Tag: church property

LANDLORD CHURCHES

Churches often own property and when that property is no longer mission critical the churches lease the property to a tenant.  It provides the church a source of income from an asset that may one day again be needed.  It allows the church to retain control of what is typically adjacent or nearby property.  Of course, the Ecclesiastical Abstention Doctrine may apply to some disputes, in whole or in part, about church property.  In Neutral Principles jurisdictions, secular issues may be decided and religious issues ignored or the reserved for decision by the church.

Beluah Pilgrim Holiness Church v Otto, Slip Op., Memorandum and Order (Mass. App. 2018) was an interlocutory appellate order concluding that the Housing Court had jurisdiction to hear eviction proceedings against tenants of church property.  The Housing Court in Massachusetts, apparently from the opinion, conducts “summary proceedings,” which are probably cases tried only on written submissions and a due process hearing.  Most likely, if either party desires trial of issues not suitable for that minimal process, the matter is transferred to a court of general jurisdiction.

The takeaway is that in Neutral Principles jurisdictions church landlords, and tenants, should be able to use limited jurisdiction courts and proceedings.  The flip side is that they can be forced to participate in proceedings before those limited jurisdiction tribunals and should not assume the church will be able to easily ascend to a court of general jurisdiction.

THE CHICKEN DID IT AGAIN

The tenth report posted herein in February 2017, entitled The Chicken Did It, was about a 2016 case out of California in which the California appellate court reversed for further proceedings a case involving over flow parking.  Well, there has been another one.  However, the lesson from these two cases is radically different.  The California case reversed for further proceedings because the church gave no warning about the busy street and took no other action to protect people jaywalking to the church.  This report is about the opposite.

In Charney v Reitz, Slip Op. (PA Supp. 2018), the church had only four paved parking spaces but was able to use a commercial parking lot across the street for over flow parking.  The use of the parking lot across the street was a practice that persisted for decades.  But, the street to be crossed, which may have not been in the distant past, became a very busy street.  The church sometimes had police or firefighters acting as crossing guards.  The church used reflective cones to warn drivers.  In a footnote, the court even reported the church tried to take other safety actions but was blocked by the state’s department of transportation.  What was the church’s reward for this diligence?  The court found the church voluntarily undertook the duty to safeguard persons crossing the street to attend church events.  The remand would be a jury trial over whether the church carried out its duty adequately in the fatality pedestrian auto accident that was the subject of the case.  The deceased was a church member and was actually the person that purchased the reflective cones, so the deceased knew about the risks of crossing the street.  But, the deceased was 84 years of age.

Trying to read the two cases side by side is disheartening because the church that did allegedly nothing, according to the court in California as reported in the February 2017 post, faced the same trial as the church reported in this post that did several things and may have been stopped from doing more.  Of course, as a practical matter, the church that tried to address the problem may with the right jury find exoneration.  Both churches hopefully had adequate insurance coverage and their legal fees were probably paid by those insurers.  In addition to making certain their insurance policies covered use of an over flow parking lot, the churches should petition, maybe repeatedly, state, county or city traffic authorities to install flashing yellow warning signs, an officially installed and painted cross walk, and other safeguards.  While the government in most states cannot be successfully joined as a party, they make a great “empty chair defendant.”  Your trial counsel can explain that one to you.

CHURCH BUILDING WOES AND WARS

A famous teacher of evangelical pastors once told me that pastors had no choice but to be jacks of all trades. In this blog, the cases reported involve everything from financial controls, zoning, internal security for vulnerable members, property titles, and corporate control issues, just to name a few.

In Christ’s Legacy Church v Trinity Group Architects, Inc., 2018 OK CIV APP 31 (oscn.net), a division of the Oklahoma Court of Appeals reviewed a trial court summary judgment in favor of an architectural firm in a case about the design of a church building. The church claimed the architectural firm was negligence and breached its contract. The Court of Appeals affirmed the judgment against the church as to the negligence claim but reversed and sent the case back to the trial court on the breach of contract claim. The architectural firm claimed the written proposal was not signed by the church so there was not a written contract. If there was only an oral contract, the statute of limitations was three years but if the contract was in writing the statute of limitations was five years. The Court of Appeals held it did not matter whether the proposal was actually signed if it, indeed, represented in writing the agreement of the parties and had been acknowledged in another way.

