Filed 10/19/21 Christian Educational Institute v. The Christian Herald CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

CHRISTIAN EDUCATIONAL 

INSTITUTE (CEI),

Plaintiff and Respondent,

v.

THE CHRISTIAN HERALD, 

INC. et al.,

Defendants and 

Appellants.

 B302175

 (Los Angeles County

 Super. Ct. No. BC645557)

APPEAL from a judgment of the Superior Court of Los 

Angeles County, Michael L. Stern, Judge. Reversed with 

directions.

Law Offices of Marc Gans and Marc Gans for Defendants

and Appellants.

Law Offices of Negin Yamini and Negin Yamini for Plaintiff 

and Respondent.
2

__________________________

The Christian Herald, Inc. (the Herald) and its chief 

executive officer Alex Jun Ho Yang (collectively, the Herald 

defendants) appeal from a judgment after a jury trial in favor of 

Christian Educational Institute (CEI). CEI filed this fraud action 

after the Herald defendants cancelled a contract to sell CEI the 

Herald, a non-profit religious corporation engaged in media 

broadcasting. The jury found in a special verdict that the Herald 

defendants intentionally misrepresented to CEI that a non-profit 

religious organization could be sold so they could induce CEI to 

spend $400,000 on a fruitless acquisition.

On appeal, the Herald defendants contend the 

misrepresentation at issue—their assurance to CEI that “‘[in] 

this country, you can sell [a] church. So how could there be any 

problem?’”—was a representation of law, not of fact, and 

therefore cannot provide the basis for a fraud claim.

1 We agree

with the Herald defendants and reverse the judgment.

1 The Herald defendants also assert on appeal that the jury 

finding that CEI reasonably relied on the Herald defendants’ 

misrepresentation was not supported by substantial evidence; the 

special verdict findings on intentional misrepresentation and 

fraudulent omission were inconsistent; the trial court erred in 

admitting evidence of checks written to the Herald defendants by 

nonparty affiliates of CEI; the compensatory damages award

erroneously included payments from the Herald to Yang; and the 

punitive damages award against Yang was not supported by 

evidence of Yang’s ability to pay. Because we agree the judgment 

is based on a misrepresentation of law, we do not reach these 

contentions.
3

FACTUAL AND PROCEDURAL BACKGROUND

A. CEI’s Acquisition of the Herald2

The Herald is a nonprofit religious corporation that 

operates a Korean-language newspaper, television station, radio 

station, and website focused on Christian programming. Yang 

acquired the Herald in 2012 and served as its chairman and chief 

executive officer. Yang spent more than $2 million of his own 

money on the Herald’s operations and developed its television 

business, but by 2015 or 2016 Yang wanted to sell the company

because it operated at a continual deficit, and Yang could no 

longer afford to support its operations.

CEI is a nonprofit religious corporation formed in 2016 by 

Reverend John Hoon Lee (Reverend Lee) and Ki Hyung Song. 

Reverend Lee died in 2018 and was succeeded by Song as CEI’s 

chief executive officer. Reverend Lee and Song met in the 

seminary and decided to establish an online Christian college. 

Song discussed the plan with Nam Soo Choi, another

acquaintance from the seminary who had previously worked as a 

sound engineer at the Herald, and Choi suggested CEI purchase 

the Herald to make use of its existing broadcast operations. Choi 

in turn discussed the idea with Alex Lee (Lee), a licensed real

estate agent who also had worked at the Herald in advertising.

Lee arranged a meeting in which he participated with 

Reverend Lee, Song, and Yang to discuss a possible acquisition of 

the Herald. The meeting took place at a hotel in Koreatown, Los 

Angeles in May or June 2016. The witnesses at trial gave 

2 Our summary of the facts is based on the testimony and

exhibits at trial.
4

different accounts of what was discussed at the meeting. Song 

testified that he asked Yang and Lee, “‘Is there any other 

problem in purchasing this company?’” Yang or Lee responded,

“‘The U.S. is a free country. This country, you can sell [a] church, 

as well. So how could there be any problem?’” Although Song 

was not initially sure whether Yang or Lee made the statement, 

Song later testified it was Lee.

