Tag: para-church organizations

CHURCH EMPLOYMENT CONTRACTS

Generally, an employment contract in writing will be enforced even if one of the contracting parties is a church or para-church organization. “A church is always free to burden its activities voluntarily through contracts, and such contracts are fully enforceable in civil court.” Mis v Fairfield College Preparatory School, Slip. Op., 2017 WL 3174422 (Sup. Conn. 2017) (unpublished) (quoting).

The Mis opinion was a trial court order overruling a Motion to Dismiss. Thus, the case continued and the opinion was not the final word. Also, in Connecticut, like most states, obtaining a dismissal is difficult because the factual record has not been developed through any discovery and the Court has only the Plaintiff’s pleading before it which must generally be treated as true regardless of whether it is true unless it is implausible.

In Mis, the Plaintiff was a tenured teacher. The school employment handbook contained a morals clause. For tenured faculty, it also contained a right to a hearing on involuntary termination. The Plaintiff during a school fundraiser was alleged by a church leader to have engaged in immoral conduct, the nature of which was not specified in the Court’s opinion. Upon termination, the teacher demanded the hearing accorded in the handbook. The hearing was conducted and the teacher was exonerated. But, the church terminated the Plaintiff. The opinion of the Court does not explain the reason the church disregarded or overruled the hearing finding, but the Plaintiff sued for breach of contract. The Plaintiff alleged the handbook constituted an employment contract.

One lesson of this opinion might be that a church school should not provide a right to a hearing if the church school does not want to be bound by the outcome of the hearing. Also, the whole concept of “tenure” generally acts to create a contract that has to be limited by specific language in the handbook or contract that would fit tenure to the church school circumstance.

CHURCH SCHOOL MINISTERS

The Ministerial Exception when applicable bars enforcement of most state and federal employment laws against church employers and bars employment claims by most church employees. Church employees are almost always engaged in religious duties in parallel with non-religious duties. Para-church organizations, however, by their hybrid nature force the Courts to inquire more deeply and with some skepticism because the further from the actual church the organization is the murkier the application of the exception probably will be. A church school is a para-church organization if it is a separate corporate or legal entity which for financial and accounting reasons most are.

In Fratello v Archdiocese of New York, 863 F3d 190 (2nd Cir., 2017), the federal appellate court had to decide whether a “lay principal” of a church high school was a “minister” triggering the exception. The Plaintiff’s contract was not renewed for a fifth year as “lay principal.” The Court opinion did not specify the reason for non-renewal. The Plaintiff’s employment contract listed Plaintiff’s job title as “Lay Principal.” But, the courts looked at the actual duties described and performed. Religious instruction by the employee of the students was the primary factor. No formal ordination was required. The Court found that the “lay principal” was delegated religious duties by the local church pastor responsible for the school to the archdiocese. Finding the employee responsible for religious instruction of students triggered the exception and the case was dismissed which the appellate court affirmed.

One lesson from this opinion was that the Court explicitly stated there was no presumption that the principal of a church school was a minister triggering the exception. Counsel with such a case for a church school must convince the church school or its sponsor to search out the record of religious entanglements with the job of the former employee. For example, in Fratello, affidavits or written statements by other school personnel confirmed the Plaintiff’s involvement in religious instruction from the school intercom broadcast of a prayer or other religious message to the actual supervision of religious instruction teachers and classes. There was likely little or no written record of the former and maybe not of the latter.

LITIGATION RISKS OF HELPING — MINISTRY IN SECULAR ENTITIES

Many secular organizations, such as jails and public hospitals, allow priests and ministers to serve as chaplains. Sometimes the chaplain is also an employee of the secular organization. More likely, a para-church organization or a church employed the priest or minister and sponsors their ministry on the premises of the secular entity. If the minister or priest is accused of misconduct or negligence, the issue of control the priest or minister might be resolved by a determination the minister or priest is supervised by both the secular and religious entity. Or, it might be determined a minister or priest thought to be solely supervised by the religious entity is, while on the grounds of the secular organization, supervised by the secular organization unilaterally.

In Savin v San Francisco, et al, Order Granting in Part and Denying in Part Motion to Dismiss (ND Cal. 2017), the priest was accused of misconduct. The Court held it was a fact question, at that point in the proceedings, whether the priest was supervised by the secular organization, too, or just the Archdiocese that employed the priest.

The issue of control, which I have relabeled “supervisory oversight,” might not be limited to tracing payroll checks. The inquiry might include, for example, access to patient records, access to non-public areas, or whether the priest or minister is part of the services hierarchy and reports to it. Even broad autonomy might have limits that would seem to be a level of supervisory oversight. The identification badge issued to the priest or minister by the secular organization might be “enough” control.

