronnoco Coffee, LLC v. 

Westfeldt Bros., 

 (8th Cir. 2019).  A brief look into the alter ego 
requirements for each of the jurisdictions involved here is required.     
   -  Minnesota:                                                        
   “Under Minnesota law, deciding whether to allow a corporate veil to be pierced 

requires  a  court  to  1)  analyze  whether  the  corporation  functioned  as  the  mere 
instrumentality of the principals a party is attempting to reach by piercing the corporate 
veil, and 2) determine whether injustice or fundamental unfairness would occur if the 
corporate veil were left intact.”  Stoebner v. Lingenfelter, 

 (8th Cir. 1997). 

   -  Iowa:                                                             
   “A corporate entity is the alter ego of a person if (1) the person influences and 
governs the entity; (2) a unity of interest and ownership exists such that the corporate 
entity and the person cannot be separated; and (3) giving legal effect to the fictional 

separation between the corporate entity and the person would sanction a fraud or 
promote injustice.”  HOK Sport, Inc. v. FC Des Moines, L.C., 

 (8th Cir. 2007) 
(quotation omitted).                                                      

   -  California:                                                       
   The California Supreme Court has held that that an alter ego claim has “two general 
requirements: (1) that there be such unity of interest and ownership that the separate 
personalities of the corporation and the individual no longer exist and (2) that, if the acts 

are treated as those of the corporation alone, an inequitable result will follow.”  Mesler 
v. Bragg Management Co., 

 (Cal. 1985) (emphasis added); Stark v. Coker, 

 (Cal. 1942) (“The two requirements [for piercing the corporate veil] are 
that there be such unity of interest and ownership that the separate personalities of the 

corporation and the individual no longer exist and that adherence to the fiction of 
separate existence would, under the circumstances, promote fraud or injustice”). 
   -  Hong Kong:                                                        
   The general requirements for lifting the corporate veil are (1) the corporate form 

is being used for the purposes of fraud or as a device to evade a contractual or other legal 
obligation, and (2) the defendant controls the corporation.  Wong Chau Wan v. Inc. 
Owners of Nos. 11 12 Canal Rd. W., [2015] H.K.D.C. 412, ¶¶ 26–27.10  Courts are not 
permitted to lift the corporate veil in the absence of those requirements even if justice so 

requires.  

                                                            
   In sum, the four jurisdictions’ requirements do not align.  In Minnesota, the 
defendant must control the alter ego corporation and failure to pierce the corporate veil 

must result in injustice or fundamental unfairness.  In Iowa and California, the defendant 
must control and own the alter ego corporation and failure to pierce the corporate veil 
must result in injustice or fraud.  And in Hong Kong the defendant must control the alter 
ego corporation and use it for the purpose of fraud.  As such, there is no false conflict 

here.                                                                     
        2. Internal Affairs Doctrine                                    

   “The internal affairs doctrine is a conflict of law principle which recognizes that 
only one State should have the authority to regulate a corporation’s internal affairs—

   10 Available at https://www.hklii.hk/cgi-                            
bin/sinodisp/eng/hk/cases/hkdc/2015/412.html?stem=&synonyms=&query=title(WONG%20C
HAU%20WAN%20and%20.%20INCORPORATED%20OWNERS%20OF%20NOS%2011%2012%20C      
ANAL%20ROAD%20WEST,%20HONG%20KONG)%20OR%20ncotherjcitationtitles(WONG%20CH
AU%20WAN%20and%20.%20INCORPORATED%20OWNERS%20OF%20NOS%2011%2012%20CA      
NAL%20ROAD%20WEST,%20HONG%20KONG).                                        
matters peculiar to the relationships among or between the corporation and its current 
officers, directors, and shareholders—because otherwise a corporation could be faced 

with  conflicting  demands.”  Edgar  v.  MITE  Corp.,  

  (1982)  (citing 
Restatement (Second) of Conflict of Laws § 302, cmt. b (1971)).           
   The Eighth Circuit has not addressed whether the internal affairs doctrine applies 
to veil piercing claims.  However, determining whether an entity is an alter ego entails a 

detailed analysis of a corporation’s internal affairs.11  Courts across many jurisdictions—
including in the District of Minnesota—have consistently found that alter ego claims are 
governed by the internal affairs doctrine.  Matson Logistics, LLC v. Smiens, No. 12-400, 

, at *6 (D. Minn. June 5, 2012) (collecting cases and stating that there is 
“near  unanimity  of  courts  in  applying  the  internal  affairs  doctrine  to  veil  piercing 
claims”).12  It follows that the internal affairs doctrine should apply to the alter ego claims 

   11 In Minnesota, for example, courts examine “insufficient capitalization for purposes of 
corporate  undertaking, failure  to  observe  corporate formalities,  nonpayment of dividends, 
insolvency of debtor corporation at time of transaction in question, siphoning of funds by 
dominant shareholder, nonfunctioning of other officers and directors, absence of corporate 
records, and existence of corporation as merely façade for individual dealings.”  Victoria Elevator 
Co. v. Meriden Grain Co., 

 (Minn. 1979).               

   12 One district court in the Eighth Circuit held that the internal affairs doctrine does not 
apply where foreign corporations are involved.  See Schwan v. CNH Am. LLC, No. 04-3384, 

, at *17 (D. Neb. May 4, 2006) (reasoning that the forum state’s interest in applying 
its law to citizens injured by foreign corporations outweighed the interests of the corporation’s 
jurisdiction of incorporation) (quoting First Nat'l City Bank v. Banco Para El Comercio Exterior De 
Cuba, 

 (1983) (emphasis in original)).                   
   However, Schwan relied on First National Bank which is inapposite here.  First National 
Bank determined that there was a genuine overriding interest in protecting domestic citizens 
from categorical violations of their rights by the actions of foreign governments.  462 U.S. at 621–
22 (“[t]o give conclusive effect to the law of the chartering state in determining whether the 
here, and the Court should apply the law of the defendant corporations’ jurisdictions of 
incorporation.                                                            

   C. Merits                                                            

   The Amended Complaint alleges a complex web of alter egos asserting that all the 
Alter Ego Defendants are functionally a single entity.  (Am. Compl. ¶ 925.)  Aviva claims 
the following alter ego relationships:                                    
     1.  Manley is an alter ego of the Principals;                      
     2.  The Hong Kong Entities, Aquawood, and the Iowa Entities are alter egos of 
        the Principals;                                                 
     3.  Manley is an alter ego of the Hong Kong Entities, Aquawood, and the Iowa 
        Entities; and                                                   
     4.  The Hong Kong Entities, Aquawood, and the Iowa Entities are alter egos of 
        one another.                                                    
     (Id.)                                                              
   In all relevant jurisdictions the plaintiffs must plead facts showing that the alter 
ego entity is controlled by its alter ego principal for a wrongful or fraudulent purpose.  
See, e.g., Victoria Elevator Co. of Mpls. v. Meriden Grain Co., 

, 512–13 
(Minn. 1979) (holding that a corporation was the alter ego of its owner who controlled 
the corporation’s finances for his own purposes); Benson v. Richardson, 

 (Iowa 1995) (“We will set aside the corporate fiction if there is such unity of interest 
and ownership that the individuality of the corporation and its owners have ceased and 

separate juridical status of its instrumentality should be respected would permit the state to 
violate  with  impunity  the  rights  of  third  parties  under  international  law  while  effectively 
insulating itself from liability.”)  That is not the case here where all the parties involved are private 
entities.                                                                 
the facts demonstrate observance of the fiction of separate existence would, under the 
circumstances, sanction a fraud or promote injustice.”); Toho-Towa Co., Ltd. v. Morgan 

Creek Prods., Inc., 

, 479–80 (Cal. Ct. App. 2013) (holding that a court 
will pierce the corporate veil where there is “such domination of finances, policies and 
practices that the controlled corporation has, so to speak, no separate mind, will or 
existence of its own and is but a business conduit for its principal”); Wong Chau Wan 

[2015] H.K.D.C. 412 ¶ 42 (“The lifting of the corporate veil requires . . . circumstances 
showing that a company has been used as the ‘alter ego’ by a defendant for the purpose 
of fraud, or as a device or sham to commit impropriety or wrongdoing[.]”).   

   Aviva alleges that the Principals ordered Manley’s business and  assets  to be 
transferred  among  and  between  the  Hong  Kong  Entities  after  Aviva  acquired  the 
judgment against Manley.  Those allegations indicate the Principal’s control over Manley 
and the Hong Kong entities.  The constant movement of assets and business between the 

entities and the explicit statement of the Principals that they did so to stay one step ahead 
of creditors shows that the corporations were used to for the purpose of perpetuating 
fraud.  Therefore, the Complaint shows control and fraudulent purpose as required by all 
jurisdictions.  Those allegations are sufficient as they pertain to Manley and the Hong 

Kong entities because they satisfy the requirements of Hong Kong law.     
   California and Iowa law require ownership in addition to control.  SEC v. Hickey, 

 (9th Cir. 2003) (“Ownership is a pre-requisite to alter ego liability, and 
not a mere ‘factor’ or ‘guideline.’”); HOK Sport, Inc., 

 (finding that a for-
profit business was the owner of a nonprofit corporation and thus could be its alter ego).  

Aviva alleges that the Principals own Aquawood, but does not allege that the Principals 
owned the Iowa entities.  According to the Amended Complaint, the Iowa Entities’ 
corporate form was fragmented and confusing, but they were taking directives from the 
Principals and their employees understood that they were working for the Principals.  

(Am. Compl. ¶ 232.)  Therefore, construing the Amended Complaint in Aviva’s favor as 
the Court must, the Plaintiffs have pled sufficient facts to indicate that the Iowa Entities 
are effectively owned by the Principals.                                  

   The Amended Complaint does not allege any facts tending to show that any of the 
corporate defendants controlled any other corporate defendant.  At no point does the 
Amended Complaint spell out instances of corporate defendants ordering or causing 
another corporate defendant to act in any way.  Instead, the Principals directed the 

actions taken by the corporations.  As such the alter ego theories regarding the corporate 
defendants rest on the fact that all of these entities appeared to work in tandem.  That, 
however, is not a sufficient allegation to maintain an alter ego claim.   
   Therefore, the Court will deny the motions to dismiss the alter ego claims alleging 

that that Manley, the Hong Kong Entities, the Iowa Entities and Aquawood are alter egos 
of the Principals.  However, because the Amended Complaint does not contain sufficient 
facts to support a finding that the Hong Kong Entities, Aquawood, the Iowa Entities, and 
Manley are alter egos of one another, the Court will grant the motions insofar as it relates 
to them.  Again, the Court will dismiss the claims without prejudice.     


V.  LIQUIDATORS’ MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION      
A. Standard of Review                                                   

   “To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving 
party need only make a prima facie showing of jurisdiction.”  Epps v. Stewart Info. Servs. 
Corp., 

 (8th Cir. 2003).  “As long as there is ‘some evidence upon which 
a prima facie showing of jurisdiction may be found to exist,’ the Rule 12(b)(2) motion will 

be  denied.”   Pope  v.  Elabo  GmbH,  

  (D.  Minn.  2008) 
(quoting Aaron Ferer & Sons Co. v. Diversified Metals Corp., 

 (8th Cir. 
1977)).  The party seeking to establish personal jurisdiction bears the burden of proof, 
and “the burden does not shift to the party challenging jurisdiction.”  Epps, 

.  For purposes of a prima facie showing, the Court must view the evidence in the light 
most favorable to the non-moving party.  K-V Pharm. Co. v. J. Uriach & CIA, S.A., 

 (8th Cir. 2011).                                                 
B.  Relevant Factual Background                                         

   In early 2016, Aviva brought a motion for sanctions against Manley for its failure 
to pay the judgment it owed to Aviva.  (Am. Compl. ¶ 551.)  A hearing on the motion was 
initially  scheduled  for  early  March  2016.    (Id.  ¶¶  580.)    However,  the  Principals 
orchestrated a sham motion to intervene in order to delay the hearing.  (Id. ¶¶ 580–584.)  
The motion to intervene was denied as “grossly deficient.”  (Id. ¶ 586.)  Nonetheless, the 

motion delayed the sanctions hearing until late March, which gave the Principals time to 
“begin Manley’s liquidation in Hong Kong and direct Manley’s liquidators to file a petition 
for chapter 15 recognition and a request for emergency provisional relief to shut down all 
U.S. litigation relating to Manley[.]” (Id. at ¶¶ 589–590.)               

