Basic Research v. Woorichemtech Co

Filing 126

MEMORANDUM DECISION ADN ORDER granting 94 Motion to Dismiss for Failure to State a Claim 84 Second Amended Third-Party Complaint. Signed by Judge David Nuffer on 3/21/16 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
BASIC RESEARCH, LLC, a Utah limited
liability company,
Plaintiff,
v.
WOODRICHEMTECH CO., LTC., a Korean
limited liability company, and JOHN DOES X,
Defendants.

MEMORANDUM DECISION AND
ORDER GRANTING MOTION TO
DISMISS SECOND AMENDED
THIRD-PARTY COMPLAINT

Case No. 2:13-cv-00509-DN
District Judge David Nuffer

WOODRICHEMTECH CO., LTC., a Korean
limited liability company,
Third-Party Plaintiff,
v.
KEVIN E. ANDERSON; ANDERSON, CALL
& WILKINSON, P.C. a Utah professional
corporation,
Third-Party Defendants.

Third-Party Defendants Kevin E. Anderson (“Anderson”) and Anderson, Call &
Wilkinson, P.C. (“ACW”) (collectively “Third-Party Defendants”) move 1 to dismiss Third-Party
Plaintiff WooriChemtech Co., Ltd.’s (“Woori”) Second Amended Third-Party Complaint. 2
Third-Party Defendants argue that they are entitled to relief because (a) Woori’s claims are
barred by the statute of limitations; and (b) Woori’s claims have been released pursuant to an

1

Motion to Dismiss Second Amended Third-Party Complaint and Memorandum in Support (“Motion”), docket no.
94, filed November 12, 2014.
2

Second Amended Third-Party Complaint, docket no. 84, filed October 15, 2014.

enforceable settlement agreement. 3 After carefully reviewing the parties’ filings and relevant
legal and statutory authorities, Third-Party Defendants’ Motion is GRANTED for the reasons set
forth below.
BACKGROUND ............................................................................................................................ 2
MOTION TO DISMISS STANDARD........................................................................................... 5
DISCUSSION ................................................................................................................................. 5
A.
Woori’s Claims Are Barred by the Statute Of Limitations..................................... 5
1.
The six-year statute of limitations does not apply to Woori’s Breach of
Contract claim ............................................................................................ 6
2.
The six-year statute of limitations does not apply to Woori’s Breach of
Implied Covenant of Good Faith and Fair Dealings claim ...................... 10
3.
The Statute of Limitations for Woori’s Causes of Action were not Tolled by
the Discovery Rule .................................................................................... 11
B.
Woori’s Claims Have Been Released Pursuant to an Enforceable Settlement
Agreement ............................................................................................................. 15
ORDER ......................................................................................................................................... 22
BACKGROUND 4
Sometime in December 2005, Woori and Basic Research, LLC (“Basic”) entered into an
international distribution agreement. 5 Eventually, certain disputes arose between Woori and
Basic concerning their agreement. 6 The two companies engaged in a series of settlement
negotiations between 2007 and 2008 regarding their disputes. 7 Heung Young Son, a longtime
friend of Woori’s president, represented that he would assist Woori in the negotiations with
Basic. 8 On December 3, 2007, Woori’s president executed a Power of Attorney authorizing
Mr. Son to represent Woori in the settlement negotiations. 9 At Mr. Son’s recommendation Woori

3

Motion at 2.

4

The following facts are taken from the Second Amended Third-Party Complaint.

5

Id. ¶ 6.

6

Id. ¶ 7.

7

Id. ¶ 8.

8

Id. ¶ 9.

9

Id. ¶ 11.

2

retained Third-Party Defendants in February 2008 to represent it in the negotiations with Basic
and also to assist Woori in negotiating a new distribution agreement with Basic. 10 A Retainer
Agreement dated February 11, 2008 memorialized Woori’s agreement with Third-Party
Defendants. 11 Woori disclosed to Third-Party Defendants confidential, non-public and
proprietary information related to Woori’s business, business strategy, and contractual and
economic relations. 12 Woori also informed Third-Party Defendants that it was trying to enter into
a new distribution agreement with Basic. 13
Woori and Basic were able to settle their disputes and on or about December 5, 2008,
they executed a Settlement Agreement, in which Basic issued a product credit to Woori in the
amount of approximately $740,000 (“2008 Settlement Agreement”). 14 Woori ordered products
from Basic using approximately $516,000 of its credit, leaving roughly $224,000 in remaining
credit. 15 Through 2009, Third-Party Defendants continued to represent Woori while it was
attempting to enter into a new distribution agreement with Basic. 16 In early 2009, without any
notice to Woori, and contrary to the interests of Woori, Third-Party Defendants began
representing Mr. Son and EPC America, Inc., EPC Korea, Inc., and/or EPC Technologies, Inc.
(collectively, “EPC”) in negotiating a separate distribution agreement with Basic. 17
Unbeknownst to Woori, EPC and Basic entered into a distribution agreement in March 2009, in
which, Basic purported to assign to EPC all of Woori’s interest under the Settlement Agreement,

10

Id. ¶ 12.

