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St. Mary's Holy Apostolic Catholic Church of the E. v. Benjamin

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT
Aug 30, 2018
No. F073705 (Cal. Ct. App. Aug. 30, 2018)

Opinion

F073705

08-30-2018

ST. MARY'S HOLY APOSTOLIC CATHOLIC CHURCH OF THE EAST, Plaintiff and Appellant, v. APREM BENJAMIN, et al., Defendants and Respondents. THE BOARD OF ST. MARY'S HOLY APOSTOLIC CATHOLIC CHURCH OF THE EAST, Plaintiff and Appellant, v. MAR ADDAI II, et al., Defendants and Respondents. ST. MARY HOLY APOSTOLIC CATHOLIC CHURCH OF THE EAST, et al. Plaintiffs and Respondents, v. STEVE JACOBS, et al., Defendants and Appellants.

Sodhi Law Group, Jakrun S. Sodhi and Ameet S. Birring for Plaintiffs, Defendants and Appellants St. Mary's Holy Apostolic Catholic Church of the East, The Board of St. Mary's Holy Apostolic Catholic Church of the East, Steve Jacobs, Khazzo Maksoud, Raymond Jacobs, Linda Yalda, Janan Bakoz, Aziz Binyamin, David Narsi, Albert Deberowly and Gilbert Deberowly. Berliner Cohen, Michael B. Ijams and Laura Palazzolo for Plaintiffs, Defendants and Respondents St. Mary Holy Apostolic Catholic Church of the East, Aprem Benjamin, Emad Esho, George Samuel, Daniel Youkhana, Albert Youkhana, Mar Addai II and Mar Zaia Khoshaba.


NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 677605)

OPINION

(Super. Ct. No. 677731)
(Consol. with Case No. 677605) (Super. Ct. No. 679548)
(Consol. with Case No. 677605) APPEAL from a judgment of the Superior Court of Stanislaus County. William A. Mayhew, Judge. Sodhi Law Group, Jakrun S. Sodhi and Ameet S. Birring for Plaintiffs, Defendants and Appellants St. Mary's Holy Apostolic Catholic Church of the East, The Board of St. Mary's Holy Apostolic Catholic Church of the East, Steve Jacobs, Khazzo Maksoud, Raymond Jacobs, Linda Yalda, Janan Bakoz, Aziz Binyamin, David Narsi, Albert Deberowly and Gilbert Deberowly. Berliner Cohen, Michael B. Ijams and Laura Palazzolo for Plaintiffs, Defendants and Respondents St. Mary Holy Apostolic Catholic Church of the East, Aprem Benjamin, Emad Esho, George Samuel, Daniel Youkhana, Albert Youkhana, Mar Addai II and Mar Zaia Khoshaba.

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This action arises out of a dispute concerning the governance of St. Mary Holy Apostolic Catholic Church of the East, a California nonprofit religious corporation (St. Mary), which was created under the authority of the Holy Apostolic Catholic Church of the East (Ancient Church). After a dispute arose between St. Mary's board of directors and the Ancient Church's hierarchy, a bishop of the Ancient Church, under the authority of the Ancient Church's patriarch, removed the board of directors, terminated their memberships in the church, and appointed a new board of directors.

When the two boards fought for use of the church premises, the old board brought a lawsuit in St. Mary's name against the new board, seeking a temporary restraining order and preliminary injunction. Eventually, two more lawsuits were filed; one by the old board in its own name against the patriarch, bishop, and the individual members of the new board, and the other in the name of St. Mary and the new board's president. All of the lawsuits require resolution of one dispositive question: Who controls St. Mary?

The new board and its related parties argued the answer to this question requires resolution of ecclesiastical matters, therefore civil courts must defer to the authoritative ecclesiastical body of the Ancient Church. Following a bifurcated bench trial on the parties' equitable claims, the trial court agreed, found the new board was St. Mary's true board, and issued equitable relief that required the old board to relinquish any claim to St. Mary's property.

The old board and its related parties appeal. They contend the dispositive question can be answered under neutral principles of law, without deciding any questions of religious doctrine. They also contend St. Mary and the new board's president as plaintiffs lost standing to maintain their lawsuit when the new board's president resigned during trial, and the trial court should not have granted the equitable relief sought in that lawsuit due to the new board president's unclean hands. Finding no merit to these contentions, we affirm the judgment.

The appellants are St. Mary's Holy Apostolic Catholic Church of the East, The Board of St. Mary's Holy Apostolic Catholic Church of the East, Steve Jacobs, Khazzo Maksoud, Raymond Jacobs, Linda Yalda, Janan Bakoz, Aziz Binyamin, David Narsi, Albert Deberowly and Gilbert Deberowly (collectively appellants).
The respondents are St. Mary Holy Apostolic Catholic Church of the East, Aprem Benjamin, Emad Esho, George Samuel, Daniel Youkhana, Albert Youkhana, Mar Addai II and Mar Zaia Khoshaba (collectively respondents).

FACTUAL AND PROCEDURAL BACKGROUND

In accordance with well-settled principles of appellate review, we summarize the facts in the light most favorable to the prevailing party, resolving all conflicts in the evidence, and drawing all legitimate inferences, in favor of the judgment. (Weeks v. Baker & McKenzie (1998) 63 Cal.App.4th 1128, 1137-1138.)

The Ancient Church

The Ancient Church is a hierarchical "apostolic" church whose spiritual and temporal leader is the Patriarch, also referred to as the Catholicos. The Patriarch is the highest authority and supreme ruler of the Ancient Church and its hierarchy. Under the Patriarch are the archbishops, bishops, and priests. The bishops, who are also referred to as metropolitans, are accountable to the archbishops, who are accountable to the Patriarch, and the lower ranks cannot transgress the edicts of the higher ranks. The Ancient Church recognizes Mar Addai II as its Patriarch.

The Ancient Church was founded on canons that have existed for well over 1,000 years. The Ancient Church's origins derive from its acceptance of the canons of the Council of Nicea at the Synod of Mar Aba in 410. Those canons are a set of synodical laws which govern the way the churches, bishops, and patriarchs function. These laws are "legally structurally part of the legal system of the church" and are "doubly binding" because they are also referenced in the Nomocanons (a collection of the Ancient Church canons through 1290 that the Ancient Church adopted in 1318). These canons continue to govern the Ancient Church.

The Ancient Church is based in Baghdad, Iraq, and has parishes in Iraq, Syria, Europe, Canada, America, Australia, and New Zealand. The parishes are organized into dioceses, with a bishop in charge of each diocese. The Ancient Church's members and clergy are Assyrian, a Middle Eastern ethnic group following the Christian faith.

The Canon Law

Under the canon law of the Ancient Church, one cannot be a member of the Ancient Church without being subject to the Patriarch's absolute power. Moreover, one cannot claim to be only a member of the nonprofit religious corporation called St. Mary and separate one's self from the Ancient Church's authority, because "the purpose of the nonprofit is to be part of the Ancient Church of the East, and to be part of the Ancient Church of the East, you have to recognize the authority of the Patriarch." According to the Synod of 424, "whoever is inferior to the Catholicos, and his disciple and subject, must be subject to the judgment of the Catholicos and must accept voluntarily all the sentences that emanate from him." The laity are disciplined by "separation until repentance." Once a member has been disciplined, a bishop or metropolitan may not, under any circumstances, "block or suspend a censure which the Patriarch has put in place."

Two academics, Dr. Edward Watts and Dr. Jonathan Philip Roth, who both have Ph.Ds in ancient history, testified as experts on the Ancient Church's history and canons, and the Patriarch's power. The trial court found their testimony persuasive and relied on it extensively as a basis for its findings.

