To Whom It May Concern (II)

In my previous post, I gave examples to illustrate the following points:

1. The Episcopal Church (USA) is not a hierarchical church at the national level. There is no absolute authority or supreme pontiff. There is only the Presiding Bishop, who presides mainly over the House of Bishops, and who has no authority over dioceses. (In one of those happy Internet coincidences, the Anglican Communion Institute and the Communion Partner bishops have issued a joint statement that says the same thing, in a much more detailed and comprehensive way. In that respect, however, it complements what I have been arguing on this blog for more than a year now. I shall have more to say about the brouhaha surrounding its publication in a later post.)

2. Notwithstanding those facts, the current Presiding Bishop has arrogated to herself a putative national authority, including the right to organize the Episcopalians remaining in a given area into a "new" diocese after their former diocese has affiliated with another church.

3. This putative authority involves (1) removing the former bishop, either by pronouncing his deposition after a canonically insufficient vote, or by treating some statement or writing of his as a "voluntary renunciation of orders" (even though it was nothing of the kind); (2) "derecognizing" the former Standing Committee by a misapplication of Canon I.17.8 to clergy, and by reading into it an "ejector seat" for laity and clergy alike that simply is not there; (3) convoking a new "special diocesan convention" in violation of the terms of the very diocesan constitution which the group is claiming to uphold; and (4) presenting that illegally called "convention" with a pre-approved bishop to install, who will toe the party line.

4. The result is a manufactured Potemkin diocese, complete with a Potemkin as its bishop, who then marches into court and claims the right to all of the former diocese's assets and property This is a high-risk, winner-take-all strategy that has to be tried out anew in front of each of the different State courts with jurisdiction over any given former diocese.

Thus far, ECUSA has been encouraged in its strategy by successes in cases involving parishes leaving dioceses. That is not the same thing, however, as dioceses leaving the Church, as I explained in great detail in this earlier post. This strategy has not yet been tested in any court that I know of thus far, but its day in court is coming soon. Pending before the Fresno County Superior Court in California are two motions. The first is the motion brought by Bishop Lamb and his putative "diocese" for a declaratory judgment that they are the legal successors to all of the property and assets of the former Diocese of San Joaquin (now "the Anglican Diocese of San Joaquin"). The second is a challenge by ECUSA and its corporate alter ego, the Domestic and Foreign Missionary Society (DFMS), to a cross-complaint that seeks to hold them liable for the costs of defending against the suit by Bishop Lamb et al., on the ground that the suit could not have been brought but for the improper machinations of ECUSA and its Presiding Bishop as outlined above.

The second motion will be heard on April 28, and the first on April 29. Although the rulings will be only at the trial court level, they will, as I say, be the first to consider the merits of the Presiding Bishop's and her Chancellor's legal strategy. That strategy has been extended, and the level of risk correspondingly increased, by what has recently taken place in Fort Worth, as I shall now explain.

The Diocese of Fort Worth began its status as a diocese of ECUSA on January 1, 1983. Like all ECUSA dioceses of which I am aware, it began as an unincorporated association of representatives from individual parishes who joined together, adopted a constitution and canons, and then elected a bishop. In this particular instance, the diocesan constitution also called for the creation of a non-profit corporation under Texas law which would hold legal title to all Church property in the diocese:

The title to all real estate acquired for the use of the Church in this Diocese, including the real property of all Parishes and Missions, as well as Diocesan Institutions, shall be held subject to control of the Church in The Episcopal Diocese of Fort Worth acting by and through a corporation known as “Corporation of the Episcopal Diocese of Fort Worth.” All such property as well as all property hereafter acquired for the use of the Church and the Diocese, including Parishes and Missions, shall be vested in Corporation of the Episcopal Diocese of Fort Worth.
. . .
All other property belonging to the Diocese, as such, shall be held in the name of the Corporation known as "Corporation of the Episcopal Diocese of Fort Worth", and no conveyance or encumbrance of any kind shall be valid unless executed by such Corporation and as may otherwise be provided by the Canons of the Diocese.

The original articles of the Corporation, filed February 28, 1983, specified a five-member Board of Trustees, whose election would be as provided "by the by-laws of the corporation as the same may be adopted and from time to time amended." The Bishop of the Diocese was ex officio the Chairman of the Board of Trustees, and thus a sixth member.

Articles IV, V and VI of the Corporation's articles were amended, and a restated version of them was filed with the Texas Secretary of State, in 2006. As so filed, the amended articles recited:

Amendments [of] these Amended and Restated Articles of Incorporation were approved by a unanimous vote at a meeting of a quorum of the members of the board of trustees (the "Board" as hereinafter defined in Article VI) for the Corporation held August 15, 2006. The Corporation has no members with voting rights.

The sentence "The Corporation has no members with voting rights" tells us that the Board of Trustees is self-electing, that is, upon the occurrence of a vacancy in any Trustee's term of office, the remaining members choose a new person to fill the post until the next Annual Convention of the Diocese. (Under Diocesan Canon 17, one Trustee is elected annually at each such Convention to a staggered five-year term.) To make such an interim appointment valid under the bylaws, all that is required is for a quorum of the trustees to be present at a properly noticed meeting. There is no provision for any involvement in such an interim appointment by the diocesan convention or any of its committees or officers---a point of some significance, to which I shall return.

