Category: Uncategorized

LITIGATING ABOUT LITIGATING – COMPLEXITY AS A DEFENSE

A state trial court case can be removed to federal court by a Defendant if the Plaintiff raises a theory of recovery that is based on federal law. If the Plaintiff’s theories of recovery are only based on state law, federal question removal is not available. The Defendant cannot create the federal question. The Plaintiff’s claim must do so.

In Savoy v Savoy, Order, (D Nev. 2017), the Plaintiff requested an accounting, claimed breach of fiduciary duty, and requested relief such injunctive and declaratory rulings. All of the theories of recovery and claims for relief were based solely on state law. None were based on federal law. The Defendants removed the case from state court to federal court claiming the Plaintiff’s claims would necessarily require court interference in ecclesiastical matters and that such interference is prohibited by the First Amendment. The federal case was remanded back to the state court.

That the Plaintiff’s state court pleading referenced “church canon” and “church law” did not change the Plaintiff’s theories of recovery from state law based claims to claims based on federal law. The Defendant’s defense based on the ecclesiastical abstention doctrine did not alone create a federal question. The Defendant’s defense based on the ecclesiastical abstention might apply but would have to be pressed in state court.

While federal constitutional rights are not as often the grist of state law claims, such rights are enforceable in state courts and should be pressed as fully. Indeed, because of the lower frequency of appearance, most state courts would tend to take genuine federal rights defenses seriously and review them carefully. In any event, even if faced with a state court that is less than an enthusiastic student of federal constitutional rights, litigating about litigating is often a better defense from a cost of defense perspective than a defense on the merits.

FIRING THE PIANO PLAYER

It is hard to imagine a church that has a constitution and bylaws so primitive that they still require that termination of any and every church employee be the subject of a public congregational meeting and vote. Not only would feelings run high in such a meeting, what might be said might make it impossible to salvage the church leadership or other employees. While the senior most pastor employed by the church might need to be subjected to a congregational meeting and vote in some traditions and denominations, it is hard to imagine a valid purpose for subjecting subordinate ministry staff, support or clerical staff to such a chaotic process.

Nevertheless, in Lippard v Holleman, Slip Op. (NC App. 2017)(unpublished), the piano player with 34 years of tenure was presented for termination to the congregation for a vote. But, after what is described as a full court press by the senior pastor, the congregation voted to retain the plaintiff. Both leading up to this meeting and in the events afterward, the piano player alleged she and her husband, a deacon, were defamed by the senior pastor and music minister. The case was procedurally tortured by the withdrawal of the piano player’s first lawyer, assignment to multiple judges, and the new lawyer filing an entirely new lawsuit.

The defendants alleged the Ecclesiastical Abstention Doctrine deprived the court of jurisdiction. Of course, the problem was the justification put forward by the senior pastor for termination did not stay private, did not stay in the congregational meeting, and was alleged to have been untrue. The appellate court reversed the trial court dismissal and sent the case back to the trial court to be heard as a defamation case.

One lesson is that the church should have had modern bylaws making employment issues private and the exclusive domain of the church board or the senior pastor. (The choice between these two is usually made based on the tradition of the denomination or the church as to the authority to accord to each but in this discussion it will be assumed the selection of the church board, whatever it might be called, is the preference.) Modern bylaws would have required the piano player’s husband to be excused from a board meeting about the employment of his wife. The likelihood a pastor could survive in a congregation that would not support his recommendation to replace a staff member or clerical person, including a piano player, seems low.

Another lesson for pastors and church board members is that employment issues should be treated as confidential, especially in “at will” jurisdictions. Indeed, one might argue the “civil procedure” set forth in Matthew 18:15 starts in private in its first stage, and only in the escalated stage does it go to the congregation or the public, and then only on disciplinary matters. Employment, which is a financial relationship, should rarely, if ever, be treated as a disciplinary matter unless there is simply no choice. Otherwise, spilling out into the street and the civil secular courts is more likely.

BOARDS AND TITLES

Church boards are called by a plethora of names and titles. Some of the names and titles are derived from scripture, some from state statutes, and some from old traditions no longer followed. Generally, churches do not call their board a “board of directors,” partly because of the history of church corporation statutes in some states, and sometimes to avoid business or commercial trappings. Regardless of the name or title, church boards derive their authority from foundational documents. Usually local church corporate bylaws at the least define the power and authority of the board(s) but denominational foundational documents can also limit a local church board’s reach or require prerequisites to the exercise of authority.

