United States v. DAS Corporation

18 F.4th 1032

UNITED STATES of America, Plaintiff,andOptional Capital, Inc., aka Optional Ventures, Claimant-Appellant,

v. DAS CORPORATION, Respondent-Appellee,and475 Martin Lane, Beverly Hills, California, Real Property, Located at, et.al., Defendants.

No. 19-55128

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 15, 2020 Pasadena, California

Filed November 19, 2021

Rehearing and Rehearing En Banc Denied February 3, 2022

Ralph Rogari (argued), Rogari Law Firm P.C., Los Angeles, California; Mary Lee, Law Offices of Mary Lee, Los Angeles, California; for Claimant-Appellant.

Prashanth Chennakesavan (argued), James M. Lee, Joe H. Tuffaha, and Kevin B. Kelly, LTL Attorneys LLP, Los Angeles, California, for Respondent-Appellee.

Before: Daniel P. Collins and Kenneth K. Lee, Circuit Judges, and Gregory A. Presnell,^* District Judge.

COLLINS, Circuit Judge

We expect parties and their counsel to be vigorous in pursuing and defending their interests in court, especially when (as here) the other side behaves very badly. But even then, sometimes litigation maneuvers can go too far. This is such a case.

Towards the end of complex civil forfeiture proceedings that had been vigorously litigated for nearly nine years, Appellant Optional Capital, Inc. ("Optional") was ultimately left as the sole remaining claimant after the last set of competing claimants settled with Optional in the midst of a bench trial to fix the parties' rights in the remaining res. (Additional competing claimants had previously been voluntarily or involuntarily dismissed, including DAS Corporation ("DAS").) Optional completed the remainder of the then-uncontested bench trial, and it drafted and presented to the district court in 2013 a proposed final judgment. The literal terms of that proposed judgment, taken out of context, could potentially be construed as effectively reversing a 2011 ruling in which, prior to its departure from the case, DAS had obtained a significant victory against Optional.

The district court did not catch the potential discrepancy, and it adopted the relevant language without modification. Five years later, Optional instituted the current proceedings in which it now seeks to exploit the potential discrepancy: it seeks to hold DAS in contempt for allegedly violating the 2013 judgment simply because DAS failed to do what the district court's 2011 order explicitly refused to order DAS to do. Optional claims that, in enforcing the judgment, the district court at this point could not consider the 2011 order and that the court instead was limited to examining only the four corners of the 2013 judgment and enforcing it in accordance with its literal terms—even if that was directly contrary to the 2011 order. The district court declined to go along with this remarkable argument, and it instead construed the 2013 judgment in a manner that rendered it consistent with the 2011 order. We affirm.

I

We set forth at some length the complex history of this bitter and protracted litigation, because it bears importantly on the issues presented in this appeal.

A

Between 2004 and 2005, the United States filed a series of three related forfeiture actions that were consolidated in the district court and that all arose from alleged fraudulent activities committed by Christopher Kim ("Kim"), "a United States citizen working in South Korea," and others working in concert with him. United States v. Real Prop. Located at 475 Martin Lane (Real Prop. I ), 545 F.3d 1134, 1139 (9th Cir. 2008). The particular property at issue in this appeal consists of "[a]ll funds in Credit Suisse Private Banking account no. 0251-844548-6 in the name of Alexandria Investment, LLC," a California corporation organized by Kim's sister, Erica Kim (the "Credit Suisse Account"). According to the Government's forfeiture complaint, the more than $15 million in this account constituted, or were derived from, proceeds of fraudulent activities involving Kim's management and control of Optional Ventures Korea, Inc., whose successor is Optional. At the time it filed the relevant complaint, the Government had already sent a request in 2004 to Swiss authorities, pursuant to the applicable Mutual Legal Assistance Treaty ("MLAT"), to seize the Credit Suisse Account. On August 8, 2005, at the Government's request, the district court also ordered the seizure and arrest of the Credit Suisse Account.

The putative owners of the various properties sought to be forfeited—Kim, his sister Erica Kim, his wife Bora Lee, his parents, First Stephora Avenue, Inc. ("First Stephora"), and Alexandria Investments, LLC ("Alexandria") (collectively, "the Kim Claimants")—contested the forfeiture actions. Real Prop. I , 545 F.3d at 1139. Optional, which by that time was no longer under control of the Kim Claimants, filed competing claims to the property, as did DAS, another South Korean company and an "alleged corporate victim of Kim's fraud." Id.