The canon law of the Ancient Church governs church property. For example, tract 8-8, capita 13 of the Nomocanons provides: "Those things which belong to the church with all care and good conscience and faith in God should be conserved and preserved by the church, which sees and judges all things. Indeed, these things ought to be dispensed according to the judgment and power of the bishop, who is trusted by all the people and the spirits of those who come together." The Nomocanons also provide: "The Church's properties shall be preserved for her [the church], diligently, in good conscience, and with faith in God who sees and judges all. In addition, these assets must also be known as being under the administration of the bishop, who has been entrusted with those properties by those assembled." Church property includes the property of local parishes like St. Mary.

According to Dr. Roth, assertions at trial by former bishops Mar Shallita and Mar Toma that the Patriarch has no power over the financial affairs of the Ancient Church or St. Mary were not consistent with the church's history or its canon law. As Dr. Roth explained, "... St. Peter is told by Christ '. . . what you do on earth, I'll do in Heaven.' [¶] . . . So he's given this authority. And in apostolic churches, that's interpreted to mean not only ecclesiastical, theological authority . . . , but also that he's in charge of all the church temporally. In other words, he has . . . control over all the church; specifically the physical churches . . . He controls all the money of the church."

The affiliation at the time of trial of these former bishops of the Ancient Church was contested.

St. Mary's Articles of Incorporation and Bylaws

The articles of incorporation, constitution, and bylaws of St. Mary (the local governing documents) show that the corporation is a subordinate and component part of the Ancient Church of the East, subject to the governance of the Patriarch and the dogma, doctrine, rules, and faith of the church, including the Ancient Church's canon laws. St. Mary was established under the authority of Patriarch Mar Addai II, and incorporated as a nonprofit religious corporation in 1985, using a standard form articles of incorporation, which were amended five times.

At the time this dispute began, the articles of incorporation provided, in relevant part: (1) "The name of this corporation shall be St. Mary Holy Apostolic Catholic Church of the East. This corporation is a subordinate corporation created under the authority of the Ancient Church of the East"; (2) the corporation is a religious corporation organized under the nonprofit religious corporation law to engage primarily and exclusively in religious purposes, and its general purposes are to exercise all rights and powers conferred on nonprofit religious corporations under the laws of California, including the power to contract, rent, buy or sell personal or real property; (3) the corporation is comprised of "members who have accepted the Holy Apostolic doctrine of the Ancient Church of the East"; (4) the corporation "is a subordinate and component part of the Catholic Patriarchate of the Holy Apostolic Catholic Church of the East" and "shall dissolve when its charter from the said Catholic Patriarchate of the Holy Apostolic Catholic Church of the East is surrendered or revoked"; and (5) upon dissolution or winding up of the corporation, its assets, after payment of debts, "shall be distributed to a nonprofit fund, foundation or corporation, organized and operated exclusively for charitable purposes" and that had established its federal tax exempt status, "at the direction of the board of directors and general membership" of St. Mary. (St. Mary Articles of Incorporation, Arts. I, II, V, & VI.)

The constitution of St. Mary (SMC) provides that it is "a branch of The Ancient Church of the East." Its legal authority as a religious body is derived from the state laws governing nonprofit corporations and the charters of religious organizations, while it is "ecclesiastically governed by His Holiness Catholicos Patriarch of the East, who presently is, His Holiness Mar-Addai II, the supreme head of the Church and Holy Synod . . . The Patriarch . . . is the final authority for all ecclesiastical questions and issues including, but not limited to, the assigning and reassigning of the Parish Priest." (SMC, Arts. I, II.) The church's members are comprised of those faithful who "have accepted the Holy Apostolic doctrine of the Ancient Church of the East and recognize the Prelates of the Church having the ecclesiastical authority over the religious functions of this parish[,]" and those who wish to be members must attest to their "solidarity and support of this Church." (SMC, Art. III.)

The SMC states the corporation's purpose is "to operate as a Church for religious purposes, to practice religious worship, services, ministrations, sacraments, and to perpetuate Christian fellowship, according to Church dogma, doctrine, rules and faith of our Apostolic Church, and to establish religious, educational and cultural institutes to inspire in our membership a sense of responsibility to preserve the Assyrian Culture, Heritage, and to promote good citizenship." (SMC, Art. IV.)

The board of directors and officers of the corporation, who are collectively referred to as the "Mutwa," are elected from among the membership. (SMC, Arts. VI & VII.) The bylaws set forth the procedures for electing the board of directors and officers. (St. Mary Bylaws, Art. I.) The Mutwa "accumulate and control all funds and properties acquired for the Church," including property deeds, and decide "secular items submitted by the membership and committees," but do not vote on religious matters, which "remain within the domain of the immediate Clergy or the Prelates." (SMC, Art. XI, §§ 1, 2.)

The bylaws address discipline of the members, stating that members may be suspended for various acts. Any suspension of a member requires written approval by the Diocesan Bishop. In addition, "[a]ny misconduct by a member which is likely to reflect unfavorably upon this organization shall be dealt [with] by the Diocesan Bishop," with the member having the right to be heard on his own behalf before the Diocesan Bishop. (St. Mary Bylaws, Art. X.)

According to the bylaws, upon winding up and dissolving the corporation, all assets remaining after the payment of the corporation's debts and obligations "shall be distributed to another 'Ancient Church of the East' Parish or Diocese (as determined by the Diocesan Bishop)," which is organized and operated exclusively for religious purposes and has established its tax-exempt status. (St. Mary Bylaws, Art. XI, § 2.)

Removal of the Jacobs Board and Appointment of the Benjamin Board

In the early months of 2012, the board of St. Mary consisted of Steve Jacobs, Khazzo Maksoud, Raymond Jacobs, Linda Yalda, Jana Bakoz, Aziz Binyamin, David Narsi, and Albert Deberowly (the Jacobs Board). On July 14, 2012, Mar Zaia Khoshaba (Bishop Khoshaba), who was then a bishop of the Ancient Church, visited St. Mary and stayed for several days. Before Bishop Khoshaba's visit, Patriarch Mar Addai II gave him a letter appointing him the "Patriarchal Representative for the United States of America[,]" with "full spiritual and administrative authority."

On July 15, 2012, after Bishop Khoshaba presided over Mass, he announced he was suspending the members of the Jacobs Board. Chaos ensued, based generally on the parties' competing positions as to Bishop Khoshaba's power over St. Mary and its board of directors. That same day, Bishop Khoshaba wrote a letter to Steve Jacobs, as president of the Jacobs Board, immediately "suspending all members" of the Jacobs Board and "removing them from any positions and authorities within the parish." Bishop Khoshaba stated this action was within his authority as bishop of the Ancient Church and representative of the Patriarch, "with full powers over the Diocese of the United States and Canada in accordance with the letter dated July 1, 2012 . . . ." Bishop Khoshaba directed the Jacobs Board not to use any parish funds or property. The next day, Bishop Khoshaba, acting on behalf of the Patriarch, appointed a "temporary board of directors" for St. Mary, consisting of Aprem Benjamin, Albert Youkhana, Emad Esho, George Samuel, and Daniel Youkhana (the Benjamin Board).

On July 17, 2012, Steve Jacobs, Raymond Jacobs, and parish priest Edward Bakoz removed all of the money from the St. Mary bank accounts, which totaled nearly $91,000, and deposited the money at a different bank. The next day, the members of the Jacobs Board each received a letter from Bishop Khoshaba terminating their memberships in the Ancient Church "based on Church Synod Laws," and setting forth reasons for their terminations. Bishop Khoshaba later terminated Rev. Bakoz from his priestly service. Within weeks of removal of the Jacobs Board, St. Mary's members held an election for the board of directors, electing the members of the Benjamin Board.

