JEFFERSON CITY, Mo. (ABP) — Windermere Baptist Conference Center acted legally when it changed its articles of incorporation, Cole County (Mo.) Circuit Court Judge Richard Callahan ruled March 4.
The ruling was the latest action in a lawsuit the Missouri Baptist Convention filed against five formerly related entities — Windermere, the Baptist Home retirement-home system, the Missouri Baptist Foundation, Missouri Baptist University and the newspaper Word & Way — more than five years ago.
The convention plans to appeal, according to MBC lead attorney Michael Whitehead in an article on the website of the convention's in-house newspaper, The Pathway.
“We are very thankful for Judge Callahan's decision,” Windermere President Dan Bench said in a March 5 written statement. “After carefully considering the merits of the case, the judge made the decision we have always believed was right. We look forward to putting this unhappy event behind us and to have all the Baptists of Missouri rejoicing and serving together.”
The convention first filed suit Aug. 13, 2002, in an effort to force the five institutions to rescind changes they had made in their corporate charters. The Baptist Home changed its articles of incorporation in 2000 to elect its own trustees. The other four agencies took similar actions in 2001.
The March 4 ruling centered on two aspects of the convention's argument: corporate membership and a contractual relationship with Windermere. The judge ruled that the Missouri convention is not a member of Windermere's corporation and that no contract exists between the two entities.
Until August 2000, the convention had governed Windermere through its executive board. Messengers to the 1999 MBC annual meeting approved a reorganization plan that included incorporation of Windermere and Word & Way as separate entities. Windermere's charter, drawn up in 2000, noted the new corporation would have no members.
The Missouri convention has acknowledged that the original incorporation articles declare that Windermere has no members. But attorneys argued that because Windermere had granted the convention permission to elect the center's trustees, the action made the convention, de facto, the only member of Windermere's corporation.
Callahan said Missouri law dictates that individuals can participate in election of an agency's board without becoming a corporate member of that organization. A corporation without members does not become a corporation with members just because it grants limited rights to a third party, he ruled.
The first judge in the case, Thomas Brown, ruled on the Missouri Baptist University's behalf in 2003. Brown lost his bid for reelection in 2006, and the case was subsequently assigned to Callahan.
Windermere also has the right to change its charter without convention approval, Callahan said. “The ‘rights and privileges' given to the MBC and/or its messengers under Windermere's original articles were not ‘fixed, unalterable, irrevocable' rights, but were rights or privileges subject to amendment by Windermere,” the judge wrote.
He added that while the law protects the convention's rights, trustee election is merely a privilege that Windermere's original incorporating articles had granted to the convention. He also noted that as a drafter of the original charter, the Missouri convention could have clearly spelled out the rights to be granted.
The judge dismissed the idea that Windermere's articles of incorporation and the MBC's governing documents — its constitution and bylaws, its business and financial plan, and the executive board's articles of incorporation and bylaws — created a contract between the two entities. The charter, he said, constitutes a contract only between the center and the State of Missouri.
The court also noted that a binding covenant agreement did not exist between the convention and Windermere because the agreement did not list obligations for both parties. The convention could change the agreement unilaterally simply by changing its governing documents, and the convention had the right to terminate a covenant agreement at any time, Callahan said.
Furthermore, Callhan said, no mutual obligation between the two existed because under the governing documents' provisions, the convention was not obligated to support the center and could withdraw any support it provided at any time. The convention withdrew Cooperative Program funds because of the charter changes.
Judge Callahan recognized control as an underlying issue.
“Plaintiffs argue, without factual support, that the MBC only released control over the assets, operations and/or funds because it knew it would retain some degree of control; that it would make no sense for the MBC to enter into the arrangement unless the right of continued control was perpetual; and that the MBC believed it would retain some degree of control,” he wrote.
The court noted that any contract “depends on what is actually said and done … not upon understanding or supposition.”
Judge Callahan denied the convention's request for a permanent injunction against Windermere. The injunction would have banned the center from any construction work, from borrowing funds or from selling or encumbering its assets.
The court has 30 days in which to make any changes to the order or to withdraw it. The convention will have an additional 10 days in which to file an appeal.
Whitehead said the convention is disappointed that the Windermere case did not go before a jury. Representatives from the Missouri convention said they plan to ask the Missouri Court of Appeals for the Western District to offer a ruling rather than to return the case to the circuit court.
In 2005, appellate judges sent the case back to Cole County Circuit Court after the state convention appealed Brown's dismissal of legal action against the university. Brown had ruled that the MBC Executive Board and six Missouri Baptist individuals who filed the original lawsuit did not have the legal right to do so. The appeals court overruled the Cole County judge on the board's standing and upheld Brown's decision.
The Windermere case does not directly affect the other four institutions because each are listed as individual defendants.
“Windermere Baptist Conference Center is very pleased with Judge Callahan's well-reasoned … judgment ruling in favor of Windermere and against plaintiffs with respect to each and every claim and issue raised in the lawsuit,” the center's lead attorney, Jim Shoemake, said in an e-mail statement. “Windermere is confident that Judge Callahan's judgment will be upheld by the court of appeals.”
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Read more:
Cole County Circuit Judge Callahan's ruling in favor of Windermere
Missouri Baptist conference center wins latest round in legal battle (9/13/2007)
Judge says Missouri Baptist agencies did not conspire to break away (7/5/2006)
Missouri appeals court ruling deals partial setback to agencies (6/3/2005)