FAMILY FEDERATION FOR WORLD PEACE AND UNIFICATION INTERNATIONAL v. HYUN JIN MOON , 129 A.3d 234 ( 2015 )

District of Columbia
Court of Appeals
No. 14-CV-0094 DEC 24 2015
FAMILY FEDERATION FOR WORLD PEACE AND
UNIFICATION INTERNATIONAL, et al.
Appellants and Cross-Appellees,
v. CAB-3721-11
HYUN JIN MOON, et al.,
Appellees and Cross-Appellants.
On Appeal from the Superior Court of the District of Columbia
Civil Division
BEFORE: Glickman and Blackburne-Rigsby, Associate Judges; and Steadman,
Senior Judge..
JUDGMENT
This case came to be heard on the transcript of record, the briefs filed, and
was argued by counsel. On consideration whereof, and as set forth in the opinion filed
this date, it is now hereby
ORDERED and ADJUDGED that the order of the trial court, denying
defendants’ motion to dismiss, is affirmed; the order of the trial court, granting
defendants’ motion for judgment on the pleadings, is reversed; and the case is remanded
for further proceedings consistent with this opinion.
For the Court:
Dated: December 24, 2015.
Opinion by Senior Judge John Steadman.
Notice: This opinion is subject to formal revision before publication in the
Atlantic and Maryland Reporters. Users are requested to notify the Clerk of the
Court of any formal errors so that corrections may be made before the bound
volumes go to press.
DISTRICT OF COLUMBIA COURT OF APPEALS
No. 14-CV-94
FAMILY FEDERATION FOR WORLD PEACE AND UNIFICATION INTERNATIONAL, ET AL.,
APPELLANTS AND CROSS-APPELLEES,
v.
HYUN JIN MOON, ET AL., APPELLEES AND CROSS-APPELLANTS.
Appeals from the Superior Court
of the District of Columbia
(CAB-3721-11)
(Hon. Natalie M. Combs Greene, Motions Judge)
(Hon. Anita Josey-Herring, Trial Judge)
(Argued March 10, 2015 Decided December 24, 2015)
Alan I. Horowitz, with whom James A. Bensfield, Emmett B. Lewis, Brian A.
Hill, John C. Eustice, Benjamin P. De Sena, Thomas C. Green, Frank R. Volpe,
George W. Jones Jr., W. Gary Kohlman, Jeffrey R. Freund, Ramya Ravindran, and
Philip C. Andonian, were on the brief, for appellants/cross-appellees.
David A. Reiser, with whom Steven M. Salky, Blair G. Brown, Caroline E.
Reynolds, Amit P. Mehta, Adam B. Abelson, Keisha N. Stanford, Peter J.
Romatowski, Adrian Wager-Zito, Shay Dvoretzky, Yaakov Roth, and Francis D.
Carter, were on the brief, for appellees/cross-appellants.
Before GLICKMAN and BLACKBURNE-RIGSBY, Associate Judges, and
STEADMAN, Senior Judge.
2
STEADMAN, Senior Judge: Before us is a dispute over legal control of a
District of Columbia nonprofit corporation, originally named the Unification
Church International (“UCI”),1 established in 1977 under the auspices of the
Reverend Sun Myung Moon, founder of the Unification Church. UCI has received
very substantial contributions in the past from entities under the greater Unification
Church umbrella and manages millions of dollars in assets. Succinctly put,
plaintiffs’ complaint involves allegations that defendants undertook a series of
coordinated and calculated illegal actions to usurp UCI and its corporate assets and
wrest control of UCI from the Unification Church.2
On direct appeal, plaintiffs appeal the trial court’s grant of the defendants’
motion for a judgment on the pleadings for lack of subject-matter jurisdiction.3
The judgment was based on the trial court’s view that the dispute could not be
1
In 2010, the corporation’s Articles of Incorporation were amended to
change the name from “Unification Church International” to “UCI.” The
motivation behind the corporation’s decision to amend its Articles is in dispute.
For simplicity, we refer to the entity as UCI throughout this opinion.
2
The plaintiffs in this action are two ousted former directors of UCI and
three entities with close interests in the operation of UCI, all as explained in more
detail in part I (B) infra. The defendants are UCI itself and its five current
directors.
3
As part of its order, the trial court dismissed the complaint with prejudice,
subject to the completion of certain collateral matters.
3
decided without the court’s venturing into religious questions forbidden by the
First Amendment. On cross-appeal by the defendants is an earlier order by the trial
court refusing to dismiss the complaint on the asserted grounds of lack of personal
jurisdiction, lack of standing, and failure to state a cause of action.
On the direct appeal, we conclude that the grant of judgment on the
pleadings prematurely resolved the constitutional issue. On the cross-appeal, we
affirm the order of the trial court.
I. UCI and Plaintiffs’ Allegations4
A. The Founding of UCI
In a broad sense, the current dispute stems from the founding by Reverend
Moon of the Holy Spirit Association for the Unification of World Christianity (the
“Unification Church”), in Seoul, South Korea, in 1954. In 1971, Reverend Moon
moved from South Korea to the United States to expand the Unification Church’s
4
We here set forth the facts as alleged in the complaint. The defendants
filed a counterclaim with a markedly different view of events. This counterclaim
was eventually dismissed, creating finality for the instant appeals.
4
activities around the globe. Two years later, in 1975, Reverend Moon directed his
close associate, Dr. Bo Hi Pak, to “open a bank account with Diplomat National
Bank in the District of Columbia in the name of Unification Church International.”
The first sum deposited in the account came from an account in Reverend Moon’s
name, and additional funds were contributed by various other Unification Church
entities. Reverend Moon “directed Dr. Pak to hold the funds in the [UCI] bank
account in trust solely for the benefit and support of the Unification Church and its
related activities.” As a key assertion, plaintiffs argue that Reverend Moon’s
statements and actions demonstrate the intent to create an oral, charitable trust with
Dr. Pak serving as the trust’s first trustee (“UCI Trust”).
By 1977, approximately $7,000,000 had been donated and was held in the
UCI bank account. Reverend Moon then directed Dr. Pak to establish a District of
Columbia nonprofit corporation to implement the UCI Trust and carry out its
purpose. Thus, UCI came into being in that year. Dr. Pak changed the UCI
Trust’s bank account to reflect that the donated funds would be held by UCI, as
opposed to the trust itself. Reverend Moon intended for this corporation to
“implement the purposes of the trust and for the Directors of the Corporation to
serve as trustees and ensure that the Corporation and its assets would be
administered for the benefit of the Unification Church.”