3 Song was not aware at the time 

that a nonprofit religious corporation has no owner and could not

be sold, and he trusted Yang and Lee.

Yang testified he was aware the Herald, as a nonprofit 

organization, could not be sold. According to Yang, “the first 

thing I mentioned was, it was a nonprofit. And I asked, ‘This is 

[a] nonprofit, so how are you going to handle in terms of buying 

and selling?’” Reverend Lee responded to Yang that “he had a 

nonprofit organization himself. So he knows what to do.” Lee 

testified he also knew at the time of the meeting that a nonprofit 

could not be sold, but he left the meeting after lunch. The parties 

only exchanged pleasantries at lunch, not the terms of a sale. He 

explained it was a Korean custom not to discuss business during

lunch.

In June and July 2016 the parties negotiated the terms of

an agreement for CEI to buy the Herald from Yang. Song 

testified the final agreement reflected the input of Reverend Lee, 

Song, Yang, and Lee; Choi also advised Song with respect to the 

transaction. CEI did not seek the advice of a lawyer; it did not 

receive any profit or loss statements for the Herald; and it did not

3 Later in his testimony Song provided another version of 

Lee’s statement: “‘[The] U.S. is so free, you can sell churches if 

you want to. What problem would there be?’”
5

investigate the Herald’s nonprofit registration or broadcasting 

permits. 

On July 29, 2016 the parties executed a “Sales Contract” 

stating, “[The] purpose of this contract is for [CEI] to take over 

from [the Herald defendants] ownership of ‘The Christian Herald 

USA—TV, newspaper, radio’ . . . and at the same time for [CEI] 

to exercise the obligation, rights and management of [the 

Herald].”4 The contract deliverables were defined to include 

“Christian Herald USA—TV, newspaper, radio, internet 

homepage, app, etc.” plus “[a]ny asset or real property” and “any 

contract” in the name of the Herald, and “any financial asset and 

financial liability.” The contract provided for three installment 

payments totaling $400,000, including a $100,000 down payment 

upon execution, a $200,000 payment due on September 30, 2016, 

and a final payment of $100,000 after the Herald defendants

made “best effort[s]” to change the Herald’s digital television 

channel. The contract provided the “[p]eriod of takeover shall be 

up to the 2nd payment date,” and the Herald defendants would 

“maintain the current title until the 2nd and 3rd payments for 

the agreed amount are paid on the agreed date.” The Herald 

defendants were authorized unilaterally to cancel the contract 

“[i]f [the] contract amount and remaining balance are not paid in 

accordance with the contract” after providing two warning notices

and a final 15-day notice of cancellation.

CEI made the initial payment of $100,000; however, it 

failed to make the second installment payment of $200,000. 

Yang gave CEI two extensions, and when CEI failed to pay, on 

4 The executed sales contract is in Korean. The certified 

translation was admitted at trial.
6

November 7 Yang sent CEI notice of cancellation of the sale and 

locked CEI out of the Herald’s offices. Song admitted CEI did not 

pay the full second installment payment, but he testified CEI 

paid a total of $508,000 to the Herald defendants in connection 

with the acquisition, including partial purchase payments, 

funding for the Herald’s operations and broadcast fees, and 

payment for expense reimbursements claimed by Yang.

5

B. The Complaint and Trial

CEI filed this action on January 3, 2017. The operative 

second amended complaint asserted causes of action against the 

Herald defendants and their television subsidiary CHTV, Inc.,6 as 

well as Lee and his affiliated real estate agency, New Star Realty,

for intentional misrepresentation, negligent misrepresentation, 

fraudulent concealment, negligence, and unjust enrichment.7 

5 Checks admitted at trial show payments to the Herald 

defendants totaling approximately $352,000. The payments 

included checks written by entities that were not parties in the 

litigation. Song testified that at least one of the nonparty entities 

was owned by Reverend Lee’s wife; no evidence was presented as 

to the other nonparty entities.

