ARBITRATION AND CHURCH LITIGATION

It is rare that a church dispute is compelled to arbitration.  Rarely is there a contract, local church control document or denominational control document that would require arbitration.  Even though there are private para-church organizations that offer the services of arbitrators, most church entities have never embraced them for anything other than disputes between members.

In Patterson v Shelton, 2017 WL 3446885 (ED Penn. 2017), twenty-two years of litigation over control over the denomination and its assets had progressed through arbitration, state trial courts, federal trial courts, and appellate courts.  The opinion does not explain the reason arbitration was compelled by the state trial court in 2006.  But, the arbitration award in favor of the Plaintiff was vacated by the state appellate court.  Efforts to enforce the arbitration award in federal court did not commence for six years for an unknown reason.  The federal court dismissed the arbitration award enforcement action and the dismissal was affirmed by the United States Court of Appeals for the 3rd Circuit.  The opinion summarized herein was the second case filed in federal court to enforce the arbitration award and again the case was dismissed.

The dismissal was based on a lack of subject matter jurisdiction because there was no federal question jurisdiction and there was not complete diversity of state citizenship between the plaintiffs and the defendants; the arbitration award had been vacated and in the eyes of the law no longer existed to enforce; further review of or enforcement of the arbitration award would require entanglement of the Court in ecclesiastical governance.

It was somewhat surprising the Court even reached the Ecclesiastical Abstention Doctrine given the absence of federal question or diversity jurisdiction.  The Court did not fully explore prohibition of enforcement of an arbitration award, a creature of contract, by the Doctrine but did explain it enough to indicate that practitioners considering mandatory arbitration clauses would do well to be skeptical of their utility in ministerial employment and church governance matters.

STAPLER RULES IN CHURCH LITIGATION

While typically Courts will not honor form over substance, sometimes they do and church lawsuits are not immune from the refusal to view the entire record before the Court on procedural grounds.

In Jane Doe v Coe and First Congregational Church of Dundee, 2017 IL. App. 2d 160875, even though it seemed from the Court’s opinion the Constitution and Bylaws of the denominational entity were in the record, the fact they were not stapled to affidavits relying upon them violated a Court rule requiring it resulting in appellate reversal of the dismissal of the case.  While such a holding would make sense if the identification of the Constitution and Bylaws were uncertain as a result, the Court’s opinion expressed no such reservation.  The issue in the case was whether any of the denominational defendants had the authority to hire or fire a youth pastor at the local church.  The Constitution and Bylaws allegedly either did not authorize that level of denominational control or prohibited it as noted in the affidavits.  Thus, a wrongful hiring or failure to fire claim would not rise above the local church absent authority or actual control.  While some denominations are vertically integrated and hierarchical in employment issues, not all are.  The autonomy of the local church as to employment issues could limit such a claim to the local church.

Stapler rules, requiring a document elsewhere in the court record to be attached to a particular pleading or other document to be considered, seem anachronistic.  Such a rule would only make sense in those remaining states that lag behind in computerization of court records.  Unless identification of the document is reasonably in doubt, if it can be considered at all and is not considered only because it is not stapled to the document considered, seems a huge waste of time and litigation cost both for the litigants and the courts.  Even in a state like Oklahoma that has generally good computer access to civil case records but where the underfunding of the courts results in judges in the trial courts not having staff attorney assistance such a rule would probably not be enforced absent extra-ordinary circumstances.  Nevertheless, church lawyers ever mindful of the resource limitations of their offering funded clients still must anticipate such things and prepare document meticulously.

ARCHEOLOGICAL CHURCH LAW

Sometimes a church has existed so long that not only has it outlived its institutional memory but may have existed long enough to cross from one legal era to another.  While such a church is so rare that it might be expected that any resulting legal problem might not be generally instructive, that is not true.  Indeed, church litigation often swirls around missing insurance policies, old sets of superseded church bylaws, or contracts that simply lapsed but no one recalled it so that it could be renewed or extended.

The case of First Congregational Church of Harwich v Eldredge, 2017 WL 3581629 (Mass. Land Court, 2017), the church was founded on a land title from 1743.  The separation of church and state in Massachusetts, according to the Court, did not occur until 1833.  The church cemetery had to be maintained by the Town of Harwich because of the Great Depression and a state statute authorized such private cemeteries to be preserved in that era of financial calamity.  The church by the 20th Century came to use one section of the cemetery and the Court held that the filed titles did not end the church’s ownership of that part of the cemetery and also held the church owned that portion of the cemetery, if for no other reason, by adverse possession.

