The San Joaquin Lawsuit: an Update

The Diocese of San Joaquin is a California unincorporated association that was, from 1961 to December 2007, one of the dioceses of the national Episcopal Church, a constituent member of the worldwide Anglican Communion. The members of the Diocese were the local Episcopal churches (called "parishes" and "missions") located in fourteen Central Valley counties of California. The Diocese was, and continues to be, governed by its internal "constitution" and "canons" (akin to bylaws). The highest legislative body of the Diocese is its Annual Convention.

On December 8, 2007, the delegates to the Diocese’s Annual Convention voted overwhelmingly (90 percent) to end the Diocese’s spiritual affiliation with The Episcopal Church and affiliate instead with the Anglican Province of the Southern Cone of America, another national member church of the worldwide Anglican Communion. The Diocese of San Joaquin is the first diocese to leave the national Episcopal Church since the Civil War, when nine dioceses departed to form an independent church in the southern states. 

The Presiding Bishop of the Episcopal Church, the Most Rev. Katharine Jefferts Schori, responded to the Diocese’s departure by doing three things: she declared that a motion to depose Bishop John-David Schofield had carried the House of Bishops, and that his see was now vacant; she declared that she refused to recognize the Standing Committee of the Diocese as its Ecclesiastical Authority, or for any other purpose; and she called on short notice a "special convention" of the parishioners remaining in TEC to consent to her designation of the Rt. Rev. Jerry A. Lamb, retired Bishop of the Diocese of Northern California, as Provisional Bishop of the Diocese of San Joaquin. Once those steps were accomplished, the special convention authorized Bishop Lamb to file suit against Bishop Schofield and the diocesan trust entities he controlled to acquire title to all of the diocesan properties, investments and accounts. TEC joined Bishop Lamb and the newly organized Episcopal "Diocese of San Joaquin" as a plaintiff in the lawsuit.

Plaintiffs subsequently amended their complaint to add Merrill Lynch as a defendant, because it was the custodian of the diocesan trust funds. Merrill Lynch has requested the Fresno Superior Court to be allowed to "interplead" all the funds it has in its possession, and to be dismissed from the lawsuit. By turning over the funds to the control of the court, and asking it to determine who is entitled to them, Merrill Lynch is abandoning any role as custodian and leaving it to the court to sort matters out. Pending the court’s order on the interpleader request, Merrill Lynch has on its own frozen all the funds so that no money may be withdrawn from the accounts without a joint agreement by the concerned parties.

Bishop Schofield and the diocesan trust entities have now responded to the first amended complaint. First, they have asked the court to strike it, on the ground that it was not drawn in compliance with California Rules of Court. Those Rules require, for instance, that in a case with multiple plaintiffs, as there are here, the complaint separately identify each plaintiff who is asserting each separate cause of action. The first amended complaint sets out seven causes of action in 142 numbered paragraphs, but it does not identify which allegations are made by The Episcopal Church, which are made by Bishop Lamb, and which are made by the plaintiff "Diocese of San Joaquin."

The defendants have also demurred to the first amended complaint. A demurrer in law basically challenges the complaint’s adequacy, by saying, in effect: "So what? Even if all you allege is true, you have not stated a case on which the court can grant you any relief."

The first ground on which defendants have demurred is that among the funds held by Merrill Lynch which plaintiffs are claiming, are moneys deposited in the names of two individual parishes: St. John’s of Tulare, and St. John’s of Porterville. Plaintiffs, however, neglected to join those parishes as defendants, and thus the court cannot declare who owns the funds without the churches being represented in the lawsuit. 

St. John's Episcopal Church in Tulare, however, has voted not to join the Diocese in aligning with the Province of the Southern Cone. Its rector, the Rev. Robert G. Eaton, also has declared his intention of remaining with The Episcopal Church. So let's understand what is actually happening on the ground here.  The Episcopal Church and its designated agent, Bishop Lamb, are claiming to own or control money belonging to one of their own parishes that has voted to remain in The Episcopal Church.  They are doing so regardless of the consequences, in order to maintain their fiction that Bishop Schofield "wrongfully" relinquished control of these funds to St. John's long after it had grown beyond the status of a diocesan mission. Simply by the expedient of a letter addressed to Merrill Lynch, The Episcopal Church has succeeded in having all the investment accounts of its rival Diocese, the Anglican Diocese of San Joaquin, frozen---along with accounts belonging to churches that have chosen to remain Episcopal. Is it not remarkable that a New York investment firm would so act on the strength of nothing more than a letter from another New York entity headquartered at 815 Second Avenue? Could any of us have succeeded in having Merrill Lynch freeze a rival's investment funds by the simple act of sending Merrill Lynch a letter? This entire episode calls for the illumination a lawsuit will bring.

Next, defendants say that the plaintiffs failed to describe the real properties they are claiming to own (other than some parcels in Kern and Madera Counties) with any degree of particularity, so that they can be readily identified. Finally, the defendants point out that plaintiff Jerry Lamb, individually, is asking for relief that properly should be requested by the religious corporation sole of which he claims to be the incumbent. The corporation sole is the entity which by law is authorized by the Diocese to hold title to diocesan property, but it is not a party to the lawsuit as currently drafted. (It is a little like the president of Exxon Corporation suing in his own name, but asking for relief that has to be given, if at all, to the company which he heads.)  

So the first skirmishes have taken place, and it is now up to the plaintiffs to decide whether to redraft their complaint and change some of the parties to it, or to try to convince the court that their complaint as filed is adequate, and needs no changes. The court will not assign a date for trial until the case is "at issue"— meaning that the allegations of the complaint have each been responded to, and the parties are ready to conduct discovery and then go to trial. A hearing on the demurrers and on the motion to strike will take place in Fresno County Superior Court the afternoon of August 20.