Kim v. Lee
OPINION AND ORDER - Based on the Court's findings of fact and conclusions of law, the Court finds for the Defendant on all counts. This case is dismissed with prejudice. Signed by Magistrate Judge Terence P. Kemp on 3/9/2017. (agm)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
Hong Sup Kim, et al.,
Case No. 2:14-cv-00591
Kee Hoon Lee,
Magistrate Judge Kemp
OPINION AND ORDER
This diversity case, in which the parties consented to the
jurisdiction of the Magistrate Judge pursuant to 28 U.S.C.
§636(c), was tried to the Court, sitting without a jury, on March
The Court held closing arguments on March 2, 2017.
This Opinion and Order constitutes the findings of fact and
conclusions of law required by Fed.R.Civ.P. 52(a)(1).
Somewhat surprisingly, after all of the testimony was taken,
there are not many disputed facts.
These are the facts
established by the testimony of Plaintiffs Pan Soo Kim (“Pastor
Kim”) and his son, Hong Sup Kim, and Defendant Kee Hoon Lee.
After summarizing the testimony, the Court will make numbered
The Trial Evidence
Mr. Lee, an Ohio resident, has a background in applied
mathematics and nuclear engineering, but in 2004 or 2005 he
purchased a Super 8 Motel in Columbus, Ohio, on a land contract.
The purchase was made through Eastern Eagle Corp., a subchapter S
Mr. Lee and his wife were the sole shareholders of
In 2006, Mr. Lee incorporated Eastern Eagle One Corp.,
another subchapter S corporation owned by him and his wife.
is not entirely clear why he did so, but eventually that company
played a part in the events which led to this lawsuit.
In 2007, it appears that the Super 8 Motel was doing well.
Mr. Lee told his pastor, Pastor Moo Soo Park, a Korean citizen
who had a residence and a church in or near Los Angeles, of his
Mr. Lee also attended a service or gathering of that
church in September, 2007.
Another attendee of that gathering was Pastor Kim, who was a
student of Pastor Park.
Pastor Kim lives in Korea, but he had
been coming to the United States twice a year to help out Pastor
Park, and when he did so he stayed with Pastor Park at his
At one point, he was asked to meet with Pastor Park
and Mr. Lee.
During that meeting, Pastor Park asked Mr. Lee to
tell him if there were any issues with Mr. Lee’s hotel business
that Pastor Park could pray about.
That was the first time
Pastor Kim and Mr. Lee met each other.
Later in 2007, something happened which led Pastor Kim to
agree to send Mr. Lee $300,000.00.
There are two versions of
According to Pastor Kim, Pastor Park told him that
Mr. Lee was in need of money, and because Mr. Lee was doing good
things for the Christian mission in America, Pastor Kim should
help him out.
Pastor Kim said that, as a student of Pastor
Park’s, he could not refuse such a request.
He put together
$300,000.00 from his own savings, money his son had saved, money
from his wife, money from a bank loan, and money from either his
daughter or from members of his congregation (or both), and wired
the money either directly or indirectly to Mr. Lee.
$100,000.00 was wired to Pastor Kim’s son, Plaintiff Hong Sup
Kim, who was living in Virginia at the time, and who then wired
that $100,000.00 to Mr. Lee.
Hong Sup Kim testified that he had
been saving up money “in his father’s pocket” and that some
amount of the $100,000.00 (perhaps $35,000.00 or $40,000.00)
represented those savings.
Mr. Lee told a different story about how this all happened.
He said that he learned from Pastor Park that Pastor Kim was
interested in investing in an American motel.
Mr. Lee was
working on the purchase of a second motel, a Howard Johnson’s
located near Cincinnati, and he offered to make Pastor Kim a
“silent partner” in that venture.
According to Mr. Lee, Pastor
Kim was insistent that his name not appear on any of the official
documents relating to the hotel purchase and operation.
February, 2008, Mr. Lee signed a franchise agreement with Howard
Johnson’s on behalf of Eastern Eagle One, and that company bought
He and Pastor Kim each invested $300,000.00 in the
Exhibit D9 has a breakdown of how that $600,000.00 was
spent, and lists Pan Soo Kim and Ju Hee Lee, Mr. Lee’s wife, as
the two investors.
