On May 31, 2024, Legal Recovery LLC filed a complaint against Crystal Lei and her son Bryant Fu in the City & County of San Francisco Superior Court. The plaintiff, Legal Recovery LLC, alleged that the defendants engaged in fraudulent conveyance and sought declaratory relief.
The case stems from a long-standing dispute involving Demas Yan, a disbarred attorney and declared vexatious litigant, who has been involved in litigation against Lei and Fu for over a decade. According to court documents, Demas Yan's mother, Tina Yan, has also been declared a vexatious litigant for assisting him in pursuing frivolous lawsuits. Legal Recovery LLC was found to be an alter ego of the Yans by the trial court, which led to its dismissal after failing to post a $150,000 security bond as ordered by the court.
The plaintiff contends that the trial court erred in declaring it an alter ego of the Yans and argued that there was a reasonable probability of prevailing in the litigation. However, the appellate court found no error in the trial court's decision. The appellate court noted that Demas Yan had engaged in persistent misconduct including filing multiple frivolous appeals resulting in sanctions. Furthermore, it was highlighted that Demas had made numerous false representations to various courts and failed to obey court orders.
The core of Legal Recovery's complaint revolved around allegations that Tony Fu (Lei’s ex-husband) and Lei engaged in a "sham divorce" to transfer community properties to Lei and shield them from creditors. These allegations were similar to those made by Demas Yan in previous lawsuits against Lei and Fu which were dismissed on merits. In March 2019, Tony Fu was granted discharge in bankruptcy but Golden State Lumber Inc., which had obtained a judgment against Tony for unpaid building materials back in 2006, settled with Legal Recovery by assigning this judgment to them.
Despite these efforts, Legal Recovery’s claim was ultimately deemed time-barred under California’s Uniform Voidable Transactions Act (UTVA), which imposes strict limitations on actions challenging fraudulent transfers. The appellate court upheld this finding noting that any claims related to fraudulent property transfers occurring more than seven years prior were extinguished by law.
In addition to affirming the dismissal of Legal Recovery’s action, the appellate court imposed $9,750 in sanctions payable to respondents Crystal Lei and Bryant Fu as well as $17,000 payable to the court for bringing what it deemed a frivolous appeal. The appellate judges underscored their decision by referencing previous sanctions imposed on both Demas Yan and Tina Yan for similar meritless appeals aimed at harassing Lei and Fu.
Representing Legal Recovery LLC is attorney William Leeds Disston Jr., who has previously faced sanctions for filing frivolous appeals on behalf of his clients. Judges Chou J., Simons Acting P.J., and Burns J., presided over this case under Case ID A167818.