Cough Up the $3M,|Judge Tells Korean Firm

(CN) - DuPont won a $920 million judgment against Kolon Industries, and a federal judge ordered Kolon to hand over $3.5 million from an account in New Jersey.

Korea-based Kolon makes chemicals, optical films, fibers and fabrics. Its New Jersey-based subsidiary, Kolon USA (KUSA), buys and sells Kolon goods throughout the United States.

E.I. du Pont de Nemours and Co. obtained a $920 million judgment against Kolon in November 2011, plus $350,000 in punitive damages, for its conspiracy to steal 149 trade secrets of the Japanese company, Teijin, and DuPont's Kevlar technology.

DuPont was allowed to register and execute the judgment in New Jersey federal court in April 2012. In August it obtained a levy against Kolon's property through a writ of execution on garnishee, Kolon USA, which has an outstanding debt of more than $3.5 million in business accounts payable to Kolon, the judgment debtor.

In August last year, a grand jury charged Kolon and five executives and employees with obstructing justice, theft of trade secrets and conspiracy to convert trade secrets from DuPont and Teijin.

DuPont filed an application under New Jersey Statute 2A:17-63 for a turnover order of the $3.5 million, which Kolon USA opposed.

But U.S. District Judge Esther Salas granted the application for turnover, finding that DuPont satisfied the three requirements of the statute.

"Under New Jersey law, there is valid notice of an application for a turnover order if the parties were served notice in accordance with New Jersey rules regarding service of process," Salas wrote. "DuPont served the notice of execution on the garnishee KUSA on June 19, 2012. Thus, KUSA had notice of the issuance of the writ of execution on that date."

DuPont emailed Kolon and KUSA's counsel a copy of the writ of execution and proof of service by U.S. Marshal on Aug. 3. The judge tossed the claim that the attorney was not notified since he was in South Korea that day.

"Even if the court were to accept the judgment debtor's position that it did not have notice on Aug. 3, 2012, the judgment debtor received notice by Aug. 13, 2012. Therefore, both Kolon and KUSA received adequate notice," Salas wrote.

She found that DuPont obtained a valid levy upon the debtor property.

"In the case of intangible property not evidenced by negotiable instruments (such as the instant debtor property which are accounts payables), the levy is complete when the officer serves a certified copy of the writ," Salas wrote. "DuPont obtained a writ against KUSA and a U.S. Marshal served it on KUSA. Accordingly, there exists a valid levy on Kolon's property held by KUSA."

Plus, KUSA has admitted the debt.

"In his deposition, KUSA's president [Jong Sik Yang] stated, 'The money that we have to give to Kolon Industries is approximately $3.5 million,'" Salas wrote. "That statement clearly constitutes an admission of the debt. KUSA further admitted its debt when it stated that it 'does not dispute its contingent liabilities due to Kolon in the amount of $3,569,038.24.' Because KUSA admitted its debt to Kolon, the third requirement of N.J.S.A. 2A:17-63 is also satisfied."

The court threw out KUSA's claim that its liabilities are "uncertain and contingent" because they stem from 63 transactions with a payment term of 150 days and are not due until their dates of maturity (ranging from Oct. 15 to Dec. 6, 2012).

"The $3,569,038.24 debt here is undisputed," Salas wrote. "KUSA has not provided any evidence that there are circumstances in which the $3,569,038.24 debt owed to Kolon 'may never become payable.'"

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