11

Id. ¶ 13; see also Retainer Agreement, docket no. 115-1, filed October 15, 2015.

12

Id. ¶ 16.

13

Id. ¶ 17.

14

Id. ¶ 18.

15

Id. ¶ 19.

16

Id. ¶ 20.

17

Id. ¶ 22.

3

including the remaining product credit of $224,000. 18 Woori alleges that EPC ordered products
from Basic in March 2009 using Woori’s remaining product credit. 19
Sometime around April 13, 2009, Anderson sent Evan Strassberg of Basic a copy of the
power of attorney that Woori had provided to Anderson, and falsely represented that Woori had
assigned its rights under the Settlement Agreement to EPC.20 This was done without Woori’s
consent or knowledge. 21 Moreover, Woori had never assigned its rights under the Settlement
Agreement to EPC, and the power of attorney did not authorize EPC to make that assignment. 22
In December 2009, Woori attempted to order additional products from Basic using its
remaining $224,000 credit. 23 Woori was told that all of Woori’s rights under the Settlement
Agreement, including the remaining product credit, had been assigned to EPC and that no credit
remained for Woori to use. 24 It was not until January of 2011, however, that Woori had any
reason to believe that Third-Party Defendants were involved in the purported wrongful transfer
of Woori’s product credit to EPC.25 Woori became aware of Anderson’s involvement when
Basic, on January 4, 2011, emailed Woori copies of two emails sent by Anderson to Basic in
April of 2009. Those emails contained a copy of the power of attorney and falsely represented
that Woori had assigned its rights under the Settlement Agreement to EPC. 26 That was the first
time that Woori had seen those emails and the first it had any reason to believe that Third-Party

18

Id. ¶ 24.

19

Id. ¶ 25.

20

Id. ¶ 27.

21

Id. ¶ 28.

22

Id. ¶ 29.

23

Id. ¶ 31.

24

Id. ¶ 32.

25

Id. ¶ 33.

26

Id. ¶ 34.

4

Defendants had sent the power of attorney to Basic, had falsely represented that Woori had
assigned its rights under the Settlement Agreement to EPC, or had otherwise breached their
duties and obligations to Woori and no longer were acting in Woori’s best interest. 27
MOTION TO DISMISS STANDARD
To avoid dismissal pursuant to Rule 12(b)(6), a complaint “must contain enough factual
allegations ‘to state a claim to relief that is plausible on its face.’” 28 To state a plausible claim,
“the Plaintiff has the burden to frame a ‘complaint with enough factual matter (taken as true) to
suggest’ that he or she is entitled to relief.” 29 “Factual allegations must be enough to raise a right
to relief above the speculative level.” 30 And although all well-pleaded facts in the complaint are
presumed true, conclusory allegations will not be considered. 31 Conclusory allegations are
allegations that “do not allege the factual basis” for the claim. 32 The court is not bound by a
complaint’s legal conclusions couched as facts. 33
DISCUSSION
A. Woori’s Claims Are Barred by the Statute Of Limitations
Third-Party Defendants move to dismiss all six of Woori’s causes of action based on the
statute of limitations. Woori, in its Second Amended Third-Party Complaint, asserts the
following causes of action: (1) Breach of Fiduciary Duty; (2) Negligence/Legal Malpractice; (3)
Breach of Contract; (4) Breach of Implied Covenant of Good Faith and Fair Dealing;
27

Id. ¶ 35.

28

Robbins v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007)).
29

VanZandt v. Oklahoma Dept. of Human Services, 276 F. App'x 843, 846 (10th Cir. 2008) (quoting Robbins, 519
F.3d at 1247.)
30

Twombly, 550 U.S. at 555.

31

See Tal v. Hogan, 453 F.3d 1244, 1252 (10th Cir. 2006), cert. denied, 549 U.S. 1209 (2007).

32

Brown v. Zavaras, 63 F.3d 967, 972 (10th Cir. 1995).

33

See Twombly, 550 U.S. at 555.

5

(5) Interference with Existing Economic Relations; and (6) Interference with Prospective
Economic Relations.
Third-Party Defendants contend that all of Woori’s claims are barred by the four-year
statute of limitations and that the equitable discovery rule does not apply to toll the statute of
limitations. Woori argues that the six year statute of limitation applies to its breach of contract
and breach of the implied covenant of good faith and fair dealings claims, and that the rest of its
claims fall under the equitable discovery tolling exception, making them timely under the
applicable four year statute of limitations.
1. The six-year statute of limitations does not apply to Woori’s Breach of Contract claim
Third-Party Defendants contend the six-year statute of limitations for written contracts
should not apply to Woori’s Breach of Contract cause of action. According to Third-Party
Defendants, this cause of action is more appropriately characterized as a legal malpractice
grounded in tort and therefore, “should be barred under the four-year statute of limitations for
legal malpractice claims.” 34 Third-Party Defendants argue that in order for liability to be founded
upon a written instrument, “[t]he liability must arise out of the written instrument ‘not remotely
or ultimately, but immediately.’” 35 Third-Party Defendants point out that the facts supporting
Woori’s Breach of Contract cause of action revolve around a written Retainer Agreement,
“which provides that Mr. Anderson would ‘assist [Woori] in protecting its interests and
defending its legal rights concerning a distribution agreement and disputes over product quality,
functionality and chemistry, and related issues and the potential arbitration of disputes.’” 36 They
argue that the “plain language of the Retainer Agreement limits the obligations of [Third-Party

34

Motion at 10.

