HUTTERVILLE HUTTERIAN BRETHREN, INC., a South Dakota nonprofit corporation; George Waldner, Sr.; Tom Waldner; Kenneth Waldner, individually and as officers and directors of Hutterville Hutterian Brethren, Inc., Plaintiffs-Appellants v. Jeffrey T. SVEEN; Rodrick L. Tobin; Harvey C. Jewett; Siegel, Barnett & Schutz, L.L.P., a South Dakota limited liability partnership, Defendants-Appellees.
No. 13-3160.
United States Court of Appeals, Eighth Circuit.
Submitted: Sept. 23, 2014. Filed: Jan. 13, 2015.
Rehearing and Rehearing En Banc Denied Feb. 17, 2015.*
774 F.3d 547
Before RILEY, Chief Judge, LOKEN and KELLY, Circuit Judges.
* Judge Wollman did not participate in the consideration or decision of this matter.
RILEY, Chief Judge.
This case publishes a new chapter in the legal struggle for control of Hutterville Hutterian Brethren, Inc. (Hutterville), a South Dakota religious nonprofit corporation whose members have split into factions, mirroring a larger division in the Hutterite religion. Though both factions claim the right to control Hutterville, the South Dakota Supreme Court has ruled this issue is not constitutionally determinable by secular courts under either the federal constitution or the state constitution because the questions of corporate governance cannot be answered without delving into disputes of ecclesiastical1 polity and hierarchy which “are shielded from judicial scrutiny under the First Amendment.” Hutterville Hutterian Brethren, Inc. v. Waldner (Hutterville I), 791 N.W.2d 169, 179-80 (S.D.2010) (no jurisdiction to answer governance issues); see also Wipf v. Hutterville Hutterian Brethren, Inc. (Hutterville II), 808 N.W.2d 678, 686 (S.D.2012) (no jurisdiction to mandate corporate dissolution). With the South Dakota Supreme Court effectively leaving a legal stalemate, the leaders of one faction brought the present suit against several attorneys and a law firm who allegedly conspired with leaders of the other faction to “manufacture” the apparent religious schism and improperly place the conspiring faction leaders in command of Hutter-
I. BACKGROUND
A. History
As the South Dakota Supreme Court explained, the Hutterite religion descends—like the Amish and Mennonite religions—from the Anabaptist movement in sixteenth-century Germany and takes its name from its founder, Jacob Hutter, who was burned at the stake in Innsbruck in 1536. See Hutterville II, 808 N.W.2d at 680; Decker ex rel. Decker v. Tschetter Hutterian Brethren, Inc., 594 N.W.2d 357, 359 (S.D.1999). In the 1870s and 80s, the Hutterites fled religious persecution in Europe, relocating in Canada and the northern United States, where their colonies remain today. See Decker, 594 N.W.2d at 359. One of the more distinguishing characteristics of the Hutterite faith is what the South Dakota Supreme Court referred to as a “community of goods“—Hutterites must disavow individual property ownership in favor of a communal lifestyle within each colony. See Hutterville II, 808 N.W.2d at 680.
As the Waldners explain, the Hutterian Brethren Church (Hutterian Church) is organized into three conferences—the Dariusleut, Lehrerleut, and Schmiedeleut Conferences—with each Hutterite colony belonging to one of these conferences. Hutterville Colony (the congregation associated with Hutterville, the corporation) is a South Dakota colony historically belonging to the Schmiedeleut Conference. See id. Consistent with the community-of-goods principle, members of Hutterville Colony live a communal lifestyle with all of the colony‘s real and personal property belonging to Hutterville. See id. Hutterville itself is a South Dakota nonprofit corporation, managed by an elected board and elected officers, who operate Hutterville as a communal farm for the colony. Formed with the stated purpose of promoting the Hutterite faith and Hutterian Church, Hutterville conducts the colony‘s business and owns all property in lieu of individual property ownership.
In 1983, when Hutterville and Hutterville Colony first formed, Reverend Jacob Kleinsasser was the Senior Elder (i.e., the spiritual and ecclesiastical leader) of the Schmiedeleut Conference. See Decker, 594 N.W.2d at 360. According to the complaint, this position made Rev. Kleinsasser “the final arbiter or decision-maker regarding issues affecting the members of the Church.”