At some point, Mr. Lee furnished a copy of
that document to Pastor Kim.
Both Pastor Kim and Mr. Lee testified about their
understanding of what kind of deal had been struck.
Pastor Kim - who said that his understanding came almost entirely
from conversations with Pastor Park - he would get his money back
in a reasonably short time frame, perhaps in a year or two.
some point in the near future, Mr. Lee would make a gift of the
hotel to Pastor Park, who would pay off any outstanding bank
loans and operate the property.
Then Pastor Park would settle up
with everyone, which settlement would include repaying Pastor
Initially, Pastor Kim did not expect to receive any
interest on the money (although that changed later).
also testified that he had at least one conversation with Mr. Lee
in which Mr. Lee confirmed that he would be giving the hotel to
Pastor Park on some future date.
Mr. Lee, on the other hand, said that through direct
discussions with Pastor Kim, the two made an arrangement to be
50-50 partners in the Howard Johnson’s venture.
was not reflected in the ownership of Eastern Eagle One since,
according to Mr. Lee, a foreign national may not be a shareholder
of an S corporation.
However, Mr. Lee intended to share the
profits of the operation equally with Pastor Kim.
Unfortunately for all parties, things went downhill in a
Right after he acquired the Howard Johnson motel, Mr. Lee
was either sued or threatened with a lawsuit by a disability
rights advocacy group which said that the motel was not in
compliance with the Americans with Disabilities Act.
fire department inspection revealed problems with the wiring for
the air conditioning.
Those two problems would have required
several hundred thousand dollars to fix.
Then, as is well known,
the economy experienced a severe downturn beginning in September,
The Super 8 Motel began to lose money, and Mr. Lee used
funds from the Howard Johnson account to cover some of Super 8's
losses, intending (he claimed) to repay it, but that never
Mr. Lee and his wife eventually filed for bankruptcy
and lost both motels.
He was never able to pay Pastor Kim any
There are a small handful of documents which provide some
circumstantial evidence about what type of agreement the parties
actually entered into.
First, Exhibit D9, the closing statement
for the Howard Johnson’s purchase, was prepared by Mr. Lee very
close in time to the money transfer.
It describes the
$300,000.00 received from Pastor Kim as “investment.”
the tax returns for Mr. Lee and for Eastern Eagle One show that
Mr. Lee claimed 100% of the revenue and expenses from the Howard
Johnson’s operation on his tax returns.
There is no evidence
that he provided Pastor Kim with any tax document reflecting that
Pastor Kim was sharing in the operation of that property
(although counsel, in closing argument, asserted that the terms
of the investment deal entitled Pastor Kim to 50% of any profit,
but did not require him to account for operating revenue or
permit him to take advantage of any tax losses).
Third, when Mr.
Lee filed for bankruptcy, he did not list Pastor Kim or any other
source of the $300,000.00 as a creditor.
There is no evidence
that he advised anyone in connection with either the bankruptcy
or a receivership which took over operation of the Howard Johnson
motel that Pastor Kim had some type of legal or equitable
interest in that property, however.
Next, there are some emails from 2009 which deal with the
subject of the downturn in the motels’ operation.
The Court will
provide a brief chronological summary of them and then discuss
They are all part of Plaintiffs’ Exhibit C.
First, on June 13, 2009, Mr. Lee emailed Pastor Kim (with
the understanding that Pastor Kim would provide a copy to Pastor
Park, who does not use email) to tell the two about problems with
At the end, he asked them to send him $100,000.00.
See Ex. C, pp. C-004 to C-006.
Almost three months later, Pastor Kim emailed Mr. Lee.
Lee’s response (Ex. C, pp. C-010 to C-012) states that there was
a telephone conversation as well.
email are these.
The key points made in that
First, Pastor Kim apparently told Mr. Lee that
some of the $300,000.00 had been borrowed from a Korean bank, and
that Pastor Kim was paying interest on the loan.