35

Id. (quoting Bracklein v. Realty Ins. Co., 80 P.2d 471, 476 (Utah 1938)).

36

Id. at 11.

6

Defendants] to the original dispute with Basic, which was resolved when Basic and Woori
entered the 2008 Settlement [Agreement].” 37 Third-Party Defendants explain that “[b]y contrast,
this lawsuit arises from events that allegedly occurred after the 2008 Settlement [Agreement] and
which are based on promises made outside of the Retainer Agreement, such as Woori’s claim
that [Third-Party Defendants] were retained to negotiate a new distribution agreement.” 38 ThirdParty Defendants conclude that “[t]hese allegations are only indirectly connected to the Retainer
Agreement and therefore . . . not subject to the six-year statute of limitations.” 39
Woori, in opposition, contends that “[a] comparison between the language of the Retainer
Agreement and the allegations in [Woori’s] Complaint,” shows that its Breach of Contract claim
is directly connected to the Retainer Agreement. 40 Woori asserts that “Anderson promised in the
Retainer Agreement that he would, among other things, ‘assist [Woori] in protecting its
interests.’ Paramount in protecting [Woori’s] interests is not representing another party in a
manner contrary to those interests.” 41 Woori argues that Anderson has breached his promise in
the Retainer Agreement to “assist [Woori] in protecting its interests[,]” by (1) representing EPC
in negotiating a distribution agreement with Basic while also representing Woori in negotiating a
distribution agreement with Basic and (2) sending to Basic a copy of the power of attorney that
Woori provided to Anderson in confidence and falsely representing to Basic that Woori had
assigned its rights under its settlement agreement with Basic to EPC. 42

37

Id.

38

Id.

39

Id.

40

WooriChemtech CO., Ltd.’s Opposition to Kevin E. Anderson and Anderson, Call & Wilkinson, P.C.’s Motion to
Dismiss Second Amended Third-Party Complaint at 15 (“Opposition”), docket no. 96, filed December 15, 2014.

41

Id. at 16.

42

Id.

7

In their reply, Third-Party Defendants reiterate that the language at issue in the Retainer
Agreement—that Third-Party Defendants will “assist [Woori] in protecting its interests”—must
be viewed in context. 43 Third-Party Defendants point out that the Retainer Agreement states that
“Anderson would ‘assist [Woori] in protecting its interests and defending its legal rights
concerning a distribution agreement[.]’” 44 Therefore, “[t]he language cited refers to specific
litigation with Basic, which was resolved when Basic and Woori entered a settlement agreement
in 2008.” 45 Third-Party Defendants again stress that the claims in the present lawsuit are only
indirectly connected to the Retainer Agreement because they arise from subsequent events when
Defendants were allegedly asked to negotiate a new distribution agreement. 46
Bracklein v. Realty Insurance Co. 47 sets forth the test to determine whether the six-year
statute of limitations applies. Bracklein states that “if the fact of liability arises or is assumed or
imposed from the instrument itself, or its recitals, the liability is founded upon an instrument in
writing.” 48 “[A] cause of action is founded upon an instrument of writing when the contract,
obligation, or liability grows out of written instruments, not remotely or ultimately, but
immediately.” 49 The obligation or “promise must arise directly from the writing itself and be
included in its terms.” 50 Bracklein clarified, however, that “a cause of action is not founded on a
written instrument merely because it is indirectly connected with the instrument. And the fact

43

Reply Memorandum in Support of Motion to Dismiss Second Amended Third-Party Complaint at 7 (“Reply”),
docket no. 105, filed January 16, 2015.
44

Second Amended Third-Party Complaint ¶ 14.

45

Reply at 7.

46

Id.

47

80 P.2d 471 (Utah 1938).

48

Id. at 476.

49

Id. (internal quotation marks and citation omitted).

50

Id.

8

that a writing may be a link in the chain of evidence establishing the liability is not sufficient to
say the cause of action is founded on such writing . . . .” 51
The only writing relied upon by Woori in the pleadings for its Breach of Contract cause
of action is the Retainer Agreement. The relevant language in the Retainer Agreement reads:
This letter will confirm that Woorichemtech Company (“Client”) has requested
that Kevin E. Anderson P.C. of the Anderson Call Law Firm (“Legal Counsel”)
assist Client in protecting its interests and defending its legal rights concerning a
distribution agreement and disputes over product quality, functionality and
chemistry, and related issues and the potential arbitration of disputes. 52
Woori relies on the language that states that Anderson will “assist [Woori] in protecting
its interests and defending its legal rights concerning a distribution agreement and disputes over
product quality, functionality and chemistry, and related issues and the potential arbitration of
disputes.” 53 Woori argues that, based on the quoted language above, Third-Party Defendants
breached the Retainer Agreement by: (1) concurrently representing both EPC and Woori in
negotiating a new distribution agreement with Basic; and (2) sending Basic a copy of the power
of attorney (that Woori had provided to Anderson) and falsely representing that under the power
of attorney Woori had assigned its settlement agreement rights with Basic to EPC.
The quoted language of the Retainer Agreement is not sufficiently connected with
Woori’s breach of contract cause of action for the six-year statute of limitations to apply. As
alleged in the Second Amended Complaint, after Woori and Basic entered into a distribution
agreement in December 2005, the parties began having disputes concerning the 2005 distribution
agreement. Due to these disputes, the parties engaged in a series of settlement negotiations
between 2007 and 2008.

