Appellate Win: No Legal Status, No Case to Bring

Posted on August 21st, 2017 by sutteroconnell

In the appeal in the case of Church at Warren v. ABC Supply Co., Inc. and Mule-Hide Products Co., Inc., the Eleventh District (Ohio) Court of Appeals affirmed the trial court granting summary judgment in favor of Sutter O’Connell’s clients ABC Supply and Mule-Hide. The appellate court agreed with the trial court that the Church at Warren was not a legal entity at the time it filed the complaint since it lacked capacity to bring the lawsuit.

The Church at Warren initially was an incorporated nonprofit organization. But in 2005 the Church allowed its incorporation to lapse, after which it was no longer a legal entity under Ohio law. Based on this undisputed fact, ABC Supply and Mule-Hide moved for summary judgment arguing that the Church lacked capacity to bring the lawsuit. In response, the Church argued that it was an unincorporated nonprofit association under O.R.C. 1745.08. In their reply, ABC Supply and Mule-Hide cited to O.R.C. 1745.05(M)(5), which expressly states that a religious organization cannot be an unincorporated nonprofit association. Because the Church was a religious organization, ABC Supply and Mule-Hide contended that the Church at Warren could not be an unincorporated nonprofit association, and therefore, it had no capacity to bring the lawsuit. The trial court agreed and granted summary judgment. The Church at Warren appealed.

In an unanimous decision, the Eleventh District agreed that the Church at Warren did not have capacity to bring the lawsuit in the first place and rejected the Church’s argument that it was not a religious organization. In affirming the summary judgment decision, the Eleventh District relied on the Church at Warren’s Complaint in which it stated that it is “a religious organization organized as a church for religious purposes.” It also relied on the testimony of the pastor of the Church at Warren in which he stated that the entity was a “church,” but that he did not know whether it was a nonprofit organization.

In an attempt to create a factual issue, the Church at Warren offered the affidavit of its pastor, which stated in one sentence that the Church at Warren was an unincorporated nonprofit association under O.R.C. 1745.08. The Eleventh District rejected this argument for two reasons. First, it declined to accept the affidavit because it was merely a legal conclusion not based on personal knowledge. Second, the affidavit contradicted the Complaint and testimony of the pastor. The appellate court relied on the long-standing principle that a party cannot create an issue of fact by offering an affidavit that contradicts prior testimony and evidence. Without any evidence to refute the Complaint and the pastor’s testimony, the Eleventh District affirmed summary judgment for ABC Supply and Mule-Hide.

A key takeaway from this case is that when dealing with nonprofit and corporate entities as opposing parties one should always check their incorporated status. Brian Roof of the firm handled this matter. A link to the Court of Appeals decision can be found here.