Cho v. CG Invites Co., Ltd.

Background

Joong Myung Cho alleged that he entered into four agreements with CG Invites, CG Pharmaceuticals, Inc. (CGP), and Yong Kyu Shin concerning a proposed spin-off of CGP. According to Cho, he agreed to resign from CG Invites’ board, sell a substantial portion of his CG Invites shares to Shin, and contribute 6 billion Korean won to CGP. In return, he alleged that he would receive 60% of CGP’s voting common stock, control two of its three board seats, and control the development of the Ivaltinostat clinical trial.

Cho alleged that he performed his obligations but that the CG Invites defendants did not perform theirs. He claimed that they refused to recognize his alleged majority ownership, attempted to replace board members he selected, sought control of CGP and the Ivaltinostat trial, and represented that CG Invites still owned 100% of CGP. Cho also brought claims against Leo Kim based on Kim’s emails concerning replacing Cho, dissolving CGP, and transferring its assets and business relationships.

CG Invites Defendants’ Motion

The CG Invites defendants argued that the Subscription Agreement never closed because Cho had not invested the required amount before filing the lawsuit. The court noted that the records showed only two pre-filing investments—$600,000 on July 15, 2024, and $650,000 on October 4, 2024—which were below the approximately $4 million required for the transaction to close and transfer majority ownership under the agreements.

The court found it unclear whether Cho’s later contributions were made under the Subscription Agreement or in another capacity, and whether that distinction affected his contractual obligations. Because the lawsuit depended on who owned and controlled CGP, the court ordered Cho to amend his complaint to plead facts showing that he satisfied his performance obligations. The court therefore granted the CG Invites defendants’ motion to dismiss with leave to amend.

The court nevertheless said that, if Cho cured the performance issue, the remainder of his claims appeared plausible. It found that his contract, implied-covenant, fraud, and civil-conspiracy allegations generally supplied enough factual detail to proceed past the pleading stage. The court also found that the allegations supported personal jurisdiction over the individual and Newlake defendants at this stage. It rejected the argument that the case belonged in Korea, reasoning that the Subscription Agreement and Shareholders’ Agreement selected California courts as the exclusive forum for disputes arising under them. The court also concluded that the fact that CGP’s Articles of Incorporation had not been amended did not appear fatal to Cho’s claims at this stage.

Kim’s Motion

The court denied dismissal of Cho’s tortious-interference claim against Kim. It found that Kim’s June 29 and June 30, 2024 emails, considered together, plausibly showed intentional disruption of the contractual relationship and an effort to displace Cho from majority control. The court also considered Kim’s alleged deletion of data from company devices as potentially relevant to his motive.

The court granted Kim’s motion to dismiss Cho’s aiding-and-abetting fraud claim, but allowed Cho to amend it. Under the heightened pleading standard for fraud-related claims, Cho had not alleged with enough specificity how Kim substantially assisted the alleged fraud or how Kim’s conduct was a substantial factor in Cho’s injury. The court found that the emails did not adequately connect Kim’s conduct to the alleged harm or show that further action resulted from his contact with counsel.

The court denied dismissal of the civil-conspiracy claims against Kim at this stage, subject to Cho resolving the performance ambiguity in an amended complaint. The court found that Cho had alleged sufficient facts concerning the alleged conspiracy’s formation, wrongful conduct, and resulting damages.

Disposition

The court ordered that any amended complaint be filed within 20 days of August 18, 2025. The order did not decide the ultimate ownership or control of CGP. It ruled on whether Cho’s allegations were adequately pleaded and allowed amendment before the case could proceed to the merits.