Schuller v. Naylor (In the Matter of: Crystal Cathedral Ministries)

Summarized by David Hercher , U.S. Bankruptcy Court, District of Oregon
11 years 6 months ago

Citation:

Robert H. Schuller et al. v. Karen Sue Naylor (Matter of Crystal Cathedral Ministries), No. 13-56039 (9th Cir. Aug. 4, 2014).

Tag(s):

Ruling:

The claim of a former pastor of the debtor church was a claim for damages resulting from termination of an employment agreement and thus limited in amount by section 502(b)(7). (Not-for-publication memorandum.)

Procedural context:

Dr. Robert H. Schuller and Robert Harold, Inc. (RHI), commenced an adversary proceeding against the debtor church and its plan agent to determine the amounts of their claims against the church. The bankruptcy court held that Dr. Schuller’s claim was limited by section 502(b)(7) and that RHI had no claim. The district court for the Central District of California affirmed the bankruptcy court, and the Ninth Circuit affirmed the district court.

Facts:

Before bankruptcy, the church and Dr. Schuller (the church’s founding pastor) entered into a Transition Agreement to address his transition from his position as Senior Pastor and define his future relationship with the church. RHI was not a party to or even mentioned in the Transition Agreement. The bankruptcy court found that Dr. Schuller’s relationship to the church under the Transition Agreement was that of an employee and thus his claim under the agreement was limited by section 502(b)(7). The court also found that RHI had no claim at all. The district court and the Ninth Circuit affirmed. According to the dissenting Ninth Circuit judge, although the question was close, the Transition Agreement was best characterized as a retirement agreement, rather than an employment agreement.

Judge(s):

Harry Pregerson, Stephen Reinhardt (dissenting), and Jacqueline H. Nguyen, Circuit Judges.

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