Another way forward to peaceful settlement?

Attorney Raymond Dague speaks on the recent historic settlement between St. George’s Anglican Church and the Episcopal Diocese of New Jersey:

The following is a memorandum outlining how St. George’s Church and the Episcopal Diocese of New Jersey found  a way forward where St. George’s was able to retain their property while at the same time find a peaceful way forward to a settlement that satisfied the Anglican congregation, the Episcopal Diocese and the Presiding Bishop.  It can be done!

From: Raymond J. Dague, attorney for St. George’s Anglican Church in Helmetta, New Jersey, and chancellor to the Anglican District of the Northeast of CANA

Re: The Account of the Amicable Purchase of Church Buildings by an Anglican Church which was Formerly an Episcopal Church without Restrictions as to the Continued use of the Property by the Anglican Parish

Dated: January 17, 2011

Is it an aberration in relations between Anglican Churches and the Episcopal Church, or a new way forward?  There has been much acrimony with hundreds of pending lawsuits across the country between Anglican Churches and the Episcopal Church.  Might this case be a pattern for a way out from the litigation?  That is the question on the minds of laity, clergy, bishops, and lawyers on both sides in the wake of an historic settlement between St. George’s Anglican Church in Helmetta, New Jersey and the Episcopal Diocese of New Jersey.  And this happened all with the full knowledge and consent of the presiding bishop of the Episcopal Church and her chancellor.

The ink is dry and the papers are filed in the Middlesex County clerk’s office following a routine real estate closing there on Tuesday, November 23, 2010.  It is a settlement which might portend a way forward out of the litigation which has engulfed the Episcopal Church and parishes which have left it for other Anglican affiliations since the election of Katherine Jefforts-Schori in 2006 to be the presiding bishop of the Episcopal Church.

The deal involved a former Episcopal Church congregation which disaffiliated from its former denomination, yet negotiated with the diocese to retain its church buildings and tangible property with complete independence from the former denomination.  The congregation is now affiliated with the Convocation of Anglicans in North America (CANA) under Missionary Bishop Martyn Minns and the Anglican Church in North America (AC-NA) under Archbishop Robert Duncan.

The property which was the subject of this negotiation was given to the newly incorporated Episcopal Church parish in 1894.  It is located at 56 Main Street, Helmetta, New Jersey.  The church building was built in 1896 on land which was given to the parish in 1894 by The George W. Helmet Company.  George W. Helmet was the owner of the large factory located near the church and the person after whom the town of Helmetta was named.  The property consisted of a large rectangular site which measured approximately 555 feet along the road frontage and 290 feet deep into a wooded area consisting of 3.7 acres of land.

The church building built on the property is a traditional high peaked ceiling church building of about 2,900 square feet in the worship area, and beneath which is a basement consisting of offices and meeting rooms occupying about 2,700 square feet.  A single family 2,900 square foot two story rectory was built on the property, as well as Ericson Hall which consists of a 5,600 square foot fellowship hall, larger than the church itself.  The property has paved driveways and parking lots, and four utility sheds.  The property is adorned with decorative stone walls and a stone staircase between the church building and the road.  The parish owned the land and buildings free and clear with no mortgage on the properties.

In early January and February of 2008 the former Episcopal Church, then known as St. George’s Church in Helmetta, New Jersey, cut its ties to the Episcopal Church and the Diocese of New Jersey and asked to be placed under CANA and its suffragan Bishop David Bena.  CANA accepted the parish, and since then Bishop Bena has made numerous episcopal visits to St. George’s.

As part of the disaffiliation process the Diocese of New Jersey prepared and gave to St. George’s in early 2008 a document called “Pastoral Direction for Parishes Seeking to Disaffiliate from the Diocese of New Jersey.”   This Pastoral Direction was not followed by the parties except in part.  But the significance of this document is the bishop’s acknowledgment of the legitimate need of a parish to disaffiliate (Introduction, page 1), the fact that the process is to be marked by negotiation (paragraph 6, page 3-5), and that “Any Agreement reached will be fully disclosed to the Diocese at large and will be made available electronically.  The Agreement shall also be provided to the Presiding Bishop and the Presiding Bishop’s Chancellor.” (Paragraph 8, page 5)

The priest at the parish of St. George’s Anglican is Fr. William Guerard.  Fr. Bill, as he is known by his people, was an Episcopal priest for 22 years.  His relations with the Bishop George Councell, the bishop of the Diocese of New Jersey were always extremely cordial.  When the congregation was thinking about making this move, it was no surprise to the bishop.  Bishop Councell asked Fr. Guerard to keep him fully apprised as to the progress of the parish in this respect.  And Fr. Guerard did so.  Both Bishop Councell and his representatives came to the parish and addressed the vestry several times to talk about these developments, both before and after the vote by the vestry to leave the Episcopal Church.  The bishop and his people were extremely gracious to the parish, and the parish was likewise quite respectful toward the diocese and the bishop.

