Thursday, November 18, 2010

Translating the Appellate Decision in the San Joaquin Case

As briefly reported in this previous post, the Fifth District Court of Appeal today reversed the grant of summary adjudication by the Fresno trial court in favor of the Episcopal Church (USA) and Bishop Jerry Lamb. It held that the trial court should not have adjudicated the issue of who was the proper Bishop of San Joaquin, with entitlement to the assets of the departed Diocese of San Joaquin (now called the "Anglican Diocese of San Joaquin").

The second amended complaint (it does not appear to be on line; here is a link to its predecessor, which is nearly identical) brought by ECUSA and Bishop Lamb contained seven causes of action, for (1) a judicial declaration that the amendments finally adopted by the Diocese in December 2007 were illegal and void under the Constitution and Canons of ECUSA, and that as a consequence Bishop Lamb had succeeded to the position as bishop of the Diocese, incumbent of its corporation sole, and president/trustee of its associated property-holding entities; (2) a declaration that all money and property in the hands of the Diocese, the corporation sole and the other related entities were held in trust for ECUSA, and could not be used in any other Church; (3) a judgment that Bishop Schofield's "diversion" of the Diocese's assets constituted a breach of his fiduciary duties owed to the Episcopal Church (USA); (4) a judgment that Bishop Schofield and the related entities had wrongfully appropriated the assets of the Diocese to their own use; (5) a judgment ordering Bishop Schofield and his staff to vacate the Diocesan offices in Fresno, and to turn over all the Diocesan property to Bishop Lamb; (6) a judgment decreeing that the deeds putting title to the diocesan assets into the hands of its related entities were fraudulent; and (7) a judgment quieting the title of the disputed assets in the name of Bishop Lamb.

Bishop Lamb and ECUSA filed a motion to have the court grant the declaratory judgment requested by the first cause of action only: this is what the courts call a "motion for summary adjudication." (It is summary relief, because it is granted without going to trial, based on a showing that there are no disputed facts which have to be tried.) And the trial court, after postponing the matter six times, granted that motion on July 21, 2009, as discussed in this post. The result was a victory for the plaintiffs which, if it stood, would have virtually ensured that the outcome of the rest of the case would be in their favor, as well.

Normally, as a decision on only one of the seven causes of action in the complaint, the ruling by the trial court would not be reviewed until after it had entered judgment on all the other causes of action, as well. But because this ruling had the ability to taint all those other causes of action, and make a complete retrial of the whole case necessary if it should prove to have been granted in error, Bishop Schofield and the related diocesan entities asked the Fifth District Court of Appeal to review the correctness of the ruling now, before the whole case was over. And in an indication of what was to come, the Court of Appeal granted that request.

The case was fully briefed to the Court of Appeal by the end of last year, but it took until this October for the oral arguments to occur. I described that occasion, in which I participated on behalf of Bishop Schofield, in this post. I noted that the very first question out of the Justices' mouth was: "How can this Court decide who is the proper Bishop of San Joaquin?" And that proved to be the Court's sticking point. There were further indications from the Court along these lines as the argument proceeded:
More than once, their questions indicated a doubt that civil courts could (or should) decide the issue of who was the Bishop of San Joaquin, without getting entangled in ecclesiastical matters which the courts are barred by the First Amendment from considering.

Justice Cornell got right to the heart of things when he asked ECUSA's attorney: "If you think Bishop Lamb is the Bishop of San Joaquin, with the right to have all the Diocese's property, then why did you move for summary judgment on this complex question of who is the rightful bishop of San Joaquin? Why didn't you simply bring a lawsuit to regain possession of the property"? (The justice used the legal term for such a lawsuit, called an "action in ejectment.") The attorney admitted, "We do have such a cause of action in our complaint, your honor." "Well, why didn't you choose to try that cause of action first?" Justice Cornell persisted. The attorney for ECUSA was candid in his response, and admitted they had requested first a declaration from the court that Bishop Lamb was the Bishop of San Joaquin because they believed "such a judgment would help sort out all of the property matters." It was not clear that the answer was what the justices were looking for. They seemed to prefer an approach where the court would be asked to decide just straightforward issues of property ownership, without having to delve into the arcana of church constitutions and canons.
Now we have the benefit of the Court's written opinion, holding exactly as Justice Cornell indicated, that if Bishop Lamb wants to claim the diocesan properties from Bishop Schofield, he should simply prove that the latter had no right to continue to hold the property, and forget about trying to prove that he was entitled to all the property just by virtue of being recognized as "the Bishop of San Joaquin" by the Episcopal Church. At issue, as far as the Court of Appeals is concerned, is not who is the actual bishop of what diocese, but who currently holds legal title to the assets in dispute, and did those entities or persons acquire their title in accordance with standard principles of property law, applied neutrally and without any reliance upon the Church's religious doctrines.

