Eastminster Presbytery v. Stark & Knoll , 2012 Ohio 900 ( 2012 )

[Cite as Eastminster Presbytery v. Stark & Knoll, 2012-Ohio-900.]
STATE OF OHIO ) IN THE COURT OF APPEALS
)ss: NINTH JUDICIAL DISTRICT
COUNTY OF SUMMIT )
EASTMINSTER PRESBYTERY C.A. No. 25623
Appellant
v. APPEAL FROM JUDGMENT
ENTERED IN THE
STARK & KNOLL COURT OF COMMON PLEAS
COUNTY OF SUMMIT, OHIO
Appellee CASE No. CV 2009-07-5332
DECISION AND JOURNAL ENTRY
Dated: March 7, 2012
CARR, Judge.
{¶1} Appellant, the Eastminster Presbytery of the Presbyterian Church USA, appeals
the order of the Summit County Court of Common Pleas that granted summary judgment to
Appellee, Stark & Knoll, L.P.A., and individual attorneys associated with the firm. We affirm.
I.
{¶2} Hudson Presbyterian Church (“HPC”) disaffiliated from the Presbyterian Church
USA (“PCUSA”) in 2006. HPC filed a declaratory judgment action in the Summit County Court
of Common Pleas and Eastminster, the presbytery within which the church was located, filed a
counterclaim on behalf of the PCUSA. Both sought a declaration regarding ownership of the
building and land owned by HPC. Eastminster argued that HPC actually held the property in
trust for the denomination; HPC maintained that it held the property free of any claim from the
denomination and could disaffiliate accordingly. The trial court granted summary judgment to
HPC, and Eastminster appealed. This Court affirmed the judgment in Hudson Presbyterian
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Church v. Eastminster Presbytery, 9th Dist. No. 24279, 2009-Ohio-446. The Ohio Supreme
Court declined jurisdiction over Eastminster’s appeal.
{¶3} Eastminster filed an action for legal malpractice against the law firm of Stark &
Knoll and the individual attorneys who represented it in the declaratory judgment case. It
argued, among other things, that had counsel included within its summary judgment exhibits a
complete, authenticated copy of the PCUSA’s 1981 Book of Order, the trial court would have
reached the conclusion that the church’s property was in fact held in trust. The trial court
granted summary judgment to Stark & Knoll and to the individual attorneys who were named as
defendants, and Eastminster appealed. Its two assignments of error raise related issues, and so
they are consolidated for purposes of analysis.
II.
ASSIGNMENT OF ERROR I
THE TRIAL COURT ERRED IN FINDING AS A MATTER OF LAW THAT
APPELLANT COULD NOT ESTABLISH THAT APPELLEES’ NEGLIGENCE
PROXIMATELY CAUSED ANY DAMAGE TO PLAINTIFF.
ASSIGNMENT OF ERROR II
THE U.S. CONST. AMEND. I REQUIRED THE TRIAL COURT TO GIVE
BINDING EFFECT TO THE BOOK OF ORDER’S EXPRESS TRUST
CLAUSE.
{¶4} In its first assignment of error, Eastminster has argued that the trial court erred in
granting summary judgment to Stark & Knoll based on the legal conclusion that, even assuming
negligence on the part of Stark & Knoll, Eastminster would not have obtained a better result in
the underlying case absent its attorneys’ actions. Specifically, Eastminster argues that the trial
court incorrectly determined that the PCUSA’s 1981 Book of Order was insufficient to
demonstrate the existence of a trust without evidence of HPC’s intention.
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{¶5} Under Civ.R. 56(C), “[s]ummary judgment will be granted only when there
remains no genuine issue of material fact and, when construing the evidence most strongly in
favor of the nonmoving party, reasonable minds can only conclude that the moving party is
entitled to judgment as a matter of law.” Byrd v. Smith, 110 Ohio St.3d 24, 2006-Ohio-3455, at ¶
10. This Court reviews an order granting summary judgment de novo. Grafton v. Ohio Edison
Co., 77 Ohio St.3d 102, 105 (1996).
