Author: churchlitigationupdate

LOCAL CHURCH MEMBERSHIP ROLLS

As we have reported several times, after maintaining the governing documents themselves, maintaining valid membership lists at least annually is about survival.  The local church that does not do both courts expensive legal repairs or a raid on assets.  Membership rolls should annually be made a part of the minutes of the church governing board.  Membership rolls kept in digital formats should at least annually be hard copy printed, or saved to media separate from the computer on which it is routinely hosted, and either or both attached to the minutes of the governing board.

In Cohen v Berliner, Unpublished Opinion (NY Supp Kings County 2021), the trial court held that the two hundred signatures submitted by the petitioner were not the valid ten signatures needed to demand a congregational meeting or vote.  However, the court conducted evidentiary hearings in which thirteen witnesses were tendered for testimony.  The local church owned a church camp primarily used in the summer.  The local church also leased the church camp to a parachurch organization for a girl’s summer camp.  Other local churches in the same denomination contributed money to the parachurch organization that operated the girl’s summer camp and that entity in turn leased the camp from the local church.  At some point, a falling out resulted and the churches supporting the para-church organization sought control over the summer camp.  The local church refused to surrender control.  The churches supporting the para-church organization submitted a petition for a congregational meeting by the local church supported by two hundred signatures from members of those churches, but none of which were members of the local church that actually owned the camp.  The petitioner sued to obtain a court order for the congregational meeting but the court upon holding extensive evidentiary hearings determined none of the two hundred signatories were members of the local church that owned the camp, but rather were members of the other churches.  The court rejected the claim that membership in the denomination was the same as membership in the local church absent such language in the governing documents.  The lease payments made by the parachurch organization did not constitute financial support of the local church that owned the camp, even if the lease payments were substantial.

Because the local church did not appear to have an official membership roll, each witness tendered had a shot at qualifying.  The court in the case reported may have given the petitioner as many as thirteen tries.  An official membership roll would have reduced the number of tries to one; only signatories also on the official membership roll could have been considered as “qualified” to call a congregational meeting.  A joint denominational asset like a church camp should be placed in a corporate shell controlled by the member congregations or the denomination and not owned by one of the constituent churches of the denomination.  Otherwise, no one but the owner of the denominational asset will have any say over its management, operation, sale or use as collateral.

BINDING THE DENOMINATION

While a church or denomination may have officers, directors, trustees, or similar leaders with ecclesiastical titles from the tradition of the denomination, generally no single officer can act for or bind the church or denomination without an enabling resolution of the governing body or authority granted by the governing documents.  Likewise, just because such an officer is a named party in a lawsuit or arbitration does not mean that the church or denomination is bound by the outcome.

In Trustees of the General Assembly v Patterson, Slip Op. (3rd Cir. 2021), upon the death of the founder, the denomination split between his sons.  Patterson went with one son to form a new church.  Both sons claimed to be the “General Overseer” of the denomination.  Patterson sued the son he had not followed and a board member of the Trustees.  Patterson, the son and the board member decided to dismiss the lawsuit in favor of arbitration.  An arbitration award was entered for Patterson.  Patterson sought to have the arbitration award enforced against the denomination as to certain church property and assets.  The federal trial court enjoined Patterson’s enforcement action and held the denomination was not a named party to the arbitration and was not bound by it even though a possible “General Overseer” and a single board member had been named.  Further, the denomination had never been served with process.  The federal court also determined that the denomination was not a “party in privity” with the alleged “General Overseer or named board member because the denomination did not agree to be bound by the arbitration, did have control of the litigation, and the legal relationship between those named and the denomination did not automatically make them representative of the denomination.  The federal appellate court affirmed.

In church litigation, just like all other cases, the correct party must be named and served.  If a church or denomination is incorporated, likely a service agent was appointed, so the correct service agent must also be served.  Proceeding through a litigated matter like an arbitration without the correct party is a colossal waste of money.  Lawyers must be cautious about merely following client advice about the nature of the legal relationship between the person named and the denomination or church to be bound and should independently verify the relationship will result in a binding outcome.

FRAUDULENT FUND-RAISING CLAIMS

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.

The “Waring Blender”

The song Poor, Poor Pitiful Me, lyrics by Warren Zevon, and sung by Linda Ronstadt and covered later by Terri Clark related the woes of a woman that lacked mate picking skills:

Well I met a man out in Hollywood

Now I ain’t naming names

Well he really worked me over good

Just like Jesse James

Yes he really worked me over good

He was a credit to his gender

Put me through some changes Lord

Sort of like a Waring blender

Churches with poor pastor picking skills suffer similarly.  Churches, no matter how small, that do not generally follow their governance documents, typically corporate bylaws, experience similar woes.

In Iglesia Pentecostal Filadelfia, Inc. v Rodriquez, Slip Op. (Tex. App. 13th, 2021), the trial court dismissed the case because it could not tell who was in governing control of the church.  A warranty deed clearly indicated the church owned the church property.  But, the failure to follow the bylaws in electing governing board members, officers and pastors left the Court with no means to determine who was in charge.  The Ecclesiastical Abstention Doctrine, the court held, precluded the court from resolving the dispute in the absence of a record.  The pastor even admitted he had been unaware of the existence of any bylaws until the lawsuit was filed in 2018 even though the church was founded and incorporated in 1987 by his parents.  The appellate court affirmed.

The only solution for a church in such a situation is to hold a congregational meeting, elect a new board, and document its decision.  The documentation probably would need to be a resolution accompanied by a signature by every voting member of the church.  Adopting a formal church membership roll in the same manner might be required to allow verification of the congregational vote.  Any church, no matter how large or small, that does not document its governance consistent with its governing documents at least to some extent risks losing control of its property, its assets and its funds to a faction or even an interloper.  Such documentation is simple, freely available on the internet or other sources, and need be updated only a few times a year.  An official copy should be kept at the church offices and a digital copy off site.  The digital copy should be updated at least annually.