Author: churchlitigationupdate

CHURCH MEMBERSHIP UNDER SECULAR LAW

In many posts we have reported court opinions that resolved disputes by using only the denominational or local church governance documents. However, there may be some disputes that cannot be resolved using Neutral Principles of Law to enforce the governance documents. Membership verification may be one of those.

In Ceglar v Christ’s Harbor Church, Slip Op. (Tex. Civ. App. 2020) the trial court held verifying the 25 plaintiffs were actually church members required ecclesiastical determinations the Court was prohibited, and unwilling, to make. The appellate court affirmed and the case was dismissed. The newly hired pastor was accused of “inappropriate behavior and misconduct” by two female members. A faction of the membership demanded a congregational meeting to determine the pastor’s employment fate, but the church board never convened the meeting. Six months later the lawsuit followed. The membership secretary affirmed the plaintiffs were on the church membership rolls but a church board member testified the plaintiffs were for the most part expunged from the membership rolls after ninety days of non-attendance. The ninety-day rule was not in the governance documents but was put forth as an interpretation of the governance documents membership clause. To resolve whether listing on the membership roll or a ninety-day membership cancellation was dispositive, the Court held, would require an ecclesiastical determination by the Court.

Purging membership rolls every ninety days seems unworkable in a volunteer organization like a church and somewhat contrary to the inclusiveness most churches want to offer. Nevertheless, if that is the “rule,” the purge process should be carried out in a disciplined manner. Annual membership roll “clean up” is the preferred practice so that the qualified voters in congregational meetings can be identified and counted. The court was completely silent on whether the church board investigated or whether the allegations against the pastor were determined “not credible.”

LOCAL CHURCH SUPPRESSION BATTLES

Economics sometimes requires denominations to reorganize local churches. If a denomination has several local churches in a locale that separately are no longer economically viable, merging the congregations into a single viable congregation is a possible solution. Indeed, it is often a better solution than allowing each local church to become insolvent, bankrupt, or to remain crippled. Denominations that control the geographical reach of their local churches may “suppress” the no longer viable local church. The decision making process of determining merger partners, surviving church staff employees, locations, and property disposition, to name but a few, invariably seem to set off disputes.

In Pagac, et al v Diocese of Pittsburgh, Slip Op. (PA 2020)(unreported), the denomination sought to “suppress” and then merge several local churches into a single survivor. The process, like most such do, suffered from fits and false starts. Eventually, the process was completed. Several parishioners of one of the closed local churches challenged in court the decision to “suppress” their local church. They also alleged that because their local church was formerly designated as a survivor of the process, and then later withdrawn from survival, they were defrauded of donations. The trial court dismissed both claims. The appellate court affirmed the dismissal of the challenge to “suppression” holding the parishioners did not have “standing” to make the challenge. Because the local church was “suppressed,” the Court held, the parishioners membership in the suppressed church no longer existed to form the basis of any challenge. Also, because any such claim would require an inquiry into internal church governance, the Ecclesiastical Abstention Doctrine precluded the claim. However, the appellate court reversed the trial court’s dismissal of the fraud claim. The appellate court held that while the denomination might have defenses to such a claim fraudulent inducement was a recognized claim and it could proceed to determination of the claim.

Whether to “suppress” a local congregation and merge it into another local church in a hierarchical denomination would in almost all cases require an inquiry into church governance issues protected by the Ecclesiastical Abstention Doctrine. Fraud in the inducement is a difficult claim to prove. Further, even if such a claim survived a motion to dismiss as this one did, running the gauntlet of discovery and other motions likely will prove more difficult. For one thing, the parishioners will have to prove that their donations were intended to be restricted to the local church and that their restricted donative intent was known to the denomination. They would also have to show expressions of restrictive donative intent were accepted by the local church or the denomination. Rarely are restricted gifts accepted at the offering plate but have to be specially arranged. Also, merely showing their local church was formerly designated as a merger survivor will not be enough. They will have to prove the designation was represented as irrevocable. They will have to prove the designation was intentionally misrepresented.

SUBMISSION TO DENOMINATIONAL AUTHORITY

Usually, there is no doubt about whether a local church submitted to denominational authority because the governing documents, including the church bylaws or constitution, and property deeds reserve submission to the denominational authority. A court need not look beyond these documents. These documents are reviewable by a court applying Neutral Principles of Law. The Ecclesiastical Abstention Doctrine is rarely implicated.

