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VirtueOnline - News - Exclusives - Soper Trust Lawsuit Intensifies: Legal Hearing Speculates if TEC Will Survive:
The Diocese of Washington's aggressive action against PNC bank continued in a hearing on January 23, 2012. The full transcripts of this hearing recently became publicly available in the United States District Court for the District of Maryland in the Greenbelt, Maryland court file. In this lawsuit, the Diocese of Washington seeks to terminate the trust left by a generous contributor to the Episcopal Church, Mrs. Ruth Gregory Soper, and place this considerable wealth under its own control. The Soper Trust began with $7 million and now has over $25 million. Originally Riggs National Bank managed the trust and after its collapse, PNC bank took over this managing function. (for more about this see other Virtueonline articles, including 10-10-11 www.virtueonline.org)
The original intent of the Soper Trust was to fund ministries but with the Diocese of Washington's steadily declining revenues, it now fills the gap in its annual budget by providing one/third of the operating expenses.
Some vocal members of the Diocese have expressed concern and anger about this use of the Soper Trust in a series of regional meetings. The Canon to the Ordinary, Paul Cooney, has given public talks about this lawsuit in an attempt to gain support for this legal action against PNC bank. Cooney says that the diocese initiated this lawsuit in order to avoid the PNC management fees of about one hundred thousand annually. Cooney hopes that they will avoid this fee if the trust is terminated and managed by him along with a diocesan committee of investors. Cooney filed an affidavit about this on January 20, 2011.
Yet this lawsuit invokes much larger issues than details about trusts. The leadership of the Episcopal Church has abandoned the central beliefs about the redemption accomplished by Jesus Christ in his death and resurrection. Now as Presiding Bishop Katharine Jefferts Schori plans to transform Christian parishes into interfaith centers, the Episcopal Church faces precipitous declines and many wonder if it will survive. Indeed, the January 23, 2012 transcripts reveal that Judge Peter J. Messitte also expressed a question about the continuation of the Episcopal Church, while in previous court actions, he had disregarded this possibility.
In this hearing the lawyer for the Diocese of Washington, Daniel Shea, dialogued with Judge Messitte about the continued survival of the Episcopal Church. The judge is called The Court in the following transcripts. These transcripts are presented in this article exactly as they read in the court file.
"MR. SHEA: Well, the next issue, Your Honor, is Your Honor went to great lengths to explain in response to PNC's last argument that, gee, maybe there'll be some other entity that will come along that has a right or title in interest to this, and you went to great lengths to explain how the Anglican church has been around since before the American Revolution when the Episcopal Church was created in the United Sates. And I'll take it a step further. The Anglican Church has been around since, I think, the Reformation, Your Honor. So the suggestion that the Episcopal Church and the Anglican church, its parent, are somehow going to go somewhere anytime soon, pales in comparison."
THE COURT: I thought some of them were going to the Catholic Church, Mr. Shea, that's what I read.
MR. SHEA: Well, I hear you. That has happened, Your Honor, where one diocese here in this - one church in this Diocese has been permitted by, I guess Rome, to join the Roman Catholic, it's very interesting, Your Honor, in terms of ecclesiastical law how all that happened. I don't profess to have any greater knowledge than what I read in the paper about that, though."
Following this exchange, the judge and Shea dropped the issue of whether the Episcopal Church will survive. In his presentation Shea explained that the Diocese of Washington's interest is to control fully the remaining Soper money. He stated that in "Mr. Cooney's declaration" the Soper Trust provides "a third of the operating budget of the Diocese." Shea mentioned Paul Cooney's testimony about the Soper Trust about ten times in the hearing. The Diocese had previously stated that they want the highest possible income stream from this trust, but this argument has now been dropped after PNC pointed out previously that Mrs. Soper did not express this in her will.
Shea stated that Mrs. Soper was not keeping the Diocese away from managing her trust, even if her 1973 will stated that the trust should continue "in perpetuity." At one point Judge Messitte requested a copy of Mrs. Soper's will but in response Shea states, "I'm sorry, Your Honor, I didn't bring the will, I apologize."
Shea expressed several times that the Diocese of Washington wants control of the money only to avoid the management fees charged by PNC bank. The judge finally expressed impatience with this argument and suggested that if the diocese gained control of the money, it would also pay management fees. The dialogue reads below.
"THE COURT: Counsel, be fair. Are you saying that you would, if the Diocese got the corpus, you would not be investing with professional investment houses [?]"
Murphy responded that the Diocese would indeed pay fees to an investment house but he thought that the fees would be less expensive.
