California judge must reconsider effort to block Catholic diocese libel suit, appellate court rules

The legal wrangling stems from an email sent by a former Catholic charity official accused of defaming California Bishop Kevin Vann.

A trial court must reconsider its denial of a motion to block a libel suit stemming from an email allegedly containing a false insinuation that Diocese of Orange Bishop Kevin Vann used Orange Catholic Foundation funds to cover legal expenses for clergy accused of child sex abuse, a state appellate court has ruled.

Suzanne Nunn, former interim executive director of the foundation, sent the email to 47 Catholic leaders throughout the country after Vann unilaterally terminated her and the organization’s board of directors in June 2020.

In the three-page email that bore the subject line, “You can’t make this stuff up,” Nunn asked a series of rhetorical questions regarding her firing and that of the board.

“Is this considered a hostile take-over to distribute funds the diocese needs to cover debt? Lawsuits?”  she asked, according to the appellate court. “Is this an overstep of authority? Is this the result of fatigue from the economic impact of the COVID crisis in addition to other financial stress? No one knows, it certainly was not shared or discussed prior to the removal of the foundation board.”

The foundation’s former board members reported Vann to the Holy See for allegedly acting beyond his authority and violating state and church law.

Vann and the diocese’s chief financial officer, Elizabeth Jensen, sued Nunn for libel and emotional distress, alleging the email implied they had committed a crime and engaged in unethical activities.

Nowhere does the email state that the bishop and Jensen planned to use Orange Catholic Foundation funds to litigate sexual abuse claims, according to the appellate court.

Vann and Jensen allege Nunn sent the email to repair her damaged reputation and increase potential job prospects with other Catholic institutions. They demanded that Nunn issue a retraction, but she did not respond.

Nunn filed a motion to strike the libel suit under California’s Strategic Lawsuits Against Public Participation, or anti-SLAPP, statute.

The statute, enacted by the state legislature in 1992, aims to protect defendants from meritless lawsuits that arise from protected activities such as the right to petition and engage in free speech.

Orange County Superior Court Judge Frederick P. Horn denied Nunn’s anti-SLAPP motion to dismiss the libel suit after finding the complaint did not arise from protected activity.

Court disagrees with trial judge

Last week, California’s Fourth District Court of Appeal disagreed with that ruling.

Nunn’s email addressed several issues impacting the public, including Vann’s alleged attempt to access millions of dollars in donations despite donor agreements restricting the use of those funds as well as his purported “take over” of the Orange Catholic Foundation’s board of directors, the court concluded.

Neither Nunn nor her attorney could be reached for comment. Vann declined to discuss the appellate decision.

“However, the well-developed factual record speaks for itself, and Bishop Vann looks forward to receiving the trial court’s decision in the near future,” Jarryd Gonzales, a spokesperson for the Roman Catholic Diocese of Orange, said Tuesday.

Jensen’s attorney, Andrew Prout, also declined to comment.

The nonprofit Orange Catholic Foundation was established in 2000 to support the philanthropic and charitable goals of Orange County’s Catholic community. It manages millions of dollars in charitable gifts, grants, donations, endowments and bequests, and uses funds to support Catholic charities, ministries, parishes and schools.

Many of the foundation’s donors earmark contributions for specific purposes and funds are distributed in accordance with each donor’s desire.

“Orange Catholic Foundation exists in large part to support the diocese in fulfilling its mission, which includes helping the needy,” the court said, adding it is fully independent of the diocese and is governed by an autonomous board of directors.

Vann, as the foundation’s sole member, has the authority to remove any board member who fails to act in accordance with the organization’s bylaws.

Diocese asks foundation for funds

As the COVID-19 pandemic began to rage In March 2020, forcing the shutdown of Catholic schools and worship services and prompting a drop in tuition payments and collections, Jensen asked the foundation to provide $12 million to offset a working capital deficit at the diocese, according to the court.

“Nunn declined the request and explained that Orange Catholic Foundation did not have any undesignated funds,” the court said. “According to Nunn, Jensen replied that Orange Catholic Foundation had buckets of money.”

Three days after the request, Jensen purportedly sent a letter to the foundation’s chairman asking for about $2.6 million from endowment funds to cover the financial needs of parishes and schools in light of the “unprecedented times.”

The foundation declined the diocese’s request for funds, but in April 2020 agreed to allocate $1.5 million to support churches and schools most impacted by the pandemic shutdown, said the court.

Two months later, Vann held a Zoom meeting with the Orange County Foundation’s executive committee. However, what transpired during the meeting is in dispute, the court said.

The bishop claimed that he expressed disappointment in delays in the search for a permanent executive director and the lack of progress in establishing a strategic plan for the foundation.

However, Nunn alleges Vann told the executive committee she was a liar, had caused irreparable damage by refusing to invade endowment funds and demanded that she be fired.

Board fired without warning

On June 19, 2020, Vann fired the foundation’s entire board without notice and then appointed a new board, which terminated Nunn’s contract and appointed a new interim executive director. The new board also began efforts to hire a permanent executive director.

The appellate court has remanded Nunn’s anti-SLAPP motion to Orange County Superior Court.