Mr. Lee replied
that Pastor Kim should have known that “it is fundamentally wrong
to invest in any business located in America with a loan obtained
Second, Mr. Lee said that he wanted to “go over
interest and principal payments which you are most interested
He commented that since Pastor Kim had not participated in
the motel’s operations, “it is most logical to believe that I
obtained a loan of $300,000 from a bank, named Reverend Pan-Soo
He then agreed to pay yearly interest of 7% and to pay
$10,000 immediately rather than the full one-year’s interest of
He also promised to pay back the entire $300,000.00
once one of the two motels was sold.
The next email was sent on September 12, 2009 (Ex. C, pp. C015 to C-016).
The email repeats questions which had been posed
to Mr. Lee in some form - perhaps in an email sent in response to
the previous one- and those questions are repeated in Mr. Lee’s
One of the things Pastor Kim apparently expressed
confusion over was Mr. Lee’s “unilateral statement” that he
considered the money sent by Pastor Kim to have been borrowed.
Pastor Kim also rejected the offer of a $10,000.00 payment and
demanded $100,000.00 immediately, which, as Mr. Lee explained, he
was unable to pay.
Pastor Kim also made this statement: “It is a
shame to see that there is a discrepancy in our agreement in
regards to the principal and interest.
It was your suggestion at
Mr. Lee replied that he would do his “best for
responsibilities in regards to your investment of $300,000 here”
and said that “I will definitely pay you back first if God helps
to sell any one of my hotels before the date of your wish.”
The final one of the Exhibit C emails was written on August
In it, Mr. Lee explained that he had been forced to
give up both properties and that he had been advised to file
That email also referred to Pastor Kim’s having
“invested” in the Howard Johnson’s project.
(Ex. C, p. C-016).
The last item of circumstantial evidence is testimony from
Mr. Lee that, after the Howard Johnson’s venture got off the
ground, Pastor Kim inquired about other possible motel
Mr. Lee consulted with real estate brokers in
Columbus who were offering motels for sale and sent at least two
emails to Pastor Kim giving him details of those properties.
Lee offered this testimony to bolster his claim that Pastor Kim
had expressed an interest in investing in American motels.
identified the emails in question, but because they had not been
translated into English and because they were identified as trial
exhibits less than two weeks before the start of the trial, the
Court did not admit them into evidence.
The Court makes these factual findings, keeping in mind that
it is the Plaintiffs’ burden to prove, by a preponderance of the
evidence, each element of their claims.
Each of the facts set
forth below is based on the Court’s determination that those
facts are more likely true than not true.
In late 2007 or early 2008, Plaintiff Pan Soo Kim wired,
or caused to be wired, a total of $300,000.00 to Defendant Kee H.
Most of that money belonged to Pan Soo Kim, either
through his personal assets or through borrowing.
$35,000 of it belonged to his son, Plaintiff Hong Sup Kim, and
approximately $40,000 was Pan Soo Kim’s wife’s money.
have come from his daughter or from members of his congregation.
The best determination the Court can make from the evidence is
that Pan Soo Kim supplied $200,000 from personal or borrowed
funds; Hong Sup Kim supplied $35,000 from personal funds held by
his father; Pan Soo Kim’s wife supplied $40,000; and the
remaining $25,000 came from other sources.
By the time Pan Soo Kim made the decision to wire the
money, Mr. Lee was already in negotiations to buy the Howard
The $300,000.00 was part of the money used to purchase
the Howard Johnson’s motel, as shown on Exhibit D9.
Any conversation which took place between Pan Soo Kim
and Mr. Lee before the money was transferred did not include any
discussion of the fact that the money was to be a loan, nor did
Pan Soo Kim, in any such conversation with Mr. Lee before the
money was wired, say that he considered it to be a loan.
There is no written agreement with respect to any aspect
of the transfer of funds.
There is no document dated prior to the transfer of the
funds which mentions, in any way, what type of transaction the
parties were entering into.
Hong Sup Kim had only one conversation with Mr. Lee
before wiring him money, and that was to confirm that the money
was being sent to the correct account number.
