Mountain of Fire and Miracles Ministries v. Oyeyemi
Filed 6/25/12
Mountain of Fire and Miracles Ministries v. Oyeyemi CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL
REPORTS
California
Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or
relying on opinions not certified for publication or ordered published, except
as specified by rule 8.1115(b). This
opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
MOUNTAIN OF FIRE AND
MIRACLES MINISTRIES, HAYWARD BRANCH,
Plaintiff and Respondent,
v.
ADE OYEYEMI,
Defendant and Appellant.
B218591
(Los Angeles County
Super. Ct. No. BC 352398)
APPEAL from a
judgment of the Superior Court of
Rex Heeseman, Judge. Reversed and
remanded, with directions.
Law Office of
Jeanne Collachia and Jeanne Collachia for Defendant and Appellant.
The Garcia Law
Firm and Gilbert A. Garcia for Plaintiff and Respondent.
Appellant Ade Oyeyemi (Pastor Oyeyemi) challenges a judgment
for conversion and negligent interference
with prospective economic relations in favor of respondent Mountain of Fire and
Miracles Ministries, Hayward Branch. He
contends that respondent lacked standing to assert claims against him, and that
it had no property interest in the assets underlying the claims; in addition,
he maintains that respondent did not establish certain elements of the
claims. We conclude that the
interference claim fails as a matter of
law on the evidence presented at trial, and that the conversion claim is
similarly defective insofar as it targeted assets in which respondent had no
property interests. We thus reverse the
judgment, and remand for a new trial on the conversion claim.
A. Background
Mountain of
Fire and Miracles Ministries (MFMM) is an international ministry founded by Dr.
Daniel K. Olukoya. Its headquarters is
in Lagos, Nigeria, where Dr. Olukoya holds the position of General Overseer. Pastor Oyeyemi participated in MFMM and had a
personal relationship with Dr. Olukoya.
In the early
2000’s, using the business name, “Mountain of Fire and Miracles Ministries,â€
Pastor Oyeyemi founded a church in Los Angeles and acted as its pastor. Following the creation of Pastor Oyeyemi’s
church in Los Angeles, respondent was established in Hayward. Respondent’s pastor was Grace Ugeh.
On November
28, 2002, Pastor Oyeyemi executed a form agreement with MFMM that provided in
part: “I hold this church in trust
for and on behalf of Mountain of Fire and Miracles Ministries.†On September 19, 2003, Pastor Oyeyemi filed
articles of incorporation for a California nonprofit corporation named, “Mountain of
Fire and Miracles Ministries, Inc.†(Mountain). Pastor
Oyeyemi was initially identified as Mountain’s agent for service of process; in
addition, he served as its first chief executive officer.
In late 2004
and early 2005, MFMM begin implementing an organizational plan that divided the
United States into regions. Region 4,
which contained both Mountain and respondent, was placed under the oversight of
Pastor Paul Campbell, whose headquarters was in Houston, Texas. A dispute soon arose between Pastor Oyeyemi
and Pastor Campbell regarding Mountain’s compliance with MFMM’s financial
reporting requirements.
In November 1,
2005, Pastor Campbell sent Pastor Oyeyemi a notice requiring him to meet with
Dr. Olukoya in Lagos within 72 hours.
The notice further stated that Pastor Oyeyemi’s failure to attend the
meeting would be deemed his termination from MFMM. On November 6, 2005, Pastor Oyeyemi agreed to
return MFMM’s property to a designated agent.
He became pastor of a new church named “Blood of Jesus Prayer and
Deliverance†(Blood of Jesus).
B. Underlying
Action
1. Initial
Proceedings
The underlying
action against Pastor Oyeyemi commenced in May 2006. The original and first amended complaints
identified Mountain as the plaintiff, and alleged that Pastor Oyeyemi had
engaged in misconduct while acting as a fiduciary of Mountain, including diverting
its members and assets to a new church.
Pastor Oyeyemi demurred to the first amended complaint, contending that
Mountain lacked standing to act as plaintiff in the action. The trial court overruled the demurrer.
In August
2008, a trial began on the first amended complaint. Following an initial bifurcated bench trial
on the issue of Mountain’s standing, the court concluded that Mountain lacked
standing to pursue the action. The court
continued the trial to permit respondent to substitute in as plaintiff and file
an amended complaint.
Prior to the
filing of respondent’s amended complaint, Pastor Oyeyemi challenged
respondent’s standing to assert claims against him. Respondent replied that MFMM’s November 2002
agreement with Pastor Oyeyemi impressed a trust on the assets of his church in
favor of MFMM, and that respondent was the assignee of MFMM’s right to collect
its property from Pastor Oyeyemi.
Following a hearing, the trial court rejected Pastor Oyeyemi’s objection
to respondent’s standing.
On February
17, 2009, respondent filed a second amended complaint for conversion and
interference with economic relations.