Around 1992, a large group of Hutterite ministers repudiated Rev. Kleinsasser‘s leadership in response to accusations of impropriety, and these ministers opted instead to follow Reverend Joseph Wipf. See id. The remaining ministers supported Rev. Kleinsasser. See id. Colonies following Rev. Wipf (forming the Schmiedeleut “Group 2“) solidified their division in 1993 by ratifying a new constitution which purported to institute new conference leadership. See Hutterville II, 808 N.W.2d at 680. Rev. Kleinsasser‘s colonies (forming the Schmiedeleut “Group 1“) refused to adopt the 1993 constitution, preserving their position in favor of Rev. Kleinsasser. See id. As the South Dakota Supreme
Meanwhile, according to the complaint, Reverend George Waldner, Sr.—Hutterville Colony‘s minister and ecclesiastical leader, as well as Hutterville‘s president and one of its directors—remained loyal to Rev. Kleinsasser and insisted that Hutterville Colony belong to Group 1 of the Schmiedeleut Conference. Not everyone in the Hutterville Colony agreed, and the members of Hutterville split into Group 1 (Waldner faction) and Group 2 (Wipf faction) supporters. See id.
Fifteen years later, the tensions of this internal split boiled over. The complaint alleges that through a series of “sham” corporate meetings in late 2008 and early 2009, a number of Wipf faction members were improperly elected to replace Waldner faction officers and directors. Among these was Johnny Wipf, who claimed to have been elected president to replace Rev. Waldner. Rev. Waldner and his faction challenged the validity of these elections and claimed Waldner faction members still maintained control. At loggerheads over who controlled the corporation, each faction began having its own member and board meetings and conducted business in the name of the company, all the while condemning the other faction‘s purported officers and directors as fraudulent imitators.
B. Hutterville‘s State Court Litigation
In August of 2009, Johnny Wipf and other Wipf faction members brought suit in South Dakota state court against Rev. Waldner, Tom Waldner, and Kenneth Waldner (Waldners), “seeking a declaration that [the Wipf faction members] were the properly elected directors of Hutterville.” Hutterville I, 791 N.W.2d at 172. Using Hutterville‘s bylaws and articles of incorporation, the state trial court determined the Wipf faction members were its duly elected directors and officers. See id. After the unfavorable decision, Rev. Waldner, who remained minister of the Hutterville church, and Rev. Kleinsasser signed a “Resolution of Action Taken by Hutterian Church Group I,” which states:
The undersigned, being duly authorized by Hutterian Church Group I to act on its behalf, hereby declare that Johnny Wipf, Alvin Hofer and Jake Hofer Sr., residents of Hutterville Hutterian Colony, are hereby excommunicated/removed as Members of the Hutterian Church, effective as of August 19, 2009. As a result of such excommunication, the said Johnny Wipf, Alvin Hofer and Jake Hofer Sr. shall no longer be considered Members of Hutterian Church Group I, nor shall they be entitled to attend services or participate in Church activities.
See id. at 172. According to the Waldner faction, excommunication from the local church made these Wipf faction members ineligible for corporate membership in Hutterville and unable to hold a director or officer position. See id. at 173.
Challenging the validity of the excommunication, the Wipf faction asked the state trial court to declare that the excommunication did not affect its conclusion that the Wipf faction members were the duly elected directors and officers of Hutterville. See id. at 172-73. Before a hearing could be held on the issue, the Waldners “moved to dismiss [the Wipf faction‘s] complaint for lack of subject matter jurisdiction.” id. at 173. The state trial court agreed jurisdiction was lacking and dismissed the Wipf faction‘s lawsuit because the matter required the court to decide disputed religious questions. See id. at 174. Accepting the Waldners’ argument, the South Dakota Supreme Court af-
In a second state action, the Wipf faction alleged deadlock and misapplication of corporate assets were causing irreparable harm to Hutterville‘s business and requested the dissolution of Hutterville and appointment of a receiver to wind up its business. See Hutterville II, 808 N.W.2d at 681. The trial court agreed and appointed a receiver, Harvey C. Jewett. See id.; see also Wipf v. Hutterville Hutterian Brethren, Inc. (Hutterville III), 834 N.W.2d 324, 328 (S.D.2013). The South Dakota Supreme Court reversed, concluding “the underlying religious controversies over church leadership so pervade the dissolution of the religious corporation that the dissolution is beyond a secular court‘s jurisdiction.” Hutterville II, 808 N.W.2d at 686.