The post-transaction evidence discussed above is, at
best, equally balanced in terms of demonstrating that the money
was intended, at the time of transfer, to be either a loan or an
Mr. Lee made statements which can be viewed, depending
on when they were made and the context in which they were made,
as supporting either proposition.
His promise to pay back the
money with interest suggests that the transaction was a loan.
His characterization, on the closing sheet, of the payment as an
investment suggests the opposite.
In some of the same emails in
which Mr. Lee offered repayment, he also made statements to the
effect that the money was an investment, that he understood
Pastor Kim was disappointed that there had been no profits, and
that repayment would occur only on the sale of the property - all
indicating some type of investment arrangement rather than a
Although Mr. Lee did not allocate any share of the
revenue or losses incurred by Eastern Eagle One to Pastor Kim, it
is not clear that he believed he was required to do so by the
terms of their understanding.
Pastor Kim and Hong Sup Kim were not repaid, at least
out of any money generated by the Howard Johnson’s operation (or,
for that matter, the Super 8 Motel operation), because those
operations ended up in either receivership or bankruptcy.
Lee and his wife, who operated their businesses jointly, also
lost a substantial amount of money from the Howard Johnson’s
Just as the Court discussed the evidence and then made
numbered findings of fact, it will discuss the law and then make
numbered conclusions of law.
Discussion of the Law
Pastor Kim and Hong Sup Kim alleged in their complaint four
causes of action: two based on breach of contract (express or
implied), one based on promissory estoppel, and one based on
In its Opinion and Order ruling on motions
for summary judgment (Doc. 37), the Court dismissed all of Hong
Sup Kim’s claims except unjust enrichment.
Court’s discussion is limited to whether Pastor Kim has proved
the first three causes of action, and whether either Plaintiff
has proved the fourth.
Breach of Contract (Counts I and II)
There is nothing new about the concept that “[t]he meeting
of the minds of parties upon its terms is necessary to the making
of a contract, and this is so whether it be an express contract
or an implied one ....”
Columbus, H.V. & T. Ry. Co. v. Gaffney,
65 Ohio St. 104 (1901), syllabus, ¶1.
“The contract is the
concrete result of the meeting of the minds of the contracting
Richmond & A.R. Co. v. R.A. Patterson Tobacco Co., 169
U.S. 311, 314 (1898).
Stated slightly differently, “[a]n
essential element needed to form a contract is that the parties
must have a distinct and common intention which is communicated
by each party to the other.”
McCarthy, Lebit, Crystal & Haimaan
Co., L.P.A. v. First Union Mgt., Inc., 87 Ohio App.3d 613, 620
(Cuyahoga Co. App. 1993).
These principles have not changed over
time, and they are the starting point of any discussion about
whether two people entered into a binding legal contract.
Generally, courts recognize three types of contracts:
express, implied in fact, and implied in law.
Legros v. Tarr, 44
Ohio St.3d 1, 6 (1989), citing Hummel v. Hummel, 133 Ohio St.
520, 525 (1938).
To make an express contract, the parties must
have actually spoken or written out the terms of the agreement
and must then have accepted them.
By contrast, the
existence of a contract implied in fact can be established by
proof of circumstances which show that the parties actually
reached a tacit (that is, unspoken or unwritten) understanding
about the terms.
The third type of contract, which is a
contract implied in law, is not actually a contract at all
because it is not based on either direct or circumstantial
evidence that the parties had a “meeting of the minds” on the
terms of their arrangement.
Rather, it is what is called a
“quasi-contract” and is based upon a legal determination that
someone has received a benefit that, for reasons arising out of
equity, it is not just or fair for that person to keep.
Unjust enrichment is a species of quasi-contract,
see Hummel, syllabus, ¶1; see also Hambleton v. R.G. Barry Corp.,
12 Ohio St.3d 179, 183 (1984), so the Court will defer any
discussion of that theory of recovery until it reaches the merits
of the unjust enrichment claim made by both Plaintiffs, see
Section C below.
The parties agree, and the evidence confirms, that there was
no express written contract setting out an agreement between the
parties, so the Court must determine whether there was either an
express oral contract or a contract to be implied from the
Was There an Oral Contract?
Answering the first question - was there an oral contract is fairly easy.
