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The Presbytery of Seattle v. Schulz

Court of Appeals of Washington, Division 1

October 7, 2019

THE PRESBYTERY OF SEATTLE, a Washington nonprofit corporation; THE FIRST PRESBYTERIAN CHURCH OF SEATTLE, a Washington nonprofit corporation; ROBERT WALLACE, President of the First Presbyterian Church of Seattle, a Washington nonprofit corporation; and WILLIAM LONGBRAKE, on behalf of himself and similarly situated members of First Presbyterian Church of Seattle, Respondents,
v.
JEFF SCHULZ, ELLEN SCHULZ, LIZ CEDERGREEN, DAVID MARTIN, LINDSEY McDOWELL, GEORGE NORRIS, NATHAN ORONA, and KATHRYN OSTROM, as trustees of The First Presbyterian Church of Seattle, a Washington nonprofit corporation, Appellants. THE PRESBYTERY OF SEATTLE, a Washington nonprofit corporation; and THE FIRST PRESBYTERIAN CHURCH OF SEATTLE, a Washington nonprofit corporation,

          Leach, J.

         This consolidated appeal involves a church property dispute and a severance agreement dispute. In Presbytery I, Jeff and Ellen Schulz, former copastors of the First Presbyterian Church of Seattle (FPCS), and six former trustees of FPCS's board of trustees (Board) (together appellants) appeal the trial court's declaratory judgment in favor of FPCS, the Presbytery of Seattle (Presbytery), which is authorized to act on behalf of the Presbyterian Church U.S.A. (PCUSA), and two members of the Presbytery's administrative commission (AC) (together respondents). Appellants contend that the trial court erred in deferring to the AC's determination assuming original jurisdiction over FPCS, rejecting FPCS's disaffiliation from PCUSA, and finding that any interest FPCS had in church property was held in trust for the benefit of PCUSA. In Presbytery II, the Schulzes appeal the trial court's declaratory judgment in favor of Presbytery and FPCS, claiming that the trial court erred in deferring to the AC's determination that their severance agreements with FPCS were invalid and unenforceable.

         In Presbytery of Seattle, Inc. v. Rohrbaugh, [1] the Washington Supreme Court established that a civil court must defer to the decision of the highest tribunal of a hierarchical church in a matter involving a church property dispute. To ensure the First Amendment guarantee to the free exercise of religion, Washington courts have extended Rohrbaugh to any civil dispute in a hierarchical church with an internal dispute resolution process. Because no genuine issue of material fact exists about whether the Presbyterian Church is hierarchical or whether it has a binding dispute resolution process, the trial court properly deferred to the AC's determinations about the property and severance agreement disputes. We affirm.

         FACTS

         From 1983 until November 15, 2015, FPCS's congregation was ecclesiastically affiliated with PCUSA. FPCS filed its first articles of incorporation in 1874 and its restated articles of incorporation in 1985. These articles recognized FPCS's governing bodies as its "Session" and Board. Its Session, comprised of ministers, elders, and deacons, governed the congregation's ecclesiastical matters. Its Board, comprised of church members, governed the FPCS's business operations, real and personal property, and "all other temporal affairs."

         FPCS purchased its first parcel of real estate in 1905 and added additional parcels over the years until it had accumulated all of its current real estate located on 7th Avenue in downtown Seattle. It purchased the property with funds from its members. Title to its property has remained in its name as a nonprofit corporation. Neither Presbytery nor PCUSA has financially contributed to its property.

         In November 2015, FPCS told Presbytery that its Session was going to vote on whether to disaffiliate from PCUSA and seek affiliation with another Presbyterian denomination. And its Board was going to vote on whether to amend the articles to remove all references to PCUSA. On November 15, the Session approved FPCS's disaffiliation from PCUSA, and the Board approved an amendment to the articles removing any reference to PCUSA.

