LEVITT v. CALVARY TEMPLE OF DENVER

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Docket Number

No. 00CA0782

Attorney(S)

Daniel F. Lynch, Denver, Colorado, for Plaintiff-Appellant Quigley, Hibschweiler, Johnson Ritter, LLC, William C. Ritter, Denver, Colorado, for Defendant-Appellee

Judges

Opinion by JUDGE DAVIDSON

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Smart Summary

Factual and Procedural Background

Plaintiff Joel Levitt, a member of Calvary Temple of Denver (a Colorado nonprofit church corporation) from 1987 until May 24, 1999, sought to inspect and copy portions of the Church's financial records pursuant to Colorado statute § 7-136-102(1), which grants members a limited right to inspect corporate records. His requests, made repeatedly from mid-1998 through May 14, 1999, yielded approximately 2,400 pages of photocopied documents.

Levitt's stated purposes for requesting the records included understanding the use of church resources, assessing the Church’s financial ability to pay creditors, and influencing Church policy regarding unpaid debts. After the Church refused further inspection following his May 14, 1999 request, Levitt filed suit on May 24, 1999, to compel inspection and copying of the documents. That same day, the Church’s Board of Elders unanimously expelled Levitt from membership.

At trial, the Church argued that Levitt, no longer a member, lacked standing to pursue inspection. The trial court found Levitt was a member at the time of his requests but ruled his purposes were not made in good faith or for a proper purpose under § 7-136-102(3)(b). Levitt appealed, contending the trial court erred both legally and factually, while the Church contended that Levitt’s expulsion divested him of standing and any right to relief.

Legal Issues Presented

Whether Levitt, as a former member expelled after making record inspection requests, retains standing to inspect and copy the Church’s financial records under Colorado nonprofit corporation law.
Whether the trial court correctly applied the "good faith" and "proper purpose" requirements of § 7-136-102(3)(b) in denying Levitt’s request.
Whether a civil court has authority to review or reverse the Church’s decision to expel a member under the applicable statutes and case law.

Arguments of the Parties

Appellant's Arguments

Levitt argued that expulsion should not eliminate his ability to obtain corporate records because such a result would render the statutory right meaningless.
He contended the trial court erred in finding his requests lacked proper purpose and good faith.

Defendant's Arguments

The Church argued Levitt’s membership was a prerequisite to standing under § 7-136-102, and his expulsion divested him of any right to inspect records.
Even if Levitt had proper purpose and good faith at the time of the request, as a nonmember he no longer had a legally cognizable interest to pursue relief.
The Church maintained that civil courts lack authority to review or overturn the Church Board of Elders’ decision to expel a member.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Wimberly v. Ettenberg, 194 Colo. 163, 570 P.2d 535 (1977)	Standing requires an actual injury and a legally protected interest.	Used to establish the general standing framework applicable to Levitt's claim.
Stifflear v. Bristol-Myers Squibb Co., 931 P.2d 471 (Colo.App. 1996)	Statutory standing depends on whether the statute grants the plaintiff a right to judicial relief.	Applied to analyze whether Levitt’s statutory claim conferred standing after expulsion.
Craig v. Boren, 429 U.S. 190, 97 S.Ct. 451, 50 L.Ed.2d 397 (1976)	Standing and mootness can be lost during litigation.	Supported the principle that Levitt’s loss of membership could moot his claim.
In re Estate of Malone, 42 Colo. App. 453, 599 P.2d 965 (1979)	Loss of status removes authority to pursue claims begun before loss.	Analogized to Levitt’s loss of membership extinguishing his right to pursue inspection.
Kehaya v. Axton, 32 F. Supp. 266 (S.D.N.Y. 1940)	A director who loses status is barred from maintaining a suit begun before removal.	Supported the court’s holding that status loss terminates standing.
Bourgeois v. Landrum, 396 So.2d 1275 (La. 1981)	Court’s authority to enforce voting members’ rights in nonprofit church corporations is severely limited.	Used to confirm the nonreviewability of the Church’s expulsion decision by civil courts.
Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696, 96 S.Ct. 2372, 49 L.Ed.2d 151 (1976)	Civil courts have no authority to review internal decisions of religious organizations.	Supported the ruling that the Church’s expulsion of Levitt is nonreviewable by the court.
Nozik v. Mentor Lagoons Yacht Club, 112 Ohio App.3d 321, 678 N.E.2d 948 (1996)	Termination of nonprofit membership must be fair, reasonable, and in good faith.	Referenced to explain typical statutory protections for expelled members, which do not apply here due to church autonomy.

Court's Reasoning and Analysis

The court began by affirming that standing requires a plaintiff to have a legally protected interest, here grounded in membership status under § 7-136-102. Although Levitt was a member when he made his requests, his subsequent expulsion terminated his membership and thus his legal interest as a member. Because the statute requires a "proper purpose" reasonably related to the member's interest, Levitt, as a nonmember, no longer possessed such an interest or standing to inspect records.

