NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-5064-11T2
JONG S. HONG,
Plaintiff-Respondent,
and
DANIEL KIM,
Plaintiff,
v.
SOON H. KIM and YEO PYEONG YUN,
Defendants-Appellants.
Submitted March 22, 2017 – Decided August 17, 2017
Before Judges Alvarez, Accurso, and Lisa.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-8580-09.
Kimm Law Firm, attorneys for appellants (Michael S. Kimm, Sung H. Jang, and Adam Garcia, on the briefs).
Sukjin Henry Cho, attorney for respondent. PER CURIAM
This appeal, filed on June 11, 2012, was stayed for years as
a result of plaintiff Jong Sul Hong and defendant Soon Hee Kim
filing consecutive bankruptcy petitions. Soon Hee's1 bankruptcy
discharged the $270,000 judgment that Hong obtained after a
fourteen-day bench trial. We therefore do not reach the issues
Soon Hee raises on appeal with regard to the judgment, as they are
moot, and address only her argument, and that of her husband and
co-defendant Yeo Pyeong Yun, 2 that their counterclaims were
improperly dismissed. We agree, and remand for trial on Soon
Hee's counterclaim for malicious prosecution, both Soon Hee and
Yun's counterclaim for breach of fiduciary duty, and Yun's
counterclaim for $75,000. The cause of action based on an alleged
violation of the Fair Debt Collection Act, 15 U.S.C.A. § 1692a and
§ 1692e, however, is not reinstated.
Every witness except Hong required the services of an
interpreter. The halts and interruptions natural to such a trial
were exacerbated by the judge's frequent interjections,
interruptions, and commentary. Instead of aiding in clarifying
the testimony, the trial judge's questioning added to the
1 We refer to Soon Hee Kim in this fashion to avoid confusion. 2 We will refer to Yeo Pyeong Yun as Yun to avoid confusion, and refer to Soon Hee and Yun collectively as defendants.
2 A-5064-11T2 confusion. This confusion was not alleviated by the judge's 104-
page written opinion.
Hong, Soon Hee, and Yun were involved in lending circles,
known as "kehs," rooted in Korean culture. Members of a keh pool
their funds, and pay out principal and interest on a rotating
basis. 3 Kehs date back to farming villages in Korea in the
sixteenth century. Lan Cao, Looking at Communities and Markets,
74 Notre Dame L. Rev. 841, 874-84 (1999).
From the trial testimony, we discern that Hong managed at
least two kehs, one formed in 2006, the other in 2008, in which
Soon Hee participated. As the administrator of the kehs, Hong
paid no interest, and she claimed not to have kept any of the
interest paid into them. At times, however, members would be paid
the keh purse and relend the money to her. Although records of
the kehs were demanded during discovery, none were produced. Hong
testified that she kept records for the 2006 keh in a notebook,
which she lost. Some Xeroxed pages, allegedly from this lost
notebook, were introduced at trial. Hong also claimed records
3 For example, in a twelve-month keh with twelve positions, requiring a $500 monthly principal payment, a monthly purse of $6000 is taken in the order designated by the keh manager. By the end of the twelve-month period, each position would have taken a $6000 pot while each member would have paid a minimum of $6000 into the keh for each position, plus interest. The positions would be paid or receive more or less interest for the duration of the keh depending on their place in the rotation order.
3 A-5064-11T2 regarding the 2008 keh were in the possession of an attorney no
longer involved in the case.
The monthly 2006 keh payment amount was $1500, and the monthly
interest was $300. Due to the number of the participants in the
keh, a total of $2.4 million in purses were paid. The 2008 keh
required monthly payments of $2500, from each of forty positions,
and interest of $500 on a pot totaling $100,000. The total purse
came to $4 million. Soon Hee held multiple positions in both the
2006 and 2008 kehs. Yun had four positions in the 2006 keh, and
none in the 2008 keh.
