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August 23, 2013


Court Dismisses +vonRosenberg’s Federal Trademark Suit against Bishop Lawrence

Today Senior Judge C. Weston Houck of the Federal District Court in the District of South Carolina entered an order dismissing “without prejudice” the federal trademark infringement lawsuit filed in that court by Provisional Bishop vonRosenberg of the “Episcopal Church in South Carolina” against Bishop Mark Lawrence of the independent Episcopal Diocese of South Carolina. The dismissal “without prejudice” means that the Court declined to rule on any of the merits of Bishop vonRosenberg’s claims, so as not to interfere with the State Court proceeding involving those same issues which is currently before Judge Diane Goodstein in the Court of Common Pleas for the First Judicial Circuit in Dorchester County, South Carolina (see the footnote on page 22 of the Order).

Should the State court proceedings not fully and finally resolve all of the trademark issues between Bishop vonRosenberg and Bishop Lawrence (and there is no reason to conceive why they should not so resolve them), then the dismissal without prejudice leaves Bishop vonRosenberg theoretically free to refile his Lanham Act (federal trademark) claims in the federal district court. However, if the State court proceedings result in a litigated final judgment, then that judgment would operate to bar any further such filings by Bishop von Rosenberg in any court.

Bishop vonRosenberg had asked for the court to enter a preliminary injunction in his favor, while conceding that he himself was already subject to a State-court preliminary injunction which barred him from using the trademarks of the Diocese of South Carolina. The court also had before it Bishop Lawrence’s motion to dismiss the federal action, and Judge Houck chose to grant the motion to dismiss rather than get entangled with the State court proceedings by issuing any injunction of his own.

Judge Houck also points out that while Bishop vonRosenberg is not a named party to the State court action, ECUSA itself is a counterclaimant, and its counterclaim there raises the exact same federal trademark claims which Bishop vonRosenberg tried to assert in federal court. Since those claims can be fully adjudicated by the State court (even though they are brought under a federal statute), there is no likelihood that the State court action will not fully and finally resolve them. Thus, there was no need for the federal court to retain jurisdiction, and Judge Houck granted Bishop Lawrence’s motion to dismiss.

The opinion, once again, shows Judge Houck’s thorough and careful approach to deciding just as much as he needs to—and no more—in order to arrive at his decision. It is replete with the finer and more technical points of federal declaratory judgment law as settled in the Fourth Circuit (the federal appellate circuit which includes the State of South Carolina, and which is headquartered in Richmond, Virginia). Because of his care in crafting his order, and also because the federal courts have wide discretion in deciding whether to entertain suits for a declaratory judgment, there is a near-zero probability that ECUSA or Bishop vonRosenberg could successfully appeal the dismissal.

The opinion also demonstrates the very substantial legal issues which are raised by ECUSA’s now-standard approach to these cases of withdrawing dioceses (thus far: San Joaquin, Fort Worth, Pittsburgh, and Quincy). Judge Houck fully appreciates that there is only one corporate Diocese under South Carolina law at this point, and that ECUSA claims ownership and control of it by virtue of its “hierarchical” polity. (Score one more meaningless point for ECUSA to quote for future court cases: on page 3 of his Order (footnote 5), Judge Houck acknowledges the Fourth Circuit precedent which binds him to repeat the mantra that ECUSA is a “hierarchy”. But the panel which decided that case, Dixon v. Edwards, 290 F.3d 699, 716 (4th Cir. 2002) made that statement as dictum in reaching its conclusion that the parish in Accokeek, Maryland had improperly denied (now deceased) Bishop Jane Dixon personally rights which she enjoyed in her capacity as bishop—to visit the parish, and to withhold her approval of any new rector, etc. The nature of the structure between ECUSA and its member dioceses was not even remotely at issue in that case, and so the panel’s language, being unnecessary to its decision, does not in fact bind any lower court. Perhaps Judge Houck was just being politely deferential to his judicial superiors.)