         On November 17, Presbytery formed the AC to investigate FPCS's disaffiliation. On February 16, 2016, the AC issued a report assuming "original jurisdiction" over FPCS based on its finding that "the governing board of FPCS (the FPCS session) is unable or unwilling to manage wisely its affairs." This report found that the 2015 amendments to FPCS's articles and bylaws were improper and ineffective, leaving the prior articles and bylaws in force. And it rejected FPCS's disaffiliation, stating that FPCS remained a part of PCUSA because PCUSA had not dismissed FPCS, which the church constitution authorized only PCUSA to do. It also ousted certain FPCS members from FPCS's Session and Board. And it elected church officers, appointed an individual to handle administrative matters, and called for an audit of FPCS's finances. It stated, "All property held by or for FPCS-including real property, personal property, and intangible property-is subject to the direction and control of the [AC] exercising original jurisdiction as the session of the church."

         A day after the AC issued its report, respondents filed a lawsuit against appellants (Presbytery I). Among other things, respondents sought a declaratory judgment stating that the AC's report was "conclusive and binding" and that any "interest FPCS has in church property is held in trust for the benefit of [PCUSA]." On March 10, 2016, respondents asked the trial court to grant partial summary judgment on its declaratory judgment claim. Appellants opposed the request and asked for a CR 56(f) continuance. They claimed respondents had not yet responded to their discovery request about whether PCUSA was hierarchical for purposes of civil disputes. Appellants also asked for a preliminary injunction to stop Presbytery from asserting control over FPCS's corporate affairs and property.

         In May 2016, the trial court ruled in respondents' favor on all three requests. It concluded that (1) PCUSA is a hierarchical church and the AC's determinations are conclusive and binding on the Session, trustees, and congregation of FPCS, (2) the AC's February 16, 2016, findings and rulings are conclusive and binding, (3) the 2015 purported amendments to the bylaws and articles of incorporation "are void and without effect," (4) FPCS holds all church property in trust for the benefit of the PCUSA, and (5) the AC is the current governing body of FPCS. Appellants asked the court to reconsider its orders granting partial summary judgment, denying a CR 56(f) continuance, and denying a preliminary injunction. In a June 20, 2016, order, the trial court denied appellants' request to reconsider its denial of the CR 56(f) motion, asked for briefing "on whether it is factually at issue that [PCUSA] is a hierarchical church," and reserved ruling on reconsideration of its denial of the request for a preliminary injunction.

         On June 30, after considering appellants' additional briefing, the trial court denied the remainder of their reconsideration requests. The trial court struck their third party complaint and dismissed their Consumer Protection Act[2] claim. Appellants voluntarily dismissed claims for defamation, intentional interference with contractual relations, slander of title, trademark infringement, and ultra vires actions. The parties settled their remaining claims and agreed to a stipulated final order and judgment entered on August 16, 2017. Following these orders, respondents assumed control of FPCS and its property.

         In September 2016, Presbytery and FPCS sued the Schulzes and asked the trial court to declare the severance agreements between the Schulzes and FPCS unenforceable (Presbytery II). The Schulzes became the copastors of FPCS in January 2006. On November 10, 2015, the Schulzes and the Board executed the Schulzes' severance agreements. These agreements had the stated purpose of encouraging the Schulzes to remain as pastors of FPCS, "including in the event of any conflict between FPCS, its Session, and its Congregation, on the one hand, and Presbyterian Church (U.S.A.), or any Presbytery, Synod, Administrative Commission, or affiliate (other than FPCS) of Presbyterian Church (U.S.A.) (collectively "PCUSA"), on the other hand." They stated that if FPCS, while under the control of PCUSA and Seattle Presbytery, terminated the Schulzes' employment other than for "Good Cause," as defined by the agreements, FPCS would (1) pay the Schulzes their "Regular Compensation" for two years or until they obtained comparable employment and (2) forebear for three years from the remedies FPCS had available under its 2006 home equity sharing agreement with the Schulzes. The severance agreements limited "good cause" to the Schulzes' commission of certain identified misconduct like dishonesty, the use of illegal drugs, and moral turpitude that harmed FPCS's reputation.

