JONG S. HONG VS. SOON H. KIM(L-8580-09, BERGEN COUNTY AND STATEWIDE), A-5064-11T2

Background

Plaintiff Jong S. Hong managed informal Korean lending circles ("kehs") in which defendants Soon Hee Kim and Yeo Pyeong Yun participated; disputes arose over large, interwoven transfers, loans, and five blank/undated checks later filled in and deposited.
Hong and co-plaintiff Daniel Kim sued; after checks were deposited and dishonored, Hong/ Kim filed criminal complaints and Hong pursued civil claims; defendants counterclaimed for breach of fiduciary duty, malicious prosecution, FDCPA violations, and recovery of $75,000.
At trial (many witnesses needed interpreters), Hong obtained a $270,000 judgment; criminal charges against Soon Hee were filed, she was briefly arrested, and the criminal case was later administratively dismissed.
Trial record was fragmented: Hong lost or failed to produce key keh records (a purported notebook, kehs’ books), and many pleading allegations and trial assertions were inconsistent or corrected by Hong.
Trial court rejected defendants’ counterclaims (fiduciary duty, malicious prosecution, FDCPA, and set-off/rehabilitation of Yun’s $75,000 claim); on appeal plaintiffs’ monetary judgment was moot due to bankruptcy discharge, so appellate review focused on defendants’ dismissed counterclaims.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Hong owed fiduciary duties as keh organizer (breach of fiduciary duty counterclaim)	Hong treated transactions as ordinary loans; relationship was creditor-debtor, not fiduciary	Keh organizer relationship and control of funds created trust, duty of loyalty, and duty to keep records; discovery failures support adverse inference	Reversed dismissal; factual record supports trial on fiduciary-duty claim and possible spoliation remedy; remand for new trial
Malicious prosecution (criminal complaint/ arrest)	Plaintiffs relied on counsel and thus acted in good faith; advice of counsel negates lack of probable cause and malice	Plaintiffs (and their counsel) omitted material facts (checks were undated and delivered earlier) so advice-of-counsel defense fails; there are disputed facts on malice/probable cause and damages	Reversed dismissal; remanded for new trial on malicious prosecution because material factual disputes exist about what counsel was told and about damages
FDCPA claim (whether Hong was a "debt collector")	Collection letters and plaintiffs’ conduct show debt-collection activity	Hong was not a debt collector as defined by statute; letters were by former counsel, not plaintiffs themselves	Affirmed dismissal of FDCPA claim; Hong not a debt collector and plaintiffs not vicariously liable for former counsel’s letters
Yun’s $75,000 claim for keh mismanagement / setoff	Plaintiffs argued no counterclaim for monies owed existed or that evidence insufficient	Yun contends trial court overlooked his keh participation and claim for $75,000 paid into keh; record shows he had positions and alleges unpaid purse	Reversed dismissal; remanded for disposition of Yun’s $75,000 claim consistent with record

Key Cases Cited

Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150 (2011) (standard and limitation of appellate review of bench trial findings)
Cesare v. Cesare, 154 N.J. 394 (1998) (appellate review standard for factual findings)
Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474 (1974) (competent, relevant, reasonably credible evidence standard)
In re Trust Created by Agreement Dated Dec. 20, 1961, ex rel Johnson, 194 N.J. 276 (2008) (appellate review of trial court findings)
F.G. v. MacDonell, 150 N.J. 550 (1997) (definition and elements of a fiduciary relationship)
LoBiondo v. Schwartz, 199 N.J. 62 (2009) (elements of malicious prosecution and role of advice-of-counsel defense)
Rosenblit v. Zimmerman, 166 N.J. 391 (2001) (spoliation inference doctrine)
Weinstein v. Klitch, 106 N.J.L. 408 (E. & A.) (Weinstein principle that complainant must truthfully present material facts to counsel for advice-of-counsel defense to apply)