{¶6} A claim of legal malpractice requires the plaintiff to prove that the attorney owed
a duty to the plaintiff, that the attorney breached that duty and failed to conform to the standard
of care, and that the failure proximately caused damages to the plaintiff. See Vahila v. Hall, 77
Ohio St.3d 421 (1997), syllabus. As a general rule, “the requirement of causation often dictates
that the merits of the malpractice action depend upon the merits of the underlying case * * *
[and] a plaintiff in a legal malpractice action may be required, depending on the situation, to
provide some evidence of the merits of the underlying claim.” Id. at 427-428. Nonetheless, the
Ohio Supreme Court has rejected universal application of the “case-within-a-case” doctrine,
concluding that “the element of causation * * * [cannot] be replaced or supplemented with a rule
of thumb requiring that a plaintiff, in order to establish damage or loss, prove in every instance
that he or she would have been successful in the underlying matter(s) giving rise to the
complaint.” Id. at 428.
{¶7} The “case-within-a-case” doctrine, however, remains relevant in cases when “the
theory of [the] malpractice case places the merits of the underlying litigation directly at issue.”
See Environmental Network Corp. v. Goodman Weiss Miller, L.L.P., 119 Ohio St.3d 209, 2008-
Ohio-3833, at ¶ 18. In order to prove causation in these cases, the plaintiff must prove that but
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for the attorney’s conduct, the plaintiff would have obtained a better outcome in the underlying
case. Id. at ¶ 19. In doing so,
All the issues that would have been litigated in the previous action are litigated
between the plaintiff and the plaintiff’s former lawyer, with the latter taking the
place and bearing the burdens that properly would have fallen on the defendant in
the original action. Similarly, the plaintiff bears the burden the plaintiff would
have borne in the original trial[.]
Restatement of the Law 3d, Law Governing Lawyers 390, Section 53, Comment b (2000).
{¶8} Eastminster’s claim puts the merits of the underlying case directly at issue: it
maintains that, but for counsel’s failure to include a complete and properly authenticated copy of
the 1981 Book of Order as an exhibit in support of its motion for summary judgment, it would
have prevailed in the underlying case. Consequently, we must consider whether the result of the
underlying case would have been different in order to determine whether the element of
proximate cause has been established in this case.
{¶9} The trial court adopted our statement of the law in Hudson Presbyterian Church,
2009-Ohio-446, as its framework for analyzing whether Eastminster could have prevailed in the
underlying case and, consequently, whether negligence on the part of Stark & Knoll proximately
caused injury to Eastminster. The context of our opinion in Hudson Presbyterian Church is
significant in this discussion. In the underlying case, the trial court concluded that under Ohio
law, Eastminster was required to prove all of the elements of an express trust. The trial court
then examined two of the conclusions reached by the magistrate. The court disagreed with the
magistrate that there was no evidence of the existence of the 1981 Book of Order, but
nevertheless concluded that its contents were not before the court in a manner contemplated by
Civ.R. 56. The court agreed with the magistrate that HPC’s articles of incorporation permitted
voluntary dissociation from the PCUSA and did not evidence an intent to place the church’s
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property in trust for the denomination. Significantly, the trial court concluded that either of the
magistrate’s conclusions in these respects “were sufficient in themselves to grant Summary
Judgment on [HPC’s] behalf.” Thus, even aside from the evidentiary problems surrounding the
1981 Book of Order, the trial court concluded that summary judgment should be granted to HPC
on the independent basis that its own articles of incorporation did not demonstrate the intent to
create a trust benefiting PCUSA.
