Korean New Life Methodist Church v. Korean Methodist Church of the Ams.
| Decision Date | 06 February 2020 |
| Docket Number | Court of Appeals No. 18CA1149 |
| Citation | 474 P.3d 143 |
| Parties | KOREAN NEW LIFE METHODIST CHURCH, a Colorado non-profit corporation, Plaintiff-Appellee, v. KOREAN METHODIST CHURCH OF THE AMERICAS, a California non-profit corporation, and Jin Hi Cha, Defendants-Appellants. |
| Court | Colorado Court of Appeals |
Mulliken Weiner Berg & Jolivet P.C., Murray I. Weiner, Hilary A. Roland, Colorado Springs, Colorado; Weeks & Luchetta, LLP, Jeffrey L. Weeks, Colorado Springs, Colorado, for Plaintiff-Appellee
Nussbaum Speir PLLC, Ian Speir, Colorado Springs, Colorado, for Defendants-Appellants
Opinion by JUDGE FREYRE
¶ 1 The First and Fourteenth Amendments to the United States Constitution preclude civil courts from resolving religious disputes involving religious law and decisions of ecclesiastical tribunals, including disputes involving church governance (polity approach). See Serbian E. Orthodox Diocese v. Milivojevich , 426 U.S. 696, 708-09, 96 S.Ct. 2372, 49 L.Ed.2d 151 (1976). But when a dispute involves the ownership and control of church property, our supreme court both permits and requires civil courts to apply neutral principles of law in resolving them (neutral principles approach). See Bishop & Diocese of Colo. v. Mote , 716 P.2d 85, 96 (Colo. 1986). This approach includes inquiring into whether the local church has submitted to the authority of a national denomination. See id. at 100.
¶ 2 No Colorado court, however, has decided the questions presented here — whether the local church actually surrendered its control and submitted to the authority of the national denomination, and whether the polity or neutral principles approach should be used to answer this question. This dispute between the local church, plaintiff, Korean New Life Methodist Church, and the national denomination, defendants, Korean Methodist Church of the Americas and Pastor Jin Hi Cha, arose from the denomination's attempt to retitle church property from the local church's to the denomination's name, contrary to the local church's articles of incorporation, bylaws, and board resolutions.
¶ 3 We hold, consistent with Mote , that the submission to authority question is one arising from the local church's organization and that neutral principles of general corporate law must be applied to resolve it. Id . at 99. Therefore, we discern no legal error in the district court's decision to apply neutral principles. As well, we discern no clear error in the district court's application of neutral principles to the evidence or in its finding that the local church never ceded control or submitted to the denomination's authority. Accordingly, we affirm the judgment.
¶ 4 In 1996, the local church began as a prayer group in the home of founder Mr. Jong Kim. In February 1997, Mr. Kim incorporated the prayer group as a nonprofit corporation named the Korean New Life Church. The articles of incorporation named six people to serve as the initial board of directors. As relevant here, Paragraph 4 of the articles of incorporation, the dissolution paragraph, provided that upon any dissolution, the board of directors should distribute the church's assets to nonprofit charitable corporations, municipal corporations, or corporations for "the purposes of carrying on nonprofit charitable purposes."
¶ 5 Several months later, the board of directors passed a resolution stating that the church "shall join the Korean Methodist Church." The resolution also changed the local church's name from Korean New Life Church to Korean New Life Methodist Church. The church filed this name change with the Colorado Secretary of State.
¶ 6 The Korean Methodist Church (KMC) is a denomination based in Seoul, South Korea. A geographic subdivision of the denomination is the Korean Methodist Church of the Americas (KMCA). The parties dispute whether the KMCA is part of the KMC. The district court concluded that it need not resolve this dispute to decide the submission question. For purposes of our analysis, we presume that the KMCA is a geographic subdivision of the KMC, and we refer to the entities collectively as "the denomination."
¶ 7 The denomination is governed by rules provided in "The Doctrines, Book of Discipline and Rules of the Korea [sic] Methodist Church (2012)" (denomination rules). Among other things, the denomination rules set forth the requirements for church membership, church property registration with the denomination, dues payments, mortgaging or selling local church property (which requires denomination permission and approval), selecting a church pastor, and general administrative control of the local church by the pastor.