In the days and weeks that followed the suspension and termination of the Jacobs Board, the members of each board sought to exclude the other's members from the church premises. On one occasion, Bishop Khoshaba held evening prayers on the sidewalk in front of the church because the Jacobs Board locked the church and took the keys from the priest. The Benjamin Board called a locksmith and locked the Jacobs Board out of the church. This battle for possession of the church continued, with security guards and sheriff's deputies being called, until a sheriff's deputy required the two boards to agree to a sharing arrangement, whereby church members following each board would hold services on alternating weekends and designated days of the week. Thus, at the time of trial, the Jacobs Board was in control of St. Mary premises every other Sunday, and part of every week. In addition, the Jacobs Board was in possession of bank accounts and some records of St. Mary.

The Three Lawsuits

On August 17, 2012, the Jacobs Board filed a complaint in the name of "St. Mary's Holy Apostolic Catholic Church of the East, a non-profit corporation" against the individual members of the Benjamin Board for a temporary restraining order, and preliminary and permanent injunctions, in superior court case No. 677605. That complaint alleges "a dispute has arisen between Plaintiff and the Ancient Church of the East, which Plaintiff is affiliated with, regarding the control of church funds, revenues, properties, church property deeds, insuring agreements, and church policies." The complaint further alleges the members of the Benjamin Board did not have the authority to assert they were the new members of the board of directors, and they wrongfully excluded the Jacobs Board members from attending to their lawful duties by changing the church's locks. The Jacobs Board sought to enjoin the Benjamin Board from interfering in the management of the church and church property.

On August 30, 2012, the Jacobs Board filed a "Verified Complaint for Injunctive Relief; Breach of Fiduciary Duty; Declaratory Relief; and Destruction of Property" in the name of "The Board of St. Mary's Holy Apostolic Catholic Church of the East, a non-profit corporation," in superior court case No. 677731. The named defendants are Mar Addai II, Mar Zaia Khoshaba, St. Mary's Holy Apostolic Catholic Church of the East, Inc., and the individual members of the Benjamin Board. The complaint alleges a controversy exists "as to the duties of the [Jacobs] Board versus the duties of the Patriarch as defined in the Constitution and Bylaws governing" the church and seeks to enjoin the defendants from interfering with church property and management. It also seeks to order the defendants to follow the SMC and bylaws, separating and limiting the Patriarch's duties to ecclesiastical issues and the board's duties to all secular issues.

A third lawsuit was filed against the individual members of the Jacobs Board and other defendants in superior court case No. 677605. The operative fourth amended complaint was brought by "St. Mary Holy Apostolic Catholic Church of the East, a California corporation, and Aprem Benjamin, in his capacity as member and President of the Board of St. Mary Holy Apostolic Catholic Church of the East, acting in his representative capacity on behalf of the Corporation and its members." The complaint alleges a controversy exists as to the governance of St. Mary and seeks declaratory and injunctive relief as to the proper board to manage St. Mary funds and property. The complaint also seeks equitable remedies, including an accounting, the imposition of a constructive trust on parish funds and property, an order quieting title as to the church real property, and various other legal remedies.

The trial court consolidated the three cases for all purposes.

Bifurcated Trial on Equitable Claims

In June 2015, the trial court bifurcated trial on the equitable claims for declaratory and injunctive relief from the remaining issues in all three cases. At a pretrial hearing, the trial court noted that other equitable causes of action raised in the third lawsuit would also be decided as appropriate.

A bench trial commenced on June 9, 2015, and concluded on July 16, 2015, after 22 days of testimony by 20 witnesses, and the introduction of numerous documentary exhibits. After post-trial briefing, the trial court issued its decision in favor of the Benjamin Board, Mar Addai II, Bishop Khoshaba, and St. Mary Holy Apostolic Catholic Church of the East, Inc., and ordered their attorneys to prepare a statement of decision. A proposed statement of decision was submitted, to which appellants filed written objections. The trial court subsequently filed its final statement of decision, finding in favor of respondents, and entered judgment accordingly.

Only the post-trial brief of the Benjamin Board, Mar Addai II, Bishop Khoshaba, and St. Mary Holy Apostolic Catholic Church of the East, Inc., is in the clerk's transcript.

The trial court made the following findings of fact: (1) the Nomocanons are the most comprehensive set of the canons of the Ancient Church of the East as may presently exist; (2) the Ancient Church is a hierarchical and apostolic church, with the Patriarch as its supreme authority; (3) the Ancient Church has both ownership and ultimate control of all of the Ancient Church's property, including St. Mary's property; (4) St. Mary's local governing documents include the articles of incorporation and the combined document that included the SMC and bylaws; (5) based on the local governing documents, St. Mary is a subordinate and component part of the Ancient Church, subject to the Patriarch's governance and the church's dogma, doctrine, rules, and faith, including the Ancient Church's canon laws; (6) Bishop Khoshaba acted as the Patriarch's delegate in taking the actions concerning the boards; (7) the suspension of the Jacobs Board, termination of the board members' church memberships, the appointment of the Benjamin Board, and the termination of Rev. Bakoz as parish priest were ecclesiastical actions by the Ancient Church hierarchy not subject to court review; and (8) the Jacobs Board possessed property of St. Mary belonging to the Ancient Church.

The trial court also made conclusions of law. The court noted the issue before it was which group rightfully represented St. Mary—the Jacobs Board or the Benjamin Board. The court found this was a matter of church discipline and hierarchy, as the articles of incorporation make it clear that St. Mary acknowledges it is subordinate to the Ancient Church, which is impliedly incorporated into St. Mary governing documents because the Patriarch's supremacy in the governance of the Ancient Church is literally a tenet of faith. Because removal of the Jacobs Board was an exercise of the church hierarchy's authority over church matters and property, the question of which board is the true board is a religious question. Therefore, the court was required to defer to the Patriarch's decision, acting through his delegate Bishop Khoshaba, to suspend the Jacobs Board, terminate their memberships in the Ancient Church, and appoint the Benjamin Board.

As part of its application of neutral principles of law, the trial court examined St. Mary's local governing documents and the Ancient Church's canon law, which showed the canon law placed St. Mary's members and property under the Patriarch's ultimate control. Moreover, under St. Mary's local governing documents, the termination of the Jacobs Board's memberships rendered them ineligible to serve as directors. After considering the evidence, the court could not find the Jacobs Board was the true governing board, as to do so would not only contradict the local governing documents and church hierarchy's determination as to who is a member of the church, but would intrude on the religious function of the Ancient Church and the parish by impeding the exercise of canon law, which is within the sole province of the Ancient Church's hierarchy, and place persons whose memberships had been terminated in control of St. Mary and its property.

The trial court further found the appointment of the Benjamin Board was within the ultimate authority of the Patriarch and his designee, Bishop Khoshaba. Moreover, the appointment was consistent with St. Mary's local governing documents, which incorporate the Ancient Church's canon law. After applying neutral principles of law and giving the required deference to the Ancient Church hierarchy on ecclesiastical issues, the court found the Benjamin Board, as presently constituted, was the true governing board of St. Mary.

