the Episcopal Diocese of Fort Worth v. the Episcopal Church ( 2013 )

IN THE SUPREME COURT OF TEXAS
444444444444
NO . 11-0265
444444444444
THE EPISCOPAL DIOCESE OF FORT WORTH, ET AL., PETITIONERS,
v.
THE EPISCOPAL CHURCH, ET AL., RESPONDENTS
4444444444444444444444444444444444444444444444444444
ON DIRECT APPEAL FROM THE 141ST
DISTRICT COURT , TARRANT COUNTY , TEXAS
4444444444444444444444444444444444444444444444444444
Argued October 16, 2012
JUSTICE JOHNSON delivered the opinion of the Court, in which JUSTICE HECHT , JUSTICE
GREEN , and JUSTICE GUZMAN joined, and in Parts I, II, III, and IV-A of which CHIEF JUSTICE
JEFFERSON joined.
JUSTICE WILLETT filed a dissenting opinion, in which JUSTICE LEHRMANN , JUSTICE BOYD ,
and JUSTICE DEVINE joined.
This direct appeal involves the same principal issue we addressed in Masterson v. Diocese
of Northwest Texas, ___ S.W.3d ___ (Tex. 2013): what methodology is to be used when Texas
courts decide which faction is entitled to a religious organization’s property following a split or
schism? In Masterson we held that the methodology referred to as “neutral principles of law” must
be used. But, in this case the trial court granted summary judgment on the basis of the “deference”
or “identity” methodology, and the record does not warrant rendition of judgment to either party
based on neutral principles of law.
We reverse and remand to the trial court for further proceedings.
I. Background
The Episcopal Church (TEC) is a religious organization founded in 1789. It has three
structural tiers. The first and highest is the General Convention. The General Convention consists
of representatives from each diocese and most of TEC’s bishops. It adopts and amends TEC’s
constitution and canons. The second tier is comprised of regional, geographically defined dioceses.
Dioceses are governed by their own conventions. Each diocese’s convention adopts and amends its
own constitution and canons, but must accede to TEC’s constitution and canons. The third tier is
comprised of local congregations. Local congregations are classified as parishes, missions, or
congregations. In order to be accepted into union with TEC, missions and congregations must
subscribe to and accede to the constitutions and canons of both TEC and the Diocese in which they
are located.
In 1982 the Episcopal Diocese of Fort Worth (the Diocese or Fort Worth Diocese) was
formed after the Episcopal Diocese of Dallas voted to divide into two parts. The Fort Worth Diocese
was organized “pursuant to the Constitution and Canons of the Episcopal Church” and its convention
adopted a constitution and canons. The Diocese’s constitution provided that all property acquired
for the Church and the Diocese “shall be vested in [the] Corporation of the Episcopal Diocese of Fort
Worth.” The canons of the Diocese provided that management of the affairs of the corporation
“shall be conducted and administered by a Board of Trustees of five (5) elected members, all of
whom are either Lay persons in good standing of a parish or mission in the Diocese, or members of
the Clergy canonically resident in the Diocese.” The Bishop of the Diocese was designated to serve
2
as chair of the board of the corporation. After adopting its constitution and canons the Diocese was
admitted into union with TEC at TEC’s December 1982 General Convention.
In February 1983, the Fort Worth Diocese filed articles of incorporation for the Fort Worth
Corporation. That same year the Dallas and Fort Worth Dioceses filed suit in Dallas County and
obtained a judgment transferring part of the Dallas Diocese’s real and personal property to the Fort
Worth Diocese. The 1984 judgment vested legal title of the transferred property in the Fort Worth
Corporation, except for certain assets for which the presiding Bishop of the Dallas Diocese and his
successors in office had been designated as trustee. The judgment transferred the latter assets to the
Bishop of the Fort Worth Diocese and his successor in office as trustee.
