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Employer Must Pay Attorney for Secret Settlement

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Two California appeals court judges affirmed that attorney Shin Yang proved that his former client William Hang had his employers coerce him to sign a secret, independent settlement agreement.

Los Angeles, CAFormer motel employee William Hang filed a wage and hour lawsuit against his employer, but when Hang’s attorney sought the employer’s payment and obtained a default judgment of $255,000, he discovered that the employer had coerced Hang into a substantially less settlement: $20,000 cash.

Litigation in this case is rather convoluted so here is an attempt to explain it by timeframe. Defendants are Ms. Wang Chien Ego Hsiao and Mr. Long Tzong Syiau, a married couple who operate the Champion Motel in San Gabriel. Plaintiff William Hang worked at the Champion Motel since June 2010. Attorney Shin P. Yang was Hang’s attorney.

June 2010: Ms. Wang Chien Ego Hsiao and Mr. Long Tzong Syiau employ William Hang at Champion Hotel in San Gabriel.

August 31, 2015: Attorney Shin P. Yang filed a wage and hour action against the Champion Motel, Hsiao, and Syiau on behalf of his client William Hang. Yang is retained on a contingency basis and the retainer agreement provided that Yang would receive a fee of 40 percent of the gross recovery after litigation commenced, and granted an attorney fees lien to Yang for his services should he be discharged prior to concluding the case.

October 6, 2015: Yang served to defendants stated damages of $300,000 in general damages, $300,000 in special damages, and $600,000 in punitive damages.

October 13, 2015: After no response to the complaint, Yang filed a request for entry of default along with the statement of damages, and default was entered.

October 21, 2015: Hang executed a declaration in support of default judgment, stating he worked 14-hour days five days a week without breaks or overtime for $905 per month. He seeks $787,465 in damages.

October 26, 2015: The Court files Hang’s declaration.

Meanwhile…

Mid-October: Without attorney Yang’s knowledge, Hsiao met with Hang and convinced him to sign a $20,000 settlement agreement. According to Hang, they met for tea and Hsiao told him she felt sorry for having underpaid him. She promised to "make up" for his loss by loaning him $20,000, knowing he needed money to support his family—after all, he was getting paid less than minimum wage.

Late October: Hsiao brought a document dated October 23 for Hang to sign, telling him it was a "receipt" for the $20,000 cash loan. Hang told Hsiao he could not read nor understand the document. Hsiao told him, "don't worry," assured him it was just a "receipt," and promised to give him more money in the future. Hang signed the agreement and Hsiao gave him the $20,000 cash.

According to court documents, the settlement agreement provided that "Defendants, and each of them individually, agree to pay the amount of $20,000, jointly payable to the Plaintiff's Attorney and Plaintiff," no later than one week after execution of the document. It set forth a comprehensive mutual release of all claims, and provided that upon execution and payment Hang would "file a dismissal with prejudice of the entire Subject Action," including against Syiau, who did not execute the agreement. The agreement was drafted by Ms. Hsiao's daughter, a certified public accountant.

November 9: Yang continued to work on Hang's wage and hour lawsuit, including submitting briefing on statute of limitations issues at the request of the trial court. Both sides were served with the trial court's request for this briefing.

On January 26, 2016, Hang signed a declaration in support of application for default judgment, seeking $255,056.50 in damages.

January 27, 2016: Yang filed and served a memorandum on statute of limitations.

January 29, 2016: The trial court issued a default judgment for Hang in the sum of $255,056.50.

April 2016: Hsiao took Hang to a notary public and had him re-sign the settlement agreement and a request for dismissal in front of a notary.

August 2016: Yang filed an application for a debtor's examination of Hsiao to enforce the judgment, and a hearing was scheduled for September 9, 2016. Shortly thereafter, Yang received a letter from Hsiao's counsel informing him of the settlement and attaching a copy of the agreement. Yang learns of the October 23 settlement agreement.

Next day: Hang showed Yang copies of the settlement agreement, an unfiled substitution of attorney form dated January 28, 2016, and a notarized unfiled request for dismissal dated January 29, 2016, which Hang stated he had signed in exchange for money from Hsiao. Hang told Yang—who was aware Hang could not read English—that he didn't know what the documents were and that no one had explained them to him.

October 4, 2016: Hsiao filed an ex parte application to set aside the judgment, enforce the settlement agreement, and dismiss the entire case with prejudice. Yang opposed the application, with a supporting declaration from Hang describing  Hang's experience with Hsiao inducing him to sign the agreement.

October 7, 2016: the trial court denied Hsiao's application except that it set aside the default judgment (but not the default) on procedural grounds because the original complaint had not stated a specific amount of damages sought and default judgments may not exceed the amount stated in the complaint

December 8, 2016: Yang filed an amended complaint.

January 13, 2017: Defendants filed an answer to the amended complaint and a cross-complaint against Hang for breach of the settlement agreement, breach of the implied covenant of good faith and fair dealing, and fraudulent and negligent misrepresentation for not dismissing the case within a week after settlement.

January 23, 2017:  Hang filed a substitution of attorney substituting himself in place of Yang as a self-represented party and filed a request for dismissal with prejudice of the complaint but not of the cross-complaint.


September 20, 2017: Defendants continued pursuing their cross-compliant against Hang and obtained a default judgment against Hang in the amount of $13,899.35.

January 24, 2017: Yang sued Hsiao, Syiau, and Hang for  “Intentional Interference” with contractual relations, civil conspiracy, and intentional and negligent interference with prospective economic relations. The case proceeded to a four-day bench trial on the single issue of intentional interference with contract against Hsiao and Syiau.

Sadly, Hang died before trial and was dismissed from the case.

The Verdict


The trial court found Hsiao's testimony incredible, concluded that Yang had proved intentional interference with contractual relations, and awarded actual damages of $102,022 (based on 40 percent of the default judgment obtained in the Hang action), $1,926 in litigation costs advanced by Yang in the Hang action, and $100,000 in punitive damages against Hsiao, individually and as Syiau's agent.

Champion Motel


Here a few Champion Motel choice reviews:

“The owner of this place has no customer service nor consideration towards his employees. I heard the owner of this establishment belittle his employees calling them dumb and stupid. The better business bureau should really check this place out. No one should talk like this to employees. I was horrified and walked away,” says Chili P.

“This motel is the trashiest place ever... my room smelled so bad. I flipped over sheets and I found hair, stains over the bedding, and cigarette burns. I went to the counter and the lady was horrible. She did not want to give a refund and she laughed as I was talking,” reports Sally L.

And this from Donald H: “Very unfriendly and very dirty. I had to call my friend and have her come to rescue me from this dump since the guy in at the counter was so rude. My friend then told me this place is for people to do "business" in and not for travellers (if you know what i mean). “I wouldn’t let my pet stay there.”

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