July 30, 2020
Goldstein Hall Litigation Team Wins Victory in First Department for Religious Corporations

Following Goldstein Hall’s Litigation Team’s victory in the Supreme Court of the State of New York, County of the Bronx, wherein, the Hon. Judge Ruben Franco granted our Client, the St. James Episcopal Church Summary Judgment against a developer seeking specific performance of a contract for the sale of Episcopal Parish owned property, where the proposed sale was not approved by the Bishop and the Standing Committee, our Litigation Team consisting of Partner, Brian J. Markowitz (left) and Associate Daniel Goldenberg (right), along with members of our Faith Based Practice Group, were able to secure a unanimous First Department affirmance. Our previous write up of this case can be found here.

The First Department held that Religious Corporations Law §12 provides that the Bishop and Standing Committee must approve the sale of its property, holding, “Because the contract was one for sale of a “Protestant Episcopal” church, the motion court was correct that it could not order specific performance of the contract where the Bishop, Standing Committee and Diocese had refused to approve the sale.”

The Court went on to hold that the Developer’s “claim for breach of the covenant of good faith and fair dealing was properly dismissed as duplicative of its breach of contract claim” and that its “claim for unjust enrichment was precluded by the existence of a valid express agreement with regard to the same subject matter.” 2520 Jerome Ave., LLC v. Corp. of Rector, 2020 N.Y. Slip Op. 03844, 1, 2020 WL 3851945 (N.Y. App. Div. July 9, 2020). Clearly ,the First Department recognizes and respects the religious hierarchy of the Episcopal Church and other religions.

The clear takeaway from this case is that Contracts of Sale of Church owned property must comply with Religious Corporation §12 and that Church owned property may be subject to additional procedural checkpoints before the sale can consummated. Further, if the proper consents are not granted, the Church may have additional defenses to some of the claims that can be asserted against other transactions.

If you are involved in litigation regarding religious property, please contact Brian Markowitz. If you are engaged in or contemplating a transaction involving the sale, mortgage or lease for more than 5 years of religious property, please contact Jason Labate.

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