The complaint alleged that beginning May 25, 2005, Pastor Oyeyemi
converted respondent’s property for use in his new church, Blood of Jesus, and
that in establishing the new church, he had improperly diverted respondent’s
members and their donations to the new church.
2. Trial
The
three-day jury trial on respondent’s claims began on April 20, 2009. Pastor Oyeyemi testified that the church he
established in Los Angeles in the early 2000’s, although independent of MFMM,
was “loosely affiliated†with MFMM in view of his personal relationship with
Dr. Olukoya and longstanding participation in MFMM. After starting the Los Angeles church, he
used some of MFMM’s religious materials and paid ten percent of the offerings
he received from churchgoers to the division of MFMM located in the
States.
In April 2002,
Pastor Oyeyemi filed a fictitious business name statement that listed himself
and Dr. Olukoya as doing business as “Mountain of Fire and Miracles
Ministries.†Later, in November 28,
2002, Pastor Oyeyemi executed an agreement with MFMM that provided: “I . . . []hereby affirm my loyalty to the Mountain of
Fire & Miracles Ministries worldwide. [¶] 1. I will not do
anything that would jeopardize the unity of the church, Mountain of Fire &
Miracles Ministries in Los Angeles, California. [¶] 2. I hold this church in trust for and on behalf
of Mountain of Fire & Miracles Ministries and it is not a personal
property. [¶] 3. I will not take any
action that would split the church, seize its assets or change the name of the
Church. [¶] 4. Any action taken in that direction shall make it haste [
In connection
with Mountain’s incorporation in September 2003, Pastor Oyeyemi filed articles
identifying the corporation’s “specific purpose†as “organiz[ing] a Christian
fellowship and a church congregation[] to develop mental health programs for
the public and to provide social services to the poor and the needy.†The bylaws also provided that “[t]he Senior
Pastor of the Church shall operate under the guidance of the General Overseer
of [MFMM] and the Board of Directors.â€
After Mountain’s incorporation, Pastor Oyeyemi reported frequently to
Dr. Olukoya. When Mountain purchased a
building for use as a church, Pastor Oyeyemi invited Dr. Olukoya to the
dedication ceremony.
In
January 2005, Pastor Oyeyemi attended the first MFMM Region 4 conference in
Houston. At the conference, he signed
the following declaration: “I undertake
to be bound by the rules and regulations governing [MFMM] and subsequent rules
and regulations which may, thereafter, from time to time, be made by the
council of the church.†MFMM’s new
organizational plan was announced during the conference. According to Pastor Oyeyemi, when Mountain’s
board of directors learned that Mountain and other California churches were to
be supervised by a regional supervisor in Houston, the board decided to
complain to Dr. Olukoya. Pastor Oyeyemi
also believed that Mountain should not be placed under Pastor Campbell’s
supervision.
title="">[3]
When Pastor
Campbell introduced a new financial reporting system, Pastor Oyeyemi -- who had
worked as an accountant -- concluded that the required forms were defective
under United States tax law. Although
Dr. Olukoya urged Pastor Oyeyemi to use the forms, Pastor Oyeyemi refused to do
so, but offered to draft adequate forms.
Despite the dispute, Pastor Oyeyemi attended the second Region 4
conference in April 2005.
In
May 2005, Pastor Campbell asked Pastor Oyeyemi to provide copies of Mountain’s
financial records. After Pastor Oyeyemi
forwarded some financial documents, Pastor Campbell informed him that the
showing was inadequate. In October 2005,
at Pastor Campbell’s request, Pastor Oyeyemi substituted Dr. Olukoya for
himself as Mountain’s agent for purposes of service of process.
On October 30,
2005, a group of pastors, including Pastors Campbell and Ugeh, appeared at
Mountain’s church to discuss Pastor Oyeyemi’s financial showing with him. According to Pastor Oyeyemi, all but one
member of the group left when churchgoers became angry at them; the remaining
member engaged in a prayer service with Pastor Oyeyemi. On November 2, 2005, Pastor Oyeyemi received
the notice from Pastor Campbell, dated November 1, 2005, requiring him to
appear in Lagos, Nigeria, within 72 hours of the date of the notice.
According
to Pastor Oyeyemi, on November 5, 2005, he and Mountain’s board of directors
decided to establish a new church. The
board devised a plan to pay off Mountain’s existing debts and transfer its
assets -- including the proceeds from a sale of the church building -- to the
new church.
title="">[4]
On November 6, 2005, Pastor Oyeyemi responded to the notice by a letter
to Dr. Olukoya, which stated: “In
reference to [the notice], which instructed me with [an] ultimatum to be in
Lagos . . . within 72 hours (November 3, 2005), or consider myself terminated
effective immediately as pastor of Mountain of Fire and Miracles[,] Los Angeles
chapter[,] [¶]. . . [¶] and arrange for the handover of all church properties
to a designated coordinator[,] [¶]. . .
