Episcopal Parties File Motion for Partial Summary Judgment Under Neutral Principles

On December 1, 2014, Plaintiffs The Episcopal Church, Local Episcopal Parties, and Local Episcopal Congregations filed a joint motion for partial summary judgment in the 141st District Court, the Honorable John P. Chupp presiding. As the motion states:

“Defendants are former Episcopalians who served as officers of The Episcopal Church’s Episcopal Diocese of Fort Worth. They gained access to more than $100 million of property in that capacity. They committed to use that property only for the benefit of the Church and its Diocese, and without those commitments, they never would have had access to the property. Now, Defendants have broken those agreements and purported to take the Episcopal Diocese and its Congregations, and along with them, all the property, out of The Episcopal Church and into another denomination.

“This conduct is unacceptable under the most basic neutral principles of Texas law, including express contractual trust, constructive trust, associations law, and corporate control. Any one of these neutral principles is sufficient. So many apply because Texas does not countenance violations of plain commitments regarding property. In Texas and in America, people can leave their Church. But they cannot take property they held for that Church.”

Motion for Partial Summary Judgment

Tables to Plaintiffs’ Motion for Partial Summary Judgment

An overview of the Episcopal Parties’ arguments is on Page 1 of the motion. Examples of evidence of Defendants’ and their predecessors’ commitments — and Defendants’ wrongful conduct in breaking away — are on Page 55.

The Texas Supreme Court ordered the parties to litigate this case under neutral principles of Texas law. Plaintiffs’ motion shows that the breakaway Defendants must return the property under any one of several neutral principles, including:

• Simple Solution: The Court can resolve this case quickly and simply under Defendants’ own admissions. Defendants admit that the Corporation holds all property in trust for the Diocese and Congregations. The question, then, is, who represents the Diocese and Congregations? And Defendants now finally admit—to the U.S. Supreme Court no less, just two months ago—that where “the property dispute’s resolution turn[s], under neutral principles of Texas law, on the local church body’s identity—an ecclesiastical matter—the court defer[s] to the national denomination’s understanding of the church’s identity. . . . [This,] the Texas Supreme Court held ‘remains the appropriate method for Texas courts.’” The Corporation thus holds all property in trust for the Diocese and Congregations, and only The Episcopal Church — not breakaway Defendants — can identify the Episcopal Diocese and Congregations under neutral principles of law.

• Contractual trust: As the Fort Worth Court of Appeals held before the Diocese was even formed, when a party agrees to honor a trust in exchange for benefits, that trust is irrevocable as a matter of law and “attempted revocation . . . [is] wholly ineffective.” Shellberg v. Shellberg, 459 S.W.2d 465, 471 (Tex. Civ. App.—Fort Worth 1970, writ ref’d n.r.e.); accord Johanson’s Tex. Estates Code Ann. § 112.051 (2014). The Diocese and Corporation agreed to hold property in trust for the Church in exchange for formation by, membership in, and property from the Church. Defendants cannot break that deal now.

• Constructive trust: Texas law says that parties cannot obtain property by breaking their promises. Defendants and their predecessors-in-office committed to hold the disputed property “for the use of The Episcopal Church” and as “approved by this Church, and for no other use.” Texas law requires a constructive trust to keep Defendants from obtaining a windfall by breaching or causing the Diocese to breach these promises.

• Associations law: As the Fort Worth Court of Appeals and courts across Texas have long held, local chapters of larger associations are not independent entities but are part and parcel of the larger association. A dissenting local majority, no matter how large, cannot sever this relationship and take property — rather, the loyal minority, as a matter of law, is the true and lawful successor to the local chapter’s property rights.

• Corporate control: And while Defendants attempt to focus this case on who controls the Corporation, that question is ultimately irrelevant, because whoever runs the Corporation is bound to honor its undisputed trust obligations to the Diocese and Congregations. If, as they purport, Defendants did control the Corporation, this Court would remove the Corporation as trustee of the Diocese’s and the Congregations’ trusts under Texas law. But even under basic principles of Texas corporations law and the Corporation’s own bylaws, Defendants cannot and do not constitute the directors of the Corporation as a matter of law.

As the motion states: “In short, under any analysis, Defendants’ conduct is contrary to neutral principles of law, because their commitments to the Church as a condition of formation were plain and obvious.”

Under the Court’s Scheduling Order, the breakaway defendants also filed a motion for summary judgment on December 1. Each side will file a response to the other side’s motion by December 22 and then file a reply to the other party’s response by January 23. A hearing on the motions is set for February 20, 2015.