Korea Deposit Ins. Corp. v JungAnnotate this Case
Decided on December 17, 2018
Supreme Court, New York County
Korea Deposit Insurance Corporation, Bankruptcy administrator for bankrupt Tomato Savings Bank Co, Ltd., Plaintiff,
Mina Jung and SUNG-MIN CHOI, Defendants.
Evan Glassman & Charles A Michael
Steptoe & Johnson LLP
1114 Avenue of the Americas 35th Floor
New York, NY 10036
FOR defendants (on the papers):
Kim & Bae, P.C.
2160 N. Central Road
Fort Lee, NJ 07024
110 E. 59th Street, 22nd Floor
New York, NY 10022
Carmen Victoria St. George, J.
Currently, plaintiff Korea Deposit Insurance Corporation (KDIC) moves to amend its complaint to add a cause of action against defendants Mina Jung and Sung-Min Choi. Plaintiff [*2]annexes the proposed amended complaint as Exhibit A.[FN1] Defendants oppose the motion. For the reasons below, the Court grants the motion.
In this action, plaintiff alleges that on March 4, 2010, when there were outstanding judgments of over $85 million against him, defendant Sung-min Choi made a fraudulent conveyance of $1.8 million to his wife, defendant Mina Jung. Ms. Jung used the money toward the purchase of a luxury apartment, unit PH2F at 205 West 76th Street in Manhattan. Plaintiff seeks to set aside the conveyance and obtain the $1.8 million as partial payment of Mr. Choi's debt. Justice Lucy Billings, who then presided over the matter, issued an injunction restraining Ms. Jung from selling the apartment, which she later converted to an attachment lien of $1.83 million on the property in plaintiff's favor (NYSCEF Doc. No. 152).
Concurrently with this lawsuit, KDIC has sought the same relief in the courts of South Korea. On April 14, 2016, in an action by KDIC against Ms. Jung, the Seoul Central District Court issued an order which voided Mr. Choi's $1.83 million transfer to Ms. Jung (NYSCEF Doc. No. 76). Ms. Jung appealed the determination. The Seoul High Court dismissed Ms. Jung's appeal in a judgment dated April 7, 2017 (NYSCEF Doc. No. 131). Ms. Jung again appealed, this time to the Korean Supreme Court, which is the nation's top court. Due to this ongoing litigation, the parties here adjourned discovery conferences on several occasions. On August 1, 2018, the high court rejected Ms. Jung's arguments and dismissed the appeal.
Shortly after the Korean Supreme Court issued its decision, plaintiff notified defendants that it intended to amend the complaint to include information about the Korea decision and would seek summary judgment here based on the amendment. The matter was set aside briefly while the parties unsuccessfully attempted to settle this case. After the failed settlement talks ended, plaintiff made this motion to amend, which defendants oppose.
Plaintiff points out that when Justice Lucy Billings issued her order dated September 5, 2017 (NYSCEF Doc. No. 152) — which, in part, allowed for KDIC's attachment — she necessarily addressed the merits of the complaint. As such, she stated that plaintiff submitted "evidence that its claims against Choi as the transferor of a fraudulent conveyance, for no consideration, to avoid his debts to plaintiff, are meritorious under various provisions of New York Debtor and Creditor Law (DCL) §§ 273-76" (id., p 9). Plaintiff also notes that, at page 13 of her order, Justice Billings noted that several factors raised an inference of fraudulent intent, which is all that DCL § 276 requires. Plaintiff notes that its goal is "to domesticate the Korean judgment" and "obviate the need to litigate the fraudulent conveyance claim on the merits before this Court" (KDIC's Mem. of Law in Support, p 6).
The Court grants the motion. As plaintiff stresses, courts freely grant leave to amend (CPLR § 3025[b]), particularly where, as here, new and relevant allegations arise after a plaintiff files his original complaint (see Haunss v City of New York, 100 AD3d 428, 428 [1st Dept 2012]). Amendments are appropriate unless they are "palpably insufficient or patently devoid of merit" (citing MBIA Ins. Corp. v Greystone & Co., Inc., 74 A3d 499, 500 [1st Dept 2010]). As plaintiff urges, defendants cannot assert prejudice or surprise. Instead, Ms. Jung and her husband were "aware . . . of the factual basis for the claims set forth in the proposed amendment" and of plaintiff's intent to add a claim based on the Korea decision (Greenburgh Eleven Union Free School Dist. v National Union Fire Ins. Co., 298 AD2d 180, 181 [1st Dept 2002]). Indeed, as [*3]plaintiff notes, the parties' discovery conference was adjourned on more than one occasion due to the pending appeal in South Korea.
