Windwood Presbyterian Church., Inc., a Texas Non-Profit Corporation v. the Presbyterian Church (USA) and Presbytery of New Covenant, Inc. ( 2014 )

Opinion issued January 7, 2014.
In The
Court of Appeals
For The
First District of Texas
________________________
NO. 01-10-00861-CV
———————————
WINDWOOD PRESBYTERIAN CHURCH, INC., A TEXAS NON-PROFIT
CORPORATION, Appellant
V.
THE PRESBYTERIAN CHURCH (U.S.A.) AND PRESBYTERY OF
NEW COVENANT, INC., Appellees
On Appeal from the 281st District Court
Harris County, Texas
Trial Court Case No. 2008-53684
OPINION
We vacate and withdraw our opinion and judgment of August 30, 2012, and
issue this opinion and judgment in their stead. In light of the new opinion,
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appellant’s motion for en banc reconsideration is dismissed as moot. See
Brookshire Bros., Inc. v. Smith, 176 S.W.3d 30, 33 (Tex. App.—Houston [1st Dist.]
2004, pet. denied).
This case involves a property dispute between a local church and its
parent denominational church. The local church, Windwood Presbyterian Church,
Inc. (“Windwood”) filed suit against The Presbyterian Church (U.S.A.)
(“PCUSA”) and Presbytery of New Covenant, Inc. (“the Presbytery”) (collectively,
“the denominational church”), seeking a declaration that the denominational church
had no legal, equitable, or other interest in the property on which Windwood’s
church campus is located. The denominational church moved for summary
judgment, contending that PCUSA is a hierarchical church, and, as such, its
decision on church property matters is entitled to deference by civil courts. The
trial court granted summary judgment, and this appeal followed. We reverse and
remand to the trial court.
BACKGROUND
Windwood Presbyterian Church, Inc. is a non-profit corporation that
maintains the civil affairs for Windwood Presbyterian Church, which is located at
1055 Spring-Cypress Road in Houston, Harris County, Texas. Windwood was
incorporated and its first trustees were elected in 1971. The 1971 articles of
incorporation pledge the assets of the corporation to the establishment and
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maintenance of a place of religious worship. In the articles, Winwood trustees
were given the power to buy, sell, and mortgage property for the church. The
articles further provide that the members of the corporation could assign other
duties to the trustees, “provided they do not infringe upon the powers and duties of
the Session or of the Board of Deacons as defined in the Book of Church Order,
Presbyterian Church in the United States.”
Windwood was at the time of its incorporation a member of Presbyterian
Church of the United States (“PCUS”), which, because of a split at the time of the
Civil War, was comprised of churches in the southern part of the United States.
The PCUS did not have any trust provisions in its constitution at the time of
Windwood’s incorporation. However, in 1983, the PCUS merged with the
churches from the northern part of the United States to form the Presbyterian
Church as it exists today, the PCUSA. Windwood has been a member of the
PCUSA since the merger of the two churches in 1983.
As a part of the reunification, PCUSA amended its church constitution—the
Book of Order—to provide:
All property held by or for a particular church, a presbytery, a synod,
the General Assembly, or the Presbyterian Church (U.S.A.), whether
legal title is lodged in a corporation, a trustee or trustees, or an
unincorporated association, and whether the property is used in
programs of a particular church or of a more inclusive governing body
or retained for the production of income, is held in trust nevertheless
for the use and benefit of the Presbyterian Church (U.S.A.).
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The Book of Order also contains a provision permitting a local church,
within eight years of the formation of the PCUSA, to opt out of the trust provision
if it had not been subject to a similar provision before the formation of the PCUSA.
Windwood never exercised this right.
The property at issue in this case was given to Windwood by warranty deeds
dated December 27, 2000 and May 12, 2003, after Windwood joined the PCUSA,
and more than eight years after the amendments to the Book of Order. Neither
deed references a trust in favor of PCUSA.
