Ryu v. Hope Bancorp, Inc.
Filing
149
MEMORANDUM ORDER denying without prejudice 135 Motion for Sanctions: For the foregoing reasons, Hope Bancorp is hereby directed to, within two weeks of this Memorandum Order, advance payments with respect to the July Invoices, the August Invoices and any subsequent invoices submitted after Ryu filed the instant motion (and withdraw funds from the escrow to the extent necessary) so as to place Ryu in the same position as if Hope Bancorp had never raised the objections to those invoices on the ground that Ryu had released his advancement rights under the Merger Agreement. If Hope Bancorp fails to comply with this directive within two weeks, Ryu may reapply for imposing sanctions and holding Hope Bancorp in contempt of court. The Clerk is directed to close the entry with the docket number 135. (Signed by Judge Jed S. Rakoff on 11/15/2019) (jwh)
USbCSDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _ _-r-,-f-,.,,,.t71"1I
DATE 1 ILED:
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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-----------------------------------------x
SUK JOON RYU, a/k/a JAMES S. RYU,
18-cv-1236 (JSR)
Plaintiff,
-vHOPE BANCORP, INC., as successor
by merger to Wilshire Bancorp, Inc.,
MEMORANDUM ORDER
Defendant.
-----------------------------------------x
JED S. RAKOFF, U.S.D.J.
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Plaintiff Suk Joon Ryu has now moved the Court to (1) hold
defendant Hope Bancorp, Inc. in contempt of court for failing to
comply with the "January 22 Order" (as defined below) by raising
allegedly baseless objections to certain invoice 9 at issue,
(2)
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impose a daily fine for every day from the date of this
Memorandum Order until Hope Bancorp comes into compliance with
the January 22 Order, and (3)
reprimand Hope Bancorp for
asserting allegedly baseless objections for the sole purpose of
harming Ryu. ECF No. 135. For the reasons set f~rth below, the
Court holds that Hope Bancorp's objections to tHe invoices at
issue are meritless, but declines at this time to impose
sanctions or to hold Hope Bancorp in contempt of court, without
prejudice to so doing in the future.
Background
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A. Instant Action
Familiarity with all prior proceedings in th~s case is here
assumed. In brief, this dispute concerns Ryu's entitlement to
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advancement of attorneys' fees from Hope Bancorp ~n connection
with federal criminal investigations and a third-party civil
action in Bank of Hope v. Miye Chon, et al., No. 2:14-cv-1770
(KM)
(JAD)
(D. N. J.)
("NJ Action") arising out of Ryu' s alleged
embezzlement from BankAsiana, Ryu's former employer. The
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advancement obligation at issue arises from a provision in a
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merger agreement pursuant to which BankAsiana meiged into
Wilshire Bank, Hope Bancorp's predecessor. See Merger Agreement,
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ECF No. 1-1, Ex. A ("Merger Agreement") § 6.7. In an Opinion and
Order dated April 24, 2018, this Court granted partial summary
judgment for Ryu, holding that he was entitled t9 advancement of
certain fees incurred in connection with the above actions. ECF
No. 34. In an Order dated September 27, 2018, th~s Court adopted
in full Magistrate Judge Katherine H. Parker's Report and
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Recommendation, dated August 29, 2019, which fix,ed the amount
for advanceable fees and expenses then-already i~curred and set
the procedure for prospective advancement. ECF Nos. 76, 90.
In an Opinion and Order dated January 22, ~019, this Court,
inter alia, held that:
Finally, for invoices covering January 2019 and future
months, the parties will adhere to the advancement
procedure, with Ryu submitting invoices on the 5th
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calendar day of each month, and Hope Bancorp
submitting objections and paying undisputed amounts
(or 50% of the amount sought, if Hope Bancorp disputes
more than 50% of the amount sought) on the 15th
calendar day. If at any time Hope Banco~p fails to
submit objections or make payments as required, the
parties will immediately convene a joint conference
call with chambers, and the Court will schedule a
contempt hearing.
ECF No. 122 ("January 22 Order"), at 9-10.
B. NJ Action
On April 10, 2019, Bank of Hope voluntarily dismissed all
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claims against Ryu with prejudice in the NJ Action. NJ Action,
ECF No. 292. The only remaining claim was Ryu's compulsory
counterclaim for illegal seizure of funds on deposit.
