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General Conference of Evangelical Methodist Church v. Crossing Church, Inc.

United States District Court, Ninth Circuit

June 3, 2013

GENERAL CONFERENCE OF THE EVANGELICAL METHODIST CHURCH, Plaintiff,
v.
THE CROSSING CHURCH, INC., f/k/a New Heart Community Fellowship, Inc., Defendant.

MEMORANDUM DECISION AND ORDER RE:PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT Docket No. 36 DEFENDANT'S MOTION FOR SUMMARY JUDGMENT Docket No. 46

RONALD E. BUSH, Magistrate Judge.

Currently pending before the Court are (1) Plaintiff's Motion for Summary Judgment (Docket No. 36) and (2) Defendant's Motion for Summary Judgment (Docket No. 46). Having carefully reviewed the record and otherwise being fully advised, the Court enters the following Memorandum Decision and Order:

I. BACKGROUND

What happens to the tangible property of faith when a local church decides to leave its ecclesiastical parent? Such is the question presented in this case involving a property dispute between a Christian faith parent denomination and those involved in one of its member churches.

In early 2004, representatives of the Evangelical Methodist Church ("EMC") met with Randy Reams and others regarding the possibility of forming an EMC church in Nampa, Idaho. See Pl.'s SOF, p. 1 (Docket No. 36, Att. 2).[1] On January 24, 2004, New Heart Community Fellowship, Inc. ("New Heart") executed the "Affiliation Resolution" to join EMC as the "New Heart Community Fellowship Evangelical Church of Nampa, " requesting and confirming affiliation with EMC. See id. at p. 2. Relevant here, by signing the Affiliation Resolution with EMC, New Heart agreed to follow "that collection of rules and procedure and organization, entitled, Discipline of the Evangelical Methodist Church, which shall be called the Discipline " (the "Discipline"). See Pl.'s Am. Compl., ¶ 6 (Docket No. 21); see also Def.'s Ans., ¶ 6 (Docket No. 23).[2]

On November 10, 2009, Mr. Reams - who, up until that time, had been serving as pastor for New Heart - informed an EMC Conference Superintendent that he was acting as pastor for a "new church, " The Crossing Church, Inc. ("Crossing");[3] Crossing was incorporated on or around July 20, 2010. See Pl.'s SOF, p. 2 (Docket No. 36, Att. 2); see also Pl.'s Am. Compl., ¶¶ 12-14 (Docket No. 21); Def.'s Ans., ¶¶ 12-14 (Docket No. 23).[4] Though Crossing was now its own, distinct corporate entity, it nonetheless held its services in the same leased space as where New Heart had conducted its services and operated its church, while also using property obtained from New Heart. See id. Moreover, New Heart's members became Crossing parishioners;[5] Crossing had the same pastor, president, secretary, and directors as New Heart; Crossing had a website very similar to New Heart's; and Crossing's Articles of Incorporation were the same as or very similar to New Heart's Articles of Incorporation. See id.

Also relevant here, as of the Summer of 2010, it is undisputed that New Heart owed approximately $93, 340.20 to EMC. See id. at ¶ 16. EMC contends that Crossing is responsible for this amount because (1) Crossing is simply a continuation of New Heart's operations under a different name and, thus, Crossing and New Heart are actually one-and-the-same, despite having different corporate identities; (2) EMC's General Council never disaffiliated New Heart/Crossing under section 609 of the Discipline; and (3) New Heart/Crossing never withdrew from the church pursuant to section 209 of the Discipline. See id. at ¶¶ 10, 12, 14-18, & 22 ("In essence, there does not appear to be a "new church" as [Mr.] Reams represented... but rather a continuation of New Heart operations by exactly the same people and in exactly the same space but under a new name."). Therefore, in this lawsuit, EMC seeks to enforce section 701 of the Discipline, compelling arbitration between it and Crossing to account for New Heart's/Crossing's alleged outstanding obligations to EMC - indeed, EMC's Amended Complaint identifies this single, sought-after remedy. See, e.g., id. at ¶¶ 32-33 (Docket No. 21) ("Through this action, the EMC seeks an order from this Court directing New Heart[6] to comply with the dispute resolution process in [section] 701 of the Discipline, including arbitration. The EMC seeks no relief from this Court other than an order compelling arbitration.").

EMC now moves for summary judgment on its Complaint to compel arbitration against Crossing on the grounds of alter ego/successor liability and equitable estoppel. See Pl.'s Mem. in Supp. of Mot. for Summ. J., p. 4 (Docket No. 36, Att. 1).[7] Crossing opposes EMC's motion for summary judgment (and files a motion for summary judgment of its own), arguing that it is not New Heart's alter ego/successor and, as a result, cannot be compelled to arbitrate a non-existent dispute between it and EMC (or, said another way, a dispute between EMC and New Heart) under the Discipline's provisions. See Def.'s Opp. to Pl.'s Mot. for Summ. J., pp. 4-7 (Docket No. 38); see also Def.'s Mem. in Supp. of Mot. for Summ. J., pp. 4-8 (Docket No. 46, Att. 1).

II. DISCUSSION

A. Summary Judgment: The Standard

Summary judgment is appropriate where the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine dispute as to any material fact and that the moving party is entitled to a judgment as a matter of law. See Fed.R.Civ.P. 56; see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). One of the principal purposes of the summary judgment "is to isolate and dispose of factually unsupported claims...." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). It is "not a disfavored procedural shortcut, " but is instead the "principal tool[] by which factually insufficient claims or defenses [can] be isolated and prevented from going to trial with the attendant unwarranted consumption of public and private resources." Id. at 327. "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48.

The evidence, including all reasonable inferences which may be drawn therefrom, must be viewed in a light most favorable to the non-moving party and the Court must not make credibility findings. See id. at 255. Direct testimony of the non-movant must be believed, however implausible. See Leslie v. Grupo ICA, 198 F.3d 1152, 1159 (9th Cir. 1999). On the other hand, the Court is not required to adopt unreasonable inferences from circumstantial evidence. McLaughlin v. Liu, 849 F.2d 1205, 1208 (9th Cir. 1988).

The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. See Devereaux v. Abbey, 263 F.3d 1070, 1076 (9th Cir. 2001). To carry this burden, the moving party need not introduce any affirmative evidence (such as affidavits or deposition excerpts) but may simply point out the absence of evidence to support the nonmoving party's case. See Fairbank v. Wunderman Cato Johnson, 212 F.3d 528, 532 (9th Cir. 2000).

This shifts the burden to the non-moving party to produce evidence sufficient to support a jury verdict in his favor. See Anderson, 477 U.S. at 256-57. The non-moving party must go beyond the pleadings and show "by [his] affidavits, or by the depositions, answers to interrogatories, or admissions on file" ...


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