Missouri Baptist Convention (MBC) officials finally admitted to a lawsuit settlement that they failed to report to members after more than eight months of secrecy.
Instead of dealing with the MBC's secrecy, The Pathway argued that the MBC did not settle the case, but that "an insurance company decided unilaterally to make a settlement payment." (File photo)
The admission followed an EthicsDaily.com exposé on Monday detailing the settlement.
MBC's admission was couched in inaccurate attacks on EthicsDaily.com.
Late last fall, the estate of the late businessman William Jester reached a $500,000 settlement with the MBC.
Jester, who died in June 2010, filed a counterclaim against the MBC in 2008 after the MBC sued him and several of his businesses in 2006. Jester's suit accused the MBC of working to block his construction plans on land he purchased from Windermere Baptist Conference Center (WBCC), one of five Missouri Baptist ministry organizations the MBC sued in 2002.
Jester's suit accused MBC leaders of making derogatory statements about his business in the MBC's official publication, The Pathway.
EthicsDaily.com's July 8 news story noted that legal documents indicated a settlement was reached by October 2012 and finalized by early November 2012.
However, despite years of claiming Jester's counterclaim had no merit, MBC leaders failed to inform members of the settlement.
The Pathway posted on July 9 a piece accusing EthicsDaily.com of being "grossly inaccurate" and having "misrepresented numerous facts and maligned the motives of Missouri Baptist Convention leaders."
The Pathway piece was MBC's first public admission of the settlement. It did not dispute the key issue in the EthicsDaily.com report – that MBC leaders failed to tell its members about the settlement.
Neither the anonymous author of The Pathway piece nor MBC Communications Director Rob Phillips, who was quoted in the piece, denied that the MBC failed to inform its members. Nor did they explain why the settlement news had remained secret.
When asked by EthicsDaily.com why the news of the settlement had not been disclosed by MBC leaders last fall, Phillips called it "a fair question" but referred the matter to Michael Whitehead, the MBC's lead attorney.
Whitehead's office informed EthicsDaily.com that he was out of the office until next week.
While details of the counterclaim settlement were sealed, MBC leaders would have been able to report that a settlement existed as long as they did not mention the terms of the settlement.
Since the seal on the records still exists, the fact that the MBC now admits there was a settlement suggests they could talk about it publicly.
Instead of dealing with the MBC's secrecy, The Pathway argued that the MBC did not settle the case, but that "an insurance company decided unilaterally to make a settlement payment."
"MBC leaders disagreed with the settlement payment, but had no control over it under the terms of the policy," the piece dubiously claimed.
When asked by EthicsDaily.com if an MBC official signed a release to accept the settlement and end the counterclaim, Phillips suggested the question be posed to Whitehead.
EthicsDaily.com news report that the MBC offered and settled the counterclaim came from an Oct. 2, 2012, legal bankruptcy court document.
Bankruptcy court document proceedings on Oct. 31 and Nov. 21, 2012, indicated the court's acceptance of the settlement terms. The phrase "Counterclaim Defendants" in the documents referred to the MBC, not the insurance company.
"Counterclaim Defendants made the same settlement offer at a formal mediation ten months ago (November 2011) and have refused to subsequently increase their offer," the first document explained. "The Counterclaim Defendants will pay the sum of $500,000 to settle the counterclaims of the Counterclaim Plaintiffs."
The document did note that the MBC leaders did not agree with the insurance company's desire to settle on these terms – as The Pathway piece argued – but the settlement was still legally treated in the documents as the MBC's with a clear distinction made between the MBC as the "Counterclaim Defendants" (with whom the settlement was made) and the insurance company.
The Pathway failed to name the insurance company, GuideOne Insurance, offering only generic references. However, the MBC's 2011 Annual included a reference to GuideOne in the MBC's financial statement.
"MBC has tendered the defense of the counterclaim to its insurer, GuideOne," the report explained. "The Executive Board has accepted the provision of a defense."
The Pathway piece claimed that the MBC did not pay any of the settlement amount, which often occurs in such situations since insurance companies cover much, if not all, of a settlement.
The Pathway asserted that "no MBC funds have ever been spent on settlements" in the case. The piece did not note, however, if the settlement will result in higher future insurance premiums or put the MBC at risk of being dropped by its insurance company.
GuideOne is the MBC's second insurance company during its more than decades-long legal battle.
The MBC's first insurance company, Church Mutual, dropped the MBC at the end of 2004 amid disputes between the insurance company and the convention over the lawsuits.
GuideOne and Church Mutual are two of the three primary insurance companies that insure churches and parachurch organizations.
Even if GuideOne paid the full settlement amount, it is still treated in bankruptcy court documents as from the MBC.
For instance, an April 3, 2013, document indicated that on Nov. 14, 2012, the Windermere Development Co.'s bankruptcy account received $170,111.28 from the "Missouri Baptist Convention" (the amount equals 50 percent of the settlement after attorneys' fees and litigation costs, with the other 50 percent going to Jester's estate). The same details were included in a June 4, 2013, court filing.
The Pathway's omission of its insurance company's name followed its pattern of not disclosing information about the Jester counterclaim. In fact, The Pathway piece did not even mention Jester by name, offering only passing allusions to "a deceased developer's probate and bankruptcy estates" and "one of the defendants in the Camden County case."
Rather than referring to Jester, The Pathway instead repeatedly referred to the case as one involving WBCC, even though WBCC was not a party in the settled counterclaim.
The Pathway referred to the Jester counterclaim as "the legal case involving Windermere Baptist Conference Center and the MBC" and "the WBCC case." The last half of the article left the issue of the Jester settlement to solely address matters related to WBCC.
Prior to The Pathway piece, the trustees of WBCC issued an open letter to Missouri Baptists citing the EthicsDaily.com article about the settlement of the Jester counterclaim.
The letter warned MBC leaders to end its lawsuits against WBCC or potentially face a counterclaim from WBCC.
"Windermere's Board wants to be clear: our desire is to resolve this matter without further litigation by any of the parties," the letter explained.
It read, "Certainly, any discussions on ending the litigation would protect the convention from the threat of further legal action. We believe the various issues can be resolved in a manner that benefits all Missouri Baptists. However, should this litigation continue, Windermere's Board has legal and fiduciary duties to take action to protect the organization from these continued expenses and injuries."
Brian Kaylor is a contributing editor for EthicsDaily.com and an editorial assistant for Churchnet.
Editor's note: Kaylor's initial column on the MBC settlement can be found here.