UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
No. 17-cv-6857 (BJS)
KOREAN AMERICAN ASSOCIATION OF GREATER NEW YORK, INC., Plaintiff, SDNY | |} VERSUS DOCUMENT ELECTRONICALLY FILED || SUNG KI MIN, DOC #: □□□ ee Defendant. DATE BEAMS: 1/3/26 | OPINION AND ORDER January 3, 2020
RICHARD J. SULLIVAN, Circuit Judge: Plaintiff Korean American Association burden on each of its claims and is entitled of Greater New York, Inc. (““KAAGNY” or to damages in the amount of $369,095.56. “the Association”) brings this action for breach of contract, breach of fiduciary duty, I, PROCEDURAL HISTORY and conversion against its former president ‘ Sel. Fee cis a KAAGNY filed its Complaint on aang i Min (Min )» alleging that Min September 7, 2017, asserting three claims iniSnanEeR ANY S assets during h i under New York state law: breach of time as president and in the year following contract, breach of fiduciary duty, and his impeachment in March 2015 when he conversion. (Doc. No. 1 (“Com 1.”),) continued to hold himself out as president, : ae Oy a before hi Mj Kim (“Kim” KAAGNY alleged that (1) Min breached his 4, Rue Ei ansun 2. { in); contractual obligation to satisfy KAAGNY’s ES ee ahi peers SE outstanding debt of approximately $300,000, bench trial in this case, the Court now issues . : : the followi find; fact d using his personal finances if necessary, ° ° ms at \ memes q ac th before leaving office; (2) Min breached his COneMUSIONS OF Naw in accorcanee WI fiduciary obligations as KAAGNY president Federal Rule of Civil Procedure 52(a). For aad de facto. president by ‘mismanaping the reasons set forth below, the Court ; P . ludes that KAAGNY h isfied j KAAGNY’s finances; and (3) Min Genes “aa ap sqtignicg Ns unlawfully converted $191,172 in funds that KAAGNY maintained in two Chase Bank
accounts to pay for personal expenses and to something by a preponderance of the fight his impeachment from office. (/d. at evidence . . . simply requires the trier of fact 5-8.) Min filed his Answer on November to believe that the existence of a fact is more 22, 2017. (Doc. No, 22.) probable than its nonexistence... .” Metro. Stevedore Co. v. Rambo, 521 U.S. 121, 137 On June 4, 2018, the case proceeded to a n.9 (1997) (internal quotation marks omitted). two-day bench trial, which was conducted in As the finder of fact, the Court is entitled to accordance with the Court’s Individual make credibility findings as to the witnesses Rules for = non-jury proceedings. and their testimony. See Krist v. Kolombos Specifically, the parties submitted affidavits Rest. Inc., 688 F.3d 89, 95 (2d Cir. 2012). containing the direct testimony of their respective witnesses, as well as copies of all III, FINDINGS OF FACT? exhibits they intended to offer as evidence. The parties were then invited to call those A. Background and KAAGNY Bank witnesses whom they wished to cross- Accounts examine at trial. In all, three witnesses — . 8 eas : KAAGNY New York-based non- Kim, Min, and KAAGNY Director and Vice oe ee President. Sarah Kim-B i profit organization that “represents the Seng hai tied ffi acm a (i fod interests of Korean-American immigrants, eagus’)—subniltied aeay: aes helps them assimilate and integrate into the before the Court. The parties submitted Un} . ; nited States, and provides a common written summations on June 19, 2018. (Doc. werpork «fee othe Zorean-Amerioan Nos. 61, 62.) KAAGNY responded to “ . □□ Min’ i June 25. 2018 (D community throughout the tri-state area. SUTSESOD OE te es ( Hie (Stip. Facts 91; see Affidavit of Minsun No. 63), and Min responded to KAAGNY’s Kim (“Kim Aff”) § 3.) KAAGNY . il . . summation on June 26, 2018 (Doc. No. 64). represents more than 500,000 Korean- Il. LEGAL STANDARD American residents and 200,000 professional, religious, educational, and To prevail on its claims, KAAGNY was trade organizations throughout the region, required to present evidence in support of and is the most prominent Korean-American the allegations set forth in its Complaint (as non-profit recognized by the President of the narrowed or focused in summation), and to Republic of Korea. (Kim Aff. § 3.) prove those allegations by a preponderance , of the evidence. See Diesel Props S.R.L. v. _KAAGNY’s principal asset is its Greystone Bus. Credit I LLC, 631 F.3d 42, building at 149 West 24th Street in 52 (2d Cir. 2011). “The burden of showing Manhattan (the “KAAGNY building”). (Ud. { 16.) Building-related expenses such as a property taxes are paid out of a bank account ' In its summation briefing, KAAGNY narrowed its that KAAGNY maintains at Chase Bank conversion claim by arguing that Min converted only $70,000 from one of KAAGNY’s bank accounts, rather than $191,172 from both accounts. (Doc. Nos. 2 The Court’s factual findings are taken from the 62 at 14-15; 63 at 2-4.) See, eg. Ortho Pharm. parties’ May 2, 2018 Stipulation of Facts (Doc. No. Corp. v. Cosprophar, Inc., 828 F. Supp. 1114, 1129 41 at 1-2 (“Stip. Facts”)), the trial transcript (Doc. (S.D.N.Y. 1993) (finding claim abandoned where Nos. 65, 67 (“Tr.”)), witness affidavits (Doc. Nos. plaintiff failed “to argue the claim in its post-trial 58-60) KAAGNY’s exhibits (“PX”) and Min’s memo or in its response papers once [the defendant] exhibits (“DX”). To the extent that any finding of had addressed [it]”), aff'd, 32 F.3d 690 (2d Cir. fact reflects a legal conclusion, it shall to that extent 1994). be deemed a conclusion of law, and vice versa.
