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Optional Capital, Inc. v. Das Corporation

California Court of Appeal, Second District, First Division

January 15, 2014

OPTIONAL CAPITAL, INC., et al., Plaintiffs and Appellants,
v.
DAS CORPORATION, Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Los Angeles County, Michelle R. Rosenblatt, Judge. Reversed. (Los Angeles County Super. Ct. No. BC474472)

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COUNSEL

[166 Cal.Rptr.3d 707] Rehm & Rogari, Ralph Rogari, Los Angeles; Law Offices of Mary Lee and Mary Lee for Plaintiffs and Appellants Optional Capital, Inc., Ralph Rogari and Mary Lee.

Law Offices of Gregory M. Lee and Gregory M. Lee, for Defendant and Respondent DAS Corporation.

OPINION

[166 Cal.Rptr.3d 708] JOHNSON, J.

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Plaintiffs appeal judgment of dismissal of their action for conversion and fraudulent conveyance against defendant DAS Corporation. The trial court granted defendant's special motion to strike pursuant to Code of Civil Procedure section 425.16[1] and sustained defendant's demurrer to plaintiffs' complaint, finding that plaintiffs' causes of action arose out of DAS's settlement of litigation, which was protected activity under section 425.16, and further that Optional's claims were barred bye the litigation privilege. We reverse.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This case involves an extremely tangled thicket of legal proceedings in both state and federal court, as well as in Switzerland. The judgment on appeal is but one installment in Optional Capital, Inc.'s attempt to recover monies it contends were looted from its corporate coffers in 2000 and 2001.

Plaintiff Optional Capital, Inc. (Optional) is a Korean Corporation. Plaintiffs Ralph Rogari and Mary Lee are attorneys licensed in California who

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represented Optional in connection with four United States District Court actions. Defendants Erica Kim, Christopher Kim,[2] and Bora Lee (Christopher Kim's wife) (the Kim parties) during the period January 2001 to August 2002 were fiduciaries of Optional. Defendant Alexandria Investments, Inc. (Alexandria) is a California Corporation, and the Kim parties are principals of Alexandria. Defendant DAS Corporation (DAS) is a Korean corporation that conducts extensive business in California manufacturing, selling, and distributing auto parts.

In January 2001, Optional was known as " New Vision Venture Capital Company Ltd." and was a publicly traded venture capital firm whose shares traded on a South Korean stock exchange. In April 2001, pursuant to a conspiracy, DAS and the Kim parties took control of Optional and used their fiduciary positions to issue stock to Christopher Kim, convert more than $30 million of property of Optional, and manipulate the market for Optional's stock. Optional alleged some of the proceeds from this scheme were used to pay debts to investors, including DAS. The remaining proceeds were deposited in bank accounts at United Commercial Bank (UCB) in Rowland Heights controlled by the Kim parties. In February 2002, the Kim parties created defendant Alexandria and transferred the money misappropriated from Optional into a bank account in the name of Alexandria at UCB. Defendants used Optional's funds to purchase real property in Beverly Hills and expensive automobiles.

According to plaintiffs, DAS was aware of and participated in the conversion by the Kim parties of more than $35 million of Optional's funds.

On May 30, 2003, DAS filed a complaint in Los Angeles Superior Court, case No. BC296604, against Christopher Kim and Bora Lee (DAS superior court litigation). Alexandria was not a party to that action. In that action, DAS sought to recover 14 billion South Korean Won (KRW) in connection with an investment DAS made in a company affiliated with Christopher Kim and Bora Lee, alleging they solicited funds from investors but instead created sham corporations " with no business except money laundering."

[166 Cal.Rptr.3d 709] In September 2003, Alexandria transferred more than $15 million of Optional's converted money to a bank account opened at Credit Suisse in Geneva, Switzerland.

Starting in March 2004, based on the conduct of the Kim parties in running Optional, the United States Government commenced forfeiture proceedings in the United States District Court for the Central District of California in three

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different cases (Nos. CV 04-2788, CV 04-3386 & CV 05-3910) [3] (forfeiture actions). The United States government seized property, including the automobiles in the United States and the Alexandria funds held at Credit Suisse Bank in Geneva, Switzerland.[4] At the request of the United States Government, the Swiss government froze the Credit Suisse account (Government Freeze). Both Optional and DAS were claimants in the forfeiture actions arising out of the Kim parties' looting of Optional, and both Optional and DAS filed claims to the various assets, including the monies in the Credit Suisse account.

In 2004, Optional filed a lawsuit against the Kim parties and Alexandria in the United States District Court, seeking damages for fraud and conversion based on the looting of Optional (No. CV 04-3866) (Optional federal court action).

On March 13, 2007, the United States District Court granted the Kim parties' summary judgment motion in the forfeiture actions, and the Ninth Circuit affirmed that decision on October 3, 2008, extinguishing the United States Government's forfeiture claim.

In April 2007, DAS instituted criminal proceedings in Switzerland against Alexandria and Christopher Kim, thereby obtaining a second freeze on the Credit Suisse funds (DAS Freeze). Although it was aware of the DAS Freeze on the funds, Optional did ...


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