The Wonderful World of Rose-Colored Spin

The Episcopal "Diocese" of San Joaquin (which is not yet an official diocese of the Episcopal Church, for reasons explained here) has put out a press release concerning a recent Stipulation approved in an Order issued by the Fresno County Superior Court in the pending litigation between TEC, Bishop Lamb, and Bishop Schofield. The press release, as most such one-sided documents are intended to do, tries to put a positive spin on what was actually a refreshingly pragmatic solution arrived at between the parties, but only after a good deal of initial resistance from the TEC side.

Before I deal with what the release says, let me give some background to the unusual situation which this Stipulation and Order address. As noted in earlier posts, the Episcopal "Diocese", Bishop Lamb, and TEC joined in a lawsuit filed in April 2008 against Bishop Schofield (whom the plaintiffs refused to title as a "bishop" in their pleadings) and various diocesan trust fund entities, who, they alleged, had absconded with buildings, properties and bank accounts which belonged to them, the plaintiffs. In a tactic designed solely to turn up the heat on the defendants, the plaintiffs amended their lawsuit in May to name as an additional defendant the brokerage firm of Merrill Lynch, with whom Bishop Schofield and the trust entities had invested their funds. In response to being sued, Merrill Lynch placed a hold, or "freeze", on some 33 different investment accounts maintained with it by the defendants (and others who were not defendants).

In describing the assets they were claiming title to in their amended complaint, Bishop Lamb and his co-plaintiffs named four accounts maintained with Merrill Lynch by individual congregations and organizations whom they had not named as defendants: St. John's in Tulare, St. John's in Porterville, St. James's Cathedral in Fresno, and the Episcopal Conference Center in Oakhurst ("ECCO"). Normal legal procedure would have required the plaintiffs first to name these parties in the action, then to give them prior notice that they would be applying to the Court for an order attaching their Merrill Lynch accounts, and thus to give them an opportunity to be heard as to why such an attachment order should not issue.

But this is The Episcopal Church of which we are speaking. Ordinary laws and rules simply do not apply to it. The details are shrouded for the time being, but the facts are that TEC had but to name Merrill Lynch in its complaint, and Merrill Lynch immediately cooperated by freezing its clients' accounts---even the accounts of those whom TEC had not named as defendants.

The consequences of Merrill Lynch's unilateral action for innocent bystanders like ECCO was disastrous. As you can see from the ECCO Budget which is attached to the Stipulation, the summer months are precisely the time when ECCO realizes its greatest revenues. But the freeze imposed by Merrill Lynch at the instigation of TEC meant that ECCO could not write a single check to pay expenses on its Merrill Lynch account---and expect that check to be honored. The Conference Center, as I stress, is an innocent bystander in all of the brouhaha. Until recently, the dispute between TEC and Bishop Schofield had not affected its operations in the slightest. Moreover, ECCO offers its facilities on an equal basis, first come first serve, to those in TEC and without. As Bishop Lamb acknowledges in the press release, its ministry is "critical." So why should the Episcopal "Diocese" of San Joaquin threaten to shut it down? Indeed---please read on.

Now, suitably informed, we may take up the "Diocese's" press release. Here starts a fisking, by way of rebuttal to the "spin" it tries to apply to the facts. (Think of this as an "annotated version", such as Harper's Magazine regularly provides to its readers.) The first thing to note is the outrageously slanted headline:

Court maintains freeze on Episcopal Diocesan accounts pending litigation

To suggest, as this headline does, that the Court was "maintaining" a freeze is to engage in sophistry for the sole purpose gaining a PR advantage. The freeze, as I said above, was unilaterally imposed by the pusillanimous Merrill Lynch in response to being sued by one of its major clients, The Episcopal Church. [UPDATE 08/27/2008: This article and this article attest to the fact that TEC maintained accounts at Merrill Lynch when its former treasurer, Ellen Cooke, managed to embezzle $2.2 million in Church funds by transferring them, in part, into her own personal account at Merrill Lynch. Whether that is still the case remains to be seen, but certainly the brokerage house's conduct in this instance supports that assumption.] To avoid the risk of offending a major client, as I suspect, Merrill Lynch chose to inconvenience what it regarded as pipsqueak investors who could not mount a meaningful counteroffensive. This would include clients like St. John's in Tulare, who was trying its level best to remain within TEC while discerning the proper path for it to tread amidst all the minefields being laid for it. Merrill Lynch, however, could not even be bothered to inquire into the view of St. John's. It was enough to take TEC's unsworn word that its account must be frozen. By such a cowardly act, Merrill Lynch spared TEC and Bishop Lamb the bother of applying to the court for an attachment order---which would have required TEC to post a bond to cover the amount of the funds being frozen. So make no mistake---given what TEC had impelled Merrill Lynch to do on its own, the parties simply sorted out what was practical under the circumstances. They looked at what would be required during the pendency of the litigation, and decided what they could accept. Rather than ordering on its own initiative that the freeze be maintained, the Court simply approved the terms on which the parties stipulated they would allow it to continue, pending the outcome of the lawsuit. (And because neither TEC nor Merrill Lynch included them in the discussions, the Stipulation does not cover four of the 33 accounts held in the names of the non-defendant St. John's Tulare, St. John's Porterville, and St. James's Fresno.)

