Opinion
No. 07-820.
Filed March 18, 2008.
Gaston County No. 05CVS2458.
Appeal by defendants from (I) order entered 12 August 2005 by Judge James W. Morgan in Superior Court, Gaston County, (II) order entered 10 January 2007 by Judge Charles P. Ginn in Superior Court, Gaston County, and (III) judgment entered 16 April 2007 by Judge Yvonne Mims Evans in Superior Court, Gaston County. Heard in the Court of Appeals 15 January 2008.
Hamrick Warshawsky, by Calvin B. Hamrick, for plaintiffs. Armagene B. Ellis-Smith and Bishop Charles D. Hines, Sr., pro se.
Although courts have no subject matter jurisdiction over ecclesiastical matters, "courts do have jurisdiction, as to civil, contract and property rights which are involved in, or arise from, a church controversy." Here, the defendants contend the trial court erred by improperly allowing the case to continue in violation of the First Amendment. Because this case involves a dispute over property rights, the trial court had subject matter jurisdiction, and therefore did not err by denying defendants' motion to dismiss.
Western Conference of Original Free Will Baptists of N.C. v. Creech, 256 N.C. 128, 140, 123 S.E.2d 619, 627 (1962).
The evidence presented at trial tended to show that Plaintiff St. John Christian Holiness Church (St. John Church) is a duly organized church in Bessemer City, North Carolina, that has operated as a church for over eighty years, despite having numerous name changes. St. John Church was originally named St. Johns Church of God of Bessemer City; however, to distinguish between two Bessemer City churches of the same name, in December 1923, the deacons of St. Johns Church of God of Bessemer City transferred the deed of their property to the trustees of the newly named Colored Holiness Church of God at Bessemer City.
Plaintiff Bishop Lenole Brown became a member of St. John Church in 1981. He became Pastor of St. John Church in 1989 and was elected Bishop in 1996.
Plaintiff Christian Holiness Church of God, Inc., is a non-profit organization licensed to do business in North Carolina. It was originally incorporated on 18 November 1931 as the Colored Holiness Church of God, Inc., but assumed its current name in February 1995. The 1931 Articles of Incorporation stated that the corporation is to have no capital stock and members may be admitted by "subscribing to the by-laws." The 1931 Articles of Incorporation also listed twenty-eight churches "under the control" of the corporation, including St. Johns Church, Bessemer City. One of the three incorporators was C. H. Hairston, Bishop of the corporation in 1931 and lineal ancestor to defendants Bishop Charles D. Hines, Sr., Catherine Hairston Hines, and Armagene B. Ellis-Smith.
On 31 December 1942, Christian Holiness Church of God, Inc., filed a Certificate of Amendment to The Charter with the North Carolina Secretary of State. The amendment stated: "The general management of the Church shall be vested in a Bishop and General Trustees. . . . The number of Trustees shall be increased or decreased at the will of the General Assembly of the Church and all vacancies shall be filled in the same manner."
Then named the Colored Holiness Church of God, Inc.
On 27 July 2004, Ms. Ellis-Smith filed Articles of Incorporation with the North Carolina Secretary of State, incorporating St. John Holiness Church of God, located at 210 Logan Street in Bessemer City, North Carolina, the same address where Plaintiff St. John Church is located.
On 2 September 2004, Ms. Ellis-Smith filed Articles of Amendment with the North Carolina Secretary of State, which changed the name of Christian Holiness Church of God, Inc., back to the Colored Holiness Church of God, Inc., named Bishop Hines as Bishop of the organization, named Bishop Hines, Ms. Ellis-Smith, and Ms. Hairston Hines as trustees, and listed Ms. Hairston Hines as the only member of the corporation. The Articles of Amendment stated that the amendments were approved by a sufficient vote of the board of trustees and member approval was not required because "[t]here is only one surviving member and she is the trustee and there are no other members." Neither Bishop Brown, the members of St. John Church, nor the directors or board members of Christian Holiness Church of God, Inc., participated in the September 2004 amendments. On 7 September 2004, Ms. Hairston Hines filed a Statement of Change of Registered Agent on behalf of the Christian Holiness Church of God, Inc., changing the corporation's registered agent from Julius Hunter to Kathy McLeod.
We note the trial court dismissed all claims against Ms. McLeod.
On 15 September 2004, Bishop Hines wrote a letter to Bishop Brown referencing the church property at 210 Logan Street in Bessemer City, North Carolina. In the letter, Bishop Hines stated that St. John Church was founded by his grandfather and the church property was owned by a corporation of which he was the presiding Bishop. Bishop Hines also stated that Bishop Brown's interest in the ministry was terminated and that he expected to receive all documents related to the organization within ten days. Bishop Brown responded through his attorney, Calvin B. Hamrick, who wrote a letter outlining the history of St. John Church and Christian Holiness Church of God, Inc., and explaining that St. John Church owned its own property through its trustees.