6 Reverend Lee was a named plaintiff in the initial 

complaint, but not the operative second amended complaint. The

second amended complaint also named Choi as a defendant. The

record on appeal does not reflect the final resolution of the claims 

against CHTV, Inc. and Choi, but CHTV and Choi did not appear 

at trial and are not parties to this appeal.

7 The operative complaint alleged Lee was working in his 

real estate capacity as an agent for Yang. Although at trial Lee 

denied he was an agent for the Herald, the Herald defendants did 
7

The complaint also asserted a cause of action for breach of 

fiduciary duty against Lee and New Star Realty. The operative 

complaint alleged as to all causes of action that “[a]t all relevant 

times [Yang] and [Lee] fraudulently represented to [CEI] that 

non-profit organizations could be sold and ownership transferred 

through the [c]ontract dated July 29, 2016. At all times during 

the course of negotiations for the purchase of [the Herald], [CEI] 

relied on [Yang’s] and [Lee’s] representations that a non-profit 

organization could be sold and that the sale of the [Herald] and 

its subsidiaries would be valid.” However, “[a]t all times, [Yang] 

and [Lee] were fully aware that a non-profit organization could 

not be sold/transferred in the manner in which the Christian 

Herald was sold/transferred to [CEI]. [Yang]’s subterfuge was to 

gain the financial benefits of the sale of the [Herald] and then 

regain control of the [Herald] once the financial bounty was 

reaped.”

A six-day jury trial was held between July 22 and 29, 2019, 

with the trial bifurcated into liability and punitive damages 

phases. Song, Yang, Lee, and New Star broker Jenny Nam were 

the principal witnesses. After CEI presented its liability case, 

Lee and New Star Realty successfully moved for a directed 

verdict on all causes of action and were dismissed. The Herald 

defendants successfully moved for a directed verdict as to the 

causes of action for negligence and unjust enrichment.

8

not argue at trial Lee was not an agent of the Herald or that 

Lee’s misrepresentation should not be attributed to them.

8 The trial court also granted CEI’s motion for nonsuit as to a 

cross-complaint filed by the Herald defendants asserting causes 

of action for intentional and negligent misrepresentation.
8

On July 29, 2019 the jury returned a verdict for CEI on its 

claim for intentional misrepresentation, and for the Herald 

defendants on CEI’s claims for negligent misrepresentation and 

fraudulent concealment. In relevant part, the jury answered

“Yes” when asked on the special verdict form, “Did the Christian 

Herald, Inc. make a false representation of facts to Christian 

Education Institute?” and “Yes” when asked, “Did Christian 

Educational Institute reasonably rely on the representation of 

the Christian Herald, Inc.?”9 The jury also made findings Yang 

and the Herald engaged in conduct with malice, oppression, or 

fraud. The jury awarded CEI $416,421 in compensatory damages

and allocated responsibility 42.26% to the Herald and 57.74% to 

Yang.

On July 29, 2019 trial commenced on the punitive damages

phase. CEI did not introduce any additional evidence, and the 

case proceeded to closing arguments.

10 The jury awarded $36,000 

9 The jury was instructed on intentional misrepresentation 

with CACI No. 1900 as follows: “To establish this claim 

against . . . each such defendant, plaintiff must prove all of the 

following for each defendant: [¶] One, that [the Herald 

defendants] represented to [CEI] that a fact was true. [¶] Two, 

that [the Herald defendants’] representation was false. [¶] 

Three, that [the Herald defendants] knew that the representation 

was false when [they] made it, or that [they] made the 

representation recklessly and without regard for its 

truth. [¶] . . . [¶] Four, that [the Herald defendants] intended 

that [CEI] rely on the representation.” The jury on its special 

verdict form found CEI proved each element.