We need not repeat in detail the at-times garbled history of
payments, checks, and other financial transactions, in addition
to the kehs, between Hong and Soon Hee including loans in both
directions, and Soon Hee's unexplained payment to at least one of
Hong's relatives. Suffice it to say that Soon Hee gave certain
blank and undated checks to Hong, who in turn gave them to Kim,
because Hong owed him money. Kim never participated in any keh
managed by Hong, but had lent her various sums totaling $205,000.
From the written documents introduced during the trial, we assume
few written records were generated as a result of these
transactions.
Kim did not know that Hong had been holding Soon Hee's checks,
and did not know when they were delivered to Hong. He deposited
4 A-5064-11T2 them because Hong advised him that it was "okay" to do so. Kim
claimed that he warned Soon Hee that he was going to deposit the
checks, and "there wasn't any response by her." On August 11,
2009, while together, Hong and Kim deposited the five checks. Kim
filled in the dates; all were dishonored.
After the checks were dishonored, Hong contacted her
attorney. It is not clear from the record if counsel was aware
of the history between the parties, either with regard to the kehs
Hong managed, or the fact the checks were initially issued with
the dates and payee in blank. Soon Hee testified the checks were
not to be deposited without her explicit consent.
Hong's attorney wrote to Soon Hee, putting her on notice that
the issuance of the checks was a third-degree crime, and that if
Soon Hee did not forward certified or bank checks in the amounts
of $120,000 and $166,582 within ten days, the matter would be
referred to the Bergen County Prosecutor. Hong, while testifying,
seemed to acknowledge that the letter was inaccurate because Soon
Hee had not filled in the dates on the checks.
On September 21, 2009, Hong and Kim filed a civil complaint
against Soon Hee and Yun, alleging that Soon Hee sought "a short-
term, interest free loan in the amount of $300,000" from both
plaintiffs. The complaint states:
5 A-5064-11T2 6. Based on the request by [d]efendant [Soon Hee], [p]laintiffs did then loan to [Soon Hee] the total sum of $287,040.00, of which $150,540.00 came from monies then possessed by . . . Hong, $120,000 came from monies then possessed by . . . Kim, and $16,500.00 came in the form of "cash advances" on credit cards maintained by . . . Hong.
7. Under the terms of the parties' agreement, the $287,040.00 which [d]efendant [Soon Hee] borrowed from . . . Hong and from . . . Kim was to be repaid in full within thirty (30) days of the date thereof. Based on the very short term of the loan and the long standing relationship of the parties, the parties agreed that the loan would not accrue interest, fees, or other charges during that thirty day term.
Additionally, the complaint stated that "[w]ithout the
knowledge, consent, or permission of the [p]laintiffs," Soon Hee
used the money to purchase a retail store, and that she refused
to pay back the loan under the original terms of the agreement.
According to the complaint, on an unspecified date, the
parties renegotiated the loan terms. Soon Hee was to pay the
principal in a lump sum within two years, and to pay $5400 per
month in interest until that time. Soon Hee paid the interest
from September 2007 until February 2009, when she asked for and
received an additional $10,000 loan under the same terms.
The complaint also alleged: "[a]s evidence of defendants'
indebtedness to Plaintiffs on the said loan, on or about August
11, 2009, defendant [Soon Hee] wrote a series of checks to the
6 A-5064-11T2 [p]laintiffs[.]" The dishonored checks were described as follows:
check number 1474 "was made payable to . . . Kim in the amount of
$60,000"; check number 1475 "was made payable to . . . Kim in the
amount of $60,000"; check number 1487 "was made payable to . . .
Hong in the amount of $50,000"; check number 1488 "was made payable
to . . . Hong in the amount of $50,000"; and check number 1489
"was made payable to . . . Hong in the amount of $66,582.00."