(account number xxxx0206) (the “building and... must be used for only building account”); in addition, KAAGNY maintains purpose[s].” (Tr. 46:19-23; see also Tr. a separate Chase account for operating 92:9-12 (Question: “[A]s far as you know, expenses (account number xxxx5517) (the other than Mr. Min, has any other person in “operating account”). Ud. □ 17; PX7.) charge of KAAGNY moved building money to the operating account to pay ordinary KAAGNY’s lease of the building expenses?” Kim: “No.”).) generates approximately $40,000 in rent each month, which goes directly into the When the Court asked Min if, “[a]s the building account to cover building-related president of the [A]ssociation, [he had] an expenses. (Tr. 165:7-13.) By contrast, understanding [as] to whether it was funds in the operating account are generated permissible to use the building account from non-building-related sources such as funds to cover expenses related to something “membership fee[s], Board of Director other than the building,” Min responded, fee[s], .. . advertisements, . . . government|] “Tijt’s not that it’s permissible, but as a support, and business income” (PX1 at 31), custom, customarily the money was taken as well as community fundraising or, in from [the building account], it was used and certain circumstances, the KAAGNY then it was replenished.” (Tr. 149:12-18.) president’s personal funds (Tr. 48:1-3, Min later clarified, however, that he had 77:17-78:2). In the event that rental income “heard” that past presidents had used in the building account is insufficient to pay building account funds for operating KAAGNY’s building-related expenses, the expenses only in “emergency situation[s].” KAAGNY president may also use (Tr. 152:5—22.) Moreover, when the Court community fundraising or personal funds to asked Min to state on the record who had cover such expenses. (Tr. 48:5—11.) told him that it was an acceptable custom to oo use building account funds to pay for _ The parties dispute whether, and in what operating expenses, Min was evasive and circumstances, building account funds may initially declined to answer the question; in be transferred to the operating account or fact, he only responded when faced with otherwise used to pay operating expenses. contempt sanctions. (Tr. 154:6—19.) In light KAAGNY’s written bylaws (“the Bylaws”), of the witnesses’ testimony and demeanor at as revised on March 11, 2013 and translated trial, the Court credits Kim’s statement that into English, do not expressly speak to this a well-recognized custom __ generally issue, providing obliquely that “[t]he prohibited KAAGNY presidents from using operation of the [KAAGNY] Building must building account funds for operating be done on a self-financed basis.” (PX1 at purposes. Although a limited exception may 37 (Article 89); see also id. at 31 (Article have existed for emergency situations, even 76(2)) (The finance whose purpose is then, past presidents would replenish the determined may not be used for other building funds after using them. To the purposes.”).) According to Kim, however, a extent Min testified that any such exception well-recognized custom prohibits KAAGNY was commonly invoked, the Court does not presidents from using building account credit Min’s testimony. Indeed, Min’s funds to pay for operations. Kim testified testimony as to the permissible use of that all KAAGNY' presidents and the building account funds is belied by his broader KAAGNY community “clearly evasive answers when questioned as to his understand” that “[b]uilding fund[s] cannot sources of information, suggesting that Min be transferred to [the] operati[ng] account
knew the use of building account funds for “Finance”) provides that “[t]he President of operating purposes was generally improper. the Association is responsible for all the □ running expenses that occur during his or B. The KAAGNY Presidency and Election her term, and the running expenses during Process his or her term cannot be transferred to the The KAAGNY president serves a two- next fiscal year unpaid.” (Jd. at 31.) As . Kim testified at trial, these financial year term that begins on May Ist of every blicati d tooing KAAGNY odd-numbered year and ends on April 30th opngaltons mace an OlgOIns . president and his or her spouse personally of the following odd-numbered year. (Kim responsible for any debt left on KAAGNY’s a ame □□□ books at the end of the presidency. (Tr. prestoenty Bs 75:10-78:18; see also PX38 at {39 (July 17, prestigious position” in the Korean- 2015 Affidavit of Sung Ki Min, Case No American community (Tr. 60:14—15), it 15-cv-3370 (RIS) CT as Pres} dent does not come cheap. To run for president, . ‘ remain personally responsible for any deficit a candidate must pay a $100,000 election ; registration fee and promise that, if elected, fecperating Binds."),) the candidate will comply with rigorous — The second affidavit, titled “Assurance and, as this case demonstrates, perhaps risky Promissory Note for the Financial Liabilities ~ financial obligations set forth in the of the Building,” set forth similar financial Bylaws. (See Kim Aff. J] 10-15, 23; PX2, obligations concerning the KAAGNY 4; Tr. 26:6-7,) building. In particular, each candidate Speci . . pledged: pecifically, each candidate in the 2013 KAAGNY presidential election was I... confirm and agree that in the required to sign a pair of affidavits (the even I am. elecied. and T ike the “2013 Affidavits”). (PX2; see Kim Aff. office as the 33rd KAAGNY 14, 23.) The first affidavit, titled president that all financial liabilities “Financial Assurance Note,” provided that, incurred by the KAAGNY [b]uilding in the event the candidate was elected during the president’s term as president, the candidate and his-or her determined by the KAAGNY By- spouse would be responsible for “all Laws shall be the responsibility of expense[s] incurred by KAAGNY during myself and assure by notarized the president’s term as determined by the signature that I shall be civilly KAAGNY By-Laws,” and that “in the event responsible for financial liabilities of [such] financial responsibilities are not the KAAGNY building. discharged,” the candidate and his or her spouse would “remain financially liable (PX2 at 5.) even after the end of [the candidate’s] term” . as president. (PX2 at 2.) The relevant Finally, candidates in the 2015 Bylaws referenced in the affidavit include KAAGNY presidential election WETS Article 69 (titled “Financial Guarantor”), required to sign an additional affidavit which provides in relevant part that “[t]he (2015 Affidavit”), which expressly barred winner of the Presidential Election . . . is the successful candidate from transferring responsible for all the running expenses that debt to his presidential successor, providing occur during his or her Presidency.” (PX1 as follows: at 27-28.) Similarly, Article 76 (titled
I... will undertake any and all in the election — which was scheduled to be financial liabilities of _.KAAGNY held only two weeks later — based on a office, in the event the Candidate newly-promulgated KAAGNY rule wins and is declared as 34" President prohibiting candidates from engaging in of [KAAGNY] and produces any certain campaign activities. (Kim Aff. financial liabilities during the 430.) On March 5, 2015, Kim filed a presidency according to the By-Laws petition pursuant to Article 78 of the New of KAAGNY Chapter 12 Article 69 York Civil Practice Laws and Rules in New in which it is specified that the York state court contesting her financial liabilities from the disqualification. (Ud. 32.) See Kim v. Secretariat of KAAGNY shall not be Korean Am. Ass'n of Greater N.Y., Inc., No. transferred to the next presidency. 100386/2015, 2016 WL 762687, at *1 (N.Y. Sup. Ct. Feb. 16, 2016). When the court (PX4.) As a candidate in both the 2013 and failed to rule by election day, March 8, 2015 presidential elections, Min signed each 2015, Min ran unopposed and was elected as of the above affidavits (collectively, the president for another term, to run from May “Campaign Affidavits”). (Kim Aff. {{ 23, 1, 2015 through April 30, 2017. (Kim Aff. 27; PX2,4,) 4 31; Min Aff. ¥ 23.) C. Min and Kim On March 14, 2015, less than a week Min first became involved with after the election, the KAAGNY Former . Presidents Advisory Committee (“FPAC”) SEKI ¥. m anys: (Affidavit of Sung Ki called a “Special General ae to be Min { nin Ae Beige being elected held on March 31, 2015, for the purpose of president in 2013, Min was a General impeaching Min. (Kim Aff. ¥ 33) Secretary of the Association and the Vice Although Min initially filed a motion in Chairman of the Board. of Directors. (Id. state court to enjoin the meeting from being 16) Jn March eA DALE OS else ied ay the held, he ultimately withdrew that motion. 33rd president of KAAGNY, with a term (Id. 4 34-35.) At the Special General scheduled to end on April 30, 2015. (Ud. Meeting, the FPAC determined that the 17) March 8, 2015 election was improper, and In December 2014, Kim announced her impeached Min. (Id. {| 36.) A new election candidacy to become KAAGNY’s 34th process was scheduled, and on April 26, president. (Kim Aff. q 24.) Min also sought 2015, Kim was elected president. (Ud. 4 37.) reelection, however, and in early February See also Kim, 2016 WL 762687, at *1—3. 2019; both he and Kim paid the $100,000 Min, however, refused to recognize his election registration fee, signed the 2015 impeachment or Kim’s subsequent election Affidavit, an fecelved approval ie a and would not vacate the KAAGNY offices, two presidential candidates. (Kim Alt Id. 4 38.) Instead, on April 30, 2015, Min 125-27, 29; PXA; Ir. 25:18-26:7.) Over caiearind a separate action — on behalf of the following year, Kim and Min engaged in the only named plaintiff, KAAGNY — in this a back-and-forth struggle for the KAAGNY Court against Kim for wrongfully holding presidency. herself out as president. Korean Am. Ass’n The opening salvo came on February 21, of Greater N.Y. Inc. v. Kim, 15-cv-3370 2015, when KAAGNY’s Election Oversight (RJS) (S.D.N.Y, April 30, 2015), ECF No. 1 Committee disqualified Kim from running (Complaint); PX36, (See also Kim Aff.
