NEUTRAL PRINCIPLES V ECCLESIASTICAL PRINCIPLES

While it is true some Courts never find an Ecclesiastical Issue over which to abstain, and some expand Neutral Principles of Law to fill all voids, generally most Courts do not seem to have any trouble with a hands-off approach to church governance.  It is true that non-profit corporations in general and churches in particular can be vulnerable to usurpation because of the volunteer nature of their leadership.  Thus, there is recognized by some Courts a “fraud or collusion” exception to the church autonomy doctrine.

In Moon v Family Federation for World Peace, Slip Op. (DC Cir., 2022), the ongoing litigation between the widow and two sons of the deceased founder was revitalized when the board of directors of Unification International, Inc. allegedly reconfigured the governing documents to permit donation of half of the assets, about half a billion dollars, of Unification to entities “not affiliated” with Family Federation.  We last reported on the litigation between these and affiliated parties on August 3, 2019.  The trial court in this instance concluded the Neutral Principles of Law could be deployed and granted summary judgment to Family Federation, directed the board members be personally liable for the assets, and removed from their positions.  The Court of Appeals for the DC Circuit reversed the summary judgment, wiping out the judgment against the board members, and remanded for a determination of whether the fraud or collusion exception to the church autonomy doctrine was a viable claim.  If the claim survives in the trial court, it may lead to a second judgment.

The failure of the founder to have a firmly structured plan for succession led to years of litigation among the surviving family.  Nevertheless, a deceased founders’ intentions and plans may or may not survive the transition to new leadership resulting in restructuring of the surviving entities and relationships.  In very rare cases, there may be evidence that the restructuring was not based religious beliefs but rather on self-dealing, fraud and conspiracy.

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