The court distinguished Levitt’s situation from that of former corporate shareholders who may retain inspection rights post-ownership, noting that nonprofit membership rights do not carry residual financial interests. It further reasoned that although statutory protections exist for fair termination of membership, these do not apply to religious organizations where internal decisions, including expulsions by the highest church judicature (the Board of Elders), are nonreviewable by civil courts under controlling precedent.

Thus, the court concluded Levitt’s expulsion rendered him an outsider with no statutory or judicially cognizable interest to inspect the Church’s financial records. The court declined to address other issues raised by Levitt, as the standing determination was dispositive.

Holding and Implications

The court AFFIRMED the trial court’s judgment denying Levitt’s request to inspect and copy the Church’s financial records.

The direct effect of this decision is that expulsion from membership in a nonprofit church corporation terminates any statutory right to inspect corporate records under § 7-136-102. The ruling reinforces the principle that civil courts have no authority to review internal religious governance decisions, including membership expulsions, even if such decisions affect statutory rights. No new precedent beyond applying existing standing and church autonomy doctrines was established.

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Joel Le v. tt, Plaintiff-Appellant,

Opinion by JUDGE DAVIDSON

In this action seeking inspection of financial records, plaintiff, Joel Levitt, appeals from the trial court's entry of judgment in favor of defendant, Calvary Temple of Denver (the Church). Although we use different reasoning, we affirm.

The Church, a Colorado nonprofit corporation, has a complex financial history closely linked to the activities of its former pastor, Charles E. Blair. A series of fundraising campaigns and financial failures in the 1970's and 1980's resulted in multiple lawsuits and extensive debt. The 1986 Second Mile Campaign, intended to pay off the remainder of the Church's unpaid creditors, resulted in further class action litigation. In 1991, that lawsuit was settled by agreement of the majority of the class members, obligating the Church to pay a $700,000 settlement. Notwithstanding this settlement, the original debt to unpaid creditors was never paid in full. In March 1999, the congregation voted not to attempt to repay any remaining unpaid creditors.

Levitt, a member of the Church from 1987 until May 24, 1999, sought to inspect and copy portions of the Church's financial records pursuant to § 7-136-102(1), C.R.S. 2000, which allows a member of a nonprofit corporation a limited right to inspect and copy the corporation's records. From mid-1998 through May 14, 1999, Levitt made repeated requests for records, accumulating approximately 2400 photocopied pages in the process.

Levitt's stated purpose for his May 14, 1999, request was that, as a member of the Church, he needed "to know what has been done with church resources." Earlier, Levitt had stated various reasons for requesting records, including: to determine the financial abilities of the Church to pay creditors, to determine whether economies could be achieved to help the Church repay unpaid creditors, and to enable him to communicate with other Church members in an effort to influence Church policy on that issue.

On May 14, after receiving the request from Levitt, the Church refused to allow further inspection. On May 24, 1999, Levitt filed this action, requesting that he be allowed to inspect and copy the documents and financial records described in his May 14 letter. That evening, the Church's Board of Elders unanimously voted to rescind Levitt's membership.

At the subsequent bench trial, the Church argued, inter alia, that, because Levitt had been expelled from membership in the Church, he had no standing to request inspection and copies of its records.

In its ruling, the trial court disagreed, reasoning that Levitt had been a member of the Church at the time of his request for records. However, the court found that, because Levitt was "obsessed" with Blair, was dissatisfied that the Church's Board of Elders had decided not to reopen a fundraising campaign to repay creditors, had specious reasons for wanting the documents, and was making unreasonable requests, his request lacked the "proper purpose" and "good faith," required by § 7-136-102(3)(b), C.R.S. 2000, for the particular documents he sought.

On appeal, Levitt contends that the trial court's determination was both legally and factually incorrect. The Church asserts, on the other hand, that Levitt, as a nonmember, now cannot have the required "proper purpose" to make a request under § 7-136-102(3)(b). In the Church's view, Levitt's membership in the Church was a prerequisite to a cognizable request for records inspection, and so divestment of Levitt's membership also divested him of standing to pursue his request. Therefore, according to the Church, even assuming that Levitt had "good faith" and a "proper purpose" when he first made his requests, as a matter of law he no longer has any right to relief. We agree with the Church.

Generally, standing depends upon whether the plaintiff has suffered an actual injury and whether the injury suffered is a legally protected or cognizable interest. See Wimberly v. Ettenberg, 194 Colo. 163, 570 P.2d 535 (1977). When a claim is based on the provisions of a statute, standing depends on whether the provisions on which the claim rests properly can be understood as granting persons in the plaintiff's position a right to judicial relief. Stifflear v. Bristol-Myers Squibb Co., 931 P.2d 471 (Colo.App. 1996).

