1. The Client’s Crisis

The client received an investment proposal from an acquaintance. The offer was, “If you invest in stocks, I will guarantee your principal, and if there is profit, we will split it equally.” Believing this statement, the client transferred KRW 100 million.

However, the investment did not proceed as planned, and when the client demanded repayment, the other party merely repeated promises such as “I’ll return it soon,” but did not actually give the money back. The client filed a criminal complaint against the other party on charges of fraud and violation of the Act on Door-to-Door Sales, etc., but the prosecutors declined to indict on the grounds that intent to deceive was difficult to establish. Having lost KRW 100 million and failed to obtain relief through the criminal process, the client came to Jonjae Law Firm as a last resort for civil litigation.

2. Key Issues

There were two issues to resolve in this case.

First, with the criminal case ending in a decision not to indict, the question was what cause of action should be asserted in the civil case in order to win. If the claim were framed as damages arising from tort, the criminal non-indictment result could work against the client, and the claim would also be vulnerable to defenses such as comparative negligence and limitation of liability. Taking advantage of the fact that the standards of proof differ between criminal and civil cases, we had to choose the cause of action with the highest chance of success.

Second, it was expected that the other party would dispute the enforceability of the principal-guarantee agreement. The other party might argue, “It was just a text message written formally to show my wife; I had no real intention to guarantee the principal,” and would likely also assert, “Investment losses should also be shared equally.” We needed to prove that the principal-guarantee agreement was legally binding.

3. Jonjae’s Strategy

Attorney Yoon Ji-sang and Attorney Noh Jong-eon took the case by focusing on the construction of the cause of action.

We changed the lawsuit, which had initially been filed as a claim for damages due to tort, into a “claim for repayment of a contractual payment based on the principal-guarantee agreement” during the trial. This was the most critical strategy in this case. If the case is framed as tort, the other party can argue comparative negligence or limitation of liability; but if it is framed as repayment of a promised amount, it becomes a matter of “return the money you promised,” leaving no room for those defenses to apply.

As expected, the other party raised two defenses. One was the claim that “since we agreed to split profits 50:50, losses should also be shared 50:50,” and the other was the assertion that “the principal-guarantee agreement was merely formal and therefore has no legal effect.”

In response, Jonjae Law Firm systematically submitted objective evidence showing that the other party had attracted investment funds by promising to guarantee the principal, and later reaffirmed the repayment intention through text messages. We proved the transfer of KRW 100 million through financial transaction records and supported the promise of repayment with the other party’s text messages, clearly establishing the existence of the debt for the contractual payment.

During the trial, the court issued a settlement recommendation decision ordering the defendant to pay the plaintiff KRW 80 million, but Jonjae Law Firm filed an objection in order to secure the full KRW 100 million plus delay damages. The judgment was that we should not settle for KRW 80 million and should obtain a formal judgment to recover the full amount.

4. Result and Recovery

The court rejected all of the other party’s defenses and fully upheld the client’s claim. It clearly held that once the other party had promised to guarantee the principal, the agreement was legally binding, and that comparative negligence or limitation of liability did not apply to a claim for repayment of a contractual payment.

The final judgment ordered payment of the full KRW 100 million plus delay damages (12% per annum). Because the other party did not appeal within the appeal period, the judgment became final, and the client secured an enforceable authenticated copy of the judgment (with writ of execution), laying the foundation for compulsory enforcement.

This was a case in which, instead of giving up in the face of the setback of a criminal non-indictment, we strategically changed the cause of action in the civil lawsuit and recovered the full investment amount. Even though the court recommended a settlement of KRW 80 million, obtaining a judgment for the full KRW 100 million was the result of pursuing the client’s practical interests to the end.

If you are wondering how to respond in a similar situation, the outcome may differ depending on the specific facts of the case, so we recommend consulting a professional.

Attorneys in charge: Attorney Yoon Ji-sang · Attorney Noh Jong-eon

To protect confidentiality, some parts of this case have been de-identified to the extent that the essence of the matter is not affected.

Watch the video on the Jonjae Law Firm YouTube channel, “Family Unboxing”