Doctrinal controversy arose within TEC, leading the Fort Worth Corporation to file
amendments to its articles of incorporation in 2006 to, in part, remove all references to TEC. The
corporate bylaws were similarly amended. The 2007 and 2008 conventions of the Fort Worth
Diocese voted to withdraw from TEC, enter into membership with the Anglican Province of the
Southern Cone, and adopt amendments to the Diocese’s constitution removing references to TEC.1
TEC responded. It accepted the renunciation of Jack Iker, Bishop of the Fort Worth Diocese,
and TEC’s Presiding Bishop removed Iker from all positions of authority within TEC. In February
2009, TEC’s Presiding Bishop convened a “special meeting of Convention” for members of the Fort
Worth Diocese who remained loyal to TEC. Those present at the meeting elected Edwin Gulick as
Provisional Bishop of the Diocese and Chair of the Board of Trustees for the Fort Worth
1
Three parishes in the Diocese did not agree with the actions and withdrew from the Diocese. The Fort W orth
Corporation transferred property used by the withdrawing parishes to them.
3
Corporation. The 2009 Convention also voted to reverse the constitutional amendments adopted at
the 2007 and 2008 Conventions and declared all relevant offices of the Diocese to be vacant. Bishop
Gulick then appointed replacements to the offices declared vacant, including the offices of the
Trustees of the Corporation. TEC recognized the persons elected at the 2009 Convention as the duly
constituted leadership of the Diocese.
TEC, Rev. C. Wallis Ohls, who succeeded Bishop Gulick as Provisional Bishop of the
Episcopal Diocese of Fort Worth, and clergy and lay individuals loyal to TEC (collectively, TEC)
filed suit against The Episcopal Diocese of Fort Worth, the Fort Worth Corporation, Bishop Iker,
the 2006 trustees of the corporation, and former TEC members (collectively, the Diocese), seeking
title to and possession of the property held in the name of the Diocese and the Fort Worth
Corporation.2 Both TEC and the Diocese moved for summary judgment. A significant disagreement
between the parties was whether the “deference” (also sometimes referred to as the “identity”) or
“neutral principles of law” methodology should be applied to resolve the property issue. TEC
contended that pursuant to this Court’s decision in Brown v. Clark, 116 S.W. 360 (Tex. 1909), the
deference methodology has been applied in Texas for over a century and should continue to be
applied. Under that methodology, it argued, TEC was entitled to summary judgment because it
recognized Bishops Gulick and Ohls, the leaders elected at the 2009 convention, and the appointees
of the Bishops as the true and continuing Episcopal Diocese. TEC also contended that even if the
2
The defendants sought mandamus in the court of appeals regarding whether the attorneys for TEC had
authority to file suit on behalf of the Corporation and the Diocese. See In re Salazar, 315 S.W .3d 279 (Tex. App.— Fort
W orth 2010, orig. proceeding). The court of appeals conditionally granted mandamus relief, holding they did not. Id.
at 285-86.
4
neutral principles methodology were applied, it would be entitled to summary judgment. The
Diocese, on the other hand, contended that in Brown this Court effectively applied the neutral
principles methodology without specifically calling it by that name, and Texas courts have continued
to substantively apply that methodology to resolve property issues arising when churches split.
Under the neutral principles methodology, the Diocese argued, it was entitled to summary judgment
affirming its right to the property. The Diocese also maintained that even if the deference
methodology were applied, it would still be entitled to summary judgment.3
The trial court agreed with TEC that deference principles should apply, applied them, and
granted summary judgment for TEC. The Diocese sought direct appeal to this Court and we noted
probable jurisdiction. We had previously granted the petition for review in Masterson, and we heard
oral arguments for both cases on the same day.
II. Jurisdiction
The Government Code provides that “[a]n appeal may be taken directly to the supreme court
from an order of a trial court granting or denying an interlocutory or permanent injunction on the
ground of the constitutionality of a statute of this state.” TEX . GOV ’T CODE § 22.001(c). The trial
court granted summary judgment and issued injunctions ordering the defendants to surrender all
Diocesan property and control of the Diocesan Corporation to the Episcopal Diocese of Fort Worth,
and ordering the defendants to desist from holding themselves out as leaders of the Diocese. While
3
The Diocese also asserts that we should dismiss certain tort claims TEC brought against individual defendants.
