CHURCH FINANCIAL CLAIMS

It seemed to the author that financial claims, called various things in various jurisdictions, such as embezzlement, conversion, theft, and breach of fiduciary duty, would not likely be shielded by the Ecclesiastical Abstention Doctrine.  Such claims can almost always be decided by Neutral Principles of Law.  A church, like any other recognized entity in American law, owns its own property and accounts.  People, regardless of their title or general authorization as an account signatory, must respect that the church property is owned by the church.  Use of that property, or cash, must be authorized by the governing body of the church and documented.  Sometimes, with the passage of years, bad practices creep in, but that is rarely the subject of a claim.

In the interlocutory appeal of In Re Munger Avenue Baptist Church, Davis, and Ward, Opinion (Tex. Civ. App. 5th, 2022), the claims against the pastor included “breach of fiduciary duty, conversion, fraud by nondisclosure, theft of property, conspiracy, and certain declaratory relief.”  The Defendants moved for dismissal of the case alleging the trial court had no jurisdiction under the Ecclesiastical Abstention Doctrine.  The trial court refused.  The appeal followed and the Texas appellate court denied the writ.  The appellate court made no ruling on whether any of the allegations were true.  But, the appellate court affirmed the trial court’s refusal to dismiss the case based on a lack of jurisdiction because of the Ecclesiastical Abstention Doctrine.  The appellate court’s opinion relied on procedural grounds and was not a finding of jurisdiction.

As a result, the author will continue to believe financial claims, called various things in various jurisdictions, such as embezzlement, conversion, theft, and breach of fiduciary duty, would not likely be shielded by the Ecclesiastical Abstention Doctrine.  Wrongdoers, embezzlers, and thieves should likewise believe that a church has a civil remedy.  Criminal prosecution is not the subject of this report.  Very often churches will not call the police, or if the church does call the police, they get a cool response.  In order to press for an investigation by law enforcement, the church (and most businesses) need to approach the police on an appointment basis, not just a phone call, and to that appointment take the report of a CPA, an affidavit of a church officer or complainant, and financial documents from which the defalcation is apparent.

IDEOLOGICAL DEFAMATION CLAIMS

The defamation claims that arise between churches or their clergy do not so far include claims by which the allegedly wronged party claimed the wrong was that their beliefs were mischaracterized, or even described pejoratively.  Usually, defamation is alleged when the allegedly wronged party claims they were falsely accused of heinous misconduct, not merely beliefs the accuser held to be unpalatable.  While it may seem obvious that the First Amendment would never permit a defamation claim based on the allegation that beliefs were mischaracterized, or even described pejoratively, it seems someone had to try it.

In United Federation of Churches, LLC v Johnson, Order Denying Motion for Reconsideration (WD Wash. 2022), the Plaintiff, also known as the “Satanic Temple,” alleged the Defendants violated the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. §1125.  The Court opinion does not recite the precise manner in which the Defendants were alleged to have done this.  But, the Plaintiff alleged their Facebook page had been compromised in some fashion.  The Court rejected the cybersquatting claim because “Facebook.com” is not a domain name protected by the statute.  The statute prohibits creation of identical or confusing domain names.  The Plaintiff alleged the Defendants defamed them on other Facebook pages accusing Plaintiff of “ableism, misogyny, racism, fascism, and transphobia.”  The federal trial court dismissed the defamation claim because “resolving the claim would require the court to violate the First Amendment by “delving into doctrinal matters,” contrary to the Ecclesiastical Abstention Doctrine, in order to “define the beliefs held by” Plaintiff to determine if the allegations were untrue.

Churches with Facebook or other social media platform presences, or even pedestrian websites, should expect that critical review, even vile critical review, of their beliefs will generally be unassailable.  Only when such castigation violates the Terms of Service of a platform will any recourse be available.  Churches should assume that even complaints about violations of Terms of Service will likely be ineffective.  Internet Trolls may be unavoidable but the sure strategy is simply to out live them.

CHURCH ELECTIONS DISPUTES

Generally, the problem with elections at local churches that result in lawsuits is a failure to have a clear membership roll by which to identify voters or a failure to have a governing document with a clear election procedure.  We have reported on courts that refused to take any action in either event because church governance is routinely held to be outside the jurisdiction of a court.  Other courts believe the Neutral Principles of Law, typically found in state non-profit or general corporation statutes, can resolve an election issue so it remains within their jurisdiction.  In these courts, the process is the question, not the merits of the election or the outcome.

In Chung v Kim, Unpublished Slip Op. (Cal. App. 2022), the trial court set aside the results of the first purported election of church leadership and ordered that a second be held pursuant to the procedures imposed by the Court.  The procedures crafted by the Court were largely taken from the church By Laws.  Implicit in the opinion is that the trial court was working off a translation of the By Laws into English.  In challenging the second election conducted under the trial court’s order, the challengers submitted a second translated set of By Laws.  Exactly how the second translation differed from the first was not reported in the opinion.  In any event, the trial court refused to consider the second translation or overturn the second election.  The appellate court affirmed the trial court.

In courts that will hear disputes about the process by which church leadership is elected in congregational churches, clear By Laws will almost always carry the day if the voters can be identified by a membership roll that appears to be legitimate.  The risk of failure to have both is a battle for control between factions.  The underlying issues that created the two factions will rarely be aired on the merits because nearly all courts will see that as straying into areas shielded by the Ecclesiastical Abstention Doctrine.

GENERIC AND ICONIC RELIGIOUS SYMBOLS

We have reported cases in which the church split led to a tug of war over a symbol that one faction tried to register and prevent other factions from using.  Symbols, both generic and iconic, often were created long ago and their exact origins will never be known sufficiently to support defendable registration as a trademark.  Symbols more recently created can become iconic, especially when they were not registered as trademarks or defended as such during the early years or decades of their existence.  Symbols that become iconic or generic representations of a religious group may lose defendable registration as a trademark.

In Holy Spirit Association v World Peace and Unification Sanctuary, Inc., Memorandum (MD Penn. 2022), the federal trial court was faced with competing claims for a trademarked symbol.  The church split arose at the denominational level between competing factions each claiming to be the legitimate heir of the deceased founder.  The symbol in question may have been created by the founder in 1965 but one faction did not attempt to trademark it until 2009.  The faction claiming the symbol was registered and defendable demanded that one of the other factions cease using the symbol.  The faction using the symbol in alleged violation of the registration claimed the symbol was iconic and represented the underlying theological premise of everyone involved and not a particular faction.  The federal court determined it could not determine whether the symbol was iconic without inquiring into the underlying theological premise the symbol was allegedly supposed to represent.  The federal trial court held such an inquiry would violate the Ecclesiastical Abstention Doctrine and could not be decided by Neutral Principles of Law.  Another religious inquiry, the court determined, would require determination of which faction was or represented the rightful heir of the founder and allegedly entitled to control the registered symbol.

The race to register the symbol as a trademark did determine a winner.  Indeed, the half a century of use of the symbol by the founder of the denomination prior to registration argued that the symbol was or had become iconic long before the actual registration.  The lesson is that trademarking registration should accompany the birth of the symbol or be commenced as soon thereafter as possible.  Founders rarely anticipate their own passing and rarely plan for succession.  Likewise, they rarely plan for competing factions among those claiming to be rightful heirs.