At the same time, I read the opinion to mean that the issue of whether a Diocese may leave the Church, and what the legal consequences of such a departure are on the entity's status under California law, is now officially off the table -- it is part of what the Court considers to be non-justiciable issues involving religious structures, government, and polity. It said (slip opinion at p. 9):
Three facts are established by the record and are, in any event, “ecclesiastical facts” that the courts have no jurisdiction to adjudicate. First, before and through January 11, 2008, Schofield was the Episcopal Bishop of the Diocese of San Joaquin; on that day, his powers as Episcopal Bishop were suspended by the national church. Second, after March 29, 2008, Lamb was the Episcopal Bishop of the Diocese of San Joaquin, duly recognized by the national church. Third, at some point Schofield became the Anglican Bishop presiding over an Anglican Diocese of San Joaquin, affiliated with the Anglican Province of the Southern Cone of South America. In further proceedings in the trial court, these facts may be relevant to the court's consideration of the issues before it, but the validity of such removals and appointments are not subject to further adjudication by the trial court. The continuity of the diocese as an entity within the Episcopal Church is likewise a matter of ecclesiastical law, finally resolved, for civil law purposes, by the Episcopal church's recognition of Lamb as the bishop of that continuing entity.
Notice how the Court fudges the ecclesiastical points at issue here. It declares that "at some point [Bishop] Schofield became the Anglican Bishop presiding over an Anglican Diocese of San Joaquin," without deciding that such point occurred upon the passage of the operative amendments to the Diocese's Constitution on December 7, 2007 -- well before the Episcopal Church's Presiding Bishop claimed the power to inhibit Bishop Schofield on January 11, 2008. If Bishop Schofield became the "Anglican Bishop of San Joaquin" upon the passage of the amendments, then he could no longer be inhibited or deposed by the Episcopal Church (USA), because he had already left that body when they went through the motions of pretending to inhibit and then depose him. Thus the transfers of property to the related diocesan entities, about which the plaintiffs are complaining, occurred when Bishop Schofield was no longer subject to the jurisdiction of the Episcopal Church, and was under the jurisdiction of the Province of the Southern Cone. The only question for the trial court, then, will be whether those transfers were in violation of some kind of "express or implied trust" imposed on the Diocese's property at that time.

The same passage just quoted also appears to take off the table any inquiry by the secular courts into the validity of the "Episcopal Diocese of San Joaquin" as a continuing entity in the Episcopal Church. The Court in effect says that the Church gets to decide that issue, and whatever it says is one of its dioceses is binding on the courts, regardless of whether the Church followed its own procedures in setting it up. But while a "diocese" may thus be seen as continuous in the eyes of the Episcopal Church, that entity, as well as the entity that departed the Church, are each still governed by, and subject to, the "First Amendment rights of individuals and corporations (see Citizens United v. Federal Election Comm’n (2010) ___ U.S. ___, ___ [130 S.Ct. 876, 899]), general California statutory and common law principles governing transfer of title by the legal title holder, the law of trusts, including establishment of trusts and transfers by a trustee in contravention of a trust upon the property (if a trust is established by the evidence), and corporations law, including the law of corporations sole (see Corp. Code, § 10010) and general principles of corporate governance." (Slip opinion, at p. 10.)

Translation: "ECUSA may call any group of its followers it wants a 'diocese' in its Church, even a tiny minority who remains behind after the great majority leaves. But whether the majority or the minority succeeds to legal title to the property is a matter of civil, not ecclesiastical, law -- including First Amendment rights of freedom of association, trust law, and the law of corporations and corporate governance. Resolution of those issues on neutral principles will decide the ultimate ownership of the disputed property, and not resolution of who is the bishop, which is an ecclesiastical question."

[UPDATE 11/19/2010: ENS and other websites on the left are repeating a statement they attribute to Bishop Lamb's Chancellor to the effect that the decision "means that 'the defendants can no longer assert in court that a diocese has the right to unilaterally secede from the Episcopal Church, or that Bishop Lamb is somehow not the bishop of the diocese.'" I have already noted above how the Court's ruling takes the irregularities in the installation of +Lamb as the provisional bishop off the table, for the purposes of this lawsuit. However, it by no means follows from the decision that defendants "can no longer assert in court that a diocese has a right to unilaterally secede [sic] from the Episcopal Church." Indeed, the decision reversed and vacated a ruling by the trial court stating exactly that.