         On August 25, 2016, the AC issued a supplemental report stating, (1) the FPCS Board that entered into the severance agreements was not "validly constituted," (2) the severance agreements constituted a "change in the terms of call" that required the congregation's and the presbytery's approval, neither of which the Schulzes sought, so the severance agreements were invalid, (3) the Schulzes "ended their pastoral relationship with FPCS when they voluntarily renounced the jurisdiction of the [PCUSA]" effective December 16, 2015, at which time they ceased to serve FPCS in good faith and good standing, (4) the severance agreements' good cause standard "cannot replace the requirements placed upon teaching elders by the Book of Order," (5) even if the good cause standard applied, FPCS had good cause to terminate the Schulzes' employment due to alleged dishonesty and misconduct, and (6) the Schulzes did not sign a release of possible claims against FPCS, so payment under the agreements was not due.

         In November 2016, after PCUSA and FPCS sued the Schulzes, FPCS stopped paying the Schulzes their regular pastoral compensation. On November 18, the Schulzes filed counterclaims against FPCS for breach of contract and willful withholding of wages. PCUSA and FPCS asked the trial court to grant them summary judgment, claiming that the AC "determined that [FPCS] has no obligations under the Severance Agreements. A civil court must defer to the [AC's] judgment." The trial court granted this request. It decided that the AC's determinations were "conclusive and binding." It concluded the severance agreements were "invalid, inapplicable, and unenforceable" because (1) they constituted "a change in the terms of call" for the Schulzes, which required FPCS's and Presbytery's congregations' approval, (2) the Schulzes terminated their pastoral relationships when they renounced the jurisdiction of PCUSA, (3) the Schulzes ceased to serve in good faith and standing as pastors of FPCS because they renounced jurisdiction, and (4) the severance agreements' attempt to replace the standards of pastoral conduct in the "Book of Order" with a "good cause" standard was improper.

         The trial court entered final judgment in Presbytery II on April 3, 2017. The Schulzes appealed to the Washington Supreme Court on April 21, 2017. The trial court entered final judgment in Presbytery I in August 2017. Appellants again appealed to our Supreme Court. The Supreme Court consolidated Presbytery I and Presbytery II. It then transferred the consolidated case to this court.

         STANDARD OF REVIEW

         This court reviews an order granting summary judgment de novo and performs the same inquiry as the trial court.[3] It considers all facts and reasonable inferences in the light most favorable to the nonmoving party.[4] And it affirms summary judgment only when the evidence presented demonstrates no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.[5]

         ANALYSIS

         Stare Decisis Requires That This Court Follow Presbytery of Seattle, Inc. v. Rohrbaugh

         Both appellants and the Schulzes maintain that stare decisis does not bar this court from reexamining the compulsory deference approach our Supreme Court adopted in Rohrbaugh because the United States Supreme Court's decision in Jones v. Wolf[6] changed Rohrbaugh's legal underpinnings. We disagree.

         In Rohrbaugh, the pastor and a third of the members of Laurelhurst United Presbyterian Church of Seattle voted to withdraw as a body from the United Presbyterian Church.[7] These members asked the Presbytery of Seattle to strike Laurelhurst from its rolls and authorize them to use the church property for their own purposes.[8] Presbytery refused and advised that the church constitution did not authorize members of an affiliated church to withdraw as a body.[9] The members maintained the fact that they were the record titleholders of the property entitled them to use and control it.[10] In examining this issue, the Washington Supreme Court adopted the rule that the United States Supreme Court articulated in Watson v. Jones:[11]

[T]he decision of the highest tribunal of a hierarchical church to which an appeal has been taken should be given effect by the courts in a controversy over the right to use church property. [And] in the absence of fraud, where a right of property in an action before a civil court depends upon a question of doctrine, ecclesiastical law, rule or custom, or church government, and the question has been decided by the highest tribunal within the organization to which it has been carried, the civil court will accept that decision as conclusive.[12]

