MBC gets favorable ruling in legal battle with breakaway agencies
By Don Hinkle
JEFFERSON CITY – A Circuit Court judge gave the Missouri Baptist Convention a major procedural victory on Dec. 15 when he “certified class representatives” in the action to recover five breakaway agencies. Cole County Circuit Court Judge Tom Brown held that the Executive Board and seven of its members – messengers – are proper plaintiffs to move the case forward.
The favorable ruling for the MBC came after more than three years of legal wrangling by agency lawyers over who has the right to take legal action in behalf of the MBC. At various points in the case it has been argued that churches, messengers or the Executive Board – or various combinations of the three, have the right to represent the MBC, an unincorporated association. The judge indicated that the process should now quickly proceed to the merits of the case, whether the corporate charters give the Convention the legal right to elect trustees.
“Judge Brown said the court of appeals wants this case to get past procedural squabbles and get to the merits quickly,” said Michael Whitehead, MBC attorney. “We’re back on track to do that. We’ll finish discovery, argue some motions and have a trial scheduling conference within six months.”
The ruling came on the same day MBC attorneys filed a motion for a temporary restraining order and injunction against the Windermere Baptist Conference Center’s board of trustees to prevent further “transferring or encumbering of real estate or timber.” Brown discussed the matter in chambers with counsel and then set a hearing on the matter for Dec. 19 at 11 a.m.
“When we told the judge about the emergency need to protect the Windermere property, he seemed to appreciate the urgency, and he gave us a prompt hearing date,” commented Whitehead. “We are hopeful that he will stop all sales of land, all mortgaging of assets and all timber removal operations, until this case is over.”
The motion for injunction was prompted by a series of stunning discoveries by MBC officials in recent days:
– Windermere’s Internal Revenue Service (IRS) Form 990 for 2004 showed that it had an operating loss of $2.1 million and total debt of $21 million.
– Word and Way reported on Dec. 1, 2005, that former president, Frank Shock, abruptly stepped down from cheif executive officer duties on Nov. 17;
– In the same story, Windermere Chairman Arthur Mallory denied that the sale of any Windermere land was being actively considered. Less than 24 hours later, he said just the opposite, explaining that some land would be sold to private developers.
– Word and Way reported on Dec. 2, 2005 that Windermere trustees had re-financed and reduced the $21 million debt to $14 million, but with a new line of credit for $30 million, and that a bond sale was planned.
– Public records in Camden County contained a “special warranty deed” to National City Bank, the former lender on the $21 million, conveying hundreds of acres of Windermere land, dated Nov. 11, 2005;
– Trees were being cut by commercial logging operations near the Windermere entrance off of State Road AA.
According to a deed of trust on the public record, the broker hired to handle the bond sale is California Plan of Church Finance, Inc., (CPCF), an affiliate of the California Southern Baptist Convention. The brokerage’s web site lists Bill Dodson as its vice president for sales and the person responsible for managing the firm’s private client and institutional client groups.
MBC Executive Director David Clippard, upon learning about the bond sale, dispatched a letter to every pastor, director of missions, WMU leader, and deacon chairman in the MBC, as well as to state Baptist convention executive directors and leaders of the Southern Baptist Convention, informing them about the bond sale.
“Investors should be aware that the MBC legal action in Cole County Circuit Court asks the judge to declare that the breakaway board has no legal authority to mortgage land or to sell bonds,” Clippard stated in his letter dated Dec. 14. “The MBC is seeking to recover ownership or control of the Windermere real estate. MBC will ask the court to cancel any debts, mortgages or bond obligations incurred by the breakaway board. Hence, individual bond investors could lose their money. It would seem prudent under the circumstances to wait for the outcome of the MBC litigation before deciding to invest in Windermere bonds.”
Windermere is one of five entities where moderate/liberal trustees opposing the conservative direction of the MBC, amended their charters to make their boards self-perpetuating and no longer accountable to Missouri Baptists. That prompted the MBC to file suit to reverse the trustee actions and to regain control of the entities that, in addition to Windermere, include The Baptist Home, Word & Way, Missouri Baptist College and the Missouri Baptist Foundation.