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Forward in Faith North America
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Latest Discussion on the Subject August 28, 2004 - CALIF. CASE CAUSE FOR OPTIMISM ON CHURCH PROPERTY ISSUES, SAYS CANON LAW INSTITUTE Case Has Implications For ECUSA, CLI Says By The Rev. Charles H. Nalls Following on a Maryland Court of Appeals decision two years ago involving the African Methodist Episcopal Church, the United Methodist Church has suffered a sound defeat in a church property matter in California. The case involved the issue of who controls a local church's property when the congregation ends its affiliation with a national or worldwide religious body. As such, the case has implications for other denominations, particularly the U.S. Episcopal Church (ECUSA), which claims a trust over parish properties based on an internal church rule. The decision in California-Nevada Annual Conference of the United Methodist Church et Al., v. St. Luke's United Methodist Church (Slip Op. F041778 9; Ca. App. 2004) marks the reaffirmation of the "neutral principles" analysis of the 1981 Barker case--an action in which three of four defendant parishes avoided the effect of ECUSA's claimed trust. The St. Luke's case also involved the application of specific provisions of the California corporate code and trust law. Thus, those seeking to apply it in other states should examine whether analogous provisions exist in their state codes. As for the facts of the California case, they are familiar in church property cases. St. Luke's, a congregation in Fresno with substantial holdings, left the main denomination over a doctrinal dispute and an attempt by the bishop to replace the pastor. The Court of Appeals took pains to avoid describing the doctrinal issue, or the positions of the parties as to the issue. The underlying litigation began when St. Luke's was sued by the California-Nevada Annual Conference of the United Methodist Church (a non-profit, religious corporation and a regional body of the United Methodist Church, hereinafter the "Annual Conference"), Bishop Talbert (the bishop responsible for oversight of local churches within the geographical area of the Annual Conference, including St. Luke's), and Rev. Healy (the District superintendent for the Fresno District of the Annual Conference). The action sought injunctive relief and damages. St. Luke's filed a cross-complaint against the Annual Conference, Bishop Talbert and Rev. Healy seeking a declaration that the cross-defendants had no interest in the property, and that St. Lukes could revoke any trust interest which might exist in the real property by recording grant deeds (prepared and attached as exhibits to the cross-complaint) by which St. Lukes would deed the real property to itself, without any trust language. After a non-jury trial, the trial court ruled that the local church held the church property in trust not only for the use and benefit of the local church, but also for the use and benefit of the United Methodist Church. The court also ruled that the local church could not revoke that trust. The trial court's ruling was based largely on its understanding of the meaning of subdivisions (c) and (d) of Corporations Code section 9142. On appeal, the local church contended that (1) the court erred inconcluding that a trust existed in favor of the United Methodist Church, and (2) even if such a trust existed, the local church could and did revoke that trust. The Court of Appeals agreed with the lower court that the evidence presented at trial supports the trial court's conclusion that a trust in favor of both churches was created. Significantly, however, the appellate court sided with the congregation and found that it could and in fact did revoke the trust which had existed in favor of the United Methodist Church. The case hinges on California Corporations Code section 9142, subdivisions (c) and (d)--sections which the court specifically noted that "may well be of particular importance to churches which now are, or in the future will be, experiencing difficult doctrinal disputes among their members." Certainly, this does not bode well for "Dennis Canon" claims by ECUSA in California. Indeed, the court found that: (1) subdivision (c)(2) of Corporations Code section 9142 does not authorize a general church to create a trust interest for itself in property owned by a local church simply by issuing a rule declaring that such a trust exists; (2) a local church's creation of a trust interest in favor of the general church--including a trust interest created by the local church's agreement to a general church's rule calling for the local church to hold property in trust for the general church--may be revoked by the local church unless that church has expressly declared that trust to be irrevocable. Interestingly, while the litigation was pending, and before the trial began, St. Luke's amended its Articles of Incorporation to state a change in the purposes of the religious corporation. Its purposes became "to establish and maintain a church . which . shall follow the tenets of Methodism, but which shall not be subject in any manner to the articles, rules, usage, discipline, or jurisdiction