'Lee Jung-jae as Major Shareholder' Entertainment Agency Wins Second Trial in 4.4 Billion Won Damages Lawsuit

Artist Company, Largest Shareholder Lee Jung-jae,

Partially Wins Damages Lawsuit Again in Appellate Court

Actor Lee Jung-jae, who is the largest shareholder of the entertainment agency "Artist Company," has partially won in the appellate court in a damages lawsuit filed against the former CEO of drama production company "Raemongraein," which has been embroiled in a management rights dispute.

Actor Lee Jungjae. Shinyoungkyun Arts and Culture Foundation

According to legal sources on September 12, the Seoul High Court's 16-2 Civil Division recently ruled in favor of Artist Company, Lee Jung-jae, and others in their claim for damages against Kim Dongrae, former CEO of Raemongraein (now Artist Studio), upholding the original court's decision to partially side with the plaintiffs.

The court ordered former CEO Kim to pay approximately 2.779 billion won to Artist Company, approximately 749 million won to Lee Jung-jae, and a combined total of approximately 899 million won to the remaining two plaintiffs.

All the plaintiffs were investors in Raemongraein. Through a paid-in capital increase in March 2024, Artist Company obtained an 18.44% stake in Raemongraein, becoming its largest shareholder. However, conflicts soon arose over the company's management direction with Kim, the founding CEO. In June of that year, the plaintiffs filed a damages lawsuit, asserting that "former CEO Kim was not responding to investor demands and was blocking their participation in management."

Kim's side argued that "Artist Company attempted to use the investment funds for purposes differing from the original plan, such as acquiring a listed entertainment company under trading suspension," and claimed that Artist Company had breached the contract.

The first-instance court judged that former CEO Kim had breached his obligations under the investment contract by dismissing all registered directors and auditors of Raemongraein and was thus responsible for failing to fulfill his duties, which included continuing the existing business operations until new directors were appointed. Accordingly, it ruled that Kim must pay the plaintiffs approximately 4.4 billion won, including penalties for breach and litigation costs. Previously, Artist Company and others had claimed a total of approximately 5.7 billion won in damages and penalties based on a breach of the investment contract; however, the court did not recognize claims for interest on investment amounts, compensation for director remuneration, or consolation money.

In the appellate trial, Kim's side argued that the clause regarding the resignation of existing directors and auditors was only a secondary obligation under the investment contract and that there was therefore no liability for breach. Nevertheless, the appellate court maintained the first-instance decision, dismissing appeals from both parties.

Both sides have filed a further appeal to the Supreme Court this month.

Meanwhile, Raemongraein is a media content production specialist listed on KOSDAQ since 2021 and has been involved in the production of titles such as "Sungkyunkwan Scandal" (2010) and "Reborn Rich" (2022).

This content was produced with the assistance of AI translation services.