A. Patterson v. K. Shelton ( 2019 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Anthonee Patterson :
: No. 439 C.D. 2018
v. :
: Submitted: December 28, 2018
Kenneth Shelton, :
Appellant :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE CHRISTINE FIZZANO CANNON, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE McCULLOUGH FILED: April 15, 2019
Kenneth Shelton (Shelton) appeals from the March 21, 2018 order of the
Court of Common Pleas of Philadelphia County (trial court) denying his petition
requesting that the trial court strike its prior orders confirming an April 26, 2006
arbitration award and refusing to vacate said award.
Facts and Procedural History
This case has a long and complicated history before this Court and the trial
court, most recently summarized in Patterson v. Shelton, 175 A.3d 442 (Pa. Cmwlth.
2017). In our 2017 decision, we referred to a 2013 unpublished decision from this
Court, Patterson v. Shelton (Pa. Cmwlth., No. 2396 C.D. 2011, filed March 6, 2013),
appeal denied, 78 A.3d 1092 (Pa. 2013), wherein we provided the following procedural
history:
The key players involved in the present offshoot of the
controversy are: (1) the Church of the Lord Jesus Christ of
the Apostolic Faith (the “Church”), an unincorporated
association, founded in 1919; (2) the “Trustees of the
General Assembly of the Church of the Lord Jesus Christ of
the Apostolic Faith, Inc.”, (the “Corporate Trustee”), a
Pennsylvania nonprofit corporation formed in 1947 to act as
the trustee and hold property in trust for the Church; (3)
Patterson, a life-long member, elder, and minister of the
Church; and (4) Shelton, the current “Bishop” and/or
“Overseer” of the Church and “President” of the Corporate
Trustee.
The dispute began in 1991 when then-Bishop S. McDowall
Shelton, died, leaving vacancies in the offices of “Overseer”
of the Church and “President” of the Corporate Trustee.
Immediately upon Bishop S. McDowall Shelton’s death,
Shelton and his “faction” took control of the accounts, trusts
and properties of the Church and Corporate Trustee. After
extensive litigation initiated by two other dissident factions
of the Church congregation over the leadership of the Church
and Corporate Trustee, the trial court ultimately determined,
and this Court later affirmed, that Shelton and his Board of
Trustees were in control.
...
On July 24, 1995, Patterson, as life-long member, elder and
minister of the Church, commenced an action in equity
against Shelton, in Shelton’s individual capacity and as the
President of the Board of Trustees of the Corporate Trustee.
Patterson alleged that since taking control of the Church and
Corporate Trustee in 1991, Shelton and his Board of Trustees
have misappropriated funds, “looted the Church’s assets,”
paid themselves salaries in contravention of Church By-
Laws, and funded private expenditures, lavish vacations,
lingerie, cars, homes and other personal incidentals with
assets which were donated and designated for Church
religious and charitable missions.
Patterson requested, inter alia: (1) the appointment of a
receiver to take control of the assets of the Church held by
the Corporate Trustee; (2) an order requiring Shelton to issue
2
annual financial reports for the years 1991, 1992, 1993, and
1994; and (3) an accounting.
The parties engaged in discovery. Patterson retained James
A. Stavros, CPA (Stavros), a forensic financial investigator,
to analyze the finances and expenditures of the Church and
the Corporate Trustee. Stavros authored a report which
detailed his findings that Shelton and his Board of Trustees
withdrew hundreds of thousands of dollars from Church
accounts with no accounting of where the funds went and
that they expended Church funds on a significant amount of
“personal” items and expenditures that appeared to be
outside the normal course of business and outside Church
laws and customs. He concluded that Church accounts had
declined by nearly $1 million under Shelton’s control.[1]
In January 2006, the parties agreed to submit to binding
arbitration. The Arbitrator concluded that the credible
evidence established that Shelton had engaged in various acts
of fraud, mismanagement, conspiracy, breach of fiduciary
responsibilities, violations of By-laws and the Articles of
Incorporation in seizing corporate funds and assets and
depleting bank accounts designated for Church-related
purposes. The Arbitrator concluded that Shelton had
diverted Church funds and assets to himself and others for
his and their benefit. The Arbitrator appointed a receiver and
directed Shelton to account for all Church funds removed by
him or those acting with him.
