Elliot Evans, Eric Chen & v. Shean Wang

Opinion issued January 8, 2004

In The

Court of Appeals

For The

First District of Texas

NO. 01-02-01005-CV

ERIC CHEN AND ELLIOT EVANS, Appellants

V.

MICHAEL TSENG, Appellee

On Appeal from the 189th District Court

Harris County, Texas

Trial Court Cause No. 2001-60670

MEMORANDUM OPINION

This is an appeal of a judgment declaring, among other things, that (1) various

purported board members were not duly and lawfully elected as members of the board of

directors of Chong Hua Sheng Mwu Gwung Committee, Inc. (the Corporation), a corporation

organized under the Texas Non-Profit Corporation Act;

(2) appellant Eric Chen was never

duly and lawfully elected as a member of the board of directors of the Corporation; (3) Chen

and co-defendant Elliot Evans had no legal right to reside in the temple, but were entitled to

visit and worship in the temple; (4) any actions taken by Chen or Evans on behalf of the

Corporation were performed without authority and were null and void ab initio ; and (5) the

only remaining directors of the board of directors were appellee, Michael Tseng (Tseng), and

Lienti Jen.

The judgment also permanently enjoined Chen and Evans from usurping the

rights, powers, and duties of Tseng as a director and officer of the Corporation, disturbing

the orderly worship in the temple, using or threatening to use force or violence against the

plaintiffs or members of the temple, assuming or attempting to perform any duties as officers

of the Corporation, taking any of the Corporation’s documents, assuming physical control

of the temple premises, and using or attempting to use the temple property as collateral or

encumbering or attempting to encumber the temple property in any manner. The judgment

awarded the Corporation $95,268.86 in damages for conversion of funds from the

Corporation’s bank account and attorney’s fees in the amount of $150,000 for trial, $30,000

if appealed to the court of appeals, and $15,000 if appealed to the Texas Supreme Court. The

damages and attorney’s fees were awarded against Chen and Evans jointly and severally. A

take-nothing judgment was rendered on Chen’s and Evans’s counterclaims.

In three issues,

Chen contends that the trial court erred (1) in finding that the Corporation was governed by

its bylaws rather than the Patriarch’s religious authority, (2) in appointing Tseng and Lienti

Jen as directors of the Corporation, and (3) in violating the Corporation’s and Chen’s rights

to religious freedom under the First Amendment to the U.S. Constitution and the Texas

Religious Freedom Act.

Chen does not challenge the damages or attorney’s fees awarded

to the Corporation. We affirm.

BACKGROUND

The Corporation

This is a dispute among certain followers of the Tien Tao religion, an ancient belief

system with its roots in China. These followers believe in a supreme being, Lao Mu, and,

until his death, recognized Fat Fan Cheung as Patriarch Qian Ren, or The Master.

In October 1992, some members of the Tien Tao religion formed the Corporation for

the purpose of building a temple in Houston, Texas. The incorporators and initial members

of the board of directors were Tseng, Lienti Jen, and Charles Chen. According to the bylaws

of the Corporation, an annual meeting of the members of the Corporation was to be held on

the second Tuesday of December of each year for the purpose of electing directors and for

the transaction of other business, and the directors elected at the annual meeting were to hold

a meeting within 30 days after the annual meeting for the purpose of electing officers and

transacting other business. The bylaws provided that directors would hold office until the

next annual meeting of the members and until a successor was elected, and vacancies could

be filled by a vote of a majority of the remaining directors at any regular or special meeting.

A director so chosen was to hold office until the next annual meeting of the members. A

director’s resignation was to be effective upon written notice delivered to the chairman of

the board, president, secretary, or board of directors, unless the notice specified a later time.

A meeting of the members was held on July 18, 1993. At that meeting, the members

elected 18 directors, and the directors elected officers, including Tseng as secretary and

Bettina Tseng as treasurer. In conducting the affairs of the Corporation, the directors and

officers consulted with Qian Ren, kept him informed about the Corporation’s affairs, and

generally followed any instructions he gave. However, Qian Ren traveled often, and the

board of directors conducted the business of the Corporation.

In 1995, Eric Chen, who had been a follower of Qian Ren since 1991, left his job to

devote his full time to Qian Ren. Chen lived and traveled with Qian Ren and served as an

assistant. In 1998, Tseng, who had been supervising the building of the temple, asked Qian

Ren for help because his responsibilities as director were interfering with his full-time work.

Qian Ren appointed Chen to assist Tseng. Qian Ren died in March 1999.