Before this ruling, Jewett moved for approval of his accounting and for payment of his fees and expenses. See Hutterville III, 834 N.W.2d at 329. The trial court approved Jewett‘s actions and accounting. See id. In the ensuing months, the Waldners challenged aspects of the circuit court‘s approval of Jewett‘s accounting, but the trial judge stood by its initial ruling and, on October 25, 2012, terminated the receivership and discharged Jewett. See id. at 330-31. On appeal, the South Dakota Supreme Court affirmed the trial court, concluding the Waldners’ allegations that Jewett was an interested party3 had been forfeited by a failure to object, reasoning any procedural errors in his appointment were harmless, concluding judicial immunity protected Jewett from liability, and rejecting on the merits the Waldners’ claims of Jewett‘s bad faith. See id. at 334-36.
C. This Lawsuit
In April 2012, as the factions were contesting the trial judge‘s ruling on Jewett‘s accounting, the Waldners filed the present action against Jewett, Siegel Barnett, and two Siegel Barnett attorneys named Rodrick L. Tobin and Jeffrey T. Sveen (collectively, attorneys), asserting claims under both the Racketeer Influenced and Corrupt Organizations Act (RICO),
The Waldners allege the attorneys, despite their fiduciary and ethical duties to Hutterville, worked with the Wipf faction to “manufacture” a dispute by which to “wrest control” of Hutterville, its business, and its assets “from its duly elected officers and directors” and in favor of the attorneys’ Wipf faction collaborators. In particular, the Waldners allege Siegel Barnett attorneys met with Wipf faction leaders and explained that they would not be able to help the Wipf faction openly, but would “work behind the curtain” to help the Wipf faction take control of Hutter-
The Waldners assert that by assisting the Wipf faction while purporting to represent Hutterville, the attorneys altered documents to impede official proceedings; helped transport stolen property known to have been taken unlawfully or through fraud; and committed numerous acts of wire, mail, bank, and common law fraud. The Waldners aver these actions constituted a pattern of predicate acts of racketeering activity and allege the attorneys violated all four subsections of
The attorneys jointly filed a motion to dismiss under
II. DISCUSSION
Religious disputes can often stray outside the ecclesiastical arena into areas of secular concern. See, e.g., Jones v. Wolf, 443 U.S. 595, 602, 605, 99 S.Ct. 3020, 61 L.Ed.2d 775 (1979) (“The only question presented by this case is which faction of the formerly united ... congregation is entitled to possess and enjoy the [real] property [in question].“); Kedroff v. St. Nicholas Cathedral of Russian Orthodox Church in N. Am., 344 U.S. 94, 95, 73 S.Ct. 143, 97 L.Ed. 120 (1952) (deciding disputed right to use and occupy a church); Watson v. Jones, 80 U.S. (13 Wall.) 679, 681, 20 L.Ed. 666 (1871) (considering
Following these principles, the South Dakota Supreme Court has twice declared itself incapable of resolving Hutterville‘s corporate governance dispute because religious questions pervade the analyses. See Hutterville II, 808 N.W.2d at 686; Hutterville I, 791 N.W.2d at 179-80. This religious impasse proves decisive here too.
A. Standing for Claims in Hutterville‘s Name4
We must first address the presence of Article III standing for the Waldners’ official capacity claims. See Brown v. Medtronic, Inc., 628 F.3d 451, 455 (8th Cir. 2010). To establish constitutional standing, the “person invoking the power of a federal court must” “prove that he has suffered a concrete and particularized injury that is fairly traceable to the challenged conduct, and is likely to be redressed by a favorable judicial decision.” Hollingsworth v. Perry, 570 U.S. 693, 704, 133 S.Ct. 2652, 2661, 186 L.Ed.2d 768 (2013). “[E]ach element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Where, as here, the case has progressed only to “the pleading stage, general factual allegations of injury resulting from the defendant‘s conduct may suffice, for on a motion to dismiss we ‘presum[e] that general allegations embrace those specific facts that are necessary to support the claim.‘” Id. (alteration in original) (quoting Lujan v. Nat‘l Wildlife Fed‘n, 497 U.S. 871, 889, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990)).
