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In Ownership Disputes, Churches Find `Messy and Uncertain’ Answers

c. 2006 Religion News Service (UNDATED) When the Rev. Allen Kannapell and most of St. Andrew’s parish in Livonia, Mich., decided earlier this year that they could no longer remain Episcopalians, the conservative pastor knew he had a choice. Kannapell could either launch an expensive legal fight to claim ownership of St. Andrew’s that he […]

c. 2006 Religion News Service

(UNDATED) When the Rev. Allen Kannapell and most of St. Andrew’s parish in Livonia, Mich., decided earlier this year that they could no longer remain Episcopalians, the conservative pastor knew he had a choice.

Kannapell could either launch an expensive legal fight to claim ownership of St. Andrew’s that he would likely lose, or simply walk away. Kannapell and his flock weighed the options and decided to turn over their keys.

“To fight over something when you’re pretty sure you can’t win is a distraction,” said Kannapell, now pastor of the Anglican Church of Livonia, where he celebrates the Eucharist under a basketball hoop at a local YMCA. “It wasn’t in the best interest of our people.”

When it comes to church property, and legal questions of who owns it and can dispose of it, the stakes could hardly be higher. National denominations, local congregations and an army of attorneys charging by the hour are battling over hundreds of millions of dollars in real estate.

The fate of disputed property may ultimately be determined by secular courts. Increasingly, judges who once deferred to bishops and cardinals are making their own decisions in what all sides call an uncomfortable confrontation between civil and church law.

“It’s a state-by-state issue, and very fact-dependent,” said Valerie Munson, a Philadelphia attorney who specializes in church property disputes. “It can be very messy and uncertain.”

In mainline Protestant churches _ especially the badly divided Episcopal Church _ bishops are battling breakaway parishes who want to secede from denominations and take their property with them.

In the Catholic Church, meanwhile, West Coast bishops already in bankruptcy are trying to protect parishes from being sold to settle sexual abuse lawsuits. On the East Coast, bishops are wrestling with restive parishioners who refuse to accept their directive to sell or close parishes to cope with a shortage of priests.

For almost all independent or congregational churches, ownership is hardly an issue since local congregations own all property. For example, if a Southern Baptist congregation wanted to leave the denomination, there is nothing the denomination could do to retain the property, and it’s unlikely it would ever try.

Hierarchical churches, however, are another story:

Roman Catholics: Trying to Have It Both Ways?

Facing big-dollar sex abuse lawsuits, the bishops of Portland, Ore., and Spokane, Wash., declared bankruptcy. In determining which assets would be available to pay creditors, the bishops said parishes were off-limits because they were not controlled by the diocese.

Under civil law, the bishops claimed they were merely trustees for the property, holding them in benefit of parishioners. Under church law, bishops said they have authority over parishes, but cannot close them at will.

“There is no doubt in canon law, absolutely no doubt, that the bishop/diocese does not own the parish,” said Nicholas Cafardi, dean of Duquesne University Law School in Pittsburgh, who has worked on the Spokane case.

But lawyers representing the creditors in Portland argue that it’s clear that the 124 parishes are owned by a corporation that is headquartered in the bishop’s office.

“There isn’t any question (among lay Catholics) that the owner of the real estate to which they were making contributions is the archdiocese, and they know it,” said Al Kennedy, a Portland lawyer representing 140 claims against the archdiocese.

In Portland, a bankruptcy judge has ruled the archdiocese and its parishes _ estimated to be worth $500 million _ are one in the same. Kennedy, for one, said the archdiocese has other assets it could liquidate and says it “isn’t very likely that churches are going to be sold.”

On the other side of the country, Boston Cardinal Sean O’Malley has claimed near-total control over parishes in his plan to remake his scandal-scarred archdiocese of Boston by closing or merging nearly 80 parishes.

Lay activists who reject O’Malley’s closure plan have invoked the bishops’ claims in Spokane and Portland to argue that if bishops don’t own churches on the West Coast, then O’Malley has no right to close them on the East Coast.

Mark Chopko, general counsel for the U.S. Conference of Catholic Bishops, said canon law allows a bishop to restructure his diocese, but does not give him the power to seize property “willy-nilly” to pay off debts.

In other words, O’Malley has the right to close parishes, but only after jumping through the appropriate “canonical hoops,” said Chopko.

“Do either of these bishops simply have the power to take these assets and apply them anywhere they want?” Chopko said. “The answer is no.”

Mainline Protestants: Do Breakaway Churches Keep Property?

Among most major mainline Protestant churches _ Methodists, Episcopalians and Presbyterians _ local property is held “in trust” for the national denomination. Rules on Lutheran churches tend to be more flexible.

In a 1979 decision, the U.S. Supreme Court signaled it would defer to church bodies to set the rules for deciding property disputes. As a result, most denominations adopted internal laws that say when a parish cuts ties with the national church, it must also forfeit its property.

Some of that, however, may be changing.

In California, the state Supreme Court ruled in 2004 that a Fresno church, St. Luke’s United Methodist, could cut ties and keep its property, based on state trust law.

In Los Angeles, Episcopal Bishop Jon Bruno is appealing court decisions that allowed two churches _ All Saints in Long Beach and St. David’s in North Hollywood _ to leave with their property.

And in Virginia, state Sen. Bill Mims last year introduced a bill, eventually defeated, that would allow breakaway churches to secede with their property. Mims is a member of an Episcopal parish that recently left to align itself with an Anglican bishop in Uganda.

“You can get varying decisions in varying states,” said Munson, who recently argued for a breakaway Episcopal parish in Philadelphia. The state Supreme Court issued a mixed decision in that case, ruling that St. James the Less Church holds title to its property but cannot arbitrarily leave the denomination.

These cases may not represent a new consensus in favor of dissident parishes, but both sides are taking the threat seriously.

In the Episcopal Church, some 28 bishops are already talking about how or whether to fight an expected flood of breakaway churches, and church leaders have earmarked $100,000 in seed money for a property defense fund.

The issue is expected to come to a head this summer at the denomination’s General Convention in Columbus, Ohio. Dissident conservatives have said they may be forced to leave _ and take their property _ if the national church does not correct its leftward drift.

Liberal Episcopal groups have drawn up contingency plans for seizing breakaway property, while conservatives have spent millions building an alternative denominational structure to receive breakaway parishes.

Last year, one of the nation’s largest Episcopal churches, Christ Church in Overland Park, Kan., aligned itself with a bishop in Uganda. The local bishop agreed to sell the building to Christ Church for $2.7 million and both sides parted ways amicably.

Episcopal Church headquarters in New York spent $500,000 on property-related legal issues in 2005, and a task force of bishops said their “financial existence, integrity and stability” is threatened by more legal action.

MO/PH END ECKSTROM

Editors: To obtain a photo of Easter services at the Anglican Church of Livonia and St. Andrew’s Episcopal Church, and of Portland Archbishop John Vlazny, go to the RNS Web site at https://religionnews.com. On the lower right, click on “photos,” then search by subject or slug.

SPECIAL REPORT: CHURCHES AND REAL ESTATE

SECOND OF TWO PARTS