5
The original February 1977 Articles of Incorporation are alleged to “reflect[]
the purposes” of the corporation and “evidence” Reverend Moon’s intent.
Specifically, Article 3, Section 2 of the Articles of Incorporation stated that the
UCI will “serve as an international organization assisting, advising, coordinating,
and guiding the activities of Unification Churches organized and operated
throughout the world.” Furthermore, Section 3 stated that the UCI will “promote
the worship of God, and to study, understand and teach the Divine Principle, the
new revelation of God, and, through the practical application of the Divine
Principle . . . achieve the interdenominational, interreligious, and international
unification of world Christianity and all other religions.” Additionally, Article 9
also stated that the Directors of UCI “recognize and acknowledge that the
Reverend Sun Myung Moon has provided the inspiration and spiritual leadership
for the founding of the Corporation and is the spiritual leader of the international
Unification Church movement.” Plaintiffs assert that the Divine Principle is the
theological textbook of the Church and contains the essential teachings of
Reverend Moon.
6
From 1977 to 2006, UCI operated without controversy.5 From 1977 through
1992, Dr. Pak, as the president of the corporation, managed the corporation’s
assets, to which various entities, notably one in Japan that is a plaintiff in this
action, donated “hundreds of millions of dollars” allegedly to be “held in trust” and
used for the Church’s endeavors. Both Dr. Pak and plaintiff Dr. Douglas D.M.
Joo, who served as President of UCI from 1992 to 2005, understood that the
corporation held its assets to fund the Church’s activities.
Things changed radically beginning in 2006, when Preston Moon,6 one of
Reverend Moon’s sons, became the new president of the UCI as well as one of the
five directors. Two years later, Reverend Moon appointed another son, Sean
Moon, as the next leader of the Church’s worldwide religious organization. This
appointment allegedly disappointed Preston Moon, who “resolved not to take
direction from his younger brother Sean Moon in matters relating to UCI,” and led
Preston Moon to take a series of actions to divest the Church of control over UCI
and divert the corporation from its alleged mission and intended purpose.
5
In 1980, UCI gave up its original tax-free status.
6
The named defendant is “Hyun Jin Moon (a/k/a Preston Moon).” The
complaint consistently refers to him as Preston Moon, and we follow that practice
here because the complaint is the focus of attention.
7
Plaintiffs’ challenge to those actions by Preston Moon and the other directors is the
subject of this law suit.
B. Plaintiffs’ Claims
Five plaintiffs are linked in this case. Three of them are entities related to
Reverend Moon’s original Unification Church. The first entity is the lead plaintiff,
Family Federation for World Peace and Unification International (“Family
Federation”) that is located in South Korea and is the current name for the religious
entity that directs the church’s activities worldwide and is now headed by Sean
Moon.7 The second entity is the Holy Spirit Association for the Unification of
World Christianity (Japan) (the “Japanese Church”), which is the “corporate
embodiment” of the Universal Church in Japan and was the primary donor of funds
to UCI for several decades. The third entity is the Universal Peace Federation, a
District of Columbia nonprofit corporation, which was a long-time major recipient
of funding from UCI prior to the takeover by Preston Moon. The other two
plaintiffs, Dr. Douglas D.M. Joo and Peter H. Kim, are individuals who were
7
As the trial court noted, when and how this succession occurred is not
clear from the record. When naming his son Sean Moon as the next leader of the
Church, Reverend Moon also named Sean Moon as the international president of
Family Federation. Reverend Moon himself died at the age of 92 on September 3,
2012.
8
directors of UCI until ousted by Preston Moon. Plaintiffs challenge virtually all of
the actions taken by Preston Moon and UCI since he gained control, summarized
as follows.8
Plaintiffs first challenge the actions taken to secure control of the
corporation’s Board of Directors. Under its by-laws, the corporation (which had
no members or stockholders) functioned under the supervision of a five-person
self-perpetuating Board of Directors. Plaintiffs assert that although the written by-
laws provide that the Board of Directors shall elect successor directors, Reverend
Moon, as the co-settlor of the trust and spiritual leader of the Church, had
designated all individuals to serve on the Board of Directors of UCI. Plaintiffs
further assert that the directors have “understood and accepted” this “long and
continuous usage of this uniform practice” that constitutes a “binding convention”
as to how the directors are to be nominated.
In January 2009, Preston Moon held a UCI board meeting during which he
arranged for the resignation of two of the five original directors and the election of
defendants Michael Sommer and Richard Perea to the Board of Directors. Preston
8
Plaintiffs’ complaint runs to forty pages plus a number of attachments.
We summarize the major assertions of wrongdoing.
9
Moon and his hand-picked directors allegedly stymied an effort by directors Joo
and Kim to elect directors designated by Reverend Moon, which contravened the
longstanding, uniform custom and practice of Reverend Moon nominating the
individuals to be directors of the corporation. Preston Moon completed his
takeover of the UCI Board of Directors in August 2009, when he convened a
special board meeting where he, Sommer, and Perea voted to remove directors Joo
and Kim from the Board of Directors.9 Defying instructions from the Family
Foundation to reinstate the removed directors, Preston Moon, Sommer, and Perea
instead added two of Preston Moon’s brothers-in-law to the Board of Directors.
Plaintiffs contend that these steps constituted “unauthorized, illegal and improper
actions” that vitiated the validity of subsequent UCI corporate acts.
Next, plaintiffs challenge the diversion of corporate expenditures from the
purposes set forth in the trust imposed on the corporation and in the original
articles. In late 2009 and early 2010, Preston Moon was stripped of his positions
on several Church entities. In response to this, Preston Moon announced that he
would act through an entity known as the Global Peace Festival Foundation
(“GPFF”), which he had created in 2009. Preston Moon further indicated that
9
The by-laws of the corporation permitted a majority of the Board to
remove any director with or without cause.
10
GPFF would have no formal or legal association with the Family Federation,
Universal Peace Foundation, or the Unification Church. This resulted in the
Universal Peace Foundation no longer receiving funding from UCI as it had for
decades. Preston Moon then began holding “Global Peace Festivals” through
GPFF and used UCI corporation assets to fund the activities, in defiance of the
wishes of Reverend Moon and the Family Foundation. In furtherance of his plan,
on April 14, 2010, Preston Moon and the UCI Board of Directors, which he now
controlled, amended the UCI Articles of Incorporation to disassociate the
corporation from the Church, specifically by changing the name from “Unification
Church International” to “UCI” and removing all references to the original purpose
of advancing the Divine Principle and supporting Unification Churches worldwide.