As the Church points out, a plaintiff may lose standing and a controversy can become moot during the course of litigation. See Craig v. Boren, 429 U.S. 190, 97 S.Ct. 451, 50 L.Ed.2d 397 (1976). Thus, the dispositive issue here is whether, as a nonmember of the Church, Levitt still has any right to inspect its financial records. We hold that, in this narrow set of circumstances, he does not.

To request the records of a nonprofit corporation, a person must be a member of the organization. See § 7-136-102, C.R.S. 2000. As a member, a person has the right to inspect and copy any records enumerated in § 7-136-101(5), C.R.S. 2000, provided he or she complies with certain procedural guidelines.

To obtain records outside this list, such as those at issue here, the member's request carries the additional requirement of "good faith" and "a proper purpose." Section 7-136-102(3)(b). "Proper purpose" means "a purpose reasonably related to the demanding member's interest as a member." Section 7-136-102(4)(b), C.R.S. 2000. Thus, to obtain records, a person must be a member with a present ability to promote the welfare of the association. See generally J. Zitter, Annotation, Right of Member of Nonprofit Association or Corporation to Possession, Inspection, or Use of Membership List, 37 A.L.R. 4th 1206 (1985).

As the trial court noted, when Levitt made his various requests, he was a member of the Church. However, when Levitt lost that status he could not, by definition, have any "interest as a member" sufficient to afford him a proper purpose to inspect records. See § 7-136-102(4)(b). Specifically, as a nonmember, Levitt no longer had a member's stake in what had been done with church resources, nor any member's interest in determining church economies, nor any member's voice with which to persuade voting church members to adopt his policies. Nor, in contrast to a former corporate stockholder, did he have any residual financial stake in the entity. Cf. § 7-113-101, et seq., C.R.S. 2000 (shareholder dissenters' rights); Cutlip v. CBA International, Inc., (Del.Ch. No. 14168NC, Oct. 27, 1995) (not officially published) (1995 Del. Ch. LEXIS 136) (court allowed former stockholder, after corporate merger, to inspect records for the sole purpose of ascertaining the true value of his shares).

Thus, Levitt's personal good intentions aside, he is now an outsider to the Church, and any attempts to use the information contained in the Church's records for his stated purposes would be futile. Accordingly, the provisions of the statute upon which his claim is based give him no right to judicial relief. Cf. In re Estate of Malone, 42 Colo. App. 453, 599 P.2d 965 (1979) (removed trustee had no authority to prosecute an appeal on behalf of the estate, even though such appeal was filed before the trustee's termination); Kehaya v. Axton, 32 F. Supp. 266 (S.D.N.Y. 1940) (because his right to sue depends on his status, director who loses his status as director is barred from maintaining a suit begun before his removal).

Levitt argues, however, that despite the plain language of the statute, if expulsion of a member from a nonprofit corporation could eliminate his or her ability to obtain corporate records, the statute would be meaningless. We disagree.

Ordinarily, judicial recourse is available to a member of a nonprofit organization seeking records who is subsequently expelled from membership. See § 7-126-302, C.R.S. 2000 (providing that the termination of a member of a nonprofit corporation must be fair, reasonable, and in good faith); Nozik v. Mentor Lagoons Yacht Club, 112 Ohio App.3d 321, 678 N.E.2d 948 (1996).

Membership and termination of membership in a nonprofit organization are governed by statute. See §§ 7-126-101 to 7-126-104, 7-126-201 to 7-126-203 (members and memberships), 7-126-301 to 7-126-303 (resignation and termination), C.R.S. 2000. As relevant here, termination requires a fair and reasonable procedure and an opportunity for a pretermination hearing. Moreover, the statute provides a claim for relief for improperly terminated members. See § 7-126-302. Thus, under typical circumstances, a person improperly expelled from membership in a nonprofit corporation may gain reinstatement and, assuming the other statutory requirements are met, access to the organization's records.

However, when the nonprofit corporation is a church, such as here, the situation is different. See Bourgeois v. Landrum, 396 So.2d 1275 (La. 1981) (court's role in enforcing a voting member's right to inspect the records of a nonprofit church corporation is severely circumscribed). Here, the Board of Elders elected by the congregation is the highest Church judicature and, as the parties agree, a civil court simply has no authority to reverse its decision, no matter how arbitrary or unfair, to expel Levitt or any other member. See Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696, 96 S.Ct. 2372, 49 L.Ed.2d 151 (1976); cf. Fowler v. Bailey, 844 P.2d 141 (Okla. 1992). Thus, under the particular circumstances here, Levitt has no recourse.

In sum, the Church's decision to expel Levitt is nonreviewable, and reinstatement of Levitt's membership would be exclusively the Church's decision. Without membership in the Church, Levitt can no longer have a proper purpose reasonably related to his interest as a member. Thus, he no longer has standing to inspect the Church's financial records under § 7-136-102.

Based on the foregoing, we need not address the remaining issues raised by Levitt.

The judgment is affirmed.

JUDGE RULAND and JUDGE KAPELKE concur.