At trial, Hong admitted that many of the allegations in the
complaint, reiterated in her interrogatory responses, were
incorrect. For example, she conceded that Soon Hee had not
transferred her interest in the business or other real estate
solely to render herself judgment proof; that plaintiffs sought
repayment of more than just a single loan; that there was never
an agreement to repay the loan within thirty days; that Kim had
never loaned Soon Hee any money; and that Hong did not make the
loans from her own funds.4
Extensive testimony was elicited from Hong with regard to her
management of the kehs. She acknowledged that she had "difficulty"
with them. Hong had comingled the money from the two kehs by
4 Kim also acknowledged that "everything [was] wrong" in the allegations in the complaint. He never lent Soon Hee or Yun money directly, nor had he received any checks from Soon Hee. In addition, "almost all" of the original answers he had provided to interrogatories through his former counsel were "incorrect."
7 A-5064-11T2 using funds from one to meet the obligations of the other. She
agreed that one person from the 2006 keh had not been paid,
although she insisted that Yun had "received everything in full,"
but had nothing in writing to establish that.
From 2008 to 2009, Hong claimed she was approximately $800,000
to $900,000 in debt, including the $300,000 Soon Hee allegedly
owed her. However, she kept no notes and had no writing to
evidence the debts, and was unsure whether the debts were cash
debts.
During Soon Hee's testimony as a hostile witness in Hong's
case, she denied borrowing "even a single dollar" from Hong. She
claimed that she had participated in seven or eight of Hong's
kehs, and that for more than ten years they had been passing money
back and forth without maintaining records. At times Soon Hee
received money from Hong, which Hong had borrowed from others, and
Soon Hee loaned money from her keh purses to third parties through
Hong. All of the transactions, Soon Hee claimed, were supposed to
be recorded in Hong's lost notebook.
Soon Hee said that it was impossible to separate the funds
generated through the kehs from the loans. Although she owed
$10,000 on the 2008 keh, she in turn was owed money from the 2006
keh, and Yun continued to be owed $75,000 from that keh to be paid
through her. She had lent Hong money at no interest, which had
8 A-5064-11T2 not been repaid. Soon Hee agreed she had signed all five checks
in blank and had written out other checks payable to plaintiff's
aunts.
Soon Hee claimed it was Hong's practice in managing the kehs
to hold personal checks in escrow and not use them until the draws
were replenished. When Hong's last keh was breaking up, Hong
needed the checks to show to others in addition to having financial
needs herself. Soon Hee had agreed that when the keh accountings
were completed, she and Hong would do the necessary calculations
to determine precisely what was owed to whom. Because Soon Hee
trusted Hong, she wrote the checks in Hong's presence, to be held
in escrow pending further keh transactions. Hong allowed Soon Hee
to charge heavily on her credit cards.
Soon Hee said that only Hong knew the identity of all the
members of the keh. She also testified that Hong would
occasionally take two positions in her own keh, pay no interest,
and then lend money privately to other keh members.
The precise nature of the multi-faceted financial
relationship between the parties was unclear. Hong tape-recorded
some conversations with Soon Hee, and the transcriptions, prepared
by an acquaintance, were proffered and accepted as evidence.
During those conversations, Hong appeared to agree that at least
9 A-5064-11T2 some of the checks Soon Hee gave her represented Soon Hee's
obligations as a participant in the kehs.
Yun testified that he did not participate in the 2005 or 2008
kehs, but he had four spots in the 2006 keh: August and September
2007, and March and April 2009. Yun received his payments through
Soon Hee and otherwise "didn't get involved." His purse was
$127,000, but he did not know if it had been paid in cash or
checks; he believed that he was still owed $10,000, although it
was unclear from which keh year. He testified that, at the time
of trial, he had not received the $75,600 he was owed from the
March and April 2009 purses in the 2006 keh.
From March to August 2009, Yun "tried very hard to settle the
money problems" between his wife and Hong but was unable to do so.
