There is progress to report today in the matter of the supersedeas bond* designed to protect property in the Diocese while the judgment against us is on appeal. After five months of negotiation without reaching agreement on the terms of the bond, attorneys returned to the 141st district court, where the Hon. John Chupp heard arguments and signed an order for a supersedeas bond and certain other injunctions and directives.

In advance of the hearing this morning, lawyers representing each side filed a motion and a new proposed order. The attorneys representing Episcopal Church interests also brought the judge three exhibits and a thick binder of material re-copied from previously-filed documents. As before, their request was for a bond of nearly $1 million.

The existing judgment in the case, if carried out, would give all assets to the local TEC parties. Therefore none of the property can be sold or mortgaged by the diocesan Corporation. Pressing the attorneys for TEC and referring to the Diocese and Corporation, Judge Chupp asked, “What assets do they have [to use for a bond]? ... I'm serious.”

After hearing from each side and noting that the 14-page proposed order submitted to him today “is a lot thicker than the one was back in May,” the judge returned to the original three-page document presented on May 19, 2011, which he said had been “sitting in my drawer since then.” He announced that he already had struck out a paragraph requesting “additional security” for the TEC parties and had entered a figure of $5 million as a benchmark of “fair market rental value” of a select dozen churches in the Diocese – a value presented in May by the TEC attorneys. Lead diocesan attorney Shelby Sharpe explained that no rent ever is paid by churches for use of property owned by the Corporation. Nevertheless, said the judge, the property “does have some value.”

Judge Chupp then set the bond at two percent of $5 million, or $100,000, to be paid by Nov. 20, 2011. In addition to the cash amount, the order requires each of the 48 parishes and missions involved in the judgment to present a “monthly summary of the sources, amounts and payees of any and all expenditures ...”

Bishop Iker wishes to thank the members of our legal team for their continued service. He also thanks all those who have prayed for an equitable resolution to this question. He added, “It is a shame that this money will not be used for ministry by either group, but only sit in a bank account for months or years.”

The terms of today's order will be in effect as long as our appeal is pending before the Texas courts.

View today's court order here.

May 19, 2011

Parties to negotiate terms of
supersedeas bond

Efforts by local Episcopal Church parties were frustrated at several points during today's court hearing, which once again failed to resolve the question of the amount of a supersedeas bond.

Early in the hearing the Hon. John Chupp announced his decision to deny the TEC group's motion to strike four affidavits submitted in support of the Diocese for a $0 bond. With those affidavits remaining in evidence, counsel for the Diocese argued that there are no funds available for a bond, since the court's judgment earlier this year awarded all property in the diocesan Corporation to the local TEC minority.

The only fund available to the Diocese is assessment income for normal operating expenses, and existing law forbids a trial court from setting a supersedeas bond that interferes with the ordinary course of business.

Attorneys for the Episcopal minority group called a forensic accountant as expert witness, but, after cross examination by diocesan counsel and the judge, the witness, who was familiar with bank lending practices, agreed that he was not versed in the peculiarities of supersedeas bonds. He also agreed that the Diocese has no collateral. "How can they get a bond [without collateral]?" the judge asked.

Several times Judge Chupp decried the increasing litigation cost in the case, citing as one example the $24,000 which the forensic accountant confirmed he had charged the plaintiffs for his services.

About 80 minutes after the hearing began, Judge Chupp asked both teams of lawyers to confer together and try to reach an agreement, if they could, on the amount of the bond and related requests for information.

"I'm not negotiating; y'all figure it out," he said, suggesting that the bond might be set at zero if other terms were agreed on.

When the hearing reconvened about 40 minutes later, attorneys for both sides agreed to work out a proposal and submit it to the court within two weeks. Each side also left a draft order with the judge. If there is no resolution within two weeks, he will sign one of the orders so that the case can proceed. It is anticipated that all this can be done without the necessity of another hearing in the matter.

*A supersedeas bond is a deposit made during an appeal process when the case involves property and the party making the appeal wishes to delay full payment until the process concludes.