   The Principals provided funding for the Liquidators to carry out the chapter 15 
proceeding, but concealed Manley’s assets and otherwise mislead the Liquidators into 
believing Manley conducted little business in the U.S. and had less than $100,000 in assets 

in the U.S.  (Id. at ¶¶ 595–597.)  The Liquidators filed the bankruptcy petition, triggered a 
bankruptcy stay, and blocked Aviva’s efforts to pursue legal action against Manley or 
access  Manley’s  documents.    (Id.  at  ¶  599.)    Meanwhile,  the  Principals  withheld 
documents from the Liquidators that might have supported fraudulent transaction or 

alter ego claims against Manley.  (Id. at ¶¶ 601–605.)  Moreover, the Principals under-
funded the Liquidators’ actions in Hong Kong where they could have pursued many of 
those claims.  (Id. at ¶ 600.)                                            
   In 2019, the Liquidators informed Aviva that they had agreed to a settlement with 

Toy Quest which would have given Manley’s creditors approximately one tenth of one 
percent of their claims against Manley.  (Id. at ¶¶ 607–612.)  The settlement agreement 
was negotiated on both sides by lawyers paid by Toy Quest.  (Id.)  In 2020, a Hong Kong 
Court rejected the settlement.  (Id. at ¶ 619.)  Thereafter, the Liquidators determined that 
they would not be able to obtain an enhanced settlement and subsequently moved to 

close the Manley liquidation proceeding.  (Id. at ¶¶ 621–622.)            
C.  Analysis                                                            

   1. Minimum Contacts                                                  
   Generally, the Court may exercise personal jurisdiction over a defendant if doing 
so (1) is consistent with Minnesota's long-arm statute and (2) comports with the Due 
Process Clause of the Fourteenth Amendment.  See Whaley v. Esebag, 

 
(8th Cir. 2020).  Because Minnesota's long-arm statute extends as far as the Due Process 

Clause allows, “the Court need only consider whether exercising personal jurisdiction 
over [a defendant] is consistent with due process.”  Pope, 

.  
   “The  Due  Process  Clause  of  the  Fourteenth  Amendment  constrains  a  State's 
authority to bind a nonresident defendant to a judgment of its courts.”  Walden v. Fiore, 

 (2014).  “The touchstone of the due-process analysis remains whether 
the  defendant  has  sufficient  ‘minimum contacts with  [the  forum]  such  that  the 
maintenance of the suit does not offend 'traditional notions of fair play and substantial 
justice.’”  Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG, 

 

(8th Cir. 2011) (quoting Int'l Shoe Co. v. Washington, 

 (1945)).  The Court 
must therefore assess whether “the defendant's suit-related conduct . . . create[s] a 
substantial connection with the forum.” Walden v. Fiore, 

 (2014). 
   The Eighth Circuit employs a five-factor personal jurisdiction test, assessing: 
        (1)  the nature and quality of the contacts with the forum      
        state;                                                          
        (2)  the quantity of the contacts with the forum state;         
        (3)  the relationship of the cause of action to the contacts;   
        (4)  the interest of the forum state in providing a forum for   
        its residents; and                                              
        (5)  the convenience of the parties.                            

See Dairy Farmers of Am., Inc. v. Bassett & Walker Int'l, Inc., 

 (8th Cir. 
2012) (citation omitted).                                                 
   “The five-factor test essentially boils down to three: (1) whether the quality and 
quantity of the defendant's contacts with the forum state establish minimum contacts; 
(2) whether the litigation arises out of those contacts; and finally, if the first two are met, 
(3) whether it is reasonable, considering the interest of the forum state and convenience 
to the parties, to force an out-of-state litigant to defend itself in the forum state.”  
Ahlgren, 438 F.Supp.3d at 987.                                            
   First,  Liquidators  do  not  have  sufficient  contact  with  Minnesota  because 
Liquidators are residents of Hong Kong and have never engaged in business in Minnesota.  
   Second, the only nexus between the present action and Minnesota is the Chapter 
15 bankruptcy case in New Jersey where Liquidators sought to dispose of Manley’s assets.  

Under § 1510 of the Bankruptcy Code, a foreign representative filing a bankruptcy 
petition does not subject itself to the jurisdiction of a U.S. Court for any purpose.  

.  As such, the second factor weighs against finding personal jurisdiction, and the 
Court does not have jurisdiction over the Liquidators under the minimum contacts test.  

   Because the first two factors are not met, this Court does not need to address the 
third factor and finds that it does not have jurisdiction over the Liquidators under the 
minimum contacts test.  Ahlgren, 438 F.Supp.3d at 987.                    
   Aviva asserts alternate bases of jurisdiction: imputed jurisdiction and the Calder’s 

effects test.13  Those theories similarly fail because Manley was not acting on behalf of 
the Liquidators and because the Liquidators did not intentionally direct their actions at 
Minnesota.  Because Aviva fails to plead a prima facie showing of jurisdiction over the 

Liquidators, the Court will dismiss them from the lawsuit.                
   2. Imputed Jurisdiction                                              

   Aviva claims that the Court’s jurisdiction over Manley is imputed to the Liquidators.  
“[C]ontacts with the forum state that are made on behalf of the defendant by others may 
be considered.”  Digi-Tel Holdings v. Proteq Telcoms., 

 (8th Cir. 1996).  

   13 Aviva also claims the Court has jurisdiction under conspiracy jurisdiction.  Aviva’s claim 
for conspiracy jurisdiction requires a showing that (1) a conspiracy existed, (2) the non-resident 
defendant participated in or joined the conspiracy, and (3) an overt act was taken in furtherance of 
the conspiracy within the forum's borders.  Yellow Brick Rd., LLC v. Childs, 

 (D. Minn. Aug. 6, 2014) (citing Hunt v. Nevada State Bank, 

 (Minn. 1969)).  
Aviva does not plead facts that show the Liquidators were part of the conspiracy, so this theory 
fails.                                                                    
   Additionally, the Liquidators ask the Court to apply the Barton doctrine.  Under Barton, a 
plaintiff cannot sue a court appointed receiver without first obtaining the leave of the appointing 
Court.  Barton v. Barbour, 

, 128–31 (1881).  However, no cases apply the Barton 
doctrine to foreign courts, so this Court will not do so.  See In re Irish Bank Resol. Corp. Ltd., No. 
18-cv-1797, 

, at *4 (D. Del. Sept. 27, 2019) (finding that applying the Barton 
doctrine to foreign courts “would be a very expansive application of Barton”). 
"[W]hen commercial activities are 'carried on in behalf of' an out-of-state party those 
activities may sometimes be ascribed to the party, at least where [it] is a 'primary 

participant' in the enterprise and has acted purposefully in directing those activities."  

 
(quoting Burger King Corp v. Rudzewicz, 

, 479 n.22 (1980)).   
   While it is undisputed that the Court has jurisdiction over Manley, Aviva’s assertion 
of imputed jurisdiction fails because Manley was not acting “on behalf of” the Liquidators.  

  Aviva fails to produce facts sufficient to support the inference that Manley’s activities 
were “directed by or primarily for the benefit of” the Liquidators.  

  The Liquidators 
served an entirely different function—to liquidate Manley’s business and distribute its 

assets to creditors.  Thus, Manley’s contacts cannot be imputed to Liquidators.14  
   3. Calder Effects Test                                               
   Finally, Aviva relies on the “effects test” articulated in Calder v. Jones, 

, 
(1984).  In Calder, the Supreme Court upheld a California court’s exercise of personal 

jurisdiction  over  the  Florida-based  "editor  and  reporter  of  the  National  Enquirer,  a 
Florida-based newspaper with a nationwide circulation.”  Dakota Indus., Inc. v. Dakota 
Sportswear, Inc., 

 (8th Cir. 1991).  Plaintiff, a California resident, had 
sued  for  libel,  and  the  Supreme  Court  concluded  that  jurisdiction  was  appropriate 


   14  Aviva  cites  personal  liability  cases  to  support  their  assertion  that  Liquidators 
“essentially are Manley, as both a practical and legal matter.”  (Aviva Opp. 12(b)(2) Mot. Dismiss, 
at 12, Oct. 12, 2021, Docket No. 398) (emphasis in original.); e.g. Lakota Girl Scout Council, Inc. v. 
Havey Fund-Raising Mgmt., Inc., 

 (8th Cir. 1975).  However, those cases are 
distinguishable because Manley did not exercise any control or domination over Liquidators, 
unlike the defendants in the cases Aviva cites.                           
because the editor and reporter (1) had acted intentionally, (2) knew that a particular 
plaintiff would be harmed, and (3) “knew that the brunt of injury would be suffered in the 

state where the plaintiff lived[.]"  

  The Court found that "under these circumstances, 
petitioners must reasonably anticipate being haled into court" in California.  

 (quoting 
Calder, 

).                                                 
   The Liquidators fail the first element of the Calder effects test because none of the 

allegations in the Amended Complaint support finding the Liquidators acted intentionally.  
The Liquidators could not have intentionally blocked Aviva from collecting its judgment 
against Manley without knowing that Manley had the capacity to pay the judgment, and 

the Liquidators could not have known if Manley had the capacity because the Principals 
“concealed Manley’s assets from the Liquidators.”  (Am. Compl. ¶ 595.)  In fact, the 
Amended Complaint suggest that the Liquidators were the victims of other defendants’ 
conspiracy actions.  The Amended Complaint alleges that the Principals frequently lied to 

them, withheld information from them, provided false information to them, and withheld 
money and documents necessary for them to pursue loss-recovery claims.  (See Id. ¶¶ 
379, 392, 458, 502–506, 552, and 595–605.)  Accordingly, the first element is not satisfied.  
   No allegations in the Amended Complaint suggest that the Liquidators knew a 

particular plaintiff would be harmed in Minnesota.  The Calder effects test does not 
displace the requirement that Defendants purposefully “tether” the effect of their actions 
to the forum state itself, as opposed to people who just happen to live there.  Pederson 
v. Frost, 

 (8th Cir. 2020) (quoting Walden, 

) (noting that 
“the proper question is not where the plaintiff experienced a particular injury or effect 

but whether the defendant’s conduct connects him to the forum in a meaningful way.”) 
(cleaned up)).  Aviva asserts that the Liquidators intentionally directed their actions at 
Minnesota by filing bankruptcy proceedings that disrupted the flow of litigation in this 
district.  (Aviva Opp. 12(b)(2) Mot. Dismiss, at 17.)  However, according to the Amended 

Complaint,  the  Liquidators  were  operating  with  limited  resources  and  incomplete 
information.  The other defendants’ “actions were taken in contemplation of Manley’s 
bankruptcy case, to drain Manley of assets prior to the filing of the chapter 15 recognition 

petition, mislead Manley’s liquidators and the court, and make it more difficult for 
creditors to trace or seize Manley’s assets.”  (Am. Compl. at ¶ 879.)  Considering all the 
allegations in the Amended Complaint as true, that claim undercuts Aviva’s argument that 
the Liquidators initiated the bankruptcy proceedings to harm Plaintiffs in Minnesota. 15  

Accordingly, this Court finds that the Calder effects test is not satisfied.  Given Aviva’s 


   15 Additionally, this is not the first time Aviva has claimed the Liquidators acted in bad 
faith in U.S. Courts.  In 2020, the U.S. Bankruptcy Court, District of New Jersey held that the 
Liquidators had not acted in bad faith.  In re Manley Toys Ltd., No. 16-cv-15374, 

, at *15 (Bankr. D.N.J. Mar. 31, 2020).  The Bankruptcy Court found that the Liquidators 
were unable to pursue claims against the defendants in this case to do lack of funding which is a 
justified reason.  Id. at *8.  The fact that Toy Quest funded the Liquidators was not an indication 
of bad faith because that was “typical in British Commonwealth countries” and Aviva never 
offered to fund the Liquidators themselves.  Id.  Further Aviva points to the presence of Manley 
associates on the committee of inspectors overlooking the Liquidators, but Aviva was offered a 
position on the committee and refused it and has not since attempted to join it.  Id. at 9.   
failure to assert a prima facie basis for jurisdiction, the Court will dismiss the Liquidators 
from the action.                                                          

