Court: Rev. Schuller was 'employee' of Crystal Cathedral, won't collect millions

Appeals court panel upholds earlier rulings that says church founder should be awarded $615,625, not millions.

Orange County Register/August 6, 2014

By Chris Haire

The Rev. Robert H. Schuller was an employee of Crystal Cathedral Ministries – the Garden Grove church he founded and helped grow to worldwide recognition – and thus is not guaranteed the millions of dollars that he says the church owes him for breach of contract, an appeals court ruled.

On Monday, three-judge panel for the 9th U.S. Circuit Court of Appeals affirmed the judgments of district and bankruptcy courts in deciding how much the ministry owes Schuller and his family. The ruling was 2-1. Schuller was awarded a much smaller amount in 2012 by the lower court – $615,625.

When Schuller retired in 2010, he entered into an agreement with the ministry that would compensate him for the rest of his life. He would also continue his role as ambassador to the ministry as part of the agreement. But all payments stopped after Crystal Cathedral entered bankruptcy.

Schuller and his family filed a number of claims in bankruptcy court, including a $5 million claim for breach of contract and another for copyright infringement for using his likeness.

But the bankruptcy court, the U.S. District Court and now the appellate panel have all ruled that the original contract Schuller signed was an employment agreement. That means, with its termination, his compensation was capped at one year.

“The bankruptcy court did not err in subjecting Schuller’s claim to the one-year cap (under federal law),” stated the majority decision by two judges, Harry Pregerson and Jacqueline H. Nguyen. “(The law) limits ‘the claim of an employee for damages resulting from the termination of an employment contract’ to ‘the compensation provided by such contract, without acceleration, for one year.’”

The dissenting judge, Stephen R. Reinhardt, argued that the contract was a retirement agreement and that payments should continue.

“The principal purpose of the agreement was to provide for Schuller’s retirement from his position as senior pastor while defining the kind of relationship he would have with Crystal Cathedral Ministries,” Reinhardt wrote. “There is no indication that Crystal Cathedral Ministries could require Schuller to perform any tasks, as one would expect in a contract for ongoing employment.”

Schuller and his family argued that the reverend was never an employee of the church, but rather a “visionary” who gave everything he had to it, said Carol Schuller Milner, the reverend’s daughter and family spokeswoman.

The church, she said, made millions of dollars off his books because Schuller requested only a minimal licensing fee and no royalties.

“He shouldn’t be penalized for maintaining a relationship with the church,” Milner said. “The entire premise (of the majority) is completely wrong. It’s painful that we feel comfortable doing this to those who came before us.”

Milner said she is unsure if the case would go to the next level, which would require asking the full 9th Circuit to hear the case or appealing to the Supreme Court. The cases and financial uncertainty have taken a toll on Schuller, who is 87 and has had a number of health problems recently, Milner said.

“Even though he’s happy, he’s penniless,” Milner said. “He has no assets. His house is fully mortgaged. Medi-Cal takes all of his Social Security. It hurts that he was abandoned by people who he served faithfully and loved.”

Crystal Cathedral’s ministry is now known as Shepherd’s Grove, which now holds services at a smaller building. Its representatives could not be reached for comment.

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