The relationship between the secular entity and the religious entity, and the priest or minister assigned, should be described and defined in writing. This should be considered even if it has never been done before. A Memorandum of Understanding might be sufficient if all sides are disclaiming control but a contract should be considered if promises must be exchanged or if money will be paid.

CORPORATE DEATH PENALTY

There is a corporate death penalty.  Religious organizations can be sentenced to oblivion.

Typically, a non-profit corporation ends up forcibly terminated because it failed to follow the corporate forms.  Usually, the failure to follow is not sporadic or just sloppiness but an abandonment.  The abandonment of the corporate life usually includes failure to maintain membership records, failure to define voting membership qualifications, failure to elect directors or other officers in accord with bylaws, failure to maintain proper financial records and controls, failure to conduct regular board meetings, and an inability by application of neutral principles for a court or court appointed receiver to identify those with a right to make decisions about the assets of the non-profit corporation.

In Ohio v Omar Ibn Khattab Mosque, Inc., 2017 Ohio 4453 (Ohio App. 10th Dist. 2017), the Attorney General of Ohio sought dissolution of the non-profit corporation and appointment of a receiver to form a successor non-profit corporation that would own the assets of Khattab Mosque, Inc.  The court affirmed a magistrate’s findings that board members were attempting to hold office beyond their terms, multiple efforts to elect successors had merely multiplied disputes and claims, the mosque’s bank froze its accounts so it could not pay its bills because of competing claims, each faction before the court wanted control of church assets and ouster of the board members representing the opposite faction, and each side was attempting to drag the Attorney General into ecclesiastical disputes over qualifications of board members.  The court refused to resolve any of the disputes, noting that years of litigation had already failed to do so, and simply granted the Attorney General’s petition to dissolve the corporation and appoint a receiver to supervise creation of a successor entity and all in only 40 pages.

Too often, such calamities arise from building programs.  The Khattab Mosque collapse began in a building program that may have resulted in a battle for control.  Churches, mosques, synagogues and para-church organizations that assume everyone will remain loyal, honest, and accommodating throughout the years will see no need for organizational documents, rules of corporate governance, and otherwise documented elections and regular meetings.  Strong leadership that seemed to make such things unnecessary will retire or die.  New members will sometimes become disenfranchised with the old ways.  These are the reasons corporate forms matter.

COMPELLING GOVERNMENT INTEREST IS ALWAYS COMPELLING – ESPECIALLY WHEN IT IS ABOUT TRAFFIC

There is nothing more annoying than when a statute passed to remediate a wrong is simply defined out of existence by judicial fiat.  The Religious Land Use and Institutionalized Persons Act (“RLUIPA”), 42 U.S.C. § 2000cc et seq is such a statute.  The statute sets forth:

No government shall impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person, including a religious assembly or institution, unless the government demonstrates that the imposition of the burden . . . (A) is in furtherance of a compelling governmental interest; and (B) is the least restrictive means of furthering that compelling governmental interest.

One would think the word “compelling,” the word “and” and the word “least” are simple and clear.  But, not so in the United States Court of Appeals for the 6th Circuit.  In the 6th Circuit, in Livingston Christian Schools v Genoa Charter Township, Slip. Op. (6th Cir. 2017), it took 22 pages to sweep these three words out of the way.

In order to deny a church and a religious school a “special use permit” for the school, the governmental interests that were compelling were:  traffic, that the church, not the school because it was a separate entity leasing space from the church, had a “history of failing to comply with its previous special-use permits” by being “disruptive,” and “inconsistency with the single family residential zoning of the surrounding area.”  Compelling these reasons were not by any rational view.

The 6th Circuit has a history of religious organization hostility and proudly recited it in the opinion.  For example, the 6th Circuit held in 2007 that denying a building permit so a church could build a multi-purpose building including a gymnasium was a “mere inconvenience” and not a “substantial burden.”

In the Livingston Christian Schools opinion, the 6th Circuit held that the school had another piece of property available to it that was only 12.1 miles from the subject property.  In other words, parents would have to drive in the morning and in the afternoon 25 miles to cover the round trip during the high traffic times of the day in a suburban traffic setting.  (In Oklahoma City, where I am located, we only have rush thirty minutes but my friends on both coasts are envious.)  I rather suspect that if the traffic was as compelling a governmental interest as the 6th Circuit held it to be, then that mileage would have strangled the school in short order.  The court noted the school had 139 students before its move to the church property, might have had 190 afterwards, but with the uncertainty of location looming because of the permit denial, might have an uncertain future.  That was not, however, “substantial.”

