Churches and parachurch organization often struggle with representations regarding the funding needs of the moment followed by spending which might not exactly match the representations after the crisis has passed. Also, using funds for “ministry” might mean one thing to a member and something different to the leader of a church or parachurch organization in the best of times much less in a crisis. The level of disclosure regarding the use of donated funds might lack clarity because the purchase of a box of paper clips, much less salaries and benefits, might be viewed as a cost of “ministry” by some but not others.
In Dux v Bugarin, Slip. Op. (Mich. App. 2021), the trial court dismissed the lawsuit by a group of parishioners disgruntled because the denomination determined that a forty-year-old allegation of sexual misconduct by the church pastor was “credible,” removed the pastor, and published the allegation. The allegation of sexual misconduct was investigated by law enforcement at the request of the church. The Plaintiffs claimed the publication of the sexual misconduct claim was a tort of outrage. The court held the Ecclesiastical Abstention Doctrine precluded the court from reviewing the denomination’s methodology in investigating and evaluation of the claim. The court likewise held that the publication that the denomination found the allegation “credible” was also an ecclesiastical matter because the weight to give to the allegation, as well as the evaluation of the conduct in question, was as ecclesiastical as the choice of method to communicate with members. The allegation that representations by the denomination’s parachurch organization that it would not use donations to pay settlements in sexual misconduct cases were false could not be evaluated by the court. Some funds, and not necessarily those donated by the Plaintiffs, were used to pay for treatment of the alleged victim and to pay for the investigation. The court held that only the church and its parachurch arm could determine whether the expenditures were “ministry” or some other similar use of funds.
Fraudulent donation claims will be effective against embezzlers and thieves. However, such claims will not likely be useful to redirect the flow of funds from one seemingly legitimate use to another. Only incredibly precise representations of the contemplated use of donated funds will make an inquiry possible but even then there will always be some reasonable discretion to use the funds otherwise.
Church Litigation Update 