Author: churchlitigationupdate

THE PASTOR’S PROMISE – IN LITIGATION

Congregations can be fickle. Every pastor knows the congregation can vote with their feet, i.e., leave; vote with their money, i.e., give less to the church; and change the channel, i.e., look for better religious entertainment. Some churches change pastors every three or four years in some sort of misguided search for the “right fit,” or the right dynamism. In response, in order to obtain some level of stability, pastors sometimes negotiate employment contracts.

In Lee v Sixth Mount Zion Baptist Church, Slip Op. (3rd Cir. 2018), the United States Court of Appeals for the 3rd Circuit affirmed a Pennsylvania federal trial court’s decision to grant summary judgment to a church in a breach of employment contract case. The trial court granted summary judgment to the church, even though the church was not moving for summary judgment but was only resisting the motion for summary judgment presented by the former pastor. The former pastor sued because he was terminated by the church twenty months into his twenty year written employment contract. The employment contract permitted termination for cause and for “material breach.” At the congregational meeting voting to confirm the employment contract, the pastor himself defined “material breach” as “not growing,” “stagnant,” “not a better place,” and “if he did not perform his duties well.” The church alleged it experienced a 39% decline in collections, a 32% drop in Sunday worship attendance, a 61% decrease in registered members, a doubling of church expenditures, and a decline in church “community outreach.” The pastor did not deny those facts but alleged his service was not the cause of those changes in the church. The pastor sought damages of more than $2,000,000 for the income lost in the unexpired term of the contract. The trial court granted summary judgment to the church because to resolve the case would, the trial court held, impermissibly entangle the court in determining whether Lee’s ministry as pastor was “adequate spiritual leadership” and “how that translates into donations and attendance.” Such inquiries, the Court held, would violate the First Amendment ministerial exception as explicated in Hosanna-Tabor Evangelical Lutheran Church v EEOC, 565 US 171 (2012) because the Court would entangle itself in a factual inquiry as to whether the church’s defenses were a pretext.

There are lessons here from two perspectives. The pastor probably should not have agreed in a congregational meeting to define “material breach” as he did. This undoubtedly created a high expectation too early in the relationship and a numerical metric both of which would fluctuate subjectively and objectively in the short term while the contract was designed for a long term. The church maintained its options by incorporating the church bylaws as a material term in the employment contract which required that the pastor provide “spiritual leadership,” a role a secular court cannot evaluate.

TRADITION AS A CHURCH GOVERNANCE POLICY

Occasionally, churches get into bad habits. Such a church may adopt a set of bylaws and a constitution when the church is formed but ignore them for decades. Eventually, however, church growth, maturation, or a dispute force the bylaws and constitution into the light and into use. The argument that the bylaws and constitution “aren’t the way we have done it” may not preserve seemingly long-established tradition. If a church ends up in a court of law on an issue that would otherwise be governed by the constitution and bylaws, tradition, especially oral and anecdotal, will be hard to prove and very unlikely to be recognized as controlling.

In Leggett v True Zion, 2018 IL App (1st) 171101 (Slip Op.) (Ill. App. 2018), prior church leadership wanted to select the new pastor and new board of directors. The congregation, however, decided to follow their bylaws and the board recorded in their minutes that the congregational meeting would be called consistent with the bylaws. The Plaintiffs actually attended the congregational meeting, which waived any notice issue, but “declined” to vote. The plaintiffs filed suit challenging the authority of the congregational meeting to select a new pastor and the new board of directors and alleged the church tradition was that the pastor would be selected by the church “overseer” and not by the board and confirmed by a congregational vote.  The bylaws were consistent with Illinois non-profit corporation governing statutes.  The trial court dismissed the case with prejudice and the appellate court affirmed.

