Wednesday, July 15, 2009

Court Blocks End Run Around St. James

Judge Thierry Patrick Colaw of the Orange County Superior Court has issued a ruling that blocks an attempt by the plaintiff Episcopal Diocese of Los Angeles and the plaintiff in intervention ECUSA to circumvent the right of the defendant St. James Parish of Newport Beach to have a trial. This ruling comes on remand of the case from the amended decision of the California Supreme Court, which I wrote about in this post. It also comes while the petition filed by St. James for review of the California Supreme Court's decision is pending in the United States Supreme Court.

In order to understand Judge Colaw's ruling, a .pdf copy of which may be downloaded from this page (the ruling begins on page 5 of the document), one has to know a little background about the special California procedures that were followed in the litigation which ended up in the California Supreme Court. Essentially, the previous steps were these:

1. After St. James voted to leave the Diocese of Los Angeles, the Diocese brought suit against the parish corporation, its rector and other clergy, and vestry members, in Orange County Superior Court, where the parish is located.

2. The parish did not immediately answer the Diocese's complaint. Instead it brought what is called a "SLAPP" motion under California law.

[Long-winded explanation for those interested: The acronym stands for "Strategic Lawsuit Against Public Participation". The paradigm for such a motion was when a large oil company brought a trade libel lawsuit against an individual who had been asking the State health department to investigate one of its home plumbing products. The court found that the only purpose of the lawsuit was to make it expensive for the individual to pursue his claim before a public agency, and that the underlying lawsuit had no real merit.

Out of this paradigm the California Legislature developed a statute allowing defendants in certain kinds of cases to challenge at the outset lawsuits brought by plaintiffs solely for the purpose of silencing their opponents' participation in public proceedings. Instead of answering to such a complaint, the defendant files a "SLAPP" motion, and since the move is directed against the "strategic lawsuit" itself, it is sometimes also called an "Anti-SLAPP" motion, so the terminology can get confusing for non-lawyers.

The trial court has a two-part inquiry before it in dealing with a SLAPP motion. First, it must ascertain whether the lawsuit being challenged is of the kind defined by the statute --- namely, whether it is directed against an individual or group in an effort to suppress their "participation in matters of public significance". If it answers that query in the affirmative, it then moves on to the second query: has the plaintiff established a probability that, notwithstanding the nature of his lawsuit, he will prevail on his claims against the defendant(s)?]

3. In the suit brought by the Diocese of Los Angeles against St. James, the trial court determined that the answer to the first inquiry was "yes", but that the answer to the second was "no" --- that the Diocese probably would not win its lawsuit. (Up to that point the leading authority in California church property cases involving the Episcopal Church was the Barker case. That case, also involving a complaint brought by the Episcopal Diocese of Los Angeles, held that three of four parishes leaving the Church could keep their property, because the Dennis Canon had not been enacted until well after they had originally joined the Diocese. [The fourth parish had the bad luck to have been incorporated after ECUSA adopted the Dennis Canon.] St. James also had been incorporated before the adoption of the Dennis Canon, and so on the authority of Barker, the trial court held that the Diocese's lawsuit showed no probability of success.)

4. The trial court accordingly dismissed the Diocese's lawsuit, and the Diocese appealed. In its opinion in The Episcopal Church Cases, the Court of Appeal surprised many observers by holding that Barker (and similar cases) had been wrongly decided, and (since it was not the same appellate court) declined to follow it. It therefore held that the Diocese's lawsuit did have a probability of success, because it decided that the parish had acceded not just to the canons existing at the time it was incorporated, but also to all subsequently enacted canons as well. On the first part of the inquiry, it also found that the Diocese's lawsuit did not come within the parameters of a SLAPP action, because it was a dispute over property, and not "public participation".

5. One might well wonder why, if the Appellate Court decided that the SLAPP statute did not apply, it even bothered to address the second part of the SLAPP inquiry --- the probability of success of the plaintiff's case on the merits. Here is the explanation it gave:
We cannot stop with prong one, however. The propriety of the sustaining of the demurrer to the national church’s complaint in intervention depends solely upon the merits of the case. We now turn to the relevant authorities that govern the issue of disputes over church property in California. We will examine them in chronological order.
6. So at this point, in order to understand what followed, I need to acquaint you with what happened to ECUSA's complaint. As I have explained elsewhere, California allows a defendant to file what is called a "demurrer" to a complaint. When a party "demurs" to a pleading, he in effect says to the court: "Even if everything X alleges were in fact true, the facts are insufficient to establish a claim on which this court could grant relief. So either make X amend his pleading, or if there is no plausible way he could amend to state a claim, then dismiss it." St. James had demurred to the complaint by ECUSA (on the principal strength of the Barker case --- that the Dennis Canon did not apply to it), and the trial court agreed that the complaint did not state a claim on which relief could be granted. It also saw no way in which the defect could be fixed by an amendment, since there was no dispute that the parish had incorporated before the enactment of the Dennis Canon. Thus it dismissed ECUSA's complaint without St. James having to file an answer to it.