He attempted to negotiate a resolution of the problem between Hong
and Soon Hee, but they were not able to agree on a price. He
fired Hong, who had worked in his store, after only two months.
He found her claim that Soon Hee owed her $600,000, and repeated
requests for a $100,000 loan, troublesome.
On September 23, 2009, plaintiffs filed criminal charges
against Soon Hee with the Fort Lee police. At trial, Hong said she
went to the police after she heard nothing from Soon Hee in
response to her attorney's demand letter. She said: "It was my
10 A-5064-11T2 knowledge that once the checks were deposited and was bounced,
returned, that . . . the criminal complaint may be filed."
Hong showed the checks to the police, who did not ask any
questions about them. She did not tell them that it was her and
Kim, not Soon Hee, who dated the checks and wrote the payee names,
or that the money for the loans had come from others. Plaintiff
said she "told the story" to her attorney and that he wrote
documents she referred to as affidavits.
Hong's affidavit stated that "2 years and few months ago" she
had loaned Soon Hee "around $300,000" in a "short term loan"; that
Soon Hee "gave me 5 checks for the money I have given it to her;"
that Soon Hee "refused" to pay back the money; that her attorney
had sent out a letter and received no response; and that she had
deposited three of the checks on August 11, 2009, and they were
returned.
In a handwritten affidavit, Kim stated that he had "received
2 checks at $60,000 each," that he deposited them on August 11,
2009, and the checks were returned for insufficient funds. He
stated that a letter had been sent to Soon Hee on September 1
asking her "to make the checks good but no response."
Kim's affidavit did not identify who gave him the checks. He
testified at trial that the police never asked how he came into
11 A-5064-11T2 possession of the checks or whether he had filled in the date and
payee, and he never told the police that he had done so.
After filing the charges, Hong spoke to someone at the
prosecutor's office and went to the Superior Court about the case
more than five times without telling anyone that the information
in the affidavit was incorrect. When asked if she was concerned
about the accuracy of her statement to the police, Hong responded:
"I did it with just the purpose of getting the money."
Kim said he had filed the criminal complaint only to ensure
that he received his money; he did not want anyone to go to jail.
If Soon Hee had called him to "make the resolution to make the
check good," he would have withdrawn it.
Detective Philip Ross of the Fort Lee Police Department
arrested Soon Hee on November 19, 2009, on five charges of the
indictable offense of passing bad checks in violation of N.J.S.A.
2C:21-5B. She surrendered in police headquarters at 9:40 a.m. on
November 19, 2009, with her attorney. Soon Hee was fingerprinted,
screened as a prisoner, pat-searched, photographed, and held
pending arraignment. She was released after arraignment at 12:30
p.m. that day. Her passport was seized as a condition of her
release.
Ross said the arrests were based on the affidavits, copies
of the returned checks, and the complaints filed by Hong and Kim.
12 A-5064-11T2 Ross was unaware that the checks had been given to plaintiff in
March 2009, or that when delivered, they were undated. If he had
known, he would not have taken any police action. The criminal
complaint against Soon Hee was administratively dismissed on July
15, 2010, eight months after her arrest.
When the matter was being processed through the criminal
court, Soon Hee "was really panicking[.]" She paid an attorney
$5000 and filed an ethics complaint against Hong's attorneys who
had sent the demand letters and filed the civil complaint. In her
written statement to the ethics committee, Soon Hee stated as
follows:
In April 2009, all five checks were give[n] by me to Ms. Jongsul Hong and she and I agreed that she will hold those checks until I repay her loan. Ms. Hong loaned money to me, which is current, for which those checks were to be held by her, and never to be cashed or deposited or given to any third-party.
Ms. Hong and I have had [a] personal loan relationship since three years ago and I give her interest monthly. The check was not to be used by anyone and it was not my payment for anything. It was only "to hold."
. . . .
I never issued those checks to "Daniel Kim" and the check[s] were blank and they were not supposed to be deposited. Everyone knew that I did not have the funds and so even the dates were not written in.