442.) Kim, in turn, sought relief in her April 9, 2015; $10,000 to Steptoe & Johnson ongoing state-court Article 78 proceedings — on April 13, 2015; and $20,000 to the specifically, “a declaration that [she] was Blackstone Law Group on March 3, 2016. properly elected and an order directing Min, (Kim Aff. 957-62; Kim-Beague Aff. having been impeached, to vacate the q{ 3841 (citing PX17-19, 23).) KAAGNY offices and relinquish control of the books and records.” (Kim Aff. 44.) AS for the operating account, the parties On February 16, 2016, the New York state do not dispute that most of the withdrawals court ruled in Kim’s favor and ordered Min and transfers from this account (set forth in to relinquish control of KAAGNY, and this full in PX7) relate to bona fide operating Court subsequently dismissed Min’s related expenses. The disputed payments include federal action. See Korean Am. Ass’n of approximately $60,000 to pay for a gala held Greater N.Y., 15-cv-3370 (RJS) (S.D.N.Y. on January 13, 2015 (Tr. 161:12-162:19; Mar. 3, 2016), ECF No. 44; Kim, 2016 WL 185:15—23), and $20,750 for dinners in 762687, at *12. (See also Kim Aff. □□ 45— March and June of 2015 (Kim Aff. □□□ 65— 47.) Min vacated the KAAGNY premises 66; Kim-Beague Aff. {{] 44-45). on. Monsh:2), 2016, atmbisiypoini Rim: taak In all, Min left KAAGNY to foot bills over as president. (Tr. 38:17-22; 85:7-10.) totaling $301,959.94 (PX9), which rose to D. KAAGNY’s Finances $319,095.56, including $61,106.33 in fees and accrued interest, by May 11, 2016, the Upon taking control as president, Kim date on which KAAGNY ultimately paid off discovered that Min had left KAAGNY with the main portion of the debt. Specifically, only $2,644.34 in the building account, according to a 60-Day Notice of Intention to $1,814.84 in the operating account, and Sell Tax Liens, dated March 10, 2016 approximately $300,000 in debts and (eleven days before Kim took over from liabilities. (Affidavit of Sarah Kim-Beague Min), KAAGNY owed the New York City (“Kim-Beague Aff.”) J] 8, 9, 19; PX9, 31.) Department of Finance (“NYCDF”) | $231,604.90 in overdue property taxes and With respect to the building account — miscellaneous property-related charges, plus which, it bears repeating, received $40,000 interest that was projected to reach in rent each month — Min transferred a total $44,248.07 by May 11, 2016. (PX25.) The of $302,957.37 in building account funds to due dates for the individual property taxes the operating account through a series of ranged from January 1, 2014 to January 1, fifty-four wire transfers between July 2014 2016; the first significant tax bill, for and January 2016. (See PX7 at 91, 126, $28,067.94, was due on January 1, 2015, 157, 171, 199, 223, 237, 251, 265-66, 279- and had accrued approximately $20,000 in 80, 295, 309, 321, 333-34; see also Kim- interest in the nearly sixteen months that had Beague Aff. {{{[ 23-36.) In addition to the elapsed before Kim assumed office and $302,957.37 that he transferred to the discovered it. (id. at 3; Tr. 182:1-183:7.) In operating account, Min paid lawyers a total addition, as reflected in an itemized receipt of $70,000 directly from the building of payments KAAGNY made to NYCDF on account to represent him in connection with April 29, 2016 ($50,000) and May 11, 2016 the impeachment and Article 78 ($245,956.23) to satisfy its property-related proceedings: $20,000 to Marc S. Bresky of debt, KAAGNY owed NYCDF “RPIE Non- the Bresky Law Firm, PLLC on March 20, Filing Fees” — fees apparently imposed for 2015; $20,000 to Steptoe & Johnson on failing to file required “Real Property
Income and Expense” statements — totaling $23,384.33, that Min had not satisfied by the $20,147. (PX27 (listing payment of $15,147 time he left office. (Tr. 104:22—105:1, for an RPIE Non-Filing Fee issued on 106:5-7; PX9.) Nevertheless, because September 3, 2013, and two payments KAAGNY had to raise funds for these totaling $5,000 for an RPIE Non-Filing Fee purposes, its ability to raise funds for other issued on January 1, 2015); see also PX28 at purposes was impaired. (£.g., Tr. 106:15— 13 (listing RPIE - 2012 Non-Filing Fee for 107:7 (Question: “And in your experience $15,147.00, due July 1, 2014); id at 25 is there an unlimited supply of funds out (listing RPIE - 2014 Non-Filing Fee for there to be raised through donations?” Kim: $5,000.00, due January 1, 2016).) See “No.” .. . Question: “[B]ecause Mr. Min generally Guide to Understanding the didn’t pay personally as he was required to Penalty for Failure to File the Real Property do, you were forced to fundraise?” Kim: Income and Expense Statement (the “Of course.” Question: “By fundraising “RPIE”), NYC Dep’t of Finance (rev. Jan. [to] cover the debt that he owed, did that 18, 2017), https://www1.nyc.gov/assets/ limit your capacity to fundraise in general finance/downloads/pdf/rpie/rpie_penalty_inf for other purposes?” Kim: “Yes.”).) o.pdf. Finally, Min also left KAAGNY with several non-NYCDF debts _ totaling IV. JURISDICTION $23,384.33, including $3,105 owed to the The Court has diversity jurisdiction over law firm of Cornicello, Tendler & Baumel- . . this action pursuant to 28 U.S.C. § 1332 Cornicello, LLP; approximately $2,700 to because Win is a New Jews ciiesa the Korea Times and $2,000 to the Korean KAAGN □□ attactoal ol fb □□□ □□ NY Daily for advertisements related to the N § principal” place oF Susiness 1s in : : ew York, and the amount in controversy impeachment and reelection campaign; and exceeds $75,000. Venue is proper in the $8,000 to TL Engineering, PC. (PX9.) Southern District of New York because “a Upon taking over from Min, Kim substantial part of the events . . . giving rise discovered that the KAAGNY building to [KAAGNY’s] claim[s] occurred” in would soon be subject to lien foreclosure if Manhattan. 28 U.S.C. § 1391(b)(2). the property-related debt were not paid, and thus she quickly raised funds from the B= RECURS Le Korean-American community to pay that As noted above, KAAGNY alleges the debt. (Kim-Beague Aff. □□ 15-17; (Ir. following three claims for damages under 41:12-42:11, 104:22-105:1.) In particular, New York law: (1) breach of contract, (2) Kim used funds she raised from the Korean- breach of fiduciary duty, and (3) American community to satisfy the conversion.? (Compl. at 5—7; see also Doc. property-related debt by making two payments to NYCDF, the first for $50,000 on April 29, 2016, and the second for 3 Because all of the events giving rise to this diversity $245,956.23 on May 11, 2016. (PX26-27; action occurred in New York City and the parties’ Tr. 40:4-17.) By paying back some of summations rely exclusively on New York KAAGNY’s debt on April 29, 2016, Kim Sait tae pee hea 61-64), the Court applies New : ork law. See Krumme v. WestPoint Stevens Inc., slightly lowered the accrued interest from 238 F.3d 133, 138 (2d Cir. 2000) (“The parties’ the projected figure of $44,248.07 (PX25) to briefs assume that New York law controls, and such $43,959.33 (see PX25, 27). KAAGNY also implied consent is sufficient to establish choice of used the community fundraiser to pay the law.” (internal quotation marks and_ alteration remaining non-NYCDF debts, _ totaling omitted)).