7. On ECUSA's appeal from that judgment, therefore, the Court of Appeal had to consider whether the authority of Barker was as controlling as the trial court had thought. As just mentioned, it held that it would not follow Barker. Instead, it resurrected an earlier line of cases that had deferred to hierarchical churches. (Barker had been a decision following "neutral principles of law", about which you may read more here.) It held that, following that line of cases, courts had to defer to the hierarchical authority of the national church, and that the Dennis Canon trumped state property law, under which a trust could not be imposed upon a person's property without that person's consent in writing. So it ruled that ECUSA's complaint was sufficient to state a claim. In doing so, it held that the Diocese had stated a claim (under the Dennis Canon, as enabled by a state statute) on which it would probably prevail, too.

8. It was in this posture that the California Supreme Court accepted review of the case. Its decision came to the same conclusion as the Court of Appeal: that the suit was a property dispute, not a SLAPP action; and that the plaintiffs had a good probability of prevailing on the merits. However, it decided to arrive at the second conclusion not by following the cases relied upon by the Court of Appeal, but by saying it was deciding case under the (more chic) "neutral principles" approach. (In the final analysis, it did not matter --- as I explained in this post about the decision, the Supreme Court in effect deferred to hierarchical churches by holding that they could bypass State property law and impose a trust on their parishes' property just because they were "hierarchical".)

9. The Court chose some very strange language, however, in which to express its opinion. At first it said:
Both lower courts also decided the merits of the dispute over ownership of the local church — the trial court in favor of the local church and the Court of Appeal in favor of the general church. We will also decide this question, which the parties as well as various amici curiae have fully briefed.
You should now be in a position to appreciate the inaccuracy of this assertion: the lower courts did not purport to decide "the merits"; they came to different conclusions about the plaintiffs' probability of success on the merits. So via the parish's petition for clarification, the California Supreme Court was forced to backtrack. In a subsequent modification of its opinion, it acknowledged that it and the lower courts had only "addressed" the merits ---"on this record". That meant that the case could go back to the trial court for the defendant parish to answer the complaints and go to trial on the factual issues. In fact, you should be aware of this specific paragraph in California's SLAPP statute (Code of Civil Procedure, section 425.16 [b] [3]):

If the court determines that the plaintiff has established a probability that he or she will prevail on the claim, neither that determination nor the fact of that determination shall be admissible in evidence at any later stage of the case, or in any subsequent action, and no burden of proof or degree of proof otherwise applicable shall be affected by that determination in any later stage of the case or in any subsequent proceeding.
10. So on remand, St. James filed an answer and cross-complaint against the Diocese, in which it sought to bar the Diocese from claiming any trust interest in its property on the strength of a 1991 letter waiving such rights, written on behalf of the Diocese by its then-Canon-to-the-Ordinary D. Bruce McPherson (now Bishop of Western Louisiana). (To see a copy of the letter, download this brief and look on page 12.) It also filed an answer to ECUSA's complaint in intervention.

Now you are finally in a position to appreciate the significance of Judge Colaw's ruling, handed down Monday. You see, the plaintiff Diocese and the plaintiff in intervention ECUSA just could not accept the fact that the Supreme Court had not ruled on the merits in their favor, but had only decided that they probably would win on the merits under the law as now interpreted by the Supreme Court. Despite the express language of section 425.16 I just quoted above, the Diocese demurred to St. James's cross-complaint on the ground that it had already been declared to have won the case on the merits --- without ever having gone to trial! And for its part, ECUSA joined in the fray, by making a motion for a "judgment on the pleadings" --- essentially, a ruling that the answer filed by St. James to its complaint was inadequate, as a matter of law, to state any defense --- so that they, too, claimed the right to a judgment against St. James without a trial.

In his ruling filed Monday, Judge Colaw decisively and thoroughly rejected the plaintiffs' spurious arguments. He patiently explained that no court had actually purported to decide the merits, and that the Supreme Court had expressly corrected its earlier decision to make it clear that it was not claiming to have done so. Thus he overruled the Diocese's demurrer --- meaning that it will now have to answer the St. James cross-complaint based on then-Canon McPherson's 1991 letter. And he denied ECUSA's motion for a judgment on the pleadings --- meaning that there will be no judgment, and the case will now proceed to discovery and a trial.

This was a correct ruling on the law. It is typical of ECUSA's and the Diocese's scorched-earth tactics that they would try to exploit to their advantage any little crumb, however small, they could glean from the Supreme Court's table. Now there will be a lot of expensive discovery ensuing, with depositions galore, as the parties seek to jockey for admissions which they can use either to shortcut the need for a trial altogether, or to use at any trial to discredit the opponent's position. Either way, they are in for a long haul.

And meanwhile, the possibility of a grant of review by the United States Supreme Court hovers in the wings. We will not find out about that until the first Monday in October (if then).


  1. Mr. Haley,

    Will the actions of the lesser court have anything to do with the Supreme Court ruling that is waiting in thewings which you referred to in the last sentence of your post? Thanks!

  2. Milton, no --- the parties will proceed with discovery in the lower court while they wait to see whether the Supreme Court grants review. If it does, it will review the rulings of law made by the California Supreme Court about hierarchical churches. Any ultimate decision by it will govern the law which the trial court eventually applies to the facts. Those facts, however, are independent of the law, and so the parties will engage in discovery to find out what really happened in the years between the time when St. James came into the Diocese and when it left. By the time they are finished with discovery, we should know how the Supreme Court rules, if it grants review.