of the United Methodist Church or any organization or other entity which is part of and/or affiliated with the United Methodist Church." St. Luke's also purposed "to acquire, manage, and hold in trust for the sole benefit of this Corporation property of every kind and nature, both real and personal .." In short, St. Lukes would not be affiliated with the United Methodist Church and would hold its property in trust for itself only. Thus, the charter amendment was actually effected while the case was pending! As there are pending matters in which CLI has been asked for assistance, the Institute will not undertake state-specific analysis at this time. However, CLI believes that the reaffirmation of Barker, the Court of Appeals analysis of trust theory, and the trust revocation analysis, are all cause for optimism for those representing individual parishes and congregations in property disputes. Finally, CLI urges reading this case together with the analysis in From the Heart Church Ministries, Inc. v. African Methodist Episcopal Zion Church, No. 3 September Term, 2000 (Md. 07/24/2002) August 17, 2004 Could this be the end of the "Dennis Canon"? ECUSA adopted, in 1979, a canon that became known as the "Dennis Canon". This canon specifies that all property held by a parish, even if deeded to that parish, is held in trust for the diocese. As such, it has made it extremely hard, if not impossible, for a parish that desires to leave ECUSA to do so and retain its property--meaning that if orthodox believers leave, they leave their property in the hands of the revisionists. There has been a surprising ruling (in California!) that has ruled that a United Methodist church that had been restrained by the United Methodist Church equivalent of the Dennis Canon could terminate that trust and leave with its property. Peter Sean Bradley reports: What this means is that the "barrier to exit" - the forfeiture of the real and personal property that the members of the church have donated for generations - for churches that are unhappy with the leftward tilt of their denomination has been essentially vaporized in California (and in other states with statutory schemes similar to those in California). What it may mean, further, is that the traditional mainstream denominations that organize themselves in quasi-hiearchical or connectional polities will find it necessary to start paying attention to their moderate congregations, lest those congregations "vote with their feet." This could be very good news for orthodox congregations in ECUSA that wish to leave, if it is upheld on appeal and sets a precedent. See also - www.courtinfo.ca.gov/opinions/documents/F041778.PDF January 29, 2004 - Bp Benitez gives some very useful information, for which we are all grateful. There was a change, however, after he rotated off the Board from: The term life insurance benefit was increased to $50,000. CPF gave both clergy and Vestries very favorable premimum terms to purchase these policies on behalf of the priest. After both he and our Vestry bought policies, my husband jokingly told the Vestry (and me): "I'm now worth more dead than alive." The major problem for a clergy family living in parish-owned housing may be finding themselves homeless, if the priest leaves ECUSA. Today's low mortgage rates are helpful, but in many parts of the country, the cost of already-built houses is "sky-high." After a year of research, I found the "best buys" are "manufactured houses" (sometimes known as "double-wide trailers"). Well-made two-bedroom houses are about $160,000. Finding a site for these houses, however, is not easy.January 29, 2004 - A reader offers an interesting comment and insight: (Comment: I trust this string on CPF is both enlightening and informative to clergy and others on this LIST...!!) The federal law the Bishop Benitez refers is ERISA, not ARISA. ERISA stands for the Employment Retirement Income Security Act of 1974. ERISA is not an agency. There is, however, the Employee Benefits Security Administration, which is a division of the Department of Labor. The DoL brings lawsuits against those who violate the pension rules contained in ERISA. Presumably the Church Pension Fund's official could be sued for a breach of fiduciary duty. The penalties can be stiff and there are criminal, as well as civil penalties. Presumably, denying someone's pension based on theology or politics would amount would be viewed in a great negative light by DoL investigators. If there were a prosecution, it would result from an investigation by the New York office of EBSA and it would be prosecuted by a U.S. Attorney. There also one other federal agency, the Pension Benefit Guaranty Corporation, which pays out pension for bankrupt or defunct companies whose pension plans have been terminated. Could it be that active clergy who do not support the Revisionists agenda will have their Pensions threatened or confiscated? Does the new make up of the Pension Fund Board, now including Gene Robinson, seeking to use the Pension Fund to further its agenda? January 29, 2004 - +Ben Benitez comments I had the privilege of serving on the Board of Trustees of the Church Pension Fund for 12 years, and rotated off in the year 2000. Although I have