   Based on the foregoing, and all the files, records, and proceedings herein, IT IS 
HEREBY ORDERED that:                                                      
      1.  Defendants’ Motions to Dismiss [Docket Nos. 342, 343, 350, 356, 361, and 

        371] are GRANTED IN PART and DENIED IN PART as follows:         
           a.  Defendant’s Motions to Dismiss are DENIED IN PART as to  
                i.  Aviva’s Fraudulent Transfer Claims Against Chan Ming Yiu, 
                  also known as Samson Chan, Liu Yi Man, also known as Lisa 

                  Liu, Brian Dubinsky, Chan Siu Lun, also known as Alan Chan, 
                  Toy Quest Ltd., Banzai International, Park Lane Solutions, 
                  Manley, and Dollar Empire; and                        
                ii.  Aviva’s Alter Ego Claims asserting that Aquawood, Toy Quest 

                  Ltd., Banzai International, Park Lane Solutions, Manley, MTD, 
                  Toy Network, LLC, and MGS International, LLC are alter egos 
                  of Chan Ming Yiu, also known as Samson Chan, Liu Yi Man, 

                  also known as Lisa Liu, Brian Dubinsky, and Chan Siu Lun, also 
                  known as Alan Chan;                                   
           b.  Defendant’s Motions to Dismiss are GRANTED IN PART as to  
                i.  Aviva’s  Fraudulent  Transfer  Claims  against  Aquawood, 

                  Wellmax, MTD, Toy Network, LLC, and MGS International, 
          LLC, Richard Toth, Peter Magalhaes, Michael Wu, Robert Lees 
          and Mat Ng;                                           

        ii.  Aviva’s Aiding and Abetting Fraudulent Transfer Claims; 
       iii.  Aviva’s Alter Ego Claims alleging Manley is an alter ego of 
          Aquawood, Toy Quest Ltd., Banzai International, Park Lane 
          Solutions,  Manley,  MTD,  Toy  Network,  LLC,  and  MGS 

          International, LLC, and;                              
       iv.  Aviva’s Alter Ego Claims alleging Aquawood, Toy Quest Ltd., 
          Banzai International, Park Lane Solutions, Manley, MTD, Toy 

          Network, LLC, and MGS International, LLC are alter egos of 
          each other.                                           
2.  Aviva’s Fraudulent Transfer claims against Aquawood, Wellmax, MTD, Toy 
Network, LLC, and MGS International, LLC, Richard Toth, Peter Magalhaes, 

Michael  Wu,  Robert  Lees  and  Mat  Ng  are  DISMISSED  WITHOUT 
PREJUDICE;                                                      
3.  Aviva’s Alter Ego Claim alleging Manley is an alter ego of Aquawood, Toy 
Quest Ltd., Banzai International, Park Lane Solutions, Manley, MTD, Toy 

Network,  LLC,  and  MGS  International,  LLC  is  DISMISSED  WITHOUT 
PREJUDICE;                                                      
       4.  Aviva’s Alter Ego Claims alleging Manley is an alter ego of Aquawood, Toy 
          Quest  Ltd.,  Banzai  International,  Park  Lane Solutions,  Manley,  MTD, Toy 
          Network,  LLC,  and  MGS  International,  LLC  are  DISMISSED  WITHOUT 
          PREJUDICE; 
       5.  Aviva’s Aiding and Abetting Fraudulent Transactions Claims are DISMISSED 
          WITH PREJUDICE; 
       6.  Aviva’s  claims  against  Robert  Lees  and  Mat  Ng  are  DISMISSED  WITH 
          PREJUDICE. 

DATED:  March 31, 2022                           JoGhn W. (edition 
at Minneapolis, Minnesota.                         JOHN R. TUNHEIM 
                                                  Chief Judge 
                                           United States District Court 

                                      42 

                 UNITED STATES DISTRICT COURT                          
                    DISTRICT OF MINNESOTA                              

ASI, INC.,                            Civil No. 19-763 (JRT/HB)          

                      Plaintiff,                                       

v.                               MEMORANDUM OPINION AND ORDER            
                              ON DEFENDANTS’ MOTIONS TO DISMISS        
AQUAWOOD, LLC, et al.,                                                   

                    Defendants.                                        

  Keith M. Sorge, ARTHUR, CHAPMAN, KETTERING, SMETAK & PIKALA, PA,     
  81 South Nineth Street, Suite 500, Minneapolis, MN 55402; Shelli L. Calland, 
  Stephen A. Weisbrod, and Tamra Ferguson, WEISBROD MATTEIS & COPLEY   
  PLLC, 1200 North West New Hampshire Avenue, Suite 600, Washington, DC 
  20036, for plaintiff;                                                

  Joseph  H.  Lubben,  Matthew  D.  Callanan,  and  Michael  Reck,  BELIN 
  MCCORMICK, PC, 666 Walnut Street, Suite 2000, Des Moines, IA 50309, for 
  defendants Aquawood, Brian Dubinsky, Peter Magalhaes, and Dollar Empire 
  LLC;                                                                 

  Brandon Underwood, and Devan Rittler-Patton, FREDRIKSON & BYRON,     
  111 East Grand Avenue, Suite 301, Des Moines, IA 50309; Joseph T Dixon, 
  III, FREDRIKSON & BYRON, 200 South Sixth Street, Suite 4000, Minneapolis, 
  MN 55402, for defendants Benzai International Ltd., Chan Ming Yiu, Liu Yi 
  Man, Chan Siu Lun, Park Lane Solutions Ltd., and Toy Quest Ltd.;     

  David  W.  Asp,  Kate  M.  Baxter-Kauf,  and  Robert  D.  Hahn,  LOCKRIDGE 
  GRINDAL  NAUEN  PLLP,  100  Washington  Avenue  South,  Suite  2200, 
  Minneapolis,  MN  55401,  for  defendants  MGS  International,  LLC,  and 
  Richard Toth;                                                        

  Douglas G. Leney and Stephen Michael Packman, ARCHER & GREINER, PC,  
  Three Logan Square, 1717 Arch Street, Suite 3500, Philadelphia, PA 19103; 
  George E. Warner, Jr. WARNER LAW LLC, 1515 Canadian Pacific Plaza, 120 
   South Sixth Street, Minneapolis, MN 55402, for defendants John Robert 
   Lees and Mat Ng.                                                     

   ASI, Inc., formally known as Aviva Sports, Inc., (“Aviva”) brings this action seeking 
to collect on an $8.5 million underlying judgment against Manley Toys, Ltd (“Manley”).  
Aviva alleges that several defendants, working as a RICO enterprise, engaged in a series 
of fraudulent transfers in order to evade paying the judgment Manley owed to Aviva.1  
Additionally, Aviva asserts that an overlapping group of defendants are alter egos of one 
another.  Five separate groups of defendants filed five separate Motions to Dismiss for 

failure to state a claim under Rule 12(b)(6) and for lack of personal jurisdiction under Rule 
12(b)(2).                                                                 
   The Court will grant the 12(b)(6) motions in part and deny them in part.  First, the 
Court will grant the motions and dismiss without prejudice the Fraudulent Transfer Claims 

against Aquawood, LLC (“Aquawood”), Wellmax Trading Ltd. (“Wellmax”), Manley Toy 
Direct (“MTD”), Toy Network, LLC (“Toy Network”), and MGS International, LLC (“MGS”), 
Richard Toth, Robert Lees, and Mat Ng.  Second, the Court will grant the motions and 

dismiss without prejudice the alter ego claims alleging Toy Quest Ltd. (“Toy Quest”), 
Banzai  International  (“Banzai”),  and  Park  Lane  Solutions  (“Park  Lane”),  MTD,  Toy 
Network, MGS, Aquawood, and Manley are alter egos of one another.  Third, the Court 
will dismiss the Aiding and Abetting Fraudulent Transfer Claims because such claims are 


   1 Manley itself has been liquidated and is not a defendant here.  (Am. Compl. ¶ 23, May 
17, 2021, Docket No. 379.)                                                
not cognizable under Minnesota law.  Lastly, the Court will dismiss the claims against 
Robert Lees, and Mat Ng because the Court lacks personal jurisdiction over them.  The 

motions will be denied as to all remaining claims.                        
                         BACKGROUND                                     

I.   THE PARTIES                                                          
   Aviva is a Minnesota corporation with its principal place of business in Minnesota.  
(Am. Compl. ¶ 23, May 17, 2021, Docket No. 284.)                          
   The Principals consist of four natural persons: defendant Chan Ming Yiu, also 

known as Samson Chan (“Samson Chan”), defendant Liu Yi Man, also known as Lisa Liu 
(“Liu”), defendant Brian Dubinsky (“Dubinsky”), and defendant Chan Siu Lun, also known 
as Alan Chan (“Alan Chan”).  (Id. ¶¶ 24-28.)  The Chans and Liu are residents of Hong Kong 
and Dubinsky is a resident of California.  (Id.)                          

   The Executives consist of two natural persons: Richard Toth and Michael Wu.  (Id. 
¶¶ 29-31.)  Toth is a resident of Iowa and Wu is a resident of California.  (Id.) 
   The Liquidators consist of two natural persons: Robert Lees and Mat Ng.   (Id. ¶¶ 

32–34.)  They are both residents of Hong Kong and are sued in their official capacity as 
liquidators of and successors to Manley.  (Id.)                           
   The final natural person named as a defendant is Peter Magalhaes (“Magalhaes”), 
who is a resident of California, and is not referred to as an Executive or Principal in the 

Complaint.  (Id. ¶ 47.)                                                   
   The remaining defendants are United States or Hong Kong corporations.  Manley 
was a Hong Kong corporation.  (Id. ¶ 35.)  Toy Quest, Banzai, and Park Lane are Hong Kong 

corporations with their principal places of business in Hong Kong.  (Id. ¶¶ 36–38.) Toy 
Quest, Banzai, and Park Lane are collectively referred to as the “Hong Kong Entities.”  (Id. 
¶ 39.)                                                                    
   MTD, Toy Network, and MGS are Iowa corporations with their principal places of 

business in Iowa.  (Id. ¶ 40–42.)  MTD, Toy Network, and MGS are collectively referred to 
as the “Iowa Entities.”  (Id. ¶ 43.)                                      
   Finally, Aquawood is a California limited liability corporation with its principal place 

of business in California.  (Id. ¶ 44.)  Dollar Empire LLC (“Dollar Empire”) is a California 
corporation with its principal place of business in California.  (Id. ¶ 45.) 
   The  Principals,  the  Executives,  the  Hong  Kong  Entities,  the  Iowa  Entities, 
Aquawood,  Dollar  Empire,  Wellmax,  Magalhaes,  Manley,  and  the  Liquidators  are 

collectively referred to as the “Fraudulent Transfer Defendants” because Count VII alleges 
they engaged in fraudulent transfers.  (Id. ¶¶ 54, 957–87.)               
   The Principals, the Hong Kong Entities, the Iowa Entities, Aquawood, Dollar Empire, 
Manley, and the Liquidators are collectively referred to as the “Alter Ego Defendants” 

because Count VI alleges they are alter egos of one another.  (Id. ¶¶ 53, 924–56.) 
II.  FACTUAL AND PROCEDURAL BACKGROUND                                    
   The Court summarizes the background as alleged by Aviva and supported by the 

record below.  Additional alleged facts will be discussed as necessary in the specific 
sections analyzing the arguments.                                         
A. The Minnesota Judgment                                               

   Defendants are an allegedly interconnected group of individuals and corporations, 
primarily based in Hong Kong, that sell toys and electronics in the United States.  (Am. 
Compl. ¶ 6–7.)  Aviva alleges that the companies are run by the Principals who use the 
corporations  interchangeably  and  shift  resources  among  them  to  obfuscate  legal 

proceedings.  (Id. ¶¶ 56–57, 66, 82.)                                     
   On August 21, 2013, Aviva won a judgment of $8,588,931.59 against Manley in an 
action in the United States District Court for the District of Minnesota.  (See Aviva Sports, 
Inc. v. Fingerhut Direct Mktg., No. 09-1091 (JNE/TNL), Judgment, Aug. 21, 2013, Docket 

No. 827.)  Aviva reports that Manley has paid only a small fraction of that award.  (See 
Aviva Sports, Inc. v. Fingerhut Direct Mktg., No. 09-1091 (JNE/TNL), Order, Mar. 21, 2019, 
Docket No. 1087.)                                                         
B.  The Bankruptcy and Liquidation Proceedings                          

   In 2016, Manley initiated proceedings in Hong Kong to liquidate its assets (the 
“Hong Kong Proceeding”).  (Am. Compl. ¶¶ 558–59.)  Shortly thereafter, the Liquidators 
filed a Chapter 15 Petition for Recognition of a Foreign Proceeding in the United States 
Bankruptcy Court for the District of New Jersey (the “N.J. Bankruptcy Proceeding”).  In re 
Manley Toys Ltd., No. 16-15374 (Bankr. D.N.J.); (Am. Compl. at ¶ 589–90.).  Pending a 

decision on the question of recognition of the Hong Kong Proceeding, the New Jersey 
Bankruptcy Court granted a provisional stay of any litigation against Manley or the 
Liquidators.  (Decl. James Schoeberl Supp. Mot. Stay, Ex. 5, Sep. 6, 2019, Doc. No. 74.)  
   In February 2018, the Bankruptcy Court recognized the Hong Kong Proceeding as 

a “foreign main proceeding.”2  In re Manley Toys Ltd., 

 (Bankr. D.N.J. 2018).  
That decision was affirmed by the District Court for the District of New Jersey.  In re 
Manley Toys Ltd., 

 (D.N.J. 2019).                             

