Word of Faith World Outreach Center Church, Inc. v. Morales

CourtCourt of Appeals for the Fifth Circuit
DecidedMarch 26, 1993
Docket92-8178
StatusPublished

This text of Word of Faith World Outreach Center Church, Inc. v. Morales (Word of Faith World Outreach Center Church, Inc. v. Morales) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Word of Faith World Outreach Center Church, Inc. v. Morales, (5th Cir. 1993).

Opinion

United States Court of Appeals,

Fifth Circuit.

No. 92-8178.

WORD OF FAITH WORLD OUTREACH CENTER CHURCH, INC., Plaintiffs-Appellees,

v.

Dan MORALES, Attorney General of Texas, Defendant-Appellant.

March 29, 1993.

Appeal from the United States District Court for the Western District of Texas.

Before REAVLEY, SMITH, and EMILIO M. GARZA, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

The Texas Attorney General appeals the district court's injunction permanently prohibiting

him from attempting to obtain certain records and documents from the Word of Faith Family Church

("Word of Faith") and enjoining him from further prosecuting the state court action in which he

sought them. In a diligent and well-intentioned effort to resolve the competing considerations, the

district court found that the Attorney General's threatened investigation violated the church's First

Amendment associational and religious freedoms. Because we discern certain unsettled state law

issues, the resolution of which may render moot the federal constitutional claims, we conclude that

the district court should have abstained from the exercise of jurisdiction under the doctrine enunciated

in Railroad Comm'n v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941).

I.

Word of Faith is a church founded in 1976 as a Texas nonprofit corporation. Its professed

beliefs apparently do not include a vow of poverty: With 12-13,000 members and some 500,000

people on its mailing list, Word of Faith grossed $65 million in revenues in 1991 on an operating

budget of $50 million.1

On November 21, 1991, the American Bro adcasting Company aired a Prime Time Live

1 The parties have stipulated that Word of Faith is a bona fide church holding sincere religious beliefs. television program unflattering to both the church and its pastor, the Reverend Robert Tilton

(collectively, with Mrs. Tilton, the "church"). The program put forth against the church essentially

four accusations: that the church was run as a sole proprietorship and that the Reverend and Mrs.

Tilton therefore had direct access to church funds; that the church falsely represented that it provided

financial support to a Haitian orphanage; that the church had sent out vials of holy water purporting

to be from the Red Sea that in fact were from Taiwan; and that prayer requests solicited by Reverend

Tilton never reached him but in fact were thrown into the garbage by the bank that processes the

church's mail and deposits its contributions.

After the program aired, the church's attorney wrote to both federal and state governmental

agencies, including the Texas Attorney General, and offered to meet with them and to permit review

and inspection of the church's records for the purpose of satisfying the governmental agencies that

the allegations made on Prime Time Live were false. The Attorney General declined this invitation;

the United States Postal Service and the Federal Bureau of Investigation accepted.

On January 13, 1992, the Consumer Protection Division of the Office of the Attorney General

faxed to the church a demand for documents pursuant to the Texas Decepti ve Trade Practices-

Consumer Protection Act ("DTPA"), TEXAS BUS. & COM. CODE ANN. § 17.41 et seq. Upon receipt

of the demand letter, the church again requested a meeting with the Attorney General and his

personnel, which the Attorney General again refused. Thereafter, pursuant to an oral request, the

Attorney General's office remitted the January 13, 1992, document demand to the print and television

media.

The publication of the Attorney General's document demand letter resulted in further

unfavorable publicity to the church, apparently prompting it to harden its position and to decline any

further cooperation with the Attorney General. Even so, the church yet again requested a meeting

with the Attorney General at which counsel for the church represented, both orally and in writing,

that if the Attorney General could convince his "clients" that their records should be examined, the

records would be made available. The Attorney General again declined the meeting. The church's

counsel then advised the Attorney General of his intention to file a lawsuit in federal court on February 6, 1992.

On February 5, 1992, five days before the deadline specified in the January 13th demand

letter, the Attorney General filed a petition in quo warranto in the Probate Court of Travis County,

Texas, pursuant to his authority under the Miscellaneous Corporation Laws Act ("MCLA"),

TEX.REV.CIV.STAT.ANN. art. 1302-5.05. The Attorney General sought not only to compel

production of the records he had requested but also, as his pleadings indicated, "forfeiture of [the

church's] charter and dissolution of the corporation and appointment of a Receiver to take possession

of the affairs of the corporation and appointment of a Receiver to take possession of the affairs of the

[church], to rehabilitate, reorganize, conserve or liquidate the affairs of the corporation," as well as

a "Permanent Injunction against the [church], its officers, directors, stockholders, agents, employees,

and representatives whomsoever from conducting any business of the [church], and from disposing

of or concealing in any manner or any way the property or other assets of any kind or nature

whatsoever of the [Church]."2

On February 7, the day after the probate court issued its show cause order and scheduled the

matter for hearing on March 9, 1992, the church filed its lawsuit in the Western District of Texas.3

The district court that same day issued a Temporary Restraining Order to halt the state court

proceedings; on March 18, 1992, it issued its Memorandum Opinion and Order enjoining the

Attorney General fro m attempting to obtain the church's documents and records or from further

prosecuting the state court quo warranto proceeding. The Attorney General appeals.

II.

We review the district court's order for abuse of discretion and reverse if the order was based

upon an erroneous legal standard or clearly erroneous factual findings. Gaudiya Vaishnava Soc'y v.

2 The documents requested by the Attorney General in his original, January 13, 1992, document demand letter are summarized in the district court's published opinion. See Word of Faith World Outreach Ctr. Church, Inc. v. Morales, 787 F.Supp. 689, 699 (W.D.Tex.1992). 3 On March 4, 1992, the Attorney General filed with the Travis County Probate Court his First Amended Petition and a modified document demand letter, both of which differed from the originals in certain material particulars. An important factor in our analysis, these alterations in the nature of the Attorney General's actions are discussed more fully below. City & County of San Francisco, 952 F.2d 1059, 1062 (9th Cir.1990), cert. denied, --- U.S. ----, 112

S.Ct. 1951, 118 L.Ed.2d 555 (1992). The At torney General argues that Eleventh Amendment

immunity bars the action, the district court incorrectly applied First Amendment caselaw, and

Pullman abstention compels the district court to abjure jurisdiction in favor of the state court

proceeding.

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