Diocese of >San Joaquin> v. Nelson



















Filed 3/14/13 Diocese of San Joaquin v. Nelson CA3











NOT TO BE PUBLISHED









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opinion has not been certified for publication or ordered published for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

THIRD APPELLATE
DISTRICT

(San Joaquin)

----






>

DIOCESE OF SAN JOAQUIN et al., Plaintiffs and Appellants, v. LEE M. NELSON et al., Defendants and Respondents.

C067958 (Super. Ct. No. 39-2010-00248560-CU-MC-STK)

In 2007,
the St. John’s Protestant Episcopal
Church of Stockton, which is a corporation (Parish Corporation), decided to
disaffiliate itself from the Episcopal Church (Church) over doctrinal
differences. The Diocese of San Joaquin
(Diocese) of the Episcopal Church filed an action for href="http://www.fearnotlaw.com/">declaratory relief against the Parish
Corporation, claiming that the property retained by the Parish Corporation is
owned by the Diocese and Church. The
Diocese also named several individual defendants: the Parish Corporation’s priest and members
of the Parish Corporation’s vestry and board of directors (Individual
Defendants). The Diocese does not seek
damages; instead, it seeks declarations that the Diocese owns and is entitled
to possess and control the property and that, upon disaffiliation, the
Individual Defendants could no longer act on behalf of the Parish
Corporation.

The
Individual Defendants demurred to the complaint. The trial court sustained the demurrer,
citing Code of Civil Procedure section 1061, which gives the court >discretion to deny declaratory relief if
the relief is not “necessary or proper at the time under all the
circumstances.”href="#_ftn1" name="_ftnref1"
title="">[1] The Parish Corporation was not a party to the
demurrer proceedings and remains as a defendant in the action.

The Diocese
appeals. It claims the trial court did
not rely on section 1061 to dismiss the action as to the Individual Defendants
and, therefore, the only relevant inquiry is whether the demurrer was sustained
on the merits of the action, which inquiry requires a de novo, rather than an abuse of discretion, standard of
review. The Diocese argues for the first
time in its reply brief on appeal
that the trial court abused its discretion under section 1061.

We conclude
that the trial court actually relied on section 1061 to dismiss the action as
to the Individual Defendants and, because the Diocese failed to argue the
section 1061 question in its opening brief, it has forfeited consideration of
that question on appeal. In any event,
the trial court did not abuse its discretion by dismissing the complaint as to
the Individual Defendants.

BACKGROUND CONCERNING
DISAFFILIATION CASES

While this
opinion does not reach the merits of who owns the parish property, a brief
summary of similar cases is helpful to understanding the issues relevant to
this action.

“ ‘The
Protestant Episcopal Church in the United States of America . . . ,
organized in 1789, was the product of secession of the Anglican church in the
colonies from the Church of England, the latter church itself being the product
of secession from the Church of Rome in 1534.’
[Citation.] The church
. . . is governed by a general convention and a presiding
bishop. In the United States, the
Episcopal Church is divided geographically into dioceses, including [here, the
Diocese of San Joaquin]. Each diocese is
governed by a diocesan convention and a bishop.
A diocese is itself divided into missions and parishes, which are
individual churches where members meet to worship. A parish is governed by a rector and a board
of elected laypersons called the vestry.
[Citation.]” (>Episcopal Church Cases (2009) 45 Cal.4th
467, 474.)

Over the
past decade, some California parishes have disaffiliated from the Church over
questions of doctrine. This has led to
disputes over who owned the parish property.
(Episcopal Church Cases, supra,
45 Cal.4th at pp. 475-476.) In >Episcopal Church Cases, the Supreme
Court held that (1) secular courts must not resolve questions of church
doctrine, on which the courts must defer to the highest relevant ecclesiastical
authority; however, (2) if the court can resolve the dispute over property
ownership without reference to church doctrine, it should do so applying
neutral principles of law. (>Id. at p. 485.) In the case before it, the Supreme Court
concluded that the local parish held the property in trust for the Church and,
therefore, upon disaffiliation, the property reverted to the Church. (Id.
at p. 493.)