In Korean New Life Methodist Church v Korean Methodist Church, 2020 COA 20 (Colo. App. 2020), the trial court held that church governing documents did not recite any submission to the denomination. The denomination urged that it was the intent of the church to submit to the denominational authority. The denomination produced the testimony of a founding board member and a record of financial payments over many years. The church characterized the nominal payments as donations and submitted the testimony of the founding pastor alleging there was no intent to submit. The trial court was affirmed.

Denominational authorities should not assume that churches are member congregations. The governing documents of the church either recite submission of the church to the denomination or do not. Churches that do not wish to submit should document that denominational interactions are not submissions to denominational authority. Financial gifts should likewise be carefully labeled as donations and not payment of dues or other indicia of membership.

BY-LAWS AMENDMENTS

As denominations and even churches grow in economic reach sometimes they will spawn non-profit corporations intended to be parachurch organizations. Typically, the mission of the parachurch organization is to achieve a charitable purpose that is part of the mission of the church or denomination. However, the church or denomination usually wishes to retain some control over the parachurch organization and its assets to assure that the church or denominational charitable goals are met. Also, control is sought such that when the mission has been fulfilled, or changes, the assets revert to the church or denomination. Sometimes the economic efficiency gained by creation of the parachurch organization is lost due to changes in society. What was once strictly charitable might be provided by for-profit entities that previously did not exist. The solution may be liquidation of the parachurch organization and redistribution of its assets to other parachurch organizations or reversion. The solution may require, however, that economic efficiency be improved by merger. In order to achieve a merger, a parachurch organization may need to be restructured so that it no longer is part of the church or denomination.

In Episcopal Church Diocese of California v Episcopal Senior Communities, Slip Op. (Cal. App. 2020), the parachurch organization to maintain economic viability needed to merge with another non-profit not affiliated with the parent denomination. The merger considered was not consummated for several years. One of the efforts manifested in a side agreement entered into that purported to allow the parachurch organization to make changes to its bylaws so as to effectuate a future merger. Unfortunately, the side agreement required the parachurch organization’s board of directors to be composed of a majority of members drawn from the denomination. But, the bylaws permitted amendment by “super majority” vote. Thus, the two governing documents would be in conflict if a super majority voted to amend to eliminate the requirement of a denominational majority on the board. The litigation resulted because that was exactly what happened. The denomination expended 147 pages of briefing and the appellate court ruled in 48 pages. The appellate court resolved the clash of the documents by affirming the decision to permit the bylaws amendment eliminating the required denominational majority on the board.

The power to amend bylaws by a parachurch organization must be carefully prescribed by the church or denomination. Such restrictions on the power to amend should not be lifted without considerable consideration of possible outcomes. In order to survive, and especially to avoid reversion of assets to the church or denomination in a liquidation, parachurch organizations may seek to amend their bylaws to eliminate reversionary clauses or governance clauses. The will to survive economically or to achieve the charitable purpose even if it can no longer be achieved using only church or denomination resources, or driven by the needs of parachurch organization officers to retain employment, may override loyalty to a church or denomination.

REMOVAL OF A CHURCH OFFICER

Churches can develop management conflicts that require to restore peace the removal of a church officer. If a church is incorporated, it may have several officers. In some states, a non-profit corporation must have trustees in addition to other officers, although trustees may also hold some other office, too. A church association may also adopt a constitution and bylaws that, like other corporate governance documents, create offices with specific duties. Most church governance documents, regardless of type or source, provide for removal of a church officer.

In Islamic Center of Passaic, Inc. v Salahuddin, the founding Imam died. His widow was the church financial director. She may have been under the mistaken impression that the founding Imam owned the church property, including its financial accounts, which she had faithfully managed and accounted for during many years, and that she inherited his ownership interest. However, the belief was mistaken. Further, two years after the founding Imam passed, the church adopted a constitution and the widow signed. A new Imam was engaged by the church and no conflict arose for a period of time. However, a successor Imam was engaged and a conflict arose between the widow and the new Imam. The widow refused to allow the new Imam to become a signatory on church accounts. After the accounts were frozen the widow opened a new account to which only she had access and continued to collect the lease payments due to the church from its tenant. There was no suggestion of defalcation. The widow twice changed the locks on the church to lock out the new Imam and prevented daily worship services. Police intervention was required. The church filed a lawsuit against the widow seeking a declaration that the church terminated the widow as financial director in compliance with the church governance documents among which was the constitution the widow signed. Applying neutral principles of law after a three day bench trial the trial court confirmed the termination. The appellate court affirmed.