As amended, the Articles of Incorporation provided more generally only for
promotion and support of the Unification Movement.
Third, plaintiffs charge that Preston Moon used his powers as President and
Chairman of UCI to engage in self-dealing transactions and to divert corporation
assets for his own interests, in violation of his fiduciary duties and of the District of
Columbia Nonprofit Corporation Act. Among other allegations, plaintiffs assert
that Preston Moon caused a UCI subsidiary to engage in a property transaction
with an entity wholly owned by Preston Moon at less than fair market value, and
11
that the transaction served no legitimate business purpose. Plaintiffs also allege
that Preston Moon caused UCI to lend $2,000,000 to that entity owned by him and
to enter into a consulting agreement with it to pay $120,000 a month when the
consulting agreement served no legitimate business purpose.
The plaintiffs’ complaint primarily relies on four legal theories, each set
forth in a separate count of the complaint, in challenging these allegedly wrongful
actions taken by Preston Moon and UCI. The first two counts, raised by all
plaintiffs, are breach of the trust established by Reverend Moon with Dr. Pak, and
breach of corporate fiduciary duties and ultra vires acts. The third count, raised
only by Family Federation, is breach of fiduciary duty by Preston Moon as an
agent of Family Federation, the principal.10 The fourth count, raised only by the
Japanese Church, is breach of contract relating to its provision of funds to UCI. 11
With this background of events, we turn now to the appeals before us. As
disposition of the cross-appeal could potentially be outcome-determinative apart
10
The other four directors are charged with aiding and abetting Preston
Moon.
11
The Japanese Church also raises quasi-contractual claims of promissory
estoppel and unjust enrichment as related bases for recovery. We see no need to
separately address these counts.
12
from the merits, we first address the challenges raised in the cross-appeal asserting
lack of personal jurisdiction, lack of standing, and failure to state a claim.
II. Personal Jurisdiction, Standing, and Failure to State a Claim
A. Personal Jurisdiction
Each of the five individual defendants was a director of UCI during part or
all of the time of the alleged wrongdoings and, according to the heading of the
complaint, was a resident of the United States. However, none was a resident of
the District. Accordingly, the trial court’s exercise of jurisdiction rests on the
District’s Long Arm Statute—“more particularly, the provision that the District’s
courts ‘may exercise personal jurisdiction over a person, who acts directly or by an
agent, as to a claim for relief arising from the person’s transacting any business in
the District of Columbia.’” Daley v. Alpha Kappa Alpha Sorority, Inc., 26 A.3d
723, 727 (D.C. 2011) (quoting D.C. Code § 13-423 (a) (2001 ed.)). “We have
repeatedly reaffirmed” that the “transacting business provision [of the District’s
Long Arm Statute] is coextensive with the due process clause of the Fifth
Amendment.” Id. (internal quotation marks removed); that is, jurisdiction extends
as far as the due process clause permits. Flocco v. State Farm Mut. Auto. Ins. Co.,
13
752 A.2d 147, 162 (D.C. 2000). “[A] nonresident defendant need not have been
physically present in the District” for our courts to exercise personal jurisdiction.
Mouzavires v. Baxter, 434 A.2d 988, 992 (D.C. 1981). Rather, the critical issue is
whether the individual’s “conduct and connection with the forum state are such
that he should reasonably anticipate being haled into court there.” Daley, supra,
26 A.3d at 727 (quoting Gonzalez v. Internacional de Elevadores, S.A., 891 A.2d
227, 234 (D.C. 2006)). In other words, the inquiry is whether maintenance of the
suit against defendants “offend[s] ‘traditional notions of fair play and substantial
justice.’” Shoppers Food Warehouse v. Moreno, 746 A.2d 320, 330 (D.C. 2000)
(en banc) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945)).
The defendants rely on the Supreme Court case of Shaffer v. Heitner, 433
U.S. 186 (1977) for the proposition that asserting jurisdiction over nonresident
directors of a forum-state corporation is inconsistent with due process.12 But, as
12
In Shaffer, Delaware law conferring jurisdiction via sequestration of the
defendant’s property in that state “to compel the personal appearance of a
nonresident defendant” was used by a plaintiff who owned one share of stock in a
Delaware company and attempted to bring a derivative suit against the company
and various officers and directors. The Court held that the principles of fairness
and substantial justice from International Shoe also apply to an in rem proceeding,
which under Delaware law and the facts of the case was insufficient to confer
jurisdiction.
14
the Fourth Circuit rightly observed in Pittsburgh Terminal Corp. v. Mid Allegheny
Corp., 831 F.2d 522 (4th Cir. 1987), the Shaffer case was based on Delaware’s
assertion of jurisdiction based on property owned by the directors in that state, not
on an assertion of jurisdiction based on a long-arm statute. Nor can these
defendants benefit from the so-called corporate fiduciary shield, whereby “[a]
court does not have jurisdiction over individual officers and employees of a
corporation just because the court has jurisdiction over the corporation.” Flocco,
supra, 752 A.2d at 162. However the doctrine may operate in normal
circumstances, we have declined to adopt an “absolute fiduciary doctrine” that
would amount to “a per se rule that an employee’s acts in his official capacity may
never give rise to personal jurisdiction over him.” Id. at 163 n.20. Accordingly,
our analysis is not a “mechanical test”; instead, we weigh the facts of each case.
Holder v. Haarmann & Reimer Corp., 779 A.2d 264, 270-71 (D.C. 2001) (citation
omitted).
The case before us is somewhat akin to our decision in Daley. In that case,
we upheld jurisdiction over the nonresident individual officers of a District of
Columbia nonprofit corporation who were alleged to have enriched themselves
without proper authority. Daley, supra, 26 A.3d at 728. While it is true that in
certain respects, the individual officers in Daley had been present in the District,
15
the association itself consisted of a wide membership, unlike the structure of UCI.
In the case before us, each defendant voluntarily undertook to serve as a director of
a nonprofit District corporation without members or stockholders, and where the
directors were self-perpetuating and in total control of the corporation, answerable
only to themselves. The plaintiffs’ allegations are that these directors participated
in wrongful activities going to the very essence of that corporation’s existence.
Furthermore, apart from the fact that all the alleged wrongdoing affected a District
of Columbia corporation, at least one of those acts and a significant one, the
allegedly wrongful amendment of the Articles of Incorporation, indubitably
occurred within the District by filing here.13 On the alleged facts of this case, we
have little difficulty in concluding these directors clearly could anticipate being
hauled into [a District of Columbia] court to account for their activities and that
doing so does not violate notions of fair play and substantial justice.