No. 62 at 5-16.) The Court addresses each To establish the existence of a contract, claim in turn. “a plaintiff must establish an _ offer, acceptance of the offer, consideration, □□ Breach of Contract mutual assent, and an intent to be bound.” i ‘ Kowalchuk v. Stroup, 873 N.Y.S.2d 43, 46 To prevail on a breach of contract claim ; under New York law, a party must prove (1st Dep’t 2009). The element in dispute “(1) the existence of a contract between here, consideration, need not take the form itself and [the] defendant; (2) performance meal car aoe S: iundamenta ht of the plaintiffs obligations under the OF me aw Oh consis OM contract; (3) breach of the contract by [the] consideration may consist wap Creme defendant; and (4) damages to the plaintiff or of a return Poort, ach TA, ESGAE □□ caused by [the] defendant’s breach.” Diesel certain circumstances not relevant here, any Props SRL. 631 F3d at 59. ew performance which is bargained for is □□ oi sy shar Min tsengtie q ii consideration.” Doctor’s Assocs., Inc. v. gues Alemayehu, 934 F.3d 245, 253 (2d Cir. contractual obligations under the Campaign : ‘acca’ Affidavits and incorporated Bylaws by 2019) (internal quotation marks, citations, allowing the Association’s debt to pass to and brackets omitted) (quoting Restatement his successor (Kim), causing damages in the \Seearidt) or Cuntiucts Go Tl, 72), Se □□□□ 5 Ingrassia y. Shell Oil Co., 394 F. Supp. 875, full amount of that debt plus interest that accrued while KAAGNY was raising funds B62 (LN 1975) (exp lai ning that, under in order to pay off the debt. (Doc. No. 62 at New cone law, a imleteral vee □□ 15-16.) In response, Min argues that there smnaitt onan or Ot f Promise ven □□□ is no contract between the parties because SOUEMINE At eae ange oF a = there was no consideration for Min’s acceptance of which “is effected by the purportedly “gratuitous” promises in the performance of the act in accordance with Campaign Affidavits (Tr. 16:3), and even if the otter. there was a contract that Min breached, Here, Min plainly received a bargained- KAAGNY suffered no damages, since third- for performance in return for the promises Delos he GA By Vor te et he made in the Campaign Affidavits 2 Es : return for Min’s promises that he wou that follow, the Court concludes that Min undertake certain Reanotal obligations — breached his contractual obligations to including, in particular, the obligation to be KAAGNY, resulting in damages in the responsible for all financial liabilities amount of $319,095.56. incurred during his term and not to pass such (. Bvisenee Cuaroer liabilities on to his successor (PX1 at 27-28, , 31; PX2 at 2, 5; PX4) - KAAGNY deemed Min argues that KAAGNY has not Min eligible to run in the presidential satisfied the first element of a breach-of- elections, (See, eg., Kim Aff. qf] 11-15, contract claim — the existence of a contract 23.) In the language of contract law, the between the parties — because the Campaign consideration for Min’s promises in the Affidavits imposed “[n]o reciprocal Campaign Affidavits was KAAGNY’s own obligation on [KAAGNY] and there is performance under the contract, which therefore a failure of consideration.” (Id. at consisted of allowing Min to participate in 5.) the elections; when KAAGNY rendered such performance, it thereby accepted Min’s offer to abide by his financial obligations in
the event he was elected, and a contract 3. Damages Causation between the parties was formed. See, e.g., Doctor’s Assoes., 934 F.3d at 253. Min finally argues that any breach of contract did not cause KAAGNY to incur 2. KAAGNY’s Performance and Min’s damages because KAAGNY _ ultimately Breach satisfied the debt that he left it by raising the necessary funds through community Min does not seriously dispute that, if fundraising. (Doc. No. 61 at 5.) Consistent the Campaign Affidavits formed part of a with the evidence at trial, KAAGNY does binding contract between him and not dispute that it ultimately paid Min’s debt KAAGNY, then the second and_ third in full (Tr. 106:5-7), but argues that, elements of KAAGNY’s breach-of-contract because Min forced KAAGNY to raise claim ~ namely, KAAGNY’s performance funds in the community to pay a debt for and Min’s breach —are satisfied. Nor could which he was personally responsible, Min he. As discussed above, KAAGNY essentially “deprived KAAGNY of performed under the contract by allowing contributions it would otherwise have had to Min to run in the 2013 and 2015 elections, run its office and its programs” (Doc. No. 63 thus satisfying the performance element. As at 5). The Court agrees with KAAGNY. to the breach element, Min breached his binding promises in the Campaign “Under New York law, damages for Affidavits by allowing KAAGNY’s debt to breach of contract should put the plaintiff in pass to his successor. Although Min’s term the same economic position he would have ended prematurely through impeachment, occupied had the breaching party performed the relevant financial obligations in the the contract.” Oscar Gruss & Son, Inc. v. Bylaws, as restated and incorporated in the Hollander, 337 F.3d 186, 196 (2d Cir. Affidavits (PX2 at 2,5; PX4), do not contain 2003). In keeping with this principle, New any express exceptions (see PX1 at 28, 31; York recognizes the “lost volume” theory of Tr. 83:18-84:5). Nor is there any other contract damages. See Donald Rubin, Inc. v. evidence in the record to suggest the Schwartz, 594 N.Y.S.2d 193, 194-95 (lst existence of an “impeachment exception” to Dep’t 1993). Under the lost volume theory, the president’s duty to assume the where an injured plaintiff “mitigates” its Association’s financial obligations. damages by entering into a subsequent