On October 1, 2007, Windwood amended its articles of incorporation to add
a declaration that all real property held by the corporation constituted a trust held
for the benefit and enjoyment of the members of the local church only.
In 2008, Windwood filed suit against PCUSA and the Presbytery seeking a
declaration that (a) the denominational church has no legal, equitable, or other
interest in the property; (b) no trust interest of any kind exists in favor of the
denominational church, or if such a trust was created, it has been revoked; (c) all
property held by or titled in Windwood’s name is held by its ownership pursuant to
its 2007 Articles of Incorporation and the terms of the deeds; and (d) that neither
PCUSA nor the Presbytery has any right to determine the ownership of the
property.
PCUSA moved for summary judgment, contending that (1) PCUSA is a
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hierarchical church, and as such (2) Texas courts must defer to the governing
church authority for resolution of property issues. Windwood responded that (1)
there are fact questions about whether PCUSA is a hierarchical church, and, even if
it is (2) the trial court should apply “neutral principles” of law in determining
ownership of the property, and (3) u n d e r “ n e u t r a l p r i n c i p l e s ”
PCUSA did not have a legally cognizable interest in the property. The trial
court granted the PCUSA’s motion, and this appeal followed.
THE FIRST AMENDMENT AND CHURCH PROPERTY DISPUTES
To resolve the issues in this case, we first consider the historical
development of church property disputes and how they are affected by the First
Amendment.
The First Amendment to the United States Constitution, applicable to the
states through the Fourteenth Amendment, Cantwell v. Connecticut, 310 U.S. 296,
303, 60 S. Ct. 900, 903 (1940), provides that “Congress shall make no law
respecting an establishment of religion, or prohibiting the free exercise thereof.”
U.S. CONST. AMEND. I. Following this constitutional mandate, civil courts may
not intrude into inherently “religious” or “ecclesiastical” matters. See Westbrook v.
Penley, 231 S.W.3d 389, 398–99 (Tex. 2007). In Texas, this doctrine has been
referred to as one of “ecclesiastical abstention” or “ecclesiastical exemption.” See
Lacy v. Bassett, 132 S.W.3d 119, 123 (Tex. App.—Houston [14th Dist.] 2004, no
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pet.); see also Patton v. Jones, 212 S.W.3d 541, 555 n.13 (Tex. App.—Austin
2006, no pet.); Schismatic & Purported Casa Linda Presbyterian Church v. Grace
Union Presbytery, Inc., 710 S.W.2d 700, 703 (Tex. App.—Dallas 1986, writ ref’d
n.r.e.). The ecclesiastical-abstention doctrine stands for the proposition that the
First Amendment prohibits civil courts from exercising jurisdiction over matters
concerning “theological controversy, church discipline, ecclesiastical government,
or the conformity of the members of the church to the standard of morals required
of them.” Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696, 713–14, 96
S. Ct. 2372, 2382 (1976). Similarly, the First Amendment prohibits civil courts
from resolving church property disputes on the basis of religious doctrine or
practice.
Watson v. Jones and Hierarchical Deference Review
For over 100 years, church property disputes were governed by the seminal
case of Watson v. Jones, 80 U.S. (13 Wall.) 679 (1871). The Court in Watson
declared that, when asked, civil courts have jurisdiction to resolve secular church
disputes over ownership of church property:
[T]he courts when so called on must perform their functions as in
other cases.
Religious organizations come before us in the same attitude as other
voluntary associations for benevolent or charitable purposes, and their
rights of property, or of contract, are equally under the protection of
the law, and the actions of their members subject to its restraints.
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Id. at 714.
To decide how to resolve such disputes, the Court drew a distinction
between “congregational” or “independent” churches and more hierarchical
churches. To determine property disputes in congregational churches or those
“governed solely within,” “the rights of such bodies to the use of the property must
be determined by the ordinary principles which govern voluntary associations.” Id.
at 724–25.