13
“Once, however, the claim is related to acts in the District, § 13-423 does
not require that the scope of the claim be limited to acts within the District.”
Shoppers Warehouse, supra, 746 A.2d at 326 (quoting Cohane v. Arpeja-
California, Inc., 385 A.2d 153, 158-59 (D.C. 1978)).
16
B. Standing and Failure to State a Claim
Although challenges based on lack of standing and failure to state a cause of
action pursuant to Super. Ct. Civ. R. 12 (b)(6) are conceptually distinct, the
interrelationship of the two in the case before us makes it useful to discuss both
challenges together.14 We first address the first two counts brought by all five
plaintiffs, resting on legal principles relating to trusts and to corporate fiduciary
duties and ultra vires acts. Next, we address the count of breach of fiduciary duty
as agent brought by Family Federation. Finally, we examine the contractual count
brought by the Japanese Church.
1. Claims of Breach of Trust and Corporate Fiduciary Duties
In contesting plaintiffs’ standing on the first two counts, the defendants
primarily invoke the traditional rule that, generally, with respect to charitable trusts
and charitable corporations “only a public officer, usually the state Attorney
General, has standing to bring an action to enforce the terms of the trust.” Hooker
14
The defendants’ brief addresses the standing issues under the heading of
failure to state a claim.
17
v. Edes Home, 579 A.2d 608, 612 (D.C. 1990).15 As we explained, this restriction
primarily flows from the “impossibility of establishing a distinct justiciable interest
on the part of a member of a large and constantly shifting benefited class, and the
recurring burdens on the trust res and trustee of vexatious litigation that would
result from recognition of a cause of action by any and all of a large number of
individuals who might benefit incidentally from the trust.” Id.
However, an important exception to the general rule exists “in situations
where an individual seeking enforcement of the trust has a ‘special interest’ in
continued performance of the trust distinguishable from that of the public at large.”
Id. While “special interest” is a term of uncertain scope, the key consideration,
discussed at length in Hooker, is whether finding a justiciable interest in a given
plaintiff would contravene the considerations underlying the traditional rule. Id. at
612. The exponential expansion of charitable institutions justifies a reasonable
relaxation of any rule limiting enforcement to a busy Attorney General.
15
That case involved a charitable corporation, but we have recognized the
applicability of the rules relating to charitable trusts to such corporations. See
Owen v. Board of Dirs. of the Washington City Orphan Asylum, 888 A.2d 255, 260
(D.C. 2005) [hereinafter WCOA II](“[W]e held that rules governing charitable
trusts could be applied to charitable corporations, thus giving the Directors
standing to sue.”).
18
We are quite satisfied that, in the circumstances here, each of the plaintiffs
has the requisite “special interest” to provide it with standing to contest the
complained-of actions by the defendants under both the trust and corporate wrong-
doing theories.
Two of the plaintiffs are the ousted directors. They occupy a status both as
the alleged successor trustees to the Moon trust and as directors of a charitable
corporation akin to a charitable trust.16 See Board. of Dirs. of the Washington City
Orphan Asylum v. Board of Trs. of the Washington City Orphan Asylum, 798 A.2d
1068 (D.C. 2002) (explaining special interest exception for former directors
challenging their ouster); WCOA II, supra note 13, 888 A.2d at 260. Family
Federation asserts an interest in several capacities: as successor in interest to
Reverend Moon and his role as settlor of the trust,17 in nominations of directors,
16
In addition to finding that the ousted directors have special interest
standing, we also conclude that they fall within the definition of “among others” in
D.C. Code § 19-1304.05 (2012 Repl.) for enforcement of charitable trusts, and may
“maintain a proceeding to enforce the trust.” The District of Columbia is one of
many jurisdictions that has adopted the Uniform Trust Code (“UTC”). D.C. Code
§ 19-1307.03 (g) (2012 Repl.), which establishes that when co-trustees are
appointed to act as stewards of a trust, “[e]ach trustee shall exercise reasonable
care to . . . [p]revent a co[-]trustee from committing a serious breach of trust; and .
. . [c]ompel a co[-]trustee to redress a serious breach of trust.”
17
See D.C. Code § 19-1304.05 (c) (2012 Repl.) (“The settlor of a charitable
trust, among others, may maintain a proceeding to enforce the trust.”).
19
and as an overarching superior and benefiting entity in UCI’s proper role to further
the mission of Family Federation and the Unification Church. The Universal
Peace Foundation was a major beneficiary from UCI for three decades,
comfortably falling within the Hooker requirement that a beneficiary be in a class
limited in number and that the nature of the challenge be to an extraordinary
measure.18 Furthermore, in Hooker, the plaintiffs granted standing were not even
current beneficiaries of the charitable corporation, only prospective ones, quite
contrary to the Universal Peace Foundation’s long--term status here. And the
contributions by the Japanese Church go far beyond the asserted rule that donors
ordinarily cannot sue charities unless they restrict their gifts, as we discuss in
subpart 3 infra.19
The defendants argue, however, that even if the plaintiffs have standing, “the
complaint does not allege facts permitting plausible inferences that UCI is
governed by a secret trust, by-law, and agency agreement that are each inconsistent
with its formal and legally-binding Articles of Incorporation and By-laws.” This
18
All plaintiffs are challenging an extraordinary measure—fundamentally
changing the purpose of UCI and taking steps to divest itself from the Unification
Church.
19
In addition, the Japanese Church alleges that it was a co-settlor of the
trust.
20
argument essentially mirrors the fallacy in limiting considerations to formal
documents discussed in the abstention context in part III (B)(1) infra. We see no
inherent reason why any of the allegations in the complaint should be dismissed at
this point as utterly implausible, given the legal doctrines governing the counts set
forth.
To survive a 12 (b)(6) motion to dismiss, a complaint “must contain
sufficient factual matter, accepted as true, to state a claim to relief that is plausible
on its face.” Grimes v. District of Columbia, 89 A.3d 107, 111-12 (D.C. 2014)
(quoting Potomac Dev. Corp. v. District of Columbia, 28 A.3d 531, 544 (D.C.
2011) (internal quotations omitted)). The facts pleaded must amount to more than
simple legal conclusions, id. at 112, i.e., “more than an unadorned, the-defendant-
unlawfully-harmed-me accusation[s],” Potomac Dev. Corp., supra, 28 A.3d at 544,
and when well-pleaded, we “assume their veracity and then determine whether
they plausibly give rise to an entitlement to relief.” Grimes, supra, 89 A.3d at 112
(citation omitted).