Usually, a single board member can do little or nothing. In the past, a small church by statute might have only a single trustee (or whatever name or title is given) authorized to transact the church business. But, in the more modern era corporate church bylaws usually require three trustees or more to transact business.

In Burns v Kingdom Impact Global Ministries, Inc., Slip Op. (NC App. 2017), one faction tried to withdraw the church from the denomination and then ousted the faction that tried to stay with the denomination. The faction leading the withdrawal charge tried to merge a new corporation with the existing church corporation and “merge it out of existence.” A trustee of the “merged” corporation was called upon to transfer real estate titles from the original church corporation to the “merged” surviving church corporation. Some, and maybe all, of the board members of the original church corporation, and members of the ousted faction, sued the “merged” surviving corporation and alleged the sole trustee that signed the “merger” documents and the transfers of property titles did not have sufficient authority to do so. The trial court and the appellate court agreed.

The corporate “merger” may have been an attempt to strip the denominational exclusivity language from the bylaws and to achieve withdrawal from the denomination. The effort failed because the records of the congregational votes taken to authorize these actions seemed dubious to the court. Also, the trustees that had authority to transact the church’s business did not authorize the transactions and the sole trustee that acted did not have sufficient authority to act alone. One of the properties sought to be transferred contained a restrictive title covenant that the “merged” corporation could not meet because it was never affiliated with the denomination. In any event, this was nearly an ignominious end for a seventy year old church.

One other lesson seems to be that churches should probably update their property titles and bylaws periodically, probably every decade, and employ competent counsel to assist. Another would be that concentration of authority may be needed in a new church work but should be wielded by a church board acting as a collegium as soon as the church is mature enough to own real property.

BYLAWS AMENDMENTS AS ESCAPE HATCHES

The local church existed for 163 years and had been voluntarily affiliated with five different denominational groups. Thus, this was not the situation often seen in which the local church was actually founded by the denomination. The local church decided to disaffiliate due to theological issues from the fifth but the denominational document imposed a property trust on the local church. The disaffiliation process led to a final break and the denomination sought foreclosure on the local church property pursuant to the property trust. However, a couple of years before commencement of the disaffiliation process, the local church amended its corporate bylaws and removed the property trust. Thus, in the foreclosure action, the local church submitted a defense based on the bylaws that contained no property trust clause. It worked.

In Presbytery of the Twin Cities Area v Eden Prairie Presbyterian Church, Inc., Slip Op. (unpublished) (Minn. App. 2017), the summary judgment for the local church was affirmed. The court noted that the denominational document only recently had been amended to claim that property “is a tool for the accomplishment of the mission” and based on that language the denomination claimed the property dispute was ecclesiastical and had to be resolved by the denomination. However, while the denominational document prohibited revocation of the property trust clause by the local church, it did not preclude bylaws amendments by the local church. Therefore, because the trust language was erased from the local church bylaws by an amendment that was not prohibited, it was valid.

The court held there was no proof that the hierarchical “ruling” of the denomination in support of the property trust was inviolate because it did not appear to be a matter of “polity or faith.” There was no proof it was a matter of “polity or faith” because the local church was not prohibited by the denominational document from amending its bylaws. Thus, without an ecclesiastical issue the neutral principles doctrine looked at the applicable church bylaws, found no remaining property trust after the amendment of the bylaws, and entered judgment for the local church.

The court also rejected “this notion” that property was a “temporal tool for the accomplishment of the mission of Jesus Christ in the temporal world” that would always be an ecclesiastical issue. Even if it was true, the local church had been paying for its property for a century before it joined the fifth denomination and the denomination could not claim it was acting as trustee for the contributions of denominational members except in the last third of the local church’s existence.

For local churches considering severing denominational ties, the lesson is that the foundational documents of the local church may still be lawfully amended in some instances. A denominational property trust might be neutralized. For denominations, the lesson is to limit unapproved local church bylaws amendments. Another technique is to make sure the title documents reflect the property trust. However, a notation on title documents might impair credit worthiness for future refinancing or under an existing mortgage may not be possible.