Next, the release brags:

In April the Episcopal Diocese of San Joaquin filed a lawsuit to recover the property and the assets of the Diocese from its former bishop, John-David Schofield. As a result of this lawsuit several of the disputed investment accounts and related funds belonging to the Diocese were frozen.

As we have seen, the phrase "as a result" covers up a multitude of sins. The funds were not frozen in accordance with the procedures called for by statute, but solely because Merrill Lynch felt impelled by TEC's lawsuit to take an adverse stance against its small-fry investors. Oh, yes---that is certainly something to crow about, all right! And as we have also seen, it is not just the "accounts and related funds belonging to the Diocese" that were frozen: TEC deliberately attacked the funds of one of its own---St. John's in Tulare---as well, and sought by its allegations to halt the operations of the independent Conference Center at Oakhurst. Inexcusably, it failed to name those entities as parties to the lawsuit, but it still managed to tie up all their accounts with Merrill Lynch. (Welcome to the current world of TEC: if you're not with us, you're against us, and even if you're with us, we reserve the right to say you're against us.)

The press release continues its one-sided account:

In a hearing yesterday, the Court adopted a stipulation and ordered that these accounts may only be accessed with the consent of the Episcopal Diocese and/or by further order of the Court. Several of the affected accounts included those critical to the operations of the Evergreen Conference Center in Oakhurst (ECCO).

This is a gross oversimplification of the terms of the Stipulation, as anyone will discover who will take the trouble to follow the link and read. The fact is that the Stipulation allows the appropriate officers at ECCO to continue to write checks as they have in the past, and to pay expenses in accordance with the annual budget that ECCO adopted, without any further input, or "consent", by the "Episcopal Diocese."

The hypocrisy of the press release mounts when it claims (emphasis added):

Bishop Jerry Lamb called the continuation of ECCO’s ministry “critical.” At the direction of the Episcopal Diocesan Council, the Chancellor for the Diocese and attorneys for the Episcopal Church contacted Mr. Schofield’s attorneys to negotiate terms for interim access to funds to support camp operations, including staff salaries, daily operations and certain capital improvements. . . .

Bishop Lamb must not have communicated his concerns about the continued operation of ECCO to his attorneys very well. For the facts are these:

1. With the ECCO accounts frozen along with all the others, TEC and Bishop Lamb were prepared to let that situation continue while TEC decided just how it would amend again its already amended complaint. The defendants had noticed demurrers to the amended complaint (which tested its legal sufficiency), which the Court had set for hearing on August 25. But rather than get a ruling from the Court that their complaint was insufficient, TEC and Bishop Lamb stipulated that they would file a second amended complaint by September 15. (Their press release says nothing about that stipulation.)
2. The Court, in a minute order entered on July 15, had ordered the parties to "meet and confer regarding the treatment of the Merrill Lynch accounts pending litigation and to discuss proxy/joinder of necessary parties." So far from TEC/Bishop Lamb's attorneys "contacting" Bishop Schofield's attorneys, the discussions---especially regarding ECCO, whose needs were indeed "critical," as Bishop Lamb admits---were initiated by the Chancellor for Bishop Schofield's Diocese, who put forward to TEC's and Bishop Lamb's attorneys concrete and specific proposals to deal with the ECCO accounts, as well as all of the other ones pertaining to the named defendants. (Notice again how TEC persists in referring to the Rt. Rev. John-David Schofield, a duly accepted member of the House of Bishops of the Anglican Province of the Southern Cone, as "Mr. Schofield"---as though it could thereby legitimize its illegal deposition of him.)
3. To ensure that there would be some kind of court ruling allowing ECCO to operate, Bishop Schofield's Chancellor filed with the Court on August 6, 2008 a "Request for Instructions" to Merrill Lynch, which consisted largely of the same terms eventually agreed to in the Stipulation, and which was noticed for hearing on August 25, when the parties would be in Court for the Case Management Conference, at which the Court would set the case for trial.
4. Instead of agreeing at once to the proposed terms for the ECCO accounts, TEC and Bishop Lamb filed with the Court on August 19 their opposition to the Request for Instructions, in which they argued (among other things) that the Request was filed too late and should not be heard, that there was no urgency about ECCO (+Jerry Lamb had not issued his statement yet), and that the defendants were not the appropriate people to speak on ECCO's behalf anyway. (Given that TEC and Bishop Lamb had not seen fit to name or join ECCO in the lawsuit, one can only wonder as to who should speak for ECCO, in their view---certainly they were not doing so. As of August 19, TEC and Bishop Lamb, according to their attorneys, at any rate, were content to see ECCO shut down altogether.)
5. The Stipulation was worked out only on the day of the hearing itself, on August 25, after Bishop Schofield and his attorneys had pointed out the hypocrisy in the position that TEC and Bishop Lamb were taking before the Court. Far from being a suggestion that originated with the latter, it was something that they agreed to only when faced with the prospect that the Court might be presented with ECCO's collapse as a consequence of their refusal to negotiate.

The one statement in the TEC/Bishop Lamb press release that is the unvarnished truth is this last, at the very end:

The Court has set a tentative date of August 24, 2009 to hear the lawsuit.

By that time, of course, TEC and Bishop Lamb will have had to demonstrate to the Court that they are legitimate parties to present a complaint against Bishop Schofield's and his diocese's departure from TEC. For all the reasons explained in my earlier posts on this subject (see the Guide to This Site; Topic: The Situation in San Joaquin), they face, in my view, an uphill battle on that score. But you will not learn that from reading their press releases.