The trial court rejected the Jacobs Board's assertion that the SMC and bylaws separated the "ecclesiastical" from the "secular" or "legal," since that document was subordinate to, and could not conflict with, the articles of incorporation, which make the entire corporation subordinate to the Patriarchate and a component part of the Ancient Church. To the extent the SMC and bylaws attempted to carve out anything legal or secular, they conflicted with the articles of incorporation. Moreover, it was an article of faith in the Ancient Church that one could not be a member without being subject to the Patriarch's absolute power, and one could not separate oneself from the Ancient Church's authority by claiming to be only a member of St. Mary.

Even if the removal of the Jacobs Board and installation of the Benjamin Board were inconsistent with any particular provision in the local governing documents, those inconsistencies were not sufficient to overcome the public policy requiring the court to defer to the church's control over its members and property according to its own canon law, which is explicitly and impliedly incorporated into the local governing documents. In addition, any relief the court might give were there irregularities could not benefit the Jacobs Board, as their memberships in the Ancient Church had been terminated.

Because the trial court found the Jacobs Board possessed property of St. Mary belonging to the Ancient Church, the court stated it would impose a constructive trust, and order both an accounting and permanent injunction, in order to afford St. Mary appropriate relief. The court stated it would also quiet title to St. Mary property in the Benjamin Board, subject to the ultimate control of the Ancient Church.

DISCUSSION

I. The Proper Board

Appellants' primary contention on appeal is that the trial court failed to resolve the issues of which board controls St. Mary, and whether St. Mary or the Ancient Church controls St. Mary's property, by applying "neutral principles of law" as described in In re Episcopal Church Cases (2009) 45 Cal.4th 467 (Episcopal Church Cases). Appellants assert the trial court completely ignored St. Mary's local governing documents and failed to consider the law regarding nonprofit religious corporations. They argue the trial court thus erred when it found the Ancient Church had both ownership and ultimate control of all of the Ancient Church's property, including St. Mary's property, and the removal of the Jacobs Board, and appointment of the Benjamin Board, were ecclesiastical decisions by the Ancient Church hierarchy.

A. Standard of Review

Our review of the trial court's decision presents mixed questions of law and fact. To the extent the trial court determined the ecclesiastical rule limited its authority to intervene, "we must consider de novo whether it was correct in doing so as a matter of law. However, to the extent that determination was itself based on weighing disputed facts in the evidentiary record, our review must be on the basis of substantial evidence." (Concord Christian Center v. Open Bible Standard Churches (2005) 132 Cal.App.4th 1396, 1408-1409 (Concord Christian).) To the extent our determination of this issue "depends on the judicial interpretation of the articles of incorporation, bylaws, and other governing documents . . ., we must apply neutral principles of law de novo." (Id. at p. 1408; see also Kim v. The True Church Members of Holy Hill Community Church (2015) 236 Cal.App.4th 1435, 1445 (Kim).) The application of the governing documents to the circumstances presented, however, depends on an analysis of the evidence adduced below, which is not undisputed. To that extent, our review is "subject to the well-established standard applicable to any claim that a judgment or finding is not supported by the evidence in the record. Under that standard, we must consider all the evidence in the light most favorable to the prevailing parties, giving them the benefit of every reasonable inference, and resolving conflicts in support of the judgment." (Concord Christian, supra, at pp. 1408-1409.)

We apply the basic tenets prescribing the scope and limits of appellate review. (Kim, supra, 236 Cal.App.4th at p. 1444.) " 'An appealed judgment is presumed to be correct. We will indulge all intendments and presumptions to support the judgment on matters as to which the record is silent and prejudicial error must be affirmatively shown.' " (Ibid.) "No judgment shall be set aside . . . for any error as to any matter of procedure, unless, after an examination of the entire cause, including the evidence, the court shall be of the opinion that the error complained of has resulted in a miscarriage of justice." (Cal. Const., art. VI, § 13.) "Prejudice is not presumed, and the burden is on the appealing party to demonstrate that a miscarriage of justice has occurred." (Waller v. TJD, Inc. (1993) 12 Cal.App.4th 830, 833; accord, Kim, supra, 236 Cal.App.4th at p. 1444.)

B. Law Governing Resolution of Disputes Involving Religious Organizations "The First and Fourteenth Amendments of the United States Constitution ' "severely circumscribe[]" ' the role of civil courts in litigation involving religious institutions." (Kim, supra, 236 Cal.App.4th at p. 1445, quoting Serbian Eastern Orthodox Diocese v. Milivojevich (1976) 426 U.S. 696, 709 (Milivojevich).) " '[W]here resolution of the disputes cannot be made without extensive inquiry by civil courts into religious law and polity, the First and Fourteenth Amendments mandate that civil courts shall not disturb the decisions of the highest ecclesiastical tribunal within a church of hierarchical polity, but must accept such decisions as binding on them, in their application to the religious issue of doctrine or polity before them.' " (Kim, supra, 236 Cal.App.4th at p. 1445.)

" 'The prohibition against civil court participation in sectarian disputes extends to issues involving membership, clergy, credentials and discipline, as well as religious entity governance and administration.' " (Kim, supra, 236 Cal.App.4th at p. 1445, quoting New v. Kroeger (2008) 167 Cal.App.4th 800, 815 (New); see also Jones v. Wolf (1979) 443 U.S. 595, 602, 603-604 (Jones), Concord Christian, supra, 132 Cal.App.4th at p. 1411.) "Civil courts cannot interfere in disputes relating to religious doctrine, practice, faith, ecclesiastical rule, discipline, custom, law, or polity." (New, supra, 167 Cal.App.4th at p. 815.) The term "polity" refers to " ' "the general governmental structure of a church, the organs of authority and the allocation and locus of its judicatory powers as defined by its own organic law." ' " (Ibid.)

Deference to ecclesiastical matters is greatest in hierarchical churches. (Classis of Central California v. Miraloma Community Church (2009) 177 Cal.App.4th 750, 760 (Miraloma).) "A hierarchical church has been defined as one 'in which individual churches are "organized as a body with other churches having similar faith and doctrine[, and] with a common ruling convocation or ecclesiastical head" vested with ultimate ecclesiastical authority over the individual congregations and members of the entire organized church. [Citations.] It has long been established that in such a hierarchical church, an individual local congregation that affiliates with the national church body becomes "a member of a much larger and more important religious organization, . . . under its government and control, and . . . bound by its orders and judgments." [Citations.] In contrast, a congregational church is defined as one "strictly independent of other ecclesiastical associations, and [one that] so far as church government is concerned, owes no fealty or obligation to any higher authority." ' " (Ibid., quoting Concord Christian, supra, 132 Cal.App.4th at p. 1409; accord, New, supra, 167 Cal.App.4th at pp. 815-816.)

As to non-ecclesiastical matters such as intrachurch property disputes, the United States Supreme Court specifically approved the "neutral principles of law" approach to resolving these issues: " '[T]here are neutral principles of law, developed for use in all property disputes, which can be applied without "establishing" churches to which property is awarded.' " (Jones, supra, 443 U.S. at p. 599.) The California Supreme Court has adopted this approach, holding that we must apply the "neutral principles" approach when resolving church property disputes in a hierarchical church. (Episcopal Church Cases, supra, 45 Cal.4th at p. 473.) As our Court explained: "State courts must not decide questions of religious doctrine; those are for the church to resolve. Accordingly, if resolution of a property dispute involves a point of doctrine, the court must defer to the position of the highest ecclesiastical authority that has decided the point. But to the extent the court can resolve a property dispute without reference to church doctrine, it should apply neutral principles of law. The court should consider sources such as the deeds to the property in dispute, the local church's articles of incorporation, the general church's constitution, canons, and rules, and relevant statutes, including statutes specifically concerning religious property, such as Corporations Code section 9142." (Episcopal Church Cases, supra, 45 Cal.4th at p. 485.)