been off the Board for four years, I still know well most of the staff members of CPF, as well as most of the current Trustees. You may be assured that the pensions and benefits of clergy who are vested in the Fund, are not in danger of having "their pension threatened or confiscated", no matter who is on the Board. ( Although I may not be up to date on the Pension Rules, I believe that any clergy person who has served for 5 years, and for whom assessments have been paid into the CPF for those years, is vested in the fund.) It is not simply a matter of good will on the part of the staff and Board, but a matter of Federal Law. The pensions are protected by a Federal agency, and I believe the name is ARISA, which was created just for the purpose of insuring that those who work for a not for profit entity like the CPF receive the full pension benefits which they have earned and to which they are entitled. Were a Board, such as our CPF, or even ECUSA to suggest the denial of the earned pension benefits of a clergy person of the Church, the staff would quickly inform the Board that such action would invite a monumental law suit to be filed against the CPF, backed up by the Federal Government, and that the CPF would be liable. What does happen to a clergy person who leaves ECUSA, through abandoning the Episcopal Church, or renouncing his or her vows, or being deposed, is that the pension of that clergy person is frozen at its present level, and he or she would begin to receive it when he or she reaches age 65, or earlier if the person is disabled, according to the present formula factors, i.e. roughly 1.5 x the number of active years served x the HAC, ( meaning the average of full compensation over the highest seven years of the past 8 years of service). Also, the CPF would no longer accept any further pension assessment into the Fund on behalf of that clergy person, after his or her separation from ECUSA, with the exception that the Fund will accept from the clergy person the assessment for a period of up to one year following separation from ECUSA. In addition, there is items that a clergy person needs to know, which is (1) that the medical benefits provided by the CPF to retired clergy in retirement, are available in full only to those clergy who have served for 20 active years in ECUSA. Those who have served a lesser number of years, will have a lesser benefit, through having to pay for some portion of it. Also, (2) the term life insurance benefit of $30,000 will be paid in full, only if twice the HAC of that priest, plus $5,000, at retirement or the departure of that priest from ECUSA, exceeds $30,000. If it does not, then the priest receives a benefit of the lesser amount. ( As always, anyone about to make plans based on my imterpretation of the CPF Rules, should first verify what I have said with the folks at CPF.) Finally, in my humble judgment, the CPF is the best run operation in ECUSA. And they play by the rules, fairly to everyone. They will not do any special favors for those who choose to leave ECUSA, nor for anyone else. About 3-4 years ago a clergy friend of mine left ECUSA to become a priest in AMiA. A lower level CPF staff member, in ignorance, refused to accept any pension assessments on his behalf, and he had not yet even been deposed. This was especially important to him, because he needed another 6 months of credited service to qualify for full medical benefits when he reached retirement age. My friend called me, and I called Alan Blanchard, who said, "That is wrong! I will take care of it right away". He did, and he told me to have the priest call him personally if he had any more problems. The priest was immediately notified, and he had no further trouble. +Maurice M. Benitez January 24, 2004 - A question that is heard repeatedly in the never-ending ECUSA crisis is this: "Would clergy leaving ECUSA lose the ability to continue to participate in the Church Pension Fund?" Someone on Fr. Kim's list has given an informed response: If clergy, after retiring through CPF, choose to continue to serve in various capacities within the Episcopal Church until mandatory retirement at 72, they are limited to earning less than $27,500 per year without being required to decrease their CPF retirement income, and they are no longer eligible to participate in the CPF program. However, no limits are placed upon how much such clergy may earn without a decrease in their pension income if they are employed by an entity other than the Episcopal Church, and benefits from CPF will continue in retirement even if the clergy choose to affiliate with a church other than the Episcopal Church. Should an individual file for retirement from CPF, that individual cannot be hired back in an "interim" or "part-time" capacity by the mission/parish being served at the time of retirement - they must "vacate their cure" upon retirement. If a vicarage or rectory is provided by the mission/parish being served at the time of retirement that property must be vacated by the clergy at time of retirement. And, since most missions/parishes provide health care insurance for their clergy, retiring clergy are no longer covered by such programs, and are not eligible for Medicare until age 65. For example: a