U.S. Supreme Court Could Be Asked to Overturn California Decision

PLEASE NOTE THE "IMPORTANT UPDATE" BELOW. The date by which to file a petition for review of the California Supreme Court's decision with the U.S. Supreme Court is May 26, 2009, for the reasons explained below.

This will be a post for attorneys and those of a similar bent of mind, who would genuinely like to understand the issues with the California Supreme Court's recent decision in The Episcopal Church Cases, 45 Cal.4th 467 (2009), and how they relate to a possible petition for review at this time to the United States Supreme Court. The decision was originally issued on January 5, 2009. Parties ordinarily have 90 days in which to ask the Supreme Court to review a State court decision. There is an exception if the State court grants a petition for rehearing and modifies its earlier decision; then the 90 days runs from the date of the modification.

In this instance, the defendant parish of St. James, Newport Beach, filed a timely petition for rehearing with the California Supreme Court, asking it to clarify its earlier ruling. The Supreme Court on February 25, 2009 issued an order denying the petition, but nevertheless correcting its decision. It included the express statement at the end: "this modification does not affect the judgment." Although that was its view of the matter, the Court was going out of its way to make it appear as though there was nothing wrong with its earlier judgment. In truth, that judgment was procedurally very much in error, since it had purported to decide the entire case "on the merits"---a phrase used when a court issues a final decision disposing of all the issues presented by the case.

Such a decision, however, was procedurally impossible for it to issue, given the posture of the case as it came before it for review. All that had happened in the trial court was that the Diocese of Los Angeles and the Episcopal Church (USA) had each filed and served their initial complaints on St. James, Newport Beach. The parish had succeeded in having the trial court strike them, on the grounds that they were substantively insufficient (in the case of ECUSA) and improper (in the case of the Diocese). Thus the parish had never filed any kind of answer to the complaints when the case went up on appeal from the decision dismissing those complaints as a matter of law.

The Court of Appeal reversed the orders striking the complaints, and the Supreme Court affirmed the decision of the Court of Appeal (albeit for slightly different reasons). What this meant in practice was that the case had to be returned to the trial court for the parish to answer the complaints. The California Supreme Court unaccountably ignored this basic fact, however, and said it was deciding the case "on the merits". Well, even if you are the Supreme Court of California, you do not get to decide a case on the merits before the other side has had an opportunity to answer the complaint. So the Court was wrong, plainly and simply, and the gracious thing for it to have done would have been to admit its mistake, modify the earlier opinion accordingly, and send it back to the trial court.

But the Court could not bring itself to admit it had committed such an elementary procedural error. In a brief unsigned order (so no one Justice would have to take the blame), the Court pretended to deny the petition for rehearing, changed the minimum language it could get away with, and then concluded: "This modification does not affect the judgment."

In truth, however, the Court had granted the petition for rehearing, which had requested it to make clear that it was not issuing, and could not issue at that point, a final judgment. That is exactly what the court did with its order: it changed certain words in the prior opinion to make it clear that "on this record"---i.e., on the posture of the case as it came before the Court---it was not purporting to decide the merits, but was merely affirming the judgment of the Court of Appeal as to the sufficiency of the complaints---on paper. That meant the case had to go back to the trial court for further proceedings, once the defendants answered the complaints.

But the Court expressly stated, contrary to what the real effect of its order was, that it did not "affect the judgment". In a strictly technical sense, this was correct, since properly interpreted, the earlier judgment simply sent the case back to the trial court for further proceedings. Even where a court misconstrues its own order, the order cannot be read as meaning what the Court has no power to make it say. So in this technical sense, the Court's subsequent order merely recognized what had really been the case all along. And in that sense, accordingly, it did not "modify" what the real judgment had been---or at least was intended to be, once the Court came to realize its mistake.

[IMPORTANT UPDATE 03/31/2009: Earlier I had calculated the deadline for asking for review from the date of the original decision. I am modifying this paragraph, and the next to the last one below, in light of the current text of Rule 13.3 of the Supreme Court Rules, which provides (emphasis added):

The time to file a petition for a writ of certiorari runs from the date of entry of the judgment or order sought to be reviewed, and not from the issuance date of the mandate (or its equivalent under local practice). But if a petition for rehearing is timely filed in the lower court by any party, or if the lower court appropriately entertains an untimely petition for rehearing or sua sponte considers rehearing, the time to file the petition for a writ of certiorari for all parties (whether or not they requested rehearing or joined in the petition for rehearing) runs from the date of the denial of rehearing or, if rehearing is granted, the subsequent entry of judgment.

Accordingly, if the parish of St. James in Newport Beach wants to ask the Supreme Court to review the decision by California's highest court, it will have to file a "petition for certiorari" on or before May 26, 2009 (90 days from the date the order denying rehearing was filed).]