[¶] I hereby inform you that the church’s properties under my care are ready to
be handed over to the designated coordinator.â€
Pastor Oyeyemi testified that the only MFMM property in his or
Mountain’s possession were approximately 100 books that had been sent from
Houston.
Pastor
Oyeyemi denied that he misappropriated any assets belonging to Mountain. According to Pastor Oyeyemi, Mountain’s board
of directors transferred its assets to a nonprofit corporation established for
Blood of Jesus. On March 26, 2007, a
certificate of dissolution was filed for Mountain.
Pastor Ugeh
testified that Pastor Oyeyemi was her senior pastor within California.
According to Pastor Ugeh, Pastor Oyeyemi viewed Pastor Campbell as unfit
to act as regional overseer; in addition, he viewed Pastor Ugeh as incompetent
to act as a pastor because she was a woman.
Pastor Oyeyemi also refused to comply with Pastor Campbell’s financial
reporting requirements.
On
October 30, 2005, at Dr. Olukoya’s request, Pastors Ugeh and Campbell, along
with three other ministers, appeared at Mountain’s church to resolve Pastor
Oyeyemi’s noncompliance with the requirements.
When the group of pastors spoke with Pastor Oyeyemi and Mountain’s board
of directors, angry churchgoers entered the meeting room and “chased †them off
the church property. Later, at Dr.
Olukoya’s request, Pastor Campbell asked Pastor Ugeh to recover MFMM’s assets
from Pastor Oyeyemi’s church. As all but
three of Mountain’s churchgoers had become members of Pastor Oyeyemi’s new
church, Pastor Ugeh also established a new MFMM church in Los Angeles.
Pastor
Campbell testified that his conflict with Pastor Oyeyemi arose when Pastor
Campbell found what he regarded as serious deficiencies in Pastor Oyeyemi’s
financial records. After the events in
early November 2005, he designated Pastor Ugeh to recover MFMM property because
she was the most senior pastor in California after Pastor Oyeyemi.
Michael Rosen,
an accounting expert, testified that he had examined the records for two bank
accounts used in connection with Pastor Oyeyemi’s church beginning in
2002. He estimated that from 2002
through November 2005, there had been withdrawals from the accounts totaling
$546,610 for which there was no adequate documentation. He also calculated that absent the disruptive
events in November 2005, Mountain would have collected a total of $283,786 in
offerings from November 2005 to the end of 2007. As the new MFMM church in Los Angeles had
collected only $72,872 during that period, he estimated that its shortfall in
collections amounted to $210,913.
3.
The jury found
that Pastor Oyeyemi had engaged in conversion and negligent interference with
prospective economic relations, and awarded respondent $99,786.78 in damages.
On May 20, 2009, judgment was entered in favor of respondent and against
Pastor Oyeyemi in accordance with the jury’s special verdicts. Later, the trial court denied Pastor
Oyeyemi’s post-trial motions for a new trial and judgment notwithstanding the
verdict.
DISCUSSION
Pastor
Oyeyemi contends that respondent’s claims against him fail because respondent
had no standing to assert the claims and no property interest in Mountain’s
assets, which respondent sought to recover at trial. In addition, he contends that respondent
never sufficiently specified the funds he allegedly converted or the
independently wrongful conduct required for negligent interference with
prospective economic relations.
As explained
below, we reject Pastor Oyeyemi’s contention that respondent lacked standing to
assert claims against him. We
nonetheless agree that respondent’s claims, as elaborated at trial, were
defective insofar as they were predicated on Mountain’s assets and income. Although the crux of respondent’s claims was
that Pastor Oyeyemi, in establishing Blood of Jesus, wrongfully converted
Mountain’s assets and diverted Mountain’s prospective income to Blood of Jesus,
respondent failed to show that MFMM had any property interest in Mountain’s
assets and prospective income.
A.
Standing
We begin by
examining whether respondent established its standing to assert claims for
conversion and negligent interference with prospective economic relations
against Pastor Oyeyemi. Generally,
standing presents a “threshold question of law†when the material facts are
undisputed. (People v. Superior Court (Plascencia)
(2002) 103 Cal.App.4th 409, 424.) Lack
of standing is a jurisdictional defect to an action that mandates dismissal (
Cal.App.4th 493, 501), unless the complaint can be amended to substitute the
proper plaintiff (Cloud v. Northrop
Grumman Corp. (1998) 67 Cal.App.4th 995. 1004-1011 (Cloud)). Because the defect
is not forfeited by a failure to object, it may be raised at any time in an
action, including on appeal. (
49 Cal.3d 432, 438-439.)
The demand for
standing is founded on Code of Civil Procedure section 367, which requires that
“[e]very action must be prosecuted in the name of the real party in interest,
except as provided by statute.†Under
this statute, “[a] real party in interest is one who has ‘an actual and
substantial interest in the subject matter of the action and who would be
benefited or injured by the judgment in the action.’†(Martin
v. Bridgeport Community Assn., Inc. (2009) 173 Cal.App.4th 1024, 1031-1032,
quoting Friendly Village Community Assn.,
Inc. v. Silva & Hill Constr. Co. (1973) 31 Cal.App.3d 220, 225.) For this reason, “a complaint by a party
lacking standing fails to state a cause of action by the particular named
plaintiff, inasmuch as the claim belongs to somebody else. [Citation.]
