Category: church employment

CHURCH LITIGATION SETTLEMENT AGREEMENTS

It is possible to settle a dispute without litigation or without completing the litigation process. Settlements can reduce costs and give the parties some control of the resolution. When a resolution is left to a trial, all control can be lost. In order to settle a lawsuit, parties often resort to mediators. Typically, the mediation is concluded by either no agreement at all or some document that constitutes an agreement in principle if not the final contract of settlement.

In Christian Methodist Episcopal Church v Grimes, Slip Op. (Ind. App. 2019), the pastor was serving under an agreement to be paid but was not actually paid. The inability of the church to pay resulted from a “downward spiral” caused by the departure of the prior Pastor. The departing Pastor took most of the membership with her. The successor Pastor served for five years without being paid, although everyone admitted there was a contractual obligation of the church to pay when its finances recovered. The successor Pastor terminated his employment and sued to be paid. During the mediation conducted to try to settle the case within the assets available, an agreement was reached with “reasonable certainty.” The church did not pay and the former Pastor alleged breach of the settlement contract. While the facts recited by the Court regarding the mediation settlement agreement indicated there may have been no meeting of the minds which might mean there was no settlement contract, the church did not contest the motion to enforce the agreement filed by the Pastor. The church appealed the Judgment on the settlement agreement and argued the Court had no jurisdiction to hear a dispute about employment of a Pastor. The Court held the Ecclesiastical Abstention Doctrine did not prevent a court from enforcing the settlement agreement with the Pastor by imposing Neutral Principles of Law.

A settlement agreement is a contract and if a court finds that such an agreement exists, the court can enforce it by any means that would be used in a secular contract enforcement action. It seems extremely unlikely that any lawsuit settlement agreement entered into at a mediation would be unenforceable. It seems more likely that a settlement agreement would be subjected to the Neutral Principles of Law faster than any other agreement involving a church. That would likely be true even if the settlement was regarding the payroll of a Pastor. While Pastoral employment is usually shielded from court review by the Ministerial Exception, a written employment contract is more likely to be enforced applying Neutral Principles of Law. A settlement agreement arrived at by mediation to settle a lawsuit regarding a Pastor’s employment is even more likely to be judicially enforced.

TERMINATED PASTOR’S CONTRACT RIGHTS

The lack of any written contract will generally make a Pastor an at will employee. Termination would be governed by the church or denominational governing documents however the process may be outside the reach of a secular court because of ecclesiastical concerns. When there is a written employment agreement, secular contract terms in a pastor’s written employment contract may be subject to the Neutral Principles of Law in many jurisdictions such that a breach of contract action might be successful. However, termination decisions are generally at best both religious, or moral, and secular decisions the mix of which might put the termination decision outside of the reach of a secular court. Thus, enforcing a secular contract term in a termination may be problematic. Because of the entanglement between religious reasons for termination and secular reasons for termination of a minister, the Ecclesiastical Abstention Doctrine of the First Amendment will generally preclude judicial intervention in terminations. Some judges, and some courts, will believe the secular contract terms can be surgically separated from the termination. However, it seems that most courts will not be comfortable trying to parse the factual issues.

In the case of In Re First Christian Methodist Evangelistic Church, Slip Op. (Tex. Civ. App. 5th, Dallas, 2019), the appellate court ordered the trial to court to dismiss the case. The trial court apparently believed it could parse secular contract issues, such as entitlement to a six-month severance, from whether the termination was for religious cause. Because the termination resulted from a vote of the qualified congregation members, verifying the exact reasons for termination would have required an exhaustive inquiry. At the end of the factual inquiry, there still would have been no logical way to separate the termination of the pastor from religious reasons that might or might not impact the right to severance.

Pastors should avoid “for cause” termination provisions. A church will always have a “for cause” basis if pressed. Such a clause probably offers no protection. If there is a severance provision negotiated, it should be triggered on involuntary termination only and not on the reason for the termination. The Pastor may be unable to enforce the provision if a severance provision is dependent on conduct. The “I did nothing wrong” defense tends to be irrelevant to courts if the claimed “wrong” is religious in nature. Because it is unlikely the severance package negotiated at the date of hire is likely to be as expensive as litigation, the hiring church might share that preference with the Pastor. For the church, finality in the conclusion of the relationship may be more cost effective than a prolonged dispute over whether a severance package is “deserved.”