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Declaration of David Dzara, ECF No. 137 ("Dzara Deel.") !! 4, 5.
During a settlement hearing on July 24, 2019, the parties
discussed, with Magistrate Judge Joseph A. Dicks?n of the
District of New Jersey, how to provide mutual releases for the
claims being settled that day and how to document those releases
in a settlement agreement. Id. !! 6, 9; Declaration of Michael
Yi, ECF No. 139 ("Yi Deel.") ! 6; NJ Action, ECF No. 316. On
August 12, 2019, Magistrate Judge Dickson issued a letter order
granting Ryu's motion to enforce settlement agafnst Bank of
Hope, holding as follows:
It is clear that Bank of Hope and Ryu ,reached an
agreement on all of the material points of the
settlement:
(4) the exchange of ;mutual releases
which would exclude Ryu's claims for malicious use of
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process and the advancement action currently pending
in the Southern District of New York.
Accordingly, the Court will enforce the' settlement
against Bank of Hope in favor of Ryu on, the following
terms:
(3) The Parties shall release each other
for any and all claims that were or could have been
raised in this lawsuit, except that Ryu does not
release (a) any claims he may have for malicious use
of civil process and (b) any claims pending in Suk
Joon Ryu v. Hope Bancorp, Inc., 1:18-c~-1236
(S.D.N.Y.).
NJ Action, ECF No. 348 ("NJ Settlement Order"), at 4-7.
In addition, the NJ Settlement Order held t~at Ryu released
his "right to indemnification for attorney's fee~ pursuant to
state laws and certain bylaws of Bank of Hope's predecessor in
interest," because Ryu's counsel was not clear about this
exclusion during the July 24, 2019 settlement he~ring. Id. On
August 26, 2019, Ryu filed a motion for partial reconsideration
of the NJ Settlement Order with respect to Magistrate Judge
Dickson's decision that Ryu released his indemnification rights
under N.J. Stat. § 17:9A-250(D). NJ Action, ECF No. 353, at 2.
That motion is still pending.
C. Instant Dispute
On September 2, 2019, Ryu's counsel submitted to Hope
Bancorp's counsel invoices for legal fees and e~penses Ryu
incurred in August 2019 ("August Invoices"). Dz~ra Deel. i 19;
Yi Deel. i 22. On September 12, 2019, Hope Bancqrp sent its
written objections to the August Invoices, objecting to the
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entire amount of $47,104.75 and arguing that Ryu ~ad released
his advancement rights under the Merger Agreemen~ as part of the
settlement in the NJ Action. Dzara Deel. 1 20; Y{ Deel. 1 24.
Based on these objections, Hope Bancorp deposited 50% of the
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A ugust Invoices into escrow,
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pursuant to the advancement
procedure set forth in this Court's September 27,' 2018 Order. Yi
Deel. 1 26.
In addition, Hope Bancorp submitted revised:objections to
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the invoices from July 2019 ("July Invoices"), r~troactively
applying the same release agreement to some of t~me entries in
the July Invoices in the amount of $3,310.00 and: offsetting such
amount from a payment it owed due to its withdrawal of an
objection to the invoices from June 2019. Dzara ~eel. 1 20; Yi
Deel. 1 25 n.8.
Ryu has now moved the Court to (1) hold Ho~e Bancorp in
civil contempt for allegedly failing to comply with this Court's
January 22 Order when Hope Bancorp raised these,objections to
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the July Invoices and the August Invoices,
(2) impose a daily
fine every day from the date of this Memorandum Order until Hope
Bancorp comes into compliance with the January ?2 Order, and (3)
reprimand Hope Bancorp for asserting allegedly baseless
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objections for the sole purpose of harming Ryu.· ECF No. 135.