The reference in the decision to the settled "continuity" of the "Episcopal Diocese" means just what I stated above -- that the Church can choose to recognize any minority it wants as a Diocese after the majority has voted to leave. When a majority amends the organization's governing documents, as happened here, the organization continues with the documents as amended, and the minority can (if it chooses) continue with the documents as they were before they were amended. There are now two organizations where there was only one before, and each shares a form of continuity with that earlier entity. After all, along with holding that the Church could recognize the minority as a continuing Diocese, the Court also held that it was an unchallengeable "ecclesiastical fact" that Bishop Schofield was the Anglican Bishop of the Anglican Diocese of San Joaquin. It could not have recognized that ecclesiastical fact if, as ENS claims the Chancellor said, it had held that a diocese has no right to leave the Church.]

When the case goes back to the trial court, therefore, the first thing that will happen is that the Church and Bishop Lamb will ask for leave to amend their (now) fourth amended complaint yet another time, and remove or entirely reframe their first cause of action. Or if they do not, Bishop Schofield will bring a motion to dismiss it, on the strength of the appellate opinion. (The Court says, at page 9 again: "The dispute set forth in the request for declaratory relief in the first cause of action, namely, whether Schofield or Lamb is the incumbent Episcopal Bishop of the Diocese of San Joaquin, is quintessentially ecclesiastical. Accordingly, the trial court erred in adjudicating that cause of action and, upon proper motion, must dismiss that cause of action" [emphasis added].)

However, the plaintiffs Lamb and ECUSA first have the option of petitioning the Court of Appeal for a rehearing, which they must do within the next fifteen days. If they file such a petition, the Court has to act on it on or before December 20, or else the Rules of Court specify that it will be deemed to have been denied. If the Court does not act on the petition by then, or if the plaintiffs do not file for rehearing, then they will have until December 28 to file a petition for review with the California Supreme Court. The grounds for any such request to the Supreme Court would have to be "to secure uniformity of decision or to settle an important question of law." Since there are no other California decisions on this precise point, it would be the latter ground for which the plaintiffs would have to argue as a reason to grant their petition. And though I am admittedly biased, I have difficulty seeing how a holding that a particular point of ecclesiastical identity is not decidable by the secular courts involves "an important question of law" which needs settling by the Supreme Court.

What does this decision signify for the other nine cases pending in various local courts in the Diocese of San Joaquin? (These are the ones filed, since the Fresno trial court's decision in this case, by Bishop Lamb and the Episcopal Diocese against the individual incorporated parishes within the Anglican Diocese.) It is probably too early too tell. More skirmishes will have to occur, and the facts become clearer, before that question may be definitively answered. For each of the parishes in question did not leave the Diocese to which they have always belonged; instead, the Diocese in question left the Church to which it belonged, and the parishes came along with the Diocese. Now that the Court of Appeal has, in effect, ruled that state courts cannot inquire into the ecclesiastical legalities of that departure (which would require them at the same time to decide who is the proper Bishop of San Joaquin), it would appear that the local courts might be equally well precluded from inquiring whether the parishes correctly followed the Diocese.

Once again, if we take the present opinion as our guide, it would seem to say that the ownership of the individual parishes' property will have to be decided based on neutral principles of property law -- the deeds and the parish articles will be examined, as well as the diocesan and the national constitution and canons. And here is where the parishes have some breathing room. For the Dennis Canon was never adopted as such in the Diocese of San Joaquin, from the time it was enacted at the national level in 1979 until the date the Diocese withdrew from the national Church in December 2007. When it was admitted as a Diocese in 1961, San Joaquin acceded only to ECUSA's Constitution, and said nothing about acceding to its canons; its diocesan Constitution still reads the same way today, under Bishop Lamb. Indeed, the Diocese enacted in 2005 a type of anti-Dennis Canon, which negated any trust interest in diocesan or parish property for the benefit of the national Church:
No ownership or proprietary interest in any real or personal property in which title and/or ownership is held by the Diocese of San Joaquin, its churches, congregations, or institutions, shall be imputed to any party other than the Bishop as Corporation Sole (including a trust, express or implied) without the express written consent of the Bishop and the Standing Committee of the Diocese.
Given these circumstances, therefore, the most important language in the Court's opinion may well be in its final three sentences, directed to the trial court (emphasis added):
Other neutral principles of civil law may be relevant; and the governing documents of the diocese and the national church, to the extent those documents may establish trust relationships and limit or expand corporate powers. (See Episcopal Church Cases, supra, 45 Cal.4th at p. 485.) Thus, the trial court may be required to determine whether properties claimed by both plaintiffs and defendants were actually transferred by their legal owners under California law, and whether otherwise-valid transfers violated the provisions of a valid express or implied trust imposed on the property. But we emphasize that in resolution of, for example, trust issues, the court is required to determine the terms of the trust based on the applicable documents and the civil law, not on the basis of religious doctrine. (See Jones v. Wolf, supra, 443 U.S. at p. 604.)
This language pretty well disposes of the many pages of its briefs which ECUSA devoted to arguing that it was "hierarchical" because of its polity and so-called "three-tiered" structure. As I noted in my earlier post, the Court does not use the word "hierarchical" anywhere in its opinion. Under neutral principles, the character of a church as "hierarchical" is important only if there has been an express trust created nationwide through an exercise of hierarchical powers. And since, as also pointed out, the Dennis Canon creates no such trust in the property of any Episcopal Diocese, there is no other language in the national Constitution or Canons on which ECUSA can base a claim for the imposition of a legally valid trust on diocesan assets.

