Story Highlights

On June 16, 2011 the Episcopal Parties filed their response to the breakaway defendants’ statement of jurisdiction in the Texas Supreme Court. A copy of the breakaways’ statement is here; a copy of the Episcopal response is here.

The Rt. Rev. C. Wallis Ohl, provisional bishop of Fort Worth, said, “We remain encouraged by Judge Chupp’s rulings in our favor. I know we all are eager to be reunited with those who have been separated from us, but I urge everyone to be patient as this process plays out. All things will be well.”

By seeking a direct appeal to the Texas Supreme Court, the breakaway defendants are attempting to avoid the Fort Worth Court of Appeals’ review of Judge Chupp’s February 8, 2011 partial summary judgment in favor of the Episcopal Parties. As you know, the Court followed long-standing state and federal law, ruling in part that:

  1. The individuals who remain loyal to The Episcopal Church are the individuals entitled to use and control church property; and
  2. The breakaway defendants must “desist from holding themselves out as leaders of the Diocese” and surrender the property and control of the Diocesan entities.

The Texas Supreme Court rarely accepts a “direct appeal,” only when a trial court has granted or denied an injunction based “on the ground of the constitutionality of a statute of this state.” Tex. Gov’t Code § 22.001(c). The Texas Supreme Court has accepted only three cases on direct appeal in the last ten years, and in each of those cases, the trial judge had specifically ruled that a state statute was “unconstitutional.”

The breakaway defendants pin their hopes for success, against overwhelming precedent, on the theory that the trial court’s order declared the Texas Trust Code and the Non-Profit Corporation Act to be unconstitutional.

The problem with the breakaways’ theory is that Judge Chupp clearly did not grant the two injunctions “on the ground of the constitutionality” of any statute and he did not apply or rule on the constitutionality of any statute. At the February 8th hearing, Judge Chupp expressly refused the breakaway’s demand that he redraft the order, acknowledging that he “can’t just craft something to make it go to the Supreme Court.” The breakaways’ attorney Scott Brister conceded that the order did not support a direct appeal, stating that, if the judge refused to rule that the statutes were unconstitutional, “then we’re going to have to go to the Second Court [Fort Worth’s Court of Appeals]. We definitely have no choice.” Yet defendants still seek a direct appeal, attempting to leapfrog the Fort Worth Court of Appeals and deny the parties their due process rights to a complete appellate process.

What happens next in the Supreme Court? The Supreme Court will either (1) find “probable jurisdiction” and the parties will then file more extensive briefing or (2) find “no jurisdiction,” giving the breakaways the opportunity to refile their appeal in the Fort Worth Court of Appeals.

What happens after all appeals are exhausted? The case will return to Judge Chupp for resolution on the remaining issues of accounting of Church property, damages, trademark violation, violation of fiduciary duty, conversion, other declarations and injunctions, and attorney fees.

The evidence against the breakaway defendants is mounting: in May, defendants’ Director of Business and Finance admitted under oath that the breakaway defendants transferred funds across state lines, specifically to make these funds harder for a court to reach, and that these secret account(s) were kept off the books and not disclosed to the Court in prior sworn statements. In addition, despite their attorneys’ assurances to Judge Chupp that the bank accounts subject to the lawsuit have grown since the schism, newly disclosed financial documents reveal that defendants have in reality dissipated extraordinary amounts of Church funds and that they selectively told the Court about only 6 of 18 accounts when wrongly suggesting that the bank account balances had gone up, not down.

On other fronts, the parties continue to negotiate in the hope of reaching an agreement on the terms of a supersedeas bond and injunctive relief to protect the church property from further dissipation by the breakaway Defendants pending their appeals.