The church was able to prove the alternative ownership theory of adverse possession through both publicly filed documents the document archives of itself and the Town.  For example, one letter from 1989 had been inscribed with identifiable handwritten notes of a telephone call that tended to establish the Town was on notice for adverse possession purposes of the church’s claim to that part of the cemetery.  In the age of the scanner, keeping hard copy is no longer essential if the digital version is reasonably well preserved against mishap.  A combination of local storage and cloud storage can assure document survival.  Most external portable hard drives will fit in safe deposit box if cloud storage is not deemed acceptable.  But, all document storage, hardcopy or digital, requires disciplined process implementation and training each successive generation of church office personnel.

PASTOR EMPLOYMENT CONTRACTS AND THE MINISTERIAL EXCEPTION

One of the interesting questions in church law is whether an employment contract with a pastor overrides the Ministerial Exception.  The Ministerial Exception is the label for the First Amendment doctrine which excludes some church employment issues from governance by secular law or secular courts.  Indeed, the uncertainty in recent years has been to determine the other church jobs that were outside the scope of court and regulatory jurisdiction.  Of course, ministers, priests and pastors were outside the scope.  Employment contracts raise the uncertainty of whether they remain outside the scope in whole or in part.

In Rev. Lee v Sixth Mount Zion Baptist Church, Slip Op., 2017 WL 3508140 (WD Penn. 2017) the federal court carefully traced the contours of a written employment agreement with a senior pastor to determine whether the employment relationship or parts of it had been carried outside of the Ministerial Exception.  The opinion also contained most of the salient terms of the employment agreement verbatim which might also assist practitioners.  The question the court answered was whether the employment contract terminated the applicability of the Ministerial Exception.  The Court held that the Ministerial Exception had, indeed, been preserved in its applicability to termination of the pastor by the employment contract.  Of course, that reserved for a future case whether some other contract might not.

The language in the employment contract that preserved the Ministerial Exception was a catch all reserve clause that merely stated termination could be “by law” and on “other grounds.”  The employment contract also specified “for cause” termination grounds and the church was claiming that the “for cause” grounds had been triggered.  The church put on evidence of declining attendance and declining finances, both of which the church labeled as “spiritual stewardship” and “financial stewardship” in the employment contract.  The Court held that these grounds for termination were ecclesiastical and triggered the Ministerial Exception because to decide them would lead to “excessive entanglement” in church affairs.  For example, the Court would have to decide whether the cause of declining finances was due to mismanagement or declining giving reflecting a loss of confidence in the pastor either of which could be ecclesiastic.

IGNOMINIOUS RETIREMENT

Too often the pastor going out the door wants to take the door with him.  That generally reflects poor church management such that at the end of what should be a long and honored tenure there is no fully funded retirement plan.  Pastors need a portable retirement plan to which employing congregations can contribute.  Any church that lacks this creates the framework for poverty or a dispute.

In National Church of God v Carrington, 2017 NY Slip Op 51007 (NY Sup 2017), the trial court excellently detailed such a situation.  Carrington was the founder of the church in 1980 and may have gotten the church property started by his own contributions.  The church was apparently small because a church list from 2015 numbered the members at 47.  Nevertheless, the church property was noted by the Court to be valued at $2,000,000 debt free.  Like a lot of churches started by a founder the church had no constitution or bylaws, did not follow the corporations statute, did not have regular congregational meetings, boards appointed only by the pastor in contravention of the statutes and the certificate of incorporation and had only ad hoc leadership outside of Carrington.  In the dispute that inevitably arose over the habitual if not also resulting lack of financial transparency, Carrington’s faction locked out the church board elected by the congregation in 2015 after the new church board tried to lock him out.  Carrington tried to transfer the title to the property to a new church entity and his lock out of the congregation deprived the church of its sanctuary.  The elected church board was able to prove its validity and the Court enjoined Carrington from transferring the title and ended the lock out.

Some pastors seem to have the idea that they own the church property.  That is rarely true.  Even a founder of many years will typically find they have created a non-profit entity funded by members that have an interest in the church property, and usually the overwhelming interest.  Long term pastors should recognize the need to plan for a transition and retirement.  It should be discussed with the church leadership which should be composed of regularly elected members.  Some churches have non-member advisory boards and such a process might work as well.  The retirement plan should be adopted by a vote of the congregation and entered into like any other contract.