clergy person who is 60 years of age with 20 years credited service files for retirement from CPF. Benefits are calculated on highest average compensation and years of credited service, with a percentage decrease per year for each year the retiree falls short of age 65 (normal retirement age). This retiree must vacate the rectory and give up health care coverage afforded by the parish at the time of retirement. Medicare coverage begins at age 65, provided the clergyperson has been participating in the program for the required number of years, and in most instances, social security retirement benefits begin at age 65, provided the clergyperson has been participating for the required number of years. Income in retirement, when the source of same is the Episcopal Church, is limited to $27,500 per year without a decrease in CPF pension benefits, and retired clergy are no longer eligible to participate in the Church Pension Fund assessment program. In this example, the retiree would need to provide health care coverage for self and dependents and earn enough part-time to offset the difference between pension and former income until age 65 when Medicare and social security income becomes available, locate another retirement income plan in which to participate, and find a residence to lease or buy. Not a very encouraging scenario is it? An involved dilemma which many clergy must now squarely face, given the apostasy and heresy rampant in the Episcopal Church that prevents them from practicing the Catholic faith from an Anglican tradition and perspective. Dec 10 - Suit Aims To Block Conservatives From Taking Church Property Special To The Christian Challenge by The Rev. Charles H. Nalls A well-known liberal Episcopal priest and a layman in the conservative Diocese of Pittsburgh filed a lawsuit October 23, seeking to prevent congregations from taking church property if they part company with the U.S. Episcopal Church (ECUSA) over the appointment of an openly gay bishop. The lawsuit filed by the Rev. Harold Lewis, his Senior Warden, Philip Richard Roberts, and Calvary Episcopal Church names Episcopal Bishop Robert Duncan Jr. and the Pittsburgh diocese. Claiming to represent the interests of the diocese and its constituent parishes, the plaintiffs say a resolution passed by Pittsburgh's recent diocesan convention contravenes ECUSA's infamous "Dennis Canon," which declares that all parish property is held in trust for the diocese and wider national church. Adopted in 1979, the canon was meant to stem the uptick of Episcopal congregations seeking to secede with their property over ECUSA's abolition of historic holy order and the traditional Prayer Book. Filed in Allegheny County Court in Pittsburgh, the civil action does not seek damages but is part of a legal procedure known as *ad litem*, which lets members of an unincorporated association -- in this case, the diocese -- assert that its members must comply with its constitution and bylaws. The complaint states that the "action is brought under the laws of the Commonwealth of Pennsylvania, to preserve and protect the unity and integrity of the property" of ECUSA and the Pittsburgh diocese. The "Dennis Canon" -- Title I, Canon 7, Section 4 of ECUSA's canons -- declares that: "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 Congregation remains a part of, and subject to, this Church and its Constitution and Canons." As indicated, this church rule has been used in a number of earlier suits by several dioceses to strip individual conservative or orthodox parishes of their property ownership. Indeed, in recent weeks, two separate state court decisions have gone against the hopes of the orthodox congregations St. James-the-Less, Philadelphia, and St. Paul's, Brockton, Massachusetts, the latter being at present the longest running ECUSA property suit. The plaintiffs contend that the Dennis Canon was challenged when Pittsburgh's September 27 diocesan convention positioned itself in six resolutions to disengage from ECUSA following the November 2 consecration of the Rev. V. Gene Robinson, an actively gay man, as Bishop of New Hampshire; the actions were part of a widespread backlash to Robinson's appointment in which some other Episcopal dioceses also laid the groundwork for separation. The last of the six resolutions adopted seeks to vest property ownership and title in the various parishes in the diocese. In so doing, the plaintiffs contend that Duncan, his Assistant Bishop, Henry Scriven, the diocesan trustees and standing committee "wrongfully, and without authority, sought to divide and separate the interests of plaintiff diocese and parishes and missions therein from the interests and authority of The Episcopal Church, of which Calvary and its congregation and the individual plaintiffs are part." Ironically, under the sixth resolution, Lewis' own parish would have clear title to its own property, which it could retain even if the diocese itself left ECUSA. Nonetheless, on September 25 Lewis apparently wrote to Bishop Duncan asking him to disavow that the purpose of the resolution was to allow congregations to leave ECUSA and keep churches and other property that they currently use or hold. Bishop Duncan refused to do so, thus