Friday, December 25, 2015

Ecclesiastical Abstention Does Not Require Dismissal of Suit Over Control of Unification Church's Assets

In Family Federation for World Peace and Unification International v. Moon, (DC App., Dec. 24, 2015), the District of Columbia Court of Appeals reversed the D.C. Superior Court's dismissal of a complicated dispute over control of a D.C. non-profit corporation, UCI, which over the years has managed hundreds of millions of dollars of assets donated to Reverend Sun Myung Moon's Unification Church. The trial court had invoked the ecclesiastical abstention doctrine, concluding that the dispute could not be resolved without the court deciding questions of religious doctrines.  The appellate court disagreed.

UCI was created in 1977.  In 2006, Preston Moon, one of Rev. Moon's sons became president of UCI and one of its five directors. In 2008, Rev. Moon appointed another son, Sean Moon, (Preston's younger brother) as the next leader of the Church's worldwide religious organization.  This "disappointed" Preston who, apparently assumed that he would be appointed to the religious as well as financial leadership of the Church.  In response to Sean's appointment, Preston took a number of steps to divest the Church of its control over UCI and its assets.

Those actions are challenged in this case by three entities connected with the original Unification Church and by two individuals who Preston removed as directors of UCI. The suit claims that Preston improperly took control of UCI's board, ignoring the long-standing practice of electing individuals nominated by Rev. Moon. The suit also alleges diversion of assets and self-dealing.  In reversing the trial court's dismissal of the case, the court said in part:
From plaintiffs’ allegations, it appears that a profound alteration in the corporation ... occurred under Preston Moon. An organization plainly established to promote the preservation of African wildlife and acquiring vast funds on that basis might well be barred from switching its purpose to expenditures on domestic cats and dogs regardless of how technically such a switch might be read into the text of its articles of incorporation. On the present record, we cannot say with confidence that a somewhat analogous transformation cannot be shown to have occurred here. And, in any event, the allegation that corporate funds were used here to benefit one of the directors personally would appear readily subject to court review....
[W]e agree with plaintiffs that the record at this early stage of a difficult and complicated dispute with many ramifications does not support a conclusion that the trial court must engage in inquiry banned by the First Amendment in order to resolve any of plaintiffs’ claims.... Were we to hold that, based on the current record, the First Amendment precludes our civil courts from adjudicating plaintiffs’ claims, then it would approach granting immunity to “every nonprofit corporation with a religious purpose from breach of fiduciary suits . . . and prevent any scrutiny of questionable transactions.”
The court also resolved jurisdictional and standing issues.