Category: Church Governance

INDEMNIFICATION OF ATTORNEY FEES

The statutes governing non-profit corporations in some states require that employees or “representatives” be indemnified for legal fees in lawsuits in which they are named because of their title or position in the non-profit.  Such statutes do not apply to personal matters that end up court.  However, even a matter that seems merely personal may be escalated by a Plaintiff searching for a Defendant with more resources than that of an individual.

In Kawimbe v African Methodist Episcopal Church, Inc., Opinion and Order (ND GA, 2021) the federal trial court in Georgia dismissed the Plaintiff’s lawsuit to recover attorney fees.  The Plaintiff was the subject of a disciplinary proceeding in the denomination that resulted in a jury trial.  The jury was composed of ministers of the denomination.  The Plaintiff hired legal counsel to conduct the jury trial and prevailed.  However, the legal fees amounted to $75,000.  The Plaintiff claimed the denomination owed the Plaintiff indemnification for the attorney fees expended defending the internal disciplinary proceeding.  The denomination’s governing document incorporated Pennsylvania law and Plaintiff invoked that state’s non-profit corporation indemnification statute.  The federal trial court, however, held the Ministerial Exception did not apply because indemnification for legal fees can be a matter of contract and decided using Neutral Principles of Law and that the indemnification issue did not implicate hiring or firing of clergy.  But, the federal trial court held that in order to determine if Plaintiff’s cost of defense of the disciplinary proceeding was incurred because of his “representative status,” as a Bishop, an element of the statute, the court would be required to inquire into ecclesiastical matters barred by the Ecclesiastical Abstention Doctrine.  The court held it would have to inquire into the duties of a Bishop, the nature of the disciplinary complaint in reference to the denomination’s governing documents and possibly other inquiries.

Written employment contracts that contain indemnification provisions may allow a court to invoke Neutral Principles of Law and decide whether clergy or non-clergy can recover attorney fees expended in their defense of claims, either internal or external.  Denominational governing documents and local church governing documents sometimes contain indemnification clauses, too, that can likewise be subjected to review under Neutral Principles of Law.  The reason may be that the court can assume the clause has been reconciled with ecclesiastical concerns and would not have been included if there was an ecclesiastical issue, or such an issue would have been stated in the clause.  Generic non-profit corporation statutes may not be as easily applied because no similar assumption can be made.

ONE LESS RISK FROM GOVERNMENT MONEY

Non-profit organizations that take federal or state funds usually must abide with governmental rules for use of the money, and sometimes other rules as well.  Church schools are the most prone to government intrusion if their funding is in part or in whole from government sources.  However, there are limits to the power of government money to compel submission by churches and denominations.

In Rutland v Nelson, Slip Op., Per Curiam (11th Cir. 2021), the federal appellate court affirmed dismissal of a case by a federal Florida trial court.  The Plaintiff was by church and denominational disciplinary proceedings banned from all church property and from speaking to the denomination’s clergy.  The federal trial court held that the Ecclesiastical Abstention Doctrine of the First Amendment barred judicial intrusion into church disciplinary proceedings and dismissed the case.  On appeal, the Plaintiff argued that because the denomination accepted federal funds, it was subject to judicial review of his complaints discrimination based on “disability, veteran status, and religion.”  The United States Court of Appeals for the 11th Circuit rejected that as a basis for shrinking or terminating First Amendment protection or expanding judicial authority.

At least for now, taking government money is not automatically a key to the church doors.

CHURCH POLICIES AND PROCEDURES AS A BASIS FOR FRAUD CLAIMS

In our report immediately prior to this one, the allegation in the case reported was that breach of the policies of the denomination or church by the church was a tort compensable in damages.  Generally, tort claims are “wrongful acts” that are committed negligently.  Intentional torts are generally those wrongful acts that are intentionally undertaken with the intent to injure, financially or physically, the damaged claimant.

