Episcopal Church v. Salazar

547 S.W.3d 353

THE EPISCOPAL CHURCH, the Local Episcopal Parties, the Local Episcopal Congregations, and the Most Rev. Katharine Jefferts Schori, Appellants

v.Franklin SALAZAR and Intervening Congregations, Appellees

NO. 02-15-00220-CV

Court of Appeals of Texas, Fort Worth.

DELIVERED: April 5, 2018

ATTORNEYS FOR THE EPISCOPAL CHURCH & THE MOST REV. KATHARINE JEFFERTS SCHORI: MARY E. KOSTEL & DAVID BOOTH BEERS, GOODWIN PROCTER LLP, WASHINGTON, D.C., SANDRA LISER, NAMAN HOWELL SMITH & LEE, PLLC, FORT WORTH, TEXAS.

ATTORNEYS FOR THE LOCAL EPISCOPAL CONGREGATIONS: FRANK HILL, FRANK GILSTRAP, HILL GILSTRAP, P.C., ARLINGTON, TEXAS.

ATTORNEYS FOR THE LOCAL EPISCOPAL PARTIES: THOMAS L. LEATHERBURY & DANIEL L. TOBEY, VINSON & ELKINS LLP, DALLAS, TEXAS, JONATHAN D.F. NELSON, JONATHAN D.F. NELSON, P.C., ARLINGTON, TEXAS, KATHLEEN WELLS, FORT WORTH, TEXAS.

ATTORNEYS FOR APPELLEES: SCOTT A. BRISTER, ANDREWS KURTH LLP, AUSTIN, TEXAS, J. SHELBY SHARPE, SHARPE & RECTOR, P.C., FORT WORTH, TEXAS, R. DAVID WEAVER & DENA G. WEAVER, LAW OFFICES OF WEAVER & WEAVER, PLLC, ARLINGTON, TEXAS.

PANEL: SUDDERTH, C.J.; GABRIEL, J.

BONNIE SUDDERTH, CHIEF JUSTICE

I. Introduction

The parties' long-running dispute involves, among other things, title to and possession of church property.¹ In 2014, on a direct appeal,² the Supreme Court of Texas identified the appropriate methodology to determine the property ownership issue—neutral principles of law—and remanded this case to the trial court. See Episcopal Diocese of Fort Worth v. Episcopal Church , 422 S.W.3d 646, 647 (Tex. 2013), cert. denied , ––– U.S. ––––, 135 S.Ct. 435, 190 L.Ed.2d 327 (2014) ; see also Masterson v. Diocese of Nw. Tex. , 422 S.W.3d 594, 596, 608 (Tex. 2013), cert. denied , ––– U.S. ––––, 135 S.Ct. 435, 190 L.Ed.2d 327 (2014). No one disputes that the Corporation of the Episcopal Diocese of Fort Worth (the Corporation) holds legal title to the property or that the Corporation holds the property in trust for the Episcopal Diocese of Fort Worth (EDFW). Rather, at its heart, the parties' dispute is over who has the right to control the Corporation and EDFW as legal entities.

In a single issue containing multiple sub-issues, Appellants The Episcopal Church (TEC), the Most Reverend Katharine Jefferts Schori, The Local Episcopal Parties, and The Local Episcopal Congregations (collectively, the TEC parties) appeal the trial court's summary judgment for Appellees Franklin Salazar and the Intervening Congregations (collectively, Appellees).³

For ease in navigating this highly complex case, we set forth the following roadmap: Part II of this opinion contains EDFW's history and the procedural background of this case as pertinent to its disposition. Part III sets out the standard of review and the case's legal framework, starting with the binding precedent of the United States Supreme Court and the Supreme Court of Texas and followed by persuasive authorities that inform our judgment before addressing the applicable state substantive law on associations, corporations, and trusts and then applying these authorities to the case's dispositive issues in parts III.B.2–B.4. Part IV sets out in full our conclusion, which is that we affirm the trial court's judgment in part and reverse it in part and remand the case to the trial court for further proceedings.

II. Background

Religious schisms that give rise to property disputes are not unprecedented.⁴

TEC, for example, was founded in 1789 after its revolutionary constituents broke away from the Church of England. See Episcopal Diocese , 422 S.W.3d at 647 ; Bennison v. Sharp , 121 Mich.App. 705, 329 N.W.2d 466, 468 (1982) ; Hon. John E. Fennelly, Property Disputes and Religious Schisms: Who is the Church? , 9 St. Thomas L. Rev. 319, 347 n.251 (1997). The Church of England, in turn, began with Henry VIII's break with the Roman Catholic Church in 1534. Fennelly, 9 St. Thomas L. Rev. at 347 & n.251 (referencing Protestant Episcopal Church v. Barker , 115 Cal.App.3d 599, 171 Cal.Rptr. 541, 544 (Cal. Dist. Ct. App.), cert. denied , 454 U.S. 864, 102 S.Ct. 323, 70 L.Ed.2d 163 (1981) ). And, as observed by the United States Supreme Court, "14 autocephalous hierarchical churches ... came into existence following the schism of the universal Christian church in 1054." Serbian E. Orthodox Diocese for U.S. of Am. & Canada v. Milivojevich , 426 U.S. 696, 699, 96 S.Ct. 2372, 2376, 49 L.Ed.2d 151 (1976) ; see also Kedroff v. St. Nicholas Cathedral of Russian Orthodox Church , 344 U.S. 94, 100, 73 S.Ct. 143, 146, 97 L.Ed. 120 (1952) ("The schism of 1054 A.D. split the Universal Church into those of the East and the West.").

