Chu v. Hong

Chong Hong (plaintiff), an American, married Gyu Kim (Gyu) (defendant), a Korean, in Korea. Hong and Gyu moved to Texas and purchased a donut shop. The following year, Hong and Gyu had marital problems and signed a contract to sell the donut shop to another couple, the Kims (defendants) for $180,000. The sales transaction failed to close on the set date. The Kims retained attorney William Chu (defendant), and after an exchange of correspondence, Gyu met with Chu by himself and agreed to close the sale. In a bill of sale drafted by Chu, Gyu represented that he was the lawful owner of the donut shop with full authority to sell. Chu knew that Gyu’s statement was untrue because Hong’s consent was needed. The Kims paid Gyu $180,000. Gyu wired the community funds to his parents in Korea and then filed for divorce from Hong. Hong counterclaimed against Gyu for defrauding the community and sued Chu and the Kims for conversion and conspiracy. Separately, Gyu was convicted of criminally assaulting Hong, and he was deported from the United States. In the divorce and fraud cases, Hong was granted a divorce. As to questions submitted to the jury, the jury found in Hong’s favor. The trial court found that Gyu had transferred the community-property donut shop without Hong’s consent, voided the sale, ordered the Kims to return the shop to Hong, and allowed Hong and Gyu to retain the marital property in their possession. The court entered a monetary judgment against the Kims and a $1.5 million punitive-damage award against Chu for conspiracy. The Kims declared bankruptcy. On Chu’s appeal, the court of appeals affirmed. The Texas Supreme Court reviewed the matter to determine whether Chu could be held liable for conspiracy, which depended on whether Gyu could be liable in tort for fraudulently transferring community property.