Church corporation governance documents are important in a church dispute. Bylaws should be followed, written minutes of meetings consistent with the bylaws should be maintained, and every couple of years the bylaws should be updated, if needed, using the procedure in the bylaws for doing so. Tradition is a relic of the past in church governance. If the tradition is that important, or deemed as a spiritual requirement, the bylaws should be amended to incorporate and spell out the tradition. If the tradition is not a relic, stop treating it like one. Even small churches have enormous financial assets compared to their size. No one would want to own a home without a valid title (and probably valid title insurance) and valid homeowners’ insurance by relying on their tradition of living there and paying the bills.

INTERNAL CHURCH INVESTIGATIONS

Internal church investigations that involve only church employees and church members may be immune from judicial intrusion. Having stated that generality, no one reading this should for a moment doubt that statement does not apply to child abuse including sexual misconduct with a child. Child abuse is a crime. It is inherently a violent crime. The First Amendment will not shield a violent crime. However, nearly all other internal church investigations, disciplinary actions, and terminations of employment or membership will be shielded by the Ecclesiastical Abstention Doctrine. That will be true in the end whether a jurisdiction treats that First Amendment doctrine as an affirmative defense or a limitation on jurisdiction.

A recent example is the opinion issued in Orr v Fourth Episcopal District African Methodist Episcopal Church, Slip Op. (Ill. App. 2018). The Plaintiff, an employed minister, faced a charge of sexual harassment not involving a child. The internal church investigatory process was halted while the matter was in litigation. As part of the process, the minister was transferred from a church in Illinois to another state. The trial court granted summary judgment on Plaintiff’s defamation theories and the appellate court affirmed. The hierarchical denomination in the case at the time of the allegations was governed by a “Book of Discipline.” The Book of Discipline established a complex system for reporting and internally adjudicating internal sexual harassment claims. The process at the time included a “judicial committee” that operated “like a grand jury,” a “trial committee,” and a “trier of appeals.” The process was confidential and there was no allegation it had not so remained.

The internal investigation will be shielded if it remains internal to the church. “Leaks” are not the issue in this report but could be in some other case. The issue will be “public pronouncements.” Internal announcements will likely be shielded as long as they are made only to leadership or only to actual church members with a need to know. The ruling of the church due process system, no matter how modest or elaborate, may be made public and may be shielded, but the exact care to be taken in implementing a final decision public announcement is not the subject of this report.

CHURCH MERGER LITIGATION

The economic pressures that bring out the purchase, sale and merger of business entities both small and enormous also do the same with churches. Churches are also impacted by the constant drain of members to the latest fads and movements, such as the mega-church complexes of this age. Churches also have life cycles; they are born, they grow, they age out and some die out. While ecumenical churches seem to preserve their outer shell against the ravages of time, nevertheless their congregations go through the same cycles and face the same economic pressures.

In Pure Presbyterian Church v Grace of God Presbyterian Church, Slip Op. (Va. 2018) the Supreme Court of Virginia, affirmed a trial court decision enforcing a merger agreement between two churches. By the time the dissenting group decided to challenge the merger, the merger was well along. Indeed, the opinion implied that the decision to challenge the merger coincided with the attempt of the dissenters to sell their property to a third party before the title transferred to the surviving entity in the merger. The dissenting group argued the Court lacked jurisdiction to hear the dispute under the Ecclesiastical Abstention Doctrine of the First Amendment. Another factor was that the jurisdictional challenge was not pressed until after the adverse jury verdict. While jurisdictional challenges can be made at any time, including on appeal, the psychology of late presentation of the challenge cannot be underestimated. An after thought never has the credibility of a challenge from inception. Be that as it may, the court held the First Amendment did not preclude application of neutral principles of contract law to the merger, even if that had an impact on church governance. The court could verify that the two congregations voted to adopt the merger contract even though that had an impact on church governance. Both could be accomplished to determine the owner of the church property. The dissenters tried to stop the merger enforcement litigation by a bankruptcy filing and automatic stay but, again, were probably too late and the bankruptcy plan was silent as to the merger.