{¶10} On appeal, Eastminster argued that “the trial court erred in failing to conclude that
the Presbyterian Church (U.S.A.)’s constitution created an express trust that governed HPC’s
property.” Hudson Presbyterian Church, 2009-Ohio-446, at ¶ 20. This Court affirmed the trial
court’s judgment “that Eastminster failed to prove an express trust” because “Eastminster did not
introduce admissible evidence of the Presbyterian Church (U.S.A.)’s constitution.” Id. at ¶ 26.
Although this Court did not explicitly address whether HPC would have been entitled to
summary judgment had the Book of Order been admitted, our opinion set forth a legal
framework consistent with the trial court’s analysis:
In Jones v. Wolf (1979), 443 U.S. 595, the Court held that:
‘Under the neutral-principles approach, the outcome of a church property dispute
is not foreordained. At any time before the dispute erupts, the parties can ensure,
if they so desire, that the faction loyal to the hierarchical church will retain the
church property. They can modify the deeds or the corporate charter to include a
right of reversion or trust in favor of the general church. Alternatively, the
constitution of the general church can be made to recite an express trust in favor
of the denominational church. The burden involved in taking such steps will be
minimal. And the civil courts will be bound to give effect to the result indicated
by the parties, provided it is embodied in some legally cognizable form.’
Accordingly, Jones sanctioned the use of an express trust in a church constitution
as a means of securing the ownership of church property, but specified that the
trust would have to be ‘embodied in some legally cognizable form.’
“In Ohio, ‘[e]xpress trusts arise by a manifested intent, either written or oral, to
create a trust.’ The elements of a trust are as follows:
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‘[T]o constitute an express trust there must be an explicit declaration of trust, * *
* accompanied with an intention to create a trust, followed by an actual
conveyance or transfer of lawful, definite property or estate or interest, made by a
person capable of making a transfer thereof, for a definite term, vesting the legal
title presently in a person capable of holding it, to hold as trustee for the benefit of
a cestui que trust or purpose to which the trust fund is to be applied; or a retention
of title by the owner under circumstances which clearly and unequivocally
disclose an intent to hold for the use of another.’
Unless the settlor and the trustee of a trust are the same person or entity, the mere
assertion that property is held in trust, without the transfer of the legal interest or
title to the property, cannot create an express trust.
(Internal citations omitted.) Hudson Presbyterian Church, 2009-Ohio-446, at ¶ 23-24.
{¶11} Central to the legal analysis of this dispute is the meaning of the language used by
the United States Supreme Court when it noted that when the parties to a hierarchical church
relationship seek to avoid property disputes by including a recitation of an express trust in the
constitution of the denomination, “civil courts will be bound to give effect to the result indicated
by the parties, provided it is embodied in some legally cognizable form.” (Emphasis added.)
Jones v. Wolf, 443 U.S. 595, 606 (1979). Notably, the Supreme Court made this statement in the
context of affirming the “neutral principles” approach to property disputes that it espoused in an
earlier case, Presbyterian Church in U.S. v. Mary Elizabeth Blue Hull Memorial Presbyterian
Church, 393 U.S. 440 (1969). In that case, the Court held that courts could not entangle
themselves in ecclesiastical matters by determining which faction in a church dispute remained
faithful to church doctrine, but nonetheless concluded that property disputes could be resolved by
resort to neutral principles of property law. Id. at 449. As the Court observed, “[c]ivil courts do
not inhibit free exercise of religion merely by opening their doors to disputes involving church
property. And there are neutral principles of law, developed for use in all property disputes,
which can be applied without ‘establishing’ churches to which property is awarded.” Id.7
{¶12} Soon after the Supreme Court articulated the “neutral principles” doctrine, the
Ohio Supreme Court considered how church property cases should be analyzed in Ohio. In
Serbian Orthodox Church Congregation of St. Demetrius of Akron v. Kelemen, 21 Ohio St.2d
154 (1970), the Court looked to the “ordinary indicia of property rights” under Ohio law. Id. at
160. The Court rejected “recognition of an implied-trust theory of real property when a local
church joins a church hierarchy[,]” and looked instead to the manifest expression of the parties’
intent in the articles of incorporation of the local congregation, the recorded deeds, and
instruments of conveyance, if any. See id.