A more accurately stated rationale would be that there is a defect in
the parties, since the party named as plaintiff is not the real party in
interest.†(Cloud, supra, 67 Cal.App.4th at p. 1004.)
In rejecting
Pastor Oyeyemi’s objections to respondent’s standing, the trial court accepted
respondent’s theory of standing, which relied on two premises. The first premise is that Pastor Oyeyemi held
at least some of his church’s assets in trust for MFMM. Before the trial court and on appeal,
respondent has placed special emphasis on Pastor Oyeyemi’s November 2002
agreement, in which he stated, “I hold this church in trust for and
on behalf of [MFMM].†The second premise is that Pastor
Campbell designated respondent “under the pastorship of Grace Ugeh†to recover
MFMM’s assets from Pastor Oyeyemi.
Before the trial court and on appeal, respondent has maintained that
Pastor Campbell’s designation assigned to respondent MFMM’s right to recover
its assets from Pastor Oyeyemi.
We conclude
that respondent demonstrated its standing to assert claims for conversion and
interference with prospective economic relations. Regarding the first premise, the parties do
not dispute that as early as April 2002, Pastor Oyeyemi operated his church
under a registered fictitious business name or “d.b.a.,†and that in November
2002, while he used the d.b.a., he entered into an agreement with MFMM to hold
the assets of his church in trust for MFMM.
These facts were sufficient to show that after November 2002, Pastor
Oyeyemi personally held the assets of his church in trust for MMFA, to the
extent the assets fell within the scope of the November 2002 agreement.
Furthermore, as the beneficiary of the trust, MFMM was entitled to
assert claims that Pastor Oyeyemi had misappropriated or diverted the assets
that he held in trust for MFMM. (
831.)
Regarding the
second premise, respondent established that it had been assigned MFMM’s claims
for conversion and interference with prospective economic relations. To begin, we observe that claims of this type
are assignable. Generally, the
assignment of a cause of action passes title to it from one person to
another. (McDermott, Will & Emery v. Superior Court (2000) 83 Cal.App.4th
378, 382.) Claims arising out of “an
obligation, breach of contract, violation of a right of property, or damage to
personal or real property†are ordinarily assignable, unlike claims arising
“from a wrong done to the person, the reputation, or the feelings of the
injured party, and from breaches of contracts of a purely personal nature
([such as] promises of marriage).†(
73 Cal.App.4th 492, 504.) Under these
principles, a claim for conversion is assignable. (Staley
v. McClurken (1939) 35 Cal.App.2d 622, 625.) We reach the same conclusion regarding a
claim for negligent interference with prospective economic relations, as
determinable interests in future earnings and profits are subject to assignment
(Bank of California v. Connolly
(1973) 36 Cal.App.3d 350, 367-368; H. S.
Mann Corp. v. Moody (1956) 144 Cal.App.2d 310, 318; see
(2004) 117 Cal.App.4th 301, 305-306, 316 [affirming damages awarded in
connection with assigned claims for negligence and negligent interference with
an economic relationship]).
Furthermore,
respondent established that MFMM had assigned its claims to respondent. “[A]n assignment,
to be effective, must include manifestation to another person by the owner of
his intention to transfer the right, without further action, to such other
person or to a third person. [Citation.] It is the substance and not the form of a
transaction which determines whether an assignment was intended. [Citations.]
If[,] from the entire transaction and the conduct of the parties it
clearly appears that the intent of the parties was to pass title to the [cause
of action], then an assignment will be held to have taken place. [Citations.]â€
(McCown v. Spencer
(1970) 8 Cal.App.3d 216, 225.) Here,
Pastors Ugeh and Campbell each testified that MFMM had authorized Pastor Ugeh
to recover its assets from Pastor Oyeyemi.
Pastor Oyeyemi
suggests that this testimony showed no assignment of MFMM’s claims to
respondent. We disagree. As noted above, the existence of an
assignment must be discerned on the basis of all the circumstances, including
the parties’ conduct; moreover, the assignee of a cause of action may assign it
to another party (see Miller v. Bank of
America (1942) 52 Cal.App.2d 512, 515-516).
As both Pastors Campbell and Ugeh voiced no objection to respondent’s
status as plaintiff during the trial, their conduct unequivocally showed that
respondent had been assigned MFMM’s claim through a direct assignment by MFMM
or a subsequent reassignment by Pastor Ugeh.
