LCC’s New Suit

UPDATE
The original article misidentified the class and lawfirm representing the filed case. Sugden McFee & Roos represent the DIL depositors, not the CEF depositors. The original article also stated that the stay of proceedings was lifted. In fact, the stay of proceedings has NOT been lifted until the Monitor (Deloitte) has issued a certificate of completion (that all assets owed have been transferred, paperwork is done, etc etc). We apologize for any confusion this may have caused. The article has been edited to reflect changes where possible.

Lutherans have a claim to theological fame: a particular view of God’s Word that is summed up in “Law and Gospel.” We discern God’s expectations, and His mercy. Without the law there’s no need for the gospel; and without the Gospel the law is pointless. They are a perfect balance for each other. Today we talk about a different kind of law being introduced into Lutheranism in Canada: the law law. LCC has a new suit, and unfortunately the suit fits. It’s a lawsuit. A big one.

Updated: the claims were filed in December in both Alberta and BC courts. The proceedings are still stayed until the monitor has issued a certificate of completion. Garber represents CEF. It has filed claims too, but they won’t be public until the stay of proceedings is lifted and defendants served. Sugden McFee & Ross represent DIL depositors. Their letter starts like this:

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NOTICE TO DEFENDANTS

You are being sued. You are a defendant.

Go to the end of this document to see what you can do and when you must do it.

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Holy. Ouch.

Defendants named include:

Lutheran Church – Canada
Lutheran Church – Canada Financial Ministries (LCC foundation)
Lutheran Church Canada – the Alberta – British Columbia District
Lutheran Church Canada – the Alberta – British Columbia District Investments Ltd.

Sherman, turn the wayback machine to January 2015. ABC District made a CCAA filing to protect itself from lawsuits. CCAA provided a “stay of proceedings” which is really just a legal way of saying, “You can’t sue them – the business is bankrupt and under court protection until it can find a way out of its mess.” Fast forward to December 20, 2016: ABC District, Synod, the Synod Foundation, and over a dozen pastors, deacons, church leaders, board members, and lawyers are named by the DIL depositors for compensation. When the stay is lifted the legal action begins.

DOCUMENT: Representative Action Statement of Claim (external link)

It’s important to have a grasp how civil litigation really works. Civil cases – it’s hard to be more delicate than this without missing the point: it’s a pissing match. Each side presents its case NOT to see who is the most right or the most wronged, but to win. It’s an intimidation game – the job for each side is to instill fear into the other side, like so: “Here’s our evidence, there’s no way you can win, look at our case…just back down and no one gets hurt.” The first one to back down loses. Or loses less. Or wins less. It’s the courts. It’s messy and doesn’t make sense to outsiders. Civil cases only gets messier as they go on. If you want a clean and tidy life, settle before it goes to court. If you’re into pain and suffering: by all means go the distance. It’s a game that is entirely different than it looks.

Class action suits are a lot like golf: they have a shotgun start. At the beginning of a suit, EVERYONE, and I mean EVERYONE, within inches of the issue is named. You bring them into a big friendly lawsuit tent, hand them a drink and canape or crudites and ask them to wait. It’s unpleasant and stressful. As information and positions from both sides develop, names are dropped because they had little involvement or there’s little evidence they did anything wrong, or there’s a low chance of successful prosecution. At some point one side may ask to open negotiations to settle out of court. Friends will be estranged, trust is suspended – and will take a long long time to be regained, because LCC is miserable at governance.

The honest and uncomfortable truth: LCC and its leadership is going to be judged publicly in court.

You have to wonder if Synod’s lack of action in responding to the CEF/DIL crisis is going to be an aggravating factor. For depositors who have taken a major financial loss and feel ignored or marginalized by the church feel like they have nothing to lose – even in the face of lawyers fees. They’ve already taken a loss, and now it’s time for others to pay. That’s called vengeance, and it’s not good because it really belongs to God, but it’s what LCC has fostered in many of its own people. Synod and District are going to be in a kind of legal lock-down. If you’re hoping for a frank and open discussion with a Synod or District leader, keep right on hoping. Synod administrations are going to be tight-lipped and say nothing that might jeopardize the larger action they’re facing. The ripples are endless.

The Statement of Claim makes the case that ABC District “was contrary to the purposes of the ABC District Church Extension Program, which was to provide mortgage financing for congregations to build churches and schools in which to carry out the ministry of the Lutheran Faith.” The argument continues that “LCC and/or LCCFM were aware of, or ought to have been aware of, and approved the ABC District’s decision to utilize CEF Trust monies for the purpose of developing the POP Village Lands.”

I hope Synod has good constitutional lawyers because it looks like the Representative Action’s lawyer has a rock solid grip on LCC’s constitution. The statement of claim is aiming part of the case at how Synod operates. If LCC and ABC District governance are scrutinized – which they will be – it could be embarrassing. It’s already embarrassing, so does more matter? We shouldn’t expect it, but nor should we be surprised to see skeletons dancing out of LCC’s many closets.

The stay of proceedings is lifted is still on. Lutherans are preparing to sue Lutherans. The honest and uncomfortable truth for LCC is that our leadership is going to be judged publicly by a court. It’s shameful and embarrassing. Depositors are out-of-pocket because something went wrong. For whatever reason, LCC will scarcely acknowledge what everyone else can see. The time for apologies or leadership or action on Synod’s part has passed. As the saying goes, the court will open closed mouths. Regardless of the outcome, we aren’t going to like what we see. I mean, we’re already watching a lawsuit unfold within the church. It’s a too late to avert our eyes now.

If you’re not feeling crushing shame about the state of LCC, please, please, please go to the window and leave it open for a few days.

This is just the start. Thank goodness it’s Friday.

Andreas Schwabe is editor and publisher of SolaGratia.ca, and an Edmonton-based multimedia & communication strategist and producer. His focus for SolaGratia is on administration, governance, and issues of faith. For clients, he writes or produces just about anything.

One thought on “LCC’s New Suit

  1. Edna Mackenzie

    This is so sad — and humiliating for all of us from Presidents down to the lowly member in the pew. As already stated in article “Eyes Wide open” had OUR (the) leaders had the courage and been forthright to apologize and then correct the FINANCIAL predicament we all found ourselves in, it could have been done— by the church– not outside the church at a huge cost to investors. Yes, it could have been — at much less cost. BUT, oh no– we hire, we fire sell, we resign– and we are now being sued in Court. I was aghast to read even the LCC president is being sued. What an unholy mess! And we claim to be brothers and sisters in Christ. We all make mistakes, miscalculations, misrepresentations. All are correctable and forgivable.

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