C. The Removal of the Jacobs Board and Installation of the Benjamin Board

Appellants do not dispute the trial court's findings that St. Mary is a subordinate member of the Ancient Church hierarchy and subject to the Patriarch's governance, as well as to the Ancient Church's dogma, doctrine, rules and faith, including its canons. Since St. Mary is part of a hierarchical church, the court "must accept as binding and defer to decisions by religious tribunals with respect to religious doctrine, practice, faith, ecclesiastical rule, discipline, custom, law, and religious entity governance and administration." (New, supra, 167 Cal.App.4th at p. 816; Jones, supra, 443 U.S. at p. 602.) The issue here is whether the decisions to remove the Jacobs Board, terminate the Jacobs Board's church memberships, and install the Benjamin Board were ecclesiastical decisions and, if not, whether the matter may be resolved by applying neutral principles of law.

The trial court found the suspension of the Jacobs Board, and the subsequent termination of the church memberships of the individual board members, were ecclesiastical actions by the Ancient Church hierarchy. We agree, as these actions were authorized by the highest ecclesiastical authority of the Ancient Church—the Patriarch—acting through his representative, Bishop Khoshaba, and involved decisions regarding church discipline and membership.

The evidence established that in 2010, Rev. Bakoz and Steve Jacobs refused to release a note on the St. Schmooni parish in Hamilton, Ontario, Canada, despite signing a document attesting to the Patriarch that they would do so. Thereafter, Steve Jacobs disseminated a petition requesting the Patriarch to defend himself in court against false rumors being spread against him. Bishop Khoshaba testified that Steve Jacobs sent him two emails in 2012, with letters attached, which requested the Patriarch to allow the Jacobs Board and the St. Schmooni parish to address rumors of patriarchal transgressions through legal channels. The Patriarch, however, had been absolved of these allegations at a Holy Synod in 2011. The Patriarch was not happy about the correspondence, so he sent Bishop Khoshaba to "go and take a look at the problems [at St. Mary] and find out what is happening with the archdiocese." After Bishop Khoshaba temporarily dissolved the Jacobs Board, the Jacobs Board refused to meet with him, locked the gates to the church, took the church's keys from the priest, and removed virtually all of the church's funds from St. Mary's bank account without permission. Thereafter, Bishop Khoshaba removed the Jacobs Board and terminated their memberships in the Ancient Church.

As respondents point out, the Ancient Church's canon law provides that the Jacobs Board members had no right to question the Patriarch, disregard his orders, and show disrespect to his delegate. The canons give the Patriarch, and his delegate, authority to terminate church members and to take them back if they repent. Moreover, Article X, section 5 of St. Mary's bylaws gives the Diocesan Bishop the authority to "deal[]" with "[a]ny misconduct by a member which is likely to reflect unfavorably upon this organization[.]" Since the church hierarchy terminated the church memberships of the Jacobs Board, the trial court was required to defer to that action. (See, e.g., Korean United Presbyterian Church v. Presbytery of the Pacific (1991) 230 Cal.App.3d 480, 502 [where the presbytery was the authoritative ecclesiastical body charged with responsibility of determining which of two factions of the church was the "true church," the presbytery's decision on that issue become binding and conclusive on the trial court].)

Once Bishop Khoshaba terminated the church memberships of the Jacobs Board, they could not continue to serve on the St. Mary board of directors. According to the articles of incorporation and SMC, only the faithful—those who accept the Holy Apostolic doctrine of the Ancient Church and recognize the church's prelates have ecclesiastical authority over the parish's religious functions—can be members of St. Mary. Moreover, under SMC Articles VI and VII, only members may hold a position as a director or officer of St. Mary. Thus, when the Jacobs Board's memberships were terminated, they were by definition disqualified from serving as officers or directors. Since the court cannot intrude on the parent church's decision to terminate their memberships, the court cannot restore them to their former positions as directors or officers.

Similarly, Bishop Khoshaba's appointment of the Benjamin Board did not violate St. Mary's bylaws. The bylaws contemplate that board vacancies may occur, which "shall be filled by a member appointed to the respective position by the president approved by the Board of Directors without undue delay, at the next Mutwa's regular meeting or a special meeting called for that purpose." (SMC, Art. IX § 4.) The bylaws, however, are silent on what should happen if the positions of the entire board of directors, including the president, are vacant. In such a scenario, filling the vacancies through appointment by the Patriarch and Bishop Khoshaba is consistent with the numerous bylaw provisions establishing St. Mary's subservience to the Ancient Church, including that St. Mary is a "branch of The Ancient Church of the East"; St. Mary is "ecclesiastically governed by His Holiness Catholicos Patriarch of the East, who presently is, His Holiness Mar-Addai II, the supreme head of the Church"; and the "corporation is a religious corporation . . . organized under the nonprofit religious corporation law . . . to perpetuate Christian fellowship, according to the Church dogma, doctrine, rules and faith of our Apostolic Church . . . ." (SMC, Arts. I, II § 2, & IV.)

Appellants assert the local governing documents draw a clear distinction between ecclesiastical and legal authority. They contend that under the bylaws, St. Mary is only subordinate to the Ancient Church on ecclesiastical matters, while property rights and corporate governance are vested with the board, and trial testimony by their witnesses, Mar Toma and Mar Shallita, shows the division between ecclesiastical and secular authority. They claim that nothing in the bylaws or articles of incorporation allows the Jacobs Board to be "ecclesiastically" removed and another board to be "ecclesiastically" put in its place without an election or other corporate process.

Appellants cite Mar Toma's testimony that local parishes own and control their own property and money, and are run by their own boards, and the church hierarchy has no control over local church property, money, or governing bodies, and Mar Shallita's testimony that the Ancient Church has never used the canons Bishop Khoshaba referenced, the local parish's property belongs to the local parish, and the local parishes select their own governing bodies and control their operations. The trial court, however, rejected this testimony, finding instead that the Nomocanons are the most comprehensive set of canons of the Ancient Church, and Mar Shallita's and Mar Toma's testimony was not consistent with the church's history or canon laws.

This claim fails because even were there areas under the local governing documents in which the St. Mary's board had autonomy, the individuals on the Jacobs Board could not exercise it after July 2012 as the Patriarch removed them as members of the church, thereby precluding them from serving on the board. Questions of church membership are purely ecclesiastical and beyond the court's ability to decide. (Jones, supra, 443 U.S. at pp. 602, 603-604; see also Metropolitan Phillip v. Steiger (2000) 82 Cal.App.4th 923, 930 ["civil courts are 'ill-equipped' to resolve disputes over which faction represents the true church".)

Appellants contend the individuals on the Jacobs Board are still members of the Ancient Church because Bishop Khoshaba testified that, under the canon law, only clergy may be excommunicated. Bishop Khoshaba did indeed testify the members of the Jacobs Board were not excommunicated. He also testified, however, that they were "stopped," which means they were separated from the church, and not allowed to come to church or attend services, until they repented. Bishop Khoshaba confirmed the canon law gives the Patriarch, archbishops, and bishops authority to terminate members and to take them back when they repent, and when he stopped the board members, he terminated their church memberships. Bishop Khoshaba's testimony supports the trial court's finding that the Jacobs Board's church memberships were terminated.

Bishop Khoshaba stopped them because they did not abide with the decision of the Holy Synod of 2011, they took the keys from the priest, and they did not allow Bishop Khoshaba to assume his responsibilities and pray in church.

