Exec. Bd. of the Mo. Baptist Convention v. Mo. Baptist Found.

• Decision Date: 24 May 2016
• Docket Number: WD 78034
• Citation: Exec. Bd. of the Mo. Baptist Convention v. Mo. Baptist Found., 497 S.W.3d 785 (Mo. App. 2016)
• Parties: The Executive Board of the Missouri Baptist Convention, et al., Respondents, v. Missouri Baptist Foundation, Appellant.
• Court: Missouri Court of Appeals

497 S.W.3d 785

The Executive Board of the Missouri Baptist Convention, et al., Respondents,

v.Missouri Baptist Foundation, Appellant.

WD 78034

Missouri Court of Appeals, Western District.

FILED: May 24, 2016

As Corrected June 2, 2016

Motion for Rehearing and/or Transfer to Supreme Court Denied July 5, 2016.

Application for Transfer Denied September 20, 2016

Jim J. Shoemaker, Clyde Farris, Michael Whitehead for respondent.

Laurence R. Tucker, Thomas B. Weaver, Jeffery T. McPherson, and Tyson H. Ketchum for appellant.

Before Division Four: Alok Ahuja, C.J., Anthony Rex Gabbert, J., and S. Margene Burnett, Sp. J.

Alok Ahuja, Chief Judge

The Missouri Baptist Foundation appeals the trial court's entry of judgment in favor of the Executive Board of the Missouri Baptist Convention.¹The judgment declared that amendments made by the Foundation to its organizational documents in 2001 were void; those amendments had the effect of eliminating various rights of the Convention to oversee and influence the Foundation's actions.The court found the amendments to be void because they were adopted without the Convention's prior review and approval, as required by the Foundation's governing documents.

On appeal, the Foundation argues that the circuit court's judgment is not an appealable final judgment and that this appeal should accordingly be dismissed.It also argues that the Convention lacks standing to sue to challenge the amendments.On the merits, the Foundation contends that summary judgment was improperly granted because material facts remained in dispute and because the Convention's summary judgment motion failed to set forth undisputed facts to negate certain of the Foundation's affirmative defenses.The Foundation also argues that the circuit court's award of attorney's fees was erroneous.

The judgment is affirmed.We conclude that the circuit court's judgment is a partial final judgment which is immediately appealable by virtue of Supreme Court Rule 74.01(b).We also conclude that the Convention has standing to challenge the Foundation's disregard of provisions of its organizational documents which gave the Convention the right to review and approve any amendments.On the merits, we find that the circuit court properly granted summary judgment to the Convention.Finally, we conclude that the Foundation's challenge to the circuit court's attorney's fees award is moot because the Convention has released its claim for attorney's fees in exchange for a payment made by the Foundation's insurer.

Factual Background

This is the second appeal from the circuit court's grant of summary judgment on the Convention's claims against the Foundation.²In the prior appeal, we found that appellate jurisdiction was lacking despite the trial court's certification of its ruling as a partial final judgment under Rule 74.01(b), because the circuit court's judgment did not fully dispose of all issues relating to a distinct “judicial unit.”Exec. Bd. of Mo. Baptist Convention v. Mo. Baptist Found., 380 S.W.3d 599, 606(Mo.App.W.D.2012).Our prior opinion contained a detailed recitation of the relevant facts, id. at 601–04, from which we borrow without further attribution.

“The Convention is an unincorporated association of messengers from affiliated Southern Baptist churches in the State of Missouri.The Convention acts by and through its Executive Board.”Exec. Bd. of Mo. Baptist Convention v. Windermere Baptist Conference Ctr., 280 S.W.3d 678, 684(Mo.App.W.D.2009).The Foundation was originally incorporated in 1946.In its 1994 charter, the Foundation was established as a charitable corporation under Chapter 352 of the Revised Statutes of Missouri, to support the mission of Missouri Baptists by “developing, managing and distributing financial resources ... as the trust services agency of the Missouri Baptist Convention.”

Consistent with its declaration that the Foundation was to serve as “the trust services agency of the Missouri Baptist Convention,” the 1994 charter recognized the close relationship between the Foundation and the Convention by giving the Convention and its Executive Board numerous specific rights.The charter established a twelve-member Board of Trustees, and specified that Trustees were to be “nominated and elected in accordance with the procedures and practices of the Nominating Committee of the Missouri Baptist Convention.”The 1994 charter required the Foundation to make quarterly reports to the Executive Board.The charter gave the Foundation the authority to receive charitable gifts and property, but did not authorize the Foundation to encumber property, or to distribute undesignated funds, without prior approval of the Executive Board.The charter also provided that, if the Foundation dissolved, its net assets after payment of liabilities would be distributed to the Executive Board.

