Song v. Kim

Filed 2/28/07 Song v. Kim CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

APPEAL from a judgment of the Superior Court of Los Angeles County, Judith C. Chirlin, Judge. Affirmed.

Law Offices of Paul Park & Associates and Paul Park for Defendant and Appellant.

Stroud & Do and James T. Stroud for Plaintiff and Respondent.

INTRODUCTION

Plaintiff and respondent Hee Ok Song (Mrs. Song) sued defendant Kevin H. Song (Mr. Song) and defendant and appellant Dr. Tay Seun Kim (Dr. Kim) for conversion and conspiracy to commit conversion. Mrs. Song alleged that Dr. Kim conspired with her former husband, Mr. Song, to convert money from a business in which Mrs. Song had invested and owned with Mr. Song in exchange for a 51 percent share of the profits. Mrs. Song alleged that Dr. Kim helped Mr. Song transfer money from the business account to Mr. Song for his personal use, and that she never received her share of profits from the business. The trial court entered judgment in favor of Mrs. Song for $450,000 against Dr. Kim and Mr. Song jointly and severally. Dr. Kim appeals from this judgment. We conclude that substantial evidence supports the judgment. We further find that Dr. Kim has not shown that an earlier judgment in Mr. and Mrs. Songs marital dissolution collaterally estops this judgment against him. We affirm the judgment.

PROCEDURAL HISTORY

In the operative complaint, plaintiff Mrs. Song sued her former husband, Mr. Song, for breach of fiduciary duty and fraud, and sued Mr. Song and defendant Dr. Kim for conversion and for conspiracy to convert.

Following a trial by the court, judgment was entered was entered in favor of Mrs. Song and against defendants Mr. Song and Dr. Kim, jointly and severally for $450,000. Judgment was entered in favor of Mrs. Song and against Mr. Song for an additional $5,000 for emotional distress damages. The judgment also adjudicated Dr. Kims cross-complaint against Mr. Song, and ordered that Dr. Kim should have judgment against cross-defendant Mr. Song and that Dr. Kim should recover from Mr. Song 75 percent of whatever Dr. Kim had to pay plaintiff Mrs. Song.

Dr. Kim filed a timely notice of appeal.

FACTS

Mr. Song and Mrs. Song were married in July 1999. In June 2001 they opened a medical business, K. S. Medical Clinic. Mr. Song was a licensed acupuncturist. Mrs. Song invested $575,000, which went into the K. S. Medical Clinic account. Mr. Song spent $400,000 for medical equipment and spent the rest to operate the business. Mrs. Song understood that part of her $575,000 investment would be used to purchase real property for the medical facility. Mrs. Song also understood that with respect to her $575,000 investment, she would receive at least 51 percent of the profits, and understood that she and Mr. Song would share the profits and that no one else would share in the profits.

The medical facility occupied leased premises at 2911 West 8th Street in Los Angeles. Later, with Mrs. Songs consent, Mr. Song purchased that building. Based on Mr. Songs representations, Mrs. Song understood that she and Mr. Song would own the building together as husband and wife. The purchase of the building took place before Mr. Song met Dr. Kim.

Besides providing acupuncture, Mr. Song intended to hire physicians and operate a medical facility. Mr. Song and Dr. Kim executed a professional service agreement in June 2001, and Mr. Song first employed Dr. Kim at the medical facility in October 2001. In August 2001, Mr. Song introduced Mrs. Song to Dr. Kim as his wife and as an investor. On two different occasions, Dr. Kim acknowledged to Mrs. Song that she had invested $575,000 in the business and that Mr. Song had not invested any money in the business.

Henry Chi, a certified public accountant with experience in forensic accounting analysis, testified that he was asked to review bank statements and transaction records of the medical practice of Mr. Song and Dr. Kim. Based on his review of deposit documents from Mrs. Songs bank account and verified transfers of those funds to Mr. Songs account, Chi concluded that Mrs. Song transferred $575,000 of her premarital money to Mr. Songs bank account.

Chi also reviewed Medicare payments deposited into Dr. Kims bank account. Chi determined that $3,016,970.82 from the medical practice was deposited into Dr. Kims Hanmi bank account No. 006-422160 from February 1, 2002, through December 28, 2003. Dr. Kim agreed that the $3,016,970.82 amount was accurate. Dr. Kim was the only authorized signatory on this account. By tracing deposit information on canceled checks written from Dr. Kims account to Mr. Songs accounts, Chi concluded that $1.1 million was transferred from Dr. Kims account to six accounts solely controlled by Mr. Song. Chi determined the following disbursements from Dr. Kims bank account: $856,788 to accounts controlled by Mr. Song; $171,000 paid to Mr. Song in cash; and $201,000 paid to the Kim and Song Medical Corporation bank account, the account for their medical practice. Dr. Kim was CEO and CFO of the Kim and Song Medical Corporation; Mr. Song was corporate Secretary. Dr. Kim explained the $856,788 transferred from his account to six accounts controlled by Mr. Song as resulting from Dr. Kims practice of giving blank checks to Mr. Song, who used whatever funds were necessary to run the clinic.

