A. Patterson v. K. Shelton, Individually and President of the Board of Trustees of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, Inc.

175 A.3d 442
CourtCommonwealth Court of Pennsylvania
DecidedNovember 29, 2017
Docket1312 C.D. 2016
StatusPublished
Cited by6 cases

This text of 175 A.3d 442 (A. Patterson v. K. Shelton, Individually and President of the Board of Trustees of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, Inc.) is published on Counsel Stack Legal Research, covering Commonwealth Court of Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
A. Patterson v. K. Shelton, Individually and President of the Board of Trustees of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, Inc., 175 A.3d 442 (Pa. Ct. App. 2017).

Opinion

OPINION BY

JUDGE McCULLOUGH

Anthonee Patterson (Patterson) appeals, pro se, from the July 14, 2016 order of the Court of Common Pleas of Philadelphia County (trial court) denying his motion to declare certain orders void based upon the lack of subject matter jurisdiction.

Facts and Procedural History

The extensive procedural and factual history of this matter is recounted in this Court’s unreported memorandum opinion in the case of Patterson v. Shelton, 2013 WL 3961047 (Pa. Cmwlth., No. 2396 C.D. 2011, filed March 6, 2013), appeal denied, 621 Pa. 705, 78 A.3d 1092 (2013), wherein we summarized the same as follows:

The key players involved in the present offshoot of the controversy are: (1) the Church of the Lord Jesus Christ of the Apostolic Faith (the “Church”), an unincorporated association, founded in 1919; (2) the “Trustees of the General Assembly of the Church of the Lord Jesus Christ of the Apostolic Faith, Inc”, (the “Corporate Trustee”), a Pennsylvania nonprofit corporation formed in 1947 to act as the trustee and hold property in trust for the Church; (3) Patterson, a life-long member, elder, and minister of the Church; and (4) Shelton, the current “Bishop” and/or “Overseer” of the Church and “President” of the Corporate Trustee. The dispute began in 1991 when then-Bishop S. McDowall Shelton, died, leaving vacancies in the offices of “Overseer” of the Church and “President” of the Corporate Trustee. Immediately upon Bishop S. McDowall Shelton’s death, Shelton and his “faction” took control of the accounts, trusts and properties of the Church and Corporate Trustee. After extensive litigation initiated by two other dissident factions of the Church congregation over the leadership of the Church and Corporate Trustee, the trial court ultimately determined, and this Court later affirmed, that Shelton and his Board of Trustees were in control.
[[Image here]]
On July 24, 1995, Patterson, as life-long member, elder and minister of the Church, commenced an action in equity against Shelton, in Shelton’s individual capacity and as the President of the Board of Trustees of the Corporate Trustee. Patterson alleged that since taking control of the Church and Corporate Trustee in 1991, Shelton and his Board of Trustees have misappropriated funds, “looted the Church’s assets,” paid themselves salaries in contravention of Church By-Laws, and funded private expenditures, lavish vacations, lingerie, cars, homes and other personal incidentals with assets which were donated and designated for Church religious and charitable missions.
Patterson requested, inter alia: (1) the appointment of a receiver to take control of the assets of the Church held by the Corporate Trustee; (2) an order requiring Shelton to issue annual financial reports for the years 1991, 1992, 1993, and 1994; and (3) an accounting.
The parties engaged in discovery. Patterson retained James A. Stavros, CPA (Stavros), a forensic financial investigator, to analyze the finances and expenditures of the Church and the Corporate Trustee. Stavros authored a report which detailed his findings that Shelton and his Board of Trustees withdrew hundreds of thousands of dollars from Church accounts with no accounting of where the funds went and that they expended Church funds on a significant amount of “personal” items and expenditures that appeared to be outside the normal course of business and outside Church laws and customs. He concluded that Church accounts had declined by nearly $1 million under Shelton’s control.®
In January 2006, the parties agreed to submit to binding arbitration. The Arbitrator concluded that the credible evidence established that Shelton had engaged in various acts of fraud, mismanagement, conspiracy, breach of fiduciary responsibilities, violations of By-laws and the Articles of Incorporation in seizing corporate funds and assets and depleting bank accounts designated for Church-related purposes. The Arbitrator concluded that Shelton had diverted Church funds and assets to himself' and others for his and ■ their benefit. The- Arbitrator appointed a receiver and directed Shelton to account for all Church funds removed by him or those acting with him.
Shelton filed a motion to vacate the award which the trial court denied.[ 2 ] On appeal, this Court overturned the arbitration award because the Arbitrator went beyond the scope of his authority in fashioning relief.' See Shelton v. Patterson, 942 A.2d 967 (Pa. Cmwlth. 2008). This Court remanded the matter to the trial court to determine whether Patterson was entitled to relief under the [Pennsylvania Nonprofit Corporation Law (NCL), 15 Pa.C.S. §§ 5101-5997], On remand, Shelton moved for summary judgment on the ground that Patterson lacked “statutory standing” under Section 5782 of the NCL, 15 Pa.C.S. § 5782. Shelton argued that only an officer, director, or member of a nonprofit corporation has “statutory' standing” to enforce a right of a nonprofit corporation through a derivative action. '
[[Image here]]
Shelton pointed to the Corporate Trustee’s Articles of Incorporation which limited its membership in the nonprofit corporation to its Board of Trustees. Shelton asserted that because Patterson was never a member of the Board of Trustees he was never a “member” of the Corporate Trustee, and thus, he had no “statutory standing” to bring claims that are derivative of the Corporate Trustee’s rights.
The trial court agreed that under Section 5782 of the NCL, Patterson could only bring suit if he was a member of the Corporate Trustee at the time of the alleged events outlined in the Complaint. The trial court looked to Article IX of the Articles of Incorporation which states: “membership in .the corporation [Corporate Trustee] shall consist of those persons serving as members of the Board of Trustees.” The trial court concluded that because Patterson had never been a member of the Board of Trustees he was not a member of the Corporate Trustee. The trial court reasoned that because the NCL created the cause of action and designated who may sue; standing i was a jurisdictional prerequisite to any action. Grom v. Burgoon, 448 Pa.Super. 616, 672 A.2d 823 (Pa. Super. 1996). The , trial court “finding no possible way to affirm that [Patterson] has standing” granted the motion for summary judgment and. dismissed the case.

Id,, slip op. at 1-6 (emphasis in original). On appeal, this Court reversed the order .of the trial court, concluding.that Patterson, as a member of the Church congregation, was “part of the beneficiary class for which the Corporate Trustee held the Church’s assets in trust,” and, as-such, had “standing to bring this action to enforce his own rights and the rights commonly held by all beneficiaries to obtain restoration «to the Church of its full losses.” Id., slip op. at 16-17. We remanded the matter to the trial court to conduct a trial on the remaining factual and legal issues raised by Patterson in his complaint.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Black Political Empowerment Project v. A. Schmidt
Commonwealth Court of Pennsylvania, 2024
C. Stedman v. Lancaster County Bd. of Commissioners
Commonwealth Court of Pennsylvania, 2019
A. Patterson v. K. Shelton
Commonwealth Court of Pennsylvania, 2019

Cite This Page — Counsel Stack

Bluebook (online)
175 A.3d 442, Counsel Stack Legal Research, https://law.counselstack.com/opinion/a-patterson-v-k-shelton-individually-and-president-of-the-board-of-pacommwct-2017.