In May 1999, Chen had Bettina Tseng add Chen’s name as a signatory to the

Corporation’s bank account. In June, Chen and some others “reorganized” the Corporation,

and Chen became president. Chen filed a report with the Secretary of State naming himself

as president of the Corporation, Tseng as vice-president, Bettina Tseng as treasurer, John

Tong as administrator, and Elliott Evans as Secretary. In that report, Chen named himself

as the registered agent of the Corporation and gave his address as that of the temple, in which

Chen was living at the time.

Chen transferred $1,000 from the Corporation’s bank account to a money market

account in the Corporation’s name, with Chen as the only signatory. He later added Tong

as a signatory to the account. Over time, Chen transferred as much as $1,000,000, and

possibly more, from the original account to the money market account.

On January 11, 2000, a meeting of the members was called without any written notice.

At that meeting, the Tsengs, who were not present, were removed from office and a new

board and new officers were elected. Chen sent a letter to Tseng, informing him that his

office of vice-president had been eliminated. Chen sent a letter to Bettina Tseng informing

her that her services in the position of treasurer were no longer needed. On January 15, John

Tong, for Wu-Wei Tien Tao Association (Wu-Wei),

executed a promissory note in favor of

the Corporation for $95,268.86. Tong, as treasurer for Wu-Wei, and Chen, as president of

the Corporation, signed an agreement that this money would be used to buy real property for

use by the Corporation to hold classes and perform activities until the temple was completed.

After the property was purchased, several members of Wu-Wei used it as a residence.

In March 2000, Chen filed a report with the Secretary of State showing Chen as

president, Tong as treasurer, and Evans as Secretary. In December 2000, Chen filed an

amendment to the articles of incorporation with the Secretary of State, changing the name

of the Corporation to Chong Hua Sheng Mu Gong. In November 2001, a report to the

Secretary of State listed eight officers of the Corporation, including Chen as secretary and

Tong and Evans as officers.

In January 2002, Tseng, Bettina Tseng, and Shean Wang, all acting as directors of the

Corporation, called for a special meeting of the board of directors to discuss corporate

governance issues.

Tseng, as board secretary, gave notice of the meeting to the 18 directors

elected at the July 1993 meeting. The meeting was held on January 23, 2002, and new

officers were elected, including Tseng as vice-president and Bettina Tseng as treasurer. At

this meeting, Lienti Jen and two other directors resigned, conditioned on the effective

election of their replacement. Three new directors were elected to fill the vacancies.

The Lawsuit

In November 2001, Shean Wang, Alex Luk, Bettina Tseng, and Tseng, as members

of the board of directors, and Agatha Yang, as a member of the Corporation, sued the

Corporation and Chen and Evans individually. The plaintiffs alleged that, in 1999, Chen and

Evans exercised unlawful domination over the Corporation and refused to allow the plaintiffs

access to the temple or the corporate records. Plaintiffs requested temporary injunctive relief

ordering Chen and Evans to provide the corporate documents and financial records to

plaintiffs and to remove Chen and Evans from any position of authority and control of the

Corporation. Plaintiffs also requested a hearing for permanent injunctive relief.

Plaintiffs’ amended petitions requested a permanent injunction; declaratory relief

regarding the validity of various elections and appointments and regarding the validity of

actions taken by Chen; actual damages for conversion, trespass, and conspiracy; exemplary

damages; and attorney’s fees. In addition, the parties were realigned so that the Corporation

became a plaintiff. After a four-day bench trial, the trial court gave the plaintiffs declaratory

relief, declaring that the elections of the board members and officers in 1993 and 2002 were

not lawful; that Chen, Evans, Tong, and Scott Milhoan had never been duly and lawfully

elected as directors or officers of the Corporation; and that Tseng and Jen, as the only

remaining directors of the original board, had the sole authority to be signatories on the

Corporation’s bank accounts.

The trial court also enjoined Chen and Evans from usurping

the duties of Tseng as a director or in any other way taking control of the Corporation. The

trial court awarded monetary damages and attorney’s fees to the Corporation against Chen

and Evans.

DISCUSSION

Pending Motions

Chen has filed with this Court a motion for contempt to enforce the final judgment.