10 The Herald defendants objected to the trial continuing as to 

punitive damages in the absence of financial documentation of 

the Herald defendants’ ability to pay, but the court allowed the 
9

in punitive damages against Yang and no punitive damages 

against the Herald.

The Herald defendants subsequently filed motions for 

judgment notwithstanding the verdict and for a new trial. They 

argued substantial evidence did not support the jury’s finding 

that CEI reasonably relied on the misrepresentation, asserting

“this was an arm[’]s-length business transaction,” “[t]here was no 

special relationship” between the parties, and “[a]ny reasonable 

business entity or person would have conducted its own research 

as to the legality of the very transaction it was attempting to 

undertake.” The Herald defendants highlighted that CEI did not 

consult any experts or conduct due diligence, instead relying on 

amateur advice from Choi, and CEI failed to consider the 

Herald’s corporate registration identifying it as a non-profit 

religious corporation “not organized for the private gain of any 

person.” The Herald defendants did not argue the 

misrepresentation was a nonactionable representation of law.

11

After a hearing, on September 27, 2019 the trial court 

denied the Herald defendants’ posttrial motions. On August 6, 

2019 the trial court entered judgment for CEI. The Herald 

defendants timely appealed from the judgment.

punitive damages phase to proceed. The only evidence presented 

at trial arguably relating to ability to pay was Yang’s testimony 

during the liability phase that he owned a shopping center and 

had spent $2 million subsidizing the Herald. 

11 Although it is unusual the Herald defendants did not argue 

in the trial court that the alleged fraudulent misrepresentation 

was not actionable because it was a representation of law, CEI 

does not on appeal argue forfeiture or waiver.
10

DISCUSSION

A. Governing Law and Standard of Review

“The essential elements of a count for intentional 

misrepresentation are (1) a misrepresentation, (2) knowledge of 

falsity, (3) intent to induce reliance, (4) actual and justifiable 

reliance, and (5) resulting damage.” (Chapman v. Skype Inc.

(2013) 220 Cal.App.4th 217, 230-231; accord, Lazar v. Superior 

Court (1996) 12 Cal.4th 631, 638; see Civil Code §§ 1709, 1710.) 

“[T]he representation must ordinarily be an affirmation of fact. 

[Citation.] A misrepresentation of law is ordinarily not 

actionable in the absence of a confidential relationship or other 

special circumstance. [Citation.] The theory is either that 

everyone is bound to know the law, or that a statement regarding 

the law is a mere opinion on which one may not rely.” (Cicone v. 

URS Corp. (1986) 183 Cal.App.3d 194, 202; accord, Seeger v. 

Odell (1941) 18 Cal.2d 409, 414 (Seeger) [plaintiff “may not 

justifiably rely upon mere statements of opinion, including legal 

conclusions drawn from a true state of facts [citations] unless the 

person expressing the opinion purports to have expert knowledge 

concerning the matter or occupies a position of confidence and 

trust”]; Regus v. Schartkoff (1957) 156 Cal.App.2d 382, 388 [“The 

general rule is that a misrepresentation of law is not actionable 

fraud. That is, a representation of law by a layman not occupying 

a confidential relationship toward the one to whom it is 

addressed and based on facts equally known or accessible to both 

does not ordinarily justify reliance on the representation.”]; 

Agnew v. Foell (1952) 113 Cal.App.2d 575, 577 [“a legal opinion 

by a layman cannot constitute the basis of recovery for fraud”].) 

An exception exists “where the party expressing the opinion, 
11

having had superior means of information, possesses a knowledge 

of the law and thereby gains an unconscionable advantage over 

one who is ignorant and has not been in a situation to become 

informed.” (Regus, at p. 388.)