In sum, respondent had standing to assert its claims for conversion and
negligent interference with prospective economic relations.
B.
No
Property Interest in Mountain’s Assets
We turn to
Pastor Oyeyemi’s contention that respondent’s claims, as elaborated at trial,
were defective as a matter of law because respondent established no property
interest in Mountain’s assets. We
agree. Although respondent had standing
as MFMM’s assignee to assert claims for conversion and negligent interference
with prospective economic advantage against Pastor Oyeyemi (see pt. A.,
sought at trial were related to Mountain’s assets, which respondent maintained
Pastor Oyeyemi held in trust for MFMM.
However, absent a showing that MFMM had a property interest in
Mountain’s assets, MFMM’s assignment of its claims against Pastor Oyeyemi to
respondent did not authorize respondent’s claims regarding Mountain’s
assets. (See Judelson v. American Metal Bearing Co. (1948) 89 Cal.App.2d 256,
261-266, [assignment of claims against incorporator does not, by itself,
entitle assignee to assert claims against pertinent corporation].) As explained below, respondent failed to show
that MFMM had any such interest in Mountain’s assets.
1.
There is no dispute that Mountain was
a nonprofit religious corporation (Corp. Code, § 9111 et seq.).
As such, it was a charitable trust required to use its assets for the
purpose stated in its
incorporation. (In re Metropolitan Baptist Church of Richmond, Inc. (1975) 48
Cal.App.3d 850, 856-857; 9 Witkin, Summary of Cal. Law (10th ed. 2005)
Corporations, §§ 252, 383, pp. 1016-1017, 1120-1121.) As is typical for such corporations, the
evidence at trial established that its assets “consisted of gifts, or the
proceeds and increment of gifts.†(
Richmond, Inc., supra, 48
Cal.App.3d at p. 857.) Mountain obtained
funds from churchgoers, which were placed in bank accounts and withdrawn for
various reasons, including the purchase of a church building. Mountain’s articles of incorporation
specified its purpose as “organiz[ing] a Christian fellowship and a church
congregation[] to develop mental health programs for the public and to provide
social services to the poor and the needy.â€
In addition, Mountain’s bylaws identified its purpose as “organiz[ing] a
Teaching and a Praying Church and . . . provid[ing] Social and Charitable
Services to the public.â€
In asserting that Pastor Oyeyemi
misappropriated or wrongfully diverted assets belonging to MFMM after
Mountain’s incorporation, respondent necessarily maintained that Mountain held
its assets for MFMM. In
467, 478-485, our Supreme Court elaborated how California courts should resolve
“internal church disputes†of this type regarding the ownership of church
property. There, a local church that
operated as a religious corporation disaffiliated itself from the national
church, resulting in a property dispute regarding the ownership of the local
church’s building. (Id. at pp. 474-476.)
As explained in Episcopal Church Cases, the United States Supreme
Court has held that state courts may resolve church property disputes in
accordance with state law, provided the method of resolution does not
contravene the First Amendment to the United States Constitution. (Episcopal
Church Cases, supra, 45 Cal.4th
at p. 478.) The United States Supreme
Court has approved two such methods. (
the “‘principle of government’†approach, a court examines whether the general
church manifested a hierarchical organization in which the local church
subordinated itself to higher church authorities on questions of faith,
discipline, or other matters; if so, the court, in resolving the property
dispute, places special emphasis on the decisions of the higher church
authorities. (Id. at p. 480.) In contrast,
if the general church does not display a hierarchical organization, the court
resolves the dispute in accordance with ordinary principles applicable to
voluntary associations. (
Under the second method, which our Supreme Court called the “neutral
principles of law†approach, a court resolves the dispute by examining the
constitutions, articles of incorporation, and other governing rules of the
local and general churches, viewed in light of relevant state statutes,
including suitably “neutral†laws concerning religious property. (Id.
at pp. 480-485.)
California
courts have long applied the neutral principles approach. (Episcopal
Church Cases, supra, 45 Cal.4th
467.) In Episcopal Church Cases, our Supreme Court dispelled residual doubts
regarding this matter, holding that to the extent property disputes involve no
point of religious doctrine, California courts must apply neutral principles of
law. (Id. at p. 485.) Under this
approach, “[t]he court should consider sources such as the deeds to the
property in dispute, the local church’s articles of incorporation, the general
church’s constitution, canons, and rules, and relevant statutes,
specifically concerning religious property, such
as . . . section 9142.â€
(Ibid.)
Regarding
religious property, subdivision (c) of section 9142 provides: “No assets of a religious corporation are or
shall be deemed to be impressed with any trust, express or implied, statutory
or at common law unless one of the following applies:
assets were received by the corporation with an express commitment by
resolution of its board of directors to so hold those assets in trust.