Chen requests that Tseng be held in contempt for not allowing Chen and those aligned with

him access to the temple on certain religious festival days and limiting access to certain days

and times. With respect to Chen’s access to the temple, the final judgment provides, “At this

time, Elliot Evans and Eric Chen are entitled to visit and worship in the Temple.” The

judgment does not include any order requiring that Tseng give Chen access on particular days

or at particular times. Chen’s motion concedes that he has been given times for access to the

temple. Chen’s complaint that “no other unauthorized siblings” will be allowed in the temple

is without merit. The judgment only states that Chen and Evans may visit and worship in the

temple. Because Tseng has given Chen access to the temple, he cannot be held in contempt

of court. We deny Chen’s motion for contempt. We also deny Tseng’s motion for sanctions

and motion to strike Chen’s exhibits.

Any other pending motions are denied as moot.

Chen’s Appeal

Chen does not challenge the monetary judgment or injunctive relief. In addition, Chen

does not challenge the trial court’s findings that the board members elected in 1993 and in

2002 were not legally elected or that Chen and others were never elected. However, he

contends that the legal authority reverts not to the original directors but to the religious

authority, which he claims to possess through appointment by Qian Ren.

Corporate Governance

In his first issue, Chen contends that the trial court erred in finding that the

Corporation was governed by its bylaws rather than by the Patriarch Qian Ren’s religious

authority. Chen argues that, although the trial court correctly found that the board members

elected or appointed between 1993 and 2002 did not have legal authority under the bylaws,

the members and directors had waived the bylaws and were estopped to enforce the bylaws

by acquiescing to the religious authority of Qian Ren.

The trial court filed findings of fact and conclusions of law. The trial court made no

findings of fact relating to the issues of waiver or estoppel. If a trial court’s original findings

do not include any findings on a party’s defense, the party relying on that defense must

request additional findings of fact or the defense is waived. Texmarc Conveyor Co. v. Arts ,

857 S.W.2d 743, 747 (Tex. App.—Houston [14th Dist.] 2000, no pet.).

Chen argues that his proposed findings of fact, which were filed before trial, should

be deemed as prematurely filed, thereby preserving his complaints of waiver and estoppel.

He cites no authority to support his implied contention that a prematurely filed request for

findings of fact may be deemed a prematurely filed request for additional findings of fact.

Rule 298 of the Rules of Civil Procedure provides, “After the court files original findings of

fact and conclusions of law, any party may file with the clerk of the court a request for

specified additional or amended findings or conclusions.” Tex. R. Civ. P. 298. A party

cannot know what specific additional findings and conclusions may be required until after

the court has filed its original findings and conclusions. We conclude that the request for

additional findings of fact must be filed after the trial court files its original findings of fact.

See Balderama v. Western Cas. Life Ins. Co. , 794 S.W.2d 84, 89 (Tex. App.—San Antonio

1990) (holding trial judge not required to file additional findings of fact and conclusions of

law when request made before filing of original findings and conclusions), rev’d on other

grounds , 825 S.W.2d 432 (Tex. 1991). Because Chen did not file a request for additional

findings and conclusions, he has not preserved his complaints regarding waiver and estoppel.

Accordingly, we overrule Chen’s first issue.

The Remaining Directors

In his second issue, Chen contends that the trial court erred in appointing Tseng and

Jen as directors of the Corporation. Under this multifarious issue, Chen also complains that

the trial court named only two directors, that there was no evidence that Tseng and Jen were

current members of the Corporation, that there was no evidence that Tseng and Jen had the

support of the majority of the members, and that the trial court erred in finding Jen had not

resigned when it found that Charles Chen had resigned.

The trial court did not appoint directors. The trial court found, in effect, that all

directors elected at the meetings of the members in 1993 and 2002, and the individuals who

were otherwise named as directors in the time between those two meetings, were not elected

as directors in accordance with the bylaws and were, therefore, not duly and lawfully elected.

The trial court then found that Tseng and Jen were “the only remaining Directors of the

original Board of Directors.” We overrule Chen’s complaint relating to the appointment of

directors.

Chen complains that the trial court named only two directors, when both the bylaws

and the Texas Non-Profit Corporations Act require a minimum of three. The trial court’s

judgment does not preclude the designation of a third director as provided in the bylaws. We

overrule Chen’s complaint regarding the number of directors.

Chen asserts that there is no evidence that Tseng or Jen was a current member of the

Corporation. Chen does not challenge their membership in 1992 when they were two of the

original three directors. Membership lists for 1992 and 1993 were admitted into evidence

and showed that Tseng and Jen were members. Their membership in 1992 and 1993 is some

evidence of their continuing membership in the Corporation.

Chen contends that a letter from the Tsengs to Chen was conclusive evidence of

Tseng’s intent to resign. That letter stated,

Since when our Master passed away, we have never had any association with

any party or group within any Tien-Tao Association or CHSMG, Inc.

throughout the world. . . .