In the trial court, the church will have to prove the written proposal was the written contract under which the architectural firm did the work even without a signature. One change order to the “proposal,” or a couple of emails, or “in re” lines on a letter or a fax will probably do it. Thus, once again, a case may be determined on whether in the age of scanners and computers the church was a reasonable records custodian. The statute of limitations barred the negligence claim because the church did not, or could not, investigate fast enough to present a claim. Most volunteer run churches usually have no more than one or two FTEs neither of which are professional property managers so the time to investigate gets away quickly. Also, well-meaning church members tend to stand around and gawk at a problem none of them are fully competent to address. Church boards need to hire the professional that can address the problem, pay for the service, and get a definitive answer with dispatch, which may include trial counsel. Large engagements like engaging an architect to design a building require as stewardship a written contract signed by everyone. One more thing for the pastor to know, right?

HIEARCHIAL CHURCH RESULTING TRUST PROVISIONS – EVERYWHERE OR NOWHERE?

In jurisdictions that decide church property issues under the Neutral Principles of Law Doctrine, the difficult question is for a court to determine which organizational documents are binding authority on the local church.  For example, denominational handbooks, like employee handbooks, might in some instances create a contractual commitment for member churches.

In Presbytery of St. Andrew v First Presbyterian Church PCUSA of Starkville, Miss., Slip Op., (Miss. 2018, en banc), the Mississippi Supreme Court collided with the issue and the majority did not view the denominational handbook as a governing authority sufficient to impose a trust on the property of the local church while the dissent did.  The majority relied on an “opt out” clause in the Constitution of the denomination which the dissent considered as adopted too late in time to avoid the binding effect of the denominational handbook.  In response to the “opt out” provision, the local church opted out and did not include property reversionary clauses in property deeds or the local church bylaws or constitution.

Denominations that desire to govern through a handbook (regardless of what it is called), should update it regularly and the local churches asked to ratify it.  Ratification once a decade would likely be sufficient.  Failure to ratify should be explicitly prohibited as a ground for disobedience.  Reversionary provisions should be in all organizational documents and the denominational handbook and required in all local church organizational documents and property deeds for denominations that intend to use.  Everywhere or nowhere.

HIEARCHIAL CHURCH WARS – INFILTRATION STRATEGIES

Church splits in hierarchical churches almost uniformly end badly for the insurgents.  The only exceptions are when church governing documents, including incorporation documents, and land titles do not consistently tie the ownership to the denomination rather than the local group of congregations or the local congregation.  Because church property in hierarchical churches is typically amassed over many years and many generations of members, the local church members often cannot truthfully say they alone bought and built it.  The denomination must admit that offerings made by members, over multiple generations of members, bought and built the church property in question and that the denomination at best is a trustee for them.

In The Episcopal Church v Salazar, Slip Op. (Tex. Civ. App. 2018), the latest appellate decision in a church split that began in 2008 (or possibly earlier) built upon a prior Texas Supreme Court Decision in Episcopal Diocese of Fort Worth v Episcopal Church, 422 SW 3d 646 (Tex. 2013), cert den., 135 S. Ct. 435 (2014) and the trial court proceedings that followed the Supreme Court’s decision.  To reach this new decision, the latest intermediate appellate opinion only sued over 50,000 words in 177 pages and 114 footnotes.  Thus, in a blog post, the reader should expect only the most summary of coverage.  It should also be noted that in the Supreme Court case, the Texas Supreme Court adopted the neutral principles of law doctrine so that a civil court could determine ownership of property and other matters important to the State without infringing on ecclesiastical issues.  Given the new ground to plow, the length of the intermediate appellate decision about which this blog reports is at least understandable.  It contained both denominational and diocesan legal histories as well as documented the evolution of neutral principles doctrine.

The trial court on remand from the Supreme Court considered the evidence and determined by summary judgment that the right to control the non-profit corporation that was the shell of the diocese was and remained under the control of the denomination.  This church split, like many of this type, began with a theological dispute which resulted in an attempt by some member organizations or local churches to “disaffiliate.”  When “disaffiliation” failed because the organizational documents of the denomination and the local organizations and churches would not support it, the next effort was to attempt to have friendlies elected to the governing board of the non-profit corporation and to displace board members loyal to the denomination (if there were any serving).  But, in addition to organizations and churches that tried to “disaffiliate,” the trial court held that the insurgents elected to the board were disqualified from election from inception due to their own “disaffiliation” which ended their memberships under the governing documents.