   Aviva, as a creditor, moved for relief from the stay, and the Bankruptcy Court 
granted the motion in part, permitting Aviva to pursue claims other than alter ego and 
fraudulent transfer claims against entities and persons related to Manley.  ((See Schoeberl 
Decl. Ex. 6); In re Manley Toys Ltd., 

, at *1–2 (Bankr. D.N.J. Feb. 23, 

2018).  The Bankruptcy Court denied relief from the stay insofar as it pertained to 
fraudulent transfer and alter ego claims against Manley affiliates because, under Hong 
Kong law, such claims “belong exclusively to the liquidators.”  In re Manley Toys Ltd., 

, at *1–2.3  With limited exceptions, the Bankruptcy Court denied Aviva’s 


   2 Pursuant to 

 and 1520, the provisional stay is converted to an automatic 
stay upon recognition of the proceeding as a “foreign main proceeding.”   

   3 AVIVA appealed that ruling to the District Court for the District of New Jersey, which 
remanded the matter to the Bankruptcy Court to consider additional arguments and evidence on 
two issues: “whether Aviva may seek injunctive sanctions against Manley for violating the 
motion for relief from the stay insofar as it pertained to actions against Manley or the 
Liquidators.  (Schoeberl Decl. Ex. 6; see also March 21, 2019 Order, Aviva Sports, Inc. v. 

Fingerhut Direct Mktg., No. 09-1091 (JNE/TNL), Order, Mar. 21, 2019, Docket No. 1087.)   
   On June 7, 2019, Aviva filed a new motion for relief from the bankruptcy stay 
seeking leave (1) to assert alter ego and fraudulent transfer claims against Manley’s 
principals and affiliates, (2) to obtain court orders requiring Manley to preserve evidence, 

and  (3)  to  pursue  injunctive  sanctions  against  Manley  for  violating  post-judgment 
discovery orders in connection with the Minnesota judgment.  (Schoeberl Decl., Ex. 8, at 
34–35.)  The Bankruptcy Court granted Aviva’s request for relief from the bankruptcy stay.  

(Decl. Matthew Callanan Supp. Mot. Dismiss, Ex. A, at ¶ 6, Aug. 09, 2021, Docket No. 364.) 
C.  The Instant Case                                                    

   Following the lift of the bankruptcy stay, Aviva filed the Amended Complaint 
adding three additional counts as well as the Liquidators as defendants.  The additional 
counts allege that, (1) the Principals, the Hong Kong Entities, Aquawood, the Iowa Entities, 
the Liquidators, and Manley were alter-egos of one another, (2) the Principals, the 
Executives, the Hong Kong Entities, Aquawood, Wellmax, the Iowa Entities, Dollar Empire, 
the Liquidators, and Manley engaged in fraudulent transfers intended to prevent Aviva 


Minnesota Federal Court’s post-judgment discovery orders or to compel compliance with such 
orders,” and “whether the Liquidators are estopped from arguing that this Chapter 15 proceeding 
or the Hong Kong ‘liquidation’ prohibit, limit, or otherwise affect such alter ego claims.” In re 
Manley Toys, Ltd., 

, at *3 (D.N.J. May 6, 2019).  The Bankruptcy Court affirmed 
its prior holding.  In re Manley Toys Ltd., 

, at *15 (Bankr. D.N.J. Mar. 31, 2020) 
from obtaining its judgement from Manley, and (3) to the extent that the Fraudulent 
Transfer Defendants were not directly involved in the fraudulent transfers, they aided and 

abetted the fraudulent transfers.  (Am. Compl. at ¶¶ 924–97.)             
   Defendants filed five separate motions to dismiss.  First, four groups of Defendants 
filed motions to dismiss the fraudulent transfer claims, aiding and abetting fraudulent 
transfer claims, and alter ego claims under Rule 12(b)(6).  (Mots. to Dismiss, Aug. 9, 2021, 

Docket Nos. 343, 350, 356, 361.)  In addition to joining the other defendants’ motions, 
the Liquidators filed a Rule 12(b)(2) motion to dismiss.  (Mot. to Dismiss, Aug. 10, 2021, 
Docket No. 371.)4                                                         

                          DISCUSSION                                    
I.  STANDARD OF REVIEW                                                    

   In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the 
Court considers all facts alleged in the complaint as true to determine if the complaint 
states a “claim to relief that is plausible on its face.”  Braden v. Wal-Mart Stores, Inc., 

 (8th Cir. 2009) (quoting Ashcroft v. Iqbal, 

 (2009)).  “A claim 

has facial plausibility when the plaintiff pleads factual content that allows the court to 
draw the reasonable inference that the defendant is liable for the misconduct alleged.”  
Iqbal, 

.  The Court construes the complaint in the light most favorable to 


   4 The Liquidators initially filed a 12(b)(2) motion to dismiss on August 9, 2021 but 
subsequently amended their motion.  (Mot. to Dismiss, Aug. 9, 2021, Docket No. 342.) 
the plaintiff, drawing all inferences in plaintiff’s favor.  Ashley Cnty. v. Pfizer, Inc., 

 (8th Cir. 2009).  Although the Court accepts the complaint's factual allegations as 

true and construes the complaint in a light most favorable to the plaintiff, it is “not bound 
to accept as true a legal conclusion couched as a factual allegation.”  Papasan v. Allain, 

 (1986).  In other words, a complaint “does not need detailed factual 
allegations”  but  must  include  more  “than  labels  and  conclusions,  and  a  formulaic 

recitation of the elements” to meet the plausibility standard.  Bell Atl. Corp. v. Twombly, 

 (2007).                                                 

   In reviewing a motion to dismiss, the Court may consider the allegations in the 
complaint as well as “those materials that are necessarily embraced by the pleadings.”  
Schriener v. Quicken Loans, Inc., 

 (8th Cir. 2014).  Documents embraced 
by the pleadings include those “whose contents are alleged in a complaint and whose 

authenticity no party questions, but which are not physically attached to the pleading.”  
Kushner v. Beverly Enters., Inc., 

, 831 (8th Cir. 2003).      
   Claims that sound in fraud are subject to Rule 9(b)’s heightened pleading standard.  

See Abels v. Farmers Commodities Corp., 

 (8th Cir. 2001).  Claims subject 
to Rule 9(b) require pleading with particularity, “enabling the defendant to respond 
specifically, at an early stage of the case, to potentially damaging allegations of immoral 
and criminal conduct.” 

  To meet this particularity requirement, the “plaintiff must 

specifically allege the circumstances constituting fraud . . . including such matters as the 
time, place and contents of false representations[.]”  

 (cleaned up).  In other words, 
“the complaint must identify the ‘who, what, where, when, and how’ of the alleged 

fraud.”  United States ex rel. Joshi v. St. Luke's Hosp., Inc., 

 (8th Cir. 2006).  
“Where multiple defendants are asked to respond to allegations of fraud, the complaint 
should inform each defendant of the nature of his alleged participation in the fraud.”  
Streambend Props. II, LLC v. Ivy Tower Minneapolis, LLC, 

 (8th Cir. 

2015).                                                                    

II.  FRAUDULENT TRANSFER CLAIMS                                           

A. Relevant Factual Background                                          

   The Amended Complaint is lengthy, convoluted, and confusing.  In no particular 
order,  Aviva  alleges  several  waves  of  fraudulent  transfers  involving  many  different 
groupings of defendants.  These fraudulent transfers were allegedly intended to block 
Aviva and other claimants from recovering judgments from Manley.  Aviva claims that the 
Principals caused Manley to fraudulently transfer its employees, documents, intellectual 
property, product inventory, good will, and accounts to other defendants.  (Am. Compl. 
¶¶ 12, 77–82.)  These transactions were not singular but carried out by several parties 
and in several waves.  (See e.g., 

 ¶ 377–80.)                          
   First, beginning in 2013, the Principals reduced the use of Manley’s name in sales 
and replaced it with Toy Quest, thereby transferring Manley’s business presence to Toy 

Quest.  (Id. ¶¶ 384–87.)  The Principals later created a new entity, Park Lane, and moved 
nearly all of Manley’s employees to identical positions there.  (Id. ¶¶ 390–91.)  Toy Quest 
and Park Lane assumed many of Manley’s accounts and documents, draining Manley of 

its assets without providing any consideration.  (Id. ¶¶ 389, 392, 396–97.)  That practice 
apparently continued for several years.  (Id. ¶ 396.)  All along the Principals, the Hong 
Kong Entitles, Magalhaes, Toy Quest, and Aquawood sent invoices to Manley customers 
demanding that payment be made to Toy Quest instead of Manley.  (Id. ¶¶ 474, 638.)  

Moreover, “[a]ll of the Defendants repeatedly lied to retailers” about which company sold 
products to them, leading retailers, creditors and Manley’s Liquidators to believe that 
millions of dollars actually owing to Manley were instead due to Toy Quest.  (Id. ¶ 457–

59.)  In a second wave of fraudulent transfers, Toy Quest’s assets were sold to Benzai at 
a mere fraction of their worth.  (Id. ¶¶ 399–400.)5                       
   Defendants’ unscrupulous actions have not gone unnoticed.  Aviva cites to several 
district court opinions from this District and from the Southern District of Iowa criticizing 

the Defendants for dishonest actions and disruption of the litigation progress.  (See e.g., 

 ¶¶ 329–41.)                                                           


B.  Statute of Limitations                                              


   5 The Amended Complaint also contains pages of facts describing how the Principals 
caused one of their corporations to shut down one day and open the next as defendant 
Aquawood to avoid a judgment in California, and how the Principals and Toft transferred 
defendant MTD’s assets to Toy Network and then MGS to avoid judgments in Iowa.  Those actions 
do not pertain to fraudulent transfers that harmed Aviva because it was not a creditor in those 
situations.                                                               
   The Defendants request that the Court dismiss Aviva’s fraudulent transfer claims 
as time barred.  The parties dispute whether Minnesota or Hong Kong’s statute of 

limitations should apply to the fraudulent transfer claim.  However, this issue cannot be 
resolved on the face of the Amended Complaint.  As such, the Court will not rule on the 
statute of limitations issue at this stage.                               
   Generally, statute of limitations defense must be raised affirmatively in an answer, 

rather than by a rule 12(b)(6) motion to dismiss.  Varner v. Peterson Farms, 

 (8th Cir. 2004); Joyce v. Armstrong Teasdale, LLP, 

 (8th Cir. 2011).  
Nonetheless, a court can dismiss a claim where the complaint on its face establishes a 

statute-of-limitations defense.  Joyce, 

.  The determination of when a 
fraudulent transfer was discovered, and thereby whether the limitations period has run, 
is a fact intensive decision to be made by a jury unless “the evidence leaves no room for 
reasonable minds to differ on the issue[.]”  Ahlgren v. Muller, 

, at *5 (D. 