Shelton filed a motion to vacate the award which the trial
court denied.[2] On appeal, this Court overturned the
arbitration award because the Arbitrator went beyond the
1
Patterson’s original complaint was stricken by the trial court in 1996 for unknown reasons
and reinstated upon Patterson’s motion in 2004. However, during the interim, the trial court
determined that Shelton was the rightful General Overseer of the Church and President of the
Corporation. By decision dated April 10, 2001, this Court affirmed the trial court’s determination
and our Supreme Court denied separate petitions for allowance of appeal. See Church of the Lord
Jesus Christ of the Apostolic Faith v. Shelton (Pa. Cmwlth., Nos. 376, 559 C.D. 2000, filed April 10,
2001), appeals denied, 790 A.2d 1019 (Pa. 2001), and 812 A.2d 1232 (Pa. 2001).
2
By order dated July 10, 2006, the trial court confirmed the Arbitrator’s award in favor of
Patterson and against Shelton and entered judgment in conformity therewith.
3
scope of his authority in fashioning relief. See Shelton v.
Patterson, 942 A.2d 967 (Pa. Cmwlth. 2008). This Court
remanded the matter to the trial court to determine whether
Patterson was entitled to relief under the [Pennsylvania
Nonprofit Corporation Law of 1988 (NCL), 15 Pa.C.S.
§§5101-5998; 6101-6146].
On remand, Shelton moved for summary judgment on the
ground that Patterson lacked “statutory standing” under
Section 5782 of the NCL, 15 Pa.C.S. §5782. Shelton argued
that only an officer, director, or member of a nonprofit
corporation has “statutory standing” to enforce a right of a
nonprofit corporation through a derivative action.
...
Shelton pointed to the Corporate Trustee’s Articles of
Incorporation which limited its membership in the nonprofit
corporation to its Board of Trustees. Shelton asserted that
because Patterson was never a member of the Board of
Trustees he was never a “member” of the Corporate Trustee,
and thus, he had no “statutory standing” to bring claims that
are derivative of the Corporate Trustee’s rights.
The trial court agreed that under Section 5782 of the NCL,
Patterson could only bring suit if he was a member of the
Corporate Trustee at the time of the alleged events outlined
in the Complaint. The trial court looked to Article IX of the
Articles of Incorporation which states: “membership in the
corporation [Corporate Trustee] shall consist of those
persons serving as members of the Board of Trustees.” The
trial court concluded that because Patterson had never been
a member of the Board of Trustees he was not a member of
the Corporate Trustee. The trial court reasoned that because
the NCL created the cause of action and designated who may
sue; standing was a jurisdictional prerequisite to any action.
Grom v. Burgoon, 672 A.2d 823 (Pa. Super. 1996). The trial
court “finding no possible way to affirm that [Patterson] has
standing” granted the motion for summary judgment and
dismissed the case.
Id., slip op. at 1-6 (emphasis in original).
4
Our 2017 decision further summarized as follows:
On appeal, this Court reversed the order of the trial court,
concluding that Patterson, as a member of the Church
congregation, was “part of the beneficiary class for which the
Corporate Trustee held the Church’s assets in trust,” and, as
such, had “standing to bring this action to enforce his own
rights and the rights commonly held by all beneficiaries to
obtain restoration to the Church of its full losses.” Id., slip
op. at 16-17. We remanded the matter to the trial court to
conduct a trial on the remaining factual and legal issues
raised by Patterson in his complaint.
On July 15, 2014, the trial court commenced a non-jury trial.
During the course of the trial, an issue arose as to whether
the trial court had subject matter jurisdiction over this
dispute. Following argument, the trial court concluded that
it lacked such jurisdiction because the matter requires
interpretation of religious doctrine and the same was
prohibited by the First Amendment. Hence, the trial court
issued an order granting a motion to dismiss filed by Shelton.
Patterson appealed to this Court, but we affirmed the trial
court’s order, concluding that the trial court ably disposed of
the subject matter jurisdiction issue in its opinion. Patterson
thereafter sought allowance of appeal with the Pennsylvania
Supreme Court, but the same was denied. Patterson
subsequently filed a petition for a writ of certiorari with the
United States Supreme Court, but the same was similarly
denied.
On May 27, 2016, Patterson filed a motion with the trial
court to determine certain orders void based on the lack of
subject matter jurisdiction. In his motion, Patterson sought
an order from the trial court “declaring that the January 31,
2008 Commonwealth Court Order, and all other post-July
10, 2006 rulings/orders not consistent with the judgments on
the binding common law arbitration award, are void . . . .”
Patterson alleged that the trial court “finally determined what
[he] has been arguing all along – that there was no subject
matter jurisdiction as the parties had agreed to resolve all of
their disputes through binding, common law arbitration.” In
sum, Patterson alleged that only the 2006 binding arbitration
5
award remained valid and asked the trial court to declare as
void all post-July 10, 2006 rulings/orders that were
inconsistent with that award because the courts lacked
subject matter jurisdiction to alter the same.
