The United Methodist Church (UMC) can be sued as a denomination for actions involving any of its affiliated units, according to a state court of appeals ruling last month in California. Attorneys and church leaders across the United States are buzzing about the implications of the ruling for the nation’s religious bodies.

“You are dealing here with a landmark case,” said Chicago lawyer Samuel W. Witwer, who is representing the UMC in an ongoing legal battle that prompted the ruling. “It would mean that every religious denomination could be sued for anything that might happen in a local church or local parish hall of a unit bearing that name.”

The ruling involves one of several bankruptcy cases facing Pacific Homes, a network of fourteen retirement and health care facilities that had been affiliated with the UMC’s Pacific and Southwest Conference. The Los Angeles based Methodist conference “had placed millions of dollars” into Pacific Homes for “the help of the elderly,” said Witwer.

Elderly residents living in Pacific Homes facilities had sued the conference, the denomination’s central funding agency (the General Council on Finance and Administration), and the UMC itself, on grounds that residents who had bought lifetime care memberships were defrauded by being asked to pay additional fees after Pacific Homes ran into money difficulties. (A court-appointed trustee took over Pacific Homes management in November 1977, and soon after the trustee and residents and bondholders of Pacific Homes filed several multi-million dollar suits that allege, among other things, breach of contract and mismanagement [Dec. 1, 1978, issue, p. 47].)

The UMC has argued that it cannot be sued for the actions of its relatively autonomous affiliate units—114 ...

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