Unless, and only to the extent that, the
articles or bylaws of the corporation, or the governing instruments of a
superior religious body or general church of which the corporation is a member,
so expressly provide.
donor expressly imposed a trust, in writing, at the time of the gift or
donation.â€
The neutral principles approach,
insofar as it relies on section 9142, overlaps in some measure with the
principle of government approach. (
Church Cases, the court concluded that under subdivision (c)(2) of section
9142, a hierarchically organized general church can unilaterally impress a
trust upon the assets of a subordinated local religious corporation when the
general church’s governing instruments expressly provide for a trust. (Episcopal
Church Cases, supra, at pp. 491-492.)
Nonetheless, under the neutral principles approach, the mere existence
of a hierarchical organization is insufficient to create such a trust, absent
provisions regarding the disposition of local church property in the governing
documents of the general or local church.
(Iglesia Evangelica Latina, Inc.
v. Southern Pacific Latin American Dist. of the Assemblies of God (2009)
173 Cal.App.4th 420, 443.)
In resolving
issues arising under the neutral principles approach, we apply two standards of
review. To the extent our inquiry hinges
on the interpretation of the articles of incorporation, bylaws, and other
governing documents of MFMM and Mountain, we apply neutral principles of law de
novo. (Concord Christian Center v. Open Bible Standard Churches (2005)
132 Cal.App.4th 1396, 1408-1409.)
However, to the extent the application of the governing documents hinges
on factual questions regarding the underlying circumstances, we examine the
record for substantial evidence favorable to the judgment. (Ibid.) Under this standard, “we must consider all
the evidence in the light most
part[y], giving [it] the benefit of every reasonable inference, and resolving
conflicts in support of the judgment.†(
2.
Analysis
We conclude
that respondent failed to show that a trust had been impressed in MFMM’s favor
on Mountain’s assets. As explained above
(see pt. B.1, ante), Mountain’s
assets were not subject to any trust -- whether “express or implied, statutory
or at common law†-- unless respondent demonstrated that at least one of the
provisions of section 9142, subdivision (c), had been satisfied. This respondent did not do.
At trial,
respondent presented evidence that MFMM is a hierarchical church. Pastor Campbell testified that MFMM imposed
requirements on its pastors regarding conduct and salaries, and financial
reporting requirements on its local branches to ensure that MFMM was “seen
. . . by the public to be accountable.â€
In addition, Pastor Ugeh testified that Dr. Olukoya had ordered local
churches that incorporated to provide in its articles and bylaws that pastors
and their relations could not be members of the board of directors.
There was also
evidence that Mountain and Pastor Oyeyemi had subordinated themselves to MFMM’s
authority in various respects.
Mountain’s bylaws provided that “[t]he Senior Pastor of the Church shall
operate under the guidance of the General Overseer of [MFMM] [¶]. . . [¶] and
the Board of Directors.†In addition,
Mountain paid ten percent of its churchgoers’ offerings to the division of MFMM
located in the United States. There was
also evidence that Pastor Oyeyemi had personally subordinated himself on
certain matters, as his November 2002 agreement required him to remain loyal to
MFMM and hold the assets of his church in trust for MFMM, and his January 2005
agreement subjected him to MFMM’s directives.
Although this
evidence shows that Mountain was a local religious corporation within a
hierarchical church, it fails to establish the existence of a trust on
Mountain’s assets under any of the three provisions of section 9142,
subdivision (c). The record discloses no
resolution by Mountain’s board of directors expressly placing its assets in
trust for MFMM, for purposes of section 9142, subdivision (c)(1). Nor is there evidence that Mountain’s
articles and bylaws or MFMM’s “governing documents†expressly provided for a
trust on Mountain’s assets, for purposes of section 9142, subdivision
(c)(2). Finally, nothing in the record
suggests that MFMM was the “donor†of the assets it sought to recover or that
it imposed a trust on any such assets “at the time of the gift or donation,â€
for purposes of section 9142, subdivision (c)(3).
Respondent
contends that Pastor Oyeyemi’s November 2002 agreement operated to impose a
trust in MFMM’s favor on Mountain’s assets.
Pointing to Episcopal Church Cases,
respondent argues that the November 2002 agreement, coupled with MFMM’s
hierarchical organization, was sufficient to create a trust. We disagree.
As explained in Episcopal Church
Cases, under section 9142, subdivision (c)(2), a general church with a
hierarchical organization can unilaterally impress a trust only when its
governing instruments “‘so provide.’†(
The November
2002 agreement cannot be regarded as an MFMM “governing instrument†that
impressed a trust on Mountain’s assets, as it was executed nearly a year before
Mountain was created, and was signed by Pastor Oyeyemi as an individual while
he operated his church under a “d.b.a.â€
Generally, a corporation is not bound by contracts executed by its
incorporator prior to the corporation’s creation absent ratification or
adoption by the corporation itself. (
(1945) 69 Cal.App.2d 667, 675.) As noted
above, once incorporated, Mountain never ratified or adopted Pastor Oyeyemi’s
personal trust obligations. For this
reason, the November 2002 agreement encompassed only those assets held by
Pastor Oyeyemi while he operated his church under a “d.b.a.,†but not the
assets that accrued to Mountain after its creation. To hold otherwise would be to disregard the
neutral principles of law central to the method for resolving property disputes
mandated in Episcopal Church Cases.
