Author: churchlitigationupdate

THE LUCK OF THE DRAW

A church received $1,000,000 from its property insurer because of hurricane damage. At about the time the money was received, the church was faced with a sexual harassment claim. The church decided the money would be safer from the sexual harassment claimant if the money was held in the trust account of the church’s lawyer. It is unknown how the church thought putting the money out of sight in their lawyer’s trust account would protect it. As it turned out, the church feared the wrong person.

The lawyer for the church transferred the money from the lawyer’s trust account to another account which appeared to be owned by the lawyer. The lawyer spent the money on himself. The theft was discovered. The lawyer fled but was captured in another state and extradited. The lawyer was convicted and drew a prison sentence of fifteen years and disbarred. Like all wrongdoers, it sometimes seems, the lawyer was gone, dead or insolvent, and in this case two of three.

However, a portion of the million dollars was used by the lawyer to make payroll in his law firm. His non-partner associate was paid from the proceeds in his routine by-monthly paycheck. The non-partner associate somehow discovered or was told about the theft, or part of it, after the fact and had no control over the trust account. The non-partner associate did not immediately report it to the church but hoped another law firm engagement would domino and that money could be used to repay the church.

The court in First United Pentecostal Church v Parker, Slip. Op. (Tex. 2017) held that the these facts stated at least a claim for breach of fiduciary duty against the non-partner associate for failing to timely report the theft. The remedy would be disgorgement of any part of the proceeds received by the non-partner associate. At trial, the non-partner associate might have other defenses; it is likely the church will be accused of unclean hands in depositing the money in the lawyer’s trust account presumably to put it out of the reach of a possible victim of sexual harassment.

Also, while the church may have had sufficient property insurance, it seems likely the church believed it did not have coverage for a sexual harassment claim such that asset protection efforts, no matter how misplaced, to the church seemed justified. In any event, if the scheme was to hide assets, which is not necessarily clear from the court opinion, hiding them in a law firm trust account is not typically going to work and most lawyers would not be a party to it. It should also be noted that clients generally do not have the means to protect themselves from their own lawyer’s avarice.

THE LAW OF CHURCH TUG OF WAR

Finally, in my fourth decade of practice, the law of Tug of War has finally been set forth by a court.

The Plaintiff was a church member and came to a church event held in a park. John v St. Thomas Indian Orthodox Church, Inc., Slip Op. (PA Sup. 2017). The Plaintiff was married so we theorize he was an adult male. He got into a Tug of War game. The opinion of the court seemed to state this was part of the organized activity of the church event. The first game of Tug of War was mentioned, too, but not whether Plaintiff was victorious or whether he was an organizer, instigator, team captain or in the critical front or rear positions.

In the second game of Tug of War, either as a prank, a life lesson, or for some other reason (e.g., rope burns, unfair balance of the sides, sudden defeat, etc.), the team opposing the Plaintiff’s team suddenly dropped the rope and the Plaintiff’s team fell in a heap. Plaintiff suffered a “torn right ACL.” (The same injury happened to me in a church softball game in the ‘90s. I thought it was the result of age.) He required surgery and had other soft tissue injuries. The Plaintiff sued alleging that the person that called for the rope to be dropped was the Pastor.

The church asserted the defense of assumption of the risk. This defense typically applies to sports. Each sport has its “inherent risks” that participants knowingly encounter. The Plaintiff responded by claiming the call to drop the rope was a game changer that was not an anticipated risk. The Plaintiff claimed he had a reasonable expectation of how the Tug of War game was to be played. (Maybe the game is played differently in other places, but the winners I have witnessed almost always end up in a tangle on the ground after the defeated team is dragged across the line, through the mud, or through the water because the moment of victory is often sudden and the command to cease tugging has to be communicated to each of the completely focused victors, which with crowd noise is not always immediate. Ropes often break under the strain putting both teams on the ground in a heap.) Apparently, the appellate court members attended a Tug of War game or two.

“It cannot be disputed that falling down and colliding with other teammates are obvious and inherent risks of tug of war.” Opinion at 8. Finally, a statement of the law of Tug of War.

MUST OREGONIAN RELIGIOUS SCHOOLS IGNORE 1 CORINTHIANS 7?

In employment cases arising from religious schools, it often seems reasonable to ask if any background inquiry was made on prospective hiring candidates, especially teaching candidates? At a religious school, unlike a private commercial employer, hiring without knowing whether the past conduct of a new hire has been consistent with the religious school’s moral imperatives would seem counterproductive.

