Updated: to read Bishop J. Jon Bruno's statement, click Read More at the end of this article. Presiding Bishop Katharine Jefferts Schori's statement is also online.

In a decision issued today, the California Supreme Court held unanimously in favor of the general church, affirming in full the judgment of the appellate court in the case between the Episcopal Diocese of Los Angeles and three disaffiliated parishes including St. James, Newport Beach. In its opinion the court stated,

Applying the neutral principles of law approach, we conclude that the general church, not the local church, owns the property in question. Although the deeds to the property have long been in the name of the local church, that church agreed from the beginning of its existence to be part of the greater church and to be bound by its governing documents. These governing documents make clear that church property is held in trust for the general church and may be controlled by the local church only so long as that local church remains a part of the general church. When it disaffiliated from the general church, the local church did not have the right to take the church property with it.

The decision makes clear that parish property is held in trust for the general church, a finding that would seem to make it unlikely that churches that left the Episcopal Diocese of San Joaquin to join the Anglican province of the Southern Cone will be successful in retaining their property.

From Episcopal News, Diocese of Los Angeles:

John R. Shiner, attorney for the diocese, said Monday’s ruling “will apply to all parishes throughout the State of California” and influence church property disputes nationally. “It’s been a long and arduous journey over the past few years,” he said. The decision, which upheld a 2007 appellate court ruling, is “final, conclusive, definitive,” he added.

(The Orange County Register story is here. See also The Los Angeles Times, and the Associated Press. See also Howard Friedman's analysis over at Religious Clause blog. Also, Michael Conlon writing in Reuters. Episcopal Life says it is "a landmark ruling that could have national implications.")

St. James' former rector is David Anderson, who is now a bishop in the Church of Nigeria. The church itself is a member of the Church of Uganda. It was (and perhaps remains) the home church of Howard Ahmanson, the California savings and loan heir who has helped finance the breakaway movement. Ahmanson's wife Roberta, is president of the board of the Institute on Religion and Democracy, which has supported the breakway movement, and once shared offices with Anderson's organization, the American Anglican Council.)

The justices affirmed the so-called Dennis Canon, the validity of which has been questioned by breakaway parishes:

Under the neutral-principles approach, the outcome of a church property dispute is not foreordained. At any time before the dispute erupts, the parties can ensure, if they so desire, that the faction loyal to the hierarchical church will retain the church property. They can modify the deeds or the corporate charter to include a right of reversion or trust in favor of the general church. Alternatively, the constitution of the general church can be made to recite an express trust in favor of the denominational church. The burden involved in taking such steps will be minimal. And the civil courts will be bound to give effect to the result indicated by the parties, provided it is embodied in some legally cognizable form.” (Jones v.Wolf, supra, 443 U.S. at p. 606, italics added.)

Shortly after this decision, and in apparent reaction to it, the Episcopal Church added Canon I.7.4, which recites an express trust in favor of the denominational church. This occurred some 25 years before the instant dispute erupted. Defendants focus on the high court’s reference to what the “parties” can do, and argue that Canon I.7.4, to be effective, had to have been enacted by the parties — in other words, that some kind of agreement must have been reached between the general church and St. James Parish (and presumably every other parish in the country) ratifying Canon I.7.4. We do not so read the high court’s words. Use of the passive voice in describing the possible “alternative[]” of making the general church’s constitution recite the trust suggests the high court intended that this could be done by whatever method the church structure contemplated. Requiring a particular method to change a church’s constitution —such as requiring every parish in the country to ratify the change — would infringe on the free exercise rights of religious associations to govern themselves as they see fit. It would impose a major, not a “minimal,” burden on the church governance. (Jones v. Wolf, supra, 443 U.S. at p. 606.)

Thus, the high court’s discussion in Jones v. Wolf, supra, 443 U.S. at page 606, together with the Episcopal Church’s adoption of Canon I.7.4 in response, strongly supports the conclusion that, once defendants left the general church, the property reverted to the general church. Moreover, Canon I.7.4 is consistent with earlier-enacted canons that, although not using the word “trust,” impose substantial limitations on the local parish’s use of church property and give the higher church authorities substantial authority over that property. For example, permitting a disaffiliating local church to take the property with it when it reaffiliates with a different church is inconsistent with the prohibition of Canon II.6, section 2, against encumbering or alienating local property without the previous consent of higher church authorities. Thus, a strong argument exists that Canon I.7.4 merely codified what had long been implicit.

More:

In short, St. James Parish agreed from the beginning of its existence to be part of a greater denominational church and to be bound by that greater church’s governing instruments. Those instruments make clear that a local parish owns local church property in trust for the greater church and may use that property only so long as the local church remains part of the greater church. Respect for the First Amendment free exercise rights of persons to enter into a religious association of their choice, as delineated in Jones v. Wolf, supra, 443 U.S. 595 (as well as the provisions of section 9142) requires civil courts to give effect to the provisions and agreements of that religious association. To adapt a similar conclusion in a recent Court of Appeal decision involving a different religious association, “In summary, [St. James Parish] is bound by the constitution, laws, rules and regulations of the [Episcopal Church]. Historically, it has accepted the authority of the national church and submitted itself to the national church’s jurisdiction.”

On attempts to delegitimize the Dennis Canon:

Defendants also suggest that the Episcopal Church did not properly adopt Canon I.7.4 under its own rules. It is a bit late to argue that Canon I.7.4 was not effectively adopted, a quarter of a century later, and, in light of the consistent conclusions of the out-of-state cases that that canon is, indeed, part of the Episcopal Church’s governing documents, the argument seems dubious at best. But, in any event, this is one of those questions regarding “religious doctrine or polity” (or, as we phrased it in Catholic Charities of Sacramento, Inc. v. Superior Court, supra, 32 Cal.4th at page 541, “religious doctrine and internal church governance”) on which we must defer to the greater church’s resolution.

The justices were not persuaded by the "we built it,we own it," argument:

Defendants state that, over the years, St. James Parish “purchased additional parcels of property in its own name, with funds donated exclusively by its members.” They contend that it would be unjust and contrary to the intent of the members who, they argue, “acquired, built, improved, maintained, repaired, cared for and used the real and personal property at issue for over fifty years,” to cause the local parish to “los[e] its property simply because it has changed its spiritual affiliation.” But the matter is not so clear. We may assume that St. James Parish’s members did what defendants say they did for all this time. But they did it for a local church that was a constituent member of a greater church and that promised to remain so. Did they act over the years intending to contribute to a church that was part of the Episcopal Church or to contribute to St. James Parish even if it later joined a different church? It is impossible to say for sure. Probably different contributors over the years would have had different answers if they had thought about it and were asked. The only intent a secular court can effectively discern is that expressed in legally cognizable documents. In this case, those documents show that the local church agreed and intended to be part of a larger entity and to be bound by the rules and governing documents of that greater entity.

And:

As stated in one of the out-of-state cases involving the same Episcopal Church, “[t]he individual defendants are free to disassociate themselves from [the parish and the Episcopal Church] and to affiliate themselves with another religious denomination. No court can interfere with or control such an exercise of conscience. The problem lies in defendants’ efforts to take the church property with them. This they may not do.” (Protestant Episc. Church, etc. v. Graves, supra, 417 A.2d at p. 25.)