Minn. Aug. 16, 2021) (citing, Jane Doe 43C v. Diocese of New Ulm, 

, 684–
85 (Minn Ct. App. 2010)).                                                 
   Minnesota applies a six-year statute of limitations for claims of ‘actual fraud’ 
fraudulent transfers, as opposed to constructive fraud.  Finn v. Alliance Bank, 

, 657–58 (Minn. 2015).  Hong Kong, on the other hand, has a one-year statute of 
limitations.  Transfer of Businesses (Protection of Creditor) Ordinance., (2019) Cap. 49, § 
9 (H.K.), available at www.elegislation.gov.hk/hk/cap49.  Minnesota follows "the almost 
universal  rule  that  matters  of  procedure  [are]  governed  by  the  law  of  the  forum 
state." Davis v. Furlong, 

 (Minn. 1983).  Minnesota courts, and 

federal  courts  interpreting  Minnesota  law,  have  routinely  found  that  statutes  of 
limitations are procedural so far as choice of law is concerned.  Fleeger v. Wyeth, 

 (Minn. 2009); Grewe v. S.W. Co., 

, at *3 (D. Minn. July 
5, 2005).                                                                 

   The Minnesota Court of Appeals has recognized, however, an exception to the 
general rule.  Where a statute of limitations applies to a statutorily created right, as 
opposed to a common law right, the statutes of limitations are considered substantive 

because it is a condition of the right itself rather a limitation on the remedy.  Christian v. 
Birch, 

 (Minn. Ct. App. 2009); Fredin v. Sharp, 

, 308–09 
(D. Minn. 1997) (stating that a statutory “statute of limitations does not merely bar the 
remedy for the violation of a right, but limits or conditions the right itself.”).  

   The Minnesota Supreme Court has stated that, “fraudulent-transfer claims based 
on an actual intent to hinder, delay, or defraud creditors existed at common law as early 
as 1868 . . . the fact that the Legislature has codified fraudulent-transfer liability does not 
change the underlying “gist and essence” of fraudulent-transfer law.”  Finn, 860 N.W. at 

657–58.  As such, the fraudulent transfer claims here are not statutorily created and the 
limitations period is procedural.  Thus, the statute of limitations of the forum state likely 
applies.                                                                  
   Defendants  argue  that  the  procedural  nature  of  the  Minnesota  statute  of 
limitations is irrelevant here because the fraudulent transfer claims are governed by the 

Minnesota Uniform Voidable Transaction Act (“MUVTA”).  MUVTA requires courts to 
apply the substantive law “of the jurisdiction in which the debtor is located when the 
transfer is made or the obligation is incurred.”  

(b).  The Hong Kong 
defendants assert that the one-year Hong Kong statute of limitations is substantive 

because it is statutorily created rather than a common law right.         
   In support of this assertion, the Hong Kong defendants cite a case from a Hong 
Kong court, however, this case undermines their argument.  The Hong Kong court stated 

that the Hong Kong limitations period “is no more than a procedural time-bar, which 
serves to bar the remedy whilst leaving the claim extant, and does not serve to extinguish 
the transferee’s liability per se . . .” OTC International AG v. Perfect Recovery Ltd., [2009] 
3 HKLRD 13, ¶ 58 (C.F.I.).                                                

   Nonetheless, regardless of which statute applies, reasonable minds could differ as 
to when Aviva should have discovered the fraudulent transfers because the defendants’ 
convoluted scheme was intended to disguise their moves.  Moreover, the Amended 
Complaint alleges that the transfer and distribution of Manley’s assets could be ongoing 

even now, and so would not be time barred under either statute of limitations.  As such, 
the Court will not dismiss the fraudulent transfer claim as time barred.  
C.  Sufficient Pleading                                                 
   Fraudulent transfer claims brought under Minnesota state law must comport with 
Rule 9(b)'s particularity requirements.  SEC v. Brown, 

 (D. Minn. 

2009); see Russo v. NCS Pearson, Inc., 

 (D. Minn. 2006) ("In cases 
brought in federal court, Rule 9(b) applies to both common law and statutory fraud claims 
made under Minnesota law where the gravamen of the complaint is fraud."). 
   MUVTA provides, in part: “[a] transfer made or obligation incurred by a debtor is 

voidable as to a creditor . . . if the debtor made the transfer or incurred the obligation: (1) 
with actual intent to hinder, delay, or defraud any creditor of the debtor[.]” 

; Bartholomew v. Avalon Cap. Grp, Inc., 

 (D. Minn. 2009).  

A transfer is defined broadly as “every mode, direct or indirect, absolute or conditional, 
voluntary or involuntary, of disposing of or parting with an asset or an interest in an asset, 
and  includes  payment  of  money,  release,  lease,  and  creation  of  a  lien  or  other 
encumbrance.”  

(16).  A fraudulent transfer claim must be made 

against the first transferee, the person for whose benefit the transfer was made, or an 
immediate or mediate transferee of the first transferee who did not take in good faith.  

.    Finally, fraudulent intent may be inferred from the presence of 
one or, preferably, several factors or “badges of fraud” laid out in statute.  Citizens State 

Bank Norwood Young Am. v. Brown, 

 (Minn. 2014).6         

   6 The “badges of fraud” include: (1) the transfer or obligation was to an insider; (2) the 
debtor retained possession or control of the property transferred after the transfer; (3) the 
transfer or obligation was disclosed or concealed; (4) before the transfer was made or obligation 
was incurred, the debtor had been sued or threatened with suit; (5) the transfer was of 
   Defendants  assert  that  Aviva  failed  to  plead  facts  pertaining  to  particular 
fraudulent transfers, but instead plead fraudulent schemes wherein transfers took place.  

Defendants’ argue that because Aviva does not allege any specific transfers that were 
received  by  any  of  the  Defendants  they  have  failed  to  satisfy  Rule  9(b)’s  pleading 
requirement.                                                              
   In certain situations, courts have relaxed the Rule 9(b) pleading standard.  Bastien 

v. R. Rowland & Co., No. 82-950, 

, at *2 (E.D. Mo. Feb. 25, 1983) (“[When] 
allegations concern matters which are peculiarly within the defendants’ knowledge, the 
pleading standards are relaxed.”); Abels v. Farmers Commodities Corp., 

 

(8th Cir. 2001) (“[A] court cannot reasonably expect highly specific allegations before 
allowing at least a brief discovery period . . .  [because the] facts that would have to be 
alleged are known to the defendants, but the plaintiffs have not yet had a chance to find 
them out.”).  Relaxing the rule, however, does not mean disregarding it entirely.  In 

Bastien, the court stated that the plaintiffs informed defendants of the occasions of fraud, 
the  specific  entities  involved  in  the  fraud,  and  the  specific  material  omissions, 
misstatements, and half-truths made by defendants that caused harm to the plaintiffs.  


substantially all the debtor's assets; (6) the debtor absconded; (7) the debtor removed or 
concealed assets; (8)the value of the consideration received by the debtor was reasonably 
equivalent to the value of the asset transferred or the amount of the obligation incurred; (9) the 
debtor was insolvent or became insolvent shortly after the transfer was made or the obligation 
was incurred; (10) the transfer occurred shortly before or shortly after a substantial debt was 
incurred; and (11) the debtor transferred the essential assets of the business to a lienor that 
transferred the assets to an insider of the debtor.  

(b). 
Bastian, 

, at *3.  Likewise, in Abels, the Eighth Circuit found that the 
plaintiffs indicated items that were mailed to support their mail and wire fraud claims.  

Abels, 

.                                                   
   Here the Fraudulent Transfer Defendants allegedly function as a closely connected 
group of entities and all of the fraudulent transfers took place between and among them.  
It follows that the specific facts of the transfers are “known to the defendants, but the 

plaintiffs have not yet had a chance to find them out.”  

              
   Aviva alleged specific fraudulent transfers bearing several badges of fraud by 
indicating  the  parties  involved,  the  general  timeframes,  and  the  general  assets 

transferred.  Namely it alleged that Principals directed the use of Manley’s name to be 
reduced, demanded money that was actually owed to Manley to be paid to Toy Quest, 
and transferred Manley’s employees to Park Lane.  It also alleged that Wu directed Dollar 
Empire to pay more than three million dollars to Toy Quest while knowing it was owed to 

Manley.  It additionally pled facts indicating transfers bearing the badges of fraud from 
Toy Quest to Benzai.  Finally, by pleading that the Principals were the real and beneficial 
owners of Manley and the other corporate Defendants, and that all the fraudulent 
transfers  were  made  among  and  between  those  corporations,  Aviva  pled  that  the 

Principals were the beneficiaries of the fraudulent transfers.  Read liberally, the Amended 
Complaint adequately alleges fraudulent transfers against those Defendants.   
   However, the Amended Complaint does not allege with any degree of specificity 
that Aquawood, Wellmax, the Iowa Entities, Toth, or the Liquidators were involved in 

making or receiving fraudulent transfers or that they were the beneficiaries of any 
fraudulent transfers.  As such, Aviva has failed at this time to state a fraudulent transfer 
claim against those Defendants.                                           
   The Court will deny the motions to dismiss the fraudulent transfer claims against 

the Principals, the Hong Kong Entities, and Dollar Empire.  The Court will grant the 
motions to dismiss the fraudulent transfer claims against Aquawood, Wellmax, the Iowa 
Entities, Toth, and the Liquidators.  To the extent that the Court dismisses the fraudulent 

transfer claims, it does so without prejudice to enable further development of the claims. 
III. AIDING AND ABETTING FRAUDULENT TRANSFER CLAIMS                       

   Aviva alternatively alleges aiding and abetting fraudulent transfer claims against 
the Fraudulent Transfer Defendants.  The Minnesota Supreme Court has not addressed 
whether aiding and abetting fraudulent transfer is a cognizable claim.  “When there is no 
state supreme court case directly on point, our role is to predict how the state supreme 

court would rule if faced with the same issue before us.”  Blankenship v. USA Truck, Inc., 

 (8th Cir. 2010).                                        
   To date, only one Minnesota court has recognized aiding and abetting fraudulent 
transfer claims.  Janssen v. Lommen, Abdo, Cole, King & Stageberg, P.A., No. A14-452, 

, at *6 (Minn. Ct. App. Dec. 22, 2014).  That holding rested on limited 
reasoning.  The Janssen opinion does not address whether aiding and abetting fraudulent 
transfer is a cognizable claim, or what element of the law supports an aiding and abetting 

claim.  It merely overturns a trial court's decision to grant a motion to dismiss several 
claims, one of which was an aiding and abetting fraudulent transfer claim.  Id. at *7.  
Moreover, Jansson is not binding on this Court.  Badrawi v. Wells Fargo Home Mortg., 
Inc., 

 (8th Cir. 2013) (“A decision of an intermediate state appellate court 

is not binding on a federal court that seeks to determine state law . . . . We will only follow 
the decisions of the state's intermediate courts when they are the best evidence of what 
the state's law is.").                                                    

   Interpreting  the  Minnesota  Uniform  Fraudulent  Transfer  Act7,  the  Minnesota 
Supreme Court stated “uniform laws are interpreted to effect their general purpose to 
make uniform the laws of those states that enact them . . . Accordingly, we give great 
weight to other states' interpretations of a uniform law."  Citizens State Bank Norwood 

Young Am.,, 

.  A significant number of cases from across the country 
have held that aiding and abetting fraudulent transfer claims are not cognizable under 
various states’ “uniform” fraudulent transfer acts.8  The consensus among courts is that 


   7 In 2015, the Minnesota Uniform Fraudulent Transfer Act was amended to the Minnesota 
Uniform Voidable Transactions Act.  See 

-.51.        
   8 Mann v. GTCR Golder Rauner, L.L.C., 

, 918–19 (D. Ariz. 2007) (holding 
that  “courts  have  uniformly  rejected”  a  claim  that  the  catch-all  provision  of  the  uniform 
fraudulent transfer act allows for aiding and abetting liability); Edgewater Growth Cap. Partners, 
L.P. v. H.I.G. Cap., Inc., No. 3601-VCS, 