51

Id.

52

Retainer Agreement at 1.

53

Id.

9

As Third-Party Defendants correctly point out, the quoted language of the Retainer
Agreement limits the obligations of Third-Party Defendants to represent Woori as it engaged in
the settlement negotiations with Basic concerning certain disputes that had arisen from their
2005 distribution agreement. Third-Party Defendants fulfilled this obligation on or about
December 5, 2008, when Woori and Basic executed a Settlement Agreement. Although Woori
alleges that Third-Party Defendants were retained to also “assist Woori in negotiating a new
distribution agreement with Basic,” this alleged obligation appears nowhere in the Retainer
Agreement.
It is possible that Third-Party Defendants engaged in legal malpractice based on their
alleged representation of EPC in a matter that seems to be adverse to Woori’s interests and also
their alleged acts of emailing the power of attorney to Basic and falsely representing that Woori
had assigned its rights under its settlement agreement. But the alleged actions of Third-Party
Defendants are not “immediately” based on a written instrument such as the Retainer Agreement
in question. Stated differently, Third-Party Defendants’ possible liability for the above alleged
actions arises from the relationship of the parties established by the Retainer Agreement, but not
directly from any specific language in the Retainer Agreement. Therefore, Third-Party
Defendants potential liability stems “remotely or ultimately” from the Retainer Agreement.
Woori’s breach of contract claim is really an action sounding in tort, and the four-year statute of
limitations applies.
2. The six-year statute of limitations does not apply to Woori’s Breach of Implied Covenant
of Good Faith and Fair Dealings claim
Every contract includes a covenant of good faith and fair dealing. 54 “As the duties of
good faith and fair dealing arise out of the relationship between the parties created by the
54

Brown v. Moore, 973 P.2d 950, 954 (Utah 1998).

10

contract and have no independent existence outside of the contract, a claim for the breach of the
covenant of good faith arises under the contract.” 55 And when the implied covenant is founded
upon a written contract, breach of the implied covenant is governed by the six-year statute of
limitations, similar to a breach of contract claim. 56 Having found that Woori’s Breach of
Contract claim is really an action sounding in tort, it naturally follows that the dependent claim
of breach of the implied covenant of good faith and fair dealing also fails as it has no
independent existence outside of a contract.
3. The Statute of Limitations for Woori’s Causes of Action were not Tolled by the Discovery
Rule
Woori argues that the equitable discovery rule applies in this case to toll the statute of
limitations on its claims. 57 Citing Russell Packard Dev. v. Carson, 58 Woori states that “[t]he
equitable discovery rule applies to toll the statute of limitations ‘(1) where a plaintiff does not
become aware of the cause of action because of the defendant’s concealment or misleading
conduct, and (2) where the case presents exceptional circumstances and the application of the
general rule would be irrational or unjust, regardless of any showing that the defendant has
prevented the discovery of the cause of action.’” 59 Woori asserts “[b]oth the ‘concealment’ and
the ‘exceptional circumstances’ versions of the equitable discovery rule apply to this case.” 60
Woori is correct that there are two circumstances in which the equitable discovery rule
prevents a statute of limitations from beginning to run upon the happening of the last event.
“However, ‘before a statute of limitations may be tolled under [the equitable discovery rule], the
55

Peterson & Simpson v. IHC Health Servs., Inc., 217 P.3d 716, 722 (Utah 2009).

56

CIG Exploration, Inc. v. State, 24 P.3d 966, 971 (Utah 2001).

57

Opposition at 17.

58

108 P.3d 741 (Utah 2005).

59

Opposition at 17–18 (citing Russell, 108 P.3d at 747).

60

Id. at 18.

