Author: churchlitigationupdate

NON-PROFIT CORPORATION STATUTES

One of the sources of Neutral Principles of Law which can be applied to resolve church disputes that spill into the street, including church governance disputes, is the state statute governing non-profit corporations in the state in which the church corporation was formed.  Typically, the statute comes into a church governance dispute when the church organizational documents do not resolve a governance issue.  Because most churches using common sense incorporate and do so with modern organizational documents periodically updated, such statutes do not often decide governance issues.

In Church in Bloomfield v Park, Slip Op. (Mich. App. 2022), the church was incorporated for many years.  But, after incorporating, the church never adopted any bylaws.  The Articles of Incorporation did not specify the means by which officers were elected or the terms to which they were elected.  For a period of time, the church allegedly did not hold a properly noticed annual meeting or an election of officers.  The church bought a residence property and sought to have the property rezoned so that worship services could be held in the residence.  The rezoning was not successful so the church, or some faction, sought to sell he property.  Another faction allegedly resisted.  A faction sought a court order compelling a properly noticed annual meeting as required by the state non-profit corporations statute.  The trial court compelled the meeting because the church organizational documents did not specify any method of electing officers.  The appellate court affirmed.  The appellate court held that the enforcement of the non-profit corporations statute upon church governance not otherwise specified in the church organizational documents was not an ecclesiastic matter.  The Ecclesiastical Abstention Doctrine did not deprive the court of jurisdiction or limit the court’s ability to order compliance with the state corporations statute.

The church did not have to incorporate, even though for many reasons that is a good practice.  Once the church incorporated, it was free to adopt governance documents like bylaws and set its own procedures.  Once the church incorporated, it became subject to state corporation statutes that apply in the vacuum of organizational governance documents.  Churches that fail to complete effective organizational governance documents and then maintain them over time are subject to chaos, disorder and usurpation.  Oh, yes, and legal fees.

COST-OF-LITIGATION BURDENS

The First Amendment’s protection of church autonomy from government regulation is in federal courts implemented by balancing the need of society to regulate conduct against the need of the ecclesiastical need for independent church governance.  To that end, federal civil rights legislation usually contains an exception for religious entities and their employees.  Likewise, the First Amendment, and state constitution counterparts, limit exercise of governing power to secular matters.  To reach these legal conclusions, however, sometimes requires a court to require the parties in a lawsuit through discovery and their own investigations to create a factual record.  The cost of litigation resides mostly in the various pre-trial phases of a lawsuit, with discovery costs being the bulk of the costs.

In Tucker v Faith Bible Chapel, Slip Op. (10th Cir. 2022), the federal trial court had before it a high school teacher in a private church school that also served as a chaplain.  The teacher / chaplain developed a chapel service that the teacher called “a symposium” “on race and faith.”  Parental and student backlash may have led to the termination of Plaintiff from the duties of chaplain and a few weeks later termination from the teaching position.  The Plaintiff alleged the termination was based on discrimination illegal under federal and state law.  The Defendant moved to dismiss invoking the Ministerial Exception to the federal civil rights law.  The federal trial court ordered discovery conducted by the parties solely on the issue of whether Plaintiff’s claim was barred by the Ministerial Exception because Plaintiff held the title of “chaplain” and because he was a high school teacher in a private religious high school.  Upon the conclusion of discovery, the federal trial court overruled the Defendant’s motion for summary judgment based on the Ministerial Exception and held there was a question of fact for a jury to decide.  The United States Court of Appeals for the 10th Circuit, presented with an interlocutory appeal of the order overruling the motion for summary judgment, dismissed the appeal holding it did not have jurisdiction to hear an interlocutory appeal at this time in the case.

By treating the Ministerial Exception to the federal civil rights laws as an “affirmative defense,” a defense that must be factually proven and raised at trial, the cost of litigation must be endured in order to reach a ruling.  The 10th Circuit did not reach the issue of whether the proof placed in the record was sufficient to support or deny the Ministerial Exception.  The impact of the ruling will be that interlocutory appeals will be problematic if a federal trial court refuses to dismiss a case due to a question of fact about the Ministerial Exception affirmative defense.  The pragmatic impact will be that the cost of litigation through trial would become unavoidable.