The Diocese moved for summary judgment to dismiss these claims and argues that if we conclude the trial court erred
in determining who was entitled to the property at issue, we should render the judgment the trial court should have
rendered and dismiss the tort claims. Because of our disposition of the issue regarding who is entitled to the property,
we do not address those claims.
5
the trial court order did not explicitly address the constitutionality of a statute, “[t]he effect of the
trial court’s order . . . is what determines this Court’s direct appeal jurisdiction.” Tex. Workers’
Compensation Comm’n v. Garcia, 817 S.W.2d 60, 61 (Tex. 1991).
In its motion for summary judgment TEC argued, in part, that the actions of the Board of
Trustees in amending the Fort Worth Corporation’s articles of incorporation were void because the
actions went beyond the authority of the corporation, which was created and existed as an entity
subordinate to a Diocese of TEC. TEC argued that “[t]he secular act of incorporation does not alter
the relationship between a hierarchical church and one of its subordinate units” and that finding
otherwise “would risk First Amendment implications.” The Diocese, on the other hand, argued that
the case was governed by the Texas Non-Profit Corporation Act4 and the Texas Uniform
Unincorporated Nonprofit Association Act5; under those statutes a corporation may amend its
articles of incorporation and bylaws; and TEC had no power to limit or disregard amendments to the
Corporation’s articles and bylaws.
In its summary judgment order the trial court cited cases it said recognized “that a local
faction of a hierarchical church may not avoid the local church’s obligations to the larger church by
amending corporate documents or otherwise invoking nonprofit corporations law.” The trial court
substantively ruled that because the First Amendment to the United States Constitution deprived it
of jurisdiction to apply Texas nonprofit corporation statutes, applying them to determine the parties’
rights would violate Constitutional provisions. The court’s injunction requiring defendants to
4
T EX . R EV . C IV . S TAT . arts. 1396-1.01 to 1396-11.02
5
T EX . R EV . C IV . S TAT . art. 1396-70.01
6
surrender control of the Fort Worth Corporation to the Episcopal Diocese of Fort Worth was based
on that determination. The effect of the trial court’s order and injunction was a ruling that the Non-
Profit Corporation Act would violate the First Amendment if it were applied in this case.
Accordingly, we have jurisdiction to address the merits of the appeal.
III. “Deference” and “Neutral Principles”
In Masterson we addressed the deference and neutral principles methodologies for deciding
property issues when religious organizations split. ___ S.W.3d at ___. Without repeating that
discussion in full, suffice it to say that generally courts applying the deference approach to church
property disputes utilize neutral principles of law to determine where the religious organization has
placed authority to make decisions about church property. See Jones v. Wolf, 443 U.S. 595, 603-04
(1979). Once a court has made this determination, it defers to and enforces the decision of the
religious authority if the dispute has been decided within that authority structure. Id. But courts
applying the neutral principles methodology defer to religious entities’ decisions on ecclesiastical
and church polity issues such as who may be members of the entities and whether to remove a bishop
or pastor, while they decide non-ecclesiastical issues such as property ownership and whether trusts
exist based on the same neutral principles of secular law that apply to other entities. See Serbian E.
Orthodox Diocese v. Milivojevich, 426 U.S. 696, 708-09 (1976). We concluded in Masterson that
the neutral principles methodology was the substantive basis of our decision in Brown v. Clark, 116
S.W. 360 (Tex. 1909), and that Texas courts should utilize that methodology in determining which
faction of a religious organization is entitled to the property when the organization splits.
___ S.W.3d at ___. We also concluded that even though both the deference and neutral principles
7
methodologies are constitutionally permissible, Texas courts should use only the neutral principles
methodology in order to avoid confusion in deciding this type of controversy. Id.
