A.S. Haley on the Fort Worth Legal Ruling

Posted by Kendall Harmon

The Court's opinion and order represent an unqualified victory for the Diocese and Corporation headed by the Rt. Rev. Jack L. Iker, which were both established in 1983. Here is the essential quote from the Court of Appeals' opinion:

It is undisputed that there is only one Corporation and only one Fort Worth Diocese, regardless of how those entities are named or characterized in the underlying suit - whether as entities, as individuals "holding themselves out" as those entities, or as individuals "associated with" one or the other Bishop. There is a single Fort Worth Diocese and Corporation, which both a majority and a minority faction claim to control. The attorneys whose authority is challenged are either authorized to represent those two entities or they are not. But the trial court has barred them from representing only the Corporation and the Fort Worth Diocese associated with the Iker Group. We are aware of no statute or common law rule allowing attorneys to prosecute a suit in the name of a corporation or other entity on behalf of only one faction or part of that corporation or entity against another part or faction.
...

Thus, the Court of Appeals has soundly rejected ECUSA's Machiavellian strategy.... Although ECUSA's own complaint (and motion for summary adjudication) will stand for the time being, Bishop Gulick and his five "trustees" will have all their pleadings stricken, and so will have to start from scratch. They will have to admit this time that the entities they claim to represent were newly organized in 2009, and that will undermine ECUSA's position as argued in its motion as well. So my guess is that if this decision stands (and there is every reason to expect that it will, since it is so straightforward), ECUSA will have to refile its motion for summary adjudication also. Given the appellate court's ruling as quoted above, ECUSA cannot go forward on its preferred theory that "dioceses never leave, only people do." That is why this decision is such a huge victory for Bishop Iker and the true Diocese of Fort Worth.

Read it all.

Filed under: * Anglican - EpiscopalEpiscopal Church (TEC)TEC ConflictsTEC Conflicts: Fort Worth* Culture-WatchLaw & Legal Issues

11 Comments
Posted June 26, 2010 at 9:30 am [Printer Friendly] [Print w/ comments]



1. New Reformation Advocate wrote:

As always, the Curmudgeion is as lucid and convincing as can be.  This is indeed an important victory for the real Diocese of Ft. Worth and a major setback for TEC.  Thanks be to God.

David Handy+

June 26, 11:08 am | [comment link]
2. cseitz wrote:

My memory is that he also published the entry having to do with Exec Council issuing loans to contribute to these cases (was it 125K per diocese?)—the entire business is questionable and presumes, I assume, that DFMS money is being loaned out for ‘missionary’ work defined as litigation cost. But leaving that aside, a loan assumes payment back, which assumes assets have been gained by legal victory. If that doesn’t happen, as here in Ft Worth, are the loans in default?

June 26, 11:27 am | [comment link]
3. mannainthewilderness wrote:

Chris:
It is a relatively unknown but perfectly legal (in accordance with General Accounting Principles) for entities to “borrow” money from themselves with the intention of “paying the loan back later.”  Such transactions show up in the notes in the back of formal filings.  Lots of TEC diocese are borrowing money from endowments to cover operational expenses right now (the intent is to pay the money back when pledges and assessments increase in the future), and not a few are using such “loans” to fund legal efforts.  By doing it this way, the diocese can represent that it is well endowed (the endowment still shows up on the assets page, and the loan on the liability page).  It certainly is not illegal, but members of those dioceses in the future will be forced to deal with the uncomfortable truth and reality that monies were not spent as they were gifted (assuming such loans are never paid back in full).  They will then have to go to big givers and explain that while previous gifts and funds were mismanaged, theirs will be used as promised.

Manna

PS This practice may play into the rationale of why there are “clarity of financial transactions/statements” resolutions at the diocesan and General Convention level frequently.  For Episcopalians to figure out just how much is being spent on legal costs, it takes a lot of detective work (and that assumes that everyone is reporting timely).

June 26, 12:45 pm | [comment link]
4. cseitz wrote:

Exactly what I said. To repeat. 1) How will loans for legal adventures that do not pan out get paid back? 2) how does the ‘missionary’ character of litigation line up with original gifts to DFMS?

June 26, 12:59 pm | [comment link]
5. martin5 wrote:

Here is the link to TEC’s monthly finance statements:
http://www.episcopalchurch.org/finance_58295_ENG_HTM.htm?menupage=856
It is strange that they have not posted Jan and Feb yet. They usually do my March. If you look at March’s statement, the legal fees expenses had money added to it. (look at the year to date figure compared to the month’s expenses) Same thing happened last year.TEC did set up a St Ives account to handle the legal fees. So I wonder if TEC is depositing that amount or if the dioceses are giving back some of the moey. I think it strange that it is added to the expense line. It distorts the real cost of litigation but that might be the point.  I am not an accountant. Either way, money is being added to the account from somewhere. The rump diocese is Fort Worth, took legal fees out of their budget the last time I looked. I suspect it is privately funded now. They also voted to give TEC their full assestment of 21% at their last convention. So, it maybe San Joaquin that might have trouble paying back the money.

June 26, 1:03 pm | [comment link]
6. mannainthewilderness wrote:

That’s why the appendices and notes are so important.  Another good example is TEC San Joachim.  TEC was (I have not looked recently) paying all diocesan expenses.  The were paying for the bishop, any assistants costs, as well as other administrative function.  TEC SJ’s askings, however, were all going for the lawsuits against the Anglicans.  TEC could say with a straight face that they were not suing Anglicans, in this instance, because TEC SJ was the real plantif.  Now, whether that adds up to Gospel imperatives is another story . . .

And yes, Chris, I know that was part of your point.  Later servants, if TEC survives this, will need to explain to future donors why their money will not be misused.  Anyone who has seen parish funds get “misapplied” in the eyes of the donor families knows exactly what will be at stake for diocese and TEC.

Manna

June 26, 7:03 pm | [comment link]
7. cseitz wrote:

Actually, Manna, for what it’s worth, it was my point pretty much in its entirety!

June 26, 7:21 pm | [comment link]
8. cseitz wrote:

I think it was Curmudgeon who examined the rationale (and propriety) of defining litigation as ‘missionary’ so as to access monies from DFMS resources (I believe the reference was to Pittsburgh, and how to cover expenses AND undertake the litigation). I cannot believe that families which have given money to DFMS for missionary work would not object strongly to using funds in this way—via loans or otherwise.

June 26, 7:35 pm | [comment link]
9. Cennydd wrote:

Cseitz, I doubt that most pay the slightest bit of attention to what TEC is doing, because if they’re like most, they’ve insulated themselves from the day-to-day happenings for many years.  In other words, they don’t know, and they don’t realize the mess they’re in.

June 28, 9:57 am | [comment link]
10. cseitz wrote:

The usual gift for missionary work comes from a donor with evangelical commitments. I would wager that most of the money given to the DFMS is not from the liberal side of the Episcopal spectrum.

June 28, 10:00 am | [comment link]
11. Cennydd wrote:

Touche’!  I’ll back your wager.

June 30, 12:46 am | [comment link]
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