Author: churchlitigationupdate

PASTOR VERSUS PASTOR

Mad Magazine has for many years published a comic strip entitled “Spy v. Spy.” It has since spread to YouTube videos and a video game. While that comic strip may have been inspired in 1961 by the Cold War, other famous small conflicts included the Hatfields and McCoys, which also spawned a US Supreme Court case in the 19th century and various dramatic interpretations. Like all such feuds, the factual history of any feud is winding and complex and not nearly as funny as “Spy v. Spy.” Unraveling the motives behind the ongoing feud is usually impossible.

In Fidelity National Title Insurance Company v New Haven Financial, Inc., Slip Op. (Cal. App. 2018), the death of the founding pastor in 2005 resulted in a power struggle between two rivals for the pastorate of the church. Several lawsuits resulted as each side in turn sought judicial relief against the other. Meanwhile, the denominational authority refused to accept the election of first one of the rivals and then the other. Further, one of the courts to hear one of the cases held the denominational authority was the only authority that could oversee an election and needed to do so because the church’s membership records were possibly unreliable. For no reason that was reported in the opinion, the denomination did not do so and the feuding continued in court. Eventually, one rival won a final judgment in a prior case. During the litigation, the rival that was later defeated in court, representing himself as pastor of the church, obtained a loan for $150,000 using church property as collateral. The foreclosure action was defeated by the winning rival and the title company had to pay the claim. The title company sought reparations from the rival, by then the losing rival, that took out the loan. The title company also sued the family of the defeated rival because the money was allegedly distributed to family members. The defeated rival filed a cross claim against the winning rival. The trial court dismissed the cross claim holding the prior ruling against the defeated rival barred further litigation of the issue by not only the defeated rival, but “parties in privity,” which included the family member that appealed in this case.

While church splits are not common enough to cause church members to even envision the possibility, church leaders should. Church and denominational documents should envision succession plans, election procedures and oversight, and membership roles should actually be kept by churches. Denominations should inspect membership lists, or require their submission at reasonable intervals, or at least require at reasonable intervals a certification in writing from the church that there is an actual membership list maintained. Denominations and church leaders may have to do more than pray for peace, they may have to impose it in extreme situations.

ECCLESIASTICAL ENTANGLEMENTS DEFENSES

A civil court will only apply Neutral Principles of Law to a dispute if the court holds that the court will not become entangled in ecclesiastical issues. If the court holds there could be entanglement, then a court will not proceed by invoking the Ecclesiastical Abstention Doctrine. Merely because a church claimed there would be entanglement will not make the defense viable. The court must agree.

In Russian Orthodox Convent v Sukharevskaya, 2018 NY Slip Op 08167 (NY App. 2018), the Defendant Nun claimed one of the convent priests was engaged in sexual misconduct. Her allegation did not find favorable review and the ruling bishops directed her to vacate the convent. The Defendant Nun refused to vacate and an ecclesiastical court disciplined her by making her ineligible to wear the apparel of a nun or receive communion for two years. However, this did not silence her and she renewed her complaint about the conduct of the priest. An ecclesiastical court permanently defrocked her and ordered her to vacate. She refused and the convent sued to evict her. In defense of the lawsuit, she claimed the ecclesiastical court was attempting to silence her. The trial court held the nun stated an equitable defense to the eviction and dismissed the eviction. The convent appealed the decision. The appellate court affirmed the trial court on Ecclesiastical Abstention Doctrine grounds holding that to determine whether the eviction was justified would require the court to determine if the defrocking of the nun was in retaliation for whistleblowing.

Generally, a court will find that ownership and possession of church property is subject to Neutral Principles of Law and decide the issue. But, in the rare event the ownership or possession of church property cannot be decided without deciding an ecclesiastical issue, the court will leave it where it finds it. The church and the adverse claimant could literally have to wait for the other to die or compromise, no matter how long that might take.