In particular, defendants contend that plaintiffs’ claim must fail because they
failed to plead sufficient facts to plausibly establish that Reverend Moon intended
to create an oral trust in 1975, and that the trust was extinguished when UCI came
21
into existence as a corporation. However the evidence may eventually turn out to
be, we are not persuaded that any decision on this issue can be based on an
inadequacy in the complaint. A writing is not required to create a valid trust.
Intent may be established by “written or spoken language or by conduct, in light of
all surrounding circumstances.” Cabaniss v. Cabaniss, 464 A.2d 87, 91 (D.C.
1983). And it is not implausible that the establishment of UCI was intended to
continue the trust in corporate form. The trustee of a trust has the “[p]ower to form
a corporation or other entity . . . for the purpose of carrying on business or
investment activities of the trust” and the trustee’s various fiduciary duties apply
“to operation of the entity.” Restatement (Third) of Trusts § 86 cmt. e (2007).
Moreover, unlike the situation in Save Immaculate/Dunblane, Inc. v. Immaculata
Preparatory Sch. Inc., 514 A.2d 1152, 1157 (D.C. 1986), relied on by defendants,
here the alleged trust can be viewed as not in conflict with the Articles of
Incorporation of UCI, but rather a direction for their exercise.
2. Breach of Fiduciary Duty as Agent
“Whether an agency relationship exists in a given situation depends on the
particular facts of each case.” Judah v. Reiner, 744 A.2d 1037, 1040 (D.C. 2000)
(citing District of Columbia v. Hampton, 666 A.2d 30, 38 (D.C. 1995)). As
22
already indicated, the complaint identifies Family Federation as the entity that
directs Unification Churches worldwide. It asserts that the Church designates
certain organizations as “providential organizations,” which are organizations that
were founded by Reverend Moon as part of his wider ministry. It further asserts
that heads of these providential organizations are appointed by, and subject to
removal by, Family Federation. UCI is said to be one of these providential
organizations.
In the third count, Family Federation makes the following assertion:
As President and Chairman of the Board of Directors of
UCI, Preston Moon is the head of a providential
organization of the Unification Church and an agent of
the Family Federation. In accepting this position,
Preston Moon agreed to act on behalf of the Family
Federation and Subject to the Family Federation’s control
and direction.
Family Federation also alleges that the other four directors wrongfully aided and
abetted Preston Moon in his breaches of his duties as agent of Family Federation.
Specifically in regards to count three, breach of principal-agent relationship, but in
a sense in all claims, Family Federation asserts that it is the principal and UCI is
the agent. Taking these assertions as true, Family Federation as principal clearly
has standing to assert breaches of the fiduciary relationship created by Moon’s
23
position as agent. Nor is such a relationship inherently implausible, given the other
allegations in the complaint.
3. Breach of Contract and Quasi-Contract Claims
The Japanese Church’s participation in this litigation is based primarily on
its prominent role in funding the operations of UCI with hundreds of millions of
dollars over a period of years. The Japanese Church alleges a contractual breach:
“A condition of the Japanese Church’s contributions to UCI was the understanding
that those funds would be used in a manner consistent with the purposes for which
the [UCI] was established.”
It is true that the general rule at common law was that “a donor who has
made a completed charitable contribution . . . as an absolute gift . . . had no
standing to bring an action to enforce the terms of his or her gift or trust . . . .”
Carl J. Herzog Found., Inc. v. University of Bridgeport, 699 A.2d 995, 997 (Conn.
1997); accord Irish J. Goodwin, Donor Standing to Enforce Charitable Gifts:
Civil Society vs. Donor Empowerment, 58 Vand. L. Rev. 1093, 1145 (2005). But
24
the Japanese Church denies that the funding it provided was “an absolute gift.”20
Each claim strongly characterizes the contributions as a restricted gift made to a
charitable corporation; funds that were contributed pursuant to a “condition” or
“promise” or “understanding.” Like any other transaction, there is no inherent
reason why funds could not be provided to a corporation, charitable or otherwise,
with a contractual understanding as to how the funds were to be used and thus
standing is established with respect to enforcing the restriction on the donations.
Turning to whether the Japanese Church has pleaded sufficient facts, we
agree with the trial judge that “[b]ased on the facts provided in the [c]omplaint, the
[c]ourt can reasonably infer that UCI had an obligation to use [the Japanese
Church’s] funds for an express purpose, and it breached that obligation by
20
The Restatement recognizes that when a contribution or disposition is
made to an “institution for a specific purpose . . . such as to support medical
research . . . or to establish a scholarship fund in a certain field of study,”
Restatement (Third) of Trusts § 28, cmt. a (Am. Law Inst. 2003), then such a
specifically targeted gift or contribution “creates a charitable trust of which the
institution is the trustee . . . .” Id. The Restatement goes on to note that when a
“nonprofit organization receives a restricted gift or devise that applicable law treats
as a charitable trust . . . special-interest standing entitles the settlor to maintain a
suit against the trustee-organization,” although “only to enforce the restriction.”
Restatement (Third) of Trusts § 94, cmt. g (3) (Am. Law Inst. 2012). While a
restricted gift is not “a trust in the technical sense” and is “not bound by all the
limitations and rules which apply to a technical trustee,” the nonprofit organization
“may not . . . receive a gift made for one purpose and use it for another . . . .” St.
Joseph’s Hosp. v. Bennett, 22 N.E.2d 305, 308 (N.Y. 1939).
25
allegedly diverting funds away from the specified purposes for which they were
contributed,” and thus pleaded sufficient facts for its contract claim. At the
pleading stage, such a contractual or quasi-contractual relationship is not
implausible and the Japanese Church has standing to assert the claims.
In summation, all plaintiffs have alleged their respective injuries, traceable
to the defendants’ actions, and the trial court can provide redress if the plaintiffs
meet their respective burdens. See Padou v. District of Columbia, 77 A.3d 383,
389 (D.C. 2013). All parties have the requisite standing. Moreover, each claim
has been pleaded with sufficient facts to withstand a Rule 12 (b)(6) challenge. The
trial judge’s denial of the defendants’ motion taken on cross-appeal is therefore
affirmed.