{¶13} Although the U.S. Supreme Court decided Jones ten years later, the result in
Kelemen is entirely consistent with that opinion. The issue squarely before the Court in Jones
was not what evidence would be sufficient in every case to establish the existence of a trust, but
whether the lower court applied the neutral principles doctrine in a constitutional manner when it
determined which of two factions constituted the local church body at issue and to what extent
the lower court could rely on ecclesiastical documents. Jones, 443 U.S. at 606-609.
Significantly, the background for the Court’s analysis was Georgia law, which recognized
implied trusts in this context. See id. at 600.
{¶14} Thus, while Jones firmly established the neutral principles doctrine and provided
guidance with respect to the extent to which courts may look to church documents in resolving
property disputes, it neither set a uniform standard for how such cases should be analyzed nor
required deference to ecclesiastical documents. Instead, it left the matter of what constitutes a
“legally cognizable form” for trusts to determination under state law. Jones, 443 U.S. at 606. In
this respect, Ohio law is well-established: any trust established between church bodies in a
hierarchical relationship must be express, not implied, and the existence of the trust must be
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established by clear and convincing evidence. See Kelemen, 21 Ohio St.2d at 160. See,
generally, Hatch v. Lallo, 9th Dist. No. 20642, 2002-Ohio-1376.
{¶15} In the underlying case, the trial court concluded that HPC’s articles of
incorporation established a voluntary association between HPC and the PCUSA and that they did
not express the requisite intent to establish a trust benefiting the PCUSA. Those articles
provided, in part:
The purpose or purposes for which said corporation is formed are * * * To
voluntarily associate together for divine worship and godly living, agreeably to
the Holy Scriptures, submitting to the authority and form of government as set
forth in the Constitution (as amended) of the United Presbyterian Church in the
United States of America, and under the further authority of Eastminster
Presbytery.
In the malpractice case, the trial court considered whether, in light of the law established by this
Court in Hudson Presbyterian Church, this result stood independently from the 1981 Book of
Order:
Nothing in the articles or bylaws of HPC creates an express trust. The only way
one could infer a trust is to couple HPC’s voluntary association with Eastminster
– as expressed in its articles of incorporation – to Eastminster’s attempt to create a
trust within the language in its Book of Order. Eastminster may have intended
that a trust be established by HPC, but it is plain that it was HPC alone that could
take action to place its property in trust for the benefit of Eastminster. The law
clearly requires more than the bald assertion – by the beneficiary – that a trust
exists. HPC would had to have in some manner indicated its intention to create an
express trust for the benefit of Eastminster. Such is manifestly absent in this
matter. HPC’s articles of incorporation do not indicate such intent. Its bylaws do
not indicate such intent. HPC is listed as the title owner of the real property with
no indication that it owned the property as trustee for Eastminster.
* * * The court in the underlying case found that no trust had been created
because nothing in the HPC articles of incorporation could be considered the clear
and convincing expression of HPC’s intent to create an express trust. Because the
court in the underlying case found that there was no expression of HPC’s intent to
create an express trust, Eastminster could not have won that case even if the Book
of Order had been properly included in the summary judgment record.
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{¶16} This Court agrees with the trial court’s analysis. As an initial matter, we have
searched the appellate file in vain for an affidavit or other means of authenticating the 1981 Book
of Order, provided to the trial court as Exhibit 100, in this case. “The requirements of Civ.R. 56
are not onerous. While a trial court may consider evidentiary materials that do not comply with
Civ.R. 56, this practice should not be viewed as license to disregard the requirements of Civ.R.