However, in a hierarchical form of church organization, the Court said, the
local church “is itself part of a large and general organization of some religious
denomination, with which it is more or less intimately connected by religious
views and ecclesiastical government.” Id. at 726. In such instances, “we are bound
to look at the fact that the local congregation is itself but a member of a much
larger and more important religious organization, and is under its government and
control, and is bound by its orders and judgments.” Id. at 726–27.
The Court then held that:
All who unite themselves to such a body do so with an implied
consent to this government, and are bound to submit to it. But it
would be a vain consent and would lead to the total subversion of
such religious bodies, if any one aggrieved by one of their decisions
could appeal to the secular courts and have them reversed. It is of the
essence of these religious unions, and of their right to establish
tribunals for the decision of questions arising among themselves, that
those decisions should be binding in all cases of ecclesiastical
cognizance, subject only to such appeals as the organism itself
provides for. Id. at 729. Thus, the Court in Watson adopted an
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approach to resolving property disputes in hierarchical churches that
has since been described as “hierarchical deference.” Under the rule of
hierarchical deference, a civil court must first determine the
organizational structure of the church and then, if it determines that the
church is hierarchical, it must defer to the decision of the highest
judicatory body of the hierarchical church.
Post-1969 Cases and the “Neutral Principles of Law” Review
In 1969, the Supreme Court indicated that neutral principles of property law
might be used to resolve church property disputes so long as application of those
principles did not draw state courts into religious controversies. Presbyterian
Church in the United States v. Mary Elizabeth Blue Hull Mem’l Presbyterian
Church, 393 U.S. 440, 89 S. Ct. 601 (1969) involved a property dispute between
two Georgia churches and the Presbyterian Church in the United States, with
which they were affiliated. The two local churches had withdrawn from the general
church over doctrinal disputes. 393 U.S. at 442, 89 S. Ct. at 602. The local
churches sought a judicial determination that the general church had substantially
departed from the tenets of faith that existed at the time of the local church’s
affiliation and that, as a result, the implied trust through which church property is
held for the general church had terminated. 393 U.S. at 443–44, 89 S. Ct. at 603. In
resolving the dispute, the Georgia Supreme Court agreed with the local churches
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that the “substantial abandonment” standard applied and submitted to the jury the
question of whether the general church organization had substantially abandoned
the tenets of faith and practice as they existed at the time of affiliation. 159 S.E.2d
690, 695 (Ga. 1968), rev’d, 393 U.S. 440, 89 S. Ct. 601 (1969). In so doing, the
Georgia court permitted a jury examination into tenets of faith of the parent
church.
Citing Watson, the Supreme Court reversed, explaining that Georgia’s
“departure-from-doctrine” approach was unconstitutional because it required the
civil court to determine matters “at the very core of a religion—the interpretation
of particular church doctrines and the importance of those doctrines to the
religion.” 393 U.S. at 450, 89 S. Ct. at 607. The Court remanded the case, holding
that the Georgia court needed to develop a method of resolving church property
disputes that did not draw state courts into religious controversies. In so holding,
the Supreme Court noted that “there are neutral principles of law, developed for
use in all property disputes, which can be applied without ‘establishing’ churches
to which property is awarded.” Id. at 449, 89 S. Ct. 606.
In a concurring opinion to Maryland and Virginia Eldership of Churches of
God v. Church of God at Sharpsburg, Inc., 396 U.S. 367, 90 S. Ct. 499 (1970), a
case dismissed for lack of a federal question, Justice Brennan cautioned that the
hierarchical deference approach should be used “only if the appropriate church
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governing body can be determined without the resolution of doctrinal questions
and without extensive inquiry into religious policy.” Id. at 370, 90 S. Ct. 501.