There is currently only one incorporated Diocese of South Carolina because ECUSA and its proxy ECSC refuse to incorporate one. To do so would give away their claim that member dioceses have no right unilaterally to withdraw from the denomination. So they have made the bed in which Judge Houck leaves them to lie. Their entire chance of success depends on proving to Judge Goodstein that the Constitution and Canons of ECUSA somehow contain language that denies to member dioceses what effectively is their right under the freedom of association guaranteed to all (including both corporations and unincorporated associations) by the First Amendment.

To prove that the DSC ever waived its First Amendment right would require quite a showing—that it knowingly and voluntarily gave up that right, as documented in some kind of writing, or legislative action by General Convention in which the DSC joined. After years of encountering the kinds of evidence ECUSA throws out to support such a claim indirectly, I am fairly confident that it has nothing directly on point. So as I say, it will have a hard uphill slog in convincing Judge Goodstein that member dioceses are prohibited from withdrawing on their own—especially with the precedent of the All Saints Waccamaw decision, which guides all inferior South Carolina courts on the rights of religious corporations under State law.

Judge Houck must have been happy to leave such an intricate ecclesiastical dispute for Judge Goodstein. His plate is now empty of all ECUSA matters, and he can hope to spend his retirement years in peace and quiet. 


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25 comments

Allan, thanks for the breaking news late on a Friday.

And it is refreshing to read of a federal judge consulting and applying the law rather than spouting ideology.

[1] Posted by Timothy Fountain on 8-23-2013 at 06:58 PM · [top]

While I am sure that vonRosenberg and TEC will find something else to sue Bishop Lawrence and DioSC over in the future, the present decision is a relief for those of us who have been praying for this outcome in the Federal Court.  Of course, the final outcome (of this case, as I am sure TEC will try to keep DioSC in court over one thing and another until the Lord’s return)  will have to await trial in South Carolina, but this certainly seems a positive development.

[2] Posted by tjmcmahon on 8-23-2013 at 07:51 PM · [top]

So Von Rosenberg’s business is not a legal corporation but is handling hundreds of thousands of dollars in operational monies? I wonder what the SC Dept. of Revenue and the IRS will think of that?

[3] Posted by Undergroundpewster on 8-24-2013 at 10:22 AM · [top]

Well, this should raise some eyebrows, shouldn’t it?  Some investigation, maybe?

[4] Posted by cennydd13 on 8-24-2013 at 10:44 AM · [top]

Somebody there in SC needs to drop a dime on the sham business front that TEC has set up.  Seriously.  If it’s going to be investigated, somebody with some standing needs to file a complaint or query with the proper state agency.

[5] Posted by Timothy Fountain on 8-24-2013 at 11:22 AM · [top]

Timothy - “Somebody with some standing”  not being limited to diocesan clergy or lay officers, but including observers from outside the church?  Possibly even preferring an outsider?

[6] Posted by maineiac on 8-24-2013 at 11:42 AM · [top]

I’m thinking a resident of the state.

[7] Posted by Timothy Fountain on 8-24-2013 at 11:48 AM · [top]

Let’s be fair.  It is not especially unusual for a parish or diocese not to be incorporated (or, at least, diocesan incorporation is a relatively recent phenomenon in most states).  The laws vary by state.  The first specific instance I actually remember was the incorporation of the Diocese of Ft Worth, and at that time, from what I understood, it was something of a novelty.  It is a good defensive tactic, in terms of providing some protection from TEC, and straightening out ownership of property and such, but even parent TEC is not a corporation (the DFMS is, but not TEC), and TEC handles millions of dollars.  You might recall that the Dio of San Joaquin was (not sure if it still is) a “corporation sole”- a designation that does not exist in all states.

Of course, vonRosenberg and his associated parishes CANNOT incorporate- to do so would negate the very premise of their existence- which is that they are already incorporated, and are the legitimate officers and members of the (corporation) Diocese of South Carolina.  If they were to incorporate, they would admit they were a new diocese, and this would make mincemeat of their own arguments in court.  Indeed, it would negatively impact the standing of all of the faux diocesan structures- since for TEC to recognize a new diocese in S Carolina would negate TEC’s stance that dioceses cannot leave.