Chi also identified payments from Dr. Kims account for Mr. Songs personal expenses, which included: $23,220.47 made for seven payments on the mortgage on the building owned by Mr. Song; $14,000 to Lynette Kim, Mr. Songs divorce lawyer; $10,000 to John Lee, Mr. Songs personal lawyer; $43,259.25 to United Escrow for a down payment on Mr. Songs purchase of a dance club business; $32,368.24 to Gold Plaza, representing monthly rent payments on the dance club business; and payments made to a Chase Bank account for Mr. Songs automobile loan.

Based on his review of these financial records, Chi concluded that Dr. Kim and Mr. Song both administered Dr. Kims bank account; that from November 2002 to the end of 2003, all checks from Dr. Kims bank account were filled out by Mr. Song, as evidenced by Mr. Songs writing, and were signed by Dr. Kim; and especially given the payments from Dr. Kims account which paid Mr. Songs credit card and automobile loan payments, Chi inferred that Mr. Song and Dr. Kim operated a business as a partnership, with each taking care of certain parts of the business.

Dr. Kim paid himself at $330,000 from November 2001 to November 2003. In part this reflected Dr. Kims monthly draw of $7,000.

On the issue of profitability, Chi testified that the national average for medical clinics was that net income was 30 to 40 percent of gross revenue. Thirty percent of K. S. Medical Clinics net income of $3,016,970 would be $900,000. Mr. Song agreed that $900,000 net income for K. S. Medical Clinic from February 2002 through the end of 2003 was correct. Mr. Song testified that Dr. Kim never paid any of that $900,000 to Mrs. Song.

The dissolution of the marriage of Mr. Song and Mrs. Song began in March 2002 and continued until 2004.

ISSUES

Dr. Kim claims on appeal that:

1. Substantial evidence does not support the judgment, in that he was an employee hired by Mr. Song and Mrs. Song and was not involved in any joint venture with them;

2. Mr. Song is the only one who converted Mrs. Songs money; and

3. Mrs. Song obtained a judgment of dissolution and distribution of marital assets in her favor, and the res judicata doctrine precludes her recovery in this case.

DISCUSSION

1. Substantial Evidence Supports the Judgment

A. The Standard of Review of a Substantial Evidence Claim

On appeal this court resolves all conflicts in the evidence in the respondents favor and indulges all legitimate and reasonable inferences to uphold the judgment if possible. The appellate courts power begins and ends with a determination whether any substantial evidence, contradicted or uncontradicted, will support the conclusion reached by the trier of fact. When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court. Substantial evidence is such relevant evidence as a reasonable person might accept as adequate to support a conclusion. Substantial evidence must be of ponderable legal significance; it must be reasonable in nature, credible, and of solid value. It must be substantial proof of the essentials which the law requires in a particular case. (Jensen v. BMW of North America, Inc. (1995) 35 Cal.App.4th 112, 134.) The testimony of a witness, even the party himself, if believed by the trier of fact, is sufficient to provide substantial evidence. (Ibid.; In re Marriage of Mix (1975) 14 Cal.3d 604, 614.)

B. Substantial Evidence Supports the Elements of Conversion

The operative complaint alleged causes of action for conversion and for conspiracy to convert all monies from operation of K. S. Medical Clinic that were deposited in a bank account in the name of Dr. Kim but actually controlled by Mr. Song, with monies to be paid out of Dr. Kims account for the use and benefit of both defendants to the exclusion of Mrs. Song.

Conversion is the wrongful exercise of dominion over the property of another. The elements of a conversion are the plaintiff's ownership or right to possession of the property at the time of the conversion; the defendant's conversion by a wrongful act or disposition of property rights; and damages. It is not necessary that there be a manual taking of the property; it is only necessary to show an assumption of control or ownership over the property, or that the alleged converter has applied the property to his own use.  [Citation.] (Spates v. DameronHospital Assn. (2003) 114 Cal.App.4th 208, 221.)

With regard to Mrs. Songs ownership or right to possession of converted property, Mrs. Song invested $575,000 in K. S. Medical Clinic, which she and Mr. Song, decided to open. Mr. Song spent the $575,000 to buy equipment and real property for the medical facility. Mrs. Song understood that regarding her $575,000 investment, she would receive at least 51 percent of profits, and understood that she and Mr. Song would share the profits and that no one else would share in the profits.

With regard to a wrongful act or disposition of Mrs. Songs share of profits of K. S. Medical Clinic, the evidence showed that from February 1, 2002, through December 28, 2003, the proceeds of K. S. Medical Clinic, $3,016,970 in Medicare payments, were deposited into Dr. Kims bank account. Dr. Kim was the only authorized signatory on this account. Through checks signed by Dr. Kim, $856,788 was disbursed from Dr. Kims bank account to accounts controlled by Mr. Song, $171,000 was paid to Mr. Song in cash, and $201,000 was paid to the Kim and Song Medical Corporation bank account, the account for their medical practice. Payments were also made from Dr. Kims account for Mr. Songs personal expenses.