While merging churches often are tempted to move slowly to allow everyone to adjust to the new normal, some members may never adjust. Leaving such minorities opportunities to interfere with or further slow the merger are invitations to expensive legal dramatics. Mergers should be closed on a day certain and all church property re-titled the same day. All bank accounts should be liquidated and closed in the extinguished entity. Indeed, new accounts may be wise in the surviving entity.

STATE AGENCY INVESTIGATIONS – PERMEABLE SEPARATION?

Regulatory investigations of all kinds are unsettling because they are usually conducted in a manner without the due process safeguards found in a court. The right of confrontation is blunted or non-existent. The regulator seems to be the prosecutor and the judge. The common sense of a jury, much less its neutrality, are often perceived as missing. Things outside of the box or the norm tend to make regulators insecure and defensive. Regulators must navigate the shoals of their own too limited budgets and too expansive mission objectives.

In Trinity Christian School v Commission on Human Rights, Slip Op. (Conn. 2018), a church employee filed a discrimination complaint against the church before the state agency. The state agency commenced a proceeding. Presumably, the proceeding was autonomic process and it did not appear from the opinion to be the result of an investigation. The church moved to dismiss the proceeding urging the Ministerial Exception of the First Amendment. The motion was overruled and an appeal to the state trial court resulted in dismissal of the appeal because the Ministerial Exception was deemed to be an affirmative defense and not an immunity. The church returned to the state agency proceeding and submitted a second motion to dismiss based on the state statute that required state burdens on free exercise of religion only when there is a compelling state interest. This second motion was denied both by the regulatory agency and the trial court. The Supreme Court of Connecticut affirmed the trial court holding that the state statue was not a statute of immunity but was a “rule of construction.” Thus, the church was returned to the state regulatory proceeding to assert the Ministerial Exception and to argue with the regulator whether the regulatory mission was a compelling state interest.

Motions to dismiss are an excellent strategy for degrading the ardor of Plaintiffs of limited resources. It is also the only means to weed out implausible claims. In a regulatory proceeding, once that tactic is exhausted, the case must be built with the same eye to creating a record that would be made in court. Indeed, this may be the “trial” and the only “day in court” the church may have. Sometimes this must be done on very short deadlines and without the full discovery tools available in court. Sometimes this must be done in the face of defensive and hostile regulators that are activists for one cause or another. Most regulators, unless they happen to be a member of a church in the same tradition as the church before them, will be completely unfamiliar with church theology or traditions. If the main defense is the Ministerial Exception, then the religious duties of the former employee must be fully documented in excruciating detail. While the expenses mount, the church may have to consider an investigation of the regulators and their history with other churches that have been brought before them. The separate of church from state is a permeable wall when least expected.

CHURCH ZONING WARS – UNPOPULAR MISSIONS

When a church as part of its mission in a community undertakes ministering to the forgotten or the hated, the neighbors might object with sufficient vehemence to invoke municipal machinery. Such legal machinery may be engaged to grind finely using rules with little substantive elucidation making them prone to subjective interpretation. Zoning is a favorite weapon.

