High Court Decides Breakaway Church can Keep Property

In a ruling that may affect the trust clauses of several mainline denominations, the California State Supreme Court let stand a lower court ruling that allowed a Fresno congregation retain its property after severing ties with the United Methodist Church (UMC), on Wednesday, December 1, 2004.

The case began in 2000, when St. Luke’s Community Church in west-central Fresno broke away from the denomination, citing theological disputes over homosexuality. Specifically, the congregation was angered at the leniency of the denomination toward those who broke the church’s Book of Disciplines that prohibit pastors from participating in same-sex union services. Following this dispute, St. Luke’s pastor and members withheld funds to the denomination, and removed the trust provisions from its deeds that defined the congregations as belonging to the UMC.

The denomination took the congregation to court, and in 2002, a Superior Court judge in Fresno ruled St. Luke’s could not remove the trust provision and that the UMC controlled the property.

Despite the dispute, the congregation continued to meet in the chapel and made an appeal to the California 5th District Court of Appeal.

On August 13, 2004, the court of appeals overturned the 2002 ruling and said St. Luke’s acted legally in changing the terms of trust language in its deeds.

Following the victory, St. Luke’s Rev. Kevin Smith said he loves the UMC but was thankful for the appellate court ruling.

“I love the United Methodist Church. But they can’t just pick and choose which parts of the Discipline they want to adhere to,” said Smith, who also said California’s corporate laws favor the congregation.

“California corporate law allows us, as owners of the property, to change terms of the trust in which we hold the property,” said Smith.

The UMC’s California-Nevada Annual (regional) Conference appealed the 5th circuit court’s decision to the California Supreme Court. However, in the Dec. 1 decision, the high court denied the petition to review the state appellate court’s August decision, thereby allowing St. Luke’s to maintain its property.

"We're just excited," said Smith to the Fresno Bee, following the Dec. 1 decision. "The Lord has done a really great thing; it's his property.”

However, Robert M. Shannon, lawyer for the denomination, said the decision was a “very disappointing situation,” and that the California-Nevada Annual Conference may appeal to the federal courts.

“The Supreme Court was in a position to rule on an important question of law that affects thousands of local churches within the United Methodist denomination,” Shannon said.

According to Shannon, the case may impact the trust clauses mainline denominations outside of the UMC as well.

“This case not only impacts the United Methodist Church but other mainline denominations with similar methods of holding property,” said Shannon. “These other denominations could potentially see their own trust clauses challenged and invalidated using the St. Luke’s case.”

The UMC’s trust clause maintains that the local church holds its property in trust for the denomination. Under the trust clause, all property and wealth provided by the congregants must be held under the provision of the larger denomination; when a local church decides to leave, it must surrender its property to the denomination. The trust clause, which dates back 250 years to the historic roots of Methodism, has been upheld consistently in the past.

Shannon said the case was only one in a long line of cases that may follow. Nonetheless, she said the ruling would neither stop the growth nor sever the body of Christ’s church.

“One of our values is the continuity of ministry from one generation to the next,” Shannon said in a statement to the United Methodist News Service. “We understand that disagreement is a part of living together. As United Methodists, we also know we are bound together for the common good of sharing the gospel of Christ that makes a difference in communities. The secular legal community has overruled our Book of Discipline with its interpretation of a California corporation code. This is disconcerting. But it does not stop ministry. It does not sever the Body of Christ.”

Wednesday’s action was the third ruling in four years by a secular state court that awarded property to the breakaway congregation. In each case, the denominational officers claimed the property belonged to the larger body under constitutional provisions.