, at *3 (Del. Ch. Mar. 3, 2010) (refusing to 
find aiding and abetting liability because “the text of the [Uniform] Act does not provide for an 
aiding and abetting claim,” “the General Assembly is free to do so itself,” and “such an innovation 
a fraudulent transfer claim is a claim of equity that cannot support third party liability 
such as an aiding and abetting claim.  See e.g. Cadle Co., 345 P.3d 1052–53 (finding aiding 

and abetting liability improper due to the equitable nature of relief provided by the 
uniform  act,  as  creditors  find  recourse  by  being  “returned  to  their  pre-transfer 
position[.]”).                                                            
   Moreover, the MUVTA does not create the right to pursue fraudulent transfer 

claims but instead recognizes the long existing Minnesota common law cause of action.  
Finn, 860 N.W. at 658.  Minnesota courts from well over a century ago recognized that 
fraudulent transfer claims are based in equity.  See Banning v. Armstrong, 

, 44 


would thereby render [the Uniform Act] non-uniform.”); Magten Asset Mgmt. Corp. v. Paul 
Hastings Jaofsky & Walker LLP, No. 04-1256-JJF, 

, at *2-3 (D. Del. Jan. 12, 2007) 
(finding non-transferees cannot be liable under Montana law under an aiding and abetting theory 
in part by comparing the uniform act to bankruptcy provisions); Freeman v. First Union Nat’l 
Bank, 

 (Fla. 2004) (“There simply is no language in FUFTA that suggests the 
creation of a distinct cause of action for aiding-abetting claims against non-transferees.  Rather, 
it appears that FUFTA was intended to codify an existing but imprecise system whereby transfers 
that were intended to defraud creditors could be set aside.”); GATX Corp. v. Addington, 

 (E.D. Ky. 2012) (denying aiding and abetting liability primarily based on its 
review of other states’ laws and the bankruptcy code and holding that to add such a claim “would 
be writing a remedy into a statute by judicial construction[.]”); Kruse v. Repp, No. 4:19-cv-00106, 

, at *13-16 (S.D. Iowa Mar. 20, 2020) (rejecting aiding and abetting liability 
under Iowa law because fraudulent transfer claims are “equitable in nature” and not tort-based 
damage claims); F.D.I.C. v. S. Prawer & Co., 

, 455–57 (D. Me. 1993) (holding no 
accessory liability lays for a violation of the Maine Uniform Fraudulent Transfers Act because it is 
an equitable remedy rather than a tort); Cadle Co. v. Woods & Erickson, LLP, 

, 1052–
53 (Nev. 2015) (finding aiding and abetting liability improper due to the equitable nature of relief 
provided by the uniform act, as creditors find recourse by being “returned to their pre-transfer 
position”); F.D.I.C. v. Porco, 

 (N.Y. 1990) (rejecting an argument that the 
uniform statute “create[d] a creditor’s remedy for money damages against parties who . . . were 
neither transferees of the assets nor beneficiaries of the conveyance.”); Rohm & Haas Co. v. 
Capuano, 

 (D.R.I. 2004) (finding a mere participant “cannot be sued” 
under the Rhode Island Uniform Transfer Act).                             
(1862) (holding that a plaintiff who brings an action “to cancel a fraudulent assignment” 
is “entitled to relief in equity”); In re Wencl, 

 (Bankr. D. Minn. 1987) 

(“Under Minnesota law, an action to set aside a fraudulent conveyance has been classified 
as a proceeding in equity virtually since statehood.”); Brill v. W.B. Foshay Co., 

 (8th Cir. 1933) (referring to the court as a “court of equity” after discussing actual and 
constructive fraud fraudulent transfers.)                                 

   The Court is aware of only two cases in this district that discuss fraudulent transfer 
claims as legal claims that can support aiding and abetting liability for third parties not 
directly involved in making or benefiting from a fraudulent transfer.  First, in Zayed v. 

Buysse the Court stated that the plaintiff could pursue a “legal claim under the [Minnesota 
Uniform Fraudulent Transfer Act.]”  No. 11-cv-1042, 

, at *35 (D. Minn. 
Sep. 27, 2012).  But in Zayad, there was no reasoning discussed in support of the 
conclusion.                                                               

   In Cedar Rapids Lodge & Suites, LLC v. Seibert, the Court held that the underlying 
fraudulent transfer claims could support a conspiracy to commit fraudulent transfer 
claim.  No. 14-cv-04839, 

, at *18 (D. Minn. Feb. 7, 2018).  The Court stated 
it would be “truly anomalous if common-law civil fraud can serve as the underlying tort 

for a conspiracy claim, but a similar statutory allegation of [actual-fraud fraudulent 
transfer] cannot.”  

                                                   
   However, the Cedar Rapids decision is not helpful to this case for three reasons.  
First, it is not binding on this Court.  Second, the Court did not address the litany of cases 

interpreting uniform fraudulent transfer statutes across the country or examine the 
history of fraudulent transfers in this state.  And finally, the  Court was not dealing with 
an aiding and abetting claim, but a conspiracy to commit fraudulent transfers between 
two parties, one of whom fraudulently transferred assets to the other.  Id. at *15.  Thus, 

Cedar Rapids is distinguishable from this case.                           
   The Court interprets  Minnesota’s fraudulent transfer law consistent with the 
interpretations of other uniform fraudulent transfer acts throughout the country.  This 

interpretation  is  in  line  with  the  history  of  fraudulent  transfer  law  in  Minnesota.  
Therefore, the Court finds that aiding and abetting fraudulent transfer claims are not 
cognizable under MUVTA, and will grant the Defendants’ Motions to Dismiss those claims. 

IV. ALTER EGO CLAIMS                                                      
   Aviva  alleges  that  the  Principals  disregarded  the  corporate  form  of  Manley, 
Aquawood, the Hong Kong Entities, and the Iowa Entities to avoid paying the judgments 

Manley incurred.  Aviva asks that the Court pierce those corporations’ corporate veils and 
treat the Principals as their alter egos, and treat each corporation as the alter ego of the 
other corporations.9                                                      


   9 Aviva alleges “alter ego claims.” However, the Eighth Circuit has stated that piercing the 
corporate veil under an alter ego theory is best thought of as a remedy to enforce a substantive 
right and not as an independent cause of action.  Tamko Roofing Prods. v. Smith Eng'g Co., 450 
   A. Relevant Factual Background                                       

   The Amended Complaint contains pages detailing how Manley shifted its business 
to Toy Quest and Park Lane at the direction of the Principals.  (Am. Compl. ¶¶ 386–97.)  
Manley received no compensation for the business or assets it transferred.  (Id. ¶ 397.)  
Moreover, the Principals directed Manley to transfer its business in order to avoid liability 
Manley had incurred.  (Id. ¶ 384).  Thereafter, the Principals continued to order the 

transfer of everything from Manley’s assets to its goodwill through a maze of corporations 
including the Hong Kong entities and the Iowa entities.  (Id. ¶¶ 398–431.)  Often the lines 
between which corporation was engaging in what business were blurred.  (Id.)   

   Throughout the convoluted process all roads led back to the Principals.  The 
Principals oversaw the transfer of Manley’s assets from one Hong Kong entity to another. 
(Id. ¶¶ 386, 398, 419.)  The Iowa entities took directives from someone named Herman 
Haas who referred to one of the Principals, Samson Chan, as his boss.  (Id. ¶¶ 306–07.) 

Two of the Principals, Samson Chan and Dubinsky, played “key roles” in the management 
Aquawood.  (Id. ¶ 333.)  And the Principals owned Aquawood.  (Id. ¶ 435.)  Finally, the 
Amended Complaint alleges that the Principals explicitly stated their use of numerous 
corporations was meant to ensure that they could “always stay ‘one step ahead’ of 

creditors.”  (Id. ¶ 442.)                                                 


F.3d 822, 826 n.2 (8th Cir. 2006).  Nonetheless, the Court will use Aviva’s “claim” terminology in 
its analysis of Aviva’s request for veil piercing relief.                 
   B. Choice of Law                                                     

   The parties disagree on which law the Court should apply to the alter ego claims.  
Aviva asserts that there is no conflict between the laws of the relevant jurisdictions so the 
law of the forum state governs.  The Defendants contend that the internal affairs doctrine 
applies, and the Court must apply the law of each corporate defendants’ incorporation.  
The Court finds that there is a genuine conflict of laws here and that the internal affairs 

doctrine  necessitates  that  it  apply  the  law  of  the  corporations’  jurisdiction  of 
incorporation.                                                            
        1. False Conflict                                               

   Aviva argues that there is no genuine conflict between Minnesota’s alter ego law 
and  the  other  relevant  jurisdictions’  alter  ego  laws.    Where  the  laws  of  separate 
jurisdictions would produce the same result on the particular issue presented, there is a 
“false conflict,” and courts should avoid choice-of-law questions.  Ronnoco Coffee, LLC v. 

Westfeldt Bros., 

 (8th Cir. 2019).  A brief look into the alter ego 
requirements for each of the jurisdictions involved here is required.     
   -  Minnesota:                                                        
   “Under Minnesota law, deciding whether to allow a corporate veil to be pierced 

requires  a  court  to  1)  analyze  whether  the  corporation  functioned  as  the  mere 
instrumentality of the principals a party is attempting to reach by piercing the corporate 
veil, and 2) determine whether injustice or fundamental unfairness would occur if the 
corporate veil were left intact.”  Stoebner v. Lingenfelter, 

 (8th Cir. 1997). 

   -  Iowa:                                                             
   “A corporate entity is the alter ego of a person if (1) the person influences and 
governs the entity; (2) a unity of interest and ownership exists such that the corporate 
entity and the person cannot be separated; and (3) giving legal effect to the fictional 

separation between the corporate entity and the person would sanction a fraud or 
promote injustice.”  HOK Sport, Inc. v. FC Des Moines, L.C., 

 (8th Cir. 2007) 
(quotation omitted).                                                      

   -  California:                                                       
   The California Supreme Court has held that that an alter ego claim has “two general 
requirements: (1) that there be such unity of interest and ownership that the separate 
personalities of the corporation and the individual no longer exist and (2) that, if the acts 

are treated as those of the corporation alone, an inequitable result will follow.”  Mesler 
v. Bragg Management Co., 

 (Cal. 1985) (emphasis added); Stark v. Coker, 

 (Cal. 1942) (“The two requirements [for piercing the corporate veil] are 
that there be such unity of interest and ownership that the separate personalities of the 

corporation and the individual no longer exist and that adherence to the fiction of 
separate existence would, under the circumstances, promote fraud or injustice”). 
   -  Hong Kong:                                                        
   The general requirements for lifting the corporate veil are (1) the corporate form 

is being used for the purposes of fraud or as a device to evade a contractual or other legal 
obligation, and (2) the defendant controls the corporation.  Wong Chau Wan v. Inc. 
Owners of Nos. 11 12 Canal Rd. W., [2015] H.K.D.C. 412, ¶¶ 26–27.10  Courts are not 
permitted to lift the corporate veil in the absence of those requirements even if justice so 

requires.  

                                                            
   In sum, the four jurisdictions’ requirements do not align.  In Minnesota, the 
defendant must control the alter ego corporation and failure to pierce the corporate veil 

must result in injustice or fundamental unfairness.  In Iowa and California, the defendant 
must control and own the alter ego corporation and failure to pierce the corporate veil 
must result in injustice or fraud.  And in Hong Kong the defendant must control the alter 
ego corporation and use it for the purpose of fraud.  As such, there is no false conflict 

here.                                                                     
        2. Internal Affairs Doctrine                                    

   “The internal affairs doctrine is a conflict of law principle which recognizes that 
only one State should have the authority to regulate a corporation’s internal affairs—

   10 Available at https://www.hklii.hk/cgi-                            
bin/sinodisp/eng/hk/cases/hkdc/2015/412.html?stem=&synonyms=&query=title(WONG%20C
HAU%20WAN%20and%20.%20INCORPORATED%20OWNERS%20OF%20NOS%2011%2012%20C      
ANAL%20ROAD%20WEST,%20HONG%20KONG)%20OR%20ncotherjcitationtitles(WONG%20CH
AU%20WAN%20and%20.%20INCORPORATED%20OWNERS%20OF%20NOS%2011%2012%20CA      
NAL%20ROAD%20WEST,%20HONG%20KONG).                                        
matters peculiar to the relationships among or between the corporation and its current 
officers, directors, and shareholders—because otherwise a corporation could be faced 

with  conflicting  demands.”  Edgar  v.  MITE  Corp.,  

  (1982)  (citing 
Restatement (Second) of Conflict of Laws § 302, cmt. b (1971)).           
   The Eighth Circuit has not addressed whether the internal affairs doctrine applies 
to veil piercing claims.  However, determining whether an entity is an alter ego entails a 

detailed analysis of a corporation’s internal affairs.11  Courts across many jurisdictions—
including in the District of Minnesota—have consistently found that alter ego claims are 
governed by the internal affairs doctrine.  Matson Logistics, LLC v. Smiens, No. 12-400, 

, at *6 (D. Minn. June 5, 2012) (collecting cases and stating that there is 
“near  unanimity  of  courts  in  applying  the  internal  affairs  doctrine  to  veil  piercing 
claims”).12  It follows that the internal affairs doctrine should apply to the alter ego claims 

   11 In Minnesota, for example, courts examine “insufficient capitalization for purposes of 
corporate  undertaking, failure  to  observe  corporate formalities,  nonpayment of dividends, 
insolvency of debtor corporation at time of transaction in question, siphoning of funds by 
dominant shareholder, nonfunctioning of other officers and directors, absence of corporate 
records, and existence of corporation as merely façade for individual dealings.”  Victoria Elevator 
Co. v. Meriden Grain Co., 

 (Minn. 1979).               