In First Lutheran Church v The City of St. Paul, Memorandum Opinion and Order on Defendant’s Motion to Dismiss (DC Minn., 2018), the church noted a homeless “day shelter” lost its location after thirty-three years and offered up its basement for the “day shelter.” The church had many outreach programs to the poor and homeless. The church, to make sure it would not have a problem operating an adult day care program sought a Determination of Similar Use from the city. The city approved the application. The program began to provide day shelter to fifty to sixty homeless persons each day. Some of the program workers, and some of the participants, became members of the church. However, the homeless persons served included some troubled persons that urinated in strange places, were on foot, sleeping outside and publicly intoxicated. The neighbors complained to the city and the city invited them to appeal the Determination of Similar Use, even though the ten day appeal window had expired three months earlier. The city accepted the appeal and the city zoning authority imposed numerous conditions on the Determination, including that the church day shelter obey the rules governing home businesses, even though the day shelter did not fit the definition. The city demanded that the day shelter deport the homeless persons from the area (“ensure the guests have left the area”). No outdoor patio was allowed. The day shelter had to give notice on a shared website of any serious incident observed. A sign had to be posted restricting after hours trespassing so the police would arrest lingering homeless persons. The day shelter could only operate 8am to 5pm. The shelter management was required to attend neighborhood policing meetings. But, the worst was the number of “guests” was limited to twenty. Comically, the number “twenty” was selected by the city because a yoga class at another church had been approved and ten participants allowed “which seemed to work.” The city sought to dismiss the case so the facts recited are only those the court could glean from pleadings and briefs. The trial court overruled the motion to dismiss holding the claims plausibly stated a claim under the federal Religious Land Use and Institutionalized Persons Act (“RLUIPA”). The church alleged that similar restrictions were not placed on a nearby college, coffee house, and a library. Of course, the city allegedly violated its own ten day zoning appeal limitation and went out of its way to do so. Therefore, Equal Protection and First Amendment claims survived, too.

The case reported herein has survived a motion to dismiss and may be pending for a considerable period of time until final resolution. The facts recited above may change. Nevertheless, the less popular the target of ministry the more resistance may be mounted both within and without. The causes of homelessness, typically drug and alcohol addiction, are not well treated in most states. Indeed, in most states, most mental hospitals have been closed and jails are used as mental hospitals. Churches that try to step up will need competent legal counsel. Whether a church could conduct such a ministry without causing friction with the neighborhood, and how to do so, are outside the scope of this site and may require local customized program enhancements developed by psychiatrists, drug counselors, and others.

EVAPORATION OF THE WIDOW’S MITE

Church pastors often suffer from an imposed “vow of poverty.” Congregations that are not faithful donors often remain chronic. Founding pastors often remain for their entire career at the same church never subjecting the church to the reality of the marketplace. Pastors that make the mistake of residing in a “parsonage” lose the home equity most middle-class Americans treat as a civil right. Founding pastors often fail to install retirement plans until late in their career with no way to “catch up” without offending the good folks at the federal and state taxing authorities. However, when a pastor or a conscience driven church leadership tries to address the problem with inadequate resources and inadequate professional advice one or the other, or both, enter into arrangements that are questionable. The pastor, and usually the pastor’s widow, end up without a solution, or worse, with a ruined legacy.

In Jenkins v Refuge Temple Church of God, Slip Op. (SC App. 2018), the founding pastor appointed board members, however, the bylaws required congregational election. The pastor asked the board to enter into an employment agreement with him that contained a survivorship clause whereby his widow would receive income for life. The employment agreement with the survivorship clause was not voted upon by the congregation nor even revealed to the congregation. After the pastor died, the widow was paid by the congregation for six years. Financial necessities convinced the successor pastor and church leadership to phase out the payments. They believed the widow’s payments fulfilled their obligation as set forth in church tradition for such situations and did not learn of the written contract until the litigation for breach of the contract was brought by the widow. The trial court entered judgment for the widow on a breach of contract theory, apply neutral principles of law, but the Court of Appeals reversed. The failure of the board to be properly elected was fatal to the enforceability of the contract. That the church had made monthly payments to the widow did not estop the church under the laches doctrine because the church did not know about the contract.

Other financial arrangements might have worked far better than a “secret” contract adopted by a board of dubious legal authority. A Certified Public Accountant, a financial planner, or even an insurance specialist could have suggested many options and revealed their relevant costs. The pastor and the church may have had a moral obligation to the widow. Whether either fulfilled that obligation is a moral question not within the scope of this report. During the pastor’s ministry, a retirement plan should have been in place other than the employment contract survivorship clause. Both the pastor and the church leadership should have enacted it. A life insurance employment benefit, for example, would have been the easiest solution.