What grounds could such a petition urge for review? There are several. However, in the interest of keeping the issues understandable, I shall focus on the principal one: the decision by the California Supreme Court violates the establishment clause of the First Amendment, which applies to the individual States by virtue of the Fourteenth Amendment. What the decision does, in essence, is allow "hierarchical" churches to bypass the Statute of Frauds. Let me explain what I mean.

The Statute of Frauds was first enacted by Parliament in 1677, and has been with us ever since. It has a number of different provisions, but the one directly relevant here is the part that says no trust in real property can be created except by a writing signed by the trustor---the person who owns the property in question, and who is deciding to place it in trust. Prior to the Statute of Frauds, courts accepted a witness' hearsay statement that the trustor had verbally declared a trust to exist with respect to his own land, in favor of someone else (usually the witness to the statement). This created, as you might imagine, a huge incentive to commit perjury and fraud on the witness stand. So the Statute of Frauds required that the party claiming the benefit of a trust in land produce a trust deed or similar instrument, signed under oath (i.e., a notarized document, required for recording in most States) by the party owning the land. That way there could be no mistake as to the owner's intent.

The Statute of Frauds was a part of the law of the thirteen original colonies, and after the Revolution was enacted into law in every State---I am not aware of a single State in which there is no statutory descendant of the original. And in every case of which I am aware---including especially California---the local equivalent of the Statute of Frauds applies to the creation of trusts in real property.

It is true that in some States, there are exceptions---whether statutory, or court-created---which allow a trust to be recognized in real property where the conduct of the parties has been proved to indicate that the owner of the land meant to put it into a trust for a particular beneficiary. But such exceptions usually require clear proof of unambiguous conduct to that effect, continuing over a substantial period of time.

With its decision in The Episcopal Church Cases, however, the California Supreme Court held that a national church, which it deemed "hierarchical" in structure based on the only evidence before it---namely, the allegations in ECUSA's complaint that claimed it was hierarchical---could in effect bypass the Statute of Frauds because it was a national, hierarchical church, with presumed hierarchical authority over every single parish in its denomination. Under those circumstances, said the Court, a canon enacted by the church (the Dennis Canon) in 1979 was sufficient to impose a permanent and irrevocable trust on every single Episcopal parish property in the State of California, without any need for individual trust documents to be signed by each of those nearly 500 parishes.

To reach this result, as I explained in this post, the California Supreme Court read a statute that was enacted as a means of trust enforcement to be a vehicle for trust creation---but only in the case of a "hierarchical" church. A congregational church, such as the Baptists, would still have to have each local parish sign a trust deed to impose a trust on its real property. But the Episcopal Church could achieve the same result, under the California statute as the State Supreme Court interpreted it, by simply enacting a single national canon.

By reading the statute in such a fashion, as allowing hierarchical churches to create trusts in local parish properties without complying with the requirements of the California Statute of Frauds, the Supreme Court in effect set up a privileged class of churches in the State, which do not have to obey the same laws as all other churches. This preferential treatment creates a natural ground for review of that decision by the United States Supreme Court.

Under our First Amendment (as applicable to individual States via the Fourteenth Amendment), no State is allowed to enact any law leading to the "establishment" of any church. This can mean that no State is allowed to grant preferential treatment to one church over others. And thus, when it read the California statute as allowing the Episcopal Church (USA) to create a trust in local parish property without having to get that parish's signature on any trust document, but simply by enacting a single national canon (or bylaw), the California Supreme Court was to that extent "establishing" the Episcopal Church in California, in violation of the First Amendment.

The case as decided on January 5 is ripe for review by the United States Supreme Court on this ground, because nothing further has to take place for the ruling of the California Supreme Court to go into effect. Although there still has to be a trial, the Supreme Court's ruling means that if the Episcopal Church (USA) proves the enactment of the Dennis Canon, it will automatically have created thereby a trust in any otherwise unrestricted property owned by the St. James parish. Given that such a construction of the statute would favor the Episcopal Church over all other congregational churches, the question is squarely presented for the United States Supreme Court: does the California Court's upholding of the Dennis Canon via the State statute violate the First Amendment's Establishment Clause?

Thus, watch for a filing by the St. James parish in the United States Supreme Court by May 26, 2009. The mere fact that such a petition is filed, however, will not guarantee that the Supreme Court will agree to review the decision. If it does not accept the case for review at this time, the parish could try again, after the entire case has been tried and affirmed on appeal---but that will be many years down the road. It would be far better for the parties to know before the case goes to trial whether or not the California court interpreted the statute correctly.

If a petition for review is filed, I will follow up on the matter in another post.