Tag Archives: ECO

A Brief, Preliminary Comment On An Interesting Church Property Decision

As regular readers know I tend to wait until I have a full court decision to break down a court ruling. In this case, This is a preliminary ruling, technically a memorandum decision, and both sides have 10 days to file responses before it is final, so I am going to trust a news article. Risky thing to do but 1) the ruling as reported seems straight forward and logical even if a bit different than usual, and 2) from the full reading the article seems fair and balanced so it seems reasonable.

From the Kansas City area KCTV 5 News reports that Judge Kevin Moriarty has reached a preliminary decision in the case of the Presbyterian Church of Stanley and Heartland Presbytery. I have discussed this church before concerning some of the nuances with the divided congregation with the two groups, an ECO group and a PC(USA) group, sharing a building until this gets straightened out.

The article begins with a very nice discussion of the situation with quotes from all sides in the matter. Good on-the-ground reporting. It is not until towards the end that it mentions the court ruling late yesterday and how Judge Moriarty diverged from the traditional legal approach in Kansas, that of hierarchical deference, and instead used neutral principles in rendering his decision. To quote the article:

Moriarty said in his ruling that church law claiming the property was held “in trust” for the regional branch wasn’t relevant. The deed names the local church, not the Presbytery. The mortgages name the local church, not the Presbytery. If the presbytery wanted a claim, the judge said, they could have placed a provision on those legal documents when they signed over the deed to the Presbyterian Church of Stanley decades ago.

The building and property, he said, belonged to the Presbyterian Church of Stanley, not Heartland Presbytery, which had filed the suit.

Now, in a “be careful what you wish for” twist, the decision continues. The property may belong to the church and not the presbytery, but with two groups claiming ownership to which does the property belong? To this the judge invoked ecclesiastical deference and said it was a church doctrine dispute and the civil courts should not get involved. Therefore, since the property was established by the PC(USA) and one group was recognized by the PC(USA) as the True Church then it gets the property.

A most interesting twist where the property does not belong to the PC(USA) in spite of the Trust Clause, but belongs to the PC(USA) congregation because of history.

As stated, this is the draft trial decision and it may change on final and is subject to possible appeal. When I have more details, and if worth another post at this time, I will probably just note at the top that this post has been superseded and point you at a new one.

In my reading of these property cases this is new legal ground. We shall see where this goes…

A Property Settlement In Texas

My most recent post was on “A Matter of Perspective.” Well, as I read the news from Texas yesterday there were certainly multiple perspectives, some might go as far as to call it spin, in the different accounts of a recent property settlement.

The news was that Highland Park Presbyterian Church and Grace Presbytery had reached a mediated settlement in a civil suit brought by the church that allows Highland Park to leave the Presbyterian Church (U.S.A.) and join ECO: A Covenant Order of Evangelical Presbyterians with its property. The headline in the press is that the monetary portion of the agreement has Highland Park paying the Presbytery $7.8 million in the settlement.

What initially caught my attention were the statements from each side with each one having a favorable spin. The church’s statement begins:

After much deliberation and prayer, last night HPPC’s elders, trustees and pastors unanimously approved the settlement agreement previously approved by Grace Presbytery over the ongoing property litigation. This resolves once and for all that the congregation of Highland Park Presbyterian Church owns and controls the assets of Highland Park Presbyterian Church, free and clear of any claims by the PC(USA). This result achieves HPPC’s goal in the litigation of clarifying its exclusive ownership and control of its property.

The Presbytery statement (which is reproduced on the PC(USA) news page) lede is:

Highland Park Presbyterian Church will pay $7.8 million to Grace Presbytery in order to obtain both a release of its obligations under the Presbyterian Church (U.S.A.)’s trust clause and ecclesiastical dismissal from the denomination.

And as you might expect you will not find the term “trust clause” in the church’s statement although it is mentioned by the pastor in his video on that page.

The other wording that caught my attention was how the monetary settlement was presented, or spun if you will. There is no question that it is $7.8 million and we are not told whether there is a breakdown for real estate, other assets and past or future per capita or mission giving. But the Presbytery describes the amount as “The $7.8 million settlement figure represents 26% of Highland Park’s “approximately thirty million dollars” of property, as alleged in Paragraph 18 of Highland Park’s amended petition filed in the lawsuit.” By contrast the church statement says “In the settlement, HPPC has agreed to pay Grace Presbytery $7.8 million, or 11% of the fair market value of the approximately $70 million of assets that were at issue in the litigation.”