The district court questioned whether Hutterville could show an injury-in-fact if the Waldners were not in control of the corporation. The district court explained that determining the existence of injury-in-fact “entails the fundamental question of whether the [Waldners] can bring claims on behalf of [Hutterville], the corporate entity that holds the property of the colony.” The district court concluded the First Amendment would not permit the court to resolve this question. The attorneys similarly propose a First Amendment problem is inevitable because any injury to Hutterville “depends upon which faction
These are not questions of Article III standing. As the Waldners point out, the corporate control issue has “inextricably bound up” the jurisdictional question of injury with the merits of their claims, both of which are premised upon the attorneys acting in concert with Hutterville‘s false agents to obtain Hutterville property. The Waldners are correct that for purposes of standing, we cannot question who controls Hutterville or acts as its authorized agents. Such questions attack the Waldners’ ability to prove their cause of action, yet “standing in no way depends on the merits of the plaintiff‘s contention that particular conduct is illegal.” Warth v. Seldin, 422 U.S. 490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975). “It is crucial ... not to conflate Article III‘s requirement of injury in fact with a plaintiff‘s potential causes of action, for the concepts are not coextensive.” Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 591 (8th Cir.2009).
It remains to be seen whether the Waldners can prove Sveen, Wipf, and the rest acted unlawfully, and “[i]f [the Waldners‘] allegations of misconduct on the part of [the attorneys] have merit, and that is the hypothesis upon which we must proceed at this stage of the case, [the Waldners] clearly ha[ve] standing in the constitutional sense.” Novartis Seeds, Inc. v. Monsanto Co., 190 F.3d 868, 871 (8th Cir.1999) (emphasis added); see also Vietnam Veterans of Am. v. Shinseki, 599 F.3d 654, 658 (D.C.Cir.2010) (“[T]he merits must be assumed when considering standing.“); Braden, 588 F.3d at 592 (“We must assume ... [plaintiff‘s] allegations are true.“). The complaint details numerous injuries to the corporation—including the conversion of its property and livestock, redirection of payments owed to Hutterville, and the unapproved re-titling of Hutterville-owned vehicles—inflicted by the purported conspiracy in favor of the allegedly expelled Wipf faction members. In one such instance, the complaint alleges Sveen, as part of the conspiracy, instructed Wipf to record a warranty deed Wipf “had fraudulently executed as Hutterville‘s ‘president,‘” which “purported to convey from Hutterville to himself as trustee and for no consideration, all the real property described therein.” As alleged in the complaint, the injury is undoubtedly concrete and particularized; it is directly attributable to Sveen and Wipf‘s participation in the alleged conspiracy; and redress is readily available in the form of damages or equitable relief. Assuming the merits, the three prongs of Article III standing have been pled. See Perry, 570 U.S. at 704; Lujan, 504 U.S. at 560-61.
While wrong to dress the issue as one of Article III standing, the district court correctly recognized a crucial defect in the Waldners’ claims.
B. Corporate Governance
We agree with the Waldners that the “only question” raised by the attorneys’ arguments is “who may authorize the corporation to act.” “[W]hether the person bringing the suit has authority to use the courts of that jurisdiction” is a “question of capacity to sue.” Moore v. Matthew‘s Book Co., 597 F.2d 645, 647 (8th Cir.1979) (per curiam). For corporations in federal court, capacity to sue depends on state law. See
As a South Dakota nonprofit corporation, see
The Waldners have shown corporate control is also a core premise of their causes of action, intertwined with the merits of both their official and individual capacity claims.6 See supra section II.A. The Waldners concede their RICO claims depend on the Waldners’ rightful control, explaining that no predicate act of racketeering activity can be proven unless the Waldner faction—and not the Wipf faction—holds rightful control of Hutterville‘s director and officer positions. See Gallagher v. Magner, 619 F.3d 823, 841 (8th Cir. 2010) (requiring a “predicate act” of racketeering activity under
Thus, the question of who rightly controls Hutterville is the unavoidable nub of the Waldners’ official and individual capacity claims, whether framed in terms of capacity to sue (for the official capacity claims) or the merits.7
C. First Amendment and Judicial Estoppel
Knowing that to resolve the disputes in this case this court must decide who controls Hutterville, we turn to whether the First Amendment will permit such an inquiry. The district court answered this question in the negative, reasoning the governance issue “is deeply intertwined with the religious dispute of who is properly a member of the true church and therefore also a member of the colony and a voting member of Hutterville.” The Waldners counter that church membership is central to the governance question but that there is no live dispute because, in their view, “Hutterville has always been a ... Group 1 Hutterite Church Colony, and the Group 1 Church hierarchy conclusively determined that Wipf is not a member and has no right to speak or act for Hutterville.” They therefore claim, “Because civil courts are bound by and cannot question the Church‘s determination of its own membership, there is no ‘religious dispute.‘” The Waldners demand “the opportunity to prove ... that any claimed ‘religious dispute’ is a sham and a fraud and that they are, in fact, Hutterville‘s officers and directors or were unlawfully removed.”