In John Doe v Roman Catholic Diocese of Dallas, Slip Op. (Tex. Civ. App. 2021) the Plaintiff’s claim was that the Defendant committed “fraud by not following its internal policies for responding to sexual abuse after he reported he was sexually abused… .”  The trial court held that the internal policies for responding to sexual abuse were “so integrally related to …dogma that it comprises part of the … religious representations, beliefs and teachings.”  Therefore, the trial court dismissed the claim pursuant to the Ecclesiastical Abstention Doctrine.  The appellate court affirmed the trial court.  The appellate court held that an inquiry into whether the church violated its own policies “necessarily [required a] reach behind the ecclesiastical curtain.”  The appellate court held that an allegation that the church violated its own policy by mishandling its internal investigation of the allegation was such an inquiry.  The appellate court held that the allegation that the church violated its own policy by misinforming congregants of the investigation or its outcome was such a claim.

Internal church governance, its practices and procedures, are often of late the subject of claims.  The damages claimed range from defamation to failure to protect from a sexual predator.  There is no credible doubt that policies, practices and procedures of churches and denominations are driven by or drafted in conformity with religious beliefs.  Therefore, interpretation and compliance by a church or denomination with its policies or procedures will be driven by the same religious beliefs.  Nevertheless, churches and denominations should not consider the ecclesiastical barrier impenetrable.  Mandatory child sexual abuse reporting statutes in most states, for example, may not tolerate contrary church policies and procedures.  In any event, major decisions by leadership that are driven by church policies and procedures, especially those derived from religious beliefs, should be documented and the applicable policy or procedure annotated in the documentation.

CHURCH POLICIES AS TORT DUTIES

In most states, in order to recover on a tort, a Plaintiff has to prove up a duty to the Plaintiff, breach of the duty by the Defendant, and damages.  The unstated other element of proof is that the breach of duty actually caused the damages.  There are many duties imposed in the law.  However, while some secular duties can be imposed on a church or denomination, such as picking up the trash and mowing the lawn, not all can be.  Herein we often report on federal employment laws that impose duties on secular employers but not on religious employers.

In Woodward v Miller, Slip Op., consolidated appeals, (Miss. En Banc, 2021) the Mississippi Supreme Court reversed the trial court and rendered Judgment in favor of the denomination and a minister that was also a psychotherapist with a certification in sex addiction.  Miller was the original Plaintiff and the wife of a minister.  The minister engaged in risky homosexual behaviors with multiple partners as well as engaging in sexual relations with his wife.  The minister contracted HIV.  The wife contracted HIV.  The couple initially contacted another minister, Woodward, who was also a psychotherapist that attempted to assist the couple with the trauma.  The wife sued the denomination claiming that the denomination should have detected her husband’s sexual adventures and warned her by properly enforcing its own policies and procedures.  The wife sued the minister – psychotherapist for advising the husband to purge from his computer pornography and email, through which he engaged in the sexual conduct, resulting in spoliation of evidence.  The appellate court held the denomination’s policies and procedures could not form the basis for a tort duty because the courts would be barred from considering them by the Ecclesiastical Abstention Doctrine.  The appellate court held the minister psychotherapist consulted after the wife knew of the HIV infection did not spoil evidence in a future hypothetical civil claim but rather was only alleged to be treating an addiction.

The duty to treat homosexual conduct no differently than any other type of sexual conduct is imposed on secular employers through federal anti-discrimination statutes.  Such a duty is not imposed on church employers because of religious entity exemptions in such statutes and the Ecclesiastical Abstention Doctrine of the First Amendment.  The closer question will probably always be whether the actions taken by the denomination spoiled evidence of wrongdoing.  For example, in the reported case the computer hard drive could have been taken into “protective custody” by the denomination as a means to “purge” the tools of addiction temptation rather than “purged.”  But, spoliation without motive is usually not actionable.  The minister psychotherapist was not alleged to have any motive.