         Our Supreme Court concluded that the record titleholder of the property was The First United Presbyterian Church of Seattle, the former name of Laurelhurst, and "a corporation which by its bylaws is subject to the discipline of the United Presbyterian Church, and is governed by a Session which must act in accord with that discipline."[13] The court further stated that according to the decision of "the highest tribunal," the members "had no right to withdraw from the church as a body and take with them the name of the church and its property," and they "forfeited their right to govern the affairs of the church when they did so."[14] The court held that because the United Presbyterian Church is hierarchical, its highest tribunal's decision about ownership and control was conclusive.[15]

         Eight years after Rohrbaugh, the United States Supreme Court decided Jones. This case involved a dispute over the ownership of church property after the rupture of a local church affiliated with the Presbyterian Church.[16] The Court characterized the Presbyterian Church as a hierarchical organization.[17] It framed the issue as "whether civil courts, consistent with the First and Fourteenth Amendments to the Constitution, may resolve the dispute on the basis of 'neutral principles of law,' or whether they must defer to the resolution of an authoritative tribunal of the hierarchical church."[18] The Court defined "neutral principles of law" as relying on "well-established concepts of trust and property law familiar to lawyers and judges" and involving, for example, "the language of the deeds, the terms of the local church charters, and state statutes governing the holding of church property, and the provisions in the constitution of the general church concerning the ownership and control of church property."[19]

The primary advantages of the neutral-principles approach are that it is completely secular in operation, and yet flexible enough to accommodate all forms of religious organization and polity. The method relies exclusively on objective, well-established concepts of trust and property law familiar to lawyers and judges. It thereby promises to free civil courts completely from entanglement in questions of religious doctrine, polity, and practice.[20]

         The Court noted that the First Amendment does not dictate that a State must follow a particular method of resolving church property disputes. Indeed, "'a State may adopt any one of various approaches for settling church property disputes so long as it involves no consideration of doctrinal matters, whether the ritual and liturgy of worship or the tenets of faith.'"[21] The Court held that "a State is constitutionally entitled to adopt neutral principles of law as a means of adjudicating a church property dispute."[22] But if "the interpretation of the instruments of ownership would require the civil court to resolve a religious controversy, then the court must defer to the resolution of the doctrinal issue by the authoritative ecclesiastical body."[23]

         Appellants contend that this court should reconsider Rohrbaugh because Jones changed its legal underpinnings. First, Jones states only that unless ecclesiastical doctrine is involved, a State may constitutionally adopt neutral principles of law as a means of adjudicating a church property dispute; Jones does not require that states adopt this approach. Second, stare decisis requires this court to follow Rohrbaugh, "Stare decisis," a Latin phrase meaning "to stand by things decided," has two manifestations: horizontal stare decisis and vertical stare decisis.[24] Under horizontal stare decisis, a court is not required to follow its own prior decisions.[25] The Washington Supreme Court has stated that generally, under stare decisis, it will not overturn its precedent unless there has been "'a clear showing that an established rule is incorrect and harmful'"[26] or "when the legal underpinnings of [its] precedent have changed or disappeared altogether."[27]But "vertical stare decisis" requires that courts "follow decisions handed down by higher courts in the same jurisdiction. For example, trial and appellate courts in Washington must follow decisions handed down by our Supreme Court and the United States Supreme Court. Adherence is mandatory, regardless of the merits of the higher court's decision."[28]

         Because our Supreme Court decided Rohrbaugh, it is binding on this court and the doctrine of vertical stare decisis does not allow this court to reconsider it.

         Church Property Dispute in Presbytery I

         Appellants alternatively contend that even if this court applies Rohrbaugh's compulsory deference approach, the trial court erred in granting respondents summary judgment because (1) a genuine issue of material fact exists about whether the Presbyterian Church is hierarchical, (2) FPCS disaffiliated from PCUSA before the AC issued its report, and (3) the trial court erred in denying appellants' motion for a continuance. We disagree.

         A. The Presbyterian Church Is Hierarchical

         First, FPCS claims that the trial court erred in deferring to the AC's report because a genuine issue of material fact exists about whether the Presbyterian Church is hierarchical. We disagree.