Moreover, the Court is especially disinclined transaction that the plaintiff would have to infer the existence of such an exception entered into anyway, the defendant who here, since Min remained in office for over a breached the contract is not entitled to a year after being impeached, during which reduction in damages for mitigation, since time he knew that he faced the prospect of the plaintiff has “lost volume” — that is, the personal liability if he passed debt to his plaintiff has been deprived of having the successor and yet used his de facto powers benefit of both transactions. See id. (citing to pay lawyers to fight his impeachment Restatement (Second) of Contracts § 347); rather than to reduce KAAGNY’s debt (and see also In re 375 Park Ave. Assocs., Inc., thus his own liability). On this record, 182 B.R. 690, 698 (Bankr. S.D.N.Y. 1995) elements (2) and (3) of KAAGNY’s breach- (recognizing that the lost volume doctrine is of-contract claim are satisfied. a “well[-|settled exception to the duty to mitigate”), Thus, for example, “if a charity solicits money on an annual basis, a donation in one year will not compensate the
charity for a donation ‘lost’ in a prior year as debt immediately, but rather would need a result of a defendant’s misconduct” some (reasonable) amount of time — here, because “[h]lad it not been for the under two months — to discover the debt and misconduct, the charity would have received raise funds in the community, leading to the contributions in both years.” Samaritan accrual of additional interest. All told, Inns, Inc. v. District of Columbia, 114 F.3d Min’s breach of contract therefore caused 1227, 1236 (D.C. Cir. 1997) (applying KAAGNY to expend $295,711.23 in funds general contract law principles). raised from the community to pay property- . related taxes, charges, fees, and interest. Here, KAAGNY lost volume because, (PX26-27 (payments totaling although it was able to cover Min’s debt by $295,956.23).)* And Min’s breach also holding an emergency fundraiser, in doing caused KAAGNY to raise funds to pay so it lost the benefit of raising those funds $23,384.33 for the remaining miscellaneous for other purposes. As Kim testified at trial, debts on its books when Min left office. and as common-sense would dictate, there is (PX9.) In sum, as a result of Min’s breach not an unlimited source of funds in the and KAAGNY’s resulting need to raise Korean-American community. (Tr. 41:21- funds to cover Min’s debt, KAAGNY was 42:3, 107:4-11.) Thus, every dollar raised deprived of $319,095.56 in community to cover the debt that Min left for Kim when funds that it could have raised for other he finally yielded the presidency was a purposes. Accordingly, the Court concludes dollar that could have been used for other that KAAGNY has carried its burden of purposes. Although Min perhaps could have proving its breach-of-contract claim, and conducted the same fundraiser while he was that it is entitled to $319,095.56 in in office, he in fact failed to do so, and short damages.° of accessing some other source of funds, he was ultimately required to cover the debt with his personal finances. TTT * KAAGNY appears to concede that two small Thus, with respect to the amount of payments that are listed in PX27 but not in PX25 — damages, it is clear that Min’s breach of $45 for building signs and $200 for the building ‘ elevator — were not due until after Min left office. contract caused KAAGNY to incur damages (See Doc. No. 62 at 3 (claiming $295,711 in of at least $301,959.94, the amount of debt property-related damages, approximately $245 less on KAAGNY’s books when Min stepped than the $295,956.23 that KAAGNY paid NYCDF).) down as president on March 21, 2016. Accordingly, these amounts are not included in the (PX9.) In addition, because KAAGNY may property-related contract damages of $295,711.23. recover consequential damages for all ° ‘In its Complaint, KAAGNY sought contract “reasonably foreseeable” losses proximately toe an ie □□ a caused by Min’s breach, Bi-Econ. Mkt., Inc. KAAGNY again seepiedtad $314,242 in ane v. Harleysville Ins. Co. of N.Y., 10 N.Y.3d damages in summation, the Court notes that 187, 193 (2008), KAAGNY is entitled to KAAGNY’s calculation (Doc. No. 63 at 2) omits recover interest that accrued on the overdue certain debts listed in PX9 and does not add up to property taxes between March 21 and May ae more generally, KAAGNY has claimed 11, 2016, the date on which KAAGNY eet _property-related contract cnuiages at : ; ifferent times throughout this case (compare Compl. finally satisfied Min’s property-related debt. { 16 ($290,858) with Doc. No. 63 at 2 ($295,711)), Although such interest accrued after Min left and has submitted exhibits that appear to support office, it was reasonably foreseeable that slightly different numbers (see PX9, 24, 25, 27, 29; KAAGNY would not be able to pay Min’s Kim-Beague Aff. { 13). As explained in the text herein, having considered all of these exhibits, the
B. Breach of Fiduciary Duty 1. Misconduct KAAGNY next claims that Min As part of his fiduciary relationship with breached his fiduciary obligations by KAAGNY, Min owed KAAGNY, inter alia, mismanaging KAAGNY’s finances. (Doc. a duty of care. See In re Perry H. Koplik & No. 62 at 5-14.) To prevail on this claim, Sons, Inc., 499 B.R. 276, 289 (S.D.N.Y. KAAGNY must prove “(1) the existence of 2013), affd, 567 F. App’x 43 (2d Cir. a fiduciary relationship, (2) misconduct by 2014). “The duty of care refers to the [Min], and (3) damages directly caused by responsibility of a corporate fiduciary to [Min]’s misconduct.” Village of Kiryas Joel exercise, in the performance of his tasks, the v. County of Orange, 43 N.Y.S.3d 51, 57 (2d care that a reasonably prudent person in a Dep’t 2016) (internal quotation marks and similar position would use under similar citations omitted), Here, it is undisputed circumstances.” Norlin Corp. y. Rooney, that the first element is satisfied because a Pace Inc, ,,744 F.2d 255, 264 (2d Cir. 1984). fiduciary relationship existed between Min This duty is “subject . . . to the business and KAAGNY while Min was president of judgment rule, which bars judicial inquiry KAAGNY, including after his impeachment into actions of corporate [officers] taken in while he continued to hold himself out as good faith and in the exercise of honest president and exercise the powers of the judgment in the lawful and legitimate office. (Doc. No. 61 at 7.) Cy. furtherance of corporate purposes.” Jn re Schneiderman ex rel. People yv. Lower Perry H. Koplik & Sons, 499 B.R. at 289 Esopus River Watch, Inc., 975 N.Y.S.2d (internal quotation marks omitted); see N.Y. 369, 2013 WL 3014915, at *25 (Sup. Ct. Bus. Corp. Law § 715(h). 