Presbytery of Ohio Valley, Inc. v. OPC, Inc.

• Decision Date: 23 October 2012
• Docket Number: No. 82S02–1105–MF–314.,82S02–1105–MF–314.
• Citation: 973 N.E.2d 1099
• Parties: The PRESBYTERY OF OHIO VALLEY, INC., d/b/a The Presbytery of Ohio Valley, d/b/a Ohio Valley Presbytery, and The Synod of Lincoln Trails of the Presbyterian Church (U.S.A.), Inc., d/b/a The Synod of Lincoln Trails, Inc., Appellants (Plaintiffs below), v. OPC, INC., f/k/a Olivet Presbyterian Church, Inc., d/b/a Olivet Presbyterian Church, d/b/a Olivet Evangelical Presbyterian Church, d/b/a Olivet Presbyterian Church of Evansville, and Olivet Evangelical Presbyterian Church of Evansville, Inc., and The Evangelical Presbyterian Church, d/b/a Evangelical Presbyterian Church of America, Appellees (Defendants below).
• Court: Indiana Supreme Court

973 N.E.2d 1099

The PRESBYTERY OF OHIO VALLEY, INC., d/b/a The Presbytery of Ohio Valley, d/b/a Ohio Valley Presbytery, and The Synod of Lincoln Trails of the Presbyterian Church (U.S.A.), Inc., d/b/a The Synod of Lincoln Trails, Inc., Appellants (Plaintiffs below),

v.OPC, INC., f/k/a Olivet Presbyterian Church, Inc., d/b/a Olivet Presbyterian Church, d/b/a Olivet Evangelical Presbyterian Church, d/b/a Olivet Presbyterian Church of Evansville, and Olivet Evangelical Presbyterian Church of Evansville, Inc., and The Evangelical Presbyterian Church, d/b/a Evangelical Presbyterian Church of America, Appellees (Defendants below).

No. 82S02–1105–MF–314.

Supreme Court of Indiana.

July 31, 2012.

Rehearing Denied Oct. 23, 2012.

Judy L. Woods, Bose, McKinney & Evans, LLP, Indianapolis, IN, Ross E. Rudolph, Rudolph, Fine, Porter, & Johnson, LLP, Evansville, IN, Attorneys for Appellants.

Brian P. Williams, Kahn, Dees, Donovan, & Kahn, LLP, Evansville, IN, Attorney for Appellee.

John C. Duffey, Stuart & Branigin, LLP, Lafayette, IN, Attorney for Amicus Curiae American Anglican Council.

David E. Gray, Paul E. Black, Bowers Harrison, LLP, Evansville, IN, Forrest Norman, Cleveland, OH, Attorneys for Amicus Curiae Presbyterian Lay Committee.

On Transfer from the Indiana Court of Appeals, No. 82A02–1003–MF–339

DICKSON, Chief Justice.

This case involves a property dispute between an individual church congregation, the Olivet Presbyterian Church (“Olivet”),¹ and the denominational organization with which it was previously affiliated, the Presbyterian Church (U.S.A.) (“PC(USA)”), and the latter's subsidiary organizations, the plaintiffs in this action—the Presbytery of Ohio Valley and the Synod of Lincoln Trails of the Presbyterian Church (U.S.A.), Inc. (collectively, “Presbytery”).² The trial court granted summary judgment rejecting the Presbytery's claims of express and implied trust and holding that the disputed property is solely owned by Olivet. The Presbytery appealed both the denial of its motion for summary judgment and the granting of Olivet's motion. The Court of Appeals reversed the trial court and granted summary judgment in favor of the Presbytery. Presbytery of Ohio Valley, Inc. v. OPC, Inc., 940 N.E.2d 1188, 1197 (Ind.Ct.App.2010). We granted transfer, thereby vacating the opinion of the Court of Appeals. Ind.App. R. 58(A)(2). We hold that genuine issues of material fact arise from the inferences flowing from the stipulated designated evidence and that neither Olivet nor the Presbytery is entitled to the full relief sought in their respective motions for summary judgment.

Olivet, formerly the Olivet Presbyterian Church of Evansville and the Olive Street Presbyterian Church, was affiliated in 1900 with an ancestor of the current PC(USA), which was not formed until the early 1980s when the United Presbyterian Church in the U.S.A. combined with the Presbyterian Church of the United States to become the PC(USA).³ In 1968, Olivet acquired the real estate and built its church building using its own resources. Beginning at least as far back as 1994, the Olivet congregation began to have doctrinal disputes with the PC(USA), “including disputes about church policies and positions on abortion, ordination, Christology and theology.” Stipulated Statement of Facts ¶ 50 [hereinafter Stip. Facts]. Olivet in 2006 (with a 98% approval vote of its congregation) decided to disassociate from the PC(USA) when the General Assembly of the PC(USA) was considering substantial alterations to its denominational policy and religious doctrine, among them: “1) the deity of Christ, 2) the essentials of salvation, and 3) the Bible as the infallible word of God.” Stipulated Documentary R. 48 [hereinafter Stip. Ex.]. In response, the PC(USA), through its Presbytery, offered to “release” Olivet from membership in the PC(USA) on condition that, while negotiations continue regarding “the issue of the disposition of the church and its real property,” Olivet must agree to treat the building as leased from the Presbytery for eight months and pay $1.00 as lease consideration and, if a settlement is not agreed, then for up to one more year “at the current market value for such space in Evansville, Indiana.” Stip. Ex. 61. Olivet did not accept this proposal.

