The following comes from a December 17 Los Angeles Daily News article:
A judge will hear further arguments before deciding whether to dismiss a $250 million lawsuit alleging the Archdiocese of Los Angeles broke deals under which a funeral home company leased land at six Catholic cemeteries for its operations.
According to the lawsuit, S.E. Funeral Homes spent about $37 million building funeral homes, chapels, mausoleums and administrative offices on leased land at All Souls Cemetery in Long Beach, Calvary Catholic Cemetery in East Los Angeles, Holy Cross Cemetery in Culver City, Queen of Heaven Cemetery in Rowland Heights, San Fernando Mission Cemetery in Mission Hills and Santa Clara Cemetery in Oxnard.
In September 1997, the archdiocese and S.E. Funeral Homes agreed to let the plaintiffs lease land for 40 years to operate chapels and funeral homes at the six cemeteries from January 1998 until December 2038, the suit says.
In September 2014, the archdiocese notified the plaintiff that it was breaking the leases, saying S.E. Funeral Homes’ corporate parent, Stewart Enterprises Inc., agreed to a reverse merger transaction with Service Corp. International without getting their landlord’s permission, the suit alleges.
Archdiocese attorney Stephen Alexander said previously that his clients did not breach the contract.
“We believe our consent was required for a change in control,” Alexander said. “This was a very specific written contract negotiated by the parties.”
The lawsuit states that no such consent was needed if there was an ownership change by the funeral homes.
“The archdiocese’s claim that (S.E. Funeral Homes) needed the archdiocese’s permission is ridiculous, a fiction much like one a greedy landlord designs to cast out a good tenant in order to raise the rent or to put pressure on a lucrative business deal to sweeten the lease’s financial terms,” the suit alleges.
I actually worked for some years for the parent funeral/cemetery company of Stewart, “SCI” (Service Corp Intnl), which is a NYSE traded company, and in my opinion, a quite mercenary organization (and why I eventually left them). They started out in the 60’s as a family-run outfit with commendable ideals and lowered prices: but since then, aggressive and opportunistic sales practices, in my opinion, have trumped concern for families at the time of death.
This suit actually came to light in Sept. 2014, with the over-the-top language by Stewart’s attorneys accusing the LA Arch of being “greedy landlords”: but one should note that in May 2015, most of the claims by Stewart were thrown out by the presiding judge. All contracts by cemetery organizations I know of have cancellation-of-agreement if ownership changes hands without consent of the landowner: this cannot be the exception. So LA Arch is protecting their faithful, in my view.
Now Stewart is down to collecting the disputed $37 million for the alleged improvements they have made—some settlement will probably be worked out, but the key thing is (and I agree with LA Arch), you don’t want SCI running Catholic funeral homes and…
cemeteries, as one who used to work for them and saw them change.
Here is a summary in May of Stewart’s virtual loss of the suit:
https://www.dailynews.com/general-news/20150506/catholic-church-gets-the-edge-in-funeral-home-lawsuit
George-
What is the impact of all of this on those who own a plot or mortuary space…and those who have prepaid Stewart for funeral arrangements but have not died yet ?
cjo,there is not too much to worry about, regarding those who already existent pre-paid cemetery and funeral pre-need contracts: The contracts and their funds, by CA law, are actually in the control of a 3rd-party trust, regulated and guaranteed by the state of CA.
The owner of the contract is really either the beneficiary or their next-of-kin, not the funeral corp. When a facility, such as a funeral home or a cemetery, changes hands, the new corp must honor in full all outstanding pre-need arrangements. However, the beneficiary is free to go elsewhere if they wish, but they should obtain a written price-guarantee from the new facility or cemetery.
My understanding is that SCI already has its own funeral homes and cemeteries in the LA basin. If true, than an arrangement where it runs the archdiocesan cemeteries is crazy: it is as if Lucky had hired Safeway to conduct the management of Lucky’s stores. Bizarre!
FrMichael is correct – except that for the Church, as well-practiced in “end of life services” as it is, to subcontract to SCI would be more like A&P contracting its groceries to Sam’s Corner Liquour and Guns.
This awfulness of this deal was reported in the Los Angeles Lay Mission at the time. It was just another one of Bishop Mahoney’s up-front-cash grabs that financed the cathedral. Its going is good news.