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South Carolina Supreme Court rules The Episcopal Church can reclaim 29 properties from breakaway parishes

South Carolina Supreme Court rules The Episcopal Church can reclaim 29 properties from breakaway parishes

By Jennifer Berry Hawes and Adam Parker
http://www.postandcourier.com/
Aug. 2, 2017

In a highly anticipated ruling, the state Supreme Court ruled Wednesday that 29 local parishes whose congregations left The Episcopal Church in 2012 cannot take their valuable properties with them, a decision that could set the stage for a massive exchange of historic church capital in the region.

However, seven churches that departed can take their properties with them because they never agreed to let the national church hold them in trust, unlike the others, and therefore shouldn't have to forfeit them, a majority of justices ruled.

It was not immediately clear in the ruling which parish properties fell into which group. Attorneys scrambled Wednesday to decipher the distinction, along with the fate of the beloved St. Christopher Camp and Conference Center on Seabrook Island.

St. Michael's Church, the oldest surviving religious building in Charleston, and St. Philip's Church, the oldest congregation in the state, appear to be among properties set to return to The Episcopal Church, several sources said.

The justices issued their 77-page divided opinion almost two years after hearing arguments in the case. Now-retired Chief Justice Costa Pleicones wrote in the lead opinion that he would reverse the entire trial court order, which allowed parishes that left the national church to take with them their church properties, the diocesan name and its identifying marks.

The protracted legal journey began when about two-thirds of parishes in the Diocese of South Carolina, along with Bishop Mark Lawrence, left the national church in 2012 after years of bitter arguments over everything from scriptural interpretations to governance powers. Lawrence's diocese has since affiliated with the Anglican Church in North America, a group that formed in 2009 as an orthodox alternative to The Episcopal Church.

After leaving, that diocese and 18 parishes then sued the national church to retain control of more than $500 million in parish properties, the 314-acre St. Christopher Camp and the diocese's name, marks and other identifiers. The number of parishes involved later rose to about three dozen.

At issue in the case is whether South Carolina civil law trumps a hierarchical national church's own canons, backed by the First Amendment's religious protections.

After a three-week, non-jury trial in summer 2014, Circuit Judge Diane Goodstein ruled that in South Carolina so-called "neutral principles" trump the church's constitution and canons. Neutral principles apply civil corporate, contract and trust laws to this type of dispute rather than deferring to a hierarchical church's internal rules. It marked an important distinction because key issues at stake in the case include whether the national church held parish properties in trust and whether the breakaway group took proper actions under state nonprofit law to separate from the national body.

Goodstein ruled strongly in favor of the breakaway parishes, saying they had the right to leave and take the Diocese of South Carolina name and their church properties with them. Those parishes include such large and historic churches as St. Philip's and St. Michael's in downtown Charleston, St. Paul's in Summerville, Christ Church in Mount Pleasant and Old St. Andrew's Parish in West Ashley.

However, Pleicones wrote in the lead opinion that Goodstein improperly ruled on the case by basing it solely on neutral principles and that she wrongly said she was required "to ignore the ecclesiastical setting in which these disputes arose." Pleicones wrote that "this error of law led, in turn, to a distorted view of the issues in this case."

Justice Kaye Hearn agreed. "Of what importance is it that a religious body be hierarchical in nature, if any individual church can choose to disassociate from the higher body and take all property with it?" she wrote.

The justices, however, split 2-2 on intellectual property issues at stake, thereby leaving in place the trial judge's ruling that the breakaway diocese could keep the Diocese of South Carolina name, marks and seals. Chief Justice Donald Beatty expressed no ruling on the issue, agreeing with colleagues who found the issues should be resolved in a separate, ongoing federal lawsuit.

Each of the justices wrote an individual opinion, and several included unusually pointed words at colleagues. Justice John Kittredge voted to affirm the lower court ruling that civil law should override church laws in the property dispute.

"The message is clear for churches in South Carolina that are affiliated in any manner with a national organization and have never lifted a finger to transfer control or ownership of their property -- if you think you're property ownership is secure, think again," Kittredge said.

In fall 2015, the Supreme Court agreed to bypass the state appellate court to hear arguments in the dispute that by then already had spanned three years of court wrangling, millions in legal fees, a three-week trial, 1,300 exhibits and an unrequited settlement offer. Two of the justices who heard arguments have since retired but still ruled in Wednesday's opinion.

The Diocese of South Carolina spans the entire eastern half of the state, so Wednesday's ruling will have profound implications on thousands of clergy and congregants, including those whose families have worshiped at colonial churches for generations and now face a decision over whether to stay or leave.

It is unclear whether the case will be appealed. In recent years, the U.S. Supreme Court has declined to hear similar cases involving departures from The Episcopal Church.

Bishop Skip Adams of The Episcopal Church in South Carolina, the diocese that remains with the national church, said in an email to parishioners that he was grateful for the decision but cautioned patience.

"It is important to note that the legal system allows for periods of judicial review and possible appeal, so it will be some time before we can say with certainty what the journey ahead will look like," Adams wrote.

The ruling presents a dilemma for The Episcopal Church, which though largely victorious now must decide what to do with so many reclaimed church properties that might have few congregants filling the pews. Two years ago, The Episcopal Church and Adams' diocese offered a settlement aimed at ending the long-running ecclesiastical conflict that would have allowed 35 breakaway parishes to keep roughly $500 million in church properties. Bishop Mark Lawrence and his diocese rejected the deal.

Now-retired Chief Justice Jean Toal voted to uphold the trial court order but acknowledged the difficulty of case and "five different, strongly-held opinions." Those conflicting opinions extend to the clergy and congregants who must sift through the complex decision and decide their next moves.