A wrinkle
in the case before us, different from Episcopal
Church Cases, is that the disaffiliation came at the diocese level. The Diocese of San Joaquin, acting through
Bishop John-David Schofield, disaffiliated from the Episcopal Church and took
steps to change its name to the Anglican Diocese of San Joaquin. (Schofield
v. Superior Court (2010) 190 Cal.App.4th 154, 158-159.) And St. John’s Parish joined in the diocese’s
disaffiliation.

The
plaintiffs here are the Diocese of San Joaquin and Bishop Jerry A. Lamb, the
provisional bishop installed by the Episcopal Church after Schofield’s
disaffiliation. (Schofield v. Superior Court, supra, 190 Cal.App.4th at pp.
159-160.)

In 2010,
the Fifth Appellate District decided a case that presented the question of who
is the incumbent bishop of the Diocese of San Joaquin: Schofield or Lamb. The court concluded that it is a question of
church doctrine. (Schofield v. Superior Court, supra, 190 Cal.App.4th at pp.
161-162.) The court then turned to the
ecclesiastical authorities and determined that the Church had deposed Schofield
and recognized Lamb as the bishop of the Diocese. (Id.
at p. 162.) That determination, however,
left unresolved “issues concerning property transfers assertedly made by
Schofield while he was the duly constituted Bishop of the Diocese of San Joaquin.” (Ibid.) The Fifth Appellate District directed that
those issues must be resolved in the trial court applying neutral principles of
law. (Id. at pp. 162-163.)

PROCEDURAL BACKGROUND

We begin
with some pertinent allegations in the complaint:

“7. Defendant [Parish
Corporation] . . . is a non-profit religious
corporation . . . .
At all times relevant to this action, Defendant Parish Corporation has
been an ecclesiastical entity in union with the Diocese and subordinate to the
Constitutions, Canons, and Conventions of the Church and the Diocese. The Parish Corporation was created for the
convenience of the parish to conduct its temporal affairs. The Parish Corporation is named as a
Defendant in this action because the individual Defendants have illegally
usurped control of the Parish Corporation and are using and occupying the
Parish Premises and Parish Assets for their own purposes. The individual Defendants lack authority to
act on behalf of the Parish Corporation.

“8. Defendant Lee M. Nelson (‘Nelson’) is the
purported priest and rector exercising de
facto control of the Parish Corporation and is in possession of, and
exercising control over, the Parish Premises and Parish Assets without the
permission, consent, or approval of the Plaintiffs or the Church. On or about February 2009, Defendant Nelson
was allegedly installed as the rector of St. John’s Stockton in the Diocese of
San Joaquin by the then deposed and former Bishop of the Diocese, John-David Schofield. Defendant Nelson has neither obtained the
consent of Plaintiff Bishop Lamb to be the rector of St. John’s parish as
required by the Canons of the Church or the Diocese, nor sought a license to
officiate in the Diocese of San Joaquin.
On May 18, 2010, the Episcopal Diocese of Fort Worth, the diocese where
Defendant Nelson is canonically resident, determined that he has abandoned the
Communion of the Church and has been inhibited from officiating as an ordained
minister of the Episcopal Church for a period of six months and is liable for
deposition and removal from the ministry of the Church.

“9. Defendants Wilson Melchor, Bob Johnson, Gary
Crowder, Phil Berghuis, Honey Rosal, Pete Ottesen, Mike Combs, Rick Dunn, Steve
Olmstead, Rachel Allanigue, Ted Yumoto and Jessica Aaron are all individuals
and former members of the Church, exercising de facto control of the Parish Corporation and purporting to be the
vestry and board of directors of the Parish Corporation. These defendants are in possession of, and
exercising control of the Parish Premises and other Parish Assets without the
permission, consent, or approval of the Plaintiffs or the Church.”