We decided to be an ordinary people. Please understand our little wish and

don’t disturb our peace any more. The language of our letters is plain, but our

hearts are clear and sincere.

At trial, Tseng testified that, in their faith, people should not associate with a small

group to rival another group, and that, in the letter, he was politely telling Chen that from his

point of view, Chen was gathering such a small group around him. He testified that he was

also saying that he and his wife were simple ordinary people, not perfect and not the holy

one. Tseng also testified that he did not submit a resignation to Chen.

We hold that Tseng’s letter to Chen is not conclusive proof that Tseng resigned from

the Corporation. We further hold that Tseng’s testimony is some evidence that he did not

resign. We overrule Chen’s legal insufficiency challenge to the trial court’s finding that

Tseng and Jen were the remaining directors.

We overrule Chen’s remaining complaints under this second issue. It was

unnecessary for the trial court to determine whether Tseng and Jen had the support of the

majority of the Corporation’s current members because the trial court was not asked to make

such a determination. The trial court’s implied finding that Charles Chen had resigned as a

director was supported by Charles Chen’s unconditional, written notice of resignation. In

addition, the trial court’s implied finding that Jen had not resigned as a director was

supported by Jen’s written resignation, which was conditioned on the election of his

replacement, and the trial court’s finding that the replacement was not lawfully elected.

Chen’s complaints regarding Tseng and Jen as remaining directors are without merit.

We overrule Chen’s second issue.

Religious Freedom

In his third issue, Chen contends that the trial court violated the Corporation’s and

Chen’s rights to religious freedom under the First Amendment and the Texas Religious

Freedom Act. Chen argues that (1) the judgment disregards the right of a hierarchical church

to govern its internal affairs and that the trial court incorrectly categorized the Corporation

as a congregational church; (2) the trial court found that Mu Yee, the “human descent” of the

supreme being Lao Mu, cannot live in the temple; (3) the judgment fails to preserve Chen’s

right to minister in the temple; and (4) the judgment permits the board to control the Tien Tao

religion.

The Corporation was aligned with the plaintiffs at trial and was awarded a money

judgment against Chen. A corporation can conduct business only through natural persons.

Household Credit Servs., Inc. v. Driscol , 989 S.W.2d 72, 82-83 (Tex. App.—El Paso 1998,

pet. denied). Chen is not an officer or director of the Corporation and does not have standing

to assert error on its behalf.

We therefore consider Chen’s third issue only as it relates to

him.

Trial courts are prohibited under the First Amendment from interfering in religious

or ecclesiastical matters affecting a religious organization. See Serbian E. Orthodox Diocese

v. Milivojevich , 426 U.S. 696, 708-09, 724-25 , 96 S. Ct. 2372, 2380, 2387-88 (1976). This

is true whether the organization’s governance is hierarchical or congregational.

However,

the civil courts have jurisdiction over matters involving civil, contract, or property rights as

long as neutral principles of law may be applied to decide the issues. Dean v. Alford , 994

S.W.2d 392, 395 (Tex. App.—Fort Worth 1999, no pet.).

The issues in this case involve property rights. Chen concedes that the trial court

applied neutral principles of law in interpreting and applying the Corporation’s bylaws.

These bylaws governed the Corporation, not the religious group. The trial court merely

applied the bylaws to make a determination of the validity of the selection of directors of the

Corporation.

Contrary to Chen’s argument, the trial court did not find that Mu Yee cannot live in

the temple. The temple had not been completed at the time of trial. The trial court found,

“No one has permission to live in the Temple.” That is not to say that, at a later time,

someone may not have such permission.

The final judgment neither preserves nor interferes with Chen’s right to minister in

the temple. The judgment recognized Chen’s entitlement to visit and worship in the temple.

However, a determination of who has the right to minister and to keep the altar is

ecclesiastical in nature, and the trial court had no jurisdiction to make such a determination.

Finally, Chen contends that, by giving the board the right to determine membership

in the Corporation, the trial court has given the board the right to control the Tien Tao

religion. Chen does not direct us to any finding of fact or conclusion of law that grants the

board the right to determine membership in the Corporation. Such membership is determined

according to the bylaws. Furthermore, the trial testimony established that membership in the

Corporation and membership in the Tien Tao religion are not coextensive. Therefore, even

if the board controls the corporate membership, it does not control membership in the

religious group.

We overrule Chen’s third issue.

CONCLUSION

We affirm the judgment of the trial court.

Sam Nuchia

Justice

Panel consists of Justices Nuchia, Higley, and Hedges.