Saturday, June 2, 2012

The Falls Church Asks Virginia Supreme Court to Hear Appeal

Virginia must be the only State (of which I am aware) in which there is no automatic right to appeal a judgment in a civil case. Its Courts of Appeal deal exclusively with criminal cases, and that structure leaves only its Supreme Court to deal with civil appeals. The latter court, however, does not have to accept any civil appeal. Instead, the procedure is to file a petition with the Court, which briefly addresses each point of error in the trial court’s decision which the petitioner would like the Supreme Court to agree to hear and resolve. In explaining the points of error, the petitioner must set forth reasons why they are worthy of attention by the State’s highest court.
Yesterday came word that one of Virginia’s largest and oldest churches, The Falls Church, which lost its case to be declared the owner, free and clear, of its long-held real and personal property (worth tens of millions of dollars), had filed a petition for review of that decision with the Virginia Supreme Court. Their petition raises six assignments of error.
The last two points of error deal specifically with the manner in which Judge Bellows of the Fairfax County Circuit Court ignored individual donors’ intent to hold that a Virginia statute (§ 57-10), which no party had cited or argued to him, dictated that the church’s personal property (pledges and gifts) had to follow its real property. Since he had concluded that the Episcopal Diocese and ECUSA itself had a “proprietary and contractual interest” in the latter, sufficient to prevent its use for any but ECUSA’s purposes, he concluded that ECUSA and the Diocese owned the gifts and pledges as well—even though the parishioners making the gifts had specified in writing that no part of their money should go either to the Diocese or to the national Church.
This aspect of Judge Bellows’ ruling in January of this year drew the attention of Virginia’s attorney general, who is charged with the responsibility of overseeing all charitable entities in the State and their management of charitable gifts. He joined The Falls Church in requesting Judge Bellows to reconsider his ruling on that point, but Judge Bellows denied their motions in March. Now the Virginia attorney general has joined The Falls Church in requesting the Supreme Court to hear the case, if only with respect to the last two points of error raised in the Church’s petition.
The first four points of error have to do with the manner in which Judge Bellows gave extraordinary precedence to ECUSA’s and the Diocese’s canons, to the point even that he allowed them to override State law and statutes. To do so, the petition argues, grants ECUSA a privilege extended to no private individual or entity, and to few other nationally organized churches: the right to bypass State law and procedure in creating an enforceable trust interest unilaterally in the property of another, without that other’s express consent to the trust, given in writing.
Such an extraordinary grant of special power, derived only from a reading of the national Church’s and the Diocese’s canons, makes a mockery of applying “neutral principles of law”, as all Virginia courts are required to do in church property disputes:
Since 1832, this Court has held 14 times that denominational trusts—which plaintiffs purport to impose unilaterally via their canons—are invalid. [Footnote omitted.] Thus, to prove ownership of local church property, denominations bear the “burden of proving” a “proprietary interest” by showing “a violation by the [congregation] of either ‘the express language of the deeds or a contractual obligation of the general church.’” Green, 221 Va. at 555, 272 S.E.2d at 185-86 (quoting Norfolk); id. (a “proprietary right” is “a right of one who exercises dominion over a thing or property”). “To this end the language of the deeds and the constitution of the general church should be considered … in the application of neutral principles of law.” Id. (emphasis added). Courts also “look to [Virginia’s] statutes” and—where appropriate—“the dealings between the parties.” Id. No decision of this Court has found a denominational proprietary interest without finding that the denomination’s interest “ha[d] its genesis in the … deed.” Id. at 556, 272 S.E.2d at 186.
The petition goes on to point out how Judge Bellows’ preference given to church canons violates neutral principles of property law:
The trial court failed to apply normal “principles of real property and contract law.” Truro, supra. As to property law, plaintiffs admit that “[n]either the Diocese nor the Episcopal Church is specifically named as a grantee as such in any [deed].” Tr. 31. In fact, four TFC deeds do not refer to anything “Episcopal”; one predates plaintiffs’ existence; and none restricts TFC’s property to use by an “Episcopal” entity or use in conformity with plaintiffs’ canons. Nevertheless, the court read all of TFC’s deeds to condition TFC’s ownership on affiliation with plaintiffs—i.e., as a restrictive covenant or a restraint on alienation. Op. 78.
The trial court’s ruling thus violated this Court’s holdings that even “[a] declaration of the use to which the granted premises are to be applied does not ordinarily import a condition or limitation, but only in cases in which a reverter or forfeiture is expressly provided.” Roadcap v. County School Bd., 194 Va. 201, 206, 72 S.E.2d 250, 253 (1952); accord Scott v. Walker, 274 Va. 209, 213, 645 S.E.2d 278, 283 (2007) (collecting cases). This rule applies with extra force when, as here, “it would have been easy to say” that property may not be used for other purposes.Id. at 218, 645 S.E.2d at 283.
The petition points up the distinct differences between the terms of The Falls Church’s deeds and those of the other churches in the case:
Conveyances to Episcopal churches other than TFC also contain express use restrictions. For example, a deed to Truro Church “forever” conditioned the grant “upon the following purposes, uses, trusts & conditions & none other … for the use of the members & congregation of the Protestant Episcopal Church of the Diocese of Va. worshipping … subject to the Constitution, canons & regulations of the Protestant Episcopal Church of the Diocese of Va.” Op. 65. St. Stephen’s deed too subjected its property “to the laws and canons” of “the Protestant Episcopal Church,” for its members’ “sole use and benefit.” Op. 68. Later deeds signed by the Diocese contain similar restrictions…
Then it shows how Judge Bellows’ ruling simply glides past these differences:
Without even discussing the foregoing precedent, the trial court simply reasoned that most deeds here “refer explicitly to the churches being Episcopal churches or make other reference to their Episcopal character,” and that “those deeds that do not use the word Episcopal were to trustees of ‘a local church that was at the time of the conveyance indisputably an Episcopal church.’” Op. 78 (citation omitted). But TFC’s original land was acquired before plaintiffs existedand nothing in any TFC deed restricts its property to use by Episcopalians. Cf. Green, 221 Va. at 553, 272 S.E.2d at 184 (“grantors conveyed the property to ‘Trustees of the A.M.E. Church of Zion,’” “for the purpose of erecting an A.M.E. Church of Zion (to be known as Lee Chapel), not a church of some other denomination”). [Footnote omitted.]
Next, the petition takes on Judge Bellows’ finding that the plaintiffs (the Episcopal Diocese and the national Church) exercised “dominion” over The Falls Church properties:
Review is further warranted by the trial court’s failure to apply neutral principles in ruling that plaintiffs exercised “dominion” over TFC’s property. This Court equates “actual dominion” with “actual possession.” Quatannens v. Tyrrell,268 Va. 360, 366, 601 S.E.2d 616, 618 (2004). And the trial court earlier found—after a trial—that “TFC’s vestry … for more than 150 years has governed the property in question, raised funds to upgrade the property, repaired the property, financed additions to the property and decided how the property was to be used.” 12/19/08 Op. 15 n.10 (not appealed).
It is undisputed that TFC alone decided who could enter the premises and on what terms. As plaintiffs’ bishop put it: “If a bishop wants to meet with a vestry, [he] would … have to be invited.” Tr. 318. Citing various facts—e.g., that bishops visited TFC for confirmations or to examine the state of the church—the trial court found plaintiffs to have “dominion.” Op. 93-94. But those facts do not add up to “dominion” under Virginia law.
To be sure, dominion also “may be accomplished ‘by residence, cultivation, improvement, or other open, notorious and habitual acts of ownership.’” Tyrrell,268 Va. at 366, 601 S.E.2d at 618. Here, however, TFC alone “chose the architecture” (Tr. 1119, 1452, 2454); incurred the costs of designing improvements (Tr. 1455-56, 2451); did “competitive bidding” and oversaw construction (Tr. 1455, 2454-55); and “work[ed] with the board of county supervisors” on zoning issues (id.). As plaintiffs’ counsel put it, the “day-to-day responsibility” for “management, payment, and so forth related to the property” is handled by “the vestry and the local church.” Tr. 964.
Plaintiffs undertook no obligation to pay for any of this; money flowed the other way. Indeed, TFC not only voluntarily gave plaintiffs $4.3 million from 1950 to 2006 ($8.8 million in real dollars) (Tr. 2525-26); it was also responsible for property upkeep and improvement for “as long as the records … show.” [Footnote omitted.] From 1991 to 2010 alone, TFC spent $6.4 million on maintenance… Plaintiffs contributed $0.
... Nor did plaintiffs pay for casualty insurance or indemnify TFC’s trustees. Rather, the Diocese indemnifies only trustees that it appoints and insures only property “over which the Diocese has control.” PX-COM-0003-028, -029 (Canon 15.7) (emphasis added). Plaintiffs’ own canons thus implicitly admit that they donot control TFC’s property.
In sum, it was TFC that bought, mortgaged, paid for, designed, built, improved, maintained, zoned, leased, managed, insured, and possessed the property. No neutral view of “dominion” supports the ruling below.
Perhaps the strongest section of the brief is the argument that follows what I have just quoted—dealing with how the opinion by Judge Bellows ignores neutral principles of contract law. The brief breaks its argument down under six points, the first of which is the requirement for mutual assent to make a contract:
First, the trial court treated plaintiffs’ unilateral canons as a contract, ignoring the absence of mutual assent or mutual remedy for breach. “[To form] an agreement, the parties must have a distinct intention common to both and without doubt or difference.” Smith v. Farrell, 199 Va. 121, 128, 98 S.E.2d 3, 8 (1957) (citation omitted). Further, the U.S. Supreme Court views mutual assent as critical to neutral principles analysis: “[T]he parties can ensure, if they so desire, that the faction loyal to the hierarchical church will retain the church property.They can modify the deeds or the corporate charter to include a right of reversion or trust.” Jones, 443 U.S. at 606 (emphasis added). But rather than negotiate a joint agreement, as required by contract law, plaintiffs responded toJones by passing canons unilaterally asserting a trust in property to which they lack title—ignoring both the mutuality requirement and Virginia’s ban on such trusts. [Footnote omitted.] And despite earlier noting that “a contract requiresmutual assent and the communication of that assent” (8/19/08 Op. 10), the trial court refused to apply that rule here…
