Episcopal land dispute melds religion, state property laws
Wading into the tricky legal waters where religion and government meet, the Texas Supreme Court will decide who owns 52 Fort Worth-area churches — the national Episcopal Church, or the diocese that broke away in protest of the consecration of a gay bishop, the ordination of women and other liberal policies.
The properties at stake are worth more than $100 million, making this the largest church-property dispute in Texas history, and probably in U.S. history as well, lawyers say.
What’s more, the court decision will affect the way Texas handles future church disputes by further pinning down a moving legal target: the dividing line between the free exercise of religion, as guaranteed by the First Amendment, and state laws affecting property, nonprofits and related areas.
“It’s not the amount of money that makes the case important,” Scott Brister, a lawyer for the breakaway dio- cese, told the court during oral arguments in October. “Churches are, of course, an important part of this state. After all, what does it profit a state to gain the whole world if you lose your soul?”
Led by conservative Bishop Jack Iker, members of the Fort Worth diocese overwhelmingly voted to leave the national church in 2008, joining an exodus involving dozens of individual congregations and three other U.S. dioceses, which are regional collections of churches.
The Iker-led diocese also claimed to hold the deeds to all church properties, including 48 congregations that followed Iker into schism and eight churches that remained loyal to the national body.
Iker eventually transferred ownership of four loyalist churches to their members, but many congregations that had not already separated along liberal and conservative lines went through a painful split that continues today. About 15 churches have two congregations meeting under the same name — Iker followers in the official sanctuary and members of the national church in a strip mall or other space.
The dispute moved into the secular realm when the national Episcopal Church filed suit in 2009, arguing that the properties belonged to the denomination. Iker, who had turned his back on that denomination, could not take church assets with him, the national body said.
Iker supporters likened the lawsuit to an attempted hostile takeover, but a state district judge sided with the national church in 2011 and gave Iker 30 days to surrender the properties, including diocesan offices in downtown Fort Worth and a youth camp in Granbury.
The transfer was placed on hold when the Ikerled diocese appealed to the Texas Supreme Court, which has no deadline to issue its ruling.
Lawyers for both sides agree that the Diocese of Fort Worth owns all church property. The problem is that both sides claim to run the diocese.
In 2009, Presiding Bishop Katharine Jefferts Schori of the national Episcopal Church removed Iker as bishop, named a replacement and recognized loyal congregants as the “continuing diocese” that holds title to all church assets.
Iker claimed Jefferts Schori did not follow church procedure in removing him and, more important, lacked the authority to replace him and other diocesan officials, particularly those serving on the board of directors for the nonprofit corporation that controls church assets.
To help the court sort out the ownership question, the factions offered competing legal theories:
The Iker-led faction suggested that the court apply the “neutral principles” standard, created by the U.S. Supreme Court to determine ownership based on a straightforward look at property records and by applying state law governing deeds, trusts and nonprofits.
Most states have adopted the neutral standard in church disputes, Brister told the Texas Supreme Court, because it is simple to implement and keeps courts from becoming entangled in ecclesiastical matters, where the First Amendment says they do not belong.
Just to prepare the Supreme Court to consider the Fort Worth case, he said, the national church submitted a 70page history of the legal dispute that was rebutted by an equally long affidavit from an equally reliable expert.
On the other hand, under the bylaws governing the nonprofit corporation that holds the diocese’s assets, only its board of directors can remove or replace its members — not the Episcopal Church or its presiding bishop, said Brister, a former justice on the court.
A study of the corporation’s bylaws, backed by state laws meant to protect nonprofits, indicates that the nonprofit corporation under Iker’s control remains in charge of diocesan assets, Brister said.
“Must Texas courts defer on property ownership questions to unwritten rules announced by whoever claims to speak for the church?” he asked. “Does it matter what deeds say, what state laws say and what church charters say, or does it only matter what the current church executive says?”
■ Lawyers for the Episcopal Church suggested that the court examine the dispute under the “defer- ence” standard, also developed by the U.S. Supreme Court to weigh disputes involving churches that belong to a hierarchical denomination.
To avoid unconstitutional meddling in religious affairs, the deference standard requires courts to accept a church hierarchy’s decisions on matters involving faith, practice and discipline — including which faction represents the “true” diocese and who is chosen to lead it, Episcopal Church lawyer Mary Kostel said.
But, Kostel added, even if the Supreme Court applies the neutral-principles standard, “we win.”
“Look at our record all over the country,” she said. “I count 32 cases from 17 states where courts have ordered that Episcopal Church property be returned to the control of local Episcopalians. Most of those cases were decided under the neutralprinciples approach.”
The victories included rulings by supreme courts in eight states ordering breakaway factions to return church property.
Success under the neutral standard hinges on documents — signed by Fort Worth and every other diocese of the church — promising to follow the denomination’s rules, hold all property in trust for the national body and open churches only for services and rites approved by the Episcopal Church, church lawyer Thomas Leatherbury said.
Brister, however, warned that the Episcopal Church’s attempt to recover the buildings violated the spirit, and history, of the denomination.
“That wasn’t the rule when the Episcopal Church left the Church of England in 1789,” Brister told the court. “That wasn’t the rule when the Church of England left the Church of Rome in 1534. (Both times), the members who weren’t loyal took all the property.
“Episcopal tradition is just the opposite that they say it is, and that’s the kind of distortion that is the reason why we require rules regarding property to be in writing,” he said.
The case is Episcopal Diocese of Fort Worth v. Episcopal Church, 110265. The court also will decide a related case, 110332, involving a diocesan congregation, Church of the Good Shepherd, in Granbury.
Bishop Jack Iker (left) and Assisting Bishop William Wantland discuss their disassociation from the Episcopal Church in ’08.
Anastashia and her sister Aleina (background) got purses as part of their gifts. ‘It will be the best Christmas ever,’ their mom said.