In recent years, judgments against churches or denominational level organizations, generally in sexual abuse cases, caused churches and denominations, as well as their insurers, to consider previously unthinkable asset exposure. When assets cannot be marshalled sufficiently to pay the judgments and preserve the church or denomination as a going concern, other avenues are considered. One that has been used is bankruptcy. Unfortunately, bankruptcy is not always a panacea.
In re Roman Catholic Church of the Archdiocese of Santa Fe, Opinion [and Recommendation] (Bkr. D. NM, 2020), the United States Magistrate recommended to the District Judge that the Unsecured Creditors’ Committee be authorized to submit avoidance claims that the Archdiocese, as Debtor in Possession, did not file. The creditors’ committee alleged that fraudulent transfers were made to a real estate trust, to or among a financial assets trust, or to avoid the parish churches’ claimed interests in property titled in the name of the Archdiocese. Several years before the bankruptcy petition, the Archdiocese restructured by transferring real estate held in its name to a real estate trust. Also, much of the real estate was held for the parish churches and actually purchased by the parish churches in prior decades before the parish churches were established as entities such as non-profit corporations. The federal magistrate noted that some or all of the transactions alleged to be fraudulent might have been made so long ago that the statute of limitations might prohibit further action. The Archdiocese argued that many of the transfers, especially those involving parish churches, were the result of internal church governance. The Archdiocese argued the Ecclesiastical Abstention Doctrine would preclude unwinding of those transfers. The Magistrate recommended the argument be rejected by the District Judge of New Mexico because the bankruptcy code was a Neutral Principle of Law. The Magistrate recommended that the underlying abuse claims be settled by the Archdiocese and the claimants rather than “millions” of dollars spent resolving fraudulent transfer claims. The transfers alleged to be fraudulent according to the Magistrate represented $150,000,000 in assets.
The Archdiocese failed to reorganize in the 20th century and the efforts to do so in the 21st century may be judged too late or too suspicious. The parish churches should have been incorporated, their property should have been titled in the name of the parish church, and warranty deed reservation clauses to the Archdiocese would have probably protected the Archdiocese from defections. Other church and parachurch organizations should have been formed to fulfill the same function. In other words, the body should have had many parts by the end of the 20th century. The lesson should not be lost on other denominations not to repeat the mistake. The other possible lesson is that bankruptcy protection may sometimes help the claimant more than the respondent, because it forces the respondent to put all of its assets on display.
Home field advantage is a substantial advantage. In litigation, sometimes it favors the Defendant and sometimes the Plaintiff. Additionally, the court near the Defendant’s headquarters might be the “forum” with the more advantageous laws, such as stricter statutes of limitation. Also, defending a case or prosecuting a case in a court distant from homes and headquarters can be expensive, in part because of travel costs, but sometimes because a local lawyer must be engaged to assist the lawyer of choice not admitted in the distant court.
In Doe v Archdiocese of Philadelphia, Opinion (D NJ, 2020), the federal trial court rather than dismiss the Plaintiff’s case transferred the case to federal trial court in Pennsylvania. The New Jersey trial court held it did not have personal jurisdiction over the Defendant in the case presented. The Plaintiff alleged the employee priest sexually abused the Plaintiff in both Pennsylvania, the location of the local church facilities, and in a beach home in New Jersey. The abuse continued for a short time even after the priest was transferred. A quarter of a century later, the priest was laicized. The federal trial court held that the priest was not acting in course and scope of employment as a matter of law while sexually abusing Plaintiff, therefore, making the transportation of Plaintiff to New Jersey not an act attributable to Defendant which might have conferred jurisdiction. The Defendant did not purposely direct its activity to New Jersey that caused the harm to Plaintiff. The Defendant did not have a “substantial connection” to the forum, New Jersey, that was related to Plaintiff’s claims. However, the Defendant did own property in New Jersey, but that property was not involved. (While the ownership of the beach house was not mentioned, it was apparently not owned by the Defendant.) The employment and assignment decisions over employed priests was not carried out in New Jersey.
The reported case might have been quite differently decided. Because the Plaintiff alleged sexual abuse occurred at the New Jersey beach house, the court could easily have held that the alleged wrongful conduct of the Defendant in failing to supervise, hire, and inquire as to reasons for transfer was substantially connected to the events in New Jersey. The beach house trips involved the priest and several young boys, only one of whom was the Plaintiff. For example, a trucking company can usually be sued along with their employee driver at the location of the accident irrespective of whether the trucking company directed the employee driver to travel through that state or to drive negligently, recklessly or drunkenly. A church bus in a foreign state engaged in a mishap will likewise likely cause the local church to be named in the foreign state court, probably even if the driver borrowed the vehicle for a personal trip.
