Category: Uncategorized

THE FINAL JUDGMENT, AGAIN

Increasingly, it seems, in civil litigation, following a similar trajectory in criminal law, there is no closure. Church litigation is increasingly no exception.

In September 2017 and then in December 2017, federal court and state court opinions in Patterson v Shelton, were reported herein. See the post, And Then Again, Maybe Not. In 1991, the founder and pastor of the church died. The power struggle that ensued was the stuff of legends, dueling and feuding, that is. It resulted in published appellate opinions in 2013 and 2017: 175 A3d 442 (Pa. Cmwlth. 2017); 78 A3d 1092 (PA. 2013). The first conflict involved the struggle to determine who was in charge. The second wave involved the conclusions of a forensic accounting investigator that hundreds of thousands of dollars were misappropriated by the church leadership that succeeded the founder. The third wave involved an arbitration decision in 2006 in which the arbitrator was persuaded by the forensic auditor and appointed a receiver to recover the assets of the church. The appellate court overturned the arbitration award concluding the arbitrator went beyond the scope of contractual authority in fashioning relief. See, 942 A2d 967 (Pa. Cmwlth. 2008). The fourth wave of litigation was the claim that Patterson was not a church leader but merely a member and did not have standing under the not for profit corporations statute to bring the claims. The appellate court overruled the trial court and held as a church member and beneficiary of the not for profit corporation, the church, Patterson had sufficient standing to bring claims. The fifth wave was marked by a bench trial regarding the claims conducted in 2014. The trial court concluded it did not have jurisdiction under the Ecclesiastical Abstention Doctrine of the First Amendment and dismissed the case. That had the effect of leaving the arbitration award as the last determination because the trial court, in effect, held that every decision made thereafter lacked jurisdiction. In the sixth and latest wave of Patterson v Shelton, the trial court was asked to strike its orders enforcing the arbitration award as the final judgment. The trial court declined. The appellate court affirmed.

One reason this litigation became so protracted was that the courts made two errors. The courts did not inquire into their own jurisdiction and its limits early in proceedings. The other was to allow judicial hostility to arbitration to again raise its long discredited visage. Arbitrations are no more or less effectual as dispute resolution mechanisms than jury trials. While judges may have greater experience than arbitration panels in dispute resolution, which in some cases would make a bench trial a better forum, the routine case does not benefit from such experience enough to invalidate the arbitral forum. Only arbitral forums that are either so expensive or so without procedural safeguards that their decision making is suspect are inferior in the typical routine case. However, if the parties contractually selected the forum, it should be assumed both sides knew the costs and the risks. If an arbitrator’s awarded relief seems to exceed the contractual grant of authority, the better practice is to either judicially revise the relief given or to remand to the arbitrator for the revision. Simply vacating the award leads to a quagmire.

DISCIPLINARY DEFAMATION

If a church through its local governing documents and denominational, if any, governing documents requires that disputes between members, especially church leadership, must be resolved pursuant to a particular procedure or process, then courts are likely to hold that defamation claims by the disparaged member or leader are barred by the Ecclesiastical Abstention Doctrine. This may be true even if the disparagement “leaks” out into the community and is not solely confined to the church.

The case of In Re Alief Vietnamese Alliance Church and Phan Phung Hung, Slip Op. (Tex. Civ. App. 1st 2019) was a request by a church for a writ sought from the appellate level to preclude the trial court from proceeding with a defamation lawsuit. The trial court overruled a plea to the jurisdiction. The appellate court ordered the trial court to dismiss the case on jurisdictional grounds or the appellate court would issue a writ of mandamus ordering the trial court to do so. In Texas, the Ecclesiastical Abstention Doctrine is a bar to exercise of jurisdiction by a court in most instances. However, the facts recited by the appellate court, and that the appellate court was not itself unanimous, demonstrated the factual uncertainty that might have led the trial court to decide it should proceed. The allegations of the disparaged person seemed from the appellate majority opinion more certain regarding internal church disciplinary disparagement but less so with regard to intentional or reckless dispersal beyond the confines of the church. Mere slight “leakage,” my words for brevity and not the court’s, did not seem sufficient to the majority to mutate the internal disparagement inherent in disciplinary matters, true or not and with or without malice, to defamation outside the shield of the First Amendment.

