Otos Tech Co., Ltd. v. OGK America Inc., No. 11-1078; Third Circuit; opinion by Chagares, U.S.C.J.; filed August 9, 2011. Before Judges Chagares, Jordan and Greenaway. On appeal from the District of New Jersey. [Sat below: Judge Walls.] DDS No. 11-8-3575 [7 pp.]
Plaintiffs Otos Tech. Co., Ltd., Otos Optical Co., Ltd. and Moon Young Huh filed suit in the District of New Jersey asserting claims for breach of contract, conversion, and embezzlement arising out of defendant Yale Kim’s retention of three checks worth $587,775.05. Kim asserted counterclaims for breach of contract, breach of a settlement agreement, and breach of the covenant of good faith and fair dealing. He argued that Otos wrongfully terminated him and that he retained the checks pursuant to an agreement between the parties to settle his wrongful termination.
While this suit was pending, Otos filed action against Kim in South Korea, asserting essentially identical claims. The South Korean court entered judgment in favor of Otos for 544,920,318 South Korean won, an amount equivalent to $587,755.05 at the time.
The New Jersey litigation then proceeded to a trial, resulting in a judgment in favor of Otos for $587,755.05 on its conversion claim and in favor of Kim for $910,000 on his counterclaim for breach of the covenant of good faith and fair dealing.
Otos then seized Kim’s assets in Korea to satisfy the Korean judgment. The South Korean court held that the payment of principal and interest was fully carried out.
Back in the United States, Kim filed a motion asking that the District Court order the turnover of funds from the accounts of one of Otos’s customers in light of its failure to satisfy the $910,000 judgment against it. Otos argued that any turnover should be subject to a “setoff” in the amount of its American judgment, $587,755.05. The District Court granted Kim’s motion and denied Otos’s request for a setoff because it was unclear whether granting a setoff would result in Otos impermissibly recovering twice for the same harm.
Otos then filed a motion to “equalize” the Korean judgment with the American judgment. Although it did not dispute that Kim had satisfied the Korean judgment, Otos asserted that due to a devaluation of the South Korean won, his satisfaction only amounted to an actual payment of $382,215. It argued that the Korean judgment should be “equalized” with the American judgment in the amount of $205,540.05, the difference between the amount of the American judgment and the actual payments made by Kim after being adjusted by currency devaluation.
The District Court denied Otos’s motion. This appeal followed.
Held: Because defendant has satisfied the Korean judgment, there is no merit in plaintiff’s attempt to satisfy that judgment for a second time in this district. Moreover, there is no support for its contention that a previously satisfied foreign judgment is subject to “equalization” in an American court in light of currency devaluation.
The Third Circuit first says that the Korean judgment is valid and enforceable in American courts pursuant to the Treaty of Friendship, Commerce and Navigation Between the United States of America and The Republic of Korea.
Nevertheless, it affirms the District Court’s denial of Otos’s motion to enforce that judgment. It says Otos is attempting to enforce the wrong judgment. The court previously noted that the record was then unclear whether Kim had satisfied the Korean judgment, and that accordingly, a setoff was inappropriate in light of the risk that Otos may impermissibly recover twice for the same harm.
The court says the record is now clear that Kim satisfied the Korean judgment — a Korean court explicitly held as much and Otos has not contested this fact. Thus, there is no merit in Otos’s attempt to satisfy the Korean judgment for a second time in the District of New Jersey. There is also no support for its novel proposition that a previously satisfied foreign judgment is subject to some kind of “equalization” in American courts in light of currency devaluation. The judgment has been fully satisfied.
— By Judith Nallin