On October 17, 2008 Fr. William Guerard, the two wardens of St. George’s, and Raymond Dague of Syracuse, New York, the attorney for the parish, attended a standing committee meeting of the diocese at the diocesan headquarters in Trenton, New Jersey.  In attendance at that meeting were Bishop Councell and his chancellor, attorney John Goldsack.  Bishop Councell on two occasions at that meeting said to the people from St. George’s, “If there is any bishop in the Episcopal Church you want to negotiate with over something like this, it is me.”  The meeting was very cordial, but no decisions were made by anyone at that time, except to keep the lines of communication open.

Fr. Guerard had previously told the bishop that they would not need to bring a lawsuit, because the parish would leave and find another place to worship if the bishop wanted that.  But Bishop Councell asked them not to do that, to stay in the church buildings and to negotiate a deal with the diocese.

On January 9, 2009 some of the people who worshiped at St. George’s organized a New Jersey religious corporation named St. George’s Anglican Church.  It was this church corporation which ultimately negotiated the deal with the diocese.

On January 12, 2009 the newly incorporated St. George’s Anglican Church communicated to the diocese the desire to retain the property and offered the diocese $360,000 to do so.  The three page letter of the parish signed by the wardens and the rector of the parish provided for the first year’s payment in an $18,000 lump sum, and payments of $1,500 per month over a 20 year period.  In exchange for that the diocese would give to the parish a general release of Dennis Canon and any other claims by the diocese to the property of St. George’s.

At a Standing Committee meeting in January the diocese reviewed the offer, and met to discuss it, but did not give a formal answer to the parish’s proposal.  The offer was ultimately refused in late 2009, but the diocese made no counter offer, yet the diocese indicated the desire to keep negotiating.

Fr. Bill Guerard left the church as an Episcopal priest and switched his episcopal oversight and holy orders to Suffragan Bishop David Bena of CANA.  Bishop Bena has made numerous pastoral visits to St. George’s Anglican since assuming his oversight role at the parish. Bishop Councell never deposed or inhibited Fr. Guerard from his ordination vows as was done with over 400 former Episcopal clergy who left the Episcopal Church for CANA and other Anglican groups.   Canon law does not require an Episcopal bishop to depose or inhibit a priest who transfers to another Anglican group, but many Episcopal bishops have done so under similar circumstances.

New Jersey law is one of the toughest in the country for a congregation which departs from the Episcopal Church.   The 1980 case of Protestant Episcopal Church in the Diocese of New Jersey v. Graves, 417 A.2d 19 (N.J. 1980) basically gives the greatest possible rights of any state in the nation to the diocese as against a departing congregation.  Further, the New Jersey statutes (N.J.S.A. 16:12-16) allow the Episcopal diocesan convention to adopt a resolution which unilaterally dissolves an Episcopal Church which has ceased to exist by declaring it so, and filing a Certificate of Extinction of the parish.  Upon the filing of the Certificate of Extinction with the county clerk, the title to the former property of the congregation transfers to the diocese without the necessity of a deed transfer or any action by the congregation.

At the diocesan convention on February 28, 2009 the Diocese of New Jersey adopted such a resolution, and filed the Certificate of Extinction in the Middlesex County clerk’s office on March 11, 2009.  These acts had the legal effect under New Jersey law of effecting an immediate dissolution of the old Episcopal Church religious corporation and the consequent vesting of the title to its property in “The Trustees of Church Property for the Diocese of New Jersey, successor in interest to the Rector, Wardens and Vestrymen of St. George’s Protestant Episcopal Church, a dissolved corporation.”   All that the diocese would have then needed to do was to commence a simple eviction proceeding to evict the Anglican Church congregation and take over the property.  The defense of such an eviction would have been only a facial challenge to the caselaw and salutatory scheme.  It would have been a difficult eviction to defend.

Yet despite the strong legal position of the diocese, Bishop Councell assured Fr. Guerard that this in no way would interfere with the continued use by the parish of the property.  Bishop Councell asked that they continue to try to negotiate a resolution to the use and ownership by the new Anglican parish.  St. George’s took no legal action against the diocese to challenge this in court.  But the diocese likewise did not go to court.  The bishop and the diocese continued to talk and negotiate with the parish.

In September of 2008 the parish had an appraiser do a formal written appraisal of the property value which came to $1.7 million.   In early 2010 the diocese paid the same real estate appraiser to reappraise the property, and the figure was revised to $1.6 million.   According to the tax assessment records of Helmetta, the land is worth $732,000 and the improvements to the property were worth $1,066,800 for a total value of $1,798,800.  Numbers in this magnitude were a non-starter for the congregation, and the parish told the diocese that. 

In early 2010 the parish made another offer to the diocese.  The proposal was for a total of $700,276.80 consisting of a $30,000 down payment and a mortgage amortized over 30 years with zero interest to be held by the diocese for the $670,276.80 balance of the purchase price.   The parish offer was that they would pay the $1,881.88 per month payments for 15 years and at the end of 15 years, the diocese would get the remaining unpaid balance as a balloon payment of $335,138.40.  The parish told the diocese that this was all they could afford to pay.