III. Religious Abstention
We now turn to the direct appeal from the trial court’s dismissal of
plaintiffs’ complaint. The trial court concluded that, under the doctrine of religious
abstention mandated by the First Amendment, it lacked subject matter jurisdiction
26
pursuant to Super. Ct. Civ. R. 12 (h)(3).21 The application vel non of religious
abstention has been treated as one of subject matter jurisdiction, Heard v. Johnson,
810 A.2d 871, 877 (D.C. 2002) (citation omitted), and the issue of subject matter
jurisdiction is a question of law that this court reviews de novo, Second Episcopal
Dist. African Methodist Episcopal Church v. Prioleau, 49 A.3d 812, 815 (D.C.
2012).
The trial court found that defendants had advanced a ‘factual attack’ on the
complaint, “challeng[ing] the existence of subject matter jurisdiction irrespective
of the pleadings.” Heard, supra, 810 A.2d at 878. However, at the time, discovery
was in its infancy and in fact, as we read the record, the trial court in its ruling
generally treated the allegations of plaintiffs as true and did not rely to any
significant extent on other evidence on the issue.
21
That subsection provides: “Whenever it appears by suggestion of the parties
or otherwise that the court lacks jurisdiction of the subject matter, the court shall
dismiss the claim.” Defendants raised the issue by a motion for judgment on the
pleadings, citing Super. Ct. Civ. R. 12 (c). Challenges to subject-matter
jurisdiction may also be raised by a motion under Super. Ct. Civ. R. 12 (b)(1).
When a party challenges the trial court’s subject matter jurisdiction over the case
pursuant to Rule 12 (c), trial court should treat the motion for judgment on the
pleadings as if it had been brought under Rule 12 (b)(1) (lack of subject matter
jurisdiction). See Kirkham v. Societe Air France, 429 F.3d 288, 291 (D.C. Cir.
2005); 5C Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure
§ 1367, at 221 (3d ed. 2004).
27
A. The Religious Abstention Doctrine
As we recently reviewed at some length, “The First Amendment provides, in
pertinent part, that ‘Congress shall make no law respecting an establishment of
religion, or prohibiting the free exercise thereof.’” Samuel v. Lakew, 116 A.3d
1252, 1256 (D.C. 2015) (quoting U.S. Const. amend. I.). Together, the Free
Exercise and Establishment Clauses operate to “severely circumscribe the role that
civil courts may play in the resolution of disputes involving religious
organizations.” Id. at 1256-57 (quoting Meshel v. Ohev Sholom Talmud Torah,
869 A.2d 343, 353 (D.C. 2005)). The First Amendment seeks to preserve the
autonomy of religious entities “to decide for themselves, free from state
interference, matters of church government as well as those of faith and doctrine.”
Hosanna-Tabor Evangelical Lutheran Church & Sch. v. EEOC, 132 S. Ct. 694,
704 (2012) (citation omitted).
Nonetheless, the Free Exercise Clause “does not mean . . . that churches are
above the law or that there can never be a civil court review of a church action,”
Heard, supra, 810 A.2d at 879. As we have recognized repeatedly, “[n]ot every
civil court decision . . . jeopardizes values protected by the First Amendment.” Id.
(citation omitted); see also Bible Way Church of Our Lord Jesus Christ of
28
Apostolic Faith of Wash., D.C. v. Beards, 680 A.2d 419, 427 (D.C. 1996)
(recognizing that “occasions can arise when civil courts are permitted to address
church activity without running afoul of the First Amendment”). “Religious
organizations come before [the courts] in the same attitude as other voluntary
associations for benevolent or charitable purposes, and their rights of property, or
of contract, are equally under the protection of the law . . . .” Watson v. Jones, 80
U.S. 679, 714 (1871). Especially when a dispute over property arises, “[t]here can
be little doubt about the general authority of civil courts to resolve [the issue],” as
“[t]he 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.” Jones v. Wolf, 443 U.S. 595, 602
(1979). Generally, “[c]ivil courts do not inhibit free exercise of religion merely by
opening their doors to disputes involving church property.” Presbyterian Church
in the U.S. v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, 393 U.S.
440, 449 (1969).
In sum, the mere fact that the issue before the court involves a church or
religious entity does not thereby bar access to our courts. On the contrary, the
courts as the ultimate arbiter of disputes short of anarchy and self-help have a
29
constitutional duty to carry out their basic function to the maximum permissible
extent.
In determining the line where the First Amendment bars judicial resolution
of disputes, this jurisdiction has consistently relied on the application of “neutral
principles of law” to the parties’ contentions. “The touchstone for determining
whether civil courts have jurisdiction is whether the courts may employ ‘neutral
principles of law’ and ensure that their decisions are not premised on the
‘consideration of doctrinal matters, whether the ritual and liturgy of worship or the
tenets of faith.’” Prioleau, supra, 49 A.3d at 816 (citing Meshel, supra, 869 A.2d
at 354 (citation omitted)).
B. Premature Decision on Application of Doctrine
As already described, plaintiffs’ complaint in this case is based upon four
distinct causes of action based upon four familiar fields of law. In its allegation of
the establishment of a trust and its breach, plaintiffs invoke an ancient and well-
developed legal area with deep roots in Anglo-American law. On the count of
corporate duties and irregularities, the plaintiffs implicate another much-litigated
area. In its count on breach of contract and quasi-contract, plaintiffs raise issues
30
encountered by first-year law students. Finally, in its count on principal and agent,
plaintiffs rely upon doctrines basic to our legal system. Thus, on its face, it would
appear that this dispute is susceptible to resolution by “neutral principles of law”
not requiring any forbidden inquiry into matters barred by the First Amendment.
In our view, in the present posture of this particular case, a contrary conclusion
should be based on a fuller exposition of the facts underlying each cause of action
and not be decided on the pleadings prior to discovery and further evidentiary
presentation by plaintiffs.
To be sure, a court must “look not at the label placed on the action but at the
actual issues the court has been asked to decide.” Samuel, supra, 116 A.3d at 1259
(citations omitted). And we are not unmindful of the principle that in a First
Amendment case, a plaintiff must present facts that take the case outside the
constitutional constraint and bears the ultimate burden to establish jurisdiction.22
As indicated in this opinion, however, we are satisfied that the plaintiffs’ pleadings
are sufficient to survive dismissal on these grounds at this point in the precise
circumstances here. This is not a suit directly against a church, synagogue, or
22
In this regard, we note, as we did in Samuels, that “The Supreme Court in
Hosanna-Tabor [Evangelical Lutheran Church & Sch. V. EEOC] held that a
defense rooted in the religious clause of the First Amendment was an affirmative
defense, rather than a jurisdictional bar.” 116 A.3d at 1261 n.16 (citing Hosanna-
Tabor, 132 S. Ct. at 710 n.4). No party has raised this issue before us.
