The opinion is under formal revision prior to publication in the Atlantic and Maryland Reporters. It addresses an appeal involving Hyun Jin Moon and others as appellants against the Family Federation for World Peace and Unification International and others as appellees. The case originates from the Superior Court of the District of Columbia, with judges Laura A. Cordero and Jennifer M. Anderson presiding.
The Reverend Sun Myung Moon founded the Unification Church in 1954 and led it for nearly six decades. Following his death, a schism emerged within the Church, primarily between his eldest son, Dr. Hyun Jin Moon, and his widow, Hak Ja Han Moon, along with his younger son, Hyung Jin Moon. Dr. Moon advocates for a non-denominational, decentralized version of the Church, aligning with the vision of his father, and chairs Unification Church International (UCI), which controls significant assets. Conversely, Hak Ja Han Moon and Hyung Jin Moon assert their roles as successors and believe the Family Federation represents the true embodiment of the Church.
The Family Federation has sued Dr. Moon and UCI’s board, alleging breaches of fiduciary duty. Specifically, they claim that UCI’s directors improperly donated approximately half of UCI’s assets to unrelated entities, contrary to the Family Federation’s wishes, which positions itself as the authoritative body directing Unification Churches globally.
Directors of UCI amended the organization's articles of incorporation to replace certain religious purposes with commitments focused on supporting the understanding of Unification Movement principles. The central issue in the appeal is whether civil courts can resolve the resulting dispute, given the First Amendment's religious abstention doctrine, which typically prevents courts from adjudicating religious conflicts. The Superior Court initially dismissed the case on these grounds, but this dismissal was deemed premature on appeal, as there was potential for a resolution based on neutral legal principles without delving into religious matters. After extensive discovery on remand, a new judge found that the dispute could be resolved using neutral principles and granted summary judgment in favor of the Family Federation, ordering the removal of UCI directors and holding them personally liable for over $500 million. However, the court recognized that this situation involves fundamental religious questions that it is not permitted to address, including the authority of the Family Federation over UCI and the changes to the articles of incorporation. The court emphasized that without explicit provisions in UCI's articles defining the decision-making authority in case of a schism, it cannot determine which faction's interpretation of the Unification Church is more valid. Consequently, the appellate court reversed the trial court’s summary judgment and remedies order, asserting that resolving the underlying religious questions is beyond its jurisdiction. Additionally, the excerpt provides background on the founding of the Unification Church by Reverend Sun Myung Moon in 1954, highlighting the institution's development and its leader's perceived role within the faith.
Rev. Moon and his widow, Hak Ja Han Moon, are regarded as the “True Parents of Humankind” by followers. The Unification Church expanded into a global movement with diverse enterprises in religion, culture, education, media, and commerce. Rev. Moon and his supporters established various religious institutions worldwide, including the Holy Spirit Association for the Unification of World Christianity (Japan) and numerous nonprofit organizations like the Universal Peace Federation (UPF). They also created for-profit entities, such as The Washington Times and True World Group. Although Rev. Moon held significant spiritual and moral authority within the movement, he lacked legal control over these organizations.
By the early 2000s, the Unification Church had a presence in 185 nations. UPF, formerly the Interreligious and International Federation for World Peace, aims to build a peaceful global community but operates independently of the Unification Church, with no mention of it in its founding documents.
In the 1970s, Rev. Moon instructed the creation of Unification Church International (UCI) in Washington, D.C., which serves as a funding source rather than a church. UCI's 1980 articles of incorporation highlighted its mission to support the Unification Church and its principles, acknowledging Rev. Moon’s role as the spiritual leader. UCI's core purposes include promoting the worship of God, teaching the Divine Principle, establishing places of worship, publishing literature, and conducting various programs aimed at fostering religious unification and world peace. Over the years, UCI provided financial support to a range of organizations and projects associated with Rev. Moon.
UCI received significant financial support from Unification Church institutions, particularly HSA Japan, which transferred approximately $100 million annually to UCI over many years. In the mid-1990s, Rev. Moon initiated a transition from the Unification Church to the Family Federation for World Peace and Unification International, aiming to establish a new providential age focused on family salvation beyond religious, national, and racial boundaries. He indicated that the traditional church structure was becoming obsolete, emphasizing a shift from individual to family-level salvation as foundational for nation-building.