11

plaintiff must make an initial showing that he did not know nor should have reasonably known
the facts underlying the cause of action in time to reasonably comply with the limitation
period.’” 61 Woori has not satisfied this threshold showing.
The four-year statute of limitations on Woori’s claims began to run when Woori’s causes
of action accrued. Woori does not dispute Third-Party Defendants’ assertion that “the last event
necessary to complete the cause of action for [Woori’s] claims may have been completed in
March 2009.” 62 Because Woori’s causes of action accrued in March 2009, the four-year statute
of limitations expired in March 2013.
Woori contends, however, that it “did not discover the facts constituting those claims
until January 2011 . . . when counsel from Basic forwarded e-mails sent by Anderson to Basic
containing the Power of Attorney and representing that the Power of Attorney meant that
[Woori] has assigned its rights under the Settlement Agreement to EPC.” 63 Even assuming
Woori did not discover its possible causes of action until January 2011, Woori nevertheless
became aware of its injuries or damages and possible causes of action almost two years before
the statute of limitations expired. “[T]he discovery rule does not apply to a plaintiff who
becomes aware of his injuries or damages and a possible cause of action before the statute of
limitations expires.” 64
Woori argues that even if it knew or reasonably should have known the facts underlying
its cause of action, the concealment exception of the equitable discovery rule may still apply. 65

61

Helfrich v. Adams, 299 P.3d 2, *6 (Utah Ct. App. 2013) (Berneau v. Martino, 223 P.3d 1128 (Utah 2009)).

62

Opposition at 18.

63

Id.

64

Atwood v. Sturm, Ruger & Co., 823 P.2d 1064, 1065 (Utah 1992) (citing Brigham Young University v. Paulsen
Construction Co., 744 P.2d 1370 (Utah 1987)).
65

Opposition at 19.

12

Woori cites to Russell, where the court held that “if a plaintiff either knew or reasonably should
have known of the facts underlying his or her cause of action before a limitations period expired,
the plaintiff may nevertheless invoke the concealment version of the discovery rule.” 66 Russell
went on to clarify that in order “for the rule to excuse a plaintiff’s failure to file within the fixed
limitations period in these circumstances, a plaintiff must show that, given the defendant’s
actions, the plaintiff acted reasonably in failing to file suit before the limitations period
expired.” 67
Woori contends that it “acted reasonably in not filing the present suit against Defendants
before the expiration of the statute of limitations.” 68 Woori asserts that
[a]fter it discovered Defendants’ misconduct, [it] filed a cross-complaint against
them in the California state court which was then overseeing a related dispute
between [Woori], EPC, and Basic. Defendants moved to dismiss [Woori]s crosscomplaint on the grounds of lack of personal jurisdiction, and by the time the
California court granted the motion and dismissed [Woori’s] cross-complaint in
August 2013, the statute of limitations on [Woori’s] claims had already passed. 69
According to Woori, it was reasonable that it did not file suit against Third-Party
Defendants until after its cross-complaint had been dismissed by the California court “because it
believed that the California court was the best forum for adjudicating the interrelated claims
between [Woori], EPC, Basic, and [Third-Party] Defendants.” 70
Woori’s “reasonableness” argument is based on an incorrect interpretation of the
rationale behind Russell’s holding that the concealment exception might still apply even if
plaintiff knew or reasonably should have known of the facts underlying its cause of action before

66

Russell, 108 P.3d at 748.

67

Id. (emphasis added).

68

Opposition at 19.

69

Id.

70

Id.

13

a limitation period expires. Russell explains that there should not be an “overly strict
interpretation” of the concealment version of the discovery rule because of “the policy of ‘not
allowing a defendant who has concealed his wrongdoing to profit from his concealment[.]” 71 “If
we were to look only to whether a plaintiff theoretically could have brought a suit before the
limitations period expired without looking to the relative reasonableness or unreasonableness of
that action under the circumstances, we would reward a defendant’s fraudulent and deceptive
misbehavior by depriving an innocent plaintiff of a reasonable period within which to act.” 72 For
this reason, the Utah Supreme Court underscored that “for the rule to excuse a plaintiff’s failure
to file within the fixed limitation period [when plaintiff either knew or reasonably should have
known], a plaintiff must show that, given the defendant’s actions, the plaintiff acted reasonably
in failing to file suit before the limitation period expired.” 73
The only reason that Woori provides for not filing suit before the limitation period
expired is its reasonable belief that the California court was the best forum to adjudicate these
claims. Woori fails to point to any actions by Third-Party Defendants that caused it not to file
suit before the limitation period expired. As previously mentioned, Woori became aware of its
causes of action at least 20 months before the statute of limitations expired. Under the
circumstances, Woori has not demonstrated that it acted reasonably in not filing a complaint until
after the limitation period expired. Therefore, the concealment version of the discovery rule does
not operate to toll the statute of limitations.
Similar to the concealment exception discussed above, “before a court reaches [the
exceptional circumstances] test, an initial showing must be made that the plaintiff did not know

71

Russell, 108 P.3d at 748. (quoting Berenda v. Langford, 914 P.2d 45, 52 (Utah 1996)).

72

Id.

73

Id. (emphasis added).