ATTACKING THE CHURCH LAWYER

Clients often turn on their lawyers.  The criminal conduct or tortious actions for which the client is being held responsible sometimes cannot be evaded.  Especially in those situations the client will often blame their own lawyer for their predicament.  The sad fact is that in by far the majority of cases, the client got all the help they could afford and probably more compassion than they deserved from their own lawyer.  Such clients are usually turning on the only friend they may have left.  For the client, it usually does not end well.

In Burri Law PA v Skurla, Slip Op. (9th Cir. 2022), the United States Court of Appeals for the 9th Circuit reversed dismissal of a defamation case by a federal trial court sitting in Arizona.  The Plaintiff law firm represented the Eparchy of Arizona.  The law firm was called upon to investigate the ERISA benefits plan of the denomination.  The law firm allegedly requested plan documents and was refused.  The law firm, however, allegedly discovered and then in an ERISA based federal lawsuit sued upon illegally commingled Plan funds, converted Plan assets, and offshore accounts.  To evade the claims, the denomination sought to merge the Plan of the Eparchy of Arizona with other plans held by other eparchies.  Meanwhile, leadership of certain other eparchies allegedly defamed the law firm to induce the Eparchy of Arizona to terminate the representation of the law firm.  The presiding officer, seemingly later, of the denomination ordered the Eparchy of Arizona to terminate the law firm and dismiss the ERISA lawsuit.  The law firm sought payment of its fees and was sued for malpractice.  The law firm began a second lawsuit alleging the eparchies and the denomination tortiously interfered with the law firm’s contract with the Eparchy of Arizona and defamed the law firm.  The 9th Circuit reversed the trial court dismissal and held there was no ecclesiastical issue requiring abstention by the court.  Turning on their lawyer did not end well because the lawsuit brought by the law firm was ordered to proceed.

While an “in house” lawyer may or may not be subject to ecclesiastical authority to the same extent as any other employee, an “outside” lawyer or law firm’s relationship is solely by secular contract even if one or more law firm members are members of the church or denomination represented.  To make the outside law firm subject to canon law would require contractual language in the engagement agreement that is not customary or usual in contracts with lawyers.  Indeed, another independent lawyer would have to draft or approve the language of the agreement.  Defamatory statements about an outside lawyer or law firm, or any other third persons, should be avoided unless the truth of the statements cannot be reasonably disputed or there is no other way to resolve a schismatic incident.

DUTY OF NONDISCLOSURE

While we have examined publication of reports of sexual misconduct by clergy as a basis for a defamation claim, and it generally will not support a defamation claim, it is rare to see a claim that the victims were outed by the local church.  The difference between defamation as a claim and invasion of privacy as a claim alone might account for different treatment of such claims.  The uncertainty regarding invasion of privacy claims is whether the church at the time of disclosure had a duty to safeguard the identity of victims.

In John Doe v Woodland Presbyterian, Slip Op. (Tenn. App. 2022), the denomination was dismissed by the trial court because the denomination as a corporate entity had no minimum contacts with Tennessee and therefore, personal jurisdiction could not be exercised by the court over the denomination.  A theory of agency or corporate alter ego (aka respondeat superior) did not save the claim.  But, the rest of the claim remained viable at this stage (the motion to dismiss stage) against the local church and archdiocese.  One of the claims preserved was that the local church revealed the identity of the victims to the media.  The appellate court held there was a duty in Tennessee of reasonable care to safeguard the identifies of the alleged victims.

“Invasion of privacy” is not widely recognized as an independent tort arising from a duty.  Indeed, while identities of certain classes of sexual misconduct victims are protected in various states, there is a lack of universality.  Because the legal clarity of this type of protection is uncertain in some states, the better practice is to avoid the issue at all by non-disclosure other than as required by Mandatory Child Abuse Reporting statutes.