It is clear that under Ohio law, “[t]he
existence and the terms of an oral contract are issues for the
trier of fact.”
See, e.g., Depompei v. Santabarbara, 2015 WL
114716, *6 (Cuyahoga Co. App. Jan. 8, 2015).
The party asserting
the existence of an oral contract - in this case, Pastor Kim “bears the burden of persuading the trier of fact that [Mr. Lee]
actually agreed to the oral contract....”
See Tubelite Co. v.
Original Sign Studio, Inc., 176 Ohio App.3d 241, 247 (Franklin
Although the “[t]erms of an oral contract may be
determined from ‘words, deeds, acts, and silence of the
parties,’” see Kostalnik v. Helper, 96 Ohio St.3d 1, 3 (2002),
quoting Rutledge v. Hoffman, 81 Ohio App. 85 (Butler Co. 1947),
syllabus ¶1, there must still be some type of credible evidence
presented that the parties came to a meeting of the minds on the
contract’s essential terms.
Here, there is no such evidence.
The only statement which Pastor Kim attributes to Mr. Lee
during the entire time period when Pastor Kim was getting the
money together was Mr. Lee’s confirmation that, on some future
date, “the hotel” (and is not clear which of the two he meant)
would be transferred to Pastor Park.
That statement, if made, is
far too indefinite to be construed as an agreement that the money
coming from Pastor Kim would be a loan.
The fact that Pastor Kim and Mr. Lee did not have a direct
conversation in which they agreed to a loan arrangement does not
necessarily mean they did not have a contract.
Parties may, and
often do, negotiate the terms of an oral contract exclusively
through a third party.
In that situation, though, each party
must still agree to the same contractual terms even if they never
speak directly to each other.
Here, Pastor Kim presented no evidence that Mr. Lee spoke
with Pastor Park about this transaction apart from telling him
that he needed $300,000.00.
Even if Pastor Kim expressly told
Pastor Park that the money was to be a loan - and the Court does
not recall him saying that - there is no evidence that Pastor
Park passed that statement on to Mr. Lee or that Mr. Lee agreed
In short, there is no credible evidence that Pastor Kim
and Mr. Lee agreed, either between themselves or through Pastor
Park, that the money constituted a loan.
That eliminates any
possibility that there was an express oral contract.
Do the Facts Imply a Contract?
The Court will next consider whether the evidence presented
by Pastor Kim shows that he and Mr. Lee, by their words, deeds,
and actions, taken as a whole, entered into an implied contract.
Under Ohio law, mutual assent to the essential elements of an
implied-in-fact contract is shown not by an express offer and
acceptance, but by the “surrounding circumstances, including the
conduct and declarations of the parties.”
must “make it inferable that the contract exists as a matter of
See GEM Indus., Inc. v. Sun Trust Bank,
700 F.Supp.2d 915 (N.D. Ohio 2010), quoting Stepp v. Freeman, 119
Ohio App. 3d 68, 74 (Montgomery Co. 1997).
As discussed in this Court’s Opinion and Order of May 17,
2016 (Doc. 37), in Stepp, a group of co-workers were
participating in a lottery pool.
The group had a set number of
members and process, and the plaintiff had been a member of the
pool for five years.
Members would often purchase the lottery
tickets for each other if one member of the group could not be
located immediately to contribute.
significant sum of money.
The group eventually won a
Because the plaintiff had not yet paid
for his share of the ticket, the other members of the pool argued
that they did not owe his share of the lottery winnings.
appellate court, affirming the trial court’s decision in favor of
the plaintiff, held that the ongoing behavior of the parties was
sufficient to demonstrate an implied-in-fact contract.
This case is much different.
In Stepp, there was a long-
standing arrangement, and the parties conducted themselves in
accordance with the terms of that arrangement.
Here, there was
no long-term understanding, and all of the conduct which Pastor
Kim and Mr. Lee engaged in is consistent with any number of
different financial arrangements.
As an example, the money changed hands between January 30
and February 12, 2008.
