CHURCH LITIGATION SETTLEMENT AGREEMENTS

It is possible to settle a dispute without litigation or without completing the litigation process. Settlements can reduce costs and give the parties some control of the resolution. When a resolution is left to a trial, all control can be lost. In order to settle a lawsuit, parties often resort to mediators. Typically, the mediation is concluded by either no agreement at all or some document that constitutes an agreement in principle if not the final contract of settlement.

In Christian Methodist Episcopal Church v Grimes, Slip Op. (Ind. App. 2019), the pastor was serving under an agreement to be paid but was not actually paid. The inability of the church to pay resulted from a “downward spiral” caused by the departure of the prior Pastor. The departing Pastor took most of the membership with her. The successor Pastor served for five years without being paid, although everyone admitted there was a contractual obligation of the church to pay when its finances recovered. The successor Pastor terminated his employment and sued to be paid. During the mediation conducted to try to settle the case within the assets available, an agreement was reached with “reasonable certainty.” The church did not pay and the former Pastor alleged breach of the settlement contract. While the facts recited by the Court regarding the mediation settlement agreement indicated there may have been no meeting of the minds which might mean there was no settlement contract, the church did not contest the motion to enforce the agreement filed by the Pastor. The church appealed the Judgment on the settlement agreement and argued the Court had no jurisdiction to hear a dispute about employment of a Pastor. The Court held the Ecclesiastical Abstention Doctrine did not prevent a court from enforcing the settlement agreement with the Pastor by imposing Neutral Principles of Law.

A settlement agreement is a contract and if a court finds that such an agreement exists, the court can enforce it by any means that would be used in a secular contract enforcement action. It seems extremely unlikely that any lawsuit settlement agreement entered into at a mediation would be unenforceable. It seems more likely that a settlement agreement would be subjected to the Neutral Principles of Law faster than any other agreement involving a church. That would likely be true even if the settlement was regarding the payroll of a Pastor. While Pastoral employment is usually shielded from court review by the Ministerial Exception, a written employment contract is more likely to be enforced applying Neutral Principles of Law. A settlement agreement arrived at by mediation to settle a lawsuit regarding a Pastor’s employment is even more likely to be judicially enforced.

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