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The Laumalie Ma'oni'oni Free Wesleyan Church of Tonga v. Etimani Ma'afu

Court of Appeals of Utah

March 21, 2019

The Laumalie Ma'oni'oni Free Wesleyan Church of Tonga, Appellant,
Etimani Ma'afu, the Rocky Mountain Conference of the United Methodist Church, the Tongan United Methodist Church, and the Board of Trustees of the United Methodist Church Appellees.

          Third District Court, Salt Lake Department The Honorable Mark S. Kouris No. 120908228

          Robert C. Avery, Nathan E. Burdsal, and Hutch U. Fale, Attorneys for Appellant

          Geoffrey C. Haslam and Kristen C. Kiburtz, Attorneys for Appellee Etimani Ma'afu

          Gary L. Johnson, Zachary E. Peterson, and Richard A. Marsh, Attorneys for Appellees the Rocky Mountain Conference of the United Methodist Church, the Tongan United Methodist Church, and the Board of Trustees of the United Methodist Church

          Judge Kate Appleby authored this Opinion, in which Judges David N. Mortensen and Jill M. Pohlman concurred.


          APPLEBY, JUDGE.

         ¶1 This case involves a church property dispute between dissident members of the Tongan United Methodist Church (TUMC) and various representatives of the United Methodist denomination, including the Rocky Mountain Conference of the United Methodist Church (the RMC).[1] TUMC is a Utah nonprofit corporation functioning as a local United Methodist congregation since 1978. The RMC is the United Methodist denomination's regional representative in Utah.

         ¶2 In 2012, a group of TUMC members purported to amend TUMC's articles of incorporation by removing any reference to the United Methodist Church and changing the corporation's name to the Laumalie Ma'oni'oni Free Wesleyan Church of Tonga (Free Wesleyan).[2] Prior to these changes, Etimani Ma'afu was the president of TUMC's board of directors, but the amendments purported to remove him from that position. Free Wesleyan filed a claim against Ma'afu in the district court, seeking an injunction forbidding him from acting on behalf of the corporation and a declaratory judgment that Free Wesleyan was the only entity entitled to control church property.

         ¶3 The RMC, joined by various parties affiliated with the United Methodist Church, filed a separate lawsuit arguing that Free Wesleyan's actions were invalid and unenforceable because the dissident members did not comply with TUMC's governing documents. The RMC also claimed that, even if the dissident members' actions were proper, those members were not entitled to use the local church property because it was held in trust by TUMC for the benefit of the United Methodist denomination. The RMC's case was consolidated with Free Wesleyan's case.

         ¶4 After discovery, the district court granted Ma'afu and the RMC's joint motion for summary judgment, determining that Free Wesleyan's actions were not authorized under TUMC's governing documents. The court then entered a final judgment restoring TUMC "to how it existed prior to the improper corporate acts."

         ¶5 Free Wesleyan appeals. We affirm.


         ¶6 The United Methodist Church is "a 'connectional' network of distinct, but affiliated entities known as local churches, charges, conferences, boards, commissions and agencies." The denomination has a "hierarchical" structure[3]consisting of multiple tiers, and each affiliated entity is subject to a higher authority within that multi-tier structure. Thus, although local churches are incorporated as individual entities, they are members of a "regional conference," which charters the local church and oversees the local congregation.

         ¶7 Within the United Methodist Church, each of the affiliated entities is required to follow the denomination's governing document: The Book of Discipline (the Discipline). In addition to detailing religious doctrine, the Discipline establishes requirements for governance of the local churches and procedures for implementing changes at the local level.

         ¶8 Under the Discipline, decisions regarding local churches are made by two groups: the Charge Conference and the Church Conference. The Charge Conference is the "connecting link between the local church and the general Church." That is, it serves as the local "unit in the connectional system of the United Methodist Church." The Charge Conference consists of a "church council" made up of elected local church members and "any others as may be designated in the Discipline." At annual or special meetings, the Charge Conference elects officers of the local congregation, authorizes property transfers, and makes other major decisions.