2013) (“A de facto officer has the same fiduciary duties to a charity as its named Here, the gravamen of KAAGNY’s officers.”). The parties, however, dispute claim is that Min breached the duty of care (1) whether Min’s actions rose to the level by misappropriating building account funds of “misconduct,” that is, a breach of his for non-building expenses, and relatedly, fiduciary duties, and if so, (2) whether any failing to pay KAAGNY’s property taxes. such breach caused KAAGNY to incur (Doc. No. 62 at 6-12.) The Court again damages. The Court will address the agrees with KAAGNY. elements of misconduct and damages As to misappropriation, the Court causation in turn. a □□ concludes that “no reasonably prudent person in Min’s position — that is, no reasonably prudent KAAGNY president — would have used the building account funds Court finds that contract damages in the amount of for non-building expenses in the manner eee Janet _ on See oe evidenced at trial. Norlin Corp., 744 F.2d at ry an e evidence al trial, § Ica □ and 2, notwithstanding KAAGNY’s request for a 264. Min transferred a total of $302,957.37 lower amount of contract damages. See, e.g., Barnes from the building account to the operating v, Sea Hawaii Rafting, LLC, 889 F.3d 517, 542, 542 account over a series of fifty-four wire n.20 (9th Cir. 2018) (holding, based on the record transfers between July 2014 and January and appellant’s legal theory, that appellant was 2016 to pay for routine operating expenses, entitled to monetary relief in an anne higher than such as the $60,000 gala he threw in January the specific amount he requested); cf Fed. R. Civ. P. ; 5A(c) (providing that a default judgment may not 2015, and then withdrew an additional exceed the amount demanded in the pleadings). $70,000 from the building account to pay
lawyers in connection with the election and account funds for an illegitimate purpose, he impeachment disputes, including $50,000 clearly breached his duty of care. after he was properly impeached. (See PX7 at 91, 126, 157, 171, 199, 223, 237, 251, Min also acted unreasonably and without 265-66, 279-80, 295, 309, 321, 333-34; a legitimate business purpose by not paying Kim Aff. §§ 57-62; Kim-Beague Aff. the property-related bills, several of which qq 23-36, 38-41.) Although Min initially were due and owing for over a year at the attempted to justify these transfers and time he left office in March 2016. (PX.25.) expenditures by claiming that former It bears noting that, of course, Min had the KAAGNY presidents had used the building discretion to prioritize certain expenses over account to pay for non-building expenses, he others. In this regard, Min testified that he acknowledged that such a practice was used the building account funds to cover reserved for “emergency” situations and that operating expenses such as the $60,000 gala, former presidents would replenish the funds instead of the overdue property taxes, after using them. (Tr. 149:12-19, 152:5— because “Jilt’s okay to pay the taxes a little 22.) Even if such a customary exception late[,] [bJut when you have an event, you existed, Min did not use the building have to make sure you do it on time.” (Tr. account funds to pay for emergencies, nor 162:17-18.) Nevertheless, even if it could did he replenish the building account after be argued that there was a legitimate withdrawing from it. business reason for delaying the payment of property-related expenses for a “little” Min cannot take refuge in the business while, there was no legitimate reason for judgment rule. Arguably the business failing to pay them through March 2016, by judgment rule does not apply at all in these which time the overall property-related bill circumstances, since Min’s use of the had ballooned to almost $300,000, including building account funds for non-building thousands of dollars in accrued interest, expenses violated a recognized customary prompting the City to threaten foreclosure. rule concerning the scope of his authority as (Kim-Beague Aff. 15; PX9, 25, 27.) In KAAGNY president. Cf Att’y Gen. of N.Y. short, Min’s failure to pay property expenses v. Lutheran Care Network, Inc., 92 that were due and accruing interest for N.Y.S.3d 154, 159 (Gd Dep’t 2018) months — and for several of the bills, over a (explaining that the business judgment rule year (PX25) — constituted a clear breach of “has no place where corporate officers or the duty of care. directors take actions that exceed their authority under the relevant corporate Finally, the Court construes KAAGNY's bylaws”). But even assuming the business breach-of-fiduciary-duty claim □ judgment rule applies generally, it does not encompassing the argument that Min acted shield Min from liability, since the payment improperly by exposing KAAGNY' to of routine operating expenses was not a “RPIE Non-Filing Fees,” since such fees are “legitimate business purpose” of building listed in PX27 and 28 and KAAGNY seeks account funds. See Brassco, Inc. v. Klipo, to recover property-related damages based No. 99-cv-3014 (PAC), 2006 WL 223154, at on the fact that it had to pay these fees (S.D.N.Y. Jan. 27, 2006) (holding that (which it incorrectly _ characterizes as the business judgment rule did not protect “interest”) to NYCDF. Given that these fees conduct that “departed from customary appear to be the result of Min’s failure to norms to an extreme degree”). Because Min file required tax forms, and there is no repeatedly and unreasonably used building legitimate business purpose for not filing
