Category: Uncategorized

CHURCH CONTRACTS ENFORCEABILITY

The sanctity of contracts is so revered in the United States that contracts are preserved and protected in the Constitution of the United States. Article 1, §10, US Constitution. Indeed, the section prohibits any state from making any law that impairs the obligation of contracts. Thus, it should not be a surprise that a claim based on a written employment contract might survive assertion of the Ministerial Exception and the Ecclesiastical Abstention Doctrine arising from the First Amendment. The idea is not that one clause overshadows the other, but rather that they are co-equal in force and must be reconciled so that both survive.

In Sumner v Simpson University, Slip Op. (Cal. App. 3rd, 2018), the Dean of the Tozer Theological Seminary, a part of Simpson University, asserted a breach of contract claim and state tort claims, such as defamation arising from her second termination. She was reinstated after her first termination and compensated for lost wages so the first termination was not argued. However, violation of what might be characterized as a corrective action plan, an insubordination charge, was alleged to be the basis of the second termination that resulted in the lawsuit. The trial court granted summary judgment because Simpson University and the seminary were religious organizations and the Dean, who also taught in the seminary, was deemed to be subject to the Ministerial Exception. The California appellate court sustained summary judgment as to the tort claims under the Ministerial Exception. However it reversed the trial court as to the breach of contract claim. Succinctly, the conclusion of the appellate court was that a contract claim could be decided under Neutral Principles of Law. The appellate court held that a charge of insubordination might or might not be based on religious doctrine. The facts recited by the Court would lead to the conclusion the alleged insubordination may have been regarding secular administrative matters rather than religious matters. However, because the trial court might still be confronted with a religious question as the proceeding developed on remand the appellate court did not foreclose a future dismissal of the claim.

While church hierarchy, ministers, pastors and priests may not be able to assert claims arising from an alleged breach of a written contract in most cases, employees of parachurch organizations with dual roles, secular and religious, may still be able to do so. Much will be determined by whether the termination arises from religious matters or secular matters. Characterization of a termination as religious will be reviewed for authenticity. Therefore, written employment contracts should be written and negotiated carefully. Adverse employment actions should always be carefully documented and especially consistently with any existing written contract governing the relationship. A contract is at its core a promise, and churches should expect to have to keep those they enshrine in written contracts.

TITLE VII EXEMPTION – RELIGIOUS ORGANIZATIONS

Parachurch organizations, religious entities that are not churches or non-profit entities that are directly or indirectly owned and controlled by churches, struggle at times with whether the Ministerial Exception or the Ecclesiastical Abstention Doctrine, both arising from the First Amendment, apply to various legal questions. This struggle is most pronounced when dealing with state law tort, employment or contract questions. It is less pronounced with regard to federal law claims, or at least, it should be.

In Aguillard v Louisiana College, Ruling, Slip Op. (WD La., Alexandria Div., 2018) the federal trial court granted summary judgment against the Plaintiff to terminate the Plaintiff’s federal employment law claims based on the religious organization exemption found in Title VII, the Civil Rights Act of 1964, at 42 USC §2000e-2(e)(2). The opinion’s analysis is instructive of the analysis probably needed in those circuits that have not considered the religious organization exemption. In this case, the Plaintiff claimed he was terminated for his religious beliefs by the religious school. Thus, Plaintiff’s claims for disability discrimination, religious belief discrimination, and age discrimination were all summarily dismissed. It should be noted termination was not simply by executive fiat but was also confirmed through the school’s own tenure required due process procedures.

Such cases will probably be determined in the first instance by the clarity with which the religious identity or purpose of the parachurch organization is enshrined in the founding documents and perpetuated in the policy and procedure manuals of the entity. Such religious identity should not be merely assumed because the organization has been around for a long time. Documents lacking clarity of identification should be amended.

THE PASTOR’S PROMISE – IN LITIGATION

Congregations can be fickle. Every pastor knows the congregation can vote with their feet, i.e., leave; vote with their money, i.e., give less to the church; and change the channel, i.e., look for better religious entertainment. Some churches change pastors every three or four years in some sort of misguided search for the “right fit,” or the right dynamism. In response, in order to obtain some level of stability, pastors sometimes negotiate employment contracts.