DEFAMATION AND EMPLOYMENT CONTRACTS WITH PASTORS

The exact line between church and state is in a tidewater subject to ebb and flow. While that is somewhat less true when the Ministerial Exception can be invoked in federal employment civil rights claims, when the employee is a minister, it is still true in that instance as well. The non-lawyer sometimes forgets, as do some lawyers, that the right to contract is enshrined in the Constitution as is the First Amendment right. Balancing these two rights, which are both critical to a free society, is sometimes a matter of mere opinion.

In Turner v Tri-County Baptist Church, 2018 Ohio 4658 (Ohio App. 12th, 2018), the Plaintiff alleged breach of contract and defamation. The trial court dismissed the lawsuit invoking the Ecclesiastical Abstention Doctrine. The appellate court affirmed by a plurality. The facts stated by the Court were that the Senior Pastor recommended that the Plaintiff retire or accept a part-time position. When the Plaintiff declined the Plaintiff was placed on a “Performance Growth Initiative.” Later, Plaintiff was demoted to part time status. This may have been part of a plan to “counsel out of the business” and thus move Plaintiff to retirement. However, at a congregational meeting, the Plaintiff stated his move to part-time status was involuntary. Believing that was divisive, the Plaintiff was terminated by the church’s governing board. The Court held that Ohio would not extend the Neutral Principles Doctrine beyond church property disputes. Therefore, the Plaintiff’s breach of contract and defamation claims were barred. There was no need for an inquiry into whether entanglement with ecclesiastical matters could be avoided by the Court.

If Courts can be convinced to articulate the bounds of Neutral Principles with this level of clarity, i.e., that the doctrine only applies to church property, then the safe harbor for churches would expand and be predictable. However, the tidal force that may erode the shoreline will be when churches use written employment contracts in such a legal framework. If written church employment contracts were unenforceable altogether then ministers would always face uncertainty in congregational churches or denominational churches that had unclear employment guarantees at the local level. As the dissent in the foregoing case exemplifies, the sanctity of contracts cannot simply be ignored.

CHURCH PROPERTY AT TAX AUCTION

Many investors troll tax auctions conducted by city, county, state or federal taxing authorities. Because the properties are often distressed or abandoned, the amounts bid typically remain modest. But, the successful bidder gets only a “tax deed,” or whatever that might be called in each state’s practice. Tax deeds are generally enforceable but unlike warranty deeds which can be all but unsaleable and insured, tax deeds can be set aside in a few cases. Buying a church property at tax auction, therefore, may or may not be “final.”

In Spiritlove Ministries v Blessed Peace Church, Slip Op. (Mich. App. 2018), the church property was abandoned by a predecessor owner that was a denominational church. The denomination declared the church property abandoned pursuant to the denominational governance documents and the reversionary clause in the title. The denomination sold the property to the Plaintiff and delivered a quit claim deed. Almost simultaneously, the Defendant discovered the church property and bought it from the taxing authority acquiring a tax deed (or whatever it might be called in Michigan). The Defendant moved onto the property. The Plaintiff church discovered this and asserted its rights and reached an accord with the Defendant church that the Defendant would vacate the property by a date certain. The Defendant acquired a quitclaim deed from the predecessor owner church that had abandoned the property in the first place and reasserted ownership of the property. The Plaintiff sought and obtained from the trial court by summary judgment a quieted title. The court concluded that under the Ecclesiastical Exception Doctrine, the court could not review the denominational decision to declare the property abandoned or the sale of the property to the Plaintiff, making it the enforceable transaction.

Denominational governance documents and reversionary clauses in church property titles remain enforceable. In obtaining a church property by purchase, or in any other way including by gift, these documents must be inspected. Claims the documents are lost or unavailable should not be relied upon. Usually, the documents are in the public record or someone’s attic, because they always seem to turn up. While a tax auction can be a wonderful investment, certain caution must accompany the investment. If due diligence prior to the purchase cannot be completed it should be immediately after. Easy sounding solutions to title problems rarely are either, easy or solutions.