In September 2005, the district court partially dismissed, as untimely filed, the Government's forfeiture proceedings with respect to some of the properties (but not the Credit Suisse Account), and the district court subsequently held that, as a result, it "no longer had jurisdiction to adjudicate competing claims to the dismissed properties." Id. at 1140. We reversed both rulings on appeal. Id. at 1141–47.

In March 2007, while that appeal remained pending and undecided, the district court granted summary judgment to the Kim Claimants as to the Credit Suisse Account and the other remaining properties in the forfeiture action, concluding that the Government had failed to present "admissible evidence that could support a finding that Kim carried out the fraud and embezzlement scheme that the Government describes" and that the evidence presented by Optional and DAS in support of the Government's position was likewise inadequate. On appeal, we affirmed the district court's grant of summary judgment against the Government and in favor of the Kim Claimants. United States v. Real Prop. Located at 475 Martin Lane (Real Prop. II ), 298 F. App'x 545, 549 (9th Cir. 2008) (decided the same day as Real Prop. I ). We nonetheless rejected the Kim Claimants' cross-appeal, which had sought to challenge the district court's assertion of jurisdiction over the Credit Suisse Account. Id. at 551. As we explained, under United States v. Approximately $1.67 Million , 513 F.3d 991 (9th Cir. 2008), "actual or constructive control over defendant property located in a foreign country is not required" in order to obtain in rem jurisdiction in a forfeiture action. Real Prop. II , 298 F. App'x at 551.

During the proceedings on remand from our decisions in Real Prop. I and Real Prop. II , the Government informed the district court at a November 2008 status conference that, in light of the dismissal of its claims, the Government was no longer in a position to ask the Swiss Government to continue to freeze the Credit Suisse Account pursuant to the earlier MLAT request. The Government noted, however, that an ongoing Swiss criminal investigation (which had been triggered by a criminal complaint from DAS) might result in the freeze continuing.

In October 2009, the district court granted motions filed by the Kim Claimants and dismissed all claims asserted by DAS and Optional against the subject properties in the forfeiture proceedings. United States v. DAS Corp. , 406 F. App'x 154, 157 (9th Cir. 2010). In December 2010, we reversed those rulings as to DAS and Optional, concluding that, notwithstanding the dismissal of the Government's forfeiture claims, the competing claims of DAS and Optional had not been addressed or resolved by our prior rulings. Id. at 159. We therefore remanded the case "for the district court to adjudicate DAS's and Optional's claims against" the properties that had been subject to the Government civil forfeiture action, including the Credit Suisse Account. Id.

B

While the forfeiture action was ongoing, Optional and DAS each took additional steps to secure their positions. In 2004, Optional sued its former directors—Kim, Erica Kim, and Bora Lee—as well as First Stephora and Alexandria (collectively, "the Kim Defendants") in the Central District of California, and that case was assigned to the same district judge as the forfeiture proceedings. See Optional Cap., Inc. v. Kim , 414 F. App'x 12, 13 (9th Cir. 2011). At the trial of Optional's suit against the Kim Defendants, a jury awarded Optional (1) 37.1 billion South Korean won (around $31.8 million today) based on a claim for conversion; and (2) an additional $31,000,000 (denominated in dollars), with half of that amount resting on one of two fraud claims and the other half resting on the other fraud claim. The district court, however, granted the Kim Defendants' motion for judgment as a matter of law on all three claims. Id. On appeal, we affirmed as to the fraud claims, but we reversed the grant of judgment as a matter of law on the conversion claim and directed the district court to reinstate the jury's award of 37.1 billion won. Id. at 15–16. The district court did so on February 7, 2011.

Meanwhile, in 2003, DAS sued Kim, Erica Kim, Bora Lee, and others in California state court. See DAS Corp. v. Kim , 2008 WL 4901097, at *1 (Cal. Ct. App. Nov. 12, 2008).¹ That action was dismissed on the pleadings, but the California Court of Appeal partially reversed that dismissal in 2008. Id. at *6. In 2007, DAS also filed a criminal complaint in Switzerland against Kim for money laundering, which (as noted earlier) led to the Swiss government's freezing of the Credit Suisse Account. In late 2010, however, DAS confidentially reached a settlement with the Kim-related parties. Pursuant to that settlement, DAS dropped its California lawsuit and sought to withdraw its Swiss money laundering criminal complaint. In response to DAS's request to withdraw that criminal complaint, and with Alexandria's consent, the Swiss Attorney General's...