In Lee v Sixth Mount Zion Baptist Church, Slip Op. (3rd Cir. 2018), the United States Court of Appeals for the 3rd Circuit affirmed a Pennsylvania federal trial court’s decision to grant summary judgment to a church in a breach of employment contract case. The trial court granted summary judgment to the church, even though the church was not moving for summary judgment but was only resisting the motion for summary judgment presented by the former pastor. The former pastor sued because he was terminated by the church twenty months into his twenty year written employment contract. The employment contract permitted termination for cause and for “material breach.” At the congregational meeting voting to confirm the employment contract, the pastor himself defined “material breach” as “not growing,” “stagnant,” “not a better place,” and “if he did not perform his duties well.” The church alleged it experienced a 39% decline in collections, a 32% drop in Sunday worship attendance, a 61% decrease in registered members, a doubling of church expenditures, and a decline in church “community outreach.” The pastor did not deny those facts but alleged his service was not the cause of those changes in the church. The pastor sought damages of more than $2,000,000 for the income lost in the unexpired term of the contract. The trial court granted summary judgment to the church because to resolve the case would, the trial court held, impermissibly entangle the court in determining whether Lee’s ministry as pastor was “adequate spiritual leadership” and “how that translates into donations and attendance.” Such inquiries, the Court held, would violate the First Amendment ministerial exception as explicated in Hosanna-Tabor Evangelical Lutheran Church v EEOC, 565 US 171 (2012) because the Court would entangle itself in a factual inquiry as to whether the church’s defenses were a pretext.

There are lessons here from two perspectives. The pastor probably should not have agreed in a congregational meeting to define “material breach” as he did. This undoubtedly created a high expectation too early in the relationship and a numerical metric both of which would fluctuate subjectively and objectively in the short term while the contract was designed for a long term. The church maintained its options by incorporating the church bylaws as a material term in the employment contract which required that the pastor provide “spiritual leadership,” a role a secular court cannot evaluate.

TRADITION AS A CHURCH GOVERNANCE POLICY

Occasionally, churches get into bad habits. Such a church may adopt a set of bylaws and a constitution when the church is formed but ignore them for decades. Eventually, however, church growth, maturation, or a dispute force the bylaws and constitution into the light and into use. The argument that the bylaws and constitution “aren’t the way we have done it” may not preserve seemingly long-established tradition. If a church ends up in a court of law on an issue that would otherwise be governed by the constitution and bylaws, tradition, especially oral and anecdotal, will be hard to prove and very unlikely to be recognized as controlling.

In Leggett v True Zion, 2018 IL App (1st) 171101 (Slip Op.) (Ill. App. 2018), prior church leadership wanted to select the new pastor and new board of directors. The congregation, however, decided to follow their bylaws and the board recorded in their minutes that the congregational meeting would be called consistent with the bylaws. The Plaintiffs actually attended the congregational meeting, which waived any notice issue, but “declined” to vote. The plaintiffs filed suit challenging the authority of the congregational meeting to select a new pastor and the new board of directors and alleged the church tradition was that the pastor would be selected by the church “overseer” and not by the board and confirmed by a congregational vote.  The bylaws were consistent with Illinois non-profit corporation governing statutes.  The trial court dismissed the case with prejudice and the appellate court affirmed.

Church corporation governance documents are important in a church dispute. Bylaws should be followed, written minutes of meetings consistent with the bylaws should be maintained, and every couple of years the bylaws should be updated, if needed, using the procedure in the bylaws for doing so. Tradition is a relic of the past in church governance. If the tradition is that important, or deemed as a spiritual requirement, the bylaws should be amended to incorporate and spell out the tradition. If the tradition is not a relic, stop treating it like one. Even small churches have enormous financial assets compared to their size. No one would want to own a home without a valid title (and probably valid title insurance) and valid homeowners’ insurance by relying on their tradition of living there and paying the bills.