         ¶9 The Church Conference "encourage[s] broader participation by members of the church" by "extending the vote" on any issue generally decided by the Charge Conference "to all professing members of the local [congregation]." A Church Conference may be called "at the discretion of the district superintendent or following a written request to the district superintendent by . . . the pastor, the church council, or 10 percent of the professing membership of the local [congregation]."

         ¶10 The Discipline requires any meeting of the Charge Conference or the Church Conference to be called and presided over by the district superintendent. Regardless of the type of meeting, the Discipline does not authorize voting by proxy or mail-in voting. Instead, at a Charge Conference, "[t]he members present and voting at any duly announced meeting shall constitute a quorum." And at a Church Conference, the vote extends "to all professing members of the local church present at [the] meetings."

         ¶11 The Discipline also establishes that all "properties of the United Methodist local churches . . . are held, in trust, for the benefit of the entire denomination, and ownership and usage of church property is subject to the Discipline." The Discipline authorizes regional conferences to bring suit in their own names to protect and enforce denominational interests in matters of local church property, governance, and operations.

         ¶12 Utah's regional conference is the RMC. In 1978, the RMC chartered a local congregation in Salt Lake City-TUMC-and appointed a minister to oversee the congregation. Under the RMC's direction, TUMC filed its original articles of incorporation (the Original Articles) with the State of Utah. The Original Articles included these provisions: (1) "The purpose for which the corporation is organized is to conduct and operate a United Methodist Church and congregation according to the Discipline"; (2) "All title to real property bought and sold by the [c]orporation shall be in full conformity with the Discipline"; (3) "The internal affairs of the corporation shall be managed and controlled by the Board of Trustees of the corporation. The bylaws . . . may be amended by the board . . ., provided that they remain in accord with these Articles of Incorporation and with the Discipline"; (4) "The Board of Trustees shall consist of the members of the Board of Trustees of the Tongan United Methodist Church of Salt Lake City, elected and organized as prescribed in the Discipline"; and (5) "Upon dissolution, all net assets and property transfer to the [RMC]."

         ¶13 A provision in the Original Articles titled "Amendments" provides:

These [Original Articles] may be amended by the vote of at least two-thirds of the members of the corporation present at the annual meeting or at a special meeting of the corporation called for that purpose.

         ¶14 After its incorporation, TUMC operated as a local congregation of the United Methodist Church for thirty-four years. In conformity with the Discipline, it elected officers, purchased property, and held annual Charge Conferences, presided over by the district superintendent. In 2012, as the result of a dispute between the RMC and the local congregation, a group of local leaders attempted to disaffiliate TUMC from the United Methodist Church. They proposed amendments to the Original Articles that removed any reference to the United Methodist Church or the Discipline, and changed the corporation's name to Free Wesleyan.

         ¶15 TUMC's corporate secretary sent a letter titled "Important Corporate Notice Regarding Proposed Amendments to Articles of Incorporation" to all local members. The letter explained the proposed amendments and directed members to vote yes or no on an attached ballot and mail it to the corporation.

         ¶16 When the RMC learned of the mail-in vote, it sent a letter to the local congregation informing it that the results of the vote "will not be valid and will be legally unenforceable" because the vote "does not comply" with the "process for calling and holding a church membership meeting" as established by the Discipline. The letter specified that a Church Conference must be called and presided over by the district superintendent and held in person, and that "[t]he only votes that count are those cast by eligible church members in attendance at a properly called meeting." It also stated that the proposed amendments would not "allow the new church to take the [local congregation's] property and building" because, "[u]nder the [Discipline], all church property is owned by the local church in trust for The United Methodist Church."

         ¶17 Despite the RMC's letter, the local leaders proceeded with the mail-in vote, and the proposed amendments were approved by two-thirds of the members. Based on the results, the local members purported to elect a new board of directors, and the board filed the amended articles of incorporation (the Amended Articles) with the Division of Corporations and Commercial Code (the Division).

         ¶18 At the time of the mail-in vote, Ma'afu was the president of TUMC's board of directors, but he was removed from that position under the Amended Articles. Ma'afu refused to recognize the amendments and continued to use local church property and withdraw funds from the local church's account.