And both sides cite their experts about the strength of their claims. In an April update the church says “Based on a review of HPPC records from 1925 through the most recent Texas Supreme Court rulings, Prof. Johanson states without a doubt that HPPC holds title to all of its church property and that none of it is subject to any trust agreement with the PC(USA) or Grace Presbytery.” Similarly, the presbytery settlement announcement has the line “Ultimately, three experts in Texas trust law retained by Grace Presbytery agreed that Highland Park’s agreement to hold its property in trust for the use and benefit of the denomination was enforceable under neutral principles of Texas law. ”

Since Highland Park initiated the lawsuit it is interesting to consider their reasons for settling at this time. The stated purpose of the lawsuit was to clarify the nature of the trust clause and ownership of their property under Texas law – something that is not clear at this time as I will discuss in a minute. A follow-up letter from the session provides some additional reasons including that the legal filing will provide a shield and time for the church to look at its options.

In the video statement from the Pastor and Head of Staff TE Bryan Dunagan regarding the settlement he does talk about the witness of the legal proceedings saying:

“We believe that it would not be a good witness to the community of Dallas to allow this litigation to run its course in the court system. Moving forward with a prolonged court battle would jeopardize our mission, our outreach efforts and our ongoing ministry for years to come.”

While I accept and respect that statement, for those of us that have been through this we know there are also plenty of practical reasons to settle. In particular it allows the church to put the case behind them and move on. It is also a matter of counting the cost: What are the chances of prevailing in the courts a couple of years from now versus what can we settle for now.

In the end each side seems to have gotten an important result. The church has gotten their dismissal with property from the PC(USA) and in the $7.8 million payment the presbytery – and by extension the denomination – has gotten a tacit acknowledgement of the trust clause.

Which brings us to the future of the trust clause in Texas…

The most advanced case regarding the trust clause and the application of Texas’ neutral principles test is a case in The Episcopal Church – Masterson and others v. Diocese of Northwest Texas and others. In the trial court the Diocese, representing The Episcopal Church, was granted summary judgement and on appeal it was affirmed. However, the Texas Supreme Court in their decision considered the issue in light of neutral principles, overturned the summary judgement and sent it back down to the trial court for a full hearing.

While Highland Park mentions this decision as a favorable sign for them in their early communication, I don’t think a particular church in a hierarchical denomination in Texas should jump to conclusions too quickly.

Let me begin by saying that I found the court decision, written by Justice Johnson, an interesting read and actually a great primer on the legal theories of church property law and their development.

When the decision gets to its final summary of Texas law, it says this (pg. 18-19, emphasis added):

The method by which this Court addressed the issues in [ a previous Texas case Brown v. Clark, 1909, ] remains the appropriate method for Texas courts to address such issues. Courts do not have jurisdiction to decide questions of an ecclesiastical or inherently religious nature, so as to those questions they must defer to decisions of appropriate ecclesiastical decision makers. But Texas courts are bound to exercise jurisdiction vested in them by the Texas Constitution and cannot delegate their judicial prerogative where jurisdiction exists. Properly exercising jurisdiction requires courts to apply neutral principles of law to non-ecclesiastical issues involving religious entities in the same manner as they apply those principles to other entities and issues. Thus, courts are to apply neutral principles of law to issues such as land titles, trusts, and corporate formation, governance, and dissolution, even when religious entities are involved.

We recognize that differences between ecclesiastical and non-ecclesiastical issues will not always be distinct, and that many disputes of the type before us will require courts to analyze church documents and organizational structures to some degree. Further, deferring to decisions of ecclesiastical bodies in matters reserved to them by the First Amendment may, in some instances, effectively determine the property rights in question. See Milivojevich, 426 U.S. at 709-10; Brown,116 S.W. at 364-65. Nevertheless, in our view the neutral principles methodology simply requires courts to conform to fundamental principles: they fulfill their constitutional obligation to exercise jurisdiction where it exists, yet refrain from exercising jurisdiction where it does not exist. The neutral principles methodology also respects and enforces the manner in which religious entities and their adherents choose to structure their organizations and their property rights in the same manner as those structures and rights are respected and enforced for other persons and entities.

As I read this decision, and particularly the highlighted section of the second paragraph, the high court seems to be leaving open the possibility that in a hierarchical denomination the ecclesiastical structure could be considered off limits to the courts and as such may  “…effectively determine the property rights in question.” This will of course have to go to trial in the Masterson case and then most likely be tested and interpreted on multiple rounds of appeal. But the hole the Texas Supreme Court decision seems to leave for ecclesiastical independence might be large enough that this decision is not a simple win for neutral principles but could be much more complicated.

So with Highland Park out of the legal mix that won’t be a Presbyterian test case for Texas, but it will be interesting to see how the Masterson case ends up as it winds its way back through the courts over the next couple of years.

So as each party in this dispute finds something positive in the settlement and the case is ultimately kept from going to trial, we wish them all well and we will see how the legal landscape in Texas develops.

UPDATE: After publishing this two other items were published that relate to this:

An article in the Christian Post has quotes from the church’s communications director and says that the $7.8 million figure was arrived at by taking the $70 million fair market value of the assets and taking 11% of that based on the percentage of members who voted “no”.

On the Layman website Carmen Fowler Laberge asks “Why did Highland Park settle?” and has an analysis much like mine above, although she reaches slightly different conclusions.