The second point (pp. 20-21) is the requirement for mutuality of remedy, i.e., that both sides to a contract must be able to enforce it. That is obviously not the way with Church canons—a parish has no ability to force a Diocese to act pursuant to its canons, and has no remedy when Dioceses breach their canonical obligations. The third point (p. 21) is the lack of considerationfor the “contract” which the court found was unilaterally established by the canons. (“Consideration” is a technical legal term that describes the incentive for each party to enter into a contract, i.e., the benefit they get out of it.) The Church’s Dennis Canon and other property canons provided no benefit to the parishes at all—they simply kept right on operating as they had before, paying for their property’s upkeep and repairs, etc.
The fourth point of contract law has to do with the trial court’s use of evidence of the “course of dealing” between the parties to establish that a contract existed. Such evidence is admissible to show the specific terms of a contract already made, but under Virginia law (as elsewhere) it cannot be used to prove the making of a contract.
I will quote the brief directly on its next point:
Fifth, the trial court recognized that Virginia law “d[oes] not validate denominational trusts” (Op. 29 n.14), and thus that plaintiffs’ trust canons are invalid. Yet it inexplicably held that “these canons could be considered in the context of that portion of the ‘neutral principle[s] of law’ analysis related to ‘course of dealings’ between the parties … and given such weight as the Court deems warranted.” Op. 50. The court even held that, in allegedly failing to object to plaintiffs’ assertions of such a facially invalid trust, TFC’s course of dealing created a contract. Op. 94 (invoking Diocesan correspondence to TFC asserting a “trust” in its property as evidencing TFC’s implicit consent to grant plaintiffs property rights, despite TFC’s challenge to that assertion, see DX-FALLS-0234-00314 to 00316).
The trial court also relied on TFC’s compliance with canons calling for Diocesan consent to encumbrances of consecrated property. But nothing in those canons alerted TFC that compliance would affect ownership. Tr. 1044-48. By analogy, a homeowner may be bound by neighborhood association rules requiring the association’s consent before she can put up a fence. But neither the existence of such rules nor the homeowner’s compliance enables the association to assert ownership of her house…
I find the last analogy particularly apt. It is all too typical of the way that ECUSA’s attorneys argue their position that they use rule-based limitations on conveying church property, which are purely moral and disciplinary in character, to insinuate that the Church thereby obtains alegally recognizable interest in the title to the real property. That is not law; it is voodoo.
The Falls Church’s sixth and last point on neutral principles of property law again relies upon a doctrine that is followed by a wide variety of States:
Sixth, the trial court ignored that even if the canons otherwise created a contract, “association regulations” are “limited by general law” and a “test of reasonableness” that bar “encumbering [members’] property” or effecting a “forfeiture” thereof. Unit Owners’ Ass’n v. Gillman, 223 Va. 752, 767, 763, 765, 292 S.E.2d 378, 385, 383-84 (1982). Rules of a “voluntary association” cannot purport “to transfer the title to [members’] property”; that is a “function[] of sovereign power.” Davis v. Mayo, 82 Va. 97, 103 (Va. 1886). The trial court’s contrary ruling compels review.
All of the preceding argument was on the first assignment of error—that the trial court did not apply strictly “neutral principles of law” to this dispute over the ownership of church property, as Virginia precedent requires. As I pointed out in my previous discussion of Judge Bellows’ opinion, he appeared slavishly to follow prior Virginia precedent—but in doing so, he selectively elevated certain evidence (regarding Church canons and “course of dealing”) into a “winner-take-all” role that makes a mockery of neutrality. If Church canons can trump State law, then there is nothing “neutral” about the principles being applied, because then churches are not subject to the same laws that all the rest of us are.
The second assignment of error (pp. 24-25 of the brief) is tied into the first: it makes the point, as discussed earlier, that granting such precedence to Church rules and canons violates the First Amendment by carving out a special niche of which only certain churches may take advantage. This is the same point being raised by the two petitions currently pending before the United States Supreme Court, as I discussed in this previous post. And it is why The Falls Church’s petition is important to keep its case alive until we can see how SCOTUS will deal with that issue.
The brief’s third assignment of error is again worth quoting directly, because it makes a technical point which, once appreciated, becomes telling:
The trial court also erred in divesting TFC of property by retroactively applying canons and laws not in force when TFC acquired its initial property or when it joined the denomination. Unlike the denomination in Green, plaintiffs cannot point to any deed as the “genesis” of their alleged interest in TFC’s property. 221 Va. at 555-56, 272 S.E.2d at 186. Nor can they point to a specific agreement by TFC to grant them a proprietary interest.
At trial, plaintiffs said their interests “arise when the congregation becomes part of the Diocese.” Tr. 39. But TFC joined in 1836, when plaintiffs admit they had no property rights. As the Diocese lamented in an 1845 petition to the General Assembly, “no Christian denomination is capable of taking and holding property of the smallest amount.”... Plaintiffs also admit that “Virginia law did not give legal recognition to unincorporated associations” until well into the 1900s… In short, as the trial court held in an earlier ruling that was not appealed, “[n]o 19th century Virginia case finds any denomination or diocese—entities that lacked legal standing and the ability to contract—to have had any enforceable interest in property”; “denominations were … without a ‘legal existence.’” 8/19/08 Op. 13 (quotations omitted).