The 6th Circuit was critical of the school for not providing financial records or enrollment records to prove the necessity of its move to the church property it wanted to lease.  Given the enrollment noted above, it is surprising the school had sufficient resources to litigate at all, much less appeal.

PAROCHIAL SCHOOLS AS RELIGIOUS ORGANIZATIONS

It would almost seem counterintuitive to suggest that a parochial school is not a religious organization.  The parochial school may be required to teach secular courses to comply with educational or even accreditation standards but unless there is no significant religious component in the curriculum it would seem unreasonable to view it as secular and not parochial.  Nevertheless, the issue seems to be on the table more than it should be.

In Miriam Grussgott v Milwaukee Jewish Day School, Inc., Order, (ED Wisc. 2017), the Plaintiff attempted to persuade the federal court that an Americans with Disabilities Act claim applied to a parochial school.  The Court rejected the claim and entered summary judgment for the parochial school under the Ministerial Exception of the First Amendment.  The Court found that the plaintiff, as a teacher of Hebrew to second and third graders, was a ministerial employee.  While the plaintiff argued the Hebrew language was merely cultural and historical, the parochial school claimed it was religious in nature because of inherent symbolism and other attributes.  Also, the parochial school was able to prove the plaintiff taught Jewish religious rites to the elementary age school children.  The Court refused to put a stopwatch to these duties to determine which predominated in the schedule or the curriculum.  While the plaintiff was not ordained or certified by an ecclesiastical body, plaintiff admitted “teaching a great deal about Judaism and specifically that her role was closely linked to Defendant’s Jewish mission.”  That admission would seem to end the dispute as to whether her role was subject to the Ministerial Exception.

One interesting aside in the opinion was that the plaintiff asserted the school’s employment manual contained an anti-discrimination clause that expressly forbade religious discrimination.  In other words, the plaintiff claimed the Ministerial Exception had been overridden by the contractual nature of the manual.  The Court held:  “This single provision of the Manual cannot stem the tide of other evidence cited above demonstrating Defendant’s religiosity.  Defendant unquestionably qualifies as a Jewish religious organization.”

Lessons for parochial schools may include assuring that their own employment manual does not create an exception to the Ministerial Exception in their region by its wording.  It might also mean that it is good practice to carefully describe in the manual the overriding religious duties of the role of teacher, regardless of educational discipline or expertise, in the religious school so that there is no reasonable dispute about the nature of the position.  Assumptions do not play well as evidence.

UPDATE REGISTERED AGENT STATUS — NOW!!

Often corporations and businesses do not update their registered agent’s name and address, typically with the Secretary of State of the state in which the principal place of business is located, so it is no surprise churches and non-profit entities fail to do so.  This is especially true when a founder or long time business manager for a non-profit entity or a church dies or retires.

An example of this is found in Fernwalt v Our Lady of Kilgore, 2017 Ohio 1260 (Ohio App. 2017).  This is such a strange little case that detecting the legal principles is hard due to the distractions.

Apparently, Fernwalt found himself “a fugitive of the law” and “attempting to leave the country and flee to Canada.”  The opinion does not explain this tantalizing fact further.  But, Fernwalt decided he could trust a priest named Steger and he transferred title to property to Steger.  Good to his word, Steger transferred the property title out of Steger’s name and into the ownership of a non-profit corporation Steger created called Our Lady of Kilgore.  Steger was the pastor of a church from which he resigned about a decade after the title transfer and then promptly died.  A second decade passed and Fernwalt returned to reclaim title to his property.  The opinion does not explain the triggering event that brought Fernwalt back.  Fernwalt filed a lawsuit against Our Lady of Kilgore, the non-profit entity, to recover his property title.  Fernwalt served the papers at the last address on file for Steger as the registered agent, which was the church he pastored a decade earlier.  The church rejected the service and no one forwarded the papers.  Fernwalt took a default judgment.

In the nick of time, Steger’s successor corporate officer found out about the lawsuit and moved to set aside the judgment.  The trial court refused to set aside the judgment but the appellate court reversed the trial court.

Some jurisdictions would not have been so forgiving, and even then in this case it took an appeal to reverse the judgment.  It is possible that due to a procedural error in entering the judgment, it would have been considered null and void and had to be reversed in any event.  Thus, the reversal of the judgment might not have occurred without the defect in entering the judgment.

In other words, do not risk it.  Make sure the church has a registered agent and that the registration is current and on file with the appropriate authorities…and do it now!