   12 One district court in the Eighth Circuit held that the internal affairs doctrine does not 
apply where foreign corporations are involved.  See Schwan v. CNH Am. LLC, No. 04-3384, 

, at *17 (D. Neb. May 4, 2006) (reasoning that the forum state’s interest in applying 
its law to citizens injured by foreign corporations outweighed the interests of the corporation’s 
jurisdiction of incorporation) (quoting First Nat'l City Bank v. Banco Para El Comercio Exterior De 
Cuba, 

 (1983) (emphasis in original)).                   
   However, Schwan relied on First National Bank which is inapposite here.  First National 
Bank determined that there was a genuine overriding interest in protecting domestic citizens 
from categorical violations of their rights by the actions of foreign governments.  462 U.S. at 621–
22 (“[t]o give conclusive effect to the law of the chartering state in determining whether the 
here, and the Court should apply the law of the defendant corporations’ jurisdictions of 
incorporation.                                                            

   C. Merits                                                            

   The Amended Complaint alleges a complex web of alter egos asserting that all the 
Alter Ego Defendants are functionally a single entity.  (Am. Compl. ¶ 925.)  Aviva claims 
the following alter ego relationships:                                    
     1.  Manley is an alter ego of the Principals;                      
     2.  The Hong Kong Entities, Aquawood, and the Iowa Entities are alter egos of 
        the Principals;                                                 
     3.  Manley is an alter ego of the Hong Kong Entities, Aquawood, and the Iowa 
        Entities; and                                                   
     4.  The Hong Kong Entities, Aquawood, and the Iowa Entities are alter egos of 
        one another.                                                    
     (Id.)                                                              
   In all relevant jurisdictions the plaintiffs must plead facts showing that the alter 
ego entity is controlled by its alter ego principal for a wrongful or fraudulent purpose.  
See, e.g., Victoria Elevator Co. of Mpls. v. Meriden Grain Co., 

, 512–13 
(Minn. 1979) (holding that a corporation was the alter ego of its owner who controlled 
the corporation’s finances for his own purposes); Benson v. Richardson, 

 (Iowa 1995) (“We will set aside the corporate fiction if there is such unity of interest 
and ownership that the individuality of the corporation and its owners have ceased and 

separate juridical status of its instrumentality should be respected would permit the state to 
violate  with  impunity  the  rights  of  third  parties  under  international  law  while  effectively 
insulating itself from liability.”)  That is not the case here where all the parties involved are private 
entities.                                                                 
the facts demonstrate observance of the fiction of separate existence would, under the 
circumstances, sanction a fraud or promote injustice.”); Toho-Towa Co., Ltd. v. Morgan 

Creek Prods., Inc., 

, 479–80 (Cal. Ct. App. 2013) (holding that a court 
will pierce the corporate veil where there is “such domination of finances, policies and 
practices that the controlled corporation has, so to speak, no separate mind, will or 
existence of its own and is but a business conduit for its principal”); Wong Chau Wan 

[2015] H.K.D.C. 412 ¶ 42 (“The lifting of the corporate veil requires . . . circumstances 
showing that a company has been used as the ‘alter ego’ by a defendant for the purpose 
of fraud, or as a device or sham to commit impropriety or wrongdoing[.]”).   

   Aviva alleges that the Principals ordered Manley’s business and  assets  to be 
transferred  among  and  between  the  Hong  Kong  Entities  after  Aviva  acquired  the 
judgment against Manley.  Those allegations indicate the Principal’s control over Manley 
and the Hong Kong entities.  The constant movement of assets and business between the 

entities and the explicit statement of the Principals that they did so to stay one step ahead 
of creditors shows that the corporations were used to for the purpose of perpetuating 
fraud.  Therefore, the Complaint shows control and fraudulent purpose as required by all 
jurisdictions.  Those allegations are sufficient as they pertain to Manley and the Hong 

Kong entities because they satisfy the requirements of Hong Kong law.     
   California and Iowa law require ownership in addition to control.  SEC v. Hickey, 

 (9th Cir. 2003) (“Ownership is a pre-requisite to alter ego liability, and 
not a mere ‘factor’ or ‘guideline.’”); HOK Sport, Inc., 

 (finding that a for-
profit business was the owner of a nonprofit corporation and thus could be its alter ego).  

Aviva alleges that the Principals own Aquawood, but does not allege that the Principals 
owned the Iowa entities.  According to the Amended Complaint, the Iowa Entities’ 
corporate form was fragmented and confusing, but they were taking directives from the 
Principals and their employees understood that they were working for the Principals.  

(Am. Compl. ¶ 232.)  Therefore, construing the Amended Complaint in Aviva’s favor as 
the Court must, the Plaintiffs have pled sufficient facts to indicate that the Iowa Entities 
are effectively owned by the Principals.                                  

   The Amended Complaint does not allege any facts tending to show that any of the 
corporate defendants controlled any other corporate defendant.  At no point does the 
Amended Complaint spell out instances of corporate defendants ordering or causing 
another corporate defendant to act in any way.  Instead, the Principals directed the 

actions taken by the corporations.  As such the alter ego theories regarding the corporate 
defendants rest on the fact that all of these entities appeared to work in tandem.  That, 
however, is not a sufficient allegation to maintain an alter ego claim.   
   Therefore, the Court will deny the motions to dismiss the alter ego claims alleging 

that that Manley, the Hong Kong Entities, the Iowa Entities and Aquawood are alter egos 
of the Principals.  However, because the Amended Complaint does not contain sufficient 
facts to support a finding that the Hong Kong Entities, Aquawood, the Iowa Entities, and 
Manley are alter egos of one another, the Court will grant the motions insofar as it relates 
to them.  Again, the Court will dismiss the claims without prejudice.     


V.  LIQUIDATORS’ MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION      
A. Standard of Review                                                   

   “To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving 
party need only make a prima facie showing of jurisdiction.”  Epps v. Stewart Info. Servs. 
Corp., 

 (8th Cir. 2003).  “As long as there is ‘some evidence upon which 
a prima facie showing of jurisdiction may be found to exist,’ the Rule 12(b)(2) motion will 

be  denied.”   Pope  v.  Elabo  GmbH,  

  (D.  Minn.  2008) 
(quoting Aaron Ferer & Sons Co. v. Diversified Metals Corp., 

 (8th Cir. 
1977)).  The party seeking to establish personal jurisdiction bears the burden of proof, 
and “the burden does not shift to the party challenging jurisdiction.”  Epps, 

.  For purposes of a prima facie showing, the Court must view the evidence in the light 
most favorable to the non-moving party.  K-V Pharm. Co. v. J. Uriach & CIA, S.A., 

 (8th Cir. 2011).                                                 
B.  Relevant Factual Background                                         

   In early 2016, Aviva brought a motion for sanctions against Manley for its failure 
to pay the judgment it owed to Aviva.  (Am. Compl. ¶ 551.)  A hearing on the motion was 
initially  scheduled  for  early  March  2016.    (Id.  ¶¶  580.)    However,  the  Principals 
orchestrated a sham motion to intervene in order to delay the hearing.  (Id. ¶¶ 580–584.)  
The motion to intervene was denied as “grossly deficient.”  (Id. ¶ 586.)  Nonetheless, the 

motion delayed the sanctions hearing until late March, which gave the Principals time to 
“begin Manley’s liquidation in Hong Kong and direct Manley’s liquidators to file a petition 
for chapter 15 recognition and a request for emergency provisional relief to shut down all 
U.S. litigation relating to Manley[.]” (Id. at ¶¶ 589–590.)               

   The Principals provided funding for the Liquidators to carry out the chapter 15 
proceeding, but concealed Manley’s assets and otherwise mislead the Liquidators into 
believing Manley conducted little business in the U.S. and had less than $100,000 in assets 

in the U.S.  (Id. at ¶¶ 595–597.)  The Liquidators filed the bankruptcy petition, triggered a 
bankruptcy stay, and blocked Aviva’s efforts to pursue legal action against Manley or 
access  Manley’s  documents.    (Id.  at  ¶  599.)    Meanwhile,  the  Principals  withheld 
documents from the Liquidators that might have supported fraudulent transaction or 

alter ego claims against Manley.  (Id. at ¶¶ 601–605.)  Moreover, the Principals under-
funded the Liquidators’ actions in Hong Kong where they could have pursued many of 
those claims.  (Id. at ¶ 600.)                                            
   In 2019, the Liquidators informed Aviva that they had agreed to a settlement with 

Toy Quest which would have given Manley’s creditors approximately one tenth of one 
percent of their claims against Manley.  (Id. at ¶¶ 607–612.)  The settlement agreement 
was negotiated on both sides by lawyers paid by Toy Quest.  (Id.)  In 2020, a Hong Kong 
Court rejected the settlement.  (Id. at ¶ 619.)  Thereafter, the Liquidators determined that 
they would not be able to obtain an enhanced settlement and subsequently moved to 

close the Manley liquidation proceeding.  (Id. at ¶¶ 621–622.)            
C.  Analysis                                                            

   1. Minimum Contacts                                                  
   Generally, the Court may exercise personal jurisdiction over a defendant if doing 
so (1) is consistent with Minnesota's long-arm statute and (2) comports with the Due 
Process Clause of the Fourteenth Amendment.  See Whaley v. Esebag, 

 
(8th Cir. 2020).  Because Minnesota's long-arm statute extends as far as the Due Process 

Clause allows, “the Court need only consider whether exercising personal jurisdiction 
over [a defendant] is consistent with due process.”  Pope, 

.  
   “The  Due  Process  Clause  of  the  Fourteenth  Amendment  constrains  a  State's 
authority to bind a nonresident defendant to a judgment of its courts.”  Walden v. Fiore, 

 (2014).  “The touchstone of the due-process analysis remains whether 
the  defendant  has  sufficient  ‘minimum contacts with  [the  forum]  such  that  the 
maintenance of the suit does not offend 'traditional notions of fair play and substantial 
justice.’”  Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co., KG, 

 

(8th Cir. 2011) (quoting Int'l Shoe Co. v. Washington, 

 (1945)).  The Court 
must therefore assess whether “the defendant's suit-related conduct . . . create[s] a 
substantial connection with the forum.” Walden v. Fiore, 

 (2014). 
   The Eighth Circuit employs a five-factor personal jurisdiction test, assessing: 
        (1)  the nature and quality of the contacts with the forum      
        state;                                                          
        (2)  the quantity of the contacts with the forum state;         
        (3)  the relationship of the cause of action to the contacts;   
        (4)  the interest of the forum state in providing a forum for   
        its residents; and                                              
        (5)  the convenience of the parties.                            

See Dairy Farmers of Am., Inc. v. Bassett & Walker Int'l, Inc., 

 (8th Cir. 
2012) (citation omitted).                                                 
   “The five-factor test essentially boils down to three: (1) whether the quality and 
quantity of the defendant's contacts with the forum state establish minimum contacts; 
(2) whether the litigation arises out of those contacts; and finally, if the first two are met, 
(3) whether it is reasonable, considering the interest of the forum state and convenience 
to the parties, to force an out-of-state litigant to defend itself in the forum state.”  
Ahlgren, 438 F.Supp.3d at 987.                                            
   First,  Liquidators  do  not  have  sufficient  contact  with  Minnesota  because 
Liquidators are residents of Hong Kong and have never engaged in business in Minnesota.  
   Second, the only nexus between the present action and Minnesota is the Chapter 
15 bankruptcy case in New Jersey where Liquidators sought to dispose of Manley’s assets.  