The Waldners’ current arguments contradict the position they took before the South Dakota Supreme Court. Rather than argue the state court did have jurisdiction and should decide the governance question in their favor (as they argue here), the Waldners in state court argued the question was untouchable and could not be resolved by a secular court in either faction‘s favor. In Hutterville I, the Waldners maintained a court could not determine “who controls Hutterville Hutterian Brethren, Inc.” without determining “the identity of [Hutterville church‘s] decision making body” or members. Brief of Appellees, Hutterville I, 791 N.W.2d 169 (No. 25553), 2010 WL 5516994, at *12, *19-20. Both questions, the Waldners asserted, were “religious in nature and reserved to the church.” Id. at *20. Because “the parties dispute[d] the validity of the church‘s excommunication of [the Wipf faction members] and who the true senior elders of the church [we]re,” the Waldners reasoned that inquiry into the governance question entailed an unconstitutional intrusion by the court. Id. In Hutterville II, the Waldners similarly argued, “[T]he decision as to who are members of Hutterville Hutterian Brethren, Inc., cannot be decided without extensive inquiry into religious doctrine and beliefs of the Hutterian faith and South Dakota courts have no constitutional basis to interfere.” Brief of Appellant, Hutterville II, 808 N.W.2d 678 (No. 25877), 2011 WL 7497040, at *20. In both instances, the South Dakota Supreme Court agreed, ruling it could not determine church leadership or who was a member of Hutterville Colony‘s church. See Hutterville II, 808 N.W.2d at 686; Hutterville I, 791 N.W.2d at 179-80.
Having twice succeeded in foreclosing judicial determination and recognition of the proper directors and officers of Hutterville, the Waldners bring this federal action questioning the legitimacy of the Wipf faction‘s claim to Hutterville and asserting the legitimacy of their own offices. We will not permit the Waldners now to claim the religious questions are a “sham” or that these issues have been resolved all along. Nor will we permit the Waldners “the opportunity to prove ... that they are, in fact, Hutterville‘s officers and di-
“First, a party‘s later position must be clearly inconsistent with its earlier position. Second, courts regularly inquire whether the party has succeeded in persuading a court to accept that party‘s earlier position, so that judicial acceptance of an inconsistent position in a later proceeding would create the perception that either the first or the second court was misled. Absent success in a prior proceeding, a party‘s later inconsistent position introduces no risk of inconsistent court determinations, and thus poses little threat to judicial integrity. A third consideration is whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair detriment on the opposing party if not estopped.”
Id. at 750-51. The Waldners successively convinced the South Dakota Supreme Court that (1) the question of which faction has authority to direct Hutterville required determinations of church membership, the validity of excommunications, and the proper designation of the “true” Schmiedeleut, and (2) inquiry into these questions were impermissible for secular courts. See Hutterville I, 791 N.W.2d at 175-80.
The Waldners do not contend these questions have been resolved since that time. When questioned at oral argument in this case, the Waldners could not identify any intervening ecclesiastical decisions which might have settled the questions. Nor do they identify newly discovered evidence resolving the governance issues in a way that permits the court to circumvent religious inquiries. At most, the Waldners argue the attorneys “invented, orchestrated and engineered a sham and fraudulent ‘religious dispute’ to conceal their scheme and to shield themselves from scrutiny and liability.” The Waldners fail to explain what it means to have a “fraudulent” religious dispute, and even if correct that the attorneys orchestrated the dispute between Hutterville‘s factions, this does not negate the religious questions they previously highlighted—i.e., which excommunications were valid and which is the true church. These issues, the Waldners once argued, are both unavoidable and unanswerable, and we fail to see how the origin of the dispute makes these inquiries now any less necessary or any less controlled by religious matters.
III. CONCLUSION
We affirm the judgment and rulings of the district court, dismissing the official capacity claims without prejudice and the individual capacity claims with prejudice.