14

of and could not reasonably have known of the existence of the cause of action in time to file a
claim within the limitation period.” 74 As mentioned above, it is undisputed that Woori became
aware of its causes of action before the expiration of the limitation period. The threshold test for
exceptional circumstances has not been met. The exceptional circumstances version of the
discovery rule does not operate to toll the statute of limitations. Accordingly, all of Woori’s
claims in its Second Amended Third-Party Complaint are barred by the statute of limitations.
B. Woori’s Claims Have Been Released Pursuant to an Enforceable Settlement
Agreement
Third-Party Defendants argue that in addition to being barred by the statute of limitations,
all of Woori’s claims against Third-Party Defendants were released by a 2013 Settlement
Agreement between Woori and EPC 75 Woori argues that the 2013 Settlement Agreement “could
not have applied to the claims filed in this action because they were not filed until seven months
after the execution of the [2013 Settlement] Agreement.” 76 Woori also contends that the plain
language of the 2013 Settlement Agreement “merely required the dismissal of claims against
Anderson (not ACW) pending at the time the [2013 Settlement] Agreement was signed.” 77
The relevant language of the 2013 Settlement Agreements reads:
1. WooriChem shall immediately withdraw any cross-complaints filed in US
courts against EPC, EPC related companies and individuals (By removing
lawsuits involving EPC, EPC America, Basic Research, Kevin Anderson, Heung
Young Sohn, Gun Choon Lee and Jung Soo Lee) Exception, Kwangwon U S A
and Kwongwon related persons shall not be part of this removal of crosscomplaints
...

74

Macris v. Sculptured Software, Inc., 2001 UT 43, ¶ 18, 24 P.3d 984, 989 (Warren, 838 P.2d at 1129).

75

Motion at 7–8.

76

Opposition at 7–8.

77

Id. at 9.

15

3. EPC and WooriChem shall not mutually file any civil/criminal lawsuits nor
objections involving Strivectin once both parties enter into this Agreement. 78
Whether the 2013 Settlement Agreement precludes Woori from bringing the claims
found in its Second Amended Third-Party Complaint is similar to an issue brought in December
2013 before the California Superior Court of San Bernardino County (“California Superior
Court”) by Basic and Kwongwon USA, Inc. and related parties (“Kwongwon”)—two of the
third-party beneficiaries of the 2013 Settlement Agreement. 79 Basic and Kwongwon argued that
the parties to the 2013 Settlement Agreement intended that Woori’s claims against them would
be dismissed with prejudice and Woori was prohibited from refiling its claims or any new
claims. 80 Woori argued that the 2013 Settlement Agreement “was ambiguous regarding a critical
term: dismissal of Woori’s claims.” 81 The California Superior Court concluded that EPC and
Woori entered into an enforceable settlement agreement and that the dismissal was with
prejudice. 82 On October 14, 2015, the California Court of Appeals affirmed the California
Superior Court’s Order enforcing the 2013 Settlement Agreement. The California Court of
Appeals held:
Here, after entering into the 2013 settlement agreement, the parties to the
agreement disagreed on whether the agreement required dismissing Woori’s
claims with prejudice. Nevertheless, the 2013 settlement agreement as a whole is
sufficiently clear and definite as to the material terms, including that Woori is
required to dismiss its claims with prejudice. This can be reasonably inferred from
language in the agreement requiring Woori to “withdraw” or dismiss its claims
and language prohibiting Woori from refiling its claims or refiling any new
claims. In effect, these terms are the equivalent of requiring dismissal with
prejudice. Woori could not initially dismiss its claims without prejudice and then
78

Agreement, Exhibit A of Motion, docket no. 94-1, filed November 12, 2014.

79

WooriChemtech Co. v. EPC Techs., Inc., No. E061174, 2015 WL 5968295, at *3–4 (Cal. Ct. App. Oct. 14, 2015)
(unpublished).

80

Id.

81

Id. *4.

82

Id.

16

later return to court and dismiss them with prejudice, after the court no longer has
jurisdiction over the matter.
We therefore conclude that, even though, after executing the 2013 settlement
agreement, the parties disagreed as to whether dismissal of Woori’s claims must
be with prejudice, the terms of the 2013 settlement agreement are sufficiently
clear that Woori must dismiss its claims with prejudice. 83
After the issuance of the California Court of Appeals Opinion, supplemental briefing was
requested on the impact of that Opinion on the present case. 84 In its supplemental brief, Woori
argues that “[t]he Opinion has no bearing on [Third-Party] Defendants’ Motion to Dismiss
because the Opinion does not address the claims brought by WooriChemtech in this action.” 85
Woori raises several arguments in support of its position.
Woori’s Arguments
First, Woori contends that “neither the trial court, nor the Court of Appeals, determined
that the 2013 Settlement Agreement precluded the claims that WooriChemtech has brought
against the [Third-Party] Defendants in this Court.” 86 According to Woori, Anderson and ACW
were not parties to the California case at the time the California Superior Court granted the
motion to enforce the 2013 Settlement Agreement. 87 Woori points out that “on July 1, 2013,
Anderson and ACW moved to quash service of a summons WooriChemtech had served on them
on the basis that the California court lacked personal jurisdiction over them. The court granted
their motion on August 9, 2013.” 88 And the motion to enforce the 2013 Settlement Agreement

83

Id. * 5 (emphasis added).

84

Docket text order, docket no. 117, filed December 2, 2015.

85

WooriChemtech Co., Ltd.’s Supplemental Brief Re Kevin E. Anderson and Anderson, Call & Wilkinson, P.C.’s
Motion to Dismiss Second Amended Third-Party Complaint at 2 (“Woori’s Supplemental Brief”), docket no. 125,
filed December 21, 2015.
86

Id. at 3.