Justice Brennan also noted that a state could adopt any of several approaches for
resolving church property disputes, including (1) Watson’s hierarchical deference
approach, (2) the use of “neutral principles of law” under which civil courts can
determine ownership by studying deeds, reverter clauses, and general state
corporations law, and (3) the passage of special statutes governing church property
arrangements. Id. at 368–70, 90 S. Ct. 500–01.
In Jones v. Wolf, 443 U.S. 595, 99 S. Ct. 3020 (1979), the majority of the
court adopted Justice Brennan’s position that the hierarchical deference view was
one of several possible methods for resolving church property disputes. Once
again, the Court emphasized that state courts must not resolve church property
disputes on the basis of religious doctrine and practice. Subject to that restriction,
the Court said that the First Amendment does not otherwise dictate that a state
must follow a particular method in resolving church property disputes. A state may
adopt “any one of various approaches for settling church property disputes so long
as it involves no consideration of doctrinal matters, whether the ritual and liturgy
of worship or the tenets of faith.” Id. at 602 (quoting Maryland & Va. Churches,
396 U.S. at 368, 90 S. Ct. at 500 (Brennan, J., concurring)) (emphasis in original).
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One acceptable approach, referred to as the “neutral principles” approach,
permits the state courts to examine legal documents of title, state statutes
governing the holding of church property, and the secular provisions of church
documents, including the terms of the local church charters and the provisions of
the constitution of the general church concerning the ownership and control of
church property. Jones, 443 U.S. at 603, 99 S. Ct. 3025. A neutral-principles
approach, the Court explained, “relies exclusively on objective, well-established
concepts of trust and property law familiar to lawyers and judges. It thereby
promises to free civil courts completely from entanglement in questions of
religious doctrine, polity, and practice.” Id.
Texas Cases Involving Church Property Disputes
In Brown v. Clark, 116 S.W. 360, 363 (Tex. 1909), the court cited Watson in
resolving a dispute between rival factions of a local Presbyterian church. The
court carefully avoided any ecclesiastical issues, including whether the local
church possessed the authority to enter into a union with the Presbyterian
denominational church. Id. at 364. The court then considered “perhaps the only
question in the case of which this court has jurisdiction,” i.e., how the union with
the denominational church affected the possession and control of the local church
property. Id. The court examined the deed, which was in the name of the local
church, but recognizing that the local church “was but a member of and under the
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control of the larger and more important Christian organization,” held that only
those members of the local church loyal to the denominational church were entitled
to use and possession of the property. Id. at 365.
Several courts since Brown interpreted it as adopting the hierarchical
deference approach. See Green v. Westgate Apostolic Church, 808 S.W.2d 547,
551 (Tex. App.—Austin 1991, writ denied) (“Appellate courts have consistently
followed the deference rule in deciding hierarchical church property disputes since
the Texas Supreme Court adopted the rule in Brown.”); Schismatic & Purported
Casa Linda Presbyterian, 710 S.W.2d at 707 (holding Texas law “has
consistently followed the deference rule” and declining to adopt the “neutral
principles” application).
However, in Masterson v. Discese of Northwest Texas, No. 11-0332,
___S.W.3d. ___, 2013 WL 4608632, at *11 (Tex. Aug. 30, 2013), which we
discuss in detail below, the Supreme Court of Texas put the issue to rest by stating,
“We hold that Texas courts should use the neutral principles methodology to
determine property interests when religious organizations are involved. Further, to
reduce confusion and increase predictability in this area of the law where the issues
are difficult to begin with, Texas courts must use only the neutral principles
construct.” Id.
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PROPRIETY OF SUMMARY JUDGMENT
The denominational church moved for summary judgment, arguing:
Under Jones v. Wolf, there are two recognized approaches from which
each state may choose: “hierarchical deference” and a “neutral
principles” approach. See Jones v. Wolf, 443 U.S. 595 (1979); Watson
v. Jones, 80 U.S. 679 (1871). Texas has explicitly adopted the
“hierarchical deference” approach. Green v. Westgate Apostolic
Church, 808 S.W.2d 547, 551 (Tex. Ct. App. 1991). Consequently,
there is only one issue before this Court, and that is whether Texas
courts have held that the PCUSA is a hierarchical church, since under
the “hierarchical deference” approach, the PCUSA and the Presbytery
are entitled to a summary judgment.