Analysis
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The dispute at issue boils down to the following question:
whether the NJ Settlement Order released Ryu's indemnification
rights
(and therefore advancement rights 1 ) under the Merger
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Agreement, when Ryu released all claims except fbr,
inter alia,
"any claims pending in Suk Joon Ryu v. Hope Bancbrp, Inc., l:18cv-1236 (S.D.N.Y.) ." Hope Bancorp answers the question in the
affirmative, because the instant action technically concerns
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Ryu's advancement, not indemnification, rights and because, in
Hope Bancorp's view, the carveout does not contain Ryu's
indemnification rights under the Merger Agreement. Id. However,
it cannot be the case that Ryu expressly, and w{th the
acknowledgement of Hope Bancorp's counsel at the July 24, 2019
settlement hearing,
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preserved his claims in th~s advancement
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According to the Merger Agreement, if Ryu's iridemnification
rights are extinguished, his advancement rights are extinguished
as well. See Merger Agreement§ 6.7 ("Acquiror shall also
advance expenses as incurred due to [the indemnification-related
clauses] above to the fullest extent so permitted").
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2
During the settlement hearing on July 24, 2019, Ryu's counsel
stated, "we also have some other matters, such as the
advancement proceedings in New York, and.
. we will not be
releasing any rights we have in that case in the advancement
proceedings as well . . . . [The settlement wil~J not have any
effect on the ongoing advancement action or any future claims
that my client may bring against [Hope Bancorp]"." Hope Bancorp's
counsel responded, "That's fine, Your Honor. So it would be there will be a carveout to the general releases, mutual general
releases for two things:
. second, [Ryu's] rights and
remedies in the advancement case pending in the Southern
District of New York." Dzara Deel. ~ 8 (quotin~ Transcript, ECF
No. 139-1, Ex. A, at 5:25-7:17).
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action but at the same time gave up his indemnification rights
under Section 6.7 of the Merger Agreement, whic~ would
completely erase his advancement rights. For th{s reason, the
Court holds that the express carveout for "any claims pending"
in this action also includes the indemnification claims under
Section 6.7 of the Merger Agreement and that Ryu did not release
his indemnification rights (and thus advancement rights) under
the Merger Agreement as relevant in this action.3
Nevertheless, imposing sanctions or holding Hope Bancorp in
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contempt of court is not necessary at this time; because the
Court finds Hope Bancorp's rationale for objecting to the July
Invoices and the August Invoices to be, although ultimately
meritless, colorable. See Schlaifer Nance & Co.~ Inc. v. Estate
of Warhol, 194 F.3d 323, 336 (2d Cir. 1999)
("Ip order to impose
sanctions pursuant to its inherent power, a dis~rict court must
find that:
(1) the challenged claim was withou~ a colorable
basis and (2) the claim was brought in bad fai~h,
i.e.,
3 In the alternative, Hope Bancorp argues that this Court should
wait until Magistrate Judge Dickson decides Ryu's motion for
partial reconsideration of the NJ Settlement Order. Hope Opp. 12
n.13. In Hope Bancorp's view, until that motion is decided, the
status of Ryu's indemnification claim remains ~ncertain. Id. at
11-12. However, Hope Bancorp misses the obvious point that the
issue in front of Magistrate Judge Dickson is whether Ryu
released his New Jersey statutory indemnification rights,
whereas the issue in front of this Court is whether Ryu released
his indemnification rights under the Merger Agteement. See NJ
Action, ECF No. 353.
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motivated by improper purposes such as harassmerit or delay.");
United States v. Ohle, No. 3:08-cr-1109 (JSR), 2012 WL 2861347,
at *5 (S.D.N.Y. July 6, 2012)
("A party may be held in civil
contempt for failure to comply with a court order if (1) the
order the contemnor failed to comply with is clear and
unambiguous,
(2) the proof of noncompliance is clear and
convincing, and (3) the contemnor has not diligently attempted
to comply in a reasonable manner.").
For the foregoing reasons, Hope Bancorp is:hereby directed
to, within two weeks of this Memorandum Order, advance payments
with respect to the July Invoices, the August Invoices and any
subsequent invoices submitted after Ryu filed the instant motion
(and withdraw funds from the escrow to the extent necessary) so
as to place Ryu in the same position as if Hop~ Bancorp had
never raised the objections to those invoices o:n the ground that
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Ryu had released his advancement rights under the Merger
Agreement. If Hope Bancorp fails to comply wit~ this directive
within two weeks, Ryu may reapply for imposing :sanctions and
holding Hope Bancorp in contempt of court.
The Clerk is directed to close the entry with the docket
number 135.
SO ORDERED.
Dated:
New York, NY
November /5', 2019
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