¶ 8 The denomination rules also define offenses, disciplinary procedures, and church hierarchy. The rules group local churches into districts, which are supervised and controlled by a district superintendent. They also give the district superintendent the authority to terminate a local church's pastor.
¶ 9 As a nonprofit organization organized under Colorado law, the local church board enacted bylaws to govern the church's administration and activities.1 The bylaws provide for a "church board" comprising the pastor, the assistant pastor, elders, and selected deacons. The bylaws contain no reference to the denomination or the denomination rules, but they provide the district superintendent with "approval" authority over the board's selection of a pastor. The bylaws are silent about the circumstances under which a pastor may be terminated.
¶ 10 The local church never amended its articles of incorporation to reflect the local church's new name, nor do the articles reference the denomination or its rules.
¶ 11 After changing its name, the local church never "registered" its property with the denomination.2 Eventually, the local church sold its original property and purchased new property without the denomination's permission or approval. As well, the deeds conveying the property never mentioned the denomination, and the property was titled in the name of the local church. The local church later mortgaged the church property without receiving permission or approval from the denomination, and two board members signed as guarantors of the loan.
¶ 12 Additionally, the local church made nominal annual payments to the denomination to support the overall church mission, and the board passed resolutions placing the local church's financial decisions squarely under its control, contrary to the denomination rules. As well, in December 2015, the board authorized two board members to sign on the church's bank accounts, and indicated that the "[p]astor will not be authorized to remove[ ] or add singers [sic]."3
¶ 13 Pastor Cha began working at the local church in 2014. In March 2018, a conflict with the board arose when he attempted to register the local church's property with the denomination and when he attempted to take control of the church's finances, contrary to the board's resolutions. The church board complained to the district superintendent about Pastor Cha's conduct, but the district superintendent concluded that the accusations were not supported by "admissible evidence."4 In response to the board's continued protests, the district superintendent, acting on behalf of the denomination, fired the board members and authorized Pastor Cha to install a new church board under the denomination's authority.5
¶ 14 In response, the old board resisted and passed resolutions terminating Pastor Cha and disassociating from the "Korean Methodist Church in the United States." It then filed this declaratory judgment and injunctive relief action asking the district court to declare that the old board was the lawful church board in control of the local church, including church property and church finances. The old board also requested injunctive relief to preserve the status quo and to bar Pastor Cha from the church property.
¶ 15 The parties eventually stipulated to a temporary restraining order to preserve the status quo, and the court entered the order in April 2018. This order established a sharing arrangement between the congregation members loyal to Pastor Cha, and the denomination and congregation members loyal to the old church board.
¶ 16 The district court conducted a preliminary injunction hearing in May 2018 and received briefing on whether to follow the polity approach or the neutral principles approach. It heard conflicting testimony about whether the local church had submitted to the authority of the denomination. The founder and an original board member, Mr. Kim, testified that the local church always intended to manage its own affairs and had never submitted to the denomination's authority. He testified that he drafted the articles of incorporation and filed them with the secretary of state, and that he had never seen the denomination rules and was unfamiliar with them. He explained that the intent of the resolution changing the church's name was to support the mission of the Korean Methodist Church in South Korea, not to submit to its authority. And, he described the church's annual payment to the church in South Korea as charitable support of the church's mission, not a dues payment to the denomination.
¶ 17 In contrast, Mr. Ryhu, another original board member, testified that the intent of the resolution changing the church's name was to join the Korean Methodist Church in Seoul and that the KMCA later became a subdivision of the KMC. He recognized the authority of the denomination and said that the local church paid annual dues to the denomination, let the district superintendent approve the selection of a pastor, and sometimes posted notices on the denomination's stationery.
¶ 18 The court also received documentary evidence, including the church's articles of incorporation, bylaws, resolutions, board minutes, real estate documents, and the denomination rules. It then issued a comprehensive oral order granting injunctive relief to the...
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