In three issues on appeal, Windwood contends the trial court erred in
granting summary judgment because (1) there is a fact question about whether
PCUSA is a hierarchical church; (2) the trial court erred by not applying the
“neutral principles” standard for resolving this dispute; and (3) PCUSA failed to
establish that is has a “legally cognizable” trust in the property. Because we find
Windwood’s second issue dispositive, we address need only address it.
Standard of Review
We review the trial court’s decision to grant summary judgment de novo.
Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). To prevail on a
summary judgment motion, the movant must demonstrate that there are no genuine
issues of material fact and that it is entitled to judgment as a matter of law. TEX. R.
CIV. P. 166a(c); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678
(Tex. 1979) (movant must conclusively prove all “essential elements of his cause
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of action or defense as a matter of law”). In deciding whether there is a disputed
material fact issue precluding summary judgment, we must take evidence favorable
to the nonmovant as true, indulge every reasonable inference in favor of the
nonmovant, and resolve any doubts in the nonmovant’s favor. Dorsett, 164
S.W.3d at 661; Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548–49 (Tex.
1985). If the movant shows that it is entitled to judgment as a matter of law, the
burden shifts to the nonmovant to present evidence to raise a material fact issue
that precludes summary judgment. See Centeq Realty, Inc. v. Siegler, 899 S.W.2d
195, 197 (Tex. 1995).
Hierarchical Deference or Neutral Principles—An Analysis of Masterson
In its second issue, Windwood contends the trial court erred by not applying
neutral principles of law to resolve this dispute. We agree based on the Texas
Supreme Court’s holding in Masterson v. Diocese of Northwest Texas, 2013 WL
4608632.
In Masterson, the Texas Supreme Court considered a property dispute between
a local Episcopal church and the national Episcopal church and diocese, from which
a majority of the local church had voted to withdraw. 2013 WL 4608632, at *1. The
local church held title to the property through a Texas non-profit corporation, which
made no reference to a trust in favor of the national church or diocese. Id. at *2.
However, a canon of the national church provided that “[a]ll real and personal
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property held by or for the benefit of any Parish, Mission or Congregation is held in
trust for [the national church].” Id. at *15. Due to doctrinal differences with the
national church, the local church voted to disassociate from the national church, and
the corporation that held the property of the local church amended its bylaws to
remove all references to the national church, withdraw its membership with the
national church, and revoke any trusts that may have been imposed on its property.
Id. at *2.
The diocese of the national church filed suit against the leaders of withdrawing
members and the corporation seeking a declaratory judgment that the local church’s
property could not or used for any purpose other than the mission of the national
church and that the property was held in trust for the national church. Id. at *2.
The national church moved for summary judgment alleging that it was a
hierarchical church, that its cannons required that all property of a local parish be
held in trust for the national church, and that when congregations of hierarchical
churches split, Texas courts must defer to the decision of the national church’s
superior hierarchical authority in determining which faction of the church constitutes
the “true” church, which would be entitled to the property held in trust for the
national church. Id. at *3. The national church’s motion asserted that “the sole legal
issue [for the trial court] is whether or not the Episcopal Church is hierarchical.” Id.
It did not plead or assert as grounds for summary judgment that it was entitled to the
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property based on an application of neutral principles of law. Id.
The trial court granted the national church’s motion for summary judgment,
which the court of appeals affirmed. Id. at *3. The supreme court, however,
disagreed by first deciding that neutral principles of law should be used to determine
property interests when religious organizations are involved, and stating that “Texas
courts must use only the neutral principles construct.” Id. at *11. In so holding, the
court recognized that its earlier opinion in Brown, which many courts had considered
to be an application of hierarchical deference, was actually following the neutral
principles construct because it considered which entity held title to the property. Id.
at *10.
