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In this case, in which Horvitz & Levy LLP, in association with John R. Shiner of Holme Roberts & Owen LLP, represented the Episcopal Diocese of Los Angeles and related persons, the California Supreme Court decided fundamental questions regarding how civil courts should resolve intra-church property disputes, and whether the anti-SLAPP statute applies to such disputes. 

In 2004, as a result of a dispute over the ordination of gay clergy, St. James Parish disaffiliated itself from the Episcopal Diocese of Los Angeles and affiliated itself with the Anglican Church of Uganda. A dispute then arose over who owned the parish building and the property on which it stood. The trial court granted St. James’ anti-SLAPP motion, dismissing the Episcopal Diocese’s lawsuit seeking to reclaim the property on the basis that the lawsuit was subject to the anti-SLAPP statute and the parish would prevail on the merits because it owned the property. The Court of Appeal reversed the trial court, and the Supreme Court granted review.

The Supreme Court first held that the trial court erred in applying the anti-SLAPP statute because, regardless of the motivation for the defendants’ disaffiliation from the Episcopal Diocese, the plaintiffs’ lawsuit addresses only the defendants’ “asserti[on of] control over the local parish property to the exclusion of a right to control asserted by plaintiffs.” Thus, while the complaint referred to conduct related to petitioning for redress of grievances within the scope of the anti-SLAPP statute (i.e., the doctrinal dispute), the gravamen of the complaint was a dispute over property. Thus, the Court concluded the complaint did not arise from protected conduct and the anti-SLAPP statute does not apply.

The court then held that the “general church, not the local church, owns the property.” To reach this conclusion, the court chose between two competing tests for resolving church property disputes – (1) the “principle of government approach,” which requires civil courts to accept as binding the decisions made by the highest church judicial authority to have decided the matter; and (2) the “neutral principles of law” approach, which requires courts to apply the same general neutral principles to church property disputes that apply to other property disputes. The Supreme Court decided that California courts should apply the neutral principles test.

In applying neutral principles to resolve the property dispute presented in the case, the Supreme Court noted that while St. James Parish holds record title to the property, other neutral principles compel the conclusion that the Episcopal Church owns the property. In particular, the court found that “from the beginning of its existence, St. James Parish promised to be bound by the constitution and canons of the Episcopal Church.” The court further found that a church canon expressly provides that all property held by a local parish “is held in trust” for the general church and the diocese, and that Corporations Code section 9142 expressly provides that a general church can amend its bylaws to create such a trust.

In light of the increasing trend of congregational disaffiliations in the Episcopal Church and other religious organizations, the Supreme Court’s decision will have an important nationwide impact in helping to shape the legal response to the inevitable property disputes that arise from such disaffiliations.