*****

South Carolina Court Hands Down Mixed Ruling in Episcopal Dispute

Institute on Religion and Democracy Press Release

By Jeff Walton
https://juicyecumenism.com/2017/08/02/south-carolina-episcopal/
August 2, 2017

"Episcopal Church officials speak regularly about themes of reconciliation, but their actions in the courts indicate that property and exclusivity of their Anglican Communion franchise is paramount." --- IRD Anglican Program Director Jeff Walton

Washington, DC-- Today the South Carolina Supreme Court in a 3-2 ruling partly overturned and partly upheld an earlier District Court ruling that had favored the Diocese of South Carolina, which dissolved its connection with the Episcopal denomination in October 2012. The majority reversed the lower court on the status of ownership for 29 of 36 disputed parish properties. A final ruling would affect more than $500 million in diocesan and parish properties.

On February 3, 2015, Circuit Court Judge Diane Goodstein ruled that the departing diocese was legally entitled to the property and use of the name "Episcopal Diocese of South Carolina".
A lower court ruling on the issue of intellectual property issues, including which group controls the diocesan name and seal, was left in place with justices splitting 2-2.

A majority of members in 49 churches voted to sever their ties to the Episcopal Church and remain affiliated with the diocese following disputes over the redefinition and reinterpretation of Scripture.
The Diocese of South Carolina is the fifth U.S. diocese to vote to depart the national church.

Based on a review of yearly audited financial statements, attorney and Episcopal Church blogger A.S. Haley estimates the denomination and its dioceses have spent in excess of $40 million in litigation expenses in disputes with departing Anglicans. In December 2011 the Diocese of Quincy (Illinois) won a legal dispute on property ownership over the Episcopal Church that was subsequently upheld on appeal. Litigation is ongoing in the state of Texas, where the diocese of Fort Worth departed the Episcopal Church in 2008.

In June 2017, the Diocese of South Carolina formally joined the Anglican Church in North America. The diocese now counts 53 member churches and more than 20,000 members.

Episcopal Church U.S. membership dropped 2.1 percent in 2015, the most recent reporting year, a loss of 37,669 persons. Attendance declined 20,631 persons, down 3.4 percent.

IRD Anglican Program Director Jeff Walton commented:

"Episcopal Church officials speak regularly about themes of reconciliation, but their actions in the courts indicate that property and exclusivity of their Anglican Communion franchise is paramount. The Episcopal Church has spent millions of dollars to litigate against departing Anglicans.

"The Episcopal Church and its liberal Mainline Protestant counterparts refuse to accept what has become obvious: the majority of many congregations across the country do not want to depart their denominations, but will do so if liberal leadership continues down an unfaithful path.

"Sadly, the Episcopal Church appears more interested in the recovery of property than in reconciliation."

*****

South Carolina Supreme Court Releases Divided Opinion on Diocese of South Carolina and Its Historic Property
A sharply divided court reverses portions of the lower court ruling

COLUMBIA, S.C. (August 2, 2017) -- In a 77 page opinion, the South Carolina Supreme Court today reversed portions of an earlier lower court ruling. In February 2015, circuit court Judge Diane Goodstein ruled that the Diocese of South Carolina, its trustees and the 50 parishes -- representing 80 percent of the members -- that disassociated with the Diocese successfully withdrew from The Episcopal Church (TEC) in 2012, taking all their property, including churches, symbols and other assets. The ruling was the result of a three-week trial in 2014.

That court found that "the Constitution and Canons of TEC have no provision which states that a member diocese cannot voluntarily withdraw its membership." This ruling found that had there been such a provision, it would have violated the diocese's "constitutionally protected right" to freedom of association. "With the freedom to associate goes its corollary, the freedom to disassociate," Judge Goodstein wrote.

In a complicated ruling consisting of five separate opinions, the S.C. Supreme Court today ruled that parishes which had "acceded" to the national church's 'Dennis canon' are subject to a trust interest on their property by the denomination. Eight congregations that had not so acceded were judged to have full rights to retain their property.

The dissenting justices expressed concern regarding the long term implications of this decision. Former Chief Justice Jean Toal stated that the court should have relied on "over three hundred years of settled trust and property law... I believe the effect of the majority's decision is to strip a title owner of its property..." on the basis of actions that do not create a trust interest under South Carolina law. In concurring with Justice Toal, Justice Kittredge observed of other church properties where there is affiliation with a national organization, based on this ruling, "if you think your property ownership is secure, think again."

This current litigation became necessary when TEC attempted to wrongly remove Bishop Lawrence, and the Diocese, in response, elected to disassociate from TEC. At that time a small group, of TEC loyalists who had been preparing for this attempted removal began an intentional campaign of using the Diocesan Seal and other service marks of the Diocese. They began to function as if they were the Diocese of South Carolina. To maintain its identity required that the Diocese defend that identity.

Lead counsel for the Diocese, Alan Runyan, said the lead opinion and concurring's decision is inconsistent with South Carolina and long-standing United States Supreme Court precedent involving church property disputes. Legal counsel continues to review a lengthy and complicated ruling comprised of five separate opinions.

LINKS: Supreme Court's Ruling: http://www.sccourts.org/opinions/HTMLFiles/SC/27731.pdf
Judge Goodstein's Orders: http://www.diosc.com/sys/images/documents/tec/15_2_3_final_order.pdf http://www.diosc.com/sys/images/documents/tec/goodstein_denies_reconsider_2_23_25.pdf
History of the Case and The Diocese of South Carolina: http://www.diosc.com/sys/legal-media

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