The national average profit for a business such as K. S. Medical Clinic was 30 to 40 percent of gross income; using the lower figure, 30 percent of K. S. Medical Clinics gross income of $3,016,970 was $900,000. None of that $900,000 was paid to Mrs. Song. Funds from Dr. Kims account were instead paid to Dr. Kim and to Mr. Song.

Based on Mrs. Songs agreement to receive at least 51 percent of K. S. Medical Clinic profits, and that no one besides herself and Mr. Song would share those profits, the $450,000 judgment jointly and severally against Mr. Song and Dr. Kim reflects Mrs. Songs damages. We conclude that substantial evidence supports the judgment.

C. The Evidence Does Not Support Dr. Kims Claim That He Was

Only an Employee and Not Involved in a Joint Venture

Dr. Kim claims that he was only an employee and was not involved in any joint venture with Mr. Song and Mrs. Song. There was evidence, however, that Dr. Kim and Mr. Song operated the business as a partnership. Dr. Kim testified that he treated patients while Mr. Song managed the business part of bringing in Medicare patients and that Dr. Kim trusted him to do so. Dr. Kim testified that after March 2002, he owned K. S. Medical Clinic and hired Mr. Song to be his business manager and that the two of them ran the business together. The evidence showed Dr. Kim was necessary to the business because Medicare payments had to be made to a physician. All Medicare payments were made to Dr. Kims account. Mr. Song testified that he filled in checks that Dr. Kim had already signed, and that Dr. Kim trusted him with the management and financial affairs of K. S. Medical Clinic. Dr. Kim and Mr. Song together assumed control and ownership over the $900,000 in profits from K. S. Medical Clinic and applied the property to their own use. We do not find that Dr. Kim has shown he was a mere employee and not a partner or joint venturer with Mr. Song.

2. Dr. Kim Has Not Established That the Prior Marital Dissolution

Judgment Collaterally Estops This Judgment

Dr. Kim claims that because Mrs. Song obtained a dissolution judgment and distribution of marital assets, the res judicata doctrine bars this judgment.

Generally, collateral estoppel precludes a party from relitigating issues litigated and decided in an earlier proceeding. The party asserting collateral estoppel bears the burden of establishing its threshold requirements. First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, the former proceeding must necessarily have decided the issue. Fourth, the decision in the former proceeding must be final and on the merits. Fifth, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding. (Gikas v. Zolin (1993) 6 Cal.4th 841, 848-849.)

Dr. Kims brief on appeal contains no citations to the record which would show that he had established any of these requirements. That omission forfeits the claim on appeal. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246.)

Although Dr. Kim does not cite to or discuss it, the record on appeal does contain the marital dissolution judgment filed on August 13, 2004, dissolving the marriage of Hee Ok Song and Kevin Hee Song and ordering a division of marital property. The marital dissolution judgment found that K. S. Medical Clinic at 2911 West 8th Street in Los Angeles was community property, but that Mrs. Song was entitled to be reimbursed for $575,000 in separate property funds that were used to support clinic operations and purchase equipment for the clinic. The judgment ordered Mr. Song to reimburse Mrs. Song for $575,000 pursuant to Family Code section 2640.

The marital dissolution judgment also found that Mr. Song breached his fiduciary duty to Mrs. Song and that his conduct merited punitive damages (Civ. Code, 3294) as guilty of oppression, fraud, and malice, and pursuant to Family Code section 1101, subdivisions (g) and (h), awarded the 2911 West 8th Street property to Mrs. Song as her sole and separate property. The marital dissolution judgment also ordered that equipment purchased for K. S. Medical Clinic either be sold and paid to Mrs. Song, or rented, and if rented, rental income received by Mrs. Song should be credited to the $575,000 due her from Mr. Song.

The marital dissolution judgment awarded Mrs. Song monthly spousal support of $3,500 until either Mrs. Song was repaid the $575,000 of her separate property, at which time spousal support shall end, or Mrs. Song remarries, dies, or the monthly spousal support amount is modified by the parties stipulation or court order.

The martial dissolution judgment contains no disposition of profits due Mrs. Song pursuant to her agreement to receive 51 percent of the profits of K. S. Medical Clinic in exchange for her investment of $575,000 in that business at its inception. Therefore the issue of the conversion of profits of K. S. Medical Clinic by Mr. Song and Dr. Kim was not litigated and decided in the marital dissolution action.

We therefore reject the claim that the collateral estoppel doctrine requires reversal of the judgment against Dr. Kim.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to plaintiff Hee Ok Song.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

KITCHING, J.

We concur:

CROSKEY, Acting P. J.

ALDRICH, J.

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