87

Id.

88

Id.

17

“was not granted until May 7, 2014, nearly 9 months after Anderson and ACW has [sic] been
dismissed as defendants for lack of personal jurisdiction.” 89 Based on the above time frame,
Woori concludes that “[t]he Opinion does not address the claims against Anderson and ACW
that had been dismissed months before the trial court ruled that the 2013 Settlement Agreement
precluded the remaining claims before it.” 90
Next, Woori argues that “the Opinion did not address whether the claims brought in this
case are within the scope of the 2013 Release Agreement’s release.” 91 Woori asserts:
The 2013 Release Agreement provided that WooriChemtech was not to bring
claims against the released parties “involving Strivectin.” The opinion does not
reach whether the claims WooriChemtech has brought against the Defendants in
this case involve Strivectin. Those claims all arise from the Defendants’ breaches
of their common law and contractual obligations to WooriChemctech as its
attorneys. WooriChemtech has alleged claims of breach of fiduciary duty,
professional negligence/legal malpractice, breach of contract, breach of the
implied covenant of good faith and fair dealing, and interference with existing and
prospective economic relations. None of those claims “involve Stivectin.” Rather
they each arise from the [Third-Party] Defendants’ decision to act against
WooriChemtech’s interests. . . . . Accordingly, the claims brought by
WooriChemtech in this case do not “involve Strivectin” and were not released by
the 2013 Release Agreement. 92
Woori’s final argument is that “the Opinion does not reach the question of whether the
2013 Release Agreement can be construed as releasing claims WooriChemtech has against
ACW. Defendant ACW was not a party to the 2013 Release Agreement, and its only potential
claim to rights under the Agreement would be as a third party beneficiary of the contract.” 93
Woori contends that “[t]hird-parties only have enforceable rights under a contract when ‘the
intention of the contracting parties to confer a separate and distinct benefit upon the third party is
89

Id.

90

Id. at 4.

91

Id.

92

Id.at 4–5.

93

Id. at 5.

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clear.’” 94 Woori concludes that “[a]t minimum, there is a question of fact as to whether the
parties to the Agreement, including WooriChemtech, intended that ACW would benefit from the
terms of the Agreement.” 95
Analysis of Woori’s Arguments
Woori is correct that neither California Superior Court nor the California Court of
Appeals considered whether the 2013 Settlement Agreement precluded the claims that
WooriChemtech has brought against the Third-Party Defendants in the present case. Also, as
Woori points out, the California Court of Appeals Opinion does not address whether the claims
in this case are within the scope of the 2013 Settlement Agreement. However, the underlying
rationale articulated by the California courts is applicable and dispositive here. A review of
Woori’s Second Amended Third-Party Complaint reveals that all of Woori’s allegations relate to
and involve Strivectin, and form the foundation of all of its claims. As aptly put by Third-Party
Defendants:
The genesis of the dispute arose from a 2005 distribution agreement in which
Woori was permitted to distribute StriVectin skin-care products in Korea. 96
Following several disputes regarding the agreement, Woori retained [Third-Party]
Defendants to “represent [Woori] in the negotiations with Basic relating to the
dispute” and “to assist [Woori] in negotiating a new distributor agreement with
Basic.” 97 Both tasks were directly related to StriVectin. 98
Woori alleges that after engaging the services of Defendants, Defendants
wrongfully terminated the relationship and proceeded to represent another party,
94

Id. (quoting BC Tech., Inc. v. Ensil Int'l Corp., No. 2:02-CV-700 TS, 2007 WL 2908282, at *3 (D. Utah Oct. 3,
2007)).
95

Id.

96

Supplemental Memorandum Supporting Motion to Dismiss Second Amended Third-Party Complaint at 4 (“ThirdParty Defendant’s Supplemental Memorandum”), docket no. 124, filed December 21, 2015 (citing WooriChemtech
Co. v. EPC Techs., Inc., 2015 WL 5968295).
97

Id. (citing Second Amended Third-Party Complaint. at ¶¶ 6–7, 12).

98
Id. (citing See Second Amended Third-Party Complaint at ¶ 14 (quoting language from the retainer agreement
providing that Defendants would “assist [Woori] in protecting its interests and defending its legal rights concerning
a distribution agreement and disputes over product quality, functionality and chemistry, and related issues”)).

