Page 1
Court of Appeal:
Church Cannot Oust Leadership Faction, Then Sue Ejected Members’ Attorneys
Opinion Says Lawyer for Expelled Parties Owes No Fiduciary Duty to Organization Despite Purporting to Represent It in Litigation
By a MetNews Staff Writer
Div. Two of this district’s Court of Appeal has held that an organization cannot have it both ways by successfully ousting a faction from control and then turning around and suing the rogue board’s attorneys—who were retained by the illegitimate leadership—for malpractice and breach of fiduciary duty although they never authorized to represent the religious institution by an actual officer.
The decision follows earlier litigation between the Los Angeles Dong San Church Corporation (“LADSC”) and its former pastor, Young Chung Park, over a bid by Park to withdraw the church from the Korean Methodist Church (“KMC”) and the Korean Methodist Church of the Americas (“KMCA”).
In March 2017, LADSC filed suit against Park and two church officers seeking to void the withdrawal and affirm control of the church by KMC and KMCA. The complaint lists LADSC as both a plaintiff and a defendant due to the defendants purporting to act on behalf of the church in attempting to exit from the KMC and KMCA.
On Dec. 14, 2017, Los Angeles Superior Court Judge Barbara Meiers granted a preliminary injunction in favor of the plaintiffs, ousting the defendants from the church.
In January 2018, Dana Moon and Jeffrey Dorsett, partners in the downtown Los Angeles firm of Moon & Dorsett P.C., and a then-associate in that firm, Mark Hu (now with Legal Aid Foundation of Los Angeles), substituted in as counsel for the ousted members. LADSC was successful in its suit and the faction members were ordered to return to LADSC any church property in their possession.
Moon & Dorsett represented the defendants in their unsuccessful appeal from the September 2018 judgment.
Malpractice Action
In October 2021, LADSC filed a complaint against Moon and Dorsett, their firm, and Hu, asserting causes of action for breach of fiduciary duty, legal malpractice, and conversion. LADSC alleged that because Moon & Dorsett and the individual lawyers purported to represent LADSC in the faction control case, they owed LADSC a fiduciary duty which was breached by representing both the church and the ousted members.
The church also claimed that the attorneys conspired with Park to convert and exercise unlawful dominion over certain personal property belonging to the church.
On Nov. 14, 2022, Meiers sustained a demurrer as to all causes of action without leave to amend. Meiers observed:
“[T]he plaintiff is contending, when you come right down to it. that when there is a split and disagreement such as this, and ostensibly, in any other similar scenario, where one faction reflects in the caption of its suit or its answer that it is claiming to act ‘for the corporation’ by bringing the suit or the response ‘in the name of the corporation or partnership’ and the other claims the same, when it is all over, the attorneys who represented the losing side are to be held liable for representing that losing side and for assisting in the suit or the defense.”
She remarked:
“This is a rather ‘cute’ idea and argument, all about how ‘there is but one entity’ so there is a conflict of interest if you purport to act for it when those who have hired you to do so were wrong, and this means that you breached your fiduciary duties to the ‘real’ Church or corporation, etc., but that is all that it is, ‘cute thinking’ but violative of the law and of common sense and of public policy.”
Final judgment in favor of the defendants was entered on Nov. 16, 2022.
Justice Victoria M. Chavez authored the unpublished opinion, filed Tuesday, affirming the judgment. Acting Presiding Justice Judith Ashmann-Gerst and Justice Brian M. Hoffstadt joined in the opinion.
Fiduciary Duty Breach
Chavez pointed out that the three elements of a breach of fiduciary duty claim are the existence of a fiduciary relationship, the breach of that duty, and damages. She noted that the complaint alleges that when the attorneys substituted into the action “the substitution was signed by a member of the rogue, unauthorized board….Therefore, [they were] never authorized at any time to act as attorneys of record for [LADSC].”
Finding this admission to be dispositive, the justice wrote:
“Because respondents were never authorized to represent LADSC by a legitimate member of LADSC’s board, respondents never had a fiduciary relationship with LADSC. Thus, LADSC has not made allegations sufficient to meet the first element of its cause of action for breach of fiduciary duty against respondents, and the cause of action fails as a matter of law.”
Turning to the legal malpractice cause of action, she reasoned that “LADSC’s allegations for legal malpractice suffer from the same omissions as its allegations for breach of fiduciary duty.” She wrote:
“LADSC never authorized respondents to represent LADSC, therefore there was no attorney-client relationship between the two. The substitution of attorney which purported to begin respondents’ representation of the rogue LADSC was authorized by Pastor Park who had already been ordered, via injunction, to cease acting for LADSC. The substitution of attorney did not create an attorney-client relationship between respondents and LADSC.”
Chavez continued:
“Respondents held themselves out to represent the withdrawing faction of LADSC, which was ultimately determined not to be legitimate. Under the circumstances, there was no attorney-client relationship between respondents and LADSC, and LADSC cannot maintain an action for legal malpractice against respondents.”
Purported Representation
LADSC asserts that the firm continued to purport to represent the church on appeal after the Park and his co-defendants appealed from the final judgment in the faction case, despite an order prohibiting the attorneys from representing the organization in the Superior Court.
She opined:
“Respondents did not violate the trial court’s order prohibiting respondents from representing LADSC. The trial court’s order specified, ‘the Moon/ Dorsett firm cannot continue to represent, or more accurately purport to represent [LADSC] in this court.’ (Italics added.) The trial court limited its order to that specific court. It did not prohibit respondents from representing LADSC in any other court. Therefore, respondents were not prohibited from representing the withdrawing faction, and the illegitimate church the withdrawing faction purported to represent, in the appeal from the trial court judgment.”
As to the conversion claim, the jurist concluded that “[t]he return of property to LADSC has been fully litigated in the faction control case and is now res judicata.”
The case is Los Angeles Dong San Church Corporation v. Moon, B325926.
Mid-Wilshire attorney Henry M. Lee represented the church on appeal. Beverly Hills lawyer Jason William Shim, of Shim & Park APLC, acted for the defendant/respondents, though no mention is made in the appellate briefs of Hu who apparently did not participate.
Copyright 2024, Metropolitan News Company