Notwithstanding its earlier ruling, the trial court pointed to TEC’s anti-alienation canons, passed circa 1870, as the principal source of plaintiffs’ alleged rights. Op. 88-89 & n.73, 55 n.36. But those canons cannot possibly have taken effectbefore plaintiffs had legal standing to form contracts or hold property. The court cited no authority holding that an interest that is null on creation can spring into existence years later if the law changes. Cf. McGehee v. Edwards, 268 Va. 15, 19, 597 S.E.2d 99, 102 (2004) (applying “the law in effect at the time the trust is executed”); 90 CJS Trusts §85 (“The law in effect at the time of the creation of the trust governs its validity”). As the Arkansas Supreme Court held in striking down a later-enacted denominational “trust” clause, the law does not “allow a grantor to impose a trust upon property previously conveyed”; “the parties to a conveyance have a right to rely upon the law as it was at th[e] time [of conveyance].” Arkansas Presbytery v. Hudson, 40 S.W.3d 301, 309-10 (Ark. 2001).
The trial court noted that Va. Code §57-15 (reproduced in the Addendum) was amended in 1904, suggesting that the amendment retroactively validated plaintiffs’ anti-alienation canons or alleged proprietary interests. Op. 55 n.36. But “retroactive laws are not favored, and … a statute is always construed to operate prospectively unless a contrary legislative intent is manifest.” Berner v. Mills, 265 Va. 408, 413, 579 S.E.2d 159, 161 (2003). Nothing in §57-15 suggests that it applies retroactively, let alone to deprive vested property rights. Nor could it. Under the Contracts Clause (U.S. Const. art. I, § 10; Va. Const. art. I, § 11), a congregation’s deed is a “binding contract,” and it is “beyond the legislative power” to apply a statute to “deprive[] the cestuis que trusts named therein, and created by the trust, of their property rights,” or to “convey[] the right to dispose of this property to others.” Finley, 87 Va. at 108-09, 12 S.E. at 230. Review is warranted.
The Falls Church’s fourth assignment of error (brief, pp. 28-29) makes a point I had not seen argued before. It contends that Judge Bellows used Church canons dealing with consecratedproperty as the basis for finding that the Church had a “proprietary and contractual interest” in all of the parish’s properties—unconsecrated as well as consecrated. The Falls Church, for example, owns a shopping mall, worth many millions of dollars. It obviously has never been consecrated to any religious purpose. Yet Judge Bellows awarded its ownership to the Diocese based on his reading of the Church’s canons forbidding the encumbrance or alienation of consecrated property without the consent of the Diocese’s ecclesiastical authority.
As you can see from my extracts, the brief again and again quotes earlier decisions of Judge Bellows in the case to contradict his latest ruling. Inconsistency in applying the law to the facts is not a virtue in judges. What happened? The only way I have to explain it is that somewhere between the first and second trials, Judge Bellows lost his enthusiasm for addressing all of the unusual and abstruse elements raised by the cases. Having had his finest work effort reversed by the Virginia Supreme Court with little acknowledgment for all of the effort he had put into the case up to that point, Judge Bellows appears to this attorney, at any rate, to have retreated into a workmanlike shell, under which he perfunctorily applied previous decisions of the Virginia courts to these complex facts, in order to come up with a “one size fits all” ruling that produced a uniform result as to all seven parishes, regardless of their individual facts and histories. And now, as the brief of The Falls Church so ably points out, his uniform approach is achieved only at the cost of inconsistency with his own earlier rulings, before the first appeal—but he simply cannot be bothered to sort the case out any further. He denied all requests to reconsider his ruling, and so left it to the higher courts to put things right.
The arguments raised in The Falls Church brief are all fine arguments, and when joined with those of the Attorney General, should get the notice of the Virginia Supreme Court. The Diocese and ECUSA will file briefs with arguments as to why Judge Bellows was correct, and telling the Court that it accordingly need not bother with granting review. Then The Falls Church may file a reply to those briefs, and all of the briefs will go to the Justices for their consideration and decision on the petition. We probably will not know that decision until early fall—particularly if, as on the earlier appeal, certain justices recuse themselves from involvement because of their own religious affiliations.
The press release linked earlier offers a final rationale for pursuing this appeal, by making an analogy to St. Paul’s own appeal to the Emperor:
When considering this decision, parishioners recalled St. Paul’s determination to appeal his false arrest in Jerusalem and trial at Caesarea to the Emperor in Rome. He judged that to use the legal system of his time was appropriate and in no way compromised his faith. Paul’s purpose was simply to be a faithful steward of all that the Lord had entrusted to him, above all the Gospel of Jesus Christ and the power of the Holy Spirit to transform lives. The purpose of the Falls Church Anglican is the same, following its motto—“that Christ be King in our lives and in the lives of others”—and its prayer that “all of the resources that God has entrusted to our care over the years would be used only and always for this purpose.”
To which one can say: Amen.