As amended and restated in 2006, Articles V and VI provided:

ARTICLE V

The registered agent of the Corporation is Rt. Rev. Jack Leo Iker, D.D.; 2900 Alemeda [sic semper] Street, Fort Worth, Texas 76108; the registered office address of the Corporation is 2900 Alemeda Street, Fort Worth, Texas 76108.

ARTICLE VI

The number of trustees constituting the board of trustees is six (6) (collectively, the ''Board"). The Bishop (herein so called) of the body now known as the Episcopal Diocese of Fort Worth shall be the Chairman of the Board. For the remaining five (5) trustees (the "Elected Trustees"), the manner of election and the period of time for which the Elected Trustees shall hold office shall be fixed by the Bylaws of the Corporation as the same may be adopted and from time to time amended.

In the event of a dispute or challenge regarding the identity of the Bishop of the body now known as the Episcopal Diocese of Fort Worth, the Elected Trustees shall have the sole authority to determine the identity and authority of the Bishop, as provided in the Bylaws of the Corporation, for purposes of these Amended and Restated Articles of Incorporation. In the event the body now known as the Episcopal Diocese of Fort Worth is without a Bishop, the Elected Trustees shall have the sole authority to appoint, as provided in the Bylaws of the Corporation, a Chairman of the Board for purposes of these Amended and Restated Articles of Incorporation and the Bylaws of the Corporation.

If a determination pursuant to this Article VI becomes necessary in the discretion of any member of the Board, a member of the Board may call a special meeting of the Board for the purpose of making such determination, as provided in the Bylaws of the Corporation.

The names and addresses of the current trustees are:

Dr. Franklin Salazar

Mr. Rod Barber

Mr. Chad Bates

Mr· Walter Virden

Mrs. Jo Ann Patton

Rt. Rev. Jack L. Iker

In 2008, as is well known, the unincorporated association which constituted the Episcopal Diocese of Fort Worth voted at its annual convention to amend its Constitution and canons to delete its affiliation with ECUSA and to enable it temporarily to affiliate with the Anglican Province of the Southern Cone. Shortly thereafter, the Presiding Bishop chose to treat Bishop Iker's public (and completely accurate, as explained in the ACI/CP article linked above) statement of his relationship to her ("never have been subject to her jurisdiction, and never will") as a "voluntary renunciation of his orders", and pronounced him no longer a Bishop in ECUSA. She thereby initiated the first part of her litigation strategy (step 1 in item #3 above); parts 2 through 4 were put into execution last month.

As explained above, however, implementation of steps 1 through 4 did not affect the status of Church property or the diocesan corporation which held title to it. The Presiding Bishop and her Chancellor therefore had to take the strategy to a new level, and implement step 5: first, "derecognize" all the members of the Board of Trustees, so that the entire Board becomes vacant (including the position of Bishop Iker, previously deposed). Next, have the specially but illegally summoned diocesan "convention" confirm the Presiding Bishop's selection of a "Provisional Bishop", who (notwithstanding his temporary and provisional status, and notwithstanding the prohibition in ECUSA's Constitution, Article II, Section 3 ["A Bishop shall confine the exercise of such office to the Diocese in which elected . . ."] against his assuming jurisdiction as ordinary in more than one diocese) will thereupon be treated as an "ex officio" Trustee, and who then may appoint (on the advice of the "convention") the five new trustees required.

We find out that this is precisely what happened by reading closely the set of "amended and restated articles" of the Corporation which were filed under the direction of Provisional Bishop Gulick with the Secretary of State just nine days ago, on April 14, 2009. These "articles" add a new "Article VII", which reads in part as follows:

To the fullest extent permitted by Texas law, the Corporation shall indemnify any person who is or was a Trustee or an officer of the Corporation, and may indemnify any person ("Discretionary Indemnitee") who is or was an employee or agent of the Corporation . . . . Neither the future amendment nor repeal of this Article shall eliminate or reduce the effect of this Article in respect of any matter occurring, or any cause of action, suit, or claim that, but for this paragraph, would accrue or arise, prior to such amendment or repeal, provided, however, that this paragraph (A) shall apply only to the following persons: (1) a person who became a Trustee by virtue of an advisory election by delegates to a Special Convention of the Episcopal Diocese of Fort Worth and subsequent appointment by the Provisional Bishop as Trustee on or about February 7, 2009 and his or her successors; (2) a person who was elected as an officer of the Corporation on or about February 12, 2009 and his or her successors; and (3) a Discretionary Indemnitee who was appointed, elected, or requested to serve by a person identified in (A)(I) or (A)(2) above, on or after February 7, 2009.