The alternative was for the parish to move out, leave the keys, and let the diocese sell the property for what they could get for it.  As with many old stone church buildings, it is in need of much maintenance.  While the church and other buildings could never be rebuilt for the appraised price, neither did the diocese have an attractive prospect for selling it to an outside buyer for what St. George’s offered.

In the week previous to Sunday, May 23, 2010 Fr. Guerard got a call from the bishop and was told that the diocesan Standing Committee accepted the terms of the sale proposed by the parish.  On that Sunday Fr. Guerard announced the acceptance and the terms to the parish at the Sunday morning service.

Bishop Councell followed his call with a letter to Fr. Guerard dated July 1, 2010 in which the bishop wrote:

The Standing Committee of the Diocese of New Jersey and I met with Canon John Wood Goldsack, Esq., Chancellor of the Diocese, on June 17, 2010 to review the terms of the proposed agreement for the sale of the property of St. George’s Church.

The Standing Committee approved the terms of the agreement.  I also gave my approval.  Canon Goldsack will prepare a formal agreement and forward it to you for your and the Vestry’s review and action.

You and the people of St. George’s remain in my prayers.

The chancellor for the diocese wanted to draft the purchase contract, and on August 17, 2010 he wrote the lawyers for the parish and confirmed the terms of the deal.

The contract was drafted and sent to one of the lawyers for the parish by letter of October 1, 2010.  In the words of the New Jersey chancellor in that letter the chancellor noted that

As part of the approval process we will also submit the documents to the Presiding Bishop and her Chancellor for their review and comment.  It is possible that there may be some modifications as a result of this review.

This was not the first time the diocese discussed with Bishop Schori the negotiations to sell the property to St. George’s.  As early as January of 2009 Bishop Councell told Fr. Guerard that he had advised the PB about what he was doing with St. George’s.  Bishop Councell said that the decision to negotiate a sale to the departing congregation was his choice, but that he felt that he needed to keep the presiding bishop apprised of what he was doing.  Paragraph 8 of the “Pastoral Direction for Parishes Seeking to Disaffiliate from the Diocese of New Jersey,” to which reference is made, supra, made it clear that, “The Agreement [of disaffiliation and property sale] shall also be provided to the Presiding Bishop and the Presiding Bishop’s Chancellor.”

On October 28, 2010 both New Jersey Bishop Councell and Chancellor John Goldsack signed the agreement which the lawyers had prepared, which consisted of a contract prepared by the diocese and a rider to the contract prepared by the attorneys for the parish.  On November 5, 2010 the senior warden of the parish signed the agreement and the rider.  From then on it was a matter of getting the title documents ready for the closing.

By a certification sworn to November 18, 2010 Bishop Councell stated that “The Diocese has complied with all Constitutional, Canonical and Statutory requirements of the Episcopal Church and of the Diocese of New Jersey and is authorized to sell the subject premises.”

The closing for the sale took place on the Tuesday before Thanksgiving, November 23, 2010.

In many discussions around the nation where there have been talks between Anglican Churches which have departed from the Episcopal Church, the diocesan officials have proposed a 5 year period after the sale when no non-Episcopal bishop would be allowed to visit the property which was proposed to be sold to the departing parish.  To date this is the first such sale, so there are no other actual completed transactions with which to compare this transaction.  But at no time during any of the negotiations did Bishop Councell or his people make this request of St. George’s as a condition of their purchase.  The deal which the parties struck in this case in fact has no such restriction, and the CANA bishops will continue to minister to the people of St. George’s Anglican Church as they have for the last several years.

It is hard to say for certain why this transaction worked an amicable settlement rather than litigation while so many other cases around the country have resulted in lawsuits.  Litigation has resulted in great cost to all parties and the ensuing bad publicity for everyone.  However it is clear to me that the very good relationship between this particular Episcopal Bishop and the rector of the parish played a huge part in the settlement.  The parish was willing to walk away from the property if the bishop said so.  The bishop was willing to negotiate with the parish rather than take over an empty building which would then be sold to someone else.  The legal framework, despite being highly favorable to the diocese because of the law and court decisions in New Jersey, was never allowed to drive the interactions between the parties.  This negotiation was conducted over the course of over two years with the presiding bishop and her chancellor well aware of what was happening and the terms of the deal.

Much can be said and much has been written about the litigiousness of these kinds of cases.   But the St. George’s in Helmetta, New Jersey goes to prove that when the parties both desire to find an amicable way to sell a formerly Episcopal Church to an Anglican Church which has disaffiliated from TEC, that a way can be found.  There is no legal bar to such a sale, nor is such a sale, even at a fraction of the appraised and assessed value of the property, in violation of the fiduciary duty of the diocese or TEC.

Where there is the will to be gracious and settle without lawsuits, there is a way that it can be done, because it was done here.  Can it be repeated elsewhere?

Perhaps the Helmetta experience might be repeated.  It need not be an isolated incident if both parties in other cases have the good will to try it.

Raymond J. Dague
Attorney at Law
620 Empire Building
472 South Salina Street
Syracuse, New York 13202
(315) 422-2052

Tip of the Tinfoil to the wonderful folks at the AAC – thank you!!