Queen of Angels Hospital v. Younger

Queen of Angels Hospital (Queen) (plaintiff) was a charity formed in 1927 with ties to the Catholic Church and the stated primary purpose of operating a hospital. The Catholic Church’s own laws and Queen’s articles of incorporation also allowed Queen to perform a variety of medical-related charitable work. Nuns from a local religious order (plaintiff) worked at Queen for many years. The hospital began having financial difficulties, and Queen arranged a multi-million-dollar deal to lease its hospital assets to an outside entrepreneur, W.D.C. Services, Inc. (plaintiff). Queen planned to retain its outpatient clinic and convent facilities and to use the hospital-lease proceeds to open free outpatient clinics in needy areas around Los Angeles. With the Catholic Church and Queen giving up control of the hospital, the nuns approached Queen about being paid for their decades of past services. The parties compromised with a proposed deal that would give $200 per month in retirement benefits to all nuns in the order over the age of 70. The state attorney general (defendant) was responsible for monitoring a charity’s legal compliance. The parties to the lease and retirement agreements filed a lawsuit against the attorney general seeking a declaration that the agreements were valid. The trial court found that the lease agreement was valid but that the retirement agreement was not. Both sides appealed.