In the primary provision at issue here, the Foundation's 1994 charter stated that it could be amended

in any manner consistent with the purposes of the Foundation as described in Article IV(A) herein, upon receiving the vote of a majority of the Trustees in office, by submitting any such amendment to the Executive Board of the Missouri Baptist Convention for its recommendation of approval to the Missouri Baptist Convention and, upon receiving the approval of the Missouri Baptist Convention of such amendment, by the President, the Secretary and the Treasurer of the Foundation submitting a petition to the Circuit Court of Cole County, Missouri, praying for a pro forma decree thereon.

We refer to this provision as the “consent provision.”

The Convention originally filed this lawsuit in 2002.The Convention's current operative pleading is its Fifth Amended Petition, filed in September 2006.The Fifth Amended Petition asserted claims against five defendants: the Foundation; the Baptist Home; Missouri Baptist University; Windermere Baptist Conference Center; and Word and Way, a newspaper.³The petition began by explaining:

This case involves the fundamental right of a religious denomination to maintain authority over its subordinate ministry corporations by reserving the rights to elect trustees and to approve charter amendments.The Plaintiffs seek declaratory and injunctive relief under Mo.Rev.Stat. § 478.070 to enforce these rights.The Plaintiffs seek a declaration that the dishonest and deceptive breakaway of five subsidiary corporations, with ministry assets totaling about a quarter of a billion dollars, violated contract promises, statutory rights and other duties owed to the Missouri Baptist Convention (the “Convention”).

The Convention asserted claims against the Foundation in Counts VII, VIII, and IX of the Fifth Amended Petition.⁴The Convention's claims against the Foundation challenged amendments made to the Foundation's organizational documents in 2001.The amendments were adopted without approval of the Convention or its Executive Board, and had the effect of eliminating the Convention's and Executive Board's oversight and approval rights under the 1994 charter.Count VII sought a declaratory judgment, Count VIII sought “rescission and restitution,” and Count IX sought a declaration that the statutes under which the Foundation obtained ex partecircuit court approval of the 2001amendments were unconstitutional.

The circumstances giving rise to the Convention's claims against the Foundation are as follows.The Foundation filed an ex parte petition in the circuit court on October 1, 2001, seeking court approval of Articles of Acceptance changing the Foundation's status from a Religious and Charitable Association under Chapter 352 of the Revised Statutes, to a Chapter 355 Nonprofit Corporation(hereinafter “First 2001Amendment”).See§§ 352.070,355.020.1(2), RSMo.The Foundation submitted the First 2001Amendment to the circuit court without prior approval of the Convention or its Executive Board.By converting to a nonprofit corporation under Chapter 355, the Foundation would cease to be governed by Chapter 352, and would no longer be subject to court supervision.

The circuit court issued the requested decree approving the First 2001Amendment.The Foundation thereafter filed Articles of Acceptance with the Secretary of State, and on October 9, 2001, the Secretary of State accepted the Foundation as a Missouri Nonprofit Corporation subject to Chapter 355.See§ 355.020.2, RSMo.The First 2001Amendment retained the substantive rights of the Convention expressed in the 1994 Charter, including the consent provision.

On the following day (October 10, 2001), the Foundation filed amended articles of incorporation with the Secretary of State (the “Second 2001Amendment”).The Second 2001Amendment eliminated the consent provision, and also eliminated the Convention's and the Executive Board's rights: to control the appointment and removal of the Foundation's Trustees; to receive quarterly reports; to receive the Foundation's net assets in the event of the Foundation's dissolution; and to approve the encumbrance of the Foundation's property and the distribution of undesignated funds.The Second 2001Amendment provided that the Foundation's Board of Trustees would be “self-perpetuating.”Neither the Convention nor its Executive Board were given the opportunity to review or approve of the Second 2001Amendment prior to its adoption.At its October 2001 annual meeting, the Convention formally disapproved of the Second 2001Amendment.Although the Convention requested that the Foundation rescind the Second 2001Amendment, the Foundation refused to do so.

In Count VII, the Convention claimed, inter alia, that the 2001Amendments violated the terms of the Foundation's governing documents, the terms of the statutes governing the Foundation's operations, and the Convention's contractual rights (or its rights as an intended third-party beneficiary) under the 1994 charter.Count VII also alleged that the 2001Amendments were procured by fraud on the circuit...