Failure to have a written succession plan that included disposition of the widow’s interests set the stage for conflict resulting in an expensive resolution. Indeed, the opinion indicated the church may have spent money on a mediator, too. A three day bench trial and the attendant legal fees for preparation was no doubt a memorable expense. The church did, however, adopt a constitution after the founding Imam passed away. That governance document, and possibly others, permitted a court to resolve the dispute. Governance documents are usually amenable to Neutral Principles of Law interpretation and enforcement.

WHEN THE SEWER BACKS UP

Most of the time when a utility like a sewer fails clean up and repair follow at costs low enough for the local church, like any other property owner, to absorb. But, when it is a disastrous backup from a city maintained line the damage from which is either not insured at all, or inadequately insured, further investigation of the cause may be required. If the cause is not the church building or its people, it may be the municipality providing the sewer line. If it is, the church may have to proceed with a claim for reimbursement of its damages.

In Crestwood Vineyard Church, Inc. v City of Oklahoma City, 2020 OK CIV APP 3, the trial court’s summary judgment in favor of the city was reversed. The church timely filed a tort claim notice in compliance with the state tort claim statute that required filing of the notice. Without such a properly filed notice, the lawsuit may have been barred. When the city denied the claim, or by operation of law it was denied, the church filed suit. The trial court entered summary judgment because the city proved it had no user complaints from the sewer line in the five years prior to the incident. The sewer back up into the basement of the church was cleaned out by the city but the damage to the basement was extensive. The appellate court held that while the lack of a user complaint to the city indicated the city did not have that type of notice, the city had not proven it lacked notice by virtue of its own maintenance records. On remand to the trial court, the church will have the opportunity to prove through sewer maintenance records, if the church can do so, that the city had another form of notice.

A large city may or may not have records that are reliable as to whether there were, indeed, user complaints. Complaints may come from so many sources that complaint tracking for a government entity is a technological and records preservation challenge. A church in such a situation should check with the neighbors, such as other users on the same sewer line. Whether maintenance records will prove the matter one way or another may also be problematic. A large city covering many square miles and managing substantial infrastructure may or may not have records of completeness and clarity. Gaps in maintenance records, if any, may be more valuable than the records themselves.

CHURCH PRENUPTIAL AGREEMENTS

While prenuptial agreements are generally outside the scope of the author’s knowledge as well as outside the scope of these reports, this report does not appear to require either divorce law knowledge or a change in focus. Churches have, however, wandered into this area.  Churches may increasingly need agreements to govern the exit of the church from an employment contract with a pastor, a denomination, or a parachurch organization.

In Tilsen v Benson, Slip Op., 2019 WL 6329065 (Supp. Ct. Conn., 2019), the trial court was asked to enforce the alleged Torah law mandate of an even division of marital property based upon a prenuptial agreement known as a “ketubah.” The ketubah apparently had some indicia of a civil contract enforceable in any court between husband and wife. It was signed by both parties and may have been supported by legally cognizable consideration other than personal promises of fidelity. The ketubah contained a dispute resolution clause that required submission of disputes to the “Biet Din,” a Rabbinic Court. A dispute resolution clause requiring arbitration or mediation could be similar. The trial court refused to consider the ketubah because to do so required ecclesiastical entanglement. Indeed, rabbinical experts were being lined up to testify and many of the terms of the agreement were not secular but were religious. To the extent the parties wished to enforce in court a secular provision in the ketubah, which appeared to the court to be a written contract, that might have been possible. But, the provisions based on Torah law were not enforceable in court. Of course, the court rendered no opinion about whether the religious provisions could be enforced in some manner not involving a secular court.

Regardless of denomination, churches struggle with civil ceremonies conducted under secular civil law. The logical solution may someday be considered. The civil ceremony and the church ceremony do not have to be in the least related, except where the parties want it. A parallel solution would be to have ketubahs and similar documents translated into English, rewritten into secular terms by a lawyer, the secular version approved by the appropriate religious authorities and the original religious version kept as well. Both could be signed in parallel. They could incorporate each other by reference. It may be that this has been done but because the case reported involved a thirty year old ketubah it may be that changing practices left it behind.