         The parties agree that under Rohrbaugh's deference approach, courts defer to an ecclesiastical tribunal only if the denomination is hierarchical.[29]Appellants rely on Southside Tabernacle v. Pentecostal Church of God, Pacific Northwest District, Inc.[30] to show that whether a church is hierarchical involves question of fact to be decided by the trial court. But Southside Tabernacle also states, "Although the hierarchical or congregational structure is a question of fact, summary judgment is available ... if the trial court can say as a matter of law that [a church] is hierarchical."[31] A church is hierarchical when it is "a subordinate member of some general church organization in which there are superior ecclesiastical tribunals."[32] A church is congregational when it is "governed independent of any other ecclesiastical body."[33]

         The constitution of PCUSA governs the church; Part II of this constitution, called the Book of Order, provides the ecclesiastical law of PCUSA. Ordained Presbyterian minister and teaching elder Scott Lumsden and the Book of Order state that congregations within the Presbyterian Church are governed by a hierarchy of councils that include, in ascending order, (1) Sessions comprised of pastors and elders of the local congregation, (2) presbyteries comprised of all pastors and at least one elder from each of the congregations within a district, (3) synods comprised of representative pastors and elders from the presbyteries within a region, and (4) the general assembly comprised of delegations of pastors and elders from the presbyteries. The Book of Order also states, "The particular congregations of the Presbyterian Church (U.S.A.) wherever they are, taken collectively, constitute one church, called the church. . . . The relationship to the Presbyterian Church (U.S.A.) of a congregation can be severed only by constitutional action on the part of the presbytery."

         FPCS relies on the declaration of Reverend Parker Williamson, an ordained Presbyterian minister. He stated that the Book of Order acknowledges that PCUSA is hierarchical for ecclesiastical matters only, not civil matters. To support his assertion, Williamson refers to provisions from the Book of Order stating that religious constitutions should not be aided by civil power and governing bodies of the church do not have civil jurisdiction. He also notes that PCUSA's General Assembly Permanent Judicial Commission has stated that although one provision in the Book of Order refers to a higher governing body's "right of review and control over a lower one," these concepts must be understood within the context of the "shared responsibility and power at the heart of Presbyterian order," not in hierarchical terms. But whether the Book of Order, internal tribunals, seminary treatises, or Presbyterian history characterize the Presbyterian Church as being hierarchical only for ecclesiastical matters is not relevant when our Supreme Court has adopted the Rohrbaugh analysis to ensure religious entities receive their First Amendment protections.

         To counter Williamson, PCUSA provided the declaration of Laurie Griffith, an elected "Assistant Stated Clerk of the General Assembly of the [PCUSA] [who is] empowered, along with other Associate and Assistant Stated Clerks, to give guidance on Authoritative Interpretations of the Constitution of the [PCUSA]." She disagreed with Williamson's conclusion that the church is not hierarchical for civil matters. She explained in her declaration that the Book of Order establishes the polity and form of the church. She detailed the levels of the hierarchy of councils governing the church discussed above, explaining that it is because of the structure of the church that "secular courts have historically identified the polity of the [PCUSA] as being hierarchical in nature." Griffith stated further, "Chapter 4 of the Book of Order unequivocally establishes that civil matters impacting church property proceed through the polity as set forth within the other parts of the Book of Order." It states that "all property held by a congregation, a presbytery, a synod, the General Assembly, or the [PCUSA] "is held in trust... for the use and benefit of the [PCUSA]."

         Additionally, the Washington Supreme Court in Rohrbaugh described the Presbyterian Church as having a hierarchical structure, and the Unites States Supreme Court in Jones stated that the Presbyterian Church "has a generally hierarchical or connectional form of government, as contrasted with a congregational form."[34] This, in addition to Griffith's interpretation of the Book of Order and the text itself, makes clear that the Presbyterian Church contains local churches that are subordinate to PCUSA. No genuine issue of material fact exists about whether the church is hierarchical. The trial court did not err in finding that it was hierarchical.

         B.FPCS's Purported Disaffiliation from PCUSA before the AC Issued Its Report Does Not Preclude Application ...


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