The United States Arbitration Act, and the arbitration statutes of each state, may require arbitration between two parties that have voluntarily agreed to arbitrate. Generally, a written contract between the two parties suffices to prove the voluntary agreement to arbitrate. In rare cases, a party seeking to be a third party beneficiary under a contract may be required to arbitrate as if they voluntarily agreed to do so because to take the benefit of a contract usually means consent to all terms. However, voluntary agreement usually cannot be inferred.
In Harbor Christian Fellowship v Southern California District Council of the Assemblies of God, Slip Op. (CA App., 2019) (unpublished) the appellate court reversed the trial court’s order compelling arbitration and vacated the arbitration award in favor of the denomination. The dispute arose because the local church property was deeded by the District Council to itself by quitclaim deed as part of the financial salvage operation necessitated because the local church fell on hard times. The trial court held that the local churches’ participation as an “affiliate” of the District Council constituted acquiescence to the bylaws of the District Council. The District Council bylaws contained a mandatory arbitration provision. However, the appellate court rejected participation as an “affiliate” alone as proof of submission to the bylaws or voluntary agreement to arbitrate. The trial court did not examine the bylaws of the local church. The appellate court held the local church bylaws adopted in 1955 explicitly defined it as a “cooperative fellowship” in contradiction to the bylaws of the District Council. The appellate court noted the District Council did not put forward any other document proving the local church agreed to be bound by the bylaws of the District Council.
The problem with the decision reported is that the courts, both at the trial and appellate level, interfered in church governance contrary to the Ecclesiastical Abstention Doctrine. The trial court interfered by compelling the local church to arbitrate with the denomination. The denomination should have been required to enforce its own arbitration provision by the internal means available to it even if that was only harsh scolding. The appellate court did exactly the same thing in reverse by deciding that a “cooperative fellowship,” as that term is used by the denomination, meant something different than “affiliate” of the District Council in order to vacate the arbitration decision. Both courts should have decided only whether the quitclaim deed was valid or invalid on its face just like any other quitclaim deed in dispute. Either the denomination could prove its authorization using Neutral Principals of Law to file the quitclaim deed or it could not. The arbitration and its outcome were irrelevant.