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Keeping Our Legacy Alive, Inc. v. Central St. Matthew United Church of Christ

Court of Appeals of Louisiana, Fourth Circuit

October 31, 2018

KEEPING OUR LEGACY ALIVE, INC.
v.
CENTRAL ST. MATTHEW UNITED CHURCH OF CHRIST

          APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2017-04952, DIVISION "E" Honorable Clare Jupiter, Judge.

          Ernest L. Jones ATTORNEY AT LAW, COUNSEL FOR PLAINTIFFS/APPELLANTS.

          Vincent J. Booth BOOTH & BOOTH, A PLC COUNSEL FOR DEFENDANT/APPELLEE.

          Court composed of Judge Terri F. Love, Judge Joy Cossich Lobrano, Judge Sandra Cabrina Jenkins

          SANDRA CABRINA JENKINS JUDGE.

         Plaintiffs, Keeping Our Legacy Alive, Inc. ("KOLA") and four individual named plaintiffs, appeal the trial court's October 24, 2017 judgment granting the exception of prescription filed by defendant, Central St. Matthew United Church of Christ ("CSM"), and dismissing plaintiffs' original, first amending, and second amending petitions with prejudice. For the following reasons, we find the trial court erred in finding plaintiffs' claims prescribed under La. R.S. 12:208(A)(1) and granting CSM's exception of prescription. However, based on our de novo review of the record and in consideration of the arguments raised in this appeal, this Court notices the failure to disclose a right of action to seek the relief prayed for in their petitions and the failure to state a cause of action upon which relief may be granted.[1] Therefore, on exceptions of no right of action and no cause of action raised sua sponte by this Court, we find that plaintiffs have no right of action against CSM to invalidate the merger and transfer of title to property and that plaintiffs' petitions fail to state a cause of action upon which relief can be granted for a petitory action. Accordingly, we affirm the dismissal of plaintiffs' petitions with prejudice.

         FACTS AND PROCEDURAL HISTORY

         In the spring of 2005, Central Congregational United Church ("Central") entered into a rental agreement with St. Matthew United Church of Christ ("St. Matthews") to temporarily hold church services in a chapel at St. Matthew while Central's church building was undergoing repairs. At that time, Central owned the church building at 2401 Bienville Street, as well as several adjacent properties on Bienville Street, North Tonti Street, and Conti Street. St. Matthew owned a church on South Carrolton Avenue.

         Until August 29, 2005, when Hurricane Katrina made landfall, the members of Central worshipped as their own congregation in the chapel leased from St. Matthew. But as a result of the impact from Hurricane Katrina, Central's congregation was disbursed and fewer members gathered to worship at the chapel. In October 2005, members of Central began to worship with the congregation of St. Matthew.

         In September 2007, Central and St. Matthew entered into a "covenant" agreement to worship together as two congregations. By a second "covenant" agreement, Central and St. Matthew agreed to unify their congregations but maintain separate ownership of church properties.

         In January 2010, Central and St. Matthew filed Articles of Incorporation with the Louisiana Secretary of State to create CSM, a nonprofit religious corporation. In October 2014, CSM filed Articles of Merger with the Louisiana Secretary of State to officially unite and merge Central and St. Matthew into the surviving corporation of CSM.

         The Articles of Merger included the following provision: [2]

At and after the Effective Time, all rights and ownership of the assets of St. Matthew and Central Congregational shall vest in CSM as the Surviving Corporation and CSM shall possess all the rights, privileges, immunities, powers and purposes of St. Matthew and Central Congregational, pursuant to La. R.S. 12:246.C and 12: 246.D.

         The Articles of Merger listed the assets affected by the merger, including the church building at 2401 Bienville Street.

         In December 2015, the Governing Council of CSM voted to sell the Bienville Street property. In January 2016, in response to CSM's vote to sell the property, a group of "pre-Katrina members of Central" organized and filed Articles of Incorporation to create KOLA, for the purpose of preserving the historic legacy and property of Central.

         On May 23, 2017, KOLA filed a petition against CSM seeking to "declare invalid a purported merger" of Central and St. Matthew, and to enjoin the sale or encumbrance of immovable property purportedly transferred from Central to CSM in the Articles of Merger. The petition alleged that the "purported merger" of Central and St. Matthew was null and void for failure to comply with the required procedures for the merger of non-profit corporations under La. R.S. 12:243. KOLA's original petition sought a declaratory judgment voiding the Articles of Merger filed and recorded on October 20, 2014, and an injunction on the sale or encumbrance of "any property acquired in the purported merger."

         On June 16, 2017, CSM filed peremptory exceptions of prescription and no right of action, arguing KOLA's claim seeking to invalidate the act of merger by CSM was an untimely ultra vires action pursuant to La. R.S. 12:208(A)(1), and KOLA had no right of action to bring an action under La. R.S. 12:208(A)(1), because KOLA was not a member of CSM.

         On July 27, 2017, KOLA filed a first amending petition wherein it named four additional, individual plaintiffs[3] and alleged that each of the individual plaintiffs was a member of CSM. That same day, plaintiffs also filed an opposition to CSM's peremptory exceptions. Prior to the trial on the peremptory exceptions, CSM filed a reply memorandum stating that the addition of new plaintiffs by the first amending petition rendered its exception of no right of action moot.

         On August 11, 2017, the trial court held a hearing on CSM's peremptory exception of prescription. At the conclusion of the hearing, the trial court took the matter under advisement.

         On September 28, 2017, prior to the rendition of judgment on CSM's exception of prescription, plaintiffs filed a second amending petition "filed before answer served." In this petition, plaintiffs added a new paragraph that reads as follows:

The purported merger was legally invalid to transfer title to real estate from Central Congregational to CSM for lack of consent and for being signed by no individual with authority to bind Central Congregational, and for other factual reasons asserted in this petition; the invalid transfer is directly challenged in this real action under the Louisiana Civil Code article 422.[4]

         The second amending petition also added the following language to the original paragraph 2: "[t]his action is brought by the possessor of the subject property who ...


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