The United States Supreme Court's decision in Milivojevich is instructive. There, an ecclesiastical tribunal of a hierarchical church decided to defrock a bishop who refused to accept the church's reorganization, on the ground it contravened the diocese's administrative authority, as well as his suspension, on the ground it was not effectuated in compliance with the parent church's constitution and laws. (Milivojevich, supra, 426 U.S. at pp. 704-706.) The Illinois Supreme Court held a court could invalidate the defrocking decision because the church's actions violated its own policies and rules. (Id. at p. 708.)

The High Court concluded the Illinois Supreme Court had "unconstitutionally undertaken the resolution of quintessentially religious controversies whose resolution the First Amendment commits exclusively to the highest ecclesiastical tribunals of the[ir] hierarchical church." (Milivojevich, supra, 426 U.S. at p. 720.) While the Court recognized that resolution of the religious dispute over the bishop's defrockment determined who controlled a monastery and who was the principal officer of the property-holding religious corporations, "civil courts must accept that consequence as the incidental effect of an ecclesiastical determination that is not subject to judicial abrogation, having been reached by the final church judicatory in which authority to make the decision resides." (Id. at pp. 709, 720.) In sum, the Court held "the First and Fourteenth Amendments permit hierarchical religious organizations to establish their own rules and regulations for internal discipline and government, and to create tribunals for adjudicating disputes over these matters. When this choice is exercised and ecclesiastical tribunals are created to decide disputes over the government and direction of subordinate bodies, the Constitution requires that civil courts accept their decisions as binding upon them." (Id. at pp. 724-725.)

Similarly here, the highest authority of the Ancient Church, the Patriarch, acting through his delegate, Bishop Khoshaba, decided to terminate the church memberships of the Jacobs Board. Review of this decision would necessarily require us to inquire into religious law and polity, which we may not do. While the effect of this decision was to divest the Jacobs Board of their positions as members of St. Mary's board of directors, we "must accept that consequence as the incidental effect of an ecclesiastical determination that is not subject to judicial abrogation . . . ." (Milivojevich, supra, 426 U.S. at p. 720.)

The ecclesiastical and secular dichotomy that appellants assert exists does not mean that Bishop Khoshaba was without power to appoint the Benjamin Board. As we have explained, the bylaws are silent on what should happen if the entire board of directors, including the president, are vacant, and therefore filling the vacancies through appointment by the Patriarch and Bishop Khoshaba is consistent with the numerous bylaw provisions establishing St. Mary's subservience to the Ancient Church.

The sole case appellants rely on, Iglesia Evangelica Latina, Inc. v. Southern Pacific Latin American Dist. of the Assemblies of God (2009) 173 Cal.App.4th 420 (Iglesia Evangelica), is readily distinguishable. That case involved a hierarchical national church comprised of a general council, regional district councils, and two types of churches—general council churches, which have their own boards and operate independently, and district council churches, which are subject to direct control by their district councils. (Id. at p. 424.) As a result of a dispute between a general council church's pastors, the district council removed the pastors, converted the local church from a general council church to a district council church, and had the local church transfer its real property to the district council. (Id. at p. 425.) The trial court ruled that it could not interfere with the district council's decisions because the national church was a hierarchical church and the local church agreed to be governed by the national church's and district council's constitution and bylaws, which gave the regional district the absolute authority to resolve disputes. (Id. at pp. 431-432.)

In reversing the trial court, the appellate court explained: "The rule of deference to ecclesiastical decisions . . . does not require us to ignore [the local church's] secular corporate form. Because we can resolve the issue of whether [the regional district's] corporate takeover of [the local church] was proper without reference to . . . church doctrine, we apply neutral principles of law to this dispute." (Iglesia Evangelica, supra, 173 Cal.App.4th at p. 440.) The appellate court examined the local church's bylaws and observed there was no evidence the district council complied with those provisions in conducting its corporate takeover of the local church. (Id. at pp. 440-441.) It also examined the governing documents of the national church and the district council, and concluded provisions in them were insufficient to permit the district council to ignore the local church's corporate form. (Ibid.) Moreover, the governing documents did not allow the district council to supplant the local church's ownership of its property and the district council did not comply with the express provisions of its own bylaws governing transfers of property. (Id. at pp. 443-444.) Because the national church's constitution and bylaws expressly recognized that a sovereign church, such as the local church, owned its property, and the governing documents did not remove that protection on the conversion of a sovereign church to a district council church, the district council could not rely on the national church's hierarchical structure and provisions for subordination of churches to supplant the local church's ownership. (Ibid.)

In contrast to the sovereign local church in Iglesia Evangelica, which operated independently and was self-governing, St. Mary is not independent of the Ancient Church. St. Mary's articles of incorporation specifically provide that St. Mary is a "subordinate corporation" created under the Ancient Church's authority and a "component part" of the "Catholic Patriarchate" of the Ancient Church. (St. Mary Articles of Incorporation, Arts. I & VI.) This is consistent with canon law, which provides that all parishes are subordinate to the Patriarch. Moreover, the SMC requires individuals to "have accepted the Holy Apostolic doctrine of the Ancient Church" to become a member, and recognizes that St. Mary was incorporated "to perpetuate Christian fellowship[] according to the Church dogma, doctrine, rules and faith of our Apostolic Church." (SMC, Arts. III § 1, IV.) Moreover, Iglesia Evangelica did not involve questions of church membership or discipline, which are "at the core of ecclesiastical concern . . . ." (Milivojevich, supra, 426 U.S. at p. 717.)

Appellants' assertion that the trial court was required to decide this matter based solely on the local governing documents contravenes the neutral principles of law approach to deciding controversies concerning religious corporations. "As the California Supreme Court has explained, religious corporations are merely 'permitted as a convenience to assist in the conduct of the temporalities of the church. Notwithstanding incorporation, the ecclesiastical body is still all important. The corporation is a subordinate factor in the life and purposes of the church proper.' " (New, supra, 167 Cal.App.4th at p. 820, quoting Wheelock v. First Presbyterian Church (1897) 119 Cal. 477, 483.) " ' "A religious corporation . . . is something peculiar to itself. Its function and object is to stand in the capacity of an agent holding the title to the property, with the power to manage and control the same in accordance with the interest of the spiritual ends of the church . . . . 'The [L]egislature never means by granting or allowing such [religious organizations] to change the ecclesiastical status of the congregation, but only to afford them a more advantageous civil status.' " ' " (New, supra, 167 Cal.App.4th at p. 820.) Thus, "in applying neutral principles of law, courts may look not only to California corporations law, but also to the religious corporation's bylaws and articles of incorporation, as well as the national church's constitutions, canons, and the like." (Ibid.)

Appellants are simply incorrect when they state that the Ancient Church's canon laws are irrelevant to the application of neutral principles of law. The canons permissibly informed the trial court's decision that the removal of the Jacobs Board and appointment of the Benjamin Board were ecclesiastical decisions that constitutionally prohibited it from reaching a different result.

D. Control of St. Mary's Property

Appellants also contend the trial court ignored the neutral principles of law when it found St. Mary's property belongs to the Ancient Church. In determining that the Ancient Church had both ownership and ultimate control of all of the Ancient Church's property, including St. Mary's, the trial court examined the local governing documents and the canon law. The trial court found the canon law, both separately and as incorporated into the local governing documents, placed both St. Mary's members and its property under the Patriarch's ultimate control.

