LITIGATION SUMMARY,

THE CASES OF THE FIVE DIOCESES
(as of July 19, 2016)

The majorities in five Episcopal Church dioceses voted to leave the Church between December of 2007 and November of 2012. In each case, the secessionist party claimed to own the old diocese, its legal rights and its property. On the other hand, the Episcopal Church claimed it reorganized and continued each diocese and that its entity owned the rights and property of the old diocese. In each of the five cases, two opposing dioceses squared off against each other in court. Legal actions ensued in every one of the five cases. The Church initiated the lawsuits in some instances, the separatist entities in others. More than eight years into the secession movement, where does the litigation now stand? We will look at each individual case: 1-Pittsburgh, 2-San Joaquin, 3-Quincy, 4-Fort Worth, and 5-South Carolina.

1. PITTSBURGH

On Oct. 24, 2003, Calvary Church of Pittsburgh and St. Stephen's of Wilkinsburg filed suit in state court to prevent the officers of the Diocese of Pittsburgh from transferring any property in violation of the TEC Constitution and Canons. This was settled on Oct. 14, 2005 in a "Stipulation" agreement between Calvary and Bishop Robert Duncan stating that property held by the diocese would continue to be held by the Episcopal diocese. The Stipulation determined all future litigation in this diocese.

In 2008, the diocesan convention voted a second and last time to leave TEC. The secessionists look the name Anglican Diocese of Pittsburgh leaving the loyalists as the Episcopal Diocese of Pittsburgh.

In January of 2009 the Anglican Diocese of Pittsburgh sued in state court for the property.

On October 6, 2009, the state court in Pennsylvania ruled that the Episcopal Church diocese was the legal and legitimate diocese and entitled to all that entailed. The court also ruled that all assets (money and property) belonged to the Episcopal Church diocese.

The Anglican diocese appealed the state court ruling to the PA Court of Appeals on Nov. 9, 2010. This court rejected the appeal in February of 2011. It reaffirmed this decision in March of 2011 by rejecting an appeal for a rehearing.

In March of 2011, the Anglican diocese appealed to the Supreme Court of Pennsylvania. On Oct. 17, 2011, that court denied the appeal leaving the lower court decision to stand. The Anglican diocese decided not to appeal to the U.S. Supreme Court.

Case closed. Decision of Oct. 6, 2009 definitive. Church side won.

2. SAN JOAQUIN

In December of 2007 the diocesan convention voted to leave TEC. The secessionist diocese later took name of Anglican Diocese of San Joaquin.

On July 21, 2009, the (state) Superior Court of California, Fresno County, ruled entirely in favor of the Episcopal Church diocese and ordered all properties to be returned to the Episcopal Church diocese. Judge Adolfo Corona ruled TEC was a hierarchical church and the diocese was bound by its Constitution and Canons. The Anglican diocese appealed.

On November 11, 2010, the California 5th District Court of Appeals overturned the July 2009 decision and remanded the case to Superior Court to be reheard under "neutral principles." The case returned to the Superior Court, Fresno County.

Judge Donald S. Black held a trial, Jan. 6-13, 2014 in the 5th District Court, Fresno following the Appeals Court direction on neutral principles. On May 5, 2014, Judge Black ruled entirely in favor of the Episcopal Church diocese and ordered the turnover of all assets to the Episcopal diocese. As Judge Corona, Judge Black ruled TEC to be hierarchical and the diocese and bishop to be bound by TEC. He said a diocese cannot leave the Church.

The Anglican diocese appealed Judge Black's decision to the California 5th District Court of Appeals on April 2, 2015. The Episcopal diocese asked Judge Black, on April 7, to enact his earlier order for the return of the assets, but he refused. The appeals court heard oral arguments on March 9, 2016. On April 15, 2016, it issued a unanimous opinion upholding Judge Black's decision.


On April 20, 2016 the Anglican diocese filed for a rehearing in the appeals court. The court rejected it on May 4. On May 13, ADSJ filed a petition with the California Supreme Court which has until July 14 to give a response. If that court refuses to hear the case, Judge Black's 2014 decision will stand as the law. On July 13, 2016, the Supreme Court of California announced its denial of petition, thus ending the case.

3. QUINCY

In November of 2008 the diocesan convention voted a last time to leave TEC. Majority later took name Anglican Diocese of Quincy (ADQ).

In January of 2009, Church lawyers got the bank to freeze the diocesan funds of $3.5m.

