Trust busting

Those people nervously pacing the floor may be denominational church officials. The latest court decision over ownership of church property in California has many of them on edge.

After St. James Episcopal Church in Newport Beach, Calif., severed ties last year with the 2.3-million-member Episcopal Church (ECUSA) over biblical issues, including homosexuality, the denomination's six-county Diocese of Los Angeles sued. It sought to confiscate the parish's multi-million-dollar property and financial assets. The diocese cited ECUSA's 1979 "Dennis" canon, or church law, that says parish property is held in trust for the denomination.

But superior court judge David C. Velasquez in Orange County dismissed the lawsuit on Aug. 15 before it went to trial. The judge acknowledged that under church law, hierarchical denominations have the final say in church property disputes. "However," he added, "California courts are not bound by canon law."

That's because the U.S. Supreme Court in 1979 modified its 1869 position granting hierarchical denominations sole determination in property disputes. Its 1979 judgment said church property disputes should be resolved through "neutral" principles of law that consider deeds, articles of incorporation, and state law, as well as church law.

Judge Velasquez said the diocese had failed to show it ever had a legal property ownership claim. It had sold the property outright to St. James for $100 in 1950, and the church has held the title deed ever since, using its own funds to build and maintain the assets.

So far, California courts appear to be the most aggressive in applying the neutral-principles doctrine. Last year, an appeals court in Fresno ruled that state corporate law trumped church law in a case involving a congregation that had split from the United Methodist Church. Among other things, it indicated that a property-trust clause is not unilateral; the church, as a party to a trust, has the right to revoke it. The California Supreme Court let the decision stand. In several other earlier cases, parishes prevailed, but at staggering legal expense.

With such costs in mind, St. James attorney Eric Sohlgren also filed what is known as an anti-SLAPP motion against the diocese. In legal jargon, a SLAPP (Strategic Lawsuit Against Public Participation) is a suit aimed at intimidating and silencing a critic by making defense so expensive the critic abandons it.

Judge Velasquez agreed with St. James: The diocese had sued only after the parish rejected its pro-homosexual doctrinal positions and the leadership of Bishop J. Jon Bruno. (Bishop Bruno had voted for the consecration of a noncelibate homosexual as bishop and endorsed blessings for same-sex couples.) The judge reasoned this made the case also a free-speech matter for the purposes of a SLAPP ruling.

Under the anti-SLAPP motion, St. James is entitled to recover legal expenses for its defense from the diocese. Costs will be tallied at a hearing scheduled for mid-September; they may range into six digits.

Bishop Bruno and the diocese's attorneys expressed outrage and said they will appeal "immediately." The bishop said the case is not about free speech, but "one that addresses who is the rightful owner of the property" under church law.

The verdict is a "momentous" one that has implications nationally, said David Anderson, pastor of St. James from 1987 to 2003 and president of the Atlanta-based American Anglican Council. The council helps other conservative Episcopal churches in trouble with ECUSA over doctrinal and property issues. The ruling will encourage conservatives in other liberal-run hierarchical denominations, Mr. Anderson suggested.

So far, states have differed on how to handle church property disputes. In many instances, they've side-stepped the Supreme Court's guidance and simply bowed to church law on property matters.

California is making that less easy for them to do.