In the twelve years prior to Preston's election as Chairman of UCI in 2006, less than five percent of UCI's disbursements were directed to church institutions. During a significant ceremony, Rev. Moon symbolically retired the Unification Church's identity, which many followers interpreted as the end of the church era. In 1998, Rev. Moon appointed Preston as vice president of the Family Federation, highlighting the significance of this role as marking the "era of the fourth Adam," with aspirations for Preston to surpass his father’s influence. Subsequently, Preston was given prominent positions within various church organizations, including co-chairmanship of UPF, which he promoted as a non-sectarian entity aligned with his father's vision of global unity without promoting a specific religion.
However, in 2008, Preston's progress within the church's institutional framework faced obstacles. In a lengthy letter titled "Report to Parents," he expressed concerns about divisions within the Church and articulated a vision for its direction, advocating for the dismantling of religious barriers to foster true interfaith unity rather than merely preserving the Unification Church's institutional integrity.
Preston aimed for UCI and UPF to align with his vision of the Unification Church as decentralized and interfaith. Following the “Report to Parents,” Sean Moon, who held a contrasting view supporting a denominational approach, was appointed president of the Family Federation. Sean asserted control over all organizations, claiming oversight under his parents' direction. At a coronation ceremony, Rev. Moon and Hak Ja Han crowned Sean. Since then, Preston has distanced himself from the Family Federation but remained Chairman of UCI’s board.
In 2009, Preston initiated a board overhaul, replacing four directors with associates who shared his vision. During a special meeting, two of his associates, Richard Perea and Michael Sommer, were elected, prompting resignations from Thomas Walsh and Victor Walters, who testified they felt pressured by Preston’s brother-in-law, Jin Hyo Kwak. Kwak, however, denied this request. Subsequent meetings held by the remaining directors, Peter Kim and Douglas Joo, failed to achieve quorum due to Preston and his allies' absence. They were later removed from the board and replaced by Preston’s brothers-in-law, JinMan Kwak and Youngjun Kim, solidifying a board aligned with Preston’s views.
The new directors, all experienced within the Unification Church, opposed Sean’s denominational approach. Preston's resistance to resigning from UCI persisted even after Rev. Moon requested his departure, as he feared losing his influence to those aligned with the Family Federation. He expressed concerns about his father's vulnerability to manipulation and stated that relinquishing his position would allow those he considered heretical to seize control of the movement. Subsequently, he claimed that Rev. Moon had turned against him.
In 2009, Preston established the Global Peace Foundation (GPF) to independently manage global peace festivals, separating it from the Universal Peace Federation (UPF) after Sean replaced him as chair. Preston’s open letter emphasized his commitment to Rev. Moon's vision of a harmonious, God-centered world, asserting that GPF would have no formal ties to the Family Federation. Despite the Family Federation's opposition and a directive from True Parents against GPF's establishment, UCI, under Preston’s control, redirected over $34 million in funding to GPF instead of UPF until a court injunction in 2016 prohibited further disbursements.
In April 2010, UCI's board, led by Preston, amended its articles of incorporation, significantly altering references to the Unification Church and its core texts. The amendments replaced mentions of the "Divine Principle" with broader terms related to the "theology and principles of the Unification Movement" and eliminated the original purpose of supporting Unification Churches globally. Additionally, the organization's name was changed from "Unification Church International" to "UCI." The amendments reflect a shift towards a more generalized mission of promoting worship and understanding of God and the Divine Principle, rather than focusing specifically on Unification Church activities.
Preston asserts that the amendments to UCI aimed to modernize and professionalize the organization while accurately reflecting a shift announced by his father in the 1990s, which was not captured in the original 1980 articles. UCI's directors argue the amendments did not fundamentally change the organization's purposes, as they incorporated all objectives from the 1980 articles and merely reflected changes in the movement since then. In contrast, the Family Federation claims the amendments were intended to fundamentally alter UCI’s relationship with the Unification Church, citing an email from a lawyer involved in drafting the amendments that indicated a goal of removing religious references from UCI’s framework.
The Family Federation contends that the directors aimed to dissociate UCI from the Unification Church to facilitate the questionable transfer of approximately half of UCI’s assets to the Kingdom Investments Foundation (KIF), a Swiss foundation established to receive these assets. UCI entered a donation agreement with KIF, committing to transfer assets that aligned with UCI's amended purposes, such as supporting the Unification Movement. However, KIF's stated purposes differed by excluding references to promoting world religious unification and substituting the promotion of "ethical principles" instead.