“64. In or about 1855, significant portions of the
Parish Premises were acquired by the Parish Corporation from private parties
under two deeds. . . .
[¶] . . . Additional properties
constituting the Parish Premises were obtained by the Parish Corporation in or
about 1957, 1993, 1995 and in 2002.”

“66. In a series of actions culminating in
December 2007, Schofield, the former bishop of the Diocese and some of the
Defendants, attempted to disaffiliate the Diocese and its congregations,
including the Parish, from the Church and affiliate them with another religious
denomination.

“67. This disaffiliation attempt of Schofield and
the Defendants supported resolutions at the annual meeting of the Diocesan
Convention that consisted of purported changes to the Diocesan Constitution and
Canons of the Diocese and the Articles of Incorporation of the Corporation Sole
that eliminated references to the accession of the Diocese to the Constitution
and Canons of the Church. These
amendments were ultra vires and null
and void and contrary to the Canons and Constitutions of the Church and the
Diocese.”

“69. After the attempted disaffiliation efforts
described above, the Church’s House of Bishops met in March 2008, and pursuant
to Canon IV.9.2 of the Church, authorized the Presiding Bishop to depose and
remove Schofield from the ordained ministry of the Church, which the Presiding
Bishop did that day.

“70. Upon Schofield’s deposition and removal as
the Bishop of the Diocese of San Joaquin, his positions as the incumbent of the
Corporation Sole, and President of the Investment Trust and the Episcopal
Foundation, automatically terminated.”

The complaint
seeks declarations that the property is held for the benefit of the Diocese and
that the property must be turned over to the Diocese. The complaint also seeks a declaration that,
upon disaffiliation from the Church, the “Individual Defendants” no longer had
authority to act on behalf of the Parish Corporation.

Attached to
the complaint is a legal description of the property subject to the
action.

The Parish
Corporation answered the complaint, but the Individual Defendants instead
demurred. They argued that the dispute
over the property was between two corporate entities: the Diocese and the Parish Corporation. They claimed that the Diocese was trying to
pierce the corporate veil. The Diocese
opposed the Individual Defendants’ demurrer, and the trial court held a
hearing.

During the
hearing, the trial court asked counsel for the Diocese why the Individual
Defendants were necessary to the action.
Counsel responded that the Individual Defendants are in possession of
the property, even though the Parish Corporation owns the property. The court noted, however, that the Individual
Defendants do not have a leasehold on the property but are merely corporate
directors. In response to the court’s
question concerning what gives the Individual Defendants a possessory interest,
counsel directed the court’s attention to a Church canon that all parish
property is held in trust for the Church and Diocese.

The Church
canon cited by counsel states: “All real
and personal property held by or for the benefit of any Parish, Mission or
Congregation is held in trust for this Church and the Diocese thereof in which
such Parish, Mission or Congregation is located. The existence of this trust, however, shall
in no way limit the power and authority of the Parish, Mission or Congregation
otherwise existing over such property so long as the particular Parish, Mission
or Congregation remains part of, and subject to, this Church and its
Constitutions and Canons.”

The trial
court stated that it would sustain the demurrer without leave to amend. It said that the canon cited by counsel for
the Diocese “does not seem to provide in any way that the individuals have
control over this property. . . .
[T]o take the individuals out I don’t think really impairs the plaintiff’s
claims as far as the property transfers are concerned.” The court added: “[S]hould discovery reveal that some of these
people ought to be involved in the case, then I think that is the way you bring
it back in. But at this point, I don’t
see any facts that would support their being in the case, and I also don’t see
any way to amend the complaint that would create a basis for that.”

Over the
Diocese’s objection, the Individual Defendants proposed, and the trial court
signed, an order stating: “[T]he Court
has concluded that Plaintiffs’ Complaint fails to demonstrate to the
satisfaction of the Court why it is ‘necessary or proper at the time under all
the circumstances’ to sue the Individual Defendants in order to obtain the
declaratory relief they seek against the corporate defendant. (See Code Civ. Proc. § 1061.)” The order added that dismissal was “without
prejudice,” a reference to its oral statement that the Diocese would be allowed
to “bring back” individuals as defendants if it was established through
discovery that they are necessary to the action.