Furthermore,
MFMM had considerable opportunity to impose a trust unilaterally on Mountain’s
assets before the critical events in November 2005, but failed to do so. Under the doctrine of estoppel, when a
corporation takes over its incorporator’s business, a third party’s claims
against the incorporator may attach to the corporation when the third party was
denied notice of the incorporation. (
263-264.) However, no evidence at trial
suggested that Pastor Oyeyemi hid Mountain’s incorporation from MFMM or that
MFMM was unaware of it. On the contrary,
the evidence showed that Pastor Oyeyemi communicated frequently with
Dr. Olukoya, that Pastors Campbell and Ugeh knew that Mountain had been
incorporated, that several churches in Region 4 had been incorporated, and that
MFMM propounded some general requirements for incorporated churches. Nonetheless, after Mountain’s incorporation
in September 2003, MFMM took no action to ensure that Mountain held its assets
in trust for MFMM.
name="_ftnref12" title="">[12]
Respondent
also contends that the provision in Mountain’s bylaws that “[t]he Senior Pastor
of the Church shall operate under the guidance of the General Overseer of
[MFMM] [¶]. . . [¶] and the Board of Directors,†coupled with the other facts
regarding Mountain’s subordination to MFMM, operated to create a trust in
MFMM’s favor on Mountain’s assets. We
find guidance on this contention from Protestant
Episcopal Church v. Barker (1981) 115 Cal.App.3d 599 (Protestant Episcopal Church), a leading case in the application of
the neutral principle approach to church property disputes. There, four local religious corporations
affiliated with a national church fell into property disputes with the national
church when they severed their relationship with it. (Id.
at pp. 604-605.) The articles of
incorporation for each local corporation stated that it was a “constituent
part†of the national church or an organizational subunit (diocese) of the
national church, but only one corporation operated under articles expressly
providing that its assets would be surrendered to the national church upon
disaffiliation. (Id. at pp. 606-611, 625.)
The appellate court concluded that only the latter held its assets in
trust for the national church, even though the other three corporations had
declared themselves to be “constituent parts†of the national church or its
subunits and had voluntarily submitted to the national church’s financial
reporting requirements. (
of incorporation did not impose an express trust on Mountain’s assets, as they
merely obliged its pastor to find guidance from Dr. Olukoya. In sum, respondent established no ownership
interest in Mountain’s assets as MFMM’s assignee.
3. Prejudice
The
remaining issues concern whether respondent’s failure to establish MFMM’s
interest in Mountain’s assets was prejudicial to Pastor Oyeyemi, and, if so,
what remedy is appropriate. As explained
below, the effect of the failure was to permit respondent to litigate its
claims on the incorrect theory that Mountain’s corporate existence was
irrelevant to Pastor Oyeyemi’s liability for conversion and negligent
interference with prospective economic relations. As a result, the failure cannot be regarded
as harmless.
name="_ftnref13" title="">[13]
Here, the special
verdict form asked the jury to make specific findings with respect to the
elements of each tort, with the exception of damages. Regarding damages, the special verdict form
requested the jury to render only a consolidated finding regarding the total amount
of damages arising from the torts. After
determining that the elements of each tort had been established, the jury found
the total amount of damages to be $99,786.78.
Respondent’s
interference claim is incapable of supporting the award of damages: because the claim relied entirely on Mountain’s assets, the claim is fatally defective. To establish this tort, respondent was
obliged to show that “an economic relationship existed between [MFMM] and
[Mountain] which contained a reasonably probable future economic benefit or
advantage to [MFMM],†and that Pastor Oyeyemi had wrongfully disrupted the
relationship. (Venhaus v. Shultz, supra,
155 Cal.App.4th at p. 1077.) In an
effort to carry this burden, respondent maintained that the creation of Blood
of Jesus improperly diverted churchgoers’ contributions from Mountain to Blood
of Jesus. Because MFMM had no ownership
interest in these contributions to Mountain, respondent did not establish the
requisite economic relationship between MFMM and Mountain.
We also
conclude that the award of damages cannot be affirmed on the basis of
respondent’s conversion claim.