13 A-5064-11T2 The trial judge rejected defendant's contention that Hong's
role as a keh organizer and loan facilitator imposed a fiduciary
duty upon her. He instead found that Soon Hee owed $270,000 to
Hong, in addition to $16,582 for the use of Hong's credit card.
He further found that Hong was "gullible and naïve," had borrowed
money "from various third parties" at Soon Hee's request, and then
loaned a minimum of $270,000 to Soon Hee to "put the loan money
into an account so defendant could obtain a loan," believing the
money would be returned. He added:
[t]he Court still has some difficulty which does leave questions of credibility that the plaintiff was only seeking to collect $270,000 representing the balance of the loan of $310,000 since $40,000 has been repaid though no records have been presented by the plaintiff as to this payment of $40,000 where the Court had previously indicated that these payments would have corroborated the agreement between the parties that this was a loan and it was to be repaid and even possibly address the issue of interest. (Do the pleadings and subsequent arguments of the defendant claiming loan sharking acknowledge that they were paying interest yet it was usurious was their argument though little testimony involved on the issue of interest on the loan except to say it was the same interest as the keh being 2% a month though there was no testimony as to how many payments were made.)
The judge observed that the checks Soon Hee had signed were
"critical" to his determination. If, as Soon Hee had testified,
"this is just the same as writing an IOU on a piece of paper and
14 A-5064-11T2 is worthless," then "[w]hy write this indebtedness on your checking
account?" He said: "[i]t would appear to be acknowledged by all
the parties that giving a personal check to a lender is an
acknowledgement of the debt being common practice. The Court
questions what are you supposed to do with these checks if not
cash them or negotiate them." Furthermore, Soon Hee acknowledged
the debt in letters she wrote to the Bergen County Ethics Committee
regarding Hong's attorneys.
As well as rejecting the notion that Hong had a fiduciary
duty, the court also dismissed defendants' counterclaim regarding
violations of the Fair Debt Collection Practices Act. The judge
concluded that Hong was not a debt collector as defined by that
legislation: "a person who regularly collects or attempts to
collect directly or indirectly debts owed or due or asserted to
be owed or due another." The court said that "plaintiffs are not
vicariously liable for their prior counsel['s] letter to the
defendant and any allegations with regards to ethics violations
have already been dismissed by the Ethics Committee."
Furthermore, the court dismissed defendants' claim of
malicious prosecution because they had failed to prove that Hong's
complaint to the police department "was done with malice." The
fact that Hong acted on the advice of counsel "show[ed] good faith
and is a valid affirmative defense." The judge opined that there
15 A-5064-11T2 were no damages other than attorney fees because, although
defendant "was briefly detained at the Fort Lee Police Department,"
and had her passport confiscated, "she never testified that this
caused her any inconvenience let alone any emotional distress."
Finally, the court said:
There was no counterclaim for any monies that the plaintiff [] Hong may owe the defendants [], there being no claim for a set off against the indebtedness found to be owed by the [Soon Hee] to the plaintiff [] Hong, therefore the Court will not nor can it consider any claims of the defendant which it may have referenced as set offs throughout this opinion.
I.
In an appeal from a bench trial, "[t]he scope of appellate
review of a trial court's fact-finding function is limited."
Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011)
(quoting Cesare v. Cesare, 154 N.J. 394, 411 (1998)). The factual
findings and legal conclusions of the trial judge are not disturbed
unless the reviewing court is "convinced that they are so
manifestly unsupported by or inconsistent with the competent,
relevant and reasonably credible evidence as to offend the
interests of justice." In re Trust Created by Agreement Dated
Dec. 20, 1961, ex rel Johnson, 194 N.J. 276, 284 (2008) (quoting
Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474,
484 (1974)). We owe no deference, however, to a trial court's
16 A-5064-11T2 interpretation of the law and the legal consequences that flow
from established facts. Gallenthin Realty Dev., Inc. v. Borough
of Paulsboro, 191 N.J. 344, 358 (2007); Manalapan Realty, L.P. v.
Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
II.
The issue of whether a duty should be imposed is a question
of law. It requires evaluation of the parties' relationship, the
nature of the risk involved, and the related public interest.
Frederick v. Smith, 416 N.J. Super. 594, 599 (App. Div. 2010),
certif. denied, 205 N.J. 317 (2011). No deference is owed to the
trial court's legal conclusion on the issue. Ibid.
A fiduciary relationship arises "when one person is under a
duty to act for or give advice for the benefit of another on
matters within the scope of their relationship." F.G. v.
MacDonell, 150 N.J. 550, 563 (1997). It occurs when the parties'
relationship involves a level of trust and confidence and one
party is in a dominant or superior position. Ibid.
The trial court here said that it found no fiduciary
relationship existed between the parties because their
relationship involved "a straightforward loan between [] Hong to
[Soon Hee]." (Da2271). Debtor-creditor relationships generally
are not considered to be fiduciary because of their essentially
17 A-5064-11T2 adversarial nature. N.J. Econ. Dev. Auth. v. Pavonia Rest., 319
N.J. Super. 435, 446 (App. Div. 1998).
But the court's finding that the matter involved a
straightforward loan was not supported by the evidence. This was
the basis for the judge's dismissal of defendants' counterclaim
that Hong had breached a fiduciary duty. There was nothing
straightforward about Hong's constantly shifting testimony
regarding the circumstances of the loans. She herself acknowledged
a long-term financial relationship with Soon Hee and her management
of the kehs in which Soon Hee and Yun were participants. The
judge's factual findings were thus inconsistent with the
reasonably credible evidence in the record, and were the sole
support for his legal conclusion that the parties had a simple
lender-borrower relationship and that therefore no fiduciary
relationship existed.
In addition, it was undisputed that Hong served as Soon Hee
and her husband's intermediary for hundreds of thousands of dollars
in keh money that she collected, paid out to them in purses, and
loaned for profit to others. In her role as the keh organizer,
Hong collected and distributed enormous sums of money. She
admittedly profited from the no-interest loans she received in
that capacity and then re-lent to others with interest.
18 A-5064-11T2 Soon Hee and Yun, and the other keh participants had to trust
that Hong would distribute their money in accordance with the
rules of the particular keh. Hong alone knew the identity of the
dozens of keh participants, the order in which payouts were to be
made, and funds distributed to the participants —— as well as to
any individuals who were making loans separately from keh payments.
Hong may well have owed defendants the duty of loyalty and
the duty to exercise reasonable skill and care that are encompassed
within a fiduciary's obligations. See F.G. v. MacDonell, supra,
150 N.J. at 564. The state of the record, however, permits no
definitive conclusion on this point. These duties include a
fiduciary obligation to maintain records regarding distribution
of keh funds.
Despite Hong's testimony to the contrary, her statements in
the April 2, 2009 telephone recordings she moved into evidence
demonstrated that at least some of the obligations represented by
the five checks were incurred as a regular part of the keh
transactions. Despite this evidence, Hong did not explain why
some of the check amounts coincided with Soon Hee's portion of the
keh purses. The judge did not address these questions in his
decision.
Soon Hee testified repeatedly that the records for the 2008
keh, and Hong's lost notebook containing the record of all of the
19 A-5064-11T2 loan transactions, would support her contention that the loan
transactions went both ways, and that Hong also owed her money.
The only evidence to the contrary was Hong's self-serving
insistence at trial that the loans were entirely separate from the
keh. In fact, it was not until December 2010, months after
defendants made the discovery request regarding Hong's financial
records, that Hong first claimed she had lost the notebook that
contained records of her loan transactions.