such forms, the Court concludes that Min plaintiff or to his property and in so doing breached his fiduciary duties to KAAGNY has conferred a special benefit to the interest by allowing it to incur $20,147 in RPIE of the plaintiff that was harmed, the value of Non-Filing Fees.° the benefit conferred is considered in mitigation of damages, to the extent that this 2. Damages Causation is equitable.”), The Court will address each As to the final element of its breach-of- of KAAGNY’s ‘three damages claims in fiduciary-duty claim, KAAGNY argues that tun, Min’s misconduct caused it to incur Overdue property taxes. KAAGNY first $425,711 in damages, calculated as follows: argues that Min’s misconduct caused it to (1) $295,711 to cover the amount of the incur damages equal to the amount of the overdue property expenses, or, at a overdue property expenses. To be sure, minimum, $64,105 in claimed interest on the there is a. causal Gourertion between. Mints property expenses ($1.33 less than the misconduct and the overdue property $43,959.33 in interest plus $20,147 in RPIE expenses that KAAGNY was required to non-filing fees discussed supra pp. 6-7, pay by raising funds in the community. By presumably due to a rounding error); (2) improperly transferring $302,957.37 from $60,000 that Min transferred from the the building account to the operating building account to the operating account to account, Min drained the building account pay for the January 2015 gala; and (3) of funds that would have been used to pay $70,000 in funds used to pay lawyers in the overdue property expenses. (See PX7 at connection with the impeachment and 91, 126, 157, 171, 199, 223, 237, 251, 265— Article 78 proceedings. (Doc. Nos. 62 at 3; 66, 279-80, 295, 309, 321, 333-34; see also 63 at 1-2.) The thrust of Min’s response is Kim-Beague Aff. J] 23-36.) In addition, again that KAAGNY mitigated any damages Min’s unreasonable failure to pay those caused by his misconduct because expenses resulted in the accrual of KAAGNY raised funds in the community to unnecessary interest, and Min’s cover the overdue property taxes, and that unreasonable failure to file necessary tax Min’s use of the building account funds to forms resulted in the assessment of RPIE pay for operations, even if improper, in fact non-filing fees. benefited KAAGNY. (Doc. Nos. 61 at 1, 7; 64 at 4.) See Restatement (Second) of Torts Furthermore, the Court rejects Min’s §920 (1979) (“When the defendant’s argument that KAAGNY mitigated all of its tortious conduct has caused harm to the damages from the overdue property expenses through the community fundraiser. TT Because a claim for breach of fiduciary duty PEUES = es a sounds in tort, see 2002 Lawrence R. rou, a “secretive scheme to purporte i * □ lease ithe KAAGNY building] for a 99-year term.” Buchalter Alaska Tr. v. Phila. Fin. Life (Doc. No. 62 at 12-13.) However, KAAGNY does Assurance Co., 96 F. Supp. 3d 182, 217 not argue that such a scheme caused it to incur (S.D.N.Y. 2015), the collateral source rule, damages. (Jd. at 13-14; see also Tr. 264:9-10 as modified by New York statute, prevents (conceding that the lease deal “didn’t cause the Court from considering “[vJoluntary damage”).) Because the lease deal therefore cannot : “ye serve as the basis for a successful breach-of- charitable contributions received _ by fiduciary-duty claim, the Court need not consider [KAAGNY] to be a collateral source of whether Min engaged in misconduct in relation to the payment ... to reduce the amount of any lease deal. award [or] judgment,” N.Y. CPLR
§ 4545(b); see Andino v. Mills, 31 N.Y.3d in a manner that failed to benefit 553, 560-63 (2018). In addition, even if KAAGNY.’ § 4545(b) did not preclude consideration of , the funds raised in the community, such Although Min is therefore correct that funds would still not constitute mitigation KAAGNY’s damages from the unpaid due to the lost-volume problem discussed property taxes are largely mitigated by the above, corresponding increase in funds in KAAGNY’s operating account, Min’s Nevertheless, the Court agrees with Min unreasonable failure to pay KAAGNY’s that his transfer of building account funds to property expenses, as noted above, caused the operating account, even if improper, KAAGNY to incur unnecessary interest. ultimately benefited KAAGNY to the extent This unreasonable delay provided no those funds were used to pay for some bona corresponding benefit to KAAGNY. While fide operating expenses. See Restatement Min claims that his failure to pay the (Second) of Torts § 920. KAAGNY does property taxes benefited KAAGNY by not dispute that Min spent most of the allowing him to pay for certain operating misappropriated funds on such operating expenses that KAAGNY could not expenses. And while KAAGNY does assert otherwise afford, Min had an obligation as that Min unreasonably paid for certain KAAGNY president to pay for those advertisements ($88,935), personal meals operating expenses by raising funds in the and entertainment ($20,750), and the community, or by using his personal January 2015 gala ($60,000), the evidence at finances, rather than by raiding the building trial did not bear out these assertions. account. His decision to pursue neither of KAAGNY presented no evidence that Min those options, while instead delaying used $88,935 to finance a _ personal payment of the overdue property expenses, advertising campaign (Compl. 421), and provided no benefit to justify mitigation of indeed, the advertisement campaign is the $43,959.33 in accrued interest on those mentioned nowhere in KAAGNY’s expenses. (PX25.) Similarly, Min’s summation papers (see Doc. Nos. 62-63). unreasonable failure to file necessary tax As for the $20,750 that Min allegedly spent forms caused KAAGNY to incur RPIE non- on “meals and entertainment for personal filing fees totaling $20,147, with no purposes” (Compl. 421), Kim-Beague offsetting benefit. Thus, the Court agrees acknowledged at trial that such expenses with KAAGNY’s alternative argument that were in fact used to pay for meetings at Min’s misconduct caused it to incur which KAAGNY members were present $61,106.33 in damages in accrued interest (Tr. at 222:13-223:24),. Similarly, and late fees. KAAGNY failed to establish that the January 2015 gala — on which Min spent $60,000 that he previously transferred from ? This mitigation analysis does not apply to the building account to the operating KAAGNY’s breach of contract claim because Min’s account — was something other than a bona breach of contract was his failure to cover fide, if perhaps ill-advised, KAAGNY event. KAAGNY’s debt with his personal expenses — a In sum, although KAAGNY disputes the failure that had no corresponding benefit to . » 5 . ; KAAGNY — whereas Min’s fiduciary misconduct wisdom of Min’s operational expenditures, consists of his misuse of building account funds, the record does not support the conclusion which, while a clear violation of KAAGNY custom, that Min used KAAGNY’s operating was still mostly undertaken for KAAGNY’s account on personal expenses or otherwise operational benefit.