On 29 October 2004, Bishop Hines unsuccessfully went to the Gaston County Police to try to have Bishop Brown removed from the premises of St. John Church. On 27 May 2005, Bishop Brown received a phone call notifying him that the security alarm at St. John Church was activated. When he arrived at the church, he found Bishop Hines and Ms. Ellis-Smith with a locksmith who had already changed the lock on one door. The police arrived and told Bishop Hines and Ms. Ellis-Smith to leave the premises.
Plaintiffs filed a complaint seeking a permanent restraining order against the defendants and an injunction to stop them from interfering with the business of St. John Church and Christian Holiness Church of God, Inc., and requesting that the court rescind the amendments of the Articles of Incorporation of St. John Church and Christian Holiness Church of God, Inc. On 12 August 2005, the trial court denied the defendants' motion to dismiss pursuant to Rule 12(b)(6). On 10 January 2007, the trial court denied the defendants' motion for summary judgment. On 16 April 2007, the trial court entered judgment in favor of the Plaintiffs, permanently enjoining the defendants from interfering with the business of St. John Church and Christian Holiness Church of God, Inc., rescinding the July 2004 Articles of Incorporation and the September 2004 Amended Articles of Incorporation, and ordering Bishop Hines and Ms. Ellis-Smith to pay $5,000 in damages.
On appeal, Defendants Ms. Ellis-Smith and Bishop Hines argue the trial court erred by (I) denying their motion to dismiss for Plaintiffs' lack of standing, (II) denying their motion for summary judgment, (III) improperly allowing the case to continue in violation of the Constitution, and (IV) finding them personally liable for damages.
I.
Defendants first argue the trial court erred by denying their motion to dismiss based on Plaintiffs' lack of standing. Although Defendants made their motion to dismiss pursuant to Rule 12(b)(6), it would have more properly been made under Rule 12(b)(1), as a motion to dismiss for lack of subject matter jurisdiction. See N.C. Gen. Stat. § 1A-1, Rule 12(b)(6) (2005) (motion to dismiss based on "failure to state a claim upon which relief can be granted"); Id. Rule 12(b)(1) (motion to dismiss based on "lack of jurisdiction over the subject matter"); Aubin v. Susi, 149 N.C. App. 320, 324, 560 S.E.2d 875, 878, disc. review denied, 356 N.C. 610, 574 S.E.2d 474 (2002) ("Standing is a necessary prerequisite to a court's proper exercise of subject matter jurisdiction."). Because we treat Defendants' motion to dismiss as one made under Rule 12(b)(1) for lack of subject matter jurisdiction, the appropriate standard of review is de novo. See Tubiolo v. Abundant Life Church, Inc., 167 N.C. App. 324, 326-27, 605 S.E.2d 161, 163 (2004), disc. review denied, 359 N.C. 326, 611 S.E.2d 853 (2005) (treating defendant's Rule 12(b)(6) motion as a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction and applying the de novo standard of review).
Defendants contend that Bishop Brown lacks standing to bring a derivative action on behalf of St. John Church and Christian Holiness Church of God, Inc. However, Defendants misinterpret the nature of this action. "Standing refers to whether a party has a sufficient stake in an otherwise justiciable controversy such that he or she may properly seek adjudication of the matter." American Woodland Indus., Inc. v. Tolson, 155 N.C. App. 624, 626, 574 S.E.2d 55, 57 (2002), review denied, 357 N.C. 61, 579 S.E.2d 283 (2003). A derivative proceeding is a civil action brought in the right of a corporation, while an individual action is one brought to enforce a right which belongs to plaintiff personally. Norman v. Nash Johnson Sons' Farms, Inc., 140 N.C. App. 390, 395, 537 S.E.2d 248, 253 (2000), disc. review denied, 353 N.C. 378, 547 S.E.2d 14 (2001). Pursuant to the North Carolina Nonprofit Corporation Act, unless the articles of incorporation or the Act provide otherwise, "every corporation has . . . the same powers as an individual to do all things necessary or convenient to carry out its affairs, including without limitation, power [t]o sue and be sued, complain and defend in its corporate name. . . ." N.C. Gen. Stat. § 55A-3-02 (2005) (emphasis added).
Here, Bishop Brown asserted two individual causes of action in the complaint, intentional and negligent infliction of emotional distress, both of which he has standing to bring. Additionally, St. John Church and Christian Holiness Church of God, Inc., asserted four causes of action, for trespass, breaking and entering and larceny, harassment, and punitive damages. Because St. John Church and Christian Holiness Church of God, Inc., have a right to prevent Defendants from interfering with their businesses and attempting to fundamentally amend their organizations, both organizations have standing to bring suit. Accordingly, we find no error.