Appellants contend there is nothing in the local governing documents that addresses the Ancient Church's authority over St. Mary's property. They point to the articles of incorporation, which state that the corporation has "the power to contract, rent, buy or sell personal or real property[,]" and the SMC, which empowers the Mutwa to "accumulate and control all funds and properties acquired for the Church" and to decide secular matters. (St. Mary Articles of Incorporation., Art. II (b); SMC, Art. XI, §§ 1 & 2.) They claim the only mention of the Ancient Church's authority in St. Mary's bylaws is authority over ecclesiastical matters, leaving St. Mary's board of directors to deal with secular issues.

Appellants also claim that respondents' expert, Dr. Roth, testified there were no canons that specifically state the Patriarch has the right to take property. But Dr. Roth explained that while there was no such canon, the vast majority of the Ancient Church's documents had been destroyed, so these canons may have existed. Moreover, Dr. Roth had found historical examples where the Patriarch had taken property.

Appellants, however, ignore that the articles of incorporation provide for the Ancient Church's authority over St. Mary, as the articles specifically state that St. Mary is a "subordinate corporation created under the authority of the [Ancient Church]" and the "corporation is a subordinate and component part of the Catholic Patriarchate of the [Ancient Church]." Thus, the articles make the entire corporation subordinate to the Patriarch and a component part of the Ancient Church, and therefore the bylaws impermissibly conflict with the articles to the extent the bylaws attempt to carve out anything secular or legal from that subordinate existence. (See Corp. Code, § 9151, subd. (c).)

Subsequent statutory references are to the Corporations Code unless otherwise stated.

Moreover, this is not a case of the Ancient Church attempting to convey property to itself, as in Iglesia Evangelica. The real property title was quieted in St. Mary and the Jacobs Board simply was ordered to turn control of St. Mary's property and funds to the Benjamin Board, which has the right and obligation to administer that property and those funds, subject to the Ancient Church's authority.

II. Standing

In the third lawsuit, St. Mary Holy Apostolic Catholic Church of the East and Aprem Benjamin (Benjamin) sued the Jacobs Board members for injunctive, equitable, and legal remedies. The caption states St. Mary is a "California corporation" and Benjamin is suing "in his capacity as member and President of the Board of St. Mary Holy Apostolic Catholic Church of the East, acting in his representative capacity on behalf of the Corporation and its members." The complaint alleges St. Mary is "a duly licensed California corporation doing business in Stanislaus County as a branch of the Ancient Church of the East" and Benjamin is "the President of the Board of St. Mary and a member of the St. Mary parish[,]" and he brought the complaint "in his representative capacity (as President) of the Corporation and its members." Only Benjamin verified the complaint. During trial, Benjamin resigned from the Benjamin Board, although he remained a member of St. Mary.

The verification is entitled "Individual Verification" and states: "I declare that: I am a Plaintiff in this action. I have read the foregoing Fourth Amended Complaint and know its contents and the contents thereof are true of my own knowledge, except as to those matters which are herein stated on my information and belief, and as to those matters I believe them to be true." Only Benjamin's name, not a title or designation, is listed under the signature line.

Appellants contend, for the first time on appeal, that St. Mary lost standing to sue the Jacobs Board when Benjamin resigned as president of the Benjamin Board. They assert Benjamin was a required party for St. Mary to have standing, as he brought suit for St. Mary, not the Benjamin Board, as shown by his verification, which appellants contend makes "clear" that St. Mary was not bringing suit by the authority of its board, but rather through its president, Benjamin. Comparing the complaint to a shareholder's derivative action, they reason that when Benjamin resigned as president, both he and St. Mary lost standing to maintain their lawsuit against the Jacobs Board.

A corporation is a "person" with the capacity, or legal authority, to sue. (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1150.) A religious corporation, which has all of the power of a natural person, operates through its board of directors, which conducts the activities and affairs of the corporation. (§§ 9140, 9210, subd. (a).) A corporation has an inherent right to sue without the board adopting a resolution that specifically authorizes the action. (Canal Oil Co. v. National Oil Co. (1937) 19 Cal.App.2d 524, 537 (Canal Oil), citing Kenton Furnace R.R. & Mfg. Co. v. McAlpin (C.C.S.D. Oh. 1880) 5 F. 737, 741 [corporate plaintiff not required to prove it had authority to institute suit; defendant may waive question regarding right to maintain action if not raised].)

Here, the complaint at issue was brought in the names of St. Mary and Benjamin, and verified by Benjamin, an officer of the corporation. (Code of Civ. Proc., § 446 ["When a corporation is a party, the verification may be made by any officer thereof."].) There is nothing in the statute that requires the board of directors to verify the complaint. Appellants do not cite any authority to support their assertion that once Benjamin resigned as president of the Benjamin Board, the verification lost its efficacy. To the extent they are contending that another officer should have submitted a new verification, they were required to raise that objection in the trial court; otherwise, it is forfeited. (Zavala v. Board of Trustees (1993) 16 Cal.App.4th 1755, 1761 [improper verification is an objection that must be raised in the trial court, otherwise the right to object is waived].)

Moreover, St. Mary was not required to allege in its complaint that the board had authorized the lawsuit. (See, e.g., Canal Oil, supra, 19 Cal.App.2d at p. 537.) The allegation that St. Mary was a California corporation is sufficient to establish the right to sue. (Friendly Village Community Association v. Silva & Hill Construction Co. (1973) 31 Cal.App.3d 220, 224 (Friendly Village), citing California Steam Navigation Co. v. Wright (1856) 6 Cal. 258, 261.) To the extent appellants are claiming that the Benjamin Board did not authorize the lawsuit, which is essentially a claim of lack of capacity to sue, they were required to raise the issue in the trial court and cannot raise it for the first time on appeal. "There is a difference between the capacity to sue, which is the right to come into court, and the standing to sue, which is the right to relief in court." (Friendly Village, supra, 31 Cal.App.3d at p. 224.) Lack of capacity to sue must be raised at the earliest opportunity or it is waived. In contrast, lack of standing is not waived by failure to object and may be raised at any time, even for the first time on appeal. (Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1604.) The claim that the Benjamin Board did not authorize the lawsuit goes to St. Mary's capacity to sue, which appellants may not raise for the first time on appeal.

Appellants' comparison to a shareholder derivative action is inapt, as the Corporations Code does not specifically authorize derivative suits for religious corporations. The Corporations Code draws a distinction between religious corporations versus public benefit and mutual benefit corporations, as it authorizes member derivative actions only in public benefit and mutual benefit corporations. (§§ 5710, 7710.) The regulation of derivative actions for both types of not-for-profits parallels its regulation of derivative suits on behalf of for-profit business corporations. (§ 800.) No comparable provisions apply to religious corporations. Moreover, even if derivative actions are available with respect to religious corporations, Benjamin remained a member of the corporation, St. Mary, after his resignation from the board. Appellants do not explain why, as a member, he could not continue to maintain a derivative action, as he still had a membership interest in the corporation.

"Because a corporation is a legal entity separate from its shareholders [citation], when a corporation has suffered an injury to its property the corporation is the party that possesses the right to sue for redress. [Citation.] If a corporation fails to pursue redress of an injury, a shareholder may file a derivative action on behalf of the corporation. The 'derivative' action is so called because the rights of the plaintiff shareholders derive from the primary corporate right to redress the wrongs against it." (Desaigoudar v. Meyercord (2003) 108 Cal.App.4th 173, 183 (Desaigoudar).)