January 2015 gala. The Court rejects former agent has a duty to the former KAAGNY’s claim that Min’s misconduct principal to cease acting or purporting to act caused KAAGNY to incur $60,000 in as that principal’s agent.”); see also id. damages corresponding to the amount of § 6.05 cmt. b (“[A] principal is not a party to funds Min expended on the January 2015 a contract when the agent who enters into gala. As explained above, the $60,000 at the contract on the principal’s behalf acts issue was part of the overall $302,957.37 without actual or apparent authority.”). that Min improperly transferred from the . building account to the operating account to It is a closer question whether Min’s pay for bona fide KAAGNY operations. payment of $20,000 to Mare S. Bresky of (PX7 at 157.) As also explained above, the Bresky Law Firm, PLLC on March 20, KAAGNY has failed to prove that any of 2015, eleven days before the impeachment, these misappropriated funds — including the provided KAAGNY with a benefit that may $60,000 transferred to the operating account be considered in mitigation. Although these to pay for the gala — were used in a way that legal services ultimately did not prevent the did not benefit KAAGNY. impeachment or consequent transition of power, they arguably still benefited $70,000 in legal expenses. In addition KAAGNY — which was named as a to the $302,957.37 that Min improperly defendant, together with Min, in the Article transferred from the building account to the 78 proceedings — at the time the legal operating account, Min — improperly services were purchased. Given the dearth withdrew $70,000 directly from the building of evidence in the record as to the specific account to pay lawyers in connection with nature of these legal services and the fact the impeachment and Article 78 that there were facially legitimate reasons proceedings. Applying the same mitigation for KAAGNY and its undisputed president, framework as above, the Court must both parties in a lawsuit, to retain counsel in determine whether and to what extent those March 2015, the Court concludes that legal services, although improperly funded, KAAGNY has not met its burden of benefited KAAGNY. At a minimum, the showing damages causation with respect to $50,000 that Min expended on legal services these pre-impeachment legal services. See after he was properly impeached on March Fed. Ins. Co. v. Mertz, No. 12-cv-1597 31, 2015 provided no benefit to KAAGNY, (NSR) (JCM), 2016 WL 164618, at □□□□ since litigating the propriety of the (S.D.N.Y. Jan. 12, 2016) (burden of proving impeachment and Article 78 proceedings at damages to a reasonable degree of certainty, that point merely delayed the transition of caused by a breach of fiduciary duty, power between the Min and Kim remains with plaintiff). administrations. Although Min may have believed in good faith that he could overturn Accordingly, the Court concludes that the impeachment, he ran the risk that, by Min’s improper use of the building account continuing to use KAAGNY’s funds in an funds to pay for legal services caused attempt to maintain power even after he was KAAGNY to incur damages in the amount impeached, he would later be held of $50,000. personally responsible for such payments in □ the event the EERE were upheld as d Total damages for breach of fiduciary ; uty. For the foregoing reasons, the Court proper in court. See Restatement (Third) of fodse that KAAGNY how caried Hs Agency § 8.09 cmt. b (2006) (“Once a ‘eel : . : : . urden of proving that Min breached his relationship of agency has terminated, the
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fiduciary duties to KAAGNY, causing to those discussed in the context of Min’s KAAGNY to incur damages in the amount fiduciary duties, the Court concludes that of $104,106.33, corresponding to Min converted $50,000 of the $70,000 in $64,106.33 in late fees and interest on the building account funds at issue. overdue property taxes plus $50,000 in post- impeachment payments to lawyers in First, $70,000 Mm funds taken from connection with the impeachment and KAAGNY’s building account to pay Article 78 proceedings. But as explained lawyers in connection with the impeachment above, KAAGNY is also entitled to recover and Article 78 proceedings constitutes a contract damages to cover the property- Te ite leer a ea related debt — including interest and fees — eiZ, INO. Li-CV- ? that Min wrongfully failed to pay before 7271219, at *14 (S.D.N.Y. Dec. 19, 2014) leaving office. Because KAAGNY may not (“In New York, the funds of a specific, recover twice for the same interest and fees, named bank account are sufficiently see Cohen vy. Lizza, 404 N.Y.S.2d 600, 601 identifiable for purposes of a conversion Ist Dep’t 1978), its net damages on the claim.” (internal quotation marks and ech aiduaier) duty claim are limited to brackets omitted)). As to the second $50,000. element, there can be no serious dispute that KAAGNY owned the funds in its building C. Conversion account before they were transferred to lawyers. Finally, the third element is Under New York law, a plaintiff must satisfied for the — post-impeachment prove the following to succeed on a payments, because Min had no authority conversion claim: “(1) the property subject over the building account after he was to conversion is a specific identifiable thing; properly impeached and his transfer of the (2) plaintiff had ownership, possession or funds at issue seriously interfered with control over the property before its KAAGNY’s ownership rights; however, this conversion; and G3) defendant exercised an element is unsatisfied for the pre- unauthorized dominion over the thing in impeachment payment, since at that time question, to the alteration of its condition or Min’s exercise of “dominion over the to the exclusion of the plaintiffs rights.” [building account funds]” was within his Apple Mortg. Corp. v. Barenblatt, ‘162 FE. authority as KAAGNY president. Apple Supp. 3d 270, 284 (S.D.N.Y. 2016) (internal Mortgage, 162 F. Supp. 3d at 284. quotation marks omitted); see also Goldstein v. Guida, 904 N.Y.S.2d 117, 119 (2d Dep’t Thus, KAAGNY has carried its burden 2010) (“Conversion is defined as an of proving that Min converted $50,000 from intentional act of domination or control over the building account to pay for legal a chattel which so seriously interferes with expenses in connection with the the right of another to control it that the impeachment and Article 78 proceedings. actor may justly be required to pay the... However, because KAAGNY cannot full value of the chattel.” (internal quotation recover twice for its loss of $50,000 from marks omitted)). Here, KAAGNY claims the building account, which is also that Min converted $70,000 from recoverable through its breach-of-fiduciary- KAAGNY’s building account funds to pay duty claim, KAAGNY may only recover a for legal expenses relating to the net total of $50,000 for both that claim and impeachment and Article 78 proceedings. its conversion claim. (Doc. No. 62 at 14-15.) For reasons similar
VI. CONCLUSION Plaintiff Korean American Association . of Greater New York, Inc. is represented by sone tha ee ee The Court Charles M. Yoon of Yoon LLP, 11 East 44th burden of proving that Min (1) breached his Street, Suite 1001, New York, New York contractual obligations under the Campaign 10017, Steven Yudin of the Law Offices of Affidavits and incorporated Bylaws, (2) Bernard D’Orazio & Associates, P.C., The violated his duty of care to KAAGNY by Legal Studio @ 238 West 139th Street, New repeatedly misappropriating building York, New York 10030, and Bernard eee oun! fends for Don-SURINe PATE, D’Orazio of the Law Offices of Bernard failing to pay overdue property taxes, and ; . . failing to file necessary tax forms, and (3) D’Orazio & Associates, P.C., 100 Lafayette converted building account funds by paying Street, Suite 601, New York, New York for legal services after he was impeached. 10013. Min’s breach of contract caused KAAGNY to incur damages equal to the amount of the Defendant Sung Ki Min is represented outstanding debt (including subsequently- by Nolan Klein and Hector Ramirez of the accrued interest) that he failed to cover Law Offices of Nolan Klein, 39 Broadway, personally, $319,095.56, and his breach of Suite 2250, New York, New York 10006. fiduciary duty and conversion caused KAAGNY to incur an additional $50,000 in damages for post-impeachment legal services. Accordingly, IT IS HEREBY ORDERED THAT, no later than January 17, 2020, KAAGNY shall submit a proposed judgment pursuant to Federal Rule of Civil Procedure 58, which shall include a proposed amount of prejudgment interest pursuant to N.Y. C.P.L.R. §§ 5001, 5004. Min may respond to the proposed judgment no later than January 31, 2020. SO ORDERED. A J. SULLIVAN United States Circuit Judge Sitting by Designation Dated: January 3, 2020 New York, New York * * *