UCI transferred significant assets to KIF, including interests in major real estate developments in Seoul, a ski resort, a construction company, and approximately $2 million in cash, totaling over $469 million. UCI's directors claimed these actions were motivated by the need for tax benefits and financing for the Parc1 project while also addressing potential banking concerns due to the Unification Church's negative reputation. Notably, the directors did not inform Rev. Moon or key Family Federation members about the asset transfer prior to its execution.
The Family Federation, along with HSA Japan and UPF, has filed a lawsuit against UCI’s directors for alleged breaches of fiduciary duty, which has been ongoing in the District courts for over a decade.
The Family Federation challenges the plausibility of the directors' justifications for a transfer, asserting there were no immediate tax benefits to UCI and that any long-term advantages were negligible compared to the value given away. It claims previous delays in the Parc1 project had been resolved before the transfer and points to KIF's quick sale of the Central City asset for nearly $1 billion as evidence of the directors' lack of good faith in promoting the church's principles. Following Rev. Moon's death in September 2012, his widow, Hak Ja Han, claimed leadership of the Unification Church, resulting in Sean Moon suing her for recognition as the church's leader. The federal court dismissed Sean's claim on First Amendment grounds, a decision later upheld by the Second Circuit. Despite this, Sean asserts he is Rev. Moon's rightful successor and created the "Sanctuary Church." The trial court initially dismissed the case against Preston and UCI directors due to potential First Amendment violations, but the dismissal was reversed on appeal, allowing for further examination of the case under neutral legal principles. On remand, a preliminary injunction was issued to restrict UCI's fund disbursement, which the directors contested based on factual inaccuracies regarding the Family Federation’s authority and the Divine Principle's status. The appellate court affirmed the injunction, noting the limited nature of the preliminary record and the directors' failure to raise their factual disputes in the trial court. It emphasized that at the time of the injunction, no theological issues were for the court to decide, while allowing for reconsideration if doctrinal matters were later found to be central to the dispute.
The trial court granted summary judgment in favor of the appellees on breach of fiduciary duty claims against UCI's directors, concluding they violated their obligations by significantly altering UCI's corporate purposes and donating approximately half of UCI's assets to KIF and GPF, which were unaffiliated entities. Following a remedies hearing, the court removed directors Preston, Sommer, Kwak, and Youngjun Kim from UCI's board and imposed a joint and several liability of $530 million on them. The directors and UCI are appealing the summary judgment and remedies orders, arguing that the trial court's decision violated the First Amendment's religious abstention doctrine, which limits civil courts' involvement in disputes concerning religious organizations. The doctrine mandates careful avoidance of adjudicating internal church disputes that require deep inquiry into ecclesiastical matters. Although the appeal is ongoing, it is noted that HSA Japan has also filed separate contract claims against UCI, which remain pending, thus the remedies order is not final. However, jurisdiction exists to review the appeal under D.C. law concerning interlocutory orders. It is argued that since UCI is not a church but a taxable nonprofit corporation, the case does not directly engage religious institutions in a manner that would invoke the First Amendment's protections against state interference in ecclesiastical governance.
The religious abstention doctrine limits courts from intervening in theological controversies and church governance, focusing on the subject matter rather than the parties involved, as established in Watson v. Jones. Courts are prohibited from resolving disputes over religious succession or ordaining successors. However, the First Amendment does not entirely shield civil courts from addressing disputes with religious elements, such as property disputes among church factions, provided these can be resolved using neutral legal principles without delving into church doctrine or practices. Courts can also enforce contracts involving religious organizations if these do not require examination of ecclesiastical matters.
In the context of a case involving the Unification Church, the court determined that questions regarding fiduciary duties intertwined with religious principles were justiciable, as the issues at stake went beyond mere labels. The trial court dismissed the directors' First Amendment arguments and granted summary judgment to the plaintiffs, concluding that the directors breached their fiduciary duties by altering the organization's corporate purposes and transferring significant assets to unrelated entities. The directors argued that the ruling violated their First Amendment rights.