A. The Hierarchical Church

TEC has been identified by our supreme court as a "hierarchical" type of religious organization, composed of tiers,⁵

[t]he first and highest [of which] is the General Convention. The General Convention consists of representatives from each diocese and most of TEC's bishops. It adopts and amends TEC's constitution and canons. The second tier is comprised of regional, geographically defined dioceses.^{[6 ]} Dioceses are governed by their own conventions. Each diocese's convention adopts and amends its own constitution and canons[ ] but must accede to TEC's constitution and canons. The third tier is comprised of local congregations.

Local congregations are classified as parishes, missions, or congregations.^{[7 ]}

Episcopal Diocese , 422 S.W.3d at 647–48 ; Masterson , 422 S.W.3d at 608 ("We agree with the court of appeals that the record conclusively shows TEC is a hierarchical organization.").

TEC's constitution and canons "establish the structure of the denomination and rules for how it operates." Masterson , 422 S.W.3d at 600. As set out in its constitution and canons, TEC's Presiding Bishop is its "chief pastor," elected by the General Convention—consisting of the House of Bishops and the House of Deputies—to a multi-year term of office and "charged with responsibility for leadership in" initiating, developing, and implementing TEC's policy and strategy. In addition to the Presiding Bishop's policy and leadership tasks, he or she also presides over meetings of TEC's House of Bishops and performs ecclesiastical tasks, including, "[i]n the event of an Episcopal vacancy" in a diocese, consulting with that diocese's "Ecclesiastical Authority to ensure that adequate interim Episcopal Services are provided." The Presiding Bishop "shall perform such other functions as shall be prescribed in" TEC's canons and may delegate some duties and responsibilities to officers in the General Convention's Executive Council, which is responsible for carrying out the General Convention's programs and policies and exercises "powers conferred upon it by Canon, and such further powers as may be designated by the General Convention." The Presiding Bishop is the chair and president of the Executive Council.

The bishop in each diocese is chosen by the rules prescribed by the convention of that diocese but cannot be ordained and consecrated without the consent of a majority of the standing committees of all of the dioceses and without the consent of a majority of TEC's bishops.⁸ If one of TEC's bishops abandons communion with TEC by open renunciation, formal admission into any religious body not in communion with TEC, or other activities, subject to the procedures set out in TEC's canons and the consent of the majority of TEC's bishops, the Presiding Bishop may depose that bishop.⁹

The convention of each diocese must appoint a standing committee, which acts as the council of advice for the diocese's bishop or substitutes as the diocese's ecclesiastical authority if there is no bishop canonically authorized to act. Under TEC's canons, a diocese without a bishop may, by an act of its convention and in consultation with the Presiding Bishop, "be placed under the provisional charge and authority of a bishop of another diocese or of a resigned bishop, who shall by that act be authorized to exercise all the duties and offices of the Bishop of the Diocese until a Bishop is elected and ordained" for that diocese or until the act of the diocese's convention is revoked.

Each diocese's secretary of convention has the responsibility to forward to the secretary of TEC's House of Deputies a copy of the latest journal of the diocesan convention. Each diocese's bishop has the duty to forward to TEC's Recorder an annual report certifying information such as the names of clergy canonically resident in the diocese and their status, including suspension, removal, deposition, or restoration.

TEC's Executive Council sets a budget that, once approved by TEC's General Convention, is sent to each diocese, setting out each diocese's proportionate part of estimated expenditures. Each diocese then notifies each parish and mission therein of its individual "apportionment" to be raised, "which shall include both its share of the proposed Diocesan Budget and its share of the objective apportioned to the Diocese by the Executive Council."¹⁰ Each diocese accounts annually to the Executive Council for its receipts and distributions,¹¹ and each diocese submits an annual report that contains statistical information concerning the diocese's parishes and missions and other "relevant information." TEC established and administers a pension fund for TEC's clergy supported by the royalties from publications authorized by the General Convention and by collections levied upon "all Parishes, Missions, and other ecclesiastical organizations or bodies subject to the authority of this Church."

A parish, part of the third tier identified by the supreme court, is governed by a rector or priest-in-charge and a vestry comprised of lay persons elected by parish members. Masterson , 422 S.W.3d at 600. Members of the vestry must meet certain qualifications, including committing to "conform to the doctrine, discipline and worship of The Episcopal Church." Id. To be accepted into union with TEC, a local congregation...