KANSAS CITY, Mo. (BP)–The Missouri Baptist Convention has filed a motion seeking review of an adverse ruling by a Kansas City appeals court or, alternatively, transfer of the case to the Missouri Supreme Court.
The Feb. 17 motion for rehearing challenges a Feb. 3 decision by a three-judge appeals panel declaring that the convention cannot legally prevent the breakaway of Windermere Baptist Conference Center because of the contents of a charter filed by the former executive director in 2000.
The convention asked the court of appeals to rehear the case, contending that numerous errors of law were committed in the three-judge appeals panel’s unanimous ruling upholding a summary judgment against the convention by Cole County Judge Richard Callahan in March 2008. A rehearing could involve all the judges in the Kansas City appeals court, “en banc,” not just the original three who issued the first opinion.
Convention attorneys also filed a separate application asking the appeals court to transfer the case to the Missouri Supreme Court because the issues at stake are of general interest and importance to numerous other groups that operate subsidiary corporations under Missouri’s Non-Profit Corporation Model Act.
The attorneys noted that, while it is rare for a rehearing or transfer to be granted, it is a necessary procedural step before appealing directly to the Missouri Supreme Court.
The attorneys said the appeals court normally rules within a few weeks on such post-decision motions. If the appeals court denies the motions, then the convention may file a request directly with the Supreme Court for a hearing. A hearing may be granted if four of seven judges believe the case contains issues of general importance and interest.
On Feb. 3, the appeals panel rejected the convention’s contention that its right to elect trustees in the original charter was legally enforceable because it made the convention the statutory “sole member” of the corporation. However, the court held that, regardless of the right to elect trustees, the convention could not be a sole member because the charter said that “this corporation shall have no members.” The court said the statutory definition of member did not apply in the case.
The court said that the voting rights of a non-member could be eliminated by charter amendment — unless a clause in the charter required convention approval of amendments. In the absence of such a “convention approval clause,” the MBC voting rights could be taken away by amendment without legal remedy, the panel ruled. The convention argued before the panel that the approval clause was intentionally left out by the former executive director, Jim Hill, who filed the charter that made him an ex officio member of the breakaway board. Hill now heads a breakaway state convention and has family ties to the development company which owns 941 acres of the original 1,300-acre Lake of the Ozarks conference center.
Michael Whitehead, legal counsel for the convention, said this is the first time a Missouri appeals court has interpreted certain sections of the nonprofit code, and the issues may be important enough that the state Supreme Court will want to review it.
“We believe that the appeals court’s novel interpretation of the nonprofit code is wrong,” Whitehead said, explaining, “A statutory definition of a term is binding on the courts. The court cannot let the Windermere incorporator define the term ‘member.’ The legislature has done so, and it says a member is a person who has the right to elect trustees more than once. Violation of basic rules of statutory interpretation or failure to follow prior precedent in contract law are the types of errors the Supreme Court may wish to correct.”
Both the convention’s motion for rehearing and the application for transfer cited numerous errors of law which the appeals panel committed, including:
— The opinion overlooks or misinterprets the line of cases which holds that a statutory definition must be used by the court when interpreting a document written under the statute. The three-judge appeals panel held that the statutory definition of “member” did not apply because the Windermere charter had a sentence saying that “this corporation shall have no members.” The convention argues that the appeals court got it backward: The “no members clause” should not apply because the statutory definition said a member is a person who has the right to elect trustees more than once, regardless of what the charter called such a person. Hence a clause giving voting rights to the convention would control over a “no members” clause because the legislature mandated this result by its definition. The importance of the definition is that a member has the statutory right to approve charter changes, and hence the breakaway amendments by the Windermere board would be void because the MBC did not approve them.
— The opinion overlooks or misinterprets the line of cases which hold that in resolving an apparent ambiguity in a contract, the court must consider the contract as a whole and not focus upon specific provisions in isolation. The appeals panel said the “no members” clause was not ambiguous, but only because the court refused to consider the convention’s voting rights clause. Either the “voting rights” clause is controlling, or it is ambiguous in relation to the “no members clause” which must be resolved by a jury trial, MBC attorneys said. In no event can the court enforce one clause and ignore a second conflicting clause.
— The opinion overlooks or misinterprets the line of cases which holds that a court may not read into a statute words that are not found in the statute. Convention attorneys are that the appeals panel disregarded the plain language of Missouri statute 355.586 by reading limitations into the statute which are not stated in the statutory language. Section 586 protects rights of a non-member from being affected by charter amendment. The court held that the word “rights” in the statute only protected “vested” rights, but then held that the convention’s voting rights were not “vested” but could be removed by amendments. The statute does not use the term “vested.”
Windermere was one of five Missouri Baptist Convention subsidiary corporations which broke from the MBC in 2000-01 by changing their charters to create self-perpetuating trustee boards.
The other breakaway entities are Missouri Baptist University, the Missouri Baptist Foundation, The Baptist Home retirement center and the Word & Way newsjournal.
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Reported by The Pathway, newsjournal of the Missouri Baptist Convention.