31
mosque or their immediate leadership. On the contrary, the defendant entity at
issue here is a taxable, albeit nonprofit, corporation. Nor does it appear that the
individual defendants have a direct religious role within the church as such, but
rather are basically operating in a secular capacity. Any claim for early immunity
from suit is far less compelling than may be the case in more typical disputes
evoking First Amendment considerations. And, as we show, the actual issues
determinative of the outcome of this case may well be resolvable without
infringement into areas precluded from court consideration by the First
Amendment.
1. Elements of Proof
In its order of dismissal, the trial court appeared to be particularly concerned
with one aspect of this case. In its view, based on “[t]he available corporate
documents in this case,” the trial court could not adjudicate any of the claims under
neutral principles of law. We agree with plaintiffs’ argument that this pure
documentary approach to deciding the abstention issue may have erroneously
permeated the entire analysis.
32
The trial court read several decisions of this court23 to stand for the
proposition that when a civil court is able to resolve a dispute implicating questions
of church doctrine or polity, “it was able to do so because the corporate documents
clearly established that [the legal theories at issue] were firmly established as
distinct and separate from matters of church doctrine or polity.” Based on that
reading, the trial court concluded that “[t]he available corporate documents in this
case . . . are insufficient to permit the court to exercise neutral principles of law
which could provide a sole basis for the resolution of this dispute.” It repeated this
conclusion when it specifically found that the claims of breach of trust and breach
of fiduciary duty could not be adjudicated because “there are no neutral principles
of law apparent from the documents which have been presented to the Court” that
would enable it to do so without “implicating the Unification movement’s polity.”
We do not take issue with the trial court’s attachment of importance to
UCI’s governing documents. But it does not follow that the application of neutral
principles of law must depend on documentary evidence alone. This court has
interpreted Jones v. Wolf, supra, and Maryland & Virginia Eldership of the
23
E.g., Prioleau, supra, 49 A.3d at 817; United Methodist Church, Balt.
Annual Conference v. White, 571 A.2d 790, 793 (D.C. 1990); Save
Immaculata/Dunblane, Inc., supra, 514 A.2d at 1153-57.
33
Churches of God24 to permit civil courts to “look to familiar corporate and trust
principles of law for relief,” so long as courts do “not decide[] questions of church
doctrine, polity, or administration.” Save Immaculata/Dunblane, Inc., supra, 514
A.2d at 1156-57. Jones itself permitted civil courts to adjudicate a property
dispute under neutral principles of law, provided that the intent of the parties was
“in some legally cognizable form.” 443 U.S. at 606. Legal rules underlying proof
in trust, corporate, contract, and agency disputes are replete with circumstances
under which non-documentary evidence may be relevant and permitted. See
Bishop & Diocese of Colo. v. Mote, 716 P.2d 85, 100 (Colo. 1986) (discussing
Jones, supra, 443 U.S. at 610-21) (noting that the Constitution does not mandate
such a “narrow inquiry”). Neutral principles of law analysis may include “other
principles from the common and statutory law of property, contracts, corporations
or voluntary associations . . . .” Id. at 100-01; accord Hope Presbyterian Church
of Rogue River v. Presbyterian Church (U.S.A.), 291 P.3d 711, 722-23 (Or. 2012)
(noting that under the neutral principles approach, a civil court would be permitted
to determine whether a trust existed under the Uniform Trust Code, which does not
require documentary evidence to create a trust). Such an approach permits the
parties to marshal as much evidence in support of their claim as possible, and
24
Maryland & Virginia Eldership of the Churches of God v. Church of God
at Sharpsburg, Inc., 396 U.S. 367 (1970).
34
permits the trial court to make a reasoned, thoughtful determination on the issue of
subject matter jurisdiction based on a more robust record, and helps to ensure that
the doors to the civil courthouse are not closed prematurely.
2. The Individual Counts
On the breach of trust and corporate misconduct counts, the trial court was
understandably concerned about its ability to locate the alleged authority of
Reverend Moon to name the directors and how such exercise of authority was
consistent with director fiduciary duty to UCI. Such concern, however, seems to
postulate the binding authority of the corporate documents. Proof of the existence
and terms of the alleged trust and of the circumstances surrounding the creation
and operations of the corporation could impose an overriding fiduciary duty not
necessarily inconsistent with the corporate documents.
In certain circumstances, a long-standing pattern or practice of corporate
behavior may give rise to a by-law. See, e.g., National Confederation of Am.
Ethnic Grps. v. Genys, 457 A.2d 395, 399 (D.C. 1983) (noting that the “long and
continuous usage of proxy voting has the force and effect of a by[-]law” (internal
quotations omitted)) and citing, inter alia, Walker v. Johnson, 17 App. D.C. 144
 35
(D.C. Cir. 1900); see also Lewis v. Don King Prods., Inc., 94 F. Supp. 2d 430, 444
(S.D.N.Y. 2000); Lamm v. Board of Comm’rs for Vermilion Hosp. Serv. Dist. No
1, 378 So. 2d 919, 922 (La. 1979); Dousman v. Kobus, No. 19258-NC, 2002 WL
1335621, at *13, 15 (Del. Ch. June 6, 2002) (quoting and citing In re Osteopathic
Hosp. Ass’n of Del., 195 A.2d 759, 762 (Del. 1963)). The trial court dismissed
plaintiffs’ argument, concluding that such an implied by-law relating to
appointment of directors could not exist, because it would breach the directors’
fiduciary duty to act in the best interest of the corporation.
We believe that the trial court’s conclusion was premature. It is of course a
“basic principle” of corporate law “that directors are subject to the fundamental
fiduciary duties of loyalty and disinterestedness.” Andarko Petroleum Corp. v.
Panhandle E. Corp., 545 A.2d 1171, 1174 (Del. 1988). But the ultimate question
here may be, under all the circumstances, where exactly that fiduciary duty lay.
For example “in a parent and wholly-owned subsidiary context, the directors of the
subsidiary are obligated only to manage the affairs of the subsidiary in the best
interests of the parent and its shareholders.” Id. Here, plaintiffs have alleged in
effect that although UCI was established as a nonprofit corporation, it was and is in
fact a subsidiary entity, both to Reverend Moon’s oral trust in 1977, and to Family
Federation. The original Articles acknowledge Reverend Moon to be the leader of
36
the Unification Church movement. For three decades, plaintiffs assert, Reverend
Moon and his church entities guided the corporation in its activities and named
every member to the Board of Directors. Moreover, and importantly, as already
noted, these practices were not necessarily inconsistent with the corporate
documents and might be viewed as supplemental thereto. It is in this context, if
fully fleshed out and proven, that the precise fiduciary duties can be adjudged.