Generally, conversion is “‘“any act of dominion wrongfully exerted over
another’s personal property in denial of or inconsistent with his rights
therein.â€â€™â€ (Messerall v. Fulwider (1988) 199 Cal.App.3d 1324, 1329.)
withdrawn funds in his church’s bank accounts without adequate
documentation. Respondent relied on its
accounting expert, Michael Rosen, who testified that he had examined the
records for two bank accounts used in connection with Pastor Oyeyemi’s church
beginning in 2002. The first account was
opened in early 2002, and the second was opened in January 2005. Some of the suspect withdrawals from the
first account may have occurred before Mountain came into existence; however,
Rosen was not asked to differentiate between withdrawals occurring before and
after Mountain’s incorporation.
The remaining
issue concerns the appropriate remedy.
Because the conversion claim was tried on an incorrect legal theory that
impaired full development of the evidence relevant to conversion, we remand the
matter for a new trial on respondent’s conversion claim, limited to whether
Pastor Oyeyemi converted bank account funds entrusted to him by MFMM under the
November 2002 agreement prior to Mountain’s incorporation. (See Toscano
v. Greene Music (2004) 124 Cal.App.4th 685, 695-697.)
C.
For the
guidance of trial court upon remand, we address Pastor Oyeyemi’s remaining
contention regarding respondent’s conversion claim. He maintains that during the underlying
trial, the court improperly rejected a special instruction that he requested. As explained below, we see no error in the
ruling.
Generally, “[a] party is entitled
upon request to correct, nonargumentative instructions on every theory of the
case advanced by him which is supported by substantial evidence.†(Soule
v. General Motors Corp. (1994) 8 Cal.4th 548, 572.) However, “[i]n order to complain of failure
to instruct on a particular issue the aggrieved party must request the specific
proper instructions. [Citations.] . . . [T]he
court has no duty to modify erroneous instructions submitted to it, and there
is no error if it simply rejects such instructions.
[Citation.] . . . [¶] Furthermore, the duty of the court is fully
discharged if the instructions given by the court embrace all the points of the
law arising in the case.
[Citations.]†(
Cal.App.3d 325, 335.)
Pastor Oyeyemi
contends that although the jury was instructed with a modified version of CACI
No. 2100, which sets forth the general elements of conversion, an additional
instruction was needed to guide the jury regarding respondent’s conversion
claim, which focused on the funds in the two bank accounts. Generally, “[a] cause of action for
conversion of money can be stated only where a defendant interferes with
plaintiff’s possessory interest in a specific, identifiable sum, such as when a
trustee or agent misappropriates the money entrusted to him.†(Kim v.
Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 284, italics
omitted.) Nonetheless, although “a
specific sum capable of identification†must be involved, “it is not necessary
that each coin or bill be earmarked.†(
674, 681.) Thus, in Fischer v. Machado (1996) 50 Cal.App.4th 1069, 1072-1074, the
appellate court affirmed the plaintiffs’ judgment for conversion against the
plaintiff’s agents, reasoning that the plaintiffs had sufficiently identified
the amount of money due them, even though the agents had commingled the funds
they received on the plaintiffs’ behalf with other money in a bank account.
Here, Pastor
Oyeyemi’s proposed instruction stated:
“Where the relationship of debtor and creditor only exists[,] conversion
of the funds representing the indebtedness is not actionable against the debtor
unless the debtor is required to return to the owner the identical money. In other words, dollars which are deposited
in a general bank account with other dollars are not the subject of an action
for conversion.†This instruction was
derived from Watson v. Stockton Morris
Plan Co. (1939) 34 Cal.App.2d 393, 403, in which the appellate court
explained that a creditor cannot assert a conversion claim based on an amount
of money against a debtor unless the debtor holds the funds in a fiduciary
capacity.
Under the
principles regarding instructions described above, the trial court properly
rejected the proposed instruction, as the record was devoid of evidence that
Pastor Oyeyemi’s relationship with MFMM was merely that of a debtor to a
creditor. On the contrary, the
that he became a trustee for MFMM under the November 2002 agreement. Nor did the CACI instruction, viewed in
context, fail to “embrace all the points of the law arising in the case†(
respondent apprised the jury that it sought specific sums in bank accounts that
Pastor Oyeyemi purportedly held for MFMM under the November 2002
agreement. In sum, there was no instructional
error.
The
judgment is reversed, and the matter is remanded to the trial court for a new
trial on respondent’s claim for conversion in accordance with this opinion,
limited to whether Pastor Oyeyemi converted bank account funds entrusted to him
by MFMM under the November 2002 agreement prior to Mountain’s
incorporation. Pastor Oyeyemi is awarded
his costs on appeal.
NOT TO BE PUBLISHED
IN THE OFFICIAL REPORTS
MANELLA,
J.
We concur:
EPSTEIN, P. J.
SUZUKAWA, J.
cross-complaint for libel against MFMM, Pastor Campbell, and Dr. Olukoya. Pastor Oyeyemi abandoned his cross-claims
during the trial on respondent’s second amended complaint.
complaint also contained a claim for defamation and requested injunctive
relief. Respondent abandoned its
defamation claim during the trial on its second amended complaint.