THE NOT RELIGIOUS ENOUGH TEST OF THE 9TH CIRCUIT – 2ND VERSE

In December 2018, as reported herein, the United States Court of Appeals for the 9th Circuit decided Biel v St. James School, 911 F3d 603 (9th Cir. 2018), by holding that the school teacher could sue the Catholic school making federal employment law claims. The 9th Circuit held that being required to teach Catholic religion thirty minutes a day was “no religious requirement for her position.” Likewise, the requirement, and the apparently mandatory training that went with it, that Catholic religious doctrine be incorporated in other lessons was “no religious requirement for her position.”

An appeal was taken to the 9th Circuit En Banc. This is a not often used procedure by which the three judge panel opinion could be accepted for review by all the sitting judges of the court of appeals for the 9th Circuit. In Biel v St. James School, Slip Op. (9th Cir. 2019), the majority of the 9th Circuit judges did not vote to review the three judge panel decision reported in 2018. However, nine of the 9th Circuit appellate judges dissented from the denial of en banc review. The 9th Circuit is authorized to employ 29 appellate judges appointed by the President and confirmed by the Senate. The dissent criticized the original panel decision in a written opinion, which is unusual. The dissent took the factual position, summarized above, the school teacher was religious enough to trigger First Amendment protections for the Catholic school and disqualify the school teacher from suing pursuant to federal employment statutes. The dissent noted the 9th Circuit was by its opinion at odds with the decision of the other United States Courts of Appeal. Also, the dissent alleged the legal test the 9th Circuit developed conflicted directly with the leading decision of the United States Supreme Court in Hosanna-Tabor Evangelical Lutheran Church & School v E.E.O.C., 565 US 171 (2012).

Will the nine appellate judges of the 9th Circuit that dissented be a loud enough voice to reach the ears of the United States Supreme Court should an application be made for certiorari by St. James Catholic School? For para-church organizations, including church schools, in the western United States, this could be of serious import. If the 9th Circuit decision stands, employment insurance costs, for example, will rise considerably. Indeed, rates may go up across the nation to funnel resources to litigation costs and settlements arising out West that are insured. Organizations that reduced or even eliminated employment litigation insurance coverage, which would be a bad judgment call in any event, may again find themselves at risk.

MINISTERIAL VOWS

There are few monastic or other orders remaining and there are few members of them. Evangelicals have generally not developed monastic traditions. Indeed, among some evangelicals, the ordination of the minister persists as long as there is a paycheck and the minister’s vow of poverty is involuntary. Nevertheless, the question of whether these vows are enforceable may arise in secular matters involving ecclesiastical monastic orders.

In Wisconsin Province (“Jesuits”) v Cassem, Memorandum of Decision on Defendant’s Motion to Dismiss (D. Conn., 2019), the federal trial court has before it a lawsuit in which a deceased Jesuit left a retirement savings account. As a Jesuit, he had contributed his earnings to the order all of his life pursuant to his vow. The order provided his living expenses since age eighteen. The bulk of his earnings, however, were derived from a very successful and prominent career as a research psychiatrist. Indeed, the retirement account at issue, which was valued at about $1.5 million, was maintained for most of its existence with a beneficiary designation that named the Jesuit order. Late in life, the Jesuit suffered from dementia and returned to reside with his family during the last years of his life. Sometime during that period, the Jesuit allegedly changed the beneficiary designation on the retirement account from the order to family members. The trial court dismissed the Jesuit’s request for a declaratory judgment that the Jesuits owned the account based on the lifelong vow of its deceased member. The court held that the vow was a contractual obligation of the deceased to the order. Remaining would be whether the order could seek contractual enforcement of the vow against the estate of the deceased Jesuit and whether that contract would supersede the beneficiary designation. That question was not answered in this opinion.

Whether an ecclesiastical vow is enforceable as a contract in a secular court would require a court to determine if the First Amendment Ecclesiastical Abstention Doctrine precluded the claim. Modern church organizations should assume an ecclesiastical vow will not be enforceable in a secular court in most situations, especially if the vow must be enforced against persons not members of the church organization in which the vow was made. For example, the retirement account should have been largely drained by the order with the assistance of the Jesuit upon retirement, if the order was aware of the account, instead of awaiting distribution upon death.