The discovery violations were not remedied or resolved before
trial. Soon Hee and Yun may have been entitled to invoke the
spoliation inference, a remedy for a litigant who becomes aware
during litigation that evidence has been destroyed or concealed.
Rosenblit v. Zimmerman, 166 N.J. 391, 401-02 (2001). The inference
serves to level the playing field by allowing a factfinder to
presume that the lost or concealed evidence would have been
unfavorable to the spoliator. Ibid. When the issues were raised,
the judge did "not concur with defendants analysis/arguments that
by not providing books and records of these kehs that the
aforementioned claims made by the defendant concerning monies owed
to them by the plaintiff must be true." Nor did the trial judge's
decision mention Hong's assertion that the 2008 keh records
allegedly remained in the possession of Hong's other attorney.
20 A-5064-11T2 In addition, without support in the record, the court found
that defendants also had the notebook. Soon Hee had merely
testified that she had seen Hong's notebook on multiple occasions.
Thus defendants are correct that the trial court erred when it
rejected out of hand their claim that Hong was in a fiduciary
relationship with them, and when he did not draw an adverse
inference from Hong's failure to produce documents that were
critical to the parties' claims. The judge's conclusions were not
supported by the record. Accordingly, we reinstate the
counterclaim and remand the matter for a new trial on that issue.
Should defendants wish to do so, they have the right to file a new
motion pretrial regarding spoliation. Our decision on these issues
results from the judge's reconstruction of the record, and is not
intended to dictate the outcome.
III.
In his decision on the parties' cross-motions for summary
judgment, another judge dismissed Yun's counterclaim for breach
of fiduciary duty. That judge mistakenly believed that only Yun
had asserted such a claim. In fact, both he and Soon Hee asserted
the counterclaim in their original answer. The judge also
mistakenly found that Yun had not been a member of any keh, and
that if he had participated, it was only "indirectly" through Soon
Hee.
21 A-5064-11T2 To the extent that defendants' breach of fiduciary duty
counterclaim was deemed dismissed by that pretrial judge's order,
it is hereby reversed. Yun was a member of the 2006 keh. The
remand for a retrial on the extent of Hong's fiduciary duty is on
the counterclaim made by both defendants.
IV.
Yun also contends that he is entitled to damages for Hong's
mismanagement of the 2006 keh in the amount he paid into the keh,
$75,000. We reverse the dismissal of this claim, because the
trial court's decision incorrectly stated no counterclaim had been
made:
What about providing evidence of what the defendant[s] paid into the keh with their books and records? Wasn't Yun's participation in this keh through [Soon Hee], did she receive those monies, where did she deposit her keh monies, where are her records as to what she paid into the keh on Yun's behalf?
Nevertheless, in the last sentence of the "Conclusion"
section of his decision, the judge said:
There was no counterclaim for any monies that the plaintiff [] Hong may owe the defendants Soon [Hee] or [] Yun, there being no claim for a set off against the indebtedness found to be owed by the defendant Soon [Hee] to the plaintiff [] Hong, therefore the Court will not nor can it consider claims of the defendant which it may have referenced as set offs throughout this opinion.
22 A-5064-11T2 Under the conflicting evidence presented at trial, the
$75,000 claim could be viewed as part of the loan and repayment
agreement between Hong and Soon Hee, or as an independent
transaction between Hong and Yun. However, Yun is entitled to a
disposition of the claim on remand, as his claim for $75,000 has
not been decided in a fashion which comports with the record.
We agree that the Fair Debt Collection Act claims should have
been dismissed. That cause of action would only be appropriate
if Hong had been a debt collector within the meaning of the
statute, which she was not.
The Act is intended "to eliminate abusive debt collection
practices by debt collectors." 15 U.S.C.A. § 1692(e). It defines
"debt collector" as
any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Notwithstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts.
[15 U.S.C.A. § 1692a(6).]
