Most pastors at some point in their lives begin planning retirement and grooming a successor or teaching leaders how to search for one. Sometimes, however, someone else wants to impose retirement on the pastor. In churches that have a high turnover among their pastors, this presents no problem because the revolving door solves the problem. But, when a pastor has been on station a long time, and is not ready to step aside even though someone wants the pastor to do so, disputes arise.
In Gregorio v Hoover, Memorandum Opinion (DDC 2017), the denominational foundation loaned money to the local church and the denomination co-signed. The church in a side contract agreed to pay the loan and the denomination agreed to hold legal title until the loan was repaid or refinanced. Once the loan was retired, the denomination was expected to transfer legal title to the local church corporation. The payments were timely made by the local church and the loan was retired. The local church had no turnover in the position of pastor. The denomination paid a small stipend to the pastor but his income was for the most part earned from the local church. Two decades passed. The denomination stopped paying the small stipend to the pastor. Three years later the denomination advised the pastor of the local church he would retire because the denomination wanted to appoint “younger people” to take his place. The pastor declined and suggested the denomination had no authority to appoint or terminate the pastor of that particular local church. The denomination locked the pastor out.
The pastor withdrew the age discrimination claim probably because the pastor had not exhausted administrative remedies by filing a complaint with the federal EEOC and obtaining a right to sue letter. However, because the pastor was the founding pastor of the local church, the local church’s corporate identity was and had always been owned and controlled by the pastor. Thus, the pastor was able to keep his claim alive by suing the denomination for failing to transfer legal title after the loan was repaid. The pastor was able to make a breach of contract claim also because the promised small stipend was two years in arrears after being paid for nearly two decades. The Ministerial Exception does not override a contract damages claim, even if it might not allow a court to compel reinstatement. Finally, the pastor asserted a claim against the denomination for unjust enrichment because the legal title was not transferred.
The success or failure of these particular claims lies in the future but there are lessons to learn from this order overruling the denomination’s motions to dismiss. Denominations that have longstanding engagements with pastors should review the governing documents, including real estate titles, to make certain current denominational retirement policies are reflected and that a retirement strategy has been agreed upon. A financial incentive to obtain agreement with updated governing documents will almost always be cheaper than litigation. A contract will often be enforced at least as to money damages. Contracts are enshrined in Article 1, Section 10 of the United States Constitution, co-equally with the First Amendment, which is why the Ministerial Exception or the Ecclesiastical Abstention Doctrine may not eclipse the contract.