A Los Angeles Superior Court judge has denied an attempt by the Rev. William Steuart McBirnie, a Glendale minister, to set aside a $1.2-million judgment against him and organizations he heads for not paying back loans obtained from 24 former members of his United Community Church.
Adding further complications to McBirnie's extensive financial and legal entanglements, Community Churches of America, said to be the umbrella organization for the 65-year-old minister's enterprises, has filed a petition for bankruptcy with the U.S. Bankruptcy Court in Washington, where the former Glendale-based organization is now based.
The bankruptcy filing may make it difficult for former parishioners to collect their award, an attorney representing McBirnie said.
At a hearing Friday, Judge Robert P. Schifferman denied motions to set aside another judge's ruling against McBirnie and five affiliated organizations. McBirnie and eight other defendants, all organizations that he founded, were ordered in May to pay the former parishioners $1 million in punitive damages in addition to about $221,000 in outstanding loans and accrued interest.
8% to 12% Interest
According to court documents, McBirnie solicited the loans between 1972 and 1980 to help finance construction of church-affiliated buildings, including a research library, training centers and the auditorium of United Community Church at the corner of Kenwood Avenue and Colorado Street. The loans, which ranged from $1,000 to $25,000, were supposed to bear 8% to 12% annual interest, court records state.
Joining McBirnie in asking Schifferman to void the May judgment were attorneys representing the "Voice of Americanism" radio program, Concord Senior Housing Foundation, United Community Church, California Graduate School of Theology and United Community Churches of America, all organizations founded by McBirnie and based in Glendale.
The other defendants named in the suit--Community Churches of America, Heritage Foundation and World Emergency Relief Foundation--did not join in last week's court proceedings.
In its bankruptcy petition, Community Churches of America listed 364 creditors, including the 24 former United Community Church members in the Glendale lawsuit, and claimed to have assets of $5 million and liabilities of $806,836.
Christ T. Troupis, the attorney representing the former parishioners, said he does not expect the bankruptcy action to interfere with his efforts to secure the $1.2-million judgment. Troupis said the money can be collected from the other defendants.
But Robert Garcin, McBirnie's attorney, said the bankruptcy action "creates some interesting problems." The bankruptcy petition could lead to an automatic stay on the judgment against Community Churches of America, Garcin said, and that stay could be extended to the other organizations, which the Glendale court has ruled are all interchangeable.
"Maybe the cases involving those other entities would have to be terminated because of the bankruptcy," Garcin said.
Schifferman's ruling rejected the argument that the defendants were never properly served with a complaint and let stand the ruling of Superior Court Commissioner Florence-Marie Cooper, the Glendale judge who presided over the May hearing. Cooper had ruled that McBirnie and his organizations were involved in fraudulent activities in connection with the loans and never intended to pay them off.
Lawyers representing the organizations involved in Friday's hearing argued that the plaintiffs' attorney erred in serving the complaint to only one defense attorney, Garcin, who represents McBirnie, United Community Churches of America and the Concord Senior Housing Foundation.
Garcin, who was served with the complaint at his office last year, claimed he was not authorized to accept the complaint on behalf of any of the defendants, including his clients.
Because the complaint went unanswered, no one representing any of the defendants was allowed to present oral or written arguments at the hearing before Cooper. The commissioner issued her judgment solely on the basis of testimony and evidence entered by Troupis. Had Schifferman granted the motions to put aside Cooper's ruling, a new trial could have been ordered.
Defense attorney Raymond Tremaine, who represents the "Voice of Americanism," a radio program featuring commentary by McBirnie, characterized Schifferman's ruling as "horrible" and "unjust." Garcin, Tremaine said, "never has represented 'Voice of Americanism' and he didn't say that he did."
'Didn't Issue the Notes'
Besides, Tremaine said, the "Voice of Americanism" has no legal ties to McBirnie or the other defendants and was not involved in a loan fraud. "They didn't do anything, let alone anything of a punitive nature," Tremaine said.
The attorney representing the California Graduate School of Theology made the same claims on behalf of his client.
"They didn't issue the notes. They didn't sign the notes," Raymond Kolts said of the school. "In fact, they weren't even a corporation when the notes were issued by Community Churches."
Tremaine, Kolts and Garcin said they expect to appeal Schifferman's ruling. William McMillan, who represents United Community Church, could not be reached for comment.
Troupis said he considered McBirnie's legal maneuverings delaying tactics and claimed that McBirnie is trying to buy time while he moves his assets around to make it difficult to collect the award.
Transfer of Property
Troupis cited the recent transfer of property at 216 S. Louise St. from Concord Senior Housing Foundation to a new owner listed as Federal Baptist Church.