Even if Benjamin lost standing to sue when he resigned from the board, St. Mary continued to have a beneficial interest in the controversy, namely which board is the "true" board and whether an injunction should issue to protect St. Mary's property. (Desaigoudar, supra, 108 Cal.App.4th at p. 183.) In addition, under the doctrine of associational standing, St. Mary had standing to sue on behalf of its members, even if those members were not named in the suit. (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003-1004 ["Under the doctrine of associational standing, an association that does not have standing in its own right may nevertheless have standing to bring a lawsuit on behalf of its members."].) Associational standing applies where an association seeks equitable relief on behalf of its members, just as St. Mary sought equitable relief on behalf of the members of the local church. (Airline Pilots Assn. International v. United Airlines, Inc. (2014) 223 Cal.App.4th 706, 728.)

"To have standing, a party must be beneficially interested in the controversy, and have 'some special interest to be served or some particular right to be preserved or protected.' " (Iglesia Evangelica, supra, 173 Cal.App.4th at p. 445.)

Associational standing exists when an association's members would otherwise have standing to sue in their own right, the interests it seeks to protect are germane to the organization's purpose, and neither the claim asserted nor the relief required requires the individual members to participate in the lawsuit. (Id. at p. 1004.)

It is true, as appellants assert, that "[a] plaintiff may lose standing even where an actual controversy originally existed 'but by the passage of time or a change of circumstances, ceased to exist." (Wolf v. CDS Devco (2010) 185 Cal.App.4th 903, 916-917.) Here, however, there was a controversy concerning St. Mary's board and its property when the litigation began, which continued to exist even after Benjamin's resignation. Appellants simply have failed to show that St. Mary lost standing during the course of this litigation.

III. Unclean Hands

Appellants assert that because Benjamin's "hands were dirty with sand and grime" before the commencement of trial and "continued to get filthier during trial[,]" respondents should not have recovered against them. Appellants contend Benjamin's misconduct included (1) quoting from a forged constitution in a declaration he signed during pretrial litigation, (2) admitting he presented false documents and testimony during trial, and (3) testifying that he did not have any information to support the "most egregious allegations" in the complaint in the third lawsuit, which he verified. Respondents counter that most of appellants' claims of inequitable conduct "are either untrue or slanted to buttress Appellants' arguments."

The record shows that in 2012, soon after the litigation began, Benjamin verified a declaration in connection with an opposition to an application for a restraining order and preliminary injunction, in which he quoted from a purported diocesan constitution of the Ancient Church. At the time, he believed the constitution was genuine and did not question its authenticity until his deposition. The constitution, however, was a forgery. Appellants entered the forged constitution into evidence at trial to impeach Benjamin. According to the trial court, while Benjamin admitted he presented a document that later turned out to be a forgery, he did not admit that he knew the constitution was a forgery when he presented it.

During trial, the court ordered Benjamin to produce documents to appellants' counsel pursuant to a subpoena duces tecum. In response, Benjamin provided his counsel with St. Mary's bank records, which he had altered to conceal that he had made unauthorized withdrawals of church funds well after the litigation commenced. Within hours, Benjamin admitted to his counsel that he had altered the records and provided counsel with the correct documents.

The trial court considered holding Benjamin in contempt, stating this was "some of the worst things I've seen as a judge, frankly, that somebody has done[,]" and noting that "every document he produces now is in question." Appellants' counsel offered the altered records into evidence to impeach Benjamin. Benjamin admitted he produced the altered documents for use as evidence at trial and he tendered his resignation from St. Mary's board of directors because he got caught. At trial, Benjamin first testified he had repaid the money, but later confirmed he was making monthly payments as ordered by the bishop.

Finally, when Benjamin was asked on cross-examination what evidence he had to support various allegations against appellants that were made in the complaint he verified, he could not identify the evidence.

"The [unclean hands] doctrine demands that a plaintiff act fairly in the matter for which he seeks a remedy. He must come into court with clean hands, and keep them clean, or he will be denied relief, regardless of the merits of his claim." (Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 978 (Kendall-Jackson).) The doctrine of unclean hands requires unconscionable, bad faith, or inequitable conduct by the plaintiff in connection with the matter in controversy. (General Elec. Co. v. Superior Court (1955) 45 Cal.2d 897, 899-900.) "Unclean hands applies when it would be inequitable to provide the plaintiff any relief, and provides a complete defense to both legal and equitable causes of action. [Citations.] 'Whether the defense applies in particular circumstances depends on the analogous case law, the nature of the misconduct, and the relationship of the misconduct to the claimed injuries.' " (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 56.)

The conduct constituting unclean hands must affect the transaction in issue in the litigation or the equitable relationship between the parties. (E.g., Jaramillo v. County of Orange (2011) 200 Cal.App.4th 811, 820 [the focus is the equities of the parties' relationship, and whether the inequitable conduct affected the transaction at issue]; Brown v. Grimes (2011) 192 Cal.App.4th 265, 282 ["the improper conduct must be 'in the particular transaction or connected with the subject matter of the litigation that is a defense' "].) The misconduct must so prejudicially affect the rights of the person against whom the relief is sought that granting relief would be inequitable. (Kendall-Jackson, supra, 76 Cal.App.4th at p. 979.) "The decision of whether to apply the defense based on the facts is a matter within the trial court's discretion." (Dickson, Carlson & Campillo v. Pole (2000) 83 Cal.App.4th 436, 447; see also Aguayo v. Amaro (2013) 213 Cal.App.4th 1102, 1109 [reviewing trial court's decision to apply unclean hands defense for abuse of discretion and trial court's factual findings for substantial evidence].)

Appellants have not shown the trial court abused its discretion in refusing to apply the defense. Benjamin's misconduct had no effect on the trial court's decision, as the trial court noted in its statement of decision that it gave little weight to Benjamin's testimony and, in any event, "his testimony was not necessary to any of the court's findings, conclusions, or rulings." The trial court reasonably could have concluded that any harm caused by Benjamin's misconduct was cured by its disregard of his testimony. Moreover, "even where a finding of unclean hands is factually established, a court may still refuse to apply the doctrine if a manifest injustice will result." (In re Brandie W. (1984) 157 Cal.App.3d 110, 113.) Here, in light of its finding that the Benjamin Board, as constituted at the time of the decision, was the true board of St. Mary's, the trial court reasonably could conclude it was not inequitable to further find that the Jacobs Board had no power or authority over St. Mary and its property, and to order the Jacobs Board to surrender possession of the church, account for all church funds and property, and impose a constructive trust. The trial court did not abuse its discretion in rejecting the unclean hands defense.

We note that it is not clear from the record that the unclean hands defense was presented to the trial court for decision at the conclusion of the trial, as appellants' post-trial briefs are not part of the appellate record and the trial court did not address the defense in its statement of decision. It is well established that an unclean hands defense raises a question of fact (Kendall-Jackson, supra, 76 Cal.App.4th at p. 978), and thus, must be raised in the trial court proceedings prior to judgment. (Marshall v. Marshall (1965) 232 Cal.App.2d 232, 253.) We nevertheless address the merits of the claim.

DISPOSITION

The judgment is affirmed. Costs on appeal are awarded to respondents.

/s/_________

ELLISON, J. WE CONCUR: /s/_________
SMITH, Acting P.J. /s/_________
MEEHAN, J.

Retired judge of the Fresno Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.


Summaries of

St. Mary's Holy Apostolic Catholic Church of the E. v. Benjamin

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT
Aug 30, 2018
No. F073705 (Cal. Ct. App. Aug. 30, 2018)
Case details for

St. Mary's Holy Apostolic Catholic Church of the E. v. Benjamin

Case Details

Full title:ST. MARY'S HOLY APOSTOLIC CATHOLIC CHURCH OF THE EAST, Plaintiff and…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT

Date published: Aug 30, 2018

Citations

No. F073705 (Cal. Ct. App. Aug. 30, 2018)