IV. Application
A. Summary Judgment—Deference
Based on our decision in Masterson, we hold that the trial court erred by granting summary
judgment to TEC on the basis of deference principles. ___ S.W.3d at ___.
B. Summary Judgment—Neutral Principles
TEC asserts that application of neutral principles may violate free-exercise protections if, for
example, the Diocese is permitted to void its commitments to church laws because the specific
formalities of Texas law governing trusts were not followed or if they are applied retroactively. See
Jones, 443 U.S. at 606 (noting that the case did not “involve a claim that retroactive application of
a neutral-principles approach infringes free exercise rights”). But TEC recognizes that whether
application of the neutral principles approach is unconstitutional depends on how it is applied. See
id. at 606 (“It remains to be determined whether the Georgia neutral-principles analysis was
constitutionally applied on the facts of this case.”). Because neutral principles have yet to be applied
in this case, we cannot determine the constitutionality of their application. Further, TEC does not
argue that application of procedural matters such as summary judgment procedures and burdens of
proof are unconstitutional. Thus, we address the arguments of the parties regarding who is entitled
to summary judgment pursuant to neutral principles and conclude that neither TEC nor the Diocese
is. See Gilbert Tex. Constr., L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 124 (Tex.
2010) (noting that when both parties move for summary judgment and the trial court grants one
8
motion and denies the other, appellate courts consider the summary-judgment evidence, determine
all questions presented, and render the judgment the trial court should have rendered).
Under the neutral principles methodology, ownership of disputed property is to be determined
by considering evidence such as deeds to the properties, terms of the local church charter (including
articles of incorporation and bylaws, if any), and relevant provisions of governing documents of the
general church. E.g., Jones, 443 U.S. at 602-03; see Presbyterian Church v. E. Heights, 167 S.E.2d
658, 659-60 (Ga. 1969). TEC points out that deeds to the properties involved were not part of the
summary judgment record when the trial court ruled. Thus, TEC argues, if we do not sustain the
summary judgment in its favor, we should remand the case so the trial court may consider the record
on the basis of neutral principles and the four factors referenced in Jones: (1) governing documents
of the general church, (2) governing documents of the local church entities, (3) deeds, and (4) state
statutes governing church property. See Jones, 443 U.S. at 602-03. We agree that the case must be
remanded for further proceedings under neutral principles.
Although deeds to the numerous properties involved were not before the trial court when it
granted summary judgment, the Diocese asserts that there is no dispute about its holding title to and
having control of the properties. But TEC disagrees with that position. And absent agreement or
conclusive proof of title to the individual properties and the capacities in which the titles were taken,
fact questions exist under neutral principles of law, at a minimum, about who holds title to each
9
property and in what capacity.6 Accordingly, we cannot render judgment on the basis of neutral
principles.
C. Remand
Because the trial court must apply neutral principles on remand, for its guidance we address
certain arguments made by the parties relating to that methodology. See Edinburg Hosp. Auth. v.
Trevino, 941 S.W.2d 76, 81 (Tex. 1997) (“Although resolution of this issue is not essential to our
disposition of this case, we address it to provide the trial court with guidance in the retrial . . . .”).
We first note that on remand the trial court is not limited to considering only the four factors
listed in Jones. As we said in Masterson, Jones did not purport to establish a federal common law
of neutral principles to be applied in this type of case. ___ S.W.3d at ___. Rather, the elements
listed in Jones are illustrative. If it were otherwise and courts were limited to applying some, but not
all, of a state’s neutral principles of law in resolving non-ecclesiastical questions, religious entities
would not receive equal treatment with secular entities. We do not believe the Supreme Court
intended to say or imply that should be the case.