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EPC, in negotiating a distribution agreement with Basic. 99 Woori further alleges
that Defendants assisted EPC in wrongfully obtaining a portion of Woori’s credit
balance with Basic, which then allowed EPC to obtain StriVectin products from
Basic. 100 Once again, each of these allegations is clearly related to StriVectin and
form the foundation of Woori’s causes of action.
Woori was fully aware of claims against Defendants as early as January 3,
2011. 101 In fact, Woori raised these claims in the California litigation on April 4,
2013—approximately a month before entering the Settlement Agreement. 102 This
sequence of events illustrates that Woori’s claims against Defendants were
inextricable from the StriVectin dispute. Although Woori is now attempting to
disguise these claims as legal malpractice, they are merely an attempt to relitigate
an old dispute—one which was dismissed by the Settlement Agreement and twice
upheld by California courts. 103
Because Woori’s claims relate to and involve Strivectin, the 2013 Settlement Agreement
precludes Woori from bringing these claims against Anderson.
Woori argues that ACW was not one of the listed parties to the 2013 Settlement
Agreement and therefor the release does not apply to ACW. It is undisputed that the 2013
Settlement Agreement does not list ACW as one of the parties whom Woori agreed to release
from liability. Utah Code Ann. § 15-4-4 of the Joint Obligations Act resolves Woori’s remaining
argument relating to ACW’s vicarious liability for the actions of Anderson. 104 Section 15-4-4 of
the Joint Obligations Act provides that if an obligee (Woori) releases or discharges a joint or
joint and several obligor and does not make a reservation of rights, the co-obligors shall be
discharged to the extent provided in § 15-4-5. 105 Because ACW is a co-obligor, 106 and the 2013

99

Id. (citing Second Amended Third-Party Complaint at ¶¶ 21–22).

100

Id. (citing Second Amended Third-Party Complaint at ¶¶ 24–25).

101

Id. (citing Second Amended Third-Party Complaint at ¶ 35).

102

Id. (citing Opposition at 6).

103

Id. at 4–5.

104

See Peterson v. Coca-Cola USA, 48 P.3d 941, 949 (Utah 2002) (stating the Joint Obligation Act “applies to
vicariously liable co-defendants”).

105

Utah Code Ann.. § 15-4-4.

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Settlement Agreement did not expressly reserve any claims against ACW as required by § 15-44, ACW “is discharged to the extent provided in § 15-4-5.”
Woori contends that even if it had released its claims against Anderson and had not made
a reservation of rights against ACW, § 15-4-5 limits Woori’s release of ACW. Section 15-4-5
provides that:
(1) If an obligee releasing or discharging an obligor without express reservation of
rights against a co-obligor then knows or has reason to know that the obligor
released or discharged did not pay as much of the claim as he was bound by his
contract or relation with that co-obligor to pay, the obligee’s claim against that coobligor shall be satisfied to the amount which the obligee knew or had reason to
know that the released or discharged obligor was bound to such co-obligor to pay.
(2) If an obligee so releasing or discharging an obligor has not then such
knowledge or reason to know [that the obligor released or discharged did not pay
as much of the claim as he was bound by his contract or relation with that coobligor to pay], the obligee’s claim against the co-obligor shall be satisfied to the
extent of the lesser of two amounts, namely:
(a) the amount of the fractional share of the obligor released or discharged;
or
(b) the amount that such obligor was bound by his contract or relation with
the co-obligor to pay. 107
Woori argues that pursuant to § 15-4-5, “ACW would only be released of its obligations
to WooriChemtech by the amount which WooriChemtech knew Anderson was bound to pay
ACW for its obligations to WooriChemtech.” 108 Woori contends that this issue cannot be
resolved on a Rule 12(b)(6) motion to dismiss because “[w]hether Anderson was bound to pay
ACW for its obligations to WooriChemtech arising from the claims in this case is a question of
fact . . . .” 109 And “[f]urther, even if Anderson were bound to make any such a payment to ACW,
106

See Nelson on Behalf of Hirschfeld v. Corp. of Presiding Bishop of Church of Jesus Christ of Latter-Day Saints,
935 P.2d 512, 514 (Utah 1997) (finding a vicariously liable employer as a co-obligor).

107

Utah Code Ann. § 15-4-5(1)-(2) (emphasis added).

108

Opposition at 14.

109

Id.

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a fact that has not been established, there is no evidence before the Court that would allow it to
reasonably conclude that WooriChemtech was aware of or should have been aware of such an
obligation.” 110 Whether Anderson is bound to pay ACW for his obligations to Woori—and the
extent of any such obligation —is a question of fact precluding determination of the extent of
Woori’s release, if any, of ACW, on this motion. 111 Any claim against ACW is nevertheless
dismissed as being barred by the statute of limitations. Accordingly, Woori’s claims against
Anderson are dismissed because those claims have been released by the 2013 Settlement
Agreement, while Woori’s claims against ACW are released due to the bar of the statute of
limitations.
ORDER
It is hereby ORDERED that Third-Party Defendant’s Motion 112 to Dismiss the Second
Amended Third-Party Complaint is GRANTED and Third-Party Plaintiff’s Second Amended
Third-Party Complaint 113 is DISMISSED WITH PREJUDICE.
Dated March 21, 2016.
BY THE COURT:
____________________________
David Nuffer
United States District Judge

110

Id.

111

See Nelson on Behalf of Hirschfeld v. Corp. of Presiding Bishop of Church of Jesus Christ of Latter-Day Saints,
935 P.2d 512, 513 (Utah 1997) (“[B]ecause the master and the servant are equally liable, both are tort-feasors under
the statute and the servant's release does not release the master.)
112

Motion to Dismiss Second Amended Third-Party Complaint and Memorandum in Support, docket no. 94, filed
November 12, 2014.
113

Second Amended Third-Party Complaint, docket no. 84, filed October 15, 2014.

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