Mar. 30, 2009, ADQ sued in state circuit court for the legal rights and the assets. On March 3, 2010, TEC filed a counterclaim for judgment. On December 16, 2011, the (state) 8th Judicial Court, Adams County, Illinois, ruled in favor of the Anglican diocese under "neutral principles." Judge Thomas Ortbal ruled that TEC was not hierarchical.

Judge Ortbal conducted a trial in April and May of 2013. On Sept. 6, 2013, he issued a decision in favor of the Anglican diocese. Ortbal took a strict construction approach. Since the TEC Constitution and Canons did not expressly give the national Church control of the dioceses and did not expressly forbid a diocese from seceding, TEC could not prevent a diocese from leaving with the property. He ruled that an endowment fund and properties belonged to the Anglican diocese.

The Episcopal diocese (now in Diocese of Chicago) appealed to the Fourth District Court of Appeals of Illinois on Oct. 15, 2013. On June 18, 2014, a hearing was held before a three judge panel of the appeals court. On July 24, 2014, the appeals court issued a judgment upholding the lower court decision entirely in favor of the Anglican diocese.  It too said TEC was not hierarchical.

The Episcopal diocese appealed to the Illinois state supreme court. On November 26, 2014, the Illinois Supreme Court denied the petition to review the lower court decision. This left the orders of the 8th Judicial Court of 2011 and 2013 in place.

The Episcopal diocese made an appeal to the 8th Judicial Court, Adams County, to freeze a portion ($800k) of the assets of the old diocese now controlled by the Anglican diocese. On February 20, 2015, Judge Mark Drummond of this court rejected the Episcopal diocese's request and admonished the diocese to respect the earlier orders.


The Episcopal Church side appealed Drummond's Feb. 20, 2015 order to the Illinois Fourth Court of Appeals. On May 13, 2016, this court issued an opinion entirely upholding Drummond's decision of 2015. The Appeals court opinion can possibly be appealed to the Illinois supreme court.


In all probability, litigation has ended for Quincy with a complete victory for the secessionist side. The courts ruled consistently that TEC is not hierarchical and that the local diocese was entitled to the rights and property following neutral principles.

It has been asserted that the Quincy decisions set the precedent for the rest of the country. The California court explicitly refuted this in its decision of April 15, 2016.

4. FORT WORTH

The majority of the diocesan convention voted to leave TEC in November of 2008. Both the majority and the minority continued using the names and symbols of the Episcopal Diocese of Fort Worth.

On April 14, 2009, the Church diocese filed suit in the 141st District Court, Tarrant County, Fort Worth, seeking to recover the rights and property of the old diocese. On January 21, 2011, Judge John P. Chupp, of the (state) 141st District Court, Tarrant County, Texas, issued a decision entirely in favor of the Episcopal Church side. He ruled TEC to be hierarchical and ordered the secessionist side to hand over the assets.

Fort Worth became the first case to be litigated in state and federal court. In July of 2010, the Church diocese registered the old names and insignia in the U.S. Patent Office. A few weeks later the Church diocese went to the U.S. District Court, Northern District of Texas, Fort Worth Division, Judge Terry R. Means. It charged secessionist bishop Jack Iker with violation of the federal Lanham Act that protects trademarks. On January 6, 2011, Judge Means issued a stay in proceedings pending the resolution of the case in state courts. (Both sides still use the identical name.)

The secessionist side appealed Judge Chupp's ruling to the Texas Supreme Court, bypassing the usual course to the appeals court. This court held a hearing on Oct. 16, 2012. On August 30, 2013, the Texas Supreme Court ruled 5-4 in favor of the separatist diocese. The majority ordered the case be sent back to the 141st District Court for rehearing following the "neutral principles" rule under strict guidelines. They also declared that the Dennis Canon could not be enforced in Texas because the Canon did not expressly forbid a diocese from revoking it (even though a diocese has to accede to TEC's C and C). The four justices in the minority ruled the case should have been dismissed because it was not appealable to the state supreme court.

In June of 2014, the Episcopal diocese filed a request with the U.S. Supreme Court for a writ of certiorari, that is, a request that the Supreme Court rule on he judgment of the Texas Supreme Court. On November 3, 2014, the U.S. Supreme Court denied the petition perhaps because it had not been resolved in state courts.

On February 20, 2015, Judge Chupp, of the 141st District Court, held a hearing lasting one and a half hours.

On March 5, 2015, Judge Chupp issued a terse order of four sentences granting all to the separatist diocese. He gave no explanation although he directly reversed his 2011 decision.

The Church diocese appealed Chupp's last ruling to the Texas Second Court of Appeals, in Fort Worth. Three justices heard oral arguments on April 19, 2016. In the hearing a justice asked two questions, one about interfering in an ecclesiastical issue and one observing the state supreme court had not rendered a decision only a remand.