By order dated July 14, 2016, the trial court denied
Patterson’s motion.[3] Patterson filed a notice of appeal with
the trial court. The trial court thereafter issued an opinion in
support of its order explaining that Patterson
mischaracterizes its previous ruling regarding lack of subject
matter jurisdiction. Contrary to Patterson’s allegations, the
trial court did not rule that it lacked subject matter
jurisdiction because of the parties’ agreement to litigate
through binding arbitration; but rather, the trial court ruled
that it lacked such jurisdiction due “to the Deference Rule,
which prohibits courts from exercising jurisdiction over
cases that would require them to decide ecclesiastical
questions.” In other words, the trial court explained that it
had no ability “to decide religious questions” and that its
prior opinion “never mentions the issue of jurisdiction as it
relates to common law arbitration.” Further, the trial court
explained that it was “without jurisdiction to strike the
Commonwealth Court’s January 2008 order vacating the
Arbitration Award” and lacked the authority to disturb an
appellate court ruling. Id. For the same reasons, the trial
court noted that it had no power to reinstate the arbitration
award which had been vacated on appeal.
Patterson, 175 A.3d at 446-47 (citations omitted).
Following an appeal by Patterson, this Court reversed the trial court’s July
14, 2016 order, concluding as follows:
In this case, Patterson’s original complaint filed with the trial
court sought relief under the NCL. The parties ultimately
agreed to proceed to binding arbitration in November 2005,
3
Shelton had filed a motion to strike Patterson’s motion as moot, alleging that Patterson’s
motion “defies logic and violates bedrock principles of jurisdiction and substantive law.” In this
motion, Shelton also sought sanctions for Patterson’s alleged bad-faith, frivolous motion. However,
by separate order of the same date, the trial court dismissed Shelton’s motion to strike as moot in light
of its order denying Patterson’s motion.
6
with no right to appeal, as memorialized in an order from the
trial court dated January 10, 2006. This order also dismissed
the case from the trial court per agreement of the parties.
Nevertheless, after the Arbitrator ruled in Patterson’s favor,
Shelton filed a petition to vacate the arbitration award with
the trial court. While the trial court denied Shelton’s petition,
this Court reversed the trial court’s decision, vacated the
arbitration award, and remanded to the trial court for further
proceedings relating to these NCL claims. However,
because this Court affirmed the trial court’s decision
concluding that it lacked subject matter jurisdiction over his
remaining NCL claims on the basis that resolution of the
same would require the trial court to interpret religious
doctrine, something it was prohibited from doing under the
First Amendment, any prior decisions relating to the same
are null and void. As a result, the only valid, remaining
determination in this case is the binding arbitration award, as
agreed to by the parties in November 2005, and confirmed
by the trial court. As noted above, the trial court, by order
dated July 10, 2006, confirmed the Arbitrator’s award and
entered judgment in favor of Patterson and against Shelton
in an order dated July 20, 2006.[4] Thus, Patterson’s remedy
lies with enforcement of that judgment.
Patterson, 175 A.3d at 449-50.5
4
A similar order was issued by the trial court on October 12, 2006, entering judgment in favor
of Patterson. Additionally, the final adjudication and decree of the Arbitrator was entered as an order
of the trial court on April 17, 2017. These orders, dated July 10 and 20, 2006, October 12, 2006, and
April 17, 2017, collectively represent the last valid judgments in this case.
5
Shelton subsequently filed a petition for allowance of appeal from this Court’s 2017 decision
with our Pennsylvania Supreme Court, but the same was denied by order dated July 31, 2018.
Patterson v. Shelton, 190 A.3d 592 (Pa. 2018). Shelton filed a petition for writ of certiorari with the
United States Supreme Court, but the same was recently denied by order dated February 19, 2019.
Shelton v. Patterson, ___ U.S. ___, 139 S. Ct. 1211 (2019).
7
Shelton’s Most Recent Motion
On January 31, 2018, Shelton filed the present motion with the trial court
seeking to strike all prior orders of the trial court as void for lack of subject matter
jurisdiction. In this motion, Shelton alleged that “Pennsylvania courts do not have and
never had subject matter jurisdiction over this religious dispute” and that “[t]herefore,
[the trial court] must strike all of its prior orders as void ab initio and decline to take
any further action in this matter.” (Reproduced Record (R.R.) at 90.)6 Shelton also
simultaneously filed a brief in support of his motion.