         ¶19 In response to Ma'afu's actions, on the same day the Division received the Amended Articles, Free Wesleyan filed with the district court a claim against Ma'afu seeking a declaratory judgment "with respect to the rights, status, and other legal relations between the parties." Free Wesleyan also asked for a temporary restraining order forbidding Ma'afu from representing "that he is an authorized agent of the Corporation," and sought damages for "the value of the property converted by [Ma'afu]" and an award of costs and attorney fees.

         ¶20 The RMC filed a motion to intervene in the case. The motion cited provisions from the Discipline that authorize the RMC "to bring suit and intervene in its own name to protect denominational interests in matters of local church governance, operations and property." It claimed that the United Methodist Church held an irrevocable trust in the local church property, and asserted that the "property is necessarily affected by the purported amendment to [the Original Articles]" and the dissident members' efforts to assume control of the property and spend the church's assets. The district court granted the motion to intervene, concluding that the RMC had "alleged a sufficient interest . . . to intervene as a matter of right."

         ¶21 The RMC also contested before the Division TUMC's filing of the Amended Articles. In a letter, it asked the Division to "conduct whatever investigation you deem appropriate to determine the validity of the contested filings." The RMC also asked the Division to change the principals of the corporation back to the principals who were in place before the mail-in vote.

         ¶22 After receiving the RMC's objections, the Division sent a letter to counsel for the parties, stating that the Division was "unable to clearly establish whether the filings were made with authority or not." It therefore took the filings on "good faith," but placed on hold all contested changes until it received "a court order or a notarized document signed by all parties that specifically states the name of the non-profit corporation and the roster of officers and directors."

         ¶23 Free Wesleyan informed the Division that it intended to challenge the decision to place the changes on hold. At the Division's request, Free Wesleyan produced affidavits from its members stating that they agreed to adopt the Amended Articles. The Division then removed the "hold" and accepted the Amended Articles. A note in the Division's records says, "Although Principals still in dispute, renewal authorized."

         ¶24 The Division issued Free Wesleyan new "Certificates of Existence." The certificates listed the new corporate name and certified that Free Wesleyan was "authorized to transact business and was duly registered under the laws of the State of Utah," had "paid all fees and penalties owed," had filed "its most recent annual report," and had not filed "Articles of Dissolution."

         ¶25 Later, the RMC filed a separate district court action against Free Wesleyan, seeking a declaratory judgment that the mail-in vote was not authorized and that "its claimed results are null and void." In response, Free Wesleyan filed a motion to consolidate the RMC's action with its own. The motion said that each of the parties claim the "control and access to the same property," and "[c]onsolidation will enable one Court to adjudicate all issues that have been raised as to the Church Property in one action." It also noted that the district court would "necessarily decide" all of the parties' claims by "determining whether the [Church] . . . properly amended its articles of incorporation and changed its name." See Utah Code Ann. § 78B-6-403(1) (LexisNexis 2018) ("When declaratory relief is sought all persons shall be made parties who have or claim any interest which would be affected by the declaration . . . .").

         ¶26 The district court granted Free Wesleyan's motion to consolidate the two actions. After discovery, the RMC and Ma'afu filed a joint motion for partial summary judgment. They argued that Free Wesleyan's actions, including electing a new board and filing the Amended Articles, were invalid because the mail-in vote did not comply with the Discipline, which, according to them, had been incorporated by reference into the Original Articles. They asked the district court to issue an order invalidating the changes and restoring the corporation's name and principals to what they had been before the mail-in vote.

         ¶27 Free Wesleyan opposed the motion on three grounds. First, it argued that the court lacked subject matter jurisdiction because the RMC and Ma'afu failed to exhaust their administrative remedies with the Division. Second, it asserted that the RMC and Ma'afu lacked standing because they were not members of the corporation and had no independent interest in its internal actions. Third, it argued that the Amended Articles were valid because they were approved according to the procedures detailed in the corporation's governing documents.

         ¶28 The district court granted the motion for partial summary judgment. It rejected Free Wesleyan's exhaustion of administrative remedies argument, stating that "the Division made no determination regarding the parties' rights, the validity of the vote by mail, or the [Amended] Articles." Thus, there was nothing "before the Court to indicate ...

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