The lesson for insurgents, and warning for denominations, is that if insurgents do not “disaffiliate” but remain members in good standing, and are elected to the board of the non-profit corporation that is the shell for a diocese or a local church, that board will have effective control of the assets.  “Loyalty oaths” have not worked, as history has taught, but restricting the power of the board to financially alienate itself from the denomination could blunt or contain the power of insurgents.  Indeed, the reason denominations have not used this technique, absent internal political necessities, was to preserve the borrowing power of the local organizations and churches to acquire church property.  The necessity of that practice may be sufficiently diminished in more mature denominations to allow greater financial oversight by the denomination.

ZONING TRAPS AND SNARES

Land use regulations, zoning laws, and permit requirements of every stripe usually constitute a maze that the uninitiated should not attempt alone.  Church leadership often begins construction or remodeling without fully considering these rules, or worse, believes they have.  Small churches are especially vulnerable because of their limited resources.

In Jesus Christ is the Answer Ministries, Inc. v Baltimore County, Slip Op. (USDC, D. Mary., 2017), the Plaintiff church started like so many in someone’s home.  As the church outgrew the home, a 1.2 acre residential lot and existing 2900 square foot home were purchased.  The church remodeled the existing home for use as a church building but apparently failed to consider land use regulations or obtain permits.  The neighbors complained and the County issued a cease and desist letter.  The court’s opinion should be consulted regarding the precise complications alleged by the County.  The church submitted at least two applications for permits and variances.  Hearings were held and the complainants were quoted by the federal court as testifying:  “[D]ancing and hollering like they are [sic] back at their home back in Africa somewhere.”  The applications were denied.  The Plaintiff sued alleging the denial was based on religious discrimination rendered unlawful by the Religious Land Use and Institutionalized Persons Act of 2000, 42 USC §2000cc.  The case was dismissed because the Plaintiffs did not plead that the County actions were intentional or subtle forms of discrimination.  The Plaintiffs also failed to plead that their applications complied at least minimally to the extent possible with land use regulations and was compatible with the neighborhood.

As noted, engaging a consultant to navigate land use regulations is imperative before purchase or construction.  Also, before engaging in litigation of this type, more so than most, laying a foundation for the case is imperative.  Discrimination is easy to claim but hard to prove.  Also, there was no limit on the number of applications that could be made.  Churches often make an application like this on their own without the benefit of qualified counsel.  While running to the federal court may have seemed like a good idea, getting on the agendas of the public boards that governed the county and stating the case may have paid greater dividends.

BLESSED SHACKLES – GOVERNMENT AID TO CHURCHES

We have reported on this type of tar baby before.  In these situations, a public funding program to accomplish a governmental purpose attracts a variety of public and private participants.  We reported in 2017 on a United State Supreme Court opinion regarding Trinity Lutheran Church v Comer, 137 S. Ct. 2012 (2017) regarding a program that paid for rubber surfacing on concrete play “ground” surfaces and a subsequent decision in Taylor v Town of Cabot, 2017 VT 92 in which a town granted money for restoration of a historic church building.  In the Vermont Taylor opinion, the case was remanded to the trial court and a risk the church ran in the case was that the church might have to refund the grant money.  In Comer, the church prevailed so that the playground upgrade need not be repaid by the church.

In Caplan v Town of Acton, Slip Op. (Mass. 2018), taxpayer protesters sued town because a church received two grants.  The appellate court split the difference, to a point.  One grant was for payment of an architect to draw up a “Master Plan” for restoration of the church building and two outlier buildings.  The main church sanctuary building was built in 1846.  The Town of Acton was founded in 1735 and the church formed part of the town square.  The other grant was to repair stain glass windows first installed in 1898.  In order to obtain the money, the church had to convey a “historic preservation restriction” on the buildings, the money could only be obtained in reimbursement on invoices for work consistent with the preservation proposed in the church’s applications for the grants.  The court remanded the “Master Plan” grant for further consideration and barred the grant for the stain glass windows.  The total value of both grants was less than $110,000, a little over $50,000 each.

The opinion is valuable for its historic review of the reason Massachusetts amended its Constitution in the Nineteenth Century by adding an “anti-aid amendment.”  The court reported that in the Nineteenth Century the pressure to provide public resources to churches caused “fear” the public coffers would be drained by competing churches and denominations.

But, historic preservation is almost too expensive for private resources to unilaterally achieve because private capital usually must chase profit.  Profit is obtained not through preservation but through maximizing return on capital.  Thus, the government purpose of preservation might be thwarted because part of the history to be preserved, which was built before several states in the union became states and is very expensive to keep, included a church.  There might be a hidden lesson in this opinion, too.  The “historic preservation restriction” might be more costly in the long run than the church presently anticipates because taking the government’s money is always risky.