The court finds that the record is more developed than in previous cases (Moon I and Moon II) and agrees with the trial court's judgment regarding fiduciary breaches by the directors of UCI due to significant alterations in UCI's articles of incorporation. It emphasizes that directors have fundamental fiduciary duties of loyalty and disinterestedness, and a substantial change to a corporation's articles can constitute a breach if it alters the corporation's essential mission. However, directors are allowed to adapt a corporation's purposes to accommodate changing circumstances, provided such amendments do not fundamentally change the nature of the business. The assessment of whether a change constitutes a breach hinges on whether it contradicts the organization’s core mission, not merely on the extent of the change. The directors' claims against this principle are dismissed, as the court is bound by prior rulings. A breach of fiduciary duty occurs only if directors abandon the corporate mission or create an entirely different entity.
An organization dedicated to preserving African wildlife cannot shift its focus to domestic animals without abandoning its central mission. In contrast, expanding a gorilla preservation mission to include other African great apes would be permissible as it does not alter the organization's essential character. The trial court determined that the directors of UCI breached their fiduciary duties by amending the articles of incorporation, invoking principles of contractual interpretation. Specifically, the court highlighted three key amendments:
1. The removal of "Unification Church" references replaced by a single mention of "Unification Movement," which the court argued detached UCI from its original obligations.
2. The excision of "the Divine Principle" references, replaced by a broader directive to support the theology of the Unification Movement.
3. The complete removal of the original purpose of assisting Unification Churches globally.
The court characterized these changes as substantial, arguing they altered UCI's corporate purposes significantly. However, the critique of the redundancy in the original articles and the significance of the amendments lacked clarity, as the court did not effectively justify the importance of the specific terms removed. The amendments were viewed as streamlining rather than fundamentally altering the mission of the organization.
Amendments to UCI’s articles of incorporation, which replaced "Unification Church" with "Unification Movement," do not necessarily reflect a substantial change in mission due to the ambiguity of the terms' meanings. The distinction between a "specific denominational reference" and a broader religious movement is not grounded in a neutral principle, as both terms can refer to either concept. The directors assert that the two terms are interchangeable and that the amendments align with Rev. Moon’s declaration of an "end of the church era," a claim which raises theological questions outside the court's expertise. The term "Unification Church" has historically referred to various institutional actors, complicating the determination of which should take precedence. The court recognizes the difficulty in evaluating claims regarding fidelity to religious tenets versus institutional identity, as such judgments are inherently religious. A hypothetical scenario is presented to illustrate the complexities involved in distinguishing between institutional and religious identities following significant theological shifts. The directors’ decision to amend UCI’s articles and rename the corporation reflects an intention to dissociate from a specific institutional interpretation while aligning with broader religious principles, supporting the conclusion that these changes do not alter the organization’s essential mission.
Eastern Orthodoxy, claimed to represent the true Christian church, challenges the validity of the Roman Catholic perspective, leading to a judicial impasse in a case involving UCI (Unification Church International). The 1980 articles of incorporation lacked a neutral principle for resolving disputes about religious authority, as suggested by the Supreme Court in Jones v. Wolf. UCI was not subordinate to any religious institution, and no authority was designated to control UCI or its assets, complicating the determination of its character in light of the amendment to “Unification Movement.” The court's involvement in adjudicating such religious disputes would infringe upon First Amendment protections by requiring interpretations of church doctrines, a role that civil courts are advised against. The plaintiffs, the Family Federation, claim to be the authoritative body directing Unification Churches, but the trial court's decisions did not reflect religious neutrality, conflating the Federation with the Unification Church. The Federation's alleged authority over UCI is contested, with UCI's directors denying any hierarchical structure. The court, therefore, lacked the jurisdiction to resolve internal ecclesiastical matters or to determine leadership within the religious organization.
The trial court examined the removal of the term "the Divine Principle" from the amended articles of the Unification Church International (UCI) and noted that while the meaning of "the Divine Principle" is clear, its omission does not signify a fundamental change in UCI's character or mission. The original articles referenced "the Divine Principle" multiple times, but the amended articles broadened UCI's objectives to include promoting a wider range of Rev. Moon's teachings and publications. The directors maintained that the Divine Principle remains a central text among others, collectively forming the religion's canon. Appellees contended that this broader language represented a departure from UCI's core purpose, but the court found no evidence that UCI had ceased promoting the Divine Principle, nor did it agree that the amendments fundamentally altered UCI's mission. The court likened this situation to a Christian church that expands its focus from the Gospels to the broader concept of the Gospel. Additionally, the directors removed a primary purpose related to assisting Unification Churches globally, which appellees argued indicated a shift away from promoting physical church activities; however, the court did not determine the implications of this change regarding UCI's religious mission.