23 A-5064-11T2 In addition to not coming within the definition, the conduct
complained of was engaged in by Hong's former attorneys. Neither
plaintiff can be held accountable for their actions.
VI.
We do not agree with the trial court's dismissal of
defendants' counterclaim for malicious prosecution. The cause of
action for malicious prosecution provides a civil remedy to
plaintiffs who have been subjected to baseless criminal actions.
LoBiondo v. Schwartz, 199 N.J. 62, 90 (2009). To sustain a claim
for malicious prosecution, a plaintiff must prove the following
four elements: "(1) a criminal action was instituted by this
defendant against this plaintiff; (2) the action was motivated by
malice; (3) there was an absence of probable cause to prosecute;
and (4) the action was terminated favorably to the plaintiff."
Ibid.
It is a complete defense to an action for malicious
prosecution that the complainant acted on the advice of counsel
that probable cause existed. Id. at 106; Weinstein v. Klitch, 106
N.J.L. 408, 409 (E. & A. 1929). Notwithstanding a malicious motive,
the showing that the complainant properly relied on the advice of
counsel erases the "absence of probable cause" element and
precludes recovery. LoBiondo, supra, 199 N.J. at 106.
24 A-5064-11T2 However, that defense requires a showing that "all of the
material facts within [the complainant's] knowledge – that is
those which would justify or negative the making of the complaint
– are fully and truthfully stated to the attorney." Weinstein,
supra, 106 N.J.L. at 409. The complainant must demonstrate that
the attorney was provided with all of the facts necessary to make
an informed decision on the probable cause issue. LoBiondo, supra,
199 N.J. at 106. Where the evidence suggests that the material
parts of the information conveyed to the attorney were knowingly
false, it is up to a jury to decide whether probable cause was
absent. Weinstein, supra, 106 N.J.L. at 409.
The court dismissed defendant's claim for malicious
prosecution because it found that plaintiffs had acted on the
advice of counsel, and that counsel was aware of the material
facts, because they had written collection letters.
There is no support for these findings, however, because the
collection letters do not indicate that plaintiffs' attorneys were
aware that the checks had been provided to Hong months earlier,
were undated, and that at least two of them had been written with
no payee. To the contrary, the letters misstated that Soon Hee had
issued the checks on August 11, 2009. Contrary to the attorneys'
assertion, Hong testified she had received checks months earlier
in March and April 2009.
25 A-5064-11T2 Thus the evidence does not support the court's finding that
plaintiffs established lack of malice because they relied on the
advice of counsel, and that counsel had been provided with all of
the material facts. The court simply erred when it entered
judgment in plaintiffs' favor on defendants' counterclaim for
malicious prosecution. There were material issues of fact that
remained to be decided on that issue, and those issues of fact
arose from Hong's own testimony.
Moreover, the court erred as to the proofs in the record when
it found that Soon Hee had no viable damage claim. According to
the court, she was neither inconvenienced nor distressed by her
arrest, and incurred only $5000 in attorney fees. A plaintiff
proving malicious prosecution is entitled to recover attorney fees
and is not required to establish a minimum amount. Seidel v.
Greenberg, 108 N.J. Super. 248, 271 (Law Div. 1969). Furthermore,
Soon Hee testified that she was panicked by her arrest, especially
as the criminal charges proceeded. She was arrested,
fingerprinted, photographed, searched, and compelled to appear in
court on several occasions. Her ability to travel was restricted
because she was required to turn over her passport. The court
improperly overlooked her testimony. We therefore remand for a
new trial on this cause of action as well.
26 A-5064-11T2 Affirmed in part; reversed in part and remanded for a new
trial on Soon Hee's counterclaim for malicious prosecution, both
Soon Hee and Yun's counterclaim for breach of fiduciary duty, and
Yun's counterclaim for $75,000. We express no opinion on the
merits of the claims.
Affirmed in part, reversed and remanded in part.
27 A-5064-11T2