Patterson filed a response asserting that Shelton’s motion constituted an
impermissible attack on this Court’s prior orders dated November 29 and December
22, 2017. Patterson stated that said orders held that the 2006 binding arbitration award
was the only valid, remaining determination in this case, referenced the trial court’s
confirmation of the award and entry of judgment in his favor, and directed any attempts
to enforce this judgment to the trial court. Patterson also contended that Shelton’s
motion attempted to resurrect legal arguments that had been previously rejected by this
Court and sought relief that wholly contradicted our prior opinions and orders. In an
accompanying brief, Patterson noted that Shelton understood the impact of this Court’s
November 29, 2017 order, as evidenced by his filing of an application for reargument
providing that “[t]he apparent effect of the panel’s decision is the retroactive validation
of an arbitration decision . . . .” (R.R. at 371.)
By order dated March 21, 2018, the trial court denied Shelton’s motion.
Shelton thereafter filed a notice of appeal with this Court. The trial court subsequently
issued an opinion in support of its order. The trial court noted that it had long ago
denied a petition from Shelton to vacate the arbitration award, confirmed the award in
6
Shelton’s reproduced record does not contain the lowercase “a” in the page number as
required by Pa.R.A.P. 2173.
8
favor of Patterson, and entered judgment in his favor. The trial court also noted that
this Court had recently declared the arbitration award to be the last valid judgment in
this matter. The trial court explained that it was bound by this Court’s prior decisions
and had no authority to grant Shelton’s motion.
Discussion
On appeal, Shelton reiterates his arguments that the trial court was
required to strike all of its prior orders as void for lack of subject matter jurisdiction
and that no court can take any further action in this matter. For the following reasons,
we disagree.
In our prior decision and order dated November 29, 2017, this Court
specifically held that:
[T]he only valid, remaining determination in this case is the
binding arbitration award, as agreed to by the parties in
November 2005, and confirmed by the trial court. As noted
above, the trial court . . . confirmed the Arbitrator’s award
and entered judgment in favor of Patterson and against
Shelton in an order dated July 20, 2006. Thus, Patterson’s
remedy lies with enforcement of that judgment.
Patterson, 175 A.3d at 450. In a subsequent clarification order dated December 22,
2017, this Court identified the various dates on which the trial court confirmed the
Arbitrator’s award, entered judgment in favor of Patterson, and, most importantly,
directed “[a]ny attempts to enforce these orders . . . to the trial court.” (R.R. at 306.)
In other words, this Court found the trial court’s orders relating to the Arbitrator’s
award to be valid and enforceable against Shelton and the trial court was bound by this
Court’s prior orders.
Moreover, as Patterson notes in his brief, Shelton’s most recent attempt to
relitigate the validity of the trial court’s orders confirming the Arbitrator’s award and
9
entering judgment in Patterson’s favor is barred by the doctrine of the “law of the case.”
Our Supreme Court has declared that the “law of the case” doctrine prohibits an
appellate court, upon a second appeal, from altering “the resolution of a legal question
previously decided by the appellate court in the matter.” Commonwealth v. Starr, 664
A.2d 1326, 1331 (Pa. 1995); see also In re Pennsylvania Turnpike Commission, 715
A.2d 1219, 1223 n.10 (Pa. Cmwlth. 1998) (“Issues decided by an appellate court on a
prior appeal between the same parties become the law of the case and will not be
considered on appeal.”) Further, while Shelton is correct that our 2017 decision did
not expressly overrule this Court’s 2008 opinion (relating to the arbitrator exceeding
the scope of his authority), the latter decision did in fact effectively overrule the 2008
opinion by holding that any prior decisions were null and void and that the only valid,
remaining determination in this case was the binding arbitration award.
Conclusion
Because Shelton’s current appeal challenges the trial court’s prior orders
in this case confirming the arbitration award and entering judgment in favor of
Patterson, which we have previously ruled to be the only valid, remaining
determinations herein, thereby precluding any further challenge under the “law of the
case” doctrine, the trial court did not err in denying Shelton’s petition seeking once
again to strike these orders.
Accordingly, the order of the trial court is affirmed.
________________________________
PATRICIA A. McCULLOUGH, Judge
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IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Anthonee Patterson :
: No. 439 C.D. 2018
v. :
:
Kenneth Shelton, :
Appellant :
ORDER
AND NOW, this 15th day of April, 2019, the order of the Court of
Common Pleas of Philadelphia County, dated March 21, 2018, is hereby affirmed.
________________________________
PATRICIA A. McCULLOUGH, Judge