Mr. Lee purchased the Howard Johnson’s
property seven days later and said on the closing statement that
Pastor Kim’s contribution to the purchase price was an
Pastor Kim did not object to that statement when he
got it and, for some period of time, did not ask for repayment or
His belief that a hotel would be given to Pastor
Park at some point and that Pastor Park would then “settle” the
matter is consistent with either a loan or an investment.
if Mr. Lee confirmed that arrangement, that statement could be
taken either way.
It is true that in September of 2009, more than eighteen
months after receiving Pastor Kim’s money, Mr. Lee acknowledged
that Pastor Kim was now asking to be repaid with interest, and he
described Pastor Kim as a “bank.”
It is also true that Pastor
Kim questioned why that statement was made.
These facts point in
Other comments from the same time period
suggest that Mr. Lee was still considering the money as an
investment, and his conduct during the bankruptcy proceedings
shows that he did not consider Pastor Kim to be a creditor.
of the parties’ actions and subsequent words point to some type
of implied contract, but do not prove which type it was.
this is primarily a factual issue, and one on which Pastor Kim,
as the plaintiff, has the burden of proof.
He did not prove
enough in the way of words or actions to make it more likely than
not that he and Mr. Lee agreed on a loan.
That is enough for the
Court to dismiss his implied contract claim.
Count III- Promissory Estoppel
In the alternative, Pastor Kim argues that if neither the
parties’ words nor their actions are sufficient to prove that
they had a meeting of the minds on the terms of a loan a
agreement, he can still get his money back from Mr. Lee under the
theory of promissory estoppel.
“Promissory Estoppel is not an
affirmative defense ... but allows a separate remedy for damages
in the absence of an enforceable contract.”
Nachar v. PNC Bank,
NA, 901 F.Supp.2d 1012, 1020 (N.D. Ohio 2012), citing Olympic
Holding Co. LLC v. ACE Ltd., 122 Ohio St.3d 89 (2009). The
elements of a claim of promissory estoppel are: “(1) a clear and
unambiguous promise; (2) reliance on that promise; (3) reliance
that was reasonable and foreseeable; and (4) damages caused by
that reliance.” JP Morgan Chase Bank, N.A. v. Horvath, 862
F.Supp.2d 744, 749 (S.D. Ohio 2012), citing Current Source, Inc.
v. Elyria City Sch. Dist., 157 Ohio App.3d 765, 773,(Lorain Co.
2004). A promise is defined as “a manifestation of intention to
act or refrain from acting in a specified way, so made as to
justify a promisee in understanding that a commitment has been
HAD Engs. v. Galloway, 192 Ohio App.3d 133, 144 (Pike Co.
2011), quoting Stull v. Combustion Engineering, Inc., 72 Ohio
App.3d 553, 557 (1991) (internal quotations omitted).
courts, interpreting the first paragraph of the syllabus of Kroll
v. Close, 82 Ohio St. 190 (1910), have held that the party
asserting the promissory estoppel claim bears the burden of
proving by clear and convincing evidence all of the elements of
See, e.g., Book Dog Books, LLC v. Cengage Learning,
Inc., 2013 WL 65465, *4 (S.D. Ohio Jan. 4, 2013), citing Swank v.
Swank, 2011 WL 6966424, *13 (Richland Co. App. Dec. 30, 2011); In
re Estate of Popov, 2003 WL 22017299, *5 (Lawrence Co. App. May
The syllabus in question actually says that “[t]he
burden is upon the party who relies upon estoppel to prove
clearly and unequivocally every fact essential to the estoppel.”
Whether this constitutes a heightened burden of proof is not
material here because Pastor Kim has not proved this claim even
by a preponderance of the evidence.
The analysis of this claim begins and ends with the first
two elements, which require proof of “a clear and unambiguous
promise” upon which the plaintiff relied.
The type of promise
necessary for this claim has been described as one “‘which the
promisor should reasonably expect to induce action or forbearance
on the part of the promisee or a third person and which does not
induce such action or forbearance [and] is binding if injustice
can be avoided only by enforcement of the promise.’”
v. State, 8 Ohio St.3d 29, 30 (1983), quoting Restatement of the
Law, Contracts 2d (1973), Section 90.