  1. Two points re Virginia procedure that should be noted for your readers here and on StandFirm.

    First, a minor point. Civil cases below $25,000 in value may originate in general district court, in which case there is a right of appeal to circuit court. Yes, arguably that means you have more procedural rights in lower dollar value cases, but that's just a side effect of making it easier to try those cases in the far more informal district courts.

    Second, and far more important to the article, is that The Falls Church is almost certainly not going to file a reply brief. On the merits -- if the petition for appeal is granted -- you have the right to a reply brief. But at the petition stage, filing a reply brief waives your right to oral argument on your petition (before a 3 judge panel). See Rule 5:19 of the Rules of the Supreme Court of Virginia (the only exception being to address cross-error if the opposition brief assigns any). It's the rare case indeed where Virginia appellate practitioners would advise the reply brief choice.

  2. Mr. Haley,

    Would not the failure of the Virginia State Supreme Court to hear this appeal introduce substantial uncertainties into the future application of that state's trust laws? ISTM that if they do not correct Judge Bellows' errors and omissions, it would make a complete and utter hash of Virginia's laws, not to mention calling into question how the court must proceed in the application of neutral principles when dealing with church properties.

    Am I making some fundamental error of reasoning or are there actual grounds for such concern?

    Pax et bonum,
    Keith Töpfer

  3. An excellent article. I'm very encouraged that the Falls Church continues to seek Biblical passages and figures to help inform the direction they have taken. Using St. Paul's appeal to Rome is another example in a long line of many they have already used. God bless them.

    I do, however, want to highlight one small point regarding St. Paul in particular. St. Paul did make it Rome. We do not know for certain whether or not he received the hearing he sought. But we do know that Paul suffered martyrdom under Nero.

    May God grant Falls Church a different outcome. May He prepare them for whatever end He has in mind for them. May He be glorified in his people.