56 [and] [n]oncompliance should be the exception rather than the rule.” Cheriki v. Black River
Industries, Inc., 9th Dist. No. 07CA009230, 2008-Ohio-2602, at ¶ 11. Neither party objected,
however, and the trial court appears to have considered Exhibit 100. See, generally, State ex rel.
The V Cos. v. Marshall, 81 Ohio St.3d 467, 473 (1998) (noting that a trial court “may * * * [but]
need not” consider evidence that does not comply with the evidentiary requirements of Civ.R.
56(C).). This Court, therefore, considers it as well. See Cheriki at ¶ 10.
{¶17} Applying the neutral principles of Ohio law to this case, this Court concludes that
even had the 1981 Book of Order been provided in the underlying case in a form contemplated
by Civ.R. 56, Eastminster would not have prevailed. As this Court noted in Hudson
Presbyterian Church, an express trust arises by virtue of the manifested intent of the parties. Id.,2009-Ohio-446, at ¶ 24. When a single party is both settlor and trustee, evidence of a
conveyance is not required, but “words or acts must denote that [the settlor-trustee] is merely the
legal title holder of the trust res and the equitable interest must lie with another.” Hatch, 2002-
Ohio-1376, at ¶ 11. A declaration by the settlor-trustee that the property is held in trust is
sufficient. See id.{¶18} The 1981 Book of Order indicates the PCUSA’s intention to be the beneficiary of
a trust:
All property held by or for a particular church * * * whether legal title is lodged
in a corporation, a trustee or trustees, or an unincorporated association * * * is
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held in trust nevertheless for the use and benefit of The United Presbyterian
Church in the United States of America.
Yet as the purported settlor-trustee, it is HPC’s intention with respect to the property that is
crucial. HPC did not indicate by words or acts that it intended by its voluntary association with
the PCUSA to create a trust over its property. In the absence of a clear expression of HPC’s
intent, and in light of the fact that the trial court in the underlying case determined that HPC’s
affiliation with PCUSA was voluntary in nature, we agree that even had the 1981 Book of Order
been properly before the court in the underlying case, the result would have been the same.
Accordingly, Eastminster cannot demonstrate that negligence on the part of Stark & Knoll, if
any, proximately caused the judgment against it in the underlying case. Eastminster’s first
assignment of error is overruled.
{¶19} Eastminster’s second assignment of error is that that the First Amendment
obligated the trial court in this case to give binding effect to the trust language in the 1981 Book
of Order. In other words, this assignment of error reiterates Eastminster’s argument that the
1981 Book of Order should have been determinative in the underlying case. As noted above,
however, the neutral principles doctrine articulated by the United States Supreme Court and
espoused by the Ohio Supreme Court does not require deference to ecclesiastical documents.
Eastminster’s second assignment of error is overruled.
III.
{¶20} Eastminster’s assignments of error are overruled, and the judgment of the trial
court is affirmed.
Judgment affirmed
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There were reasonable grounds for this appeal.
We order that a special mandate issue out of this Court, directing the Court of Common
Pleas, County of Summit, State of Ohio, to carry this judgment into execution. A certified copy
of this journal entry shall constitute the mandate, pursuant to App.R. 27.
Immediately upon the filing hereof, this document shall constitute the journal entry of
judgment, and it shall be file stamped by the Clerk of the Court of Appeals at which time the
period for review shall begin to run. App.R. 22(C). The Clerk of the Court of Appeals is
instructed to mail a notice of entry of this judgment to the parties and to make a notation of the
mailing in the docket, pursuant to App.R. 30.
Costs taxed to Appellant.
DONNA J. CARR
FOR THE COURT
BELFANCE, P.J.
DICKINSON, J.
CONCUR
APPEARANCES:
TIMOTHY A. SHIMKO, Attorney at Law, for Appellant.
LAWRENCE A. SUTTER, Attorney at Law, JOHN C. LEACH, Attorney at Law, and
STEPHANIE D. ADAMS, Attorney at Law, for Appellee.