provoking the suit. Despite a clear majority of the diocese favoring the resolution at issue, Lewis claims to represent the "real" interests of the diocese in charging a breach of fiduciary duty on the part of Duncan and his fellow defendants, and a threat to improperly transfer property contrary to such interests. The defendants have not yet formally answered the suit. Lewis, long identified with liberal causes in the church, told the Associated Press that the lawsuit "has nothing to do with Gene Robinson; this is not about homosexuality...This is about the Episcopal Church...The court, I think, will uphold our position because the people of [ECUSA] in this diocese are entitled to the use and the enjoyment of the property." Bishop Duncan said he was disappointed but not surprised by the lawsuit. "I think the action on their part is definitely premature, since what we've done is try to protect all the churches' property," he said. Robinson's consecration has widened fissures in the global Anglican Communion, which is wrangling over questions of homosexual behavior and biblical authority. Around the world, 77 million people are members of Anglican churches; the Episcopal Church USA has about 2.3 million members. Observers view the suit as part of an ongoing strategy by ECUSA and the Presiding Bishop's Chancellor, David Booth Beers, to hold parishes in the denomination by threats to the property. The fact that the suit involves national church interests and is against the duly-elected diocesan authorities is a new dimension to ECUSA property suits and will be subject to close scrutiny and analysis. NOTABLY, BEERS was said to be summarizing recent case law regarding church property this fall for selected audiences, including the October 24-27 ECUSA Executive Council meeting in Lake Geneva, Wisconsin. The Living Church reported Beers as asserting that individuals may leave ECUSA, but if there is a remnant within a diocese who wish to remain, they will retain title to church property for the diocese. He added that the Episcopal Church Center has already been contacted by remnants from the dioceses of Pittsburgh and South Carolina. According to three bishops who were present during a Province 4 meeting of bishops and chancellors October 2-4 in Browns Summit, North Carolina, Beers stressed on at least four occasions that he was presenting legal theory, not national church policy. A third meeting was scheduled with selected diocesan chancellors only to be present. The legal conclusion Beers draws about parishes being bound to a diocese is correct, but his theory that a diocese has a similar fiduciary duty to the national church is unproven, according to the Rt. Rev. William C. Wantland, the retired Bishop of Eau Claire, Wisconsin, and a canon law expert associated with the Canon Law Institute. Bishops hold great power over clergy through their ability to license, Bishop Wantland explained, but the ties which bind a diocese to the national church are much weaker. Bishop Wantland said congregations seeking to leave a diocese with their property intact have almost always lost in court, but there is no legal precedent to apply national church canons regarding property to an entire diocese. A number of dioceses have also reached amicable separations with congregations in the past without being challenged by the national church, he said. Nov. 15 - Federal law mandates that after five years one's pension is vested - which means that it can't be taken away from you. However, if one leaves the Episcopal Church, one can no longer contribute to the CPF. In effect, one's account is frozen, and one will receive a pension in due course only for one's credited service before leaving. If a priest left the Episcopal Church, his church would need to stop contributing to the Fund as once notified by the Bishop, the Pension Fund will refuse to receive contributions on his behalf! Nov. 14 - There is a new wrinkle which I hope people well-versed in the Pension Fund (Bp. Benitez, et al) will consider.
November 15 - A rather large group of attorneys have researched this. One of the best presentations at the Dallas Meeting was on this very subject. Wicks Stephens of TESM (Trinity Episcopal School for Ministry), Hugo Blankenship (of Righter trial fame) and Tad Brenner of Quincy were involved in that presentation. November 14 - A priest wrote: In speaking with the Church Pension Group folks, it turns out that clergy will receive the pension benefits they are entitled to at retirement age, after being vested, which is 5 years. It does not depend on continuing to pay into the plan if a cleric is not in ECUSA subsequently. If one leaves the Episcopal Church before 5 years, there is no benefit at retirement. The pension benefit would be based on highest income levels and years of service
at retirement age for whatever that turned out to be for a given individual. November 13 - One retired priest called yesterday to report that if he left ECUSA, he was told by the Church Pension Fund that he has a right to his BASIC supplementary insurance and Rx. That it cannot be taken away. His diocese enjoys an elevated level of insurance, but the Basic level is guaranteed. |
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