1. Case Overview

The plaintiff, a contractor engaged in the construction of a mixed-use residential and commercial building, entered into a managed land trust agreement with the trustor, developer, and the defendant trust company acting as trustee.
The plaintiff subsequently entered into a construction contract with the developer, and during the course of the project, a separate succession agreement was executed between the trust company and the developer.

The plaintiff later paid certain supervision service fees and project-related charges on behalf of the project and demanded reimbursement from the defendant trust company.
When the trust company refused to disburse funds, the plaintiff filed suit, alleging that the trust company was obligated to reimburse those expenses.

2. Key Issues

The central issue in this case was whether the plaintiff could seek reimbursement under the legal doctrine of management of affairs without mandate (negotiorum gestio).

The plaintiff argued that:

• The trust company was obligated under the trust agreement to pay expenses that ranked as first-priority or third-priority disbursements;

• Because the plaintiff paid such expenses on the trust company's behalf, the requirements for management of affairs without mandate were satisfied.

The plaintiff further argued that:

• The trust company breached its obligations under the trust agreement by refusing reimbursement without justification and was therefore liable for damages; or

• Alternatively, because the plaintiff's payments and approvals increased the value of the project, the trust company obtained a benefit and should therefore return such benefit under principles of unjust enrichment.

3. Legal Strategy

Attorneys Eun-young Jung and Seong-hoon Park of One Law Partners, LLC vigorously argued that the doctrine of management of affairs without mandate was inapplicable.

The attorneys emphasized that, for such a claim to succeed, the plaintiff must have managed another person's affairs with the intention of doing so.
In this case, however, the expenses advanced by the plaintiff were incurred solely in connection with the plaintiff's own contractual obligations and business interests.
Accordingly, the trust company had no obligation to reimburse those payments.

The attorneys further argued that:

• The trust company had no obligation to disburse funds unless the specific requirements set forth in the trust agreement had been satisfied;

• Because those conditions had not been met, no claim for damages could arise from the trust company's refusal to make payment; and

• The trust company had not received any actual economic benefit from the plaintiff's voluntary payment of the expenses and therefore could not be liable under a theory of unjust enrichment.

4. Significance of the Decision

The court accepted all of the defendant's arguments and dismissed the plaintiff's claims in their entirety.
The court held that the obligation to pay the relevant expenses rested with the developer or the plaintiff contractor under the terms of the trust arrangement and that the requirements for management of affairs without mandate were not satisfied.

The court also concluded that:

• The trust company did not breach any duty by refusing the request for fund disbursement;

• The plaintiff failed to establish any compensable damage caused by the trust company's conduct.

In addition, the court recognized that the trust company, as trustee, was merely required to manage trust property within the scope authorized by the trust agreement and was subject to significant contractual limitations. Because the plaintiff still retained the possibility of recovering the expenses through the disposition and settlement of trust assets, the court found that no definitive loss had yet occurred.

This decision is significant because it confirms that a trustee must comply with the disbursement requirements expressly set forth in a trust agreement and has no obligation to make payments where those requirements have not been satisfied.
The ruling further makes clear that under such circumstances, claims based on reimbursement of expenses, damages, or unjust enrichment cannot be sustained.
 

---

Attorney Eun-young Jung | eyjung@onelawpartners.com
Attorney Seong-hoon Park | shpark@onelawpartners.com
 

---

Public Relations Team, One Law Partners, LLC | pr@onelawpartners.com