In short, 815's strategy of claiming the property of a departing Diocese because it is somehow "hierarchical" today went down to defeat in Fresno. How the Presiding Bishop and her attorneys react to this decision will speak volumes for their intentions to keep relying on that strategy to win cases in the secular courts.


  1. Mr. Haley,

    I have one major problem with the sort of thinking embodied in the Court of Appeal's decision. Specifically, I do not understand how anyone literate in English can determine (once it is recognized that an organization has established specific, clear and non-doctrinal rules that establish required administrative procedures) how a court can rationally decide that applying those rules to establish whether or not an outcome is procedurally valid somehow requires the court to decide that doing so would entangle the court in First Amendment issues. To hold that opinion is quite illogical on its face.

    To assert that the failure of a body, particularly one which has no identifiable "highest adjudicatory," to follow its own rules in calling a convention, etc., amounts to alowing the party who has acted outside the organization's rules to do anything they want, justifying their actions on the basis of "because I said so!" That seems to me a reasonable example of what I could only term lawlessness.

    Is there something in the Amendment, which reads "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof," that I am overlooking?

    Pax et bonum,
    Keith Töpfer

  2. Martial Artist, you are quite correct that there was nothing that prevented the Court of Appeal from looking at whether ECUSA had followed proper procedures in re-creating its Diocese of San Joaquin. However, the most it could have done in that regard was to find that there were disputed issues of fact whether they had done so, and send the case back for further proceedings and evidence on that point.

    Instead, the Court chose a more expedient route -- one that gets rid of the question altogether. By focusing, not on the organization of the new "diocese", but on the issue of who was the proper "Bishop of San Joaquin", the Court demonstrated the futility of wrangling over internal procedures, and got the parties back to the main track. In effect, it said: "Take those issues of legitimacy back to your churches and resolve them there. If you want us to tell you who now owns the properties, show us the deeds, and any other documents you claim establish a binding and valid trust on the property in question. We will analyze those documents in terms of traditional property and trust law, and tell you whether Bishop Schofield was under any constraints or not when he conveyed the properties to a diocesan holding corporation after his diocese had withdrawn from the Church."

    I like that approach, because it greatly simplifies the trial of the case. Can ECUSA show any language in its Constitution or Canons which imposes a trust in its favor on the property of its member dioceses? I know that they cannot, and that is why I am hopeful that this decision will point the way to the ultimate demise of ECUSA's bogus property claims against the Diocese and its parishes.

  3. Mr. Haley,

    Thank you for explaining the tacit message in the Appeal Court's ruling. I suppose I am simply too direct and forthright to have ever been a jurist, with the possible exception of replacing Judge Judy on the TV banc.


    Pax et bonum,
    Keith Töpfer

  4. I was impressed with the tone of the decision. The judges concluded that what TEC was arguing was, "we believe this is our bishop, so judges, you believe it, too!"

    As you say, Mr. Haley, it's really just a side issue to whether there is anything in the property deeds that created a beneficial interest for TEC.

    It's clear that the diocese never committed the property affiliated with it to TEC, but rather, simply joined TEC. Then it left.

    I would bet most of the parishes have deed language something like "Episcopal Church in the Diocese of San Joaquin". This simply points to the Diocese as the governing entity.

    Roman Catholic practices and beliefs are not state civil law, and this seems to be the shadow argument being made by TEC. Nothing to do with what was actually written down on property documents.

    TEC is saying, "we created (i.e. believe as a matter of doctrine in) this new bishop of ours, so give him all of that property over there."

    There was a study done out there recently which showed that the United States has a banana republic level of justice nowadays, so it will be interesting to see how this case turns out.