Judge's Ruling in St. James Case Puts Cloud on Many Former Episcopal Properties in California

Judge Kim Dunning of the Orange County Supreme Court handed down on May 1 a surprise ruling in the case involving the property of St. James's parish in Newport Beach, and held that St. James could not retain title to its property after it voted in 2004 to disaffiliate from the Episcopal Church (USA). But due to the bizarre reasoning she used to reach that conclusion, the ruling -- if upheld on appeal -- would put a cloud on the title of every previous sale or disposition of any Episcopal parish property in the State since 1980.

The wrinkle in the St. James case -- a feature which distinguished it from the cases of two other parishes in the Diocese of Los Angeles (St. David's Hollywood; and All Saints, Long Beach) which Judge Dunning ruled last September could not retain their properties either -- was that St. James had been given an explicit letter from the Diocese in 1991 prior to purchasing the property at issue here, and undertaking the multi-million-dollar expense of developing it. The letter, written by then Canon to the Ordinary D. Bruce MacPherson (who resigned last year from his later jurisdiction as the bishop diocesan of Western Louisiana), told the parish (its text is reproduced on page 5 of the opinion linked above, and a facsimile of the original may be viewed on page 12 of the brief linked here; I have added the bold emphasis below):

The Rector, Wardens and Vestry of Saint James' Parish, Inc. of Newport Beach, are given permission by the Bishop of Los Angeles, the Rt. Rev. Frederick H. Borsch, to purchase and own the property on 32nd Street in Newport Beach, in the name of the Rector, Wardens and Vestry of Saint James' Parish, Inc. and not held in trust for the Diocese of Los Angeles, or the Corporation Sole.

On the strength of that letter, St. James said in its papers opposing the Diocese's motion for summary adjudication as to the ownership of the property, it had "changed its position to its substantial detriment" by investing millions of dollars in the acquisition and development of what was then (and still is) prime real estate in one of the wealthiest areas of Orange County.

But after St. James voted to disaffiliate in 2004, the current Bishop of Los Angeles, the Rt. Rev. J. Jon Bruno, reneged on the prior understanding and filed suit for all of the parish's properties -- including that which it had purchased in 1991. ECUSA added its voice to the property claims by filing a complaint in intervention. And now Judge Dunning has ruled that the letter, "as a matter of law ... was not effective to erase the trust under which the St. James Parish properties were held" (italics added).

The trust that the letter could not erase was, of course, the Dennis Canon, purportedly passed by General Convention in 1979 (the key records that would show its consideration and passage by both houses of that body have since mysteriously been lost, or else never existed in the first place). California courts have held that its unilateral declaration of a universal trust on all Episcopal parish properties everywhere was authorized by a specific statute which took effect in 1980 (Corporations Code Section 9142 [c]), and that the Dennis Canon has the force and effect of law in California as a consequence.

Now comes Judge Dunning, however, and rules that a diocesan bishop is without authority to release the trust on behalf of ECUSA, no matter what. She bases this conclusion on the authority of affidavits  submitted by ECUSA's well-paid historian, Prof. Bruce Mullin, and by the Rt. Rev. John Buchanan (provisional bishop of the rump diocese of Quincy), which contended that no one Episcopal bishop has any authority to alter or suspend the canons in his diocese, or to speak for or to bind ECUSA in any matter.

(Those opinions might come as a surprise to those bishops who have suspended the marriage canons in their diocese to provide a "pastoral response" to gay couples, or who have suspended the applicability of the canon requiring that all persons partaking of Holy Eucharist be baptized. And of course, no one said anything about the self-contradiction inherent in Bishop Buchanan's proclaiming, on behalf of ECUSA, that no one bishop may speak for ECUSA.)

So according to Judge Dunning's May 1 ruling, the trust imposed on all Episcopal parishes in California may only be dissolved in the manner by which it was imposed in the first place -- by a canon duly enacted by General Convention.

Do you understand now the huge impact this ruling could have if it is affirmed on appeal?

According to it, since no sale of any California property owned by an Episcopal parish ever received any release of the Dennis Canon by General Convention, then all of those properties that have been marketed and sold since 1980 -- parking lots, rectors' residences, and auxiliary properties, to say nothing of church buildings themselves -- are still subject to the Dennis Canon trust, no matter what any diocesan bishop or standing committee purported to allow. They were not the General Convention.

To reach her ridiculous conclusion, therefore, that no one diocesan or standing committee may waive or release the Dennis Canon on behalf of any Diocese, or on behalf of the national Church, Judge Dunning has managed at one stroke to cloud the titles of hundreds, perhaps thousands, of pieces of property sold and conveyed by Episcopal parishes in California since 1980.

And that is just one problem with her seriously flawed decision, which relies upon circular reasoning and deliberate misreadings of parish governing documents, as well. The decision is not only a travesty of justice, but as I say, it should make title companies all across California fear for all of the various policies they have issued to buyers of church property since 1980.

[UPDATE 05/03/2013: Of course, the impact of this ruling on the Diocese of Los Angeles itself has probably not yet dawned upon Bishop Bruno and his allies. It means that the Diocese will not be able to offer free and clear marketable title to any of the properties it has confiscated over the years from so many of its former parishioners: St. Luke’s in the Mountains, St. David’s, All Saints ... and now St. James. Unless and until the Diocese can obtain an amendment to the Dennis Canon from General Convention, the Court’s ruling means that all those properties remain impressed with a trust in favor of ECUSA, which cannot be modified, altered, waived or released in any way. Moreover, lenders will now not loan against ECUSA parish properties for purchase or construction unless General Convention agrees to subordinate its Dennis Canon to the loan in every case. Watch out what you ask for, Bishop Bruno! And good luck with recovering the millions you have spent on property fights.]

Making a mish-mash of the law of the several States in this fashion must be what ECUSA really wants, because that is just what it has systematically been doing over the past ten years (and more). It cares not about the effects or difficulties that its arguments may cause for other law-abiding property owners, just so that it can pursue its scorched-earth policy to let no disaffiliating parish go unpunished, anywhere.

And God save us from unthinking and unaware judges who have no clue to what they are holding, finding, or deciding. Save for a random and capable judge here and there, the majority of them have shown themselves less than equipped for the tasks which these cases present.