When Olivet declined to relinquish ownership of its church property, the Presbytery filed this action claiming a trust on Olivet's property in favor of the PC(USA) and seeking a declaratory judgment divesting Olivet from all right, title, and interest in its property. As explained by the trial court, the “PC(USA) seeks through this litigation to take control of the building and real property at 5600 Oak Hill Road as well as the congregation bank accounts and any other property.” Entry of Final Judgment with Findings of Fact and Conclusions of Law, Appellants' App'x at 13–14.⁴ The trial court, faced with competing motions for summary judgment, determined that the property belonged exclusively to Olivet; that the Presbytery, its associated plaintiff, and the PC(USA) had no rights in the property; that the property was not held in trust—expressly, impliedly, or constructively—in favor of the PC(USA) or its associated entities, the plaintiffs; and that Olivet had not been unjustly enriched nor had it converted property belonging to the PC(USA) or the plaintiffs. The Presbytery instituted this appeal requesting both the entry of summary judgment in its favor and reversal of the trial court's judgment for Olivet. Additional facts will be provided as needed.

1. Neutral Principles of Law

As a general matter, it is clear that Indiana courts have subject-matter jurisdiction over Indiana church-property disputes. Ramsey v. Hicks, 174 Ind. 428, 431, 91 N.E. 344, 346 (1910); see also Jones v. Wolf, 443 U.S. 595, 602, 99 S.Ct. 3020, 3024–25, 61 L.Ed.2d 775, 783–84 (1979) (“There can be little doubt about the general authority of civil courts to resolve [church property] question[s]. The State has an obvious and legitimate interest in the peaceful resolution of property disputes, and in providing a civil forum where the ownership of church property can be determined conclusively.”). However, “ ‘the First Amendment severely circumscribes the role that civil courts may play in resolving church property disputes' ” and “prohibit[s] civil courts from resolving church property disputes on the basis of religious doctrine and practice.” Jones, 443 U.S. at 602, 99 S.Ct. at 3025, 61 L.Ed.2d at 784 (quoting Presbyterian Church in the U.S. v. Mary Elizabeth Blue Hull Mem'l Presbyterian Church, 393 U.S. 440, 449, 89 S.Ct. 601, 606, 21 L.Ed.2d 658, 665 (1969) [hereinafter Hull ] ). The U.S. Supreme Court has declined to adopt a “particular method” for states to follow in resolving church property disputes. Id. Rather, “a State may adopt any one of various approaches for settling church property disputes so long as it involves no consideration of doctrinal matters, whether the ritual and liturgy of worship or the tenets of faith.” Id. (quoting Md. & Va. Eldership of the Churches of God v. Church of God at Sharpsburg, Inc., 396 U.S. 367, 368, 90 S.Ct. 499, 500, 24 L.Ed.2d 582, 584 (1970) [hereinafter Sharpsburg II ] (Brennan, J., concurring)) (internal quotation marks omitted).

The parties dispute which method Indiana courts should apply in such cases. The Presbytery contends that the “preferred” approach is the polity approach (also termed the “hierarchical deference rule”) enunciated by the Supreme Court in Watson v. Jones, 80 U.S. (13 Wall.) 679, 20 L.Ed. 666 (1871). Appellants' Br. at 13–15. Olivet contends that the better method is the neutral-principles-of-law approach which was approved by the Supreme Court in Jones v. Wolf, 443 U.S. at 602–04, 99 S.Ct. at 3025–26, 61 L.Ed.2d at 784–85. We agree with Olivet.

The polity approach was developed by the Supreme Court to settle a property dispute resulting from a schism in a local church. See Watson, 80 U.S. (13 Wall.) at 726–27, 20 L.Ed. at 676. Rejecting the “English” rule, which required inquiry into the “true standard of faith in the church organization” and then into which schismatic faction was most loyal to that standard, the Court determined that “whenever the questions of discipline, or of faith, or ecclesiastical rule, custom, or law have been decided by the highest ... church judicatories ..., the legal tribunals must accept such decisions as final, and as binding on them, in their application to the case before them.” Id. at 727, 20 L.Ed. at 676. The polity approach first inquires into the organizational structure of the denomination and, if found to be “hierarchical,” ⁵ requires the civil courts to defer to the determination of the denominational church organization. Id. This amounts to a “rule of compulsory deference to religious authority in resolving church property disputes.” Jones, 443 U.S. at 605, 99 S.Ct. at 3026, 61 L.Ed.2d at 786 (responding to the dissenters contention that states should be required to apply Watson in all cases). As the Court noted in Jones, in some instances “this task would not prove to be difficult,” but in others such a determination “would appear to require ‘a searching and therefore impermissible inquiry into church polity.’ ” Id. (quoting Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696, 723, 96 S.Ct. 2372, 2387, 49 L.Ed.2d 151, 170). This may be especially true where, as here, the parties dispute the structural form of the denominational church organization. Moreover, the polity approach cannot be applied to all church-property cases, for instance, where the organizational structure of the denomination is “connectional” or “congregational” ⁶ resort must be made to “the ordinary principles which govern voluntary associations.” Watson, 80 U.S. (13 Wall.) at 725, 20 L.Ed. at 675. This would result in two rules, one for “hierarchical” churches (polity approach) and another for all other churches (“ordinary...