We are awaiting the impending decision of the appeals court. It is impossible to tell which way this court will lean.

NOTES

Ft. Worth is a strange and curious case. It has had polar opposite ruling, from the same judge. At first, Judge Chupp ruled very clearly and strongly in favor of the Episcopal Church diocese. There was no doubt in his mind about this case. However, the state supreme court changed everything. In Texas, the nine seats of the state supreme court are elected state wide. Given politics in Texas, this guarantees a unanimous and conservative Republican bench in the state supreme court. Even so, the anti-Episcopal Church party barely squeaked by in a split decision. The majority more or less ordered Chupp to reverse his decision. He had already said in his order that he had considered neutral principles and that they did not matter in this case. It seemed that Chupp was none too pleased in the higher court action. Apparently he only grudgingly complied. He held as brief a hearing as he could (1 and 1/2 hours) and immediately issued an order that was as terse as imaginable, just one short page. His last sentence was that it could be appealed. He gave not one word of explanation. The impression one gets is of a judge following orders from above but only against his better judgment.

5. SOUTH CAROLINA

South Carolina has had two avenues of litigation, state and federal.

In state court, the secessionist diocese acted first and chose the venue. It sued the Episcopal Church in the court of its choice, the (state) Circuit Court, in Dorchester County (Judge Diane Goodstein). From the first, the judge there ruled in favor of the secessionists. A fourteen day trial was conducted in July of 2014, highly favorable to the secessionists. The judge handed down her decision on Feb. 3, 2015. It appeared to have been written by the secessionists' lawyers. It found all in favor of the separatists and against the Episcopal Church. Although it purported to follow "neutral principles" the order often made judgments on the internal working of the Episcopal Church. The judge later refused to reconsider her decision.

On March 24, 2015, Church lawyers filed an appeal with both the state court of appeals and the state supreme court. On April 15, 2015, the state supreme court agreed to hear the appeal.

On September 23, 2015, the SC supreme court held a hearing on the appeal of the circuit court order. The tenor of the hearing was quite critical of the lower court decision.

In federal court, the Episcopal Church diocese brought suit in March of 2013 claiming its bishop and not the separatists' bishop was the legal and legitimate bishop of the diocese of South Carolina. Judge C. Weston Houck, in the U.S. District Court, in Charleston, dismissed the case in favor of the prior litigation in the state court.

The Episcopal Church side appealed the District Court decision to the U.S. Fourth Circuit Court of Appeals, in Richmond. A hearing was held in January of 2015. On March 31, 2015, the appeals court overturned Houck's decision and redirected the case to be heard under the Colorado River rule of narrow bounds. On Sept, 21, 2015, Judge Houck issued an order to stay the proceedings until the resolution of the state case. On Oct. 19, 2015, TEC lawyers appealed Houck's order to the Fourth Court of Appeals, in Richmond.

We are awaiting two court decisions: 1-the SC Supreme Court ruling on the appeal of the circuit court order, and 2-the appeal to the U.S. Court of Appeals on Judge Houck's deferral.

NOTES

South Carolina is important among the five cases in several ways. It is being litigated simultaneously in state and federal court. It is also the only one to bind the individual parishes into the lawsuit against the Episcopal Church so that both secessionist diocese and its (35) parishes are part of the same suit against TEC and its diocese. More than forty lawyers are participating on their side. Too, to my knowledge, it is the only one in which the secessionists got to choose their own court venue (a wise preemptive strike, and stunningly successful as it turned out). The DSC lawyers adopted a highly aggressive scheme against TEC even months before they entered the first lawsuit in contrast to the earlier four cases where the lawyers were slow to act. For instance, SC is the only one of the five cases where the Episcopal Church diocese has been legally banned from using the name of the Episcopal Diocese (in 3 of the 5 cases, the secessionists have adopted the name "Anglican Diocese of..."). Only in Ft. Worth and SC do the secessionists continue to call themselves "The Episcopal Diocese of..." In Ft. Worth, the Episcopal Church diocese uses the same name as the secessionists. Not in SC where the Church diocese has had to adopt another name (Episcopal Church in South Carolina). This is because the DSC lawyers struck early and convinced their judge to grant an injunction controlling the name. This is symptomatic of the more aggressive course of strategy and tactics employed by the secessionist diocese in SC.

The pending state supreme court decision is impossible to know, of course, but signs in the hearing of Sept. 23, 2015, showed a strong criticism of the circuit court decision and its underlying rationale.

The federal case is open to speculation. The 4th Circuit has already virtually ordered Judge Houck to proceed under certain guidelines. He refused pending the state court decision.

