Court rules City is not responsible for lost contributions.
San Leandro won a partial victory on August 20th in its ongoing legal battle against the Faith Fellowship Four Square Church. A federal judge ruled that the City is not liable for the contributions the Church alleged it has lost by not being able to grow its congregation. Faith Fellowship had been rapidly growing through 2006, when they reached the limit of how many people their existing facilities could accommodate. They bought a much larger property in the industrial area of town, but the City stopped them from using it as the zoning code did not allow non-commercial assembly use in that area. Faith Fellowship alleges that this has cause them $19M to $23M in total damages, including $10.4M to $14.3M in contributions it would have received, had it been able to move to its new facilities and further grow its congregation. The Court found these specific damages were too speculative to be considered.
The Court also found, however, that the City may be liable for the “hard” damages incurred by the Church as it was forced to sell the property at a loss, as well as for the mortgage, insurance and taxes it paid while it owned the property. According to the Church, these add up to about $8.4M.
The case is scheduled to go to trial in October, when a jury will decide whether the City imposed a “substantial burden” on the Church by not allowing them use of their newly acquired property. If so, the jury will also determine the amount of damages that should be paid to the Church. The Court will then decide whether the City must also pay the Church’s legal fees. The City has spent close to $1M on its own legal fees, and may be liable to the Church for a similar amount for theirs.
If the jury finds for the City, the Church may still appeal to the 9th Circuit alleging that the City violated the equal treatment clause of the Religious Land Use and Institutionalized Persons Act (RLUIPA) by allowing commercial entertainment in properties zoned industrial, but not religious assemblies. Recent jurisprudence makes it very likely that the Church would win on these grounds. The case may then be sent back to trial for a determination of the monetary damages. This whole procedure is likely to cost the City hundreds of thousands of dollars in additional legal fees. We better hope we lose at trial this October and the jury doesn’t feel too generous with the Church.
Many interesting things have been happening on this case in the last few months, and I will write about them in a different post.