Episcopal Church Cases (2007) 152 Cal.App.4th 808, review granted Sept. 12, 2007, S155094

Horvitz & Levy LLP represents the Protestant Episcopal Church in the Diocese of Los Angeles and related parties in this pending California Supreme Court case, in which the Supreme Court will decide two issues: (1) whether the anti-SLAPP statute applies to a property dispute between the Diocese and former members of a parish who have asserted ownership and control over the parish’s property; and (2) on the merits, what principles of law should a court apply in resolving a dispute between a hierarchical church and members of a parish who have disaffiliated from the main church? With regard to the first issue, the Supreme Court will likely decide whether the dispute at issue involves protected First Amendment activity that brings the anti-SLAPP statute into play, or whether it is a simple property dispute that does not involve any protected religious rights.

The issues in the case are of national significance. A growing number of conservative congregations have disassociated from the Episcopal Church and affiliated with foreign Anglican churches after the Episcopal Church decided to accept women and gays as priests and bishops. As a result of this schism, disputes have arisen about whether the property of parishes that have disaffiliated from the church is owned by the local Diocese or by the local parish. In this case, the trial court dismissed the Diocese’s lawsuit to recover its property in response to defendants’ anti-SLAPP motion. The trial court ruled the lawsuit arose from the former members’ petitioning conduct and that under “neutral principles of law” the property belonged to the local church corporation. The Court of Appeal reversed, finding the complaint was not subject to an anti-SLAPP motion because it arose from a dispute over property, not petitioning conduct. The court also found that the Diocese would prevail on the merits under the “principle of government” theory, under which courts defer to the decisions of hierarchical churches.

In light of the nation-wide trend of religious disaffiliations in the Episcopal Church and other religions, this decision will have an important nation-wide impact in helping to shape the legal response to the inevitable property disputes that arise from such disaffiliations. For example, if the Supreme Court agrees that the dispute is grounded on the wrongful assertion of control over parish property and not theological differences, and finds that the anti-SLAPP statute does not apply, other courts may be inclined to view such disputes principally as property cases, not cases that raise religious controversies.

On the merits, the Supreme Court will have to decide which of three theories governs the resolution of property disputes that arise when a schism develops within a religious denomination. First, the court will have to decide whether the dispute can be resolved by Corporations Code section 9142, which provides that the assets of a local religious corporation are held in trust for a denomination where, as in the case of the Episcopal Church, “the governing instruments of a superior religious body or general church of which the corporation is a member, so expressly provide.” (Corp. Code, § 9142, subd. (c)(2).) If the court looks beyond section 9142, it must decide whether to apply the “principle of government” test or the “neutral principles” test. Under the former, where the local church is a member of a hierarchical church, courts defer to the rule or determination made by the highest authority within that hierarchical church regarding the use or control of local church property. Under the “neutral principles” test, the court will endeavor to apply to church controversies the same principles it would apply to a purely secular dispute. The goal of both tests is to avoid judicial entanglement in church affairs.

Because of the impact the Supreme Court’s decision may have in resolving future religious disputes involving hierarchical churches, numerous amicus briefs have been filed on both sides of the case by a wide range of religious organizations.

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