The primary issue in this appeal is whether the Herald 

defendants’ misrepresentation that CEI could buy a church (and 

thus a nonprofit religious corporation) was a statement of fact or 

a legal opinion, that is, whether the misrepresentation supported 

the jury’s finding the Herald defendants made a “false 

representation of facts” to CEI. Although we ordinarily review a 

jury’s special verdict findings for substantial evidence, because 

the Herald defendants do not dispute the substance of the 

representation, we review the question whether the 

representation was one of fact or law de novo. (See Boling v. 

Public Employment Relations Bd. (2018) 5 Cal.5th 898, 912 [“the 

application of law to undisputed facts ordinarily presents a legal 

question that is reviewed de novo”]; Crocker National Bank v. 

City and County of San Francisco (1989) 49 Cal.3d 881, 888

[because question whether a computer component constituted a 

“fixture” for property-tax purposes required “a critical 

consideration, in a factual context, of legal principles and their 

underlying values,” the question is “predominantly legal and its 

determination is reviewed independently”].)

B. The Herald Defendants’ Misrepresentation of Law Does Not 

Support the Jury’s Verdict

CEI adduced only one misrepresentation at trial to support 

its fraud claims: when Song asked at the initial meeting of the 

parties whether there would be any problem with CEI purchasing 

the Herald from Yang, Lee responded, “‘The U.S. is a free 
12

country. This country, you can sell [a] church, as well. So how 

could there be any problem?’” Insofar as this was a 

misrepresentation (which the Herald defendants do not dispute), 

it was a misrepresentation of law—namely, an assurance that it 

is legal to sell a nonprofit religious corporation (the equivalent of 

a church) in the United States.

12 CEI does not contend, nor does 

the evidence support a finding, that one of the exceptions to the 

general rule that representations of law are nonactionable 

applies here: it is undisputed the representation was made by a 

layman (Lee) who was not in a confidential relationship with the 

recipient of the representation (Song), and it was based on facts 

equally known or accessible to Lee and Song. (Regus v. 

Schartkoff, supra, 156 Cal.App.2d at p. 388.)

Zeh v. Alameda Community Hotel Corp. (1932) 

122 Cal.App. 366, cited by the Herald defendants, is directly on 

point. There, an agent acting for a hotel developer represented to 

a potential investor that preferred stock in the hotel would pay 

interest, although under California law preferred stock cannot. 

(Id. at pp. 367-369.) Affirming dismissal of the investor’s claim

for rescission upon fraud, the Court of Appeal explained, “Any 

statements made as to payment of interest upon this stock, and 

the provisions of the stock certificates in this respect, were 

misrepresentations of law. It is well settled that such 

misrepresentations, at least where there is no relation of trust or 

confidence between the parties, do not amount to fraud.” (Id. at 

p. 369.) The court reasoned, “The allegation of the complaint in 

the instant case that ‘the plaintiff is a woman unfamiliar with the 

12 We do not reach the Herald defendants’ argument the 

misrepresentation was not actionable because it was puffery.
13

difference between interest and dividends’ shows clearly that the 

gravamen of her complaint is ignorance of the law, upon which 

she had no right to rely. The truth or falsity of such 

representations could have been tested by ordinary vigilance and 

attention. The law is presumed to be equally within the 

knowledge of all parties. There is no allegation of any 

confidential or fiduciary relations between the parties hereto.” 

(Ibid.) So too here, the gravamen of CEI’s claim is that despite 

itself being a nonprofit religious corporation involved in an arm’slength negotiation of a $400,000 acquisition over a two-month 

period, CEI was ignorant of the laws governing transactions 

involving nonprofit religious corporations and acted in total 

reliance on Lee’s assurance that even churches can be sold in the 

United States.