Necessarily, such a
promise, in order to induce the other party to act on it, must
have been made before the other party acted - in this case,
before Pastor Kim sent Mr. Lee the money.
This principle (which
should be self-evident) is illustrated by this quotation from
Konover Property Trust, Inc. v. WHE Associates, Inc., 142 Md.App.
476, 485 (2002):
[The plaintiff] does not contend that [the
defendant] actually promised [Plaintiff] that he would
be compensated for these actions before [he] actually
performed. Therefore, it cannot be said that
[Plaintiff] relied on such promises or statements in
performing his service....
Here, Pastor Kim did not prove that Mr. Lee made any promise
to repay him his money at any particular time, in any particular
manner, and under any particular circumstances, before Pastor Kim
parted with the funds in question.
Pastor Kim may have been
relying on Pastor Park’s assurances that he would be repaid
quickly, but there is no evidence that Mr. Lee authorized Pastor
Park to make that promise on his behalf, and it is not the type
of clear and unambiguous promise that can support a claim of
Even if the Court were to credit in full
Pastor Kim’s claim that Mr. Lee said the hotel would “soon” be
transferred to Pastor Park, that statement is loaded with
Which hotel did he mean?
How was Pastor Park to
settle up with anyone once he got the hotel?
“settlement” which Pastor Park intended to make depend upon the
hotel’s either generating sufficient profit to pay Pastor Kim
back, or having enough equity in it to allow that repayment once
the hotel was sold?
None of these questions have clear answers.
In the absence of a definite promise made by Mr. Lee to Pastor
Kim before he parted with his money that the money would be
treated as a loan and would be repaid even if the hotel project
was an economic failure - something the facts do not show - the
Court simply cannot grant Pastor Kim relief on this theory.
Count IV- Unjust Enrichment
The final claim asserted by both Pastor Kim and his son,
Hong Sup Kim, is a claim based on the quasi-contractual theory of
Unjust enrichment occurs “when a party
retains money or benefits which in justice and equity belong to
Cooper v. Smith, 155 Ohio App.3d 218 (Lawrence Co.
2003), quoting Liberty Mut. Ins. Co. v. Indus. Comm., 40 Ohio
St.3d 109, 111 (1988) (internal quotations omitted). Unjust
enrichment is not available as a remedy when an express contract
covers the same subject matter. See, e.g., Hughes v. Oberholtzer,
162 Ohio St. 330 (1954).
“Under the doctrine of unjust
enrichment (i.e., quantum meruit), a party may recover the
reasonable value of services rendered in the absence of an
express contract if denying such recovery would unjustly enrich
the opposing party.”
In re Estate of Popov, 2003 WL 22017299, *4
(Lawrence Co. May 21, 2003).
In order to recover on a claim of unjust enrichment, the
party asserting the claim must demonstrate “(1) a benefit
conferred by a plaintiff upon a defendant; (2) knowledge by the
defendant of the benefit; and (3) retention of the benefit by the
defendant under circumstances where it would be unjust to do so
Hambleton v. R.G. Barry Corp., 12 Ohio St.3d
179, 183 (1984); see also Myers v. Good, 2007 WL 2897753, *2
(Ross Co. App. Sept. 27, 2007) (“When a contract fails for a lack
of ‘meeting of the minds,’ equity should be imposed to prevent an
unjust enrichment... The proper remedy is quantum meruit, or the
value of the benefit conferred on the other party”).
There is no question that Pastor Kim (and any other person
whose funds made up the $300,000.00 wired to Mr. Lee in early
2008) conferred a benefit on Mr. Lee, nor is there any question
that he knew about the benefit.
The question here is whether it
would be unjust, under all the circumstances, for him to retain
the benefit (i.e. not repay Pastor Kim or Hong Sup Kim).
following reasons, the Court cannot reach that conclusion.
The Court does not believe, although there might be some
evidence to support this conclusion, that the money was intended
as an unconditional gift.
Cf. Camp St. Mary's Assn. of W. Ohio
Conference of the United Methodist Church, Inc. v. Otterbein
Homes, 176 Ohio App.3d 54, 71 (Auglaize Co. 2008)(“an absolute
gift bars a claim for unjust enrichment”).
