The Supreme Court faces another Religious Property Dispute

The Episcopal Church (TEC) and its diocese of Fort Worth have asked the United States Supreme Court to accept their appeal of the decision of the Texas Supreme Court who found in favor of local churches leaving the denomination and retaining their property. This application is one of many request made by denominations to have the Supreme Court revisit the issue of the ownership of religious property and the enforceability of denominational trust clauses – something the Court has refused to do on numerous occasions since it last looked at the issue in 1979.

The resolve of the local churches challenging the exceptionally well-funded TEC is a lesson in perseverance for local churches challenging denominational trust clauses in religious property.

The Procedural History

• Similar to the collapsing Methodist Church, in 2008, a majority of clergy and laity left the Episcopal Church. At stake are properties worth an estimated $100 million dollars – all paid for and maintained by the local churches. The TEC filed suit against the local churches seeking to quiet title in its name arguing that the Trust Clause of the Episcopal Church – called the Dennis Cannon – compels the Court to award ownership of the properties to the denomination.
• In 2011, the state District Court ruled all in favor of the TEC diocese. The Texas Supreme Court ultimately reversed the District Court decision in 2013, finding that the Dennis Cannon was subject to Texas law and remanded the case back to the District Court with instructions to enter an Order awarding the religious property of local churches to the local churches. The TEC’s application for leave to appeal to the U.S. Supreme Court was rejected.
• In 2015, the District Court entered an order consistent with the decision of the Texas Supreme Court in favor of the local churches. The TEC side appealed again to the Court of Appeal, who, concluded in 2018 that even though the Dennis Canon did not impose a trust on the local property, the local church could not retain the property it purchased and developed.
• The local churches appealed to the Texas Supreme Court. In May 2020, the Texas Supreme Court again reversed the decision of the Court of Appeals, concluding that that under neutral principles of law, the local church could retain its property as there was no enforceable express or implied trust.

The Religious Property Question before the Court

The TEC’s application for leave to appeal to the United States Supreme Court request the Court to conclude that in religious property disputes, the denomination should keep the property – through a trust clause. You can find the application here. One important fact that you will not see in the application is the fact that the local church – on its own – paid for the land, developed the property, built the buildings and maintained the property for decades without any financial assistance from the denomination.

The Supreme Court’s decision in Jones allowed courts to rule on church issues of property as long as they followed “neutral principles,” that is, looking at state contract, trust law, corporate law and property laws in making a determination on religious property disputes. State Courts have since decided to either (1) apply neutral principals strictly, (2) apply a hybrid of neutral principals and deference, or (3) applied deference – when evaluating religious property disputes.

Will the Supreme Court grant the appeal?  Perhaps. We have three new Justices that have been appointed to the Court since 2014 and they may wish to pursue this issue. It is important to keep an eye on this case as it relates to the Methodist Trust Clause. Clarity in the law would be welcomed, especially if the Court finds for the local Church.

The professionals at Dalton & Tomich PLC have worked with dozens of local churches across the United States that have left – and are in the process of leaving – the Methodist, Presbyterian, Episcopal and Reformed Church denominations which have resulted in the local Churches keeping their property. Contact Dan Dalton to discuss your case and learn how we can serve as your guide through this process.