HIERARCHIAL CHURCH TITLES AND TRADEMARKS

For some reason, some in the judicial branch have difficulty refraining from interfering in internal denominational matters when the local church or local diocese tries to escape from the parent organization with the local land holdings, too, rather than simply leaving and starting anew.  This seems odd given that these assets are generally amassed by local church members over a period of decades or even centuries that thought they were supporting their denominational church.  The new leadership or congregation in the local church may in recent times decide it can no longer as a matter of conscience support the parent church, but that does not automatically relieve them of the duties they may owe the denomination as to church assets accumulated by prior generations of members.

Episcopal Church litigation has focused the judicial microscope on denominational documents, land titles and ecclesiastical process as well as the hesitancy of some in the judicial branch to abstain as noted above.  In Protestant Episcopal Church, et al, v The Episcopal Church, ___ SE2d ___, 2017 WL 3274123 (SC 2017) it took four justices each writing separately to reverse the trial court (and there was a dissent).  The guiding finding was that the Defendant was the parent church in a hierarchical church and that the Plaintiffs were subordinate church entities.  Once this finding was made, the Ecclesiastical Abstention Doctrine required the Court to defer to the ecclesiastical decision-making by the parent church.  The Court concluded (quoting) “what happens to the relationship between a local congregation that is part of a hierarchical religious organization when members of the local congregation vote to disassociate is an ecclesiastical matter over which civil courts generally do not have a jurisdiction.”  Thus, the denominational requirement that the subordinate church entities held title to local church property in trust for the parent church was enforceable as were the federally registered trademarks.  Indeed, one of the concurring opinions suggested the Plaintiffs were “masquerading” as an authorized diocese in an effort to secure their land titles.  The autonomic reflex of the Court to switch to “neutral principles of law” regarding trust issues and property title issues was deemed inapplicable given the applicability of the Ecclesiastical Abstention Doctrine and the resulting deference to ecclesiastical due process imposed by the parent church.

The lesson for local churches is to be prepared to buy the property from the parent church or be prepared to leave it behind when disassociating and before announcing the disassociation.  With most local churches, the denominational parent will be unable or unwilling to keep the local church property and payoff remaining mortgages and maintenance costs and will negotiate a reasonable and affordable sale of the rights.  But, if the parent church decides to play “hardball,” the local church may be forced to relocate.

“DISFELLOWSHIPPING” LEGALITIES

I am not sure “disfellowshipping” is actually a word but I have seen it in various church writings over the years.  It seems to be the termination of church membership and exclusion from the church property in the traditions that use it.  It seems to be a step down from excommunication which in some traditions at times was thought to be a sure fire damnation.  Also, disfellowshipping seems to be used in both a temporary mode and a permanent mode.  Whether “disfellowshipping” is a good idea or a bad one depends on the view taken of I Corinthians 5 and other similar passages.  That is outside the scope of this blog and this post.

In Campbell v Shiloh Baptist Church, Slip Op. 2017 WL 1434249 (Sup. Conn. 2017), a trial court was confronted with the legal ramifications.  The Plaintiff’s church membership had been revoked by a congregational vote in a congregational church (although on this topic it might not have mattered).  The Plaintiff sued to enjoin the church from revoking his membership in the church.  Interesting, too, was that the church’s Board of Deacons meeting authorizing the congregational meeting and vote on membership revocation was preserved in an audio recording.  Also interesting was that the church took the precaution of video recording the congregational meeting at which the expulsion vote was taken.  The Plaintiff alleged “procedural irregularities and inequities” in the congregational vote.  The audio recording and video recording was not surprising because this was the second time the Court ruled upon Plaintiff’s quest for reinstatement.  In the first case, and quoted in this opinion, the Court held its inquiry was limited, “as stated in this court’s earlier decision … a court may inquire whether the act of expulsion was in fact the act of the religious organization.”  63 Conn. L. Rptr. 531.  The Court determined the expulsion was the act of the Defendant church and dismissed the Plaintiff’s case.  The Court would not undertake “policing of a religious organization’s compliance with its internal procedures.”

This opinion is a reasonable blueprint for the procedure of “disfellowshipping.”  Few churches ever have to do this but churches with a reasonable set of bylaws, reasonable leadership, the appropriate mechanism, be it a board or the entire congregation, and reasonable documentation of the vote of either or both will not leave an opening for legal process.  In churches where the power is vested in the hierarchy, and the process is settled, the result should be legally impenetrable.  For churches where the power is not specified in bylaws, typically congregational churches, the congregational vote is the only mechanism.