Real Estate – Church Property – Episcopal Church Split – Endowment Fund

In this dispute over property claimed by both the Episcopal Diocese of Virginia and the national church, and several breakaway congregations, a Fairfax Circuit Court takes under advisement a motion for partial summary judgment filed by the diocese and the national church contending that the Falls Church Endowment Fund Inc. is not subject to the Falls Church’s petition filed pursuant to Va. Code § 57-9, which governs determination of property rights on “division” of a church or religious society.

The Endowment Fund is a nonprofit corporation, organized in 1976, whose “main purpose” is “to further the ministry and outreach of the Christian Church.” The diocese and the national church argue that because the Fund is a corporation, because it is a distinct legal entity from The Falls Church (TFC), because its directors are appointed by the vestry of TFC rather than by its trustees, and because TFC cannot have a “personal property” interest in a charitable nonprofit entity, there is no basis for a finding that its property is subject to TFC’s § 57-9(A) petition. TFC asserts that it does have a “personal property” interest in the Endowment Fund that brings the Fund within the scope of its § 57-9(A) petition.

The resolution of this issue actually turns on the application of § 57-10, rather than § 57-9(A), as both parties recognize and concede.

TFC asserts that its personal property interest is the power of the vestry to appoint the Fund’s directors. The diocese and the national church argue that the right to appoint directors to a nonprofit corporation can never be a “personal property” interest and that, as a pure question of law, the court should reject TFC’s argument and grant the diocese’s and TFC’s motion for partial summary judgment.

The court takes the motion for summary judgment under advisement and will give both parties the opportunity to present such evidence as each party deems warranted on the question whether TFC – at the time of the vote to disaffiliate – had a personal property interest in the Fund by virtue of its vestry’s power to appoint the directors of the Fund. While the court is skeptical that there is a factual component to this question, and is inclined to believe that it is a pure question of law, the court will give the parties the opportunity to put their facts before the court.

In re Multi-Circuit Episcopal Church Property Litigation, Falls Church Endowment Fund (Bellows, J.) No. CL2007-0248724, Oct. 17, 2008; Fairfax Cir.Ct.; Gordon A. Coffee, Bradfute W. Davenport Jr., Mary C. Zinsner, Heather H. Anderson, Adam Chud, George O. Peterson, Mary A. McReynolds, E. Andrew Burcher, James E. Carr, R. Hunter Manson, Scott J. Ward, James A. Johnson, Edward H. Grove III, Robert C. Dunn; Robert F. McDonnell, William E. Thro, Stephen R. McCullough, Office of AG. VLW 008-8-223, 5 pp.