In Richardson v Northwest Christian University, Slip Op. (D. Oregon, Eugene Div., 2017), the federal trial court wrote a very interesting opinion concluding on the record before it that the church school fired a teacher based on “marital status discrimination” and allowed a disparate treatment / pretext basis for a sex / pregnancy discrimination claim. The teacher it was learned by the school was cohabitating with the other parent of an unborn child but the couple was not married. The school gave the teacher the choice to marry, or stop cohabitating, or be terminated. The teacher more or less rejected the first two choices and was terminated.

However, the court held that the case outcome was not determined by the ministerial exception or the ecclesiastical exception doctrine. Based on the record before the court, while the religious school’s employment manual seemed to refer generally to religious principles, the manual did not appear to spell them out (at least not sufficiently for a court in the federal 9th Circuit). That may explain the court’s conclusion. The teacher in question was an instructor of “exercise science.” The court found the teacher’s duties did not include “teaching scripture or praying with students.”

Prior to knowledge of the living arrangement or expected child, the school thought the teacher was unmarried. But, the school knew the teacher had two children. The school did not, insofar as it would seem from the court opinion, inquire as to whether the teacher was married or divorced. The lesson might be that while the inquiry might not have been made directly to the teacher at the application stage, a competent pre-hiring background investigation conducted under the appropriate written release would likely have revealed either a marriage or divorce, or both. Demanding personal references from others inside the religion of the church school regarding good moral character might provide notice of a variant life style. A religious school that can abide divorce, or children without marriage, may have a hard time at a later date trying to enforce its moral position as a religious school as to cohabitation of unmarried persons. (Even many churches have decided to tolerate divorce even in leadership because of its prevalence, so tolerating cohabitation may not be as big a leap as some would think.)

Also, a religious school that does not explicitly require, through employee manuals and contracts, its teachers to participate in religious education, prayer, or other on campus worship leadership may have created what an Oregonian court might consider a secular position inside the religious school.

TEXAS CHURCH SPLITS

A friend once reminded me that everything is bigger in Texas. That appears to apply to church splits, too. In Mouton v Christian Faith Missionary Baptist Church, Slip. Op. (Tex. Civ. App.-1st Dist., 2016), the Pastor died and a pulpit committee was selected to nominate a successor for a congregational vote to approve or reject. The pulpit committee nominated the deceased Pastor’s son as the successor Pastor. However, certain other church officers objected. They filed the first lawsuit to enjoin the congregational vote on the nomination in 2012. The trial court dismissed the case.

A congregational meeting was convened and the pulpit committee members and the son of the deceased Pastor were expelled from the church and a new Pastor was elected a month later, seemingly after a nomination by a new pulpit committee and in a second congregational meeting. The expelled pulpit committee decided to change the signature cards on the church bank accounts to obtain control of the accounts. But, the current signatory on the accounts would not confirm their authorization to do so. The bank filed an interpleader action, i.e., the second lawsuit. The bank account balances were ordered paid into the registry of the court and the trial court dismissed the claims of both groups, the prior pulpit committee and the newer pulpit committee. The prior pulpit committee also tried to replace church officers by filing a certificate with the secretary of state of Texas. But, prior such filings had been approved by the Pastor and because there was not one at the time of the filing, the court disregarded it. The trial court decision was affirmed by the appellate in the first appeal in 2014.

The parties returned to the trial court, without the bank this time, and resumed their cross claims against one another. The trial court dismissed all claims for lack of jurisdiction under the ecclesiastical abstention doctrine. The appellate court again affirmed the trial court. The appellate court held that merely because the bylaws of the church mandated a pastoral selection process did not did not make the claims of the parties “categorically reviewable by a civil court.” In other words, the courts of Texas would not select a Pastor and would not decide who was expelled from membership. Clearly, there had been a congregational vote and as far as the Court seemed concerned, that was the end of it. That the congregation may or may not have perfectly followed its bylaws by ousting one pulpit committee in favor of another was within the congregation’s prerogatives. Thus, the new Pastor remained in place and the members on the first pulpit committee remained expelled, and this group recovered the bank account balances from the court registry in the fullness of time.

The flaw in the bylaws that might have contributed to this problem was that the bylaws (as quoted by the court) did not with great clarity specify how a pulpit committee would be selected. The reality, too, was that the congregation could vote one way and be reconvened to vote another way even a short time later. One possible consideration is that a church that has lost a Pastor to death, retirement or attrition of any kind may want to consider engaging temporary pastors for as much as a year not only so that a careful pulpit committee search can be conducted, but to allow the congregation to adjust to the idea of a new pastor.