Furthermore, plaintiff correctly contends that the amendment is not palpably improper or devoid of merit. New York is "a generous forum in which to enforce judgments for money damages rendered by foreign courts" (Sung Hwan Co., Ltd. v Rite Aid Corp., 7 NY3d 78, 83  [citation and internal quotations omitted]) Under CPLR § 5303, "a foreign country judgment meeting the requirements of section 5302 is conclusive between the parties to the extent that it grants or denies recovery of a sum of money." Thus, foreign judgments are enforceable in New York absent a showing of fraud or "or that recognition of the judgment would do violence to some strong public policy of this State" (Sung Hwan Co., Ltd., 7 NY3d at 83 [citation and internal quotation marks omitted]). As the order of the Korean Supreme Court was "final, conclusive and enforceable where rendered" (id. [quoting CPLR § 5302]; see Harvardsky Prumyslovy Holding, A.S.—V Likvidaci v Kozeny, AD3d , , NY Slip Op 07939 ), plaintiff has the legal right to interpose the proposed cause of action here.
The full list of exceptions to this principle are set forth in CPLR § 5304. The Court concludes that, as plaintiff asserts, none of these exceptions apply as a matter of law. The Court rejects defendants' argument that, as a matter of law, "the cause of action on which the judgment is based is repugnant to the public policy of [New York]" (CPLR 5304 ) because it rests upon the "absurd legal premise" that Mr. Choi gave money to his wife when his debts exceeded his assets (Aff. in Opp., ¶¶ 6, 7). Defendants' arguments — which include that under this principle the United States would be in constant violation due to the size of the national debt, and that many Americans owe more money than they have in the bank so would be precluded from giving money to others — twist the meaning of the law the South Korean court applied. The Korean courts relied on the finding that the transfer of money from Mr. Choi to his wife was a deceptive act, notwithstanding the passage of time between the gift and the Korean Supreme Court's ruling and the fact that Mr. Choi was not in default to plaintiff's predecessor in interest, Tomato Bank.
Moreover, the underlying principle is not repugnant to the principles which underpin New York law. New York also has a policy of voiding fraudulent conveyances designed to evade creditors (see Debtor and Creditor Law §§ 270-81; e.g., 320 West 13th Street, LLC v Wolf Shevack, Inc., 85 AD3d 629 [1st Dept 2011]). In addition, under New York's Debtor and Creditor Law § 273, the transferor's intent is irrelevant:
Every conveyance made without fair consideration when the person making it is a defendant in an action for money damages or a judgment in such an action has been docketed against him, is fraudulent as to the plaintiff in that action without regard to the actual intent of the defendant if, after final judgment for the plaintiff, the defendant fails to satisfy the judgment.
Defendants overlook that this Court is not examining the appropriateness of the Korean court's ruling, but on whether the amendment is palpably improper. On its face, the ruling is not inconsistent with the laws of New York. The Court additionally reiterates, on this point, that Justice Billings granted an attachment to plaintiff based on her conclusion that plaintiff had a strong case under Debtor and Creditor Law § 273.
Defendants rely Byblos Bank Europe, S.A. v Sekerbank Turk Anonym Syrketi (10 NY3d 243, 247 ) to support their argument that the instant judgment should be unenforceable. That decision is distinguishable from the situation at hand, however. In that case, the foreign judgment was unenforceable because it was in direct conflict with the final decision of another [*4]foreign court (see id. at 248). The court did not examine the equities of the situation — whether there was a debt, or whether it was appropriate to enforce it, for example — but found that the policy of ignoring res judicata principles with respect to foreign judgments is itself repugnant.
Plaintiff's counsel also points out that initially, and more than once, defendants' attorney indicated he had no objection to the amendment. In its reply, plaintiff amplifies this position and urges the Court to hold counsel to his earlier representations. Although the Court sympathizes with plaintiff, counsel's prior representations are not binding. Defendants retained the right to oppose the motion. Moreover, in the email that plaintiff annexes to show that defendants' counsel changed his position, defendants' counsel explained that he did so following the express directions of his client.
The Court has considered the parties' additional arguments and they do not alter its conclusion. Therefore, it is
ORDERED that the plaintiff's motion for leave to amend the complaint is granted; and it is further
ORDERED that the amended complaint annexed as Exhibit A to plaintiff's motion (NYSCEF Doc. No. 169) shall be deemed served within 30 days after service of a copy of this order with notice of entry; and it is further
ORDERED that defendants shall have 30 days from the date of service to serve their amended answer to the amended complaint; and it is further
ORDERED that the parties shall appear for a discovery conference on Thursday, March 7, 2019 at 2:15 p.m. The parties are directed to confirm this information closer to the date of the conference.
December 17, 2018
CARMEN VICTORIA ST. GEORGE, J.S.C. Footnotes
Footnote 1:Plaintiff states the complaint is "in substantially the form of Exhibit A" (Notice of Motion, ¶ 1). However, the Court grants plaintiff's motion as it relates to the papers submitted.