St. Sava Mission Corp. v. Serbian Eastern Orthodox Diocese

Decision Date19 September 1990
Docket NumberNo. C003665,C003665
Citation273 Cal.Rptr. 340,223 Cal.App.3d 1354
CourtCalifornia Court of Appeals Court of Appeals
PartiesST. SAVA MISSION CORPORATION, Plaintiff and Appellant, v. SERBIAN EASTERN ORTHODOX DIOCESE FOR THE UNITED STATES OF AMERICA AND CANADA et al., Defendants and Respondents.

Fitzgerald, Abbott & Beardsley, Richard T. White, and Michael P. Walsh, Oakland, for plaintiff and appellant.

McDonough, Holland & Allen, Michael T. Fogarty, Sacramento, Jenner & Block, Albert E. Jenner, Jr., Robert L. Graham, Katz, Karacic & Helmin, and Thomas J. Karacic, Chicago, Ill., for defendants and respondents.

SIMS, Associate Justice.

In this case, we consider a dispute that has its origins in a schism in the Serbian Eastern Orthodox Church in America--a schism that made its way to the Supreme Court of the United States. (See Serbian Orthodox Diocese v. Milivojevich (1976) 426 U.S. 696, 96 S.Ct. 2372, 49 L.Ed.2d 151.)

At all relevant times St. Sava Mission Corporation ("St. Sava"), plaintiff below, has been the record owner of 173 acres of property located in Jackson, California ("the Jackson property"). Defendant Serbian Eastern Orthodox Diocese for the United States of America and Canada ("Diocese") contends it is the beneficial owner of the property and St. Sava holds title in trust for the Diocese. St. Sava disputes this claim and contends it owns the property independent of the Diocese.

The trial court granted summary judgment in favor of the Diocese. The trial court ruled an earlier judgment of an Illinois state court had concluded St. Sava held title to the Jackson property in trust for the Diocese. The trial court reasoned that, even though St. Sava was never a party to the Illinois proceedings, the Illinois judgment was entitled to full faith and credit in California and principles of res judicata barred St. Sava's claims. St. Sava appealed.

We conclude that, under Illinois law, the Illinois judgment cannot bind St. Sava unless it is shown St. Sava's interest was actually and efficiently represented by a party to the proceedings. We further conclude the record reflects a factual dispute with respect to whether St. Sava's interest was so represented. Because the record tenders a factual dispute respecting the validity of the Illinois judgment (and consequently whether it is entitled to full faith and credit in California), we will reverse the summary judgment.

FACTUAL AND PROCEDURAL BACKGROUND

The current litigation is only the latest action in a string of court battles dating back to the early 1960s, stemming from an internecine dispute within the Serbian Eastern Orthodox Church in America. In order to clarify the setting of the current lawsuit we first recount as briefly as possible the essential facts of the prior litigation.

1. The Illinois Litigation

The Serbian Eastern Orthodox Church ("Mother Church") is a worldwide church organized on hierarchical principles, whose Patriarchal See is located in Belgrade, Yugoslavia. Its ruling body is known as the Holy Assembly of Bishops.

From the time the Mother Church established itself in America until 1963, its supreme religious and administrative body Dionisije's predecessor as head of the Diocese organized an Illinois religious corporation bearing the same name as the Diocese, pursuant to the Illinois Religious Corporation Act (Ill.Rev.Stat. ch. 32, para. 164 et seq. (1990)), for the purpose of holding title to certain diocesan property located in Illinois. Thereafter an Illinois not-for-profit corporation was formed, also under the Illinois Religious Corporation Act, and title to the Illinois property was transferred to that corporation. The Diocese later formed similar secular corporations to hold title to properties in other states. St. Sava, like the Illinois not-for-profit corporation, received its title by transfer from the Illinois religious corporation. The parties to this litigation dispute whether St. Sava was formed and later existed to hold title to diocesan property in trust for the Diocese.

in this country was the Diocese. The religious and administrative head of the Diocese from 1939 to 1963 was Bishop Dionisije Milivojevich ("Dionisije"). In his capacity as Bishop, Dionisije administered all properties belonging to the Diocese and served as chief executive officer of its corporations.

In 1963 the Holy Assembly of Bishops suspended Dionisije from office and reorganized the Diocese into three new dioceses. Subsequently it defrocked him, removed him from office, and appointed new bishops to succeed him.