What happens to the poor folks who stuck with TEC should Bishop Lawrence and the true Diocese of South Carolina prevail in the current legal dispute? (As now appears likely)  Will TEC bite the bullet, admit that a diocese can leave TEC, and formalize a new diocese in South Carolina?  It strikes me as more likely that they will opt for placing the remaining TEC parishes under the jurisdiction of Upper South Carolina, while still claiming to be the legitimate heirs of Dio SC, court decisions notwithstanding. Or they might go the route they have gone in TEC_Quincy, which has voted to merge with Chicago, making the existence, or not, of the TEC diocese a moot point, and allowing TEC to take advantage of the more extensive resources and political influence of Dio Chicago to continue litigation.

[8] Posted by tjmcmahon on 8-24-2013 at 11:55 AM · [top]

Remember too that the financial and other records of both the TEC group and the Diocese are under intense scrutiny of attorneys from both sides, and no doubt Goodstein will get a good look as well.  One would think that any malfeasance will be reported by an officer of the court directly to the State Attorney General or other authority with jurisdiction. 

If I were in TEC, I’d be more worried about how much of the money I put in the plate on Sunday was going to coffers of 815, where a substantial portion of it was being turned over to support TEC’s legal effort to crush the dioceses and parishes that have left.

[9] Posted by tjmcmahon on 8-24-2013 at 12:06 PM · [top]

Tjmcmahon, I am resident in the real Diocese of San Joaquin, and our bishop is, I believe, the corporation sole. I am a delegate to deanery and convention, and have heard nothing to the contrary.

[10] Posted by cennydd13 on 8-25-2013 at 12:15 AM · [top]

[7]  Yes, Tim, and that person or persons would have to be from the local District Attorney’s office, I believe, if there’s any suspicion of something wrong.

[11] Posted by cennydd13 on 8-25-2013 at 12:21 AM · [top]

TJ,
I don’t know if they (the TEC remnant group) have incorporated themselves under SC law (probably not for the reasons you state) or not but I do know at their convention, they called it the 220th annual convention of the Diocese of South Carolina and proceeded to adopt the constitution and canons as it was before we dropped the accession clause. I wonder if they realize that one does NOT contain any of the Title IV changes. Perhaps they did add the title IV changes at the convention?? I have not heard anything except they went ahead and adopted our previous constitution and canons as their own. Nice….....  wink

Yesterday (once again) I had to correct a newspaper article once again over the confusion of the TEC remnant continuing to use the name of the “Diocese of South Carolina”.  [You can read it at scnow.com Just look for “District Court rules against TEC”].

I tried to post yesterday but FB *hiccuped* as I was trying to submit my post so here it is again.

1) Thanks to the many people who have been praying for us here in the Diocese of SC.

2) Our legal team is aware of many of the shady things are going on so no worries there. For example the newspaper ads that were widely published in various newspapers around the state last fall when the TEC group inappropriately used the name and seal of the Diocese of SC. That caused an immense amount of confusion for some- even some clergy were confused because the ads had the name and seal of the diocese.  Even their recent convention where their bulletin clearly states 220th annual convention of the Diocese of South Carolina- in clear violation of the court’s injunction against them.

3) Judge Houck’s ruling should come as no surprise if you read his ruling that remanded the other case (aka the *church* case) back to state court. In the very first paragraph, he summarily dismisses federal jurisdiction of the matter before him.

4) Please keep praying for us…. we are praying for many across the WWAC including the real Diocese of San Joaquin (whose people are very dear to us here as we have one of their best as our Bishop….. we are very fortunate indeed).

[12] Posted by SC blu cat lady on 8-25-2013 at 05:22 AM · [top]

Upon re-reading my post, further explanation of #3). Judge Houck dismisses federal jurisdiction in his court under the Federal Landham Trademark Act. So a perfect set up for his ruling in this case (aka the *Bishop* case).

[13] Posted by SC blu cat lady on 8-25-2013 at 05:29 AM · [top]

I am certain that the state prosecutors, given their full load, are more than happy to let the two sides battle it out and would only step in if during the discovery phase of this or any upcoming case it is revealed that some abuse of tax law had taken place.