The court then considered the propriety of the summary judgment in light of
its holding that church property disputes should be resolved by applying neutral
principles of law. Id. at *11. The court concluded that the record conclusively
established that the Episcopal Church was hierarchical, and that the trial court had
properly deferred to the bishop’s determination as to members of the vestry and
ecclesiastical matters of church governance. Id. at *12. However, the court also
concluded that applying deference to those issues did not necessarily determine who
owned the property. Id. The court then held that, because the national church’s
motion for summary judgment was based on its argument that the bishop’s
determination of property ownership should be afforded deference, and that the
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national church did not plead or urge as grounds for summary judgment that it was
entitled to the property on the basis of neutral principles, the trial court erred in
granting the national church’s motion for summary judgment. Id. Therefore, the
supreme court reversed the court of appeals’ judgment and remanded the case to the
trial court.1 Id.
Application of Masterson to This Case
In this case, as in Masterson, the denominational church’s motion was based
solely on the contention that this property dispute should be resolved by applying the
hierarchical deference approach and deferring to governing church authorities on the
issue. Indeed, the denominational church’s motion states that “there is only one issue
before this Court, and that is whether Texas courts have held that the PCUSA is a
hierarchical church, since under the ‘hierarchical deference’ approach, the PCUSA
and the Presbytery are entitled to a summary judgment.” Because this was the only
ground urged for summary judgment, under Masterson, the denominational church’s
summary judgment must be reversed and remanded to the trial court. “Because the
1
After holding that the summary judgment must be reversed, the Masterson
court went on to address several issues that would “feature prominently on
retrial” in order to “provide guidance to the trial court,” even though those
issues were not necessary to the resolution of the appeal. Id. Specifically, the
court addressed (1) who controlled the corporation, and (2) who controlled the
property. Id. at *13–14. In so doing, the court recognized that whether a trust
was established under Texas law and whether that trust was irrevocable would
be issues on remand. Id.
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deference methodology is not to be used to determine this type dispute, the [national
church’s] pleadings and motion will not support summary judgment.” Id.
The denominational church nonetheless argues that “the summary judgment
record is broad enough for the court to affirm the trial court’s grant of summary
judgment under both neutral principles and Masterson.” Specifically, the
denominational church points out that, in its response to summary judgment,
Windwood requested that the trial court apply neutral principles of law to determine
the property issue and attached as summary judgment evidence the documents of title
which would allow the trial court to do so. Masterson also had summary judgment
evidence showing documents of title, references by the nonmovant to neutral
principles, and a reply by the national church arguing that it was entitled to summary
judgment under both the deference and neutral principles analyses. See id. at *3.
Despite the fact that the neutral principle analysis was discussed in the summary
judgment briefing and the evidence included some of the documents that would be
necessary to conduct such an analysis, the supreme court reversed the national
church’s summary judgment because its motion was strictly based on an application
of hierarchical deference. Id. at *12. The same is true in this case. We decline to
perform a neutral principles analysis because that was not the grounds alleged or
asserted in the denominational church’s motion or pleadings. Such issues should be
addressed and properly raised in the trial court with the guidance given by the
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Masterson opinion.
The denominational church also argues that Masterson is not controlling
because “there is no schism and property disputes are governed by the Presbyterian
church.” While it is true that Masterson involved a church schism and this case
arguably does not because Windwood has yet to leave the PCUSA, the Masterson
holding is not so limited. Indeed, the court stated, “We hold that Texas courts should
use the neutral principles methodology to determine property interests when religious
organizations are involved.” Id. at *1. This case is a property dispute involving a
religious organization, thus we conclude that Masterson is applicable and mandates
reversal of the denominational church’s summary judgment.
CONCLUSION
We reverse the trial court’s judgment and remand for further proceedings.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
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