Moreover, plaintiffs here in a separate count have alleged that a concrete
principal-agent relationship existed between Family Federation and Preston Moon
with respect to the operation of UCI. The trial court was concerned about this
count as obligating it to impermissibly inquire into the governing hierarchy of the
Church. But we fail to see why this necessarily must prove to be the case. The
relationship between Preston Moon and Family Federation does not necessarily
turn on facts involving religious doctrine and practices or the internal policies of
the Unification Church. Plaintiffs assert that the “right to control and direct”
Preston Moon can be established “through documents[,] [] testimony,” and the
actual course of dealings between the parties, and not through application of “the
Divine Principle or through any interpretation of Unification Church doctrine.”
Neutral principles of law can govern the establishment of an agency relationship,
and it may be that an examination of the structure and long-standing practices of
37
the Church will provide an answer to the actual existence of such a relationship.
See Heard, supra, 810 A.2d at 880 (applying neutral principles of law to
employment disputes); EEOC v. Miss. Coll., 626 F.2d 477 (5th Cir. 1980). At this
stage, we believe that it is premature to preclude plaintiffs from proffering
evidence in support of their claim that would permit an adjudication of this claim
without impermissible intrusion into “religious doctrine and practice.”
Apart from the appointment of directors, the trial court expressed concern
about its ability to determine whether, in their actions reorganizing the corporation
and changing its expenditure recipients, the defendants had deviated from the
original purpose of the corporation or had acted ultra vires. In particular, it failed
to see how it could determine whether those actions were or were not in accord
with the “Divine Principle” expressed in the Articles of Incorporation.
This is also an understandable concern but one, we think, that does not
absolutely preclude consideration of plaintiffs’ claims at this point. Determining
who the intended beneficiaries of a trust were and whether corporate assets were
used in accordance with corporate laws are normally governed by neutral
principles of law. See Hooker, supra, 579 A.2d at 612. While it may be difficult
at times to draw clear lines, a deviation by a charitable corporation from its original
38
purpose may be so great as to preclude any argument that correction was not called
for.
It can be a breach of duty to “change substantially the objects and purposes
of the corporation.” 7A Fletcher Cyclopedia of the Law of Corps. § 3718 (2006);
see Queen of Angels Hosp. v. Younger, 136 Cal. Rptr. 36, 41 (Cal. Ct. App. 1977)
(“The question is whether [the corporation] can cease to perform the primary
purposes for which it was organized. That, we believe, it cannot do.”); Hollinger
Int’l, Inc. v. Black, 844 A.2d 1022 (Del. Ch. 2004), aff’d, 872 A.2d 559 (Del.
2005) (distinguishing legal powers of directors from equitable duty); Matter of
Manhattan Eye, Ear & Throat Hosp. v. Spitzer, 715 N.Y.S.2d 575, 595 (N.Y. Sup.
Ct. 1999) (breach of fiduciary duty to depart “from the charity’s central and well-
understood mission”).
From plaintiffs’ allegations, it appears that a profound alteration in the
corporation, perhaps recognized by the directors themselves in changing the name
and amending the article of incorporation, occurred under Preston Moon. An
organization plainly established to promote the preservation of African wildlife
and acquiring vast funds on that basis might well be barred from switching its
purpose to expenditures on domestic cats and dogs regardless of how technically
39
such a switch might be read into the text of its articles of incorporation. On the
present record, we cannot say with confidence that a somewhat analogous
transformation cannot be shown to have occurred here. And, in any event, the
allegation that corporate funds were used here to benefit one of the directors
personally would appear readily subject to court review. 25
To be sure, the trial court should not be called on to make a lengthy and
painstaking interpretation of UCI’s “Divine Principle,” as “the court must be
cautious not to entangle itself in the decision-making process of the Church with
regard to its religious obligations.” Costello Publ’g Co. v. Rotelle, 670 F.2d 1035,
1050 n.31 (D.C. Cir. 1981). However, these concerns “should not block the court,
from at least considering,” id., “the circumstances of the alleged activity to
determine whether a religious concern existed and whether a nonintrusive remedy
could be fashioned.” Minker v. Baltimore Annual Conference of United Methodist
Church, 894 F.2d 1354, 1360 (D.C. Cir. 1990) (discussing Costello Publ’g Co.,
supra, 670 F.2d at 1050 n.31). At least some factual inquiry by the trial court into
25
The same considerations apply to the Japanese Church’s claims of
contract and quasi-contractual breaches, which are based upon the same assertion
of misuse of funds donated by it, and it may be that the contract terms limited the
permissible use of corporate funds more sharply than the articles themselves. “A
church is always free to burden its activities voluntarily through contracts, and
such contracts are fully enforceable in civil court.” Minker, supra, 894 F.2d at
1359 (citing Watson, supra, 80 U.S. at 714).
40
the nature of UCI’s use of assets by the trial court would not appear to violate the
First Amendment.
In sum, we agree with plaintiffs that the record at this early stage of a
difficult and complicated dispute with many ramifications does not support a
conclusion that the trial court must engage in inquiry banned by the First
Amendment in order to resolve any of plaintiffs’ claims. See Prioleau, supra, 49
A.3d at 817 (concluding that at the motion to dismiss stage, “the record as
developed” did not suggest that resolving plaintiff’s contract claim would “require
the court to entangle itself in church doctrine”). Were we to hold that, based on
the current record, the First Amendment precludes our civil courts from
adjudicating plaintiffs’ claims, then it would approach granting immunity to “every
nonprofit corporation with a religious purpose from breach of fiduciary suits . . .
and prevent any scrutiny of questionable transactions.” Askew v. Trustees of the
Gen. Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, Inc.,
644 F. Supp. 2d 584, 597 (E.D. Pa. 2009).26
26
We take special note, however, as we did in Prioleau, that “going
forward, if it becomes apparent to the trial court that this dispute does in fact turn
on matters of doctrinal interpretation or church governance, the trial court may
grant summary judgment to avoid excessive entanglement with religion.” 49 A.2d
at 818 (internal quotation and citation omitted).
41
IV. Conclusion
Accordingly, we affirm the order of the trial court denying defendants’
motion to dismiss, we reverse the order of the trial court granting defendants’
motion for judgment on the pleadings, and we remand the case for further
proceedings consistent with this opinion.
So ordered.