With that in mind, I wonder what EIN is written on von Rosenberg’s paycheck? If the remnant group filed for a new EIN, then that is a tacit admission that they are not DSC, and if they make the mistake to use the old EIN, then whichever party loses would have run afoul of the law.

[14] Posted by Undergroundpewster on 8-25-2013 at 08:22 AM · [top]

SC blu cat lady- I agree, I have no doubt that the attorneys for Bishop Lawrence and the Diocese are keeping tabs on the various violations of Judge Goodstein’s restraining order.  TEC and its minions will have some explaining to do in court.

UP- you raise a very interesting question on the EINs- I wonder what TEC has done in Ft. Worth and Quincy?  Or are “diocesan” officials and bishops being paid direct from NYC (the “remnant dioceses” are certainly not funding the massive legal expenses, and Quincy was too small to support much diocesan structure before the split)?  One would think the restraining order would prevent them using the diocese EIN, but then, TEC is no respecter of courts, laws, canons, theology, or ecclesiology except when it suits their purpose.  Would be ironic, if after all these years of abusing the courts to seize property, they ended up nailed for a tax law violation, ala Al Capone.

[15] Posted by tjmcmahon on 8-25-2013 at 10:00 AM · [top]

UP and TJ,
I don’t know about the EINs the TEC remnant may be using. However, I can say that TEC is being a bit obnoxious towards our (Diocese of SC) lay employees when they want to transfer their retirement monies to other companies.  At the very least, that is not nice. At worst….. it could possibly be illegal….. Last I heard (a couple of months ago), they (TEC) were “waiting word from our attorneys” hhhhhhhhhhhhmmmmmmmmmmmm…............

[16] Posted by SC blu cat lady on 8-25-2013 at 03:56 PM · [top]

Hey UP,
This *is* TEC we are discussing .... so perhaps he is being paid in another way???....... Anyway, von Rosenberg is officially “retired” so he gets a pension….. whether he draws a salary for being *bishop* is another matter to which I don’t know the answer. Perhaps one of you CPA types could do some Uh….. checking…..... wink

[17] Posted by SC blu cat lady on 8-25-2013 at 04:01 PM · [top]

Would someone please say what an “EIN” is? Thanks Bob+

[18] Posted by Bob+Retired on 8-25-2013 at 04:56 PM · [top]

EIN usually means Employer’s ID # - also known as a Federal Tax ID.

[19] Posted by The Little Myrmidon on 8-25-2013 at 06:12 PM · [top]

Even though churches are tax-exempt, they probably have Federal Tax ID’s for their 501C’s.

[20] Posted by The Little Myrmidon on 8-25-2013 at 06:15 PM · [top]

You have to have an EIN to establish a bank account and to file W-2s and 1099s for people who are employees or earn stipends of some kind.  They have to be using something, presumably a new number, lest their financial reporting be commingled with DSC’s.

[21] Posted by Katherine on 8-25-2013 at 06:34 PM · [top]

[17]  I’m neither a lawyer nor a CPA, but since +von Rosenburg is retired and receiving his pension, he probably is receiving a small stipend to cover his expenses…..travel, gas, etc.

[22] Posted by cennydd13 on 8-25-2013 at 08:20 PM · [top]

For those who may have forgotten…. your SSN is *your* taxpayer ID number. Employers also have a *taxpayer ID* number. It was never meant to be a catch all ID number like it is being used currently.

[23] Posted by SC blu cat lady on 8-27-2013 at 01:44 PM · [top]

At risk of being off topic, what is the status of the cases regarding the other dioceses that have left TEC ?

[24] Posted by AndrewA on 8-27-2013 at 03:02 PM · [top]

AndrewA, If you don’t already, the best place to go to keep up with all legal news is the Curmudgeon’s own blog. He is now a regular here as we all know but has archives that go back many years. There is a summary of the various lawsuits on his blog. I know someone who has put in a table form which I have. If you want that, PM me. I don’t check this mail often but if I know you have sent me a message, I will check it.

[25] Posted by SC blu cat lady on 8-28-2013 at 08:56 AM · [top]

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