Rev. Robert Schuller Loses Crystal Cathedral Bankruptcy Appeal

In 1955, the Rev. Robert Schuller established Garden Grove Community Church in an old drive-in theater in Orange County, California. Over the next 50 years, the "community" church became a megachurch called Crystal Cathedral, from which Schuller broadcast a show called "Hour of Power." At its height, "Hour of Power" was seen by 1.3 million people in 156 countries, according to The Huffington Post.

That all changed in 2010 when Crystal Cathedral filed for bankruptcy in the face of a $36 million mortgage and $7.5 million it owed to different vendors. In 2011, Crystal Cathedral got some help from the sale of its 40-acre property to the Catholic Church diocese in Orange County.

To Bankruptcy!

But wait, there's more! In 2012, Schuller himself became a bankruptcy creditor, filing a claim against Crystal Cathedral for $5 million for the use of his intellectual property. He claimed he owned the rights to books and the "Hour of Power" show. A judge, however, awarded the Schuller family only $700,000. Schuller appealed.

In an unpublished opinion Monday, a three-judge panel of the Ninth Circuit affirmed the bankruptcy award.

One of Schuller's claims against Crystal Cathedral was breach of contract. The Ninth Circuit, however, concluded that Schuller was an employee and the contract in question was an employment contract. Not so good for Schuller because bankruptcy law places a cap on damages employees can get from bankruptcy.

The court also affirmed the bankruptcy court's decision that Crystal Cathedral didn't owe Schuller for the use of his likeness or other intellectual property.

Want to spend more time practicing, and less time advertising? Leave the marketing to the experts.

Judge Reinhardt, Dissenting

Judge Stephen Reinhardt dissented because he believed Schuller was a retiree, not an employee.

The contract in question -- styled "Transition Agreement" -- is a retirement contract, Reinhardt said. The agreement allowed Schuller to continue working with Crystal Cathedral after he retired. His new roles -- "fund-raising 'as his interest and time permit,' chairing the board, and serving as 'roving Ambassador' for Crystal Cathedral Ministries -- are more akin to an emeritus status than an employment relationship," Reinhardt wrote.

In spite of the agreement, however, things seemed testy between Schuller and what remained of his church. In November 2012, he and his wife resigned from the board of directors when they and the church couldn't agree on some of the very intellectual property disputes at issue, reported Southern California Public Radio.

According to the Orange County Register, Schuller plans to petition for an en banc rehearing at the Ninth Circuit or take the case to an even higher power: the U.S. Supreme Court.

Related Resources:

• Lasting Tributes Meet Early End in Bankruptcy (The New York Times)
• The Crystal Cathedral Becomes Christ Cathedral (National Catholic Register)
• Anna Nicole Smith's Bankruptcy Legacy; Case Outlives Most Parties (FindLaw's U.S. Ninth Circuit Blog)
• Interpretation of Bankruptcy Homestead Exemption, and Criminal Matter (FindLaw's U.S. Ninth Circuit Blog)