There are movements afoot, that may or may not be successful, to make criminal convictions non-public and to ban employers from considering convictions, much less allegations that did not lead to convictions. The concerns behind these movements is that persons convicted of crimes, especially felonies, are permanently “marked” and find employment problematic. Meanwhile, there are movements afoot, that have had marked temporal success demanding transparency regarding allegations of sexual misconduct against those in power and especially in the clergy. Those targeted by such allegations, even though the allegations are no longer actionable or prosecutable are often similarly “marked” and their future employment impaired. Persons against which allegations were made but for which no conviction resulted may resort to civil lawsuits to try to clear their name or suppress continued reporting of pending or unresolved allegations.
In Kaucheck v Detroit Free Press, Slip Op. (Mich. App. 2020), a priest was suspended from public ministry in 2009 regarding allegations of sexual misconduct after an “independent investigation” determined the allegations were “deemed substantive.” The church process regarding the allegations remained in the “Congregation for Clergy at the Vatican.” The priest founded in 2016 a ministry to teenage pregnant females at which he served as an ex-officio board of directors member and “director of development.” The ministry was not officially affiliated with the church. A public outcry ensued which found its way onto the internet and finally into the news media. The Plaintiff sued the news media and the individuals and organizations complaining about the Plaintiff’s involvement in the ministry to teenage pregnant females. The trial court granted summary judgment to the defendants. The appellate court affirmed holding that the statements made were not defamatory because they were true and because public reporting of the allegations and the outcry was protected non-actionable First Amendment speech.
The structural flaw in the Catholic church is that the final decision to defrock or exonerate a priest, bishop or cardinal cannot be completed in a timely manner. In the case reported the case remained unresolved after eleven years. Thus, the Plaintiff was left before the public as a priest. The announcement of the church that the Plaintiff was “banned from public ministry” was not emblazoned on Moses’ tablets and was prone to being lost in the mists of time. The Catholic church could restructure such decisions so that national level determinations are made by a “jury” of the leadership. Appeal to a Vatican level review could be by application for certiorari, much like the United States Supreme Court.
Evangelical denominations move more quickly but then must require their local churches not to allow defrocked clergy into local church leadership positions. Verification should be practiced by an annual review of the names of local church leaders and employees. In the age of computers, this is not an insurmountable task. Non-denominational churches should actually call church leaders at prior employers, rather than only conduct inexpensive criminal conviction background checks (which have their own problems in the age of identity theft and identity obscuring). Personnel file waivers can be signed by candidates for employment that allow personnel files to be retrieved from prior employers to verify that there have been no sexual misconduct complaints.
Churches want clergy that are “called” to be clergy. What that might mean in any given individual or church context may differ, but the idea is that somehow the Heavenly Father made this choice and not the individual candidate or the church. Determining when someone has such a “calling,” without an objectively observed and verified Divine action, is a subjective determination. Sometimes, it is simply assumed.
In Doe v Apostolic Assembly of the Faith, Order, 2020 WL 1684227 (WD Tex. 2020), the federal district overruled a Motion to Dismiss. Motions to Dismiss are heard by courts at the inception of a lawsuit so that the court can exercise a gatekeeper function to prevent legally prohibited or frivolous lawsuits from proceeding. If the motion is overruled, the case proceeds through the pleading and discovery stage and may be disposed of by summary judgment or trial. Jane Doe, an underage female, was photographed in the nude with her youth pastor by the youth pastor at a hotel during a youth event. The photograph was posted to social media. The youth pastor pled guilty to interstate travel to meet a minor for illicit sexual conduct and was sentenced to 71 months of incarceration, post-incarceration probation of fifteen years and sex offender registration. The Plaintiff alleged that the church hired and ordained the youth pastor without conducting any interview as to training or fitness. This seems to have occurred because the youth pastor’s father was a pastor and a denominational officer. During travel events, the youth pastor was not otherwise supervised.
Failing to interview and screen church staff that will be charged with ministering to minors is all but indefensible. Churches that can afford to do so but do not have staff Human Relations professionals can engage an “HR” firm to conduct initial screening and background investigations. As to youth pastors and staff teachers, churches and church schools should impose strict written rules about communications with minors and children. Violation of the rules should result in immediate termination. Youth pastors and teachers that are permitted to interact with minors or children via social media should be restricted by policy to using only approved platforms and approved devices. Personal devices and unapproved social media platforms used should result in immediate termination. Parents should be made aware of these policies, approved devices, and approved social media platforms. Approved devices and approved platforms should be routinely inspected by other church staff for policy compliance.