Court Rejects Challenge By Donors and Diocese To Plans For Sale of Catholic High School

In Anderson v. Loretto High School, (CA App., Aug. 10, 2010), a California appellate court concluded that the Roman Catholic Bishop of Sacramento and seven donors to a $4.5 million capital campaign of a Catholic high school are  not entitled to a temporary restraining order or preliminary injunction to require the proceeds of the sale of the school to a private company to be held in escrow.  The Loretto Sisters who operated the school plan to use the proceeds of the sale to pay off debts and provide retirement benefits for members of their religious order.  The school closed because of declining enrollments several years after the capital improvements were made. Plaintiffs sued to require that a portion of the sale price of the school be devoted to the education of women of high school age attending Catholic school in Sacramento. The court concluded that plaintiffs had not shown they were likely to succeed on the merits of their claims under the California non-profit corporation law. There was no showing that donors had intended their contributions to be restricted beyond their initial application to capital improvements of the school.  There was no improper diversion of those contributions. Today's California Catholic Daily reports on the decision and gives additional background.