SUMMARY

Three cases have now been settled, Pittsburgh, Quincy, and San Joaquin. Is there a consensus of court opinion on the right of a diocese to withdraw from the Episcopal Church and retain the local property?

There is no consensus.

Pittsburgh was settled simply by the Stipulation of 2005 that stated all property would be held by the Episcopal diocese. This was a unique case. No other diocese had such an agreement.

Quincy was settled by courts that consistently followed strict  construction. They found the Church did not have explicit authority over dioceses and property.  The key decision here was Judge Ortbal's September 6, 2013, ruling:

There is no explicit provision in TEC's Constitution and Canons specifying the office or body having supremacy or ultimate authority over the acknowledged Ecclesiastical Authority of a Diocese...

There is no provision in TEC's Constitution and Canons which require prior approval of a diocesan constitution and canons. There is no express prohibition against withdrawal of a diocese...there is no explicit or clearly delineated expression of TEC's claim that the General Convention is the ultimate authority or judicatory of the Church.

...

the court finds that DOQ met its burden of proof, in its case in chief, that it has title and ownership of the accounts and deed titled in the Trustees. Reviewing its actions under neutral principles of law, DOQ established its withdrawal from association with TEC was compliant with the applicable corporate charter, bylaws, as amended, as well as the not for profit corporation laws.

In reference to the Dennis Canon, Ortbal said:

The court does not find that the law of Illinois would establish an implied trust based upon the evidence before the court. The court has concluded that the supreme and ultimate authority of the General Convention over the property of the DOQ cannot be constitutionally determined.

In the case of Fort Worth, the Texas Supreme Court ruled similarly in its August 30, 2013, decision:

The corporation was incorporated pursuant to Texas corporation law and that law dictates how the corporation can be operated, including determining the terms of office of corporate directors, the circumstances under which articles and bylaws can be amended, an the effects of the amendments...We conclude that this record fails to show that, as a matter of law, the trustees had been disqualified from serving as corporate trustees at the relevant times.

Concerning the Dennis Canon the court said:

even assuming a trust was created as to parish property by the Dennis Canon and the bylaws and actions of a parish non-profit corporation holding title to the property, the Dennis Canon "simply does not contain language making the trust expressly irrevocable."

In other words, the Texas court said the diocese could discard the Dennis Canon because there was nothing in the Canon to prevent it from being revoked. This was a novel interpretation.

In the matter of San Joaquin, the key court ruling was Judge Donald S. Black's ruling of May 5, 2014:

The pivotal issue here, however, is whether Scofield's attempted transfers of real and personal property to the Anglican Diocese Holding Corporation, after Schofield was deposed as bishop of DSJ, were valid.

Black went on to rule that the transfers were not valid:

On such matters of religious polity and governance, this court must defer to the determination made by the Church. Thus, Bishop Lamb became the incumbent of the property-holding corporate entities. Schofield's property transfers, then, were ineffective because he did not have the authority or title necessary to effectuate the transfers. Because the property was not validly transferred to the Holding Company, title must remain with the Plaintiff Diocese and Church.

The California Fifth District Appeals Court agreed in its decision of April 5, 2016. However, this court backed away from the Dennis Canon:

Further, courts will not imply a trust on church property. Implying a trust almost invariably puts the civil courts squarely in the midst of ecclesiastical controversies, in that every dispute over church doctrine that produces strongly held majority and minority views forces the court to determine the true implied beneficiaries of the church entities involved. The court would be required to determine which faction continued to adhere to the "true" faith. This is something a civil court is not permitted to do.

If a common picture is emerging it is that courts are viewing property ownership in local terms and avoiding the Dennis Canon. However, this resulted in diametrically opposed rulings in Illinois and California both claiming to follow neutral principles. The difference boiled down to whether the courts saw the local diocese as independent (Quincy) or not (San Joaquin). Although claiming neutrality, courts are still judging the structure of a religious institution but doing so in very different ways.

What does all this mean for the impending decision in South Carolina?

The hearing in the SC supreme court was last September 23. The justices almost certainly met a couple of weeks later and arrived at a decision in the case. Then began the writing phase. When the court's decision is released it becomes permanent. Until then, the written decision(s) are fluid and can be changed. The justices and their clerks are free write what they please in both majority and dissenting opinions until all the justices are satisfied their work is finished. Thus, they could now use the new California opinions in what they are presently writing.

Lack of a national judicial consensus on the right of a diocese to leave the Episcopal Church and leave holding the local properties makes the upcoming South Carolina decision even more important as a guide to a national standard on the issue.