There could not be any more tailor-made language than this. It says that the Corporation shall indemnify (that is, protect from any financial consequences) any person who became a director of the Corporation "by virtue of an advisory election by delegates to a Special Convention of the Episcopal Diocese of Fort Worth and subsequent appointment by the Provisional Bishop as Trustee on or about February 7, 2009 . . .". That description fits exactly the following five persons, who are named as Trustees of the Corporation in the "newly restated" Article V as follows:

The Rev. John Stanley

Ms. Cherie Shipp

The Rev. James Hazel

Mr. Robert M. Bass

Dr. Trace Worrell

These "trustees", of course, are completely different from the ones elected by the previous Board of Trustees and listed earlier. Notice, too, that the indemnity provision is so tightly drafted that it excludes from its terms the Right Reverend Edward Gulick himself, who as Provisional Bishop became (in 815's distorted view of the matter) an ex officio Trustee (and Chairman) of the Corporation upon his confirmation at the "Special Convention" held February 7. For he is neither a person who became a Trustee "by virtue of an advisory election . . . and subsequent appointment by the Provisional Bishop" (since he is the "Provisional Bishop"), nor is he "a person who was elected as an officer of the Corporation on or about February 12, 2009", since he assumed his office not by election on February 12, but (according to 815's elaborate strategy) earlier on February 7, ex officio after his confirmation as Provisional Bishop.

The entire process of thus replacing all of the Trustees of the Corporation of the Episcopal Diocese of Fort Worth rests upon several very shaky legal propositions, to wit:

(1) the Corporation, whose only function is to administer and hold title to parish and diocesan property, is nonetheless a religious entity "of this Church" for purposes of Canon I.17.8, thus making the position of its Trustees an "office in this Church";

(2) the provisions of that Canon as interpreted by the Presiding Bishop (whose interpretation is of course final, non-appealable, and not open to question or challenge in any secular court) provide an "ejector seat" for anyone who dares to do something of which she disapproves, or who is blocking her attempt to achieve a certain goal;

(3) a "Provisional Bishop" elected pursuant to Canon III.13.1 may exercise all the functions of an ordinary despite the provision of Article II, Section 3 of the Constitution quoted earlier, since the "Ecclesiastical Authority" [who is the Presiding Bishop, under 815's reading of the Canons] of the "diocese" in question asked him to do so; and

(4) the convocation of a Special Convention of Fort Worth in violation of its own Constitution (since its "Ecclesiastical Authority" did not convoke it, unless you adopt 815's reading of the Canons) nevertheless managed canonically to elect appropriate officers and committees, and to confirm a Provisional Bishop.

As a church canon lawyer for many years, I would not like to stake any outcome on any of those propositions, which as a matter of contractual interpretation have practically no support in the language of the governing instruments.

The indemnity provision quoted above for corporate Trustees thus is and will be a legal nullity unless and until the Presiding Bishop's newly summoned "diocese" of Fort Worth prevails in Tarrant County District Court over the established and existing Diocese of Fort Worth. And in the event it so prevails, the indemnity provision will be entirely unnecessary. It is only if the pseudo-diocese loses in court that the indemnity provision will come into play---but then the Corporation per se will not have to honor it, because losing the case means that the pseudo-trustees were never actual trustees when they voted on the indemnity clause.

For these reasons, the enactment of the indemnity provision by the pseudo-trustees following their pseudo-election can only have been with the following provision of the Texas Business Organizations Code in mind:

BOC §4.007. LIABILITY FOR FALSE

FILING INSTRUMENTS

(a) A person may recover damages, court costs, and reasonable attorney's fees if the person incurs a loss and:
(1) the loss is caused by a:
(A) forged filing instrument [meaning articles of incorporation, or amended or restated articles, as in this instance]; or
(B) filed filing instrument that constitutes an offense under Section 4.008; or
(2) the person reasonably relies on:
(A) a false statement of material fact in a filed filing instrument . . .
(b) A person may recover under Subsection (a) from:
(1) each person who forged the forged filing instrument or signed the filing instrument and knew when the instrument was signed of the false statement or omission;
(2) any managerial official of the entity who directed the signing and filing of the filing instrument.

In other words, if the pseudo-trustees lose their case, they could be held liable for damages as a result of anything they purported to do on behalf of the Corporation of the Diocese of Fort Worth. And thus if they lose, it apparently eases their minds to know that their pseudo-Corporation will be on the hook to indemnify them. (Where it will get the assets with which to do so will be 815's problem.)

But there is one more provision in the Texas Business Organization Code, which the pseudo-trustees and their counsel may have overlooked. For section 4.008 of the Code provides a criminal penalty for filing false papers with the Secretary of State---for which, of course, no indemnification is possible:

(a) A person commits an offense if the person signs or directs the filing of a filing instrument that the person knows is materially false with intent that the filing instrument be delivered on behalf of an entity to the secretary of state for filing.

(b) An offense under this section is a Class A misdemeanor unless the actor's intent is to defraud or harm another, in which event the offense is a state jail felony.

As you can see, the strategy adopted by 815, and followed dutifully by those wishing to remain Episcopal in Fort Worth, is very high-risk indeed. Things are about to get a whole lot more interesting in Fort Worth.