Next we address the Diocese’s argument that under neutral principles courts do not defer to
TEC’s decisions about non-ecclesiastical matters such as the identity of the trustees of the Fort
Worth Corporation. The Diocese argues that under the Non-Profit Corporation Act the trustees are
the 2006 trustees who are named as defendants in this suit. TEC responds that the trustees are
6
Deeds filed after the trial court granted summary judgment were dated both before and after the 1984 judgment
transferring properties from the Dallas Diocese. The deeds dated after the judgment reflect various grantees. Some
properties were deeded to the Fort W orth Corporation or local entities, while others were deeded in trust to the
Corporation, local entities, or various other persons and entities.
10
required by the corporate bylaws to be lay persons in “good standing,” the Diocese rules require them
to be loyal Episcopalians, and the bylaws provide that trustees do not serve once they become
disqualified. Those determinations, TEC argues, were made by Bishops Gulick and Ohls and the
2009 convention, and courts must defer to those determinations because they are ecclesiastical
decisions.
While we agree that determination of who is or can be a member in good standing of TEC
or a diocese is an ecclesiastical decision, the decisions by Bishops Gulick and Ohls and the 2009
convention do not necessarily determine whether the earlier actions of the corporate trustees were
invalid under Texas law. 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, and the
effect of the amendments. See TEX . BUS. ORG . CODE §§ 22.001–.409. 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. Nor does the record conclusively show whether the 2009 appointments
to the corporation board by Bishop Ohl were valid or invalid under Texas law, or whether, under
Texas law, the actions taken by the trustees appointed by Bishop Ohl in 2009 were valid or invalid.
Third, the Diocese argues that TEC has no trust interest in the property. TEC Canon I.7.4,
also known as the Dennis Canon, provides:
All real and personal property held by or for the benefit of any Parish, Mission or
Congregation is held in trust for this Church and the Diocese thereof in which such
Parish, Mission or Congregation is located. The existence of this trust, however,
shall in no way limit the power and authority of the Parish, Mission or Congregation
otherwise existing over such property so long as the particular Parish, Mission or
11
Congregation remains a part of, and subject this Church and its Constitution and
Canons.
The Diocese asserts that this canon does not create a trust under Texas law, but that even if it does,
it was revocable and the Diocese revoked it when the Diocesan canons were amended to state:
Property held by the Corporation for the use of a Parish, Mission or Diocesan School
belongs beneficially to such Parish, Mission or Diocesan School only. No adverse
claim to such beneficial interest by the Corporation, by the Diocese, or by The
Episcopal Church of the United States of America is acknowledged, but rather is
expressly denied.
TEC counters that the Dennis Canon creates a trust because the corporation acceded to it and the
Diocese could not have adopted a canon revoking the trust. TEC also asserts that the statutes
applicable to charitable trusts apply, but if they do not, a resulting trust or other trust may be applied
here because the history, organization, and governing documents of the Church, the Diocese, and the
parish support implication of a trust. The Diocese responds to TEC’s arguments by referencing
Texas statutory law requiring a trust to be in writing and providing that trusts are revocable unless
they are expressly made irrevocable. See TEX . PROP . CODE § 112.004, .051. These issues were not
addressed by the trial court because it granted summary judgment based on deference principles.
Upon remand the parties will have the opportunity to develop the record as necessary and present
these arguments for the trial court to consider in determining the rights of the parties according to
neutral principles of law. But regarding the trial court’s consideration of the issue, we note that in
Masterson we addressed the Dennis Canon and Texas law. There we said that 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
12
making the trust expressly irrevocable.... Even if the Canon could be read to imply the trust was
irrevocable, that is not good enough under Texas law. [Texas Property Code § 112.051] requires
express terms making it irrevocable.” Masterson, ___ S.W.3d at ___.
Finally, as to the argument that application of neutral principles may pose constitutional
questions if they are retroactively applied, we note that over a century ago in Brown v. Clark, 116
S.W. 360 (Tex. 1909), our analysis and holding substantively reflected the neutral principles
methodology.
V. Conclusion
We reverse the judgment of the trial court and remand the case to that court for further
proceedings consistent with this opinion.
________________________________________
Phil Johnson
Justice
OPINION DELIVERED: August 30, 2013
13