The Supreme Court’s decision in Haviland v. Southern 

California Edison Co. (1916) 172 Cal. 601, upon which the Zeh

court relied, is also instructive. There, an electric utility obtained 

a liability release from an injured lineman by telling the lineman 

and his wife the release “was a mere matter of form, which he 

had to sign in order to be placed on the pay[]roll, and that if he 

did sign it he would receive $42 on account of wages for July (he 

had not been working during that month), and would be kept on 

the pay[]roll until able to work.” (Id. at p. 608.) The Supreme 

Court held the trial court erred in instructing the jury that a 

waiver obtained by fraud is void, explaining, “Assuming that 

these representations were made by [defendant], their making 

did not constitute fraud in the legal sense. They were not 

statements of fact, but at most misrepresentations of law. . . . 

Whether the true ground for the rule be that everyone is 

presumed (or, rather, bound) to know the law, or that a 
14

representation regarding the law constitutes an expression of 

opinion upon which the party to whom it is addressed has no 

right to rely, the rule itself is thoroughly well settled.” (Id. at 

pp. 608-609.)

CEI relies on Seeger, supra, 18 Cal.2d at page 416 for the 

proposition that “a false statement of fact . . . is not rendered less 

actionable because it also contained legal conclusions.” CEI 

argues, “Alex Lee’s intentionally false legal representation that a 

nonprofit organization could be sold was based on the knowingly 

false premise that, in a free country such as the [U.S.], anything 

could be sold. Hence, not only was the legal conclusion relayed by 

Alex Lee an intentional misrepresentation, but the purported fact 

on which it was based—that in a free country anything could be 

sold—was knowingly false as well.” This bootstrap argument 

fails: the only misrepresentation at issue here was that a church 

can be sold in the United States. The fact the premise of Lee’s

statement was a fact (that anything can be sold in the United 

States) does not change the misrepresentation to one of fact. 

Moreover, Seeger is distinguishable. The Supreme Court in 

Seeger held an attorney’s false representation to property owners 

who had defaulted on their mortgage that a levy and sale of their 

property had occurred, made to induce them to agree to lease 

their property for oil drilling so they would “receive some return 

from the land out of which they would otherwise get nothing,” 

was a false statement of fact, notwithstanding that it related to 

the legal status of their property, and their examination of public 

records “would have revealed to plaintiffs the falsity of the 

representation.” (Seeger, at pp. 413, 415.)

Bobak v. Mackey (1951) 107 Cal.App.2d 55, also relied on 

by CEI, is likewise distinguishable. In that case, the defendant 
15

vendor of real property falsely represented to the buyer that the 

property at issue was located in a light manufacturing zone, 

when in fact it was located in a different zone where such 

manufacturing was prohibited. (Id. at pp. 56-57.) Rejecting the 

vendor’s appeal from the judgment for fraud, the Court of Appeal 

reasoned, “Such a statement, if made, and relied upon by the 

purchaser is as much a representation of fact as would be a 

statement that the premises involved were within the corporate 

limits of Los Angeles, when they were not, or that they abutted 

on a certain named thoroughfare in Los Angeles, when they did 

not. In each of these examples the facts represented come about 

by reason of law. But the facts as stated are not for that reason 

misrepresentations of law, but on the contrary of facts. The same 

is true here. . . . [¶] The representation was not a mere 

misrepresentation of law, i.e., the classification made by the law, 

but of the fact that the property lay within a zone of a particular 

character . . . .” (Id. at p. 57.) By contrast, Lee’s pronouncement 

that anything can be sold in the United States, including a 

church, is a “classification made by law” about types of 

businesses that can be sold, not, for example, a misrepresentation 

about the Herald’s corporate status as a nonprofit corporation, 

which was undisputed.
16

DISPOSITION

The judgment for CEI is reversed. The case is remanded to 

the trial court for entry of a new judgment in favor of the Herald 

defendants on CEI’s cause of action for intentional 

misrepresentation. The Herald defendants are to recover their 

costs on appeal.

FEUER, J.

We concur:

SEGAL, Acting P. J.

IBARRA, J.*

* Judge of the Santa Clara County Superior Court, assigned 

by the Chief Justice pursuant to article VI, section 6 of the 

California Constitution.