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PASTOR GENERAL'S REPORT, January 25, 1980
Page 8
Court rules require opposition pleadings to be filed no later than 3 court
days before a hearing. Perhaps not wishing to break precedent and actually
observe a local court rule, the Attorney General's office complained at the
May 30th hearing that they had misplaced their copy of the moving papers
and hadn't discovered their carelessness until it was too late to file a
response. Judge Johnson, after chiding them for not taking the case as
seriously as they should, had pity on them and granted them an unusual
extension of time in which to respond. Their response was remarkable for
its unresponsiveness, and on June 15, 1979, the second demurrer was ap
proved by the court. Again, the State was given 30 days leave to amend.
The Second Amended Complaint was finally filed (again late) on July 30,
1979. By this time the accounting firm's malpractice insurance carrier
had finally decided to retain separate counsel to protect its two million
dollar exposure, and the new attorneys, unfortunately, requested an
extension of time in which to answer the new complaint. On September 11,
1979, after convincing the insurance company lawyers that it was the best
to do so, Palazzo & Kessler filed a new demurrer and set it for argument
on September 25.
When the third successive demurrer was finally accepted by the court on
November 15, 1979, (again with 30 days for the Attorney General to try to
restate the case against the accounting firm!) the court's order stated:
"This should be final attempt by plaintiff [the State]." On December 4,
1979, rather than amending its complaint, the State submitted a written
motion for December 19, wherein they attempted to persuade the court that
its earlier rulings on the demurrers were wrong. The court was not impress
ed, denied the motion, yet surprisingly gave them yet another 30 days to
file an amended complainttt
Thus, after the Attorney General failed to meet even this extended d�cta.i.i.11e,
the stage was set at last for the ex parte "motion to dismiss." Although the
Attorney General's office was extended the courtesy of four hours notice,
they chose not to appear. Judqe Johnson refused to hear the matter (even
though he now sits in the department where ex parte matters are heard).
But Mr. Palazzo found a Commissioner who would hear the motion, and after
considering the chronology of events, he granted it.
So what does this all mean? First, only the accounting firm (Rader,
Cornwall, Kessler and Palazzo) represented by Messrs. Palazzo and Kessler
is out of the case. Second, even though the dismissal arose strictly from
pro�edural grounds, it has the same force and effect as a verdict after
trial. Third, the Attorney General will undoubtedly appeal the verdict.
But the standard of review in this case requires that if there is any
defect in the State's complaint that could.have been cured by an amendment
(a rewording of the suit), then the verdict will stand and there is no
chance to amend. Fourth, because the accounting firm is now finally out
of the case (State of California vs Worldwide Church of God), it can pursue
a federal court action and not run into the "abstention doctrine"* that
federal judges Firth and Waters interposed upon the Church, since there is
no ''concurrent state court proceeding wherein the same issues could be
raised." Fifth, and perhaps most importantly, in a suit for "an account·
ing" it is more than a little strange that the State is unable to present
a case against the accountants. If their reports have already been admitted
into evidence (and they have), it seems silly for the State to keep insist
ing that they still need a "true accounting" of the Church's affairs so