The trial
court dismissed the action as to the Individual Defendants, and the Diocese
appeals.

SECTION 1061

The Code of
Civil Procedure allows a party to seek a declaration from the courts concerning
the parties’ legal rights and duties “in cases of actual controversy relating
to the legal rights and duties of the respective parties . . . .” (§ 1060.)
However, “[t]he court may refuse to exercise the power granted by [the
statutes governing declaratory relief] in any case where its declaration or
determination is not necessary or proper at the time under all the
circumstances.” (§ 1061.)

“The
discretion to be exercised pursuant to section 1061 is not unlimited. It is a legal or judicial discretion subject
to appellate review, and declaratory relief must be granted when the facts
justifying that course are sufficiently alleged. [Citation.]
Refusal is limited to cases where a declaration of rights and
obligations would be unnecessary or improper at the time under all the
circumstances. The determination rests
on the facts in each case.” (>Kessloff v. Pearson (1951) 37 Cal.2d
609, 613.)

“[I]f a
plaintiff . . . has other means of seeking a determination of [its]
rights, then a trial judge may sustain a general demurrer to a declaratory
relief claim.” (C.J.L. Construction, Inc. v. Universal Plumbing (1993) 18
Cal.App.4th 376, 390 and cases cited therein.)

“[W]hether,
under all of the circumstances, a declaration of the rights of the parties is
necessary or proper is a matter within the discretion of the trial court, and
in the absence of a clear showing of abuse of that discretion, . . .
its decision will not be disturbed upon appeal.
(Code Civ. Proc. § 1061; [citations].)”
(Lawrence Barker, Inc. v. Briggs
(1952) 39 Cal.2d 654, 669-670.)

A court may
rely on its discretionary power under section 1061 to sustain a demurrer to a
declaratory relief action. (>Simpson v. Security First Nat. Bank
(1945) 71 Cal.App.2d 154, 157-158.)

DISCUSSION

The Diocese
insists in its opening brief that the trial court did not sustain the demurrer
based on an exercise of discretion under section 1061. Having so insisted, the Diocese does not
address in its opening brief whether the trial court abused its discretion
under section 1061. Instead, the Diocese
contends that the sustaining of the demurrer was improper as a matter of law
based on the merits of the dispute.

In its
response, the Individual Defendants assert that sustaining the demurrer under
section 1061 was not an abuse of discretion.
They also note that the Diocese has not argued that it was an abuse of
discretion.

In the last
few pages of its reply brief, the Diocese, for the first time, contends that
sustaining the demurrer was an abuse of discretion under section 1061.

We conclude
that (1) the trial court relied on section 1061 in sustaining the demurrer
(which means that we apply an abuse of discretion standard on appeal); (2) the
Diocese forfeited any claim that the trial court abused its discretion because
it makes the argument for the first time in the reply brief; and (3) in any
event, the trial court did not abuse its discretion under the circumstances of
this case.

I

The Trial Court Relied on Section 1061

The Diocese
bases the legal argument in its opening brief on its assertion that the trial
court did not rely on section 1061 when it sustained the Individual Defendants’
demurrer. Since the trial court did not
rely on section 1061, argues the Diocese, the proper standard of review is
whether the demurrer was improperly sustained as a matter of law on the
substantive merits of the action. This
premise is false, as the trial court explicitly relied on section 1061.