Under § 1510 of the Bankruptcy Code, a foreign representative filing a bankruptcy 
petition does not subject itself to the jurisdiction of a U.S. Court for any purpose.  

.  As such, the second factor weighs against finding personal jurisdiction, and the 
Court does not have jurisdiction over the Liquidators under the minimum contacts test.  

   Because the first two factors are not met, this Court does not need to address the 
third factor and finds that it does not have jurisdiction over the Liquidators under the 
minimum contacts test.  Ahlgren, 438 F.Supp.3d at 987.                    
   Aviva asserts alternate bases of jurisdiction: imputed jurisdiction and the Calder’s 

effects test.13  Those theories similarly fail because Manley was not acting on behalf of 
the Liquidators and because the Liquidators did not intentionally direct their actions at 
Minnesota.  Because Aviva fails to plead a prima facie showing of jurisdiction over the 

Liquidators, the Court will dismiss them from the lawsuit.                
   2. Imputed Jurisdiction                                              

   Aviva claims that the Court’s jurisdiction over Manley is imputed to the Liquidators.  
“[C]ontacts with the forum state that are made on behalf of the defendant by others may 
be considered.”  Digi-Tel Holdings v. Proteq Telcoms., 

 (8th Cir. 1996).  

   13 Aviva also claims the Court has jurisdiction under conspiracy jurisdiction.  Aviva’s claim 
for conspiracy jurisdiction requires a showing that (1) a conspiracy existed, (2) the non-resident 
defendant participated in or joined the conspiracy, and (3) an overt act was taken in furtherance of 
the conspiracy within the forum's borders.  Yellow Brick Rd., LLC v. Childs, 

 (D. Minn. Aug. 6, 2014) (citing Hunt v. Nevada State Bank, 

 (Minn. 1969)).  
Aviva does not plead facts that show the Liquidators were part of the conspiracy, so this theory 
fails.                                                                    
   Additionally, the Liquidators ask the Court to apply the Barton doctrine.  Under Barton, a 
plaintiff cannot sue a court appointed receiver without first obtaining the leave of the appointing 
Court.  Barton v. Barbour, 

, 128–31 (1881).  However, no cases apply the Barton 
doctrine to foreign courts, so this Court will not do so.  See In re Irish Bank Resol. Corp. Ltd., No. 
18-cv-1797, 

, at *4 (D. Del. Sept. 27, 2019) (finding that applying the Barton 
doctrine to foreign courts “would be a very expansive application of Barton”). 
"[W]hen commercial activities are 'carried on in behalf of' an out-of-state party those 
activities may sometimes be ascribed to the party, at least where [it] is a 'primary 

participant' in the enterprise and has acted purposefully in directing those activities."  

 
(quoting Burger King Corp v. Rudzewicz, 

, 479 n.22 (1980)).   
   While it is undisputed that the Court has jurisdiction over Manley, Aviva’s assertion 
of imputed jurisdiction fails because Manley was not acting “on behalf of” the Liquidators.  

  Aviva fails to produce facts sufficient to support the inference that Manley’s activities 
were “directed by or primarily for the benefit of” the Liquidators.  

  The Liquidators 
served an entirely different function—to liquidate Manley’s business and distribute its 

assets to creditors.  Thus, Manley’s contacts cannot be imputed to Liquidators.14  
   3. Calder Effects Test                                               
   Finally, Aviva relies on the “effects test” articulated in Calder v. Jones, 

, 
(1984).  In Calder, the Supreme Court upheld a California court’s exercise of personal 

jurisdiction  over  the  Florida-based  "editor  and  reporter  of  the  National  Enquirer,  a 
Florida-based newspaper with a nationwide circulation.”  Dakota Indus., Inc. v. Dakota 
Sportswear, Inc., 

 (8th Cir. 1991).  Plaintiff, a California resident, had 
sued  for  libel,  and  the  Supreme  Court  concluded  that  jurisdiction  was  appropriate 


   14  Aviva  cites  personal  liability  cases  to  support  their  assertion  that  Liquidators 
“essentially are Manley, as both a practical and legal matter.”  (Aviva Opp. 12(b)(2) Mot. Dismiss, 
at 12, Oct. 12, 2021, Docket No. 398) (emphasis in original.); e.g. Lakota Girl Scout Council, Inc. v. 
Havey Fund-Raising Mgmt., Inc., 

 (8th Cir. 1975).  However, those cases are 
distinguishable because Manley did not exercise any control or domination over Liquidators, 
unlike the defendants in the cases Aviva cites.                           
because the editor and reporter (1) had acted intentionally, (2) knew that a particular 
plaintiff would be harmed, and (3) “knew that the brunt of injury would be suffered in the 

state where the plaintiff lived[.]"  

  The Court found that "under these circumstances, 
petitioners must reasonably anticipate being haled into court" in California.  

 (quoting 
Calder, 

).                                                 
   The Liquidators fail the first element of the Calder effects test because none of the 

allegations in the Amended Complaint support finding the Liquidators acted intentionally.  
The Liquidators could not have intentionally blocked Aviva from collecting its judgment 
against Manley without knowing that Manley had the capacity to pay the judgment, and 

the Liquidators could not have known if Manley had the capacity because the Principals 
“concealed Manley’s assets from the Liquidators.”  (Am. Compl. ¶ 595.)  In fact, the 
Amended Complaint suggest that the Liquidators were the victims of other defendants’ 
conspiracy actions.  The Amended Complaint alleges that the Principals frequently lied to 

them, withheld information from them, provided false information to them, and withheld 
money and documents necessary for them to pursue loss-recovery claims.  (See Id. ¶¶ 
379, 392, 458, 502–506, 552, and 595–605.)  Accordingly, the first element is not satisfied.  
   No allegations in the Amended Complaint suggest that the Liquidators knew a 

particular plaintiff would be harmed in Minnesota.  The Calder effects test does not 
displace the requirement that Defendants purposefully “tether” the effect of their actions 
to the forum state itself, as opposed to people who just happen to live there.  Pederson 
v. Frost, 

 (8th Cir. 2020) (quoting Walden, 

) (noting that 
“the proper question is not where the plaintiff experienced a particular injury or effect 

but whether the defendant’s conduct connects him to the forum in a meaningful way.”) 
(cleaned up)).  Aviva asserts that the Liquidators intentionally directed their actions at 
Minnesota by filing bankruptcy proceedings that disrupted the flow of litigation in this 
district.  (Aviva Opp. 12(b)(2) Mot. Dismiss, at 17.)  However, according to the Amended 

Complaint,  the  Liquidators  were  operating  with  limited  resources  and  incomplete 
information.  The other defendants’ “actions were taken in contemplation of Manley’s 
bankruptcy case, to drain Manley of assets prior to the filing of the chapter 15 recognition 

petition, mislead Manley’s liquidators and the court, and make it more difficult for 
creditors to trace or seize Manley’s assets.”  (Am. Compl. at ¶ 879.)  Considering all the 
allegations in the Amended Complaint as true, that claim undercuts Aviva’s argument that 
the Liquidators initiated the bankruptcy proceedings to harm Plaintiffs in Minnesota. 15  

Accordingly, this Court finds that the Calder effects test is not satisfied.  Given Aviva’s 


   15 Additionally, this is not the first time Aviva has claimed the Liquidators acted in bad 
faith in U.S. Courts.  In 2020, the U.S. Bankruptcy Court, District of New Jersey held that the 
Liquidators had not acted in bad faith.  In re Manley Toys Ltd., No. 16-cv-15374, 

, at *15 (Bankr. D.N.J. Mar. 31, 2020).  The Bankruptcy Court found that the Liquidators 
were unable to pursue claims against the defendants in this case to do lack of funding which is a 
justified reason.  Id. at *8.  The fact that Toy Quest funded the Liquidators was not an indication 
of bad faith because that was “typical in British Commonwealth countries” and Aviva never 
offered to fund the Liquidators themselves.  Id.  Further Aviva points to the presence of Manley 
associates on the committee of inspectors overlooking the Liquidators, but Aviva was offered a 
position on the committee and refused it and has not since attempted to join it.  Id. at 9.   
failure to assert a prima facie basis for jurisdiction, the Court will dismiss the Liquidators 
from the action.                                                          

   Based on the foregoing, and all the files, records, and proceedings herein, IT IS 
HEREBY ORDERED that:                                                      
      1.  Defendants’ Motions to Dismiss [Docket Nos. 342, 343, 350, 356, 361, and 

        371] are GRANTED IN PART and DENIED IN PART as follows:         
           a.  Defendant’s Motions to Dismiss are DENIED IN PART as to  
                i.  Aviva’s Fraudulent Transfer Claims Against Chan Ming Yiu, 
                  also known as Samson Chan, Liu Yi Man, also known as Lisa 

                  Liu, Brian Dubinsky, Chan Siu Lun, also known as Alan Chan, 
                  Toy Quest Ltd., Banzai International, Park Lane Solutions, 
                  Manley, and Dollar Empire; and                        
                ii.  Aviva’s Alter Ego Claims asserting that Aquawood, Toy Quest 

                  Ltd., Banzai International, Park Lane Solutions, Manley, MTD, 
                  Toy Network, LLC, and MGS International, LLC are alter egos 
                  of Chan Ming Yiu, also known as Samson Chan, Liu Yi Man, 

                  also known as Lisa Liu, Brian Dubinsky, and Chan Siu Lun, also 
                  known as Alan Chan;                                   
           b.  Defendant’s Motions to Dismiss are GRANTED IN PART as to  
                i.  Aviva’s  Fraudulent  Transfer  Claims  against  Aquawood, 

                  Wellmax, MTD, Toy Network, LLC, and MGS International, 
          LLC, Richard Toth, Peter Magalhaes, Michael Wu, Robert Lees 
          and Mat Ng;                                           

        ii.  Aviva’s Aiding and Abetting Fraudulent Transfer Claims; 
       iii.  Aviva’s Alter Ego Claims alleging Manley is an alter ego of 
          Aquawood, Toy Quest Ltd., Banzai International, Park Lane 
          Solutions,  Manley,  MTD,  Toy  Network,  LLC,  and  MGS 

          International, LLC, and;                              
       iv.  Aviva’s Alter Ego Claims alleging Aquawood, Toy Quest Ltd., 
          Banzai International, Park Lane Solutions, Manley, MTD, Toy 

          Network, LLC, and MGS International, LLC are alter egos of 
          each other.                                           
2.  Aviva’s Fraudulent Transfer claims against Aquawood, Wellmax, MTD, Toy 
Network, LLC, and MGS International, LLC, Richard Toth, Peter Magalhaes, 

Michael  Wu,  Robert  Lees  and  Mat  Ng  are  DISMISSED  WITHOUT 
PREJUDICE;                                                      
3.  Aviva’s Alter Ego Claim alleging Manley is an alter ego of Aquawood, Toy 
Quest Ltd., Banzai International, Park Lane Solutions, Manley, MTD, Toy 

Network,  LLC,  and  MGS  International,  LLC  is  DISMISSED  WITHOUT 
PREJUDICE;                                                      
       4.  Aviva’s Alter Ego Claims alleging Manley is an alter ego of Aquawood, Toy 
          Quest  Ltd.,  Banzai  International,  Park  Lane Solutions,  Manley,  MTD, Toy 
          Network,  LLC,  and  MGS  International,  LLC  are  DISMISSED  WITHOUT 
          PREJUDICE; 
       5.  Aviva’s Aiding and Abetting Fraudulent Transactions Claims are DISMISSED 
          WITH PREJUDICE; 
       6.  Aviva’s  claims  against  Robert  Lees  and  Mat  Ng  are  DISMISSED  WITH 
          PREJUDICE. 

DATED:  March 31, 2022                           JoGhn W. (edition 
at Minneapolis, Minnesota.                         JOHN R. TUNHEIM 
                                                  Chief Judge 
                                           United States District Court 

                                      42