The omission of support for brick-and-mortar churches from UCI's amended articles is argued by the directors to be either non-essential, as the purposes of the amended articles encompass this support, or to not constitute a substantial change, given UCI's historical lack of significant resources allocated to such churches. Prior to the current president's term, UCI reportedly directed less than five percent of its disbursements to traditional church entities while remaining compliant with the 1980 articles. The trial court noted that removing the first purpose of the 1980 articles did not fundamentally alter UCI's mission, emphasizing the difficulty of assessing the significance of UCI's other purposes without infringing on religious doctrine considerations.
Additionally, the trial court granted summary judgment for the appellees regarding the directors' alleged breach of fiduciary duties in transferring approximately half of UCI's assets to KIF and GPF, entities not affiliated with the Unification Church. The court differentiated these donations from UCI's historical practices by noting that previous donations were typically sanctioned by Rev. Moon or made to organizations he established. It concluded that the donations to KIF and GPF were distinct due to their explicit nature and the assumption that they had to align with UCI’s corporate purposes as stated in the 1980 articles, without contesting the appropriateness of this assumption.
The trial court's determination that the 1980 articles prohibited donations to KIF and GPF, and that the directors breached their fiduciary duties by facilitating these transfers, is deemed incorrect. The court failed to convincingly distinguish these transfers from UCI's historical donations to various unaffiliated organizations, which included significant contributions to entities like the Universal Ballet, the University of Bridgeport, and The Washington Times—none of which were affiliated with the Unification Church. Evidence indicates a longstanding pattern of UCI supporting nonsectarian organizations, undermining the argument that such donations were ever prohibited by the articles.
Moreover, the appellees’ attempt to differentiate the KIF and GPF donations based on the lack of Rev. Moon’s approval is rejected, as it implies that only donations sanctioned by him align with UCI’s mission. This reasoning assumes a hierarchical church structure where church leaders’ approvals dictate compliance with organizational purposes, a premise that raises contested issues of church governance. The court concludes that the trial court overstepped its authority under the First Amendment by adopting this reasoning.
The court referenced Samuel, 116 A.3d at 1259, which established that resolving disputes regarding religious leadership involves impermissible inquiries into church governance, as per the First Amendment. It noted that even if the Unification Church has a hierarchical structure with a single leader, civil courts cannot decide who that leader is. Testimonies indicated that Rev. Moon's declining health led to manipulation by others, while Preston was recognized by some co-directors as the true leader even before Rev. Moon's death. The court acknowledged the dispute over spiritual authority as central to the case, despite appellees' claims of its irrelevance.
Additionally, the court critiqued the trial court's failure to differentiate between the contested financial transfers to GPF and KIF and UCI’s historical donations, neglecting to address the substantive purposes of UCI as outlined in its 1980 articles. These purposes include worship, promoting unity among religions, and sponsoring educational and cultural programs. The directors argued that the transfers were in line with UCI's mission, citing GPF’s peace-building efforts and KIF’s role in financing a key real estate project aligned with Rev. Moon’s vision. The court noted that any interpretation of the 1980 articles would necessarily involve adjudicating longstanding religious debates, which is unconstitutional. Ultimately, the trial court incorrectly concluded that UCI’s donations to KIF and GPF violated UCI’s corporate purposes.
Appellants seek to reverse the summary judgment against them and dismiss the breach of fiduciary duty claim entirely. However, a third theory of fiduciary breach, involving allegations of self-dealing by directors, remains unaddressed by the trial court. This self-dealing claim, asserting that directors diverted corporate assets for personal gain, could still be actionable if supported by evidence. Although the doctrine of religious abstention generally protects religious organizations from civil court interference, a “fraud or collusion” exception may allow civil courts to intervene in ecclesiastical disputes when bad faith is involved. The court notes that while the Supreme Court has not definitively established this exception, it may apply in situations where religious figures mask secular misconduct. The court refrains from determining whether this exception exists or how it might apply in this case, as these issues were not briefed by the parties. The trial court mistakenly applied neutral principles of law to resolve ecclesiastical disputes and erred in granting summary judgment to the appellees. Consequently, the court reverses the trial court's judgment and remands the case for further proceedings, allowing for the potential consideration of the self-dealing claim without delving into religious questions.