The trial
court’s order cites section 1061 and states that declaratory relief against the
Individual Defendants is not “ ‘necessary or proper at the time under all the
circumstances.’ ” The Diocese objected
in the trial court to this language concerning section 1061 when counsel for
the Individual Defendants sought approval of the proposed order, and the trial
court effectively overruled the objection by using the proposed language in the
order. Despite this clear invocation of
the court’s discretionary power, the Diocese contends that, because section
1061 was neither briefed nor discussed at the hearing on the demurrer, “[i]t is
clear . . . from the order on the demurrer that the trial court did
not sustain the demurrer pursuant to an exercise of its discretion under
Section 1061 . . . .”
The Diocese argues that the trial court actually based its sustaining of
the demurrer on the merits of the issues relating to corporate law and
possession of the property.

In an
attempt to bolster its argument that the court did not rely on section 1061,
the Diocese cites Collins v. City &
Co. of S.F. (1952) 112 Cal.App.2d 719 (Collins). In that case, the court held that, before
reviewing a case for abuse of discretion under section 1061, the court must
have evidence that the trial court acted under section 1061. Since the trial court’s ruling sustaining the
demurrer went to the merits of the action and did not purport to rely on
section 1061, the appellate court refused to consider the section 1061
issue. (Collins, supra, at pp. 723-724.)

Unlike the
circumstances of Collins, the trial
court here expressly relied on section 1061 in sustaining the demurrer. In addition to that express reference, the
trial court explored at the hearing whether the Individual Defendants’ presence
in the action was necessary to the relief the Diocese sought. The court asked: “[Counsel], let me ask, though, if the
individuals were dismissed from the action, how does that impair your
action? You still have your claims
against the corporate entity.”

We
therefore conclude that, contrary to the Diocese’s argument, the trial court
actually relied on section 1061 in sustaining the demurrer.

II

The Diocese Forfeited an Abuse-of-Discretion Challenge

As a result
of its insistence that the trial court did not rely on its discretionary power
under section 1061, the Diocese argues in its opening brief only that
sustaining the demurrer was error as a matter of law on the merits of the
action and that we must apply a de novo
standard of review. The opening brief,
therefore, does not present a challenge to the trial court’s exercise of
discretion under section 1061. And
because the Diocese does not make this challenge in its opening brief, the
challenge is forfeited.

“ ‘Points
raised for the first time in a reply brief will ordinarily not be considered,
because such consideration would deprive the respondent of an opportunity to
counter the argument.’ [Citation.] ‘Obvious reasons of fairness militate against
consideration of an issue raised initially in the reply brief of an
appellant.’ [Citation.] ‘ “Obvious considerations of fairness in
argument demand that the appellant present all of his points in the opening
brief. To withhold a point until the
closing brief would deprive the respondent of his opportunity to answer it or
require the effort and delay of an additional brief by permission. Hence the rule is that points raised in the
reply brief for the first time will not be considered, unless good reason is
shown for failure to present them before.” ’
[Citation.]” (>Reichardt v. Hoffman (1997) 52 Cal.App.4th
754, 764.)

The Diocese
offers no good reason for not addressing in its opening brief whether the trial
court abused its discretion under section 1061.
Therefore, the argument is forfeited.

III

The Trial Court did not Abuse Its Discretion

In any event,
even were we to consider the issue on the merits, we would conclude that the
trial court did not abuse its discretion under section 1061.

This is not
an action for ejectment or trespass. In
fact, the Diocese seeks only a declaration
that it owns the property and is entitled to control and possess it. The essence of this action is that the Parish
Corporation holds the parish property in trust for the benefit of the Diocese
and the Church. The complaint does not
allege that the Individual Defendants claim any ownership or possessory right
beyond the title held by the Parish Corporation. Therefore, we see no reason why declaratory
relief against the Individual Defendants is “necessary or proper at the time
under all the circumstances.”href="#_ftn2"
name="_ftnref2" title="">[2] (§ 1061.)

DISPOSITION

The order
dismissing the action as to the Individual Defendants is affirmed. The Individual Defendants are awarded their href="http://www.fearnotlaw.com/">costs on appeal. (Cal. Rules of Court, rule 8.278(a).)







NICHOLSON , Acting P. J.







We concur:







BUTZ , J.







DUARTE , J.