Discipline is inherently disparaging, at least to certain hearers. It is always based on an alleged violation of church procedure, church law, or morality endorsed by the church in some manner. Thus, church leadership should carefully keep such matters confidential even as to members that do not need to be informed. Greater still should be the confidentiality maintained with regard to non-members. The only exception to either should be in those rare instances when a governmental law enforcement agency must be involved, e.g., child abuse, child pornography, child neglect and offenses requiring registration as a sex offender. Even then, a church should engage legal counsel to determine what is safe to report or shield from the public and or the membership. The test is legal; it is no longer based on a belief or lack thereof in “guilt.”

THE REACH OF DENOMINATIONAL AUTHORITY

Denominational authority over a local congregation or its property is rarely extinguishable at the local level. If it is severable, the process is likely long and arduous. The process often depends upon unilateral agreement by the denomination which is historically unlikely to be obtained for any reason. Indeed, it is so unlikely the better plan is simply to develop external resources and then quietly exit the denominational local church, leaving behind a shell.

In Cedar Grove Baptist Church v Barnham, Slip Op. (Unpublished) (NJ App Div., 2019), the pastor advised the denomination he was leaving the denomination and taking the church with him. Apparently, however, his plan was not known, and later not supported, by the church he served. Indeed, in the ensuing battle over the local church property, the church leadership appointed a new pastor and then sued to enjoin the former pastor from control or presence on the church property. The trial court granted the injunction and the appellate court affirmed.

While instinctively church members think of the local church and its property as “theirs” and not the denomination’s property, this is rarely totally true. If a church has been a member of a denomination for many decades generations of the faithful have contributed to its existence. While the current generation may disdain the denominational roots, the denomination speaks for the generations that went before that now have no other voice. However that may be, denominations that themselves “go rogue” or no longer meet the need of a particular local church cannot stop a group of members from leaving and organizing under a different banner using their own resources. While growth by fission is painful, it is not illegal.

MANDATORY CHURCH MEDIATIONS

While placing a church under external supervision is a rare exercise in judicial power, it is not unheard of. We have reported on imposition of Special Masters, especially to determine membership or supervise elections. Mediators and Special Masters are not always different species. Also, mediators sometimes do not use shuttle diplomacy between striving factions but rather impose procedures, as do sometimes Special Masters, so that the resolution process may advance. If a church split is bad enough, and cannot be resolved merely by reviewing organizational documents, then a mediator or Special Master may be appointed.

In Eskridge v Peacock, Slip Op. (Miss. App. 2018), after the death of a pastor, two striving factions emerged each attempting to appoint the next pastor. There appeared to also be a fracture in recognized church leadership that made congregational rule either a stalemate or problematic. To resolve the impasse, the trial court appointed a mediator with instructions to conduct a congregational election. The mediator appointed was the denominational authority to which the church appeared to belong. Indeed, the court had to take testimony to confirm the church was part of the denomination appointed to mediate. A new pastor was elected under the supervision of the mediator but the losing faction appealed. The appellate court held that appointment of a mediator to supervise the congregational vote and ordering enforcement of the result, but not otherwise dictating the choice of pastor, did not entangle the trial court in ecclesiastical matters so the trial court was affirmed.

Churches may wish to contemplate in their bylaws mandating the appointment of an identified mediator in to be used in the event of court action. Possible mediators could include denominational authority, bible college faculty, or a particular accounting or lawfirm. Indeed, the language of the appointment could also include mandatory pre-litigation requirements that such a process be undertaken. The language should also specify the powers of the mediator or Special Master. A funding mechanism should also be spelled out. Demanding the challenger pay half or all of the cost may keep out all but serious challengers.

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.

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.