But the facts also do
not support the claim that it was intended to be a loan and that
Mr. Lee so understood it.
Mr. Lee testified credibly that he
considered the money to be an investment in the Howard Johnson’s
venture, and that had that venture proved profitable, he would
have shared any profit equally with Pastor Kim.
It is true that, under some circumstances, money intended as
an investment can be recovered under an unjust enrichment theory.
See, e.g., Lozinsky v. Georgia Resources Management LLC, 734
F.Supp.2d 150 (D.D.C. 2010).
There, the court found that a
company which had obtained money from the plaintiff as an equity
investment had to pay it back because it had never, in the four
years during which it had the money, provided the plaintiff with
anything stating that he had become a part owner, and there was
also no evidence that it used his money to further the company’s
Because it took his money “under the guise
of an investment, but provided ... nothing in return” the Court
concluded that it would be “unjust for [the defendant] to retain
[the] investment.” Id. at 156.
See also Meadaa v. K.A.P.
Enterprises, L.L.C., 756 F.3d 875, 884 (5th Cir. 2014)(ordering
return of funds under an unjust enrichment theory when the
recipient of the funds used the money to do improvements to its
own property and to pay down a bank loan, but the investors
“received nothing in return...”).
Here, the evidence shows that Mr. Lee used the money
received from Pastor Kim to purchase the Howard Johnson’s
His closing statement constitutes an admission on his
part that he (or his wife) and Pastor Kim were equal investors in
Had the hotel ever generated a profit, or had it
been sold, Mr. Lee stood ready to share the proceeds equally with
Pastor Kim did not get “nothing” for his money; he
acquired an interest in a motel.
While Mr. Lee did not give him
shares of stock in Eastern Eagle One, that was not necessary
since the arrangement could well have been, as counsel argued, a
joint venture between that corporation and Pastor Kim, with each
having a one-half interest in the profits of the venture.
these circumstances, it would have been unjust for Mr. Lee to
retain the money only if the motel had been profitable, or had it
been sold at a profit, and Mr. Lee then refused to acknowledge
Pastor Kim as a 50-50 partner.
Consequently, although this case
shares some similarities with Lozinsky in that Mr. Lee did not
provide much in the way of documentation to establish Pastor
Kim’s ownership interest, he did send him the closing statement,
and afterwards acknowledged in writing Pastor Kim’s ownership
These circumstances are inconsistent with a finding
that Mr. Lee unjustly retained the benefit of Pastor Kim’s money,
as is the fact that, ultimately, Mr. Lee also lost the entirety
of his investment and was forced to file for bankruptcy and
forfeit the property.
The Court therefore finds that the
Plaintiffs have not proved the third element of their unjust
Conclusions of Law
Plaintiffs had the burden of proof with respect to each
element of their contract, promissory estoppel, and unjust
Plaintiff Pan Soo Kim did not prove, by a preponderance
of the evidence, that he and Defendant Lee entered into an oral
agreement about the transfer of the funds; there was simply no
meeting of the minds which preceded that transfer.
The circumstances surrounding the transfer and use of
the money do not imply that the parties had a meeting of the
minds to the effect that the money was a loan.
There is no evidence of a clear and unequivocal promise
made by Mr. Lee, either directly or indirectly to Pastor Kim, and
at or before the time that the money was transferred, to the
effect that the money would be treated as a loan and would be
repaid regardless of the success of one or both of Mr. Lee’s
It would not be unjust for Mr. Lee to retain the benefit
of the funds transferred to him in light of his agreement to
share any profits of the Howard Johnson’s venture with Pastor Kim
on a 50-50 basis and in light of the fact that the venture was
unsuccessful, resulting in the loss not only of Pastor Kim’s
money but Mr. Lee’s investment as well.
The Plaintiffs are not entitled to relief on any of
their four claims.
Based on the Court's findings of fact and conclusions of
law, the Court finds for the Defendant on all counts.
is dismissed with prejudice.
The Clerk is directed to enter
judgment in favor of the Defendant.
/s/ Terence P. Kemp
United States Magistrate Judge
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