II.
Defendants next argue the trial court erred by denying their motion for summary judgment. However, our Supreme Court has stated:
To grant a review of the denial of the summary judgment motion after a final judgment on the merits, however, would mean that a party who prevailed at trial after a complete presentation of evidence by both sides with cross-examination could be deprived of a favorable verdict. This would allow a verdict reached after the presentation of all the evidence to be overcome by a limited forecast of the evidence. In order to avoid such an anomalous result, we hold that the denial of a motion for summary judgment is not reviewable during appeal from a final judgment rendered in a trial on the merits.
Harris v. Walden, 314 N.C. 284, 286, 333 S.E.2d 254, 256 (1985); see also Chaney v. Young, 122 N.C. App. 260, 262, 468 S.E.2d 837, 838 (1996) (stating that "this Court has held that when a case has been decided on the merits, a denial of a motion for summary judgment is not reviewable, and is therefore properly dismissed.").
Accordingly, because this case was determined by a final judgment on the merits, we cannot address this assignment of error.
III.
Defendants next contend that the trial court erred by improperly allowing the case to continue in violation of the First Amendment. Defendants essentially argue that the trial court erred by denying their motion to dismiss for a lack of subject matter jurisdiction. Therefore, the appropriate standard of review is de novo. Tubiolo, 167 N.C. App. at 327, 605 S.E.2d at 163.
It is well established that courts have no subject matter jurisdiction over ecclesiastical matters. Western Conference of Original Free Will Baptists of N.C. v. Creech, 256 N.C. 128, 140, 123 S.E.2d 619, 627 (1962). Our Supreme Court has defined an ecclesiastical matter as
one which concerns doctrine, creed, or form of worship of the church, or the adoption and enforcement within a religious association of needful laws and regulations for the government of membership, and the power of excluding from such associations those deemed unworthy of membership by the legally constituted authorities of the church; and all such matters are within the province of church courts and their decisions will be respected by civil tribunals.
Eastern Conference of Original Free Will Baptists of N.C. v. Piner, 267 N.C. 74, 77, 147 S.E.2d 581, 583 (1966) (citation omitted), overruled in part by Atkins v. Walker, 284 N.C. 306, 200 S.E.2d 641 (1973). However,
courts do have jurisdiction, as to civil, contract and property rights which are involved in, or arise from, a church controversy. Where civil, contract or property rights are involved, the courts will inquire as to whether the church tribunal acted within the scope of its authority and observed its own organic forms and rules.
Creech, 256 N.C. at 140-41, 123 S.E.2d at 627 (internal citations omitted).
Here, the primary dispute is over property rights to St. John Church and Christian Holiness Church of God, Inc. Defendants claim because they are trustees of Christian Holiness Church of God, Inc., they own St. John Church, while Plaintiffs claim not only are Defendants not authorized trustees of Christian Holiness Church of God, Inc., St. John Church is owned by its trustees, as evidenced by the 1923 deed. Additionally, Bishop Brown seeks redress for emotional distress that has resulted from the property dispute. Because this case involves a dispute over property rights, we conclude the trial court had subject matter jurisdiction and did not err by denying Defendants' motion to dismiss.
IV.
In their last assignment of error, Defendants contend the trial court erred by finding them personally liable for damages. Defendants cite N.C. Gen. Stat. § 61-1(b) (2005) for support.
Section 61-1(b) of our General Statutes provides "[a] person serving as a trustee . . . of a religious society shall be immune individually from civil liability for monetary damages, except to the extent covered by insurance, for any act or failure to act arising out of this service," with five listed exceptions. Id.
Although Defendants contend that they were acting as trustees of Christian Holiness Church of God, Inc., in trying to remove Bishop Brown and take over St. John Church, there is no evidence in the record that Defendants were authorized trustees. Pursuant to the 1942 Amendment to the Articles of Incorporation, the general management of Christian Holiness Church of God, Inc., was vested in a Bishop and General Trustees, with the number of trustees increased or decreased at the will of the General Assembly of the church. The 1931 Certificate of Incorporation listed C. H. Hairston as Bishop and two other men as officers. By 1942, the Bishop had changed to Joe D. Blake and five new general trustees were listed. When Ms. Ellis-Smith filed Articles of Amendment in 2004 naming Bishop Hines as Bishop, and naming herself, Bishop Hines, and Ms. Hairston Hines as trustees, there is no evidence that the board of trustees or General Assembly of Christian Holiness Church of God, Inc., participated in the amendments. Because Defendants were not authorized trustees of Christian Holiness Church of God, Inc., section 61-1(b) does not apply. Accordingly, we conclude the trial court did not err by finding them personally liable for damages.
Affirmed.
Judges McGEE and CALABRIA concur.
Report per Rule 30(e).