Also in 1963, Dionisije caused a lawsuit to be filed in Illinois state court in the name of the two Illinois corporations against his appointed successor, Bishop Firmilian Ocokoljich ("Firmilian"), contending the actions of the Holy Assembly violated the constitution and laws of the Mother Church. The suit sought a declaration that Dionisije remained the rightful Bishop of the Diocese and an injunction against any interference with his control of diocesan property.

The Diocese and Firmilian also filed a lawsuit against Dionisije, the two Illinois corporations, and numerous clerical and lay supporters of Dionisije. The relief sought in the suit included control of all diocesan property. The two rival lawsuits were consolidated.

St. Sava was not named as a party nor served with process in the Illinois litigation, nor did it make an appearance. Various members of St. Sava's board of directors--including Dionisije and his chief deputy, Bishop Irinej Kovacevich ("Irinej")--were originally named defendants in Firmilian's suit, but the captions of the pleadings did not designate them in their corporate capacities. Moreover, all but Dionisije were dismissed from the action at an early stage.

In the course of the Illinois litigation Dionisije identified three parcels of real property as diocesan property subject to the court's disposition. One of these parcels was the Jackson property. As of 1962 (before the Illinois litigation began), title to this property was held by St. Sava.

The Illinois trial court granted summary judgment to Dionisije. The Appellate Court of Illinois reversed and remanded for trial (Serbian Eastern Orthodox Diocese v. Ocokoljich (1966) 72 Ill.App.2d 444, 219 N.E.2d 343). On remand, the trial court held in 1973 that Dionisije's defrockment and removal from office were legal and that all diocesan properties were held in trust for the members of the Diocese. Dionisije appealed the trial court's finding as to his defrockment and removal, but not its finding as to the manner in which title to diocesan property was held. The Illinois Supreme Court reversed, concluding the proceedings against Dionisije were illegal under Church law (Serbian Eastern Orth. Diocese, etc. v. Milivojevich (1975) 60 Ill.2d 477, 328 N.E.2d 268). The United States Supreme Court granted certiorari. ((1975) 423 U.S. 911, 96 S.Ct. 213, 46 L.Ed.2d 139.)

Before the United States Supreme Court, Dionisije stated: "This litigation concerns the control of extensive property interests of the American-Canadian Diocese of the Serbian Orthodox Church." He specifically named the Jackson property as one of "three large religious-cultural centers" owned by the Diocese and alleged that he and his followers had "been in control and possession of the property since its acquisition."

The United States Supreme Court reversed the Illinois Supreme Court on the ground it had contravened the First and Fourteenth Amendments by improperly inquiring into matters of ecclesiastical cognizance and polity and impermissibly interfering with decisions of the highest authority of a hierarchical church. (Serbian Orthodox Diocese v. Milivojevich, supra, 426 U.S. 696, 96 S.Ct. 2372, 49 L.Ed.2d 151.) Notwithstanding that the resolution of the dispute determined the control of church property, the Court held that the dispute was religious in nature and that the civil courts must defer to the Holy Assembly's decision. (Ibid.)

On remand, the Illinois trial court in 1978 entered a "Final Judgment" in accordance with the holding of the United States Supreme Court. As pertinent here, the court found and ordered:

(1) The real property in California to which St. Sava held title was impressed with a trust in favor of the Diocese;

(2) St. Sava is a secular arm of the Diocese;

(3) Pending reorganization of the old Diocese into three new Dioceses, Bishop Firmilian was entitled to hold in trust and administer the diocesan properties, including the property held by St. Sava;

(4) Dionisije and all persons and corporations acting with him or under his direction were ordered to turn over control and management of all diocesan property to Firmilian.

Dionisije appealed to the Illinois Supreme Court. Here he contended that the trial court exceeded its jurisdiction by requiring St. Sava to turn over its assets to the plaintiffs even though it had not been served with process, named as a party, or appeared in the suit. In addition, he contended for the first time that the Jackson property was not actually diocesan property but was controlled individually by the members of St. Sava. The court rejected these arguments and affirmed the final judgment. (Serbian Eastern Orthodox Diocese v. Milivojevich (1979) 74 Ill.2d 574, 25 Ill.Dec. 629, 387 N.E.2d 285.)

As to Dionisije's contention that the final judgment improperly required St. Sava to turn over its assets to the plaintiffs, the court noted: "The ordering portion of the [final judgment] does not in terms direct ... the California ... corporation to turn over assets to the [Diocese]. [p] ... The [Diocese's] second amended and supplemental complaint does not seek relief against the foreign corporations, and we do not consider that the ordering portion of the judgment is intended to require action on their part." (Serbian...

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