In his attempts to get the judge to rule for the termination of the Soper Trust, Shea took great care to define Cooney and other diocesan money managers by the term "sophisticated." In the following exchange, Shea said that because of diocesan sophistication, PNC management should be dismissed.
"MR. SHEA: The Diocese is a sophisticated diocese, Your Honor, with a sophisticated investment committee with sophisticated members on the committee, Your Honor, . . . So we're dealing with a sophisticated, not a non-sophisticated beneficiary . . .Clearly there's a need to have some sophisticated management over assets."
PNC lawyer Sean Murphy addressed Mr. Shea's argument rooted in the term "sophisticated" by offering this fact showing PNC's vast experience handling money as compared to the limited expertise of the diocese.
"MR. MURPHY: [PNC] manages nearly 40 billion in assets under management as opposed to the 16 million of the Diocese."
Murphy stated that under Washington DC law UPMIFA there would be no restrictions on the Soper body of money if the diocese gained control of it. He stated, "Under UPMIFA in Washington D.C., if you're going to use these funds for your own use, then there are no restrictions on what you can do with it. In other words, you can dip into the fund and use it for income. . . .They can take our corpus, if they want under UPMIFA as enacted in D.C. And that's - that's our point. . . It exposes the corpus to the claims of creditors, the right to spend the money as they deem fit jeopardizes what she wanted, [which] was the fund to exist in perpetuity."
In conclusion, Judge Messitte denied both the Diocese of Washington and PNC bank's motion for summary judgment and said that this issue should proceed to a trial with a public record. The lawyers for the diocese expressed distress about this ruling and in particular asked for a limited amount of discovery for this upcoming trial. Another attorney for the Diocese, Albert Brault said, "I don't want to get into this discovery route with, you know, boxes of records . . . In talking about discovery, we are in the unenviable position of that its trust funds that are undoubtedly paying the expenses. And so we would be very concerned with the expense factor and hoping we could hold it down." PNC lawyer Murphy agreed that in principle they could try to hold the discovery down.
The point here though is that PNC does not have to look far for an example to prove that the Diocese of Washington if left to its own devices will use the Soper Trust for its personal piggybank without concern for Mrs. Soper's wish for the trust to continue in perpetuity. Funding this lawsuit over the Soper Trust was not in the 2012 budget that the Diocese of Washington convention approved by a vote, though perhaps this expense was slipped into a general category without making the convention aware of it. If the Diocese of Washington gets control of the Soper Trust, the long-term survival of this trust seems questionable.
A crucial point in this hearing was that Mrs. Soper made no direct gifts to the Diocese of Washington but left money to it only under a separate management from the diocese. The judge seemed to seek a legal interpretation of her action and whether it is was meant to keep her financial assets away from the management of the Diocese of Washington.
That argument that Mrs. Soper held concerns about the Diocese of Washington can be made from her choice of church membership. In her will, Mrs. Soper gave an outright gift of 25,000 to her parish. Ruth Gregory Soper's church, All Saints, Chevy Chase, Maryland, now holds a distant relationship with the Episcopal Church. In the early 2000s, this church requested alternative oversight so it would not have to receive the bishop of the Diocese of Washington. The Rt. Rev. Edward L. Salmon, Jr., the former Bishop of South Carolina provided Episcopal support to this congregation so it would not be under the authority of the former Washington D.C. Bishop John Bryson Chane. This prominent parish's criticism of the leadership of the Episcopal Church is well known and from this it can logically be speculated that Mrs. Soper (as a long-term member) also had reservations about the direction of the Diocese of Washington. The court wanted to know if someone could testify that knew Mrs. Soper and her thinking about the Episcopal Church. No name was mentioned in the transcripts.
On March 26, 2012 both counsel produced the subsequent schedule. Legal discovery will continue until October 30, 2012 and the trial should happen in November or December 2012.
Even a limited discovery process should reveal the debts and financial decline that the Diocese of Washington now experiences. Its situation is dire and getting worse.Already the sophisticated Diocese of Washington pays for lawsuits out of a trust, dismisses concern of whether its actions will drive the Episcopal Church out of existence, and plans a hearing about Mrs. Soper's trust without a written copy of the will. In a parallel way, the current sophisticated leadership of the Episcopal Church conducts dozens of lawsuits, while watching its money disappear. The Episcopal Church as a whole watches parishes and dioceses flee to Rome or faithful Anglican groups, and yet it still continues to reject the scriptures with their written record of the holy actions of Christ. For those watching the Episcopal Church's follies and heresies, this hearing seems somehow indicative of the Church as a whole.
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