Tag: Succession Plans

THE POWER OF MEMBERS

Congregational church governing documents often are not drafted with any an eye to resolving disputes or reflecting significant changes in leadership. They should be. They should be reviewed annually or bi-annually to make sure they are current and complete. At least bi-annually church counsel should review them. In hierarchal churches, the governing documents of the denomination are usually adopted or modified in denominational meetings that occur less often. The local church governing documents, unless dictated by the denomination, should still be reviewed.

In Bui v Bach, Slip Op. (CA. App. 2022), the “internecine battle for control of the temple” commenced upon the death of the founder. The founder allegedly selected a successor, a successor allegedly confirmed by the membership, but two factions formed to challenge each other. The Plaintiffs were “long-time dues-paying congregants” but not office holders. The Defendants were two of the members of the board of directors that allegedly sought to force out the allegedly chosen and confirmed successor. The trial court held the “long-time dues-paying congregants” did not have “standing.” In other words, the court held the congregants did not have an interest recognized in the law to allow them to judicially challenge the actions of the directors. The appellate court reversed in part. While the appellate court held the congregants lacked standing for a cause of action based on a state corporation statute, which required that the Plaintiff be a director, other theories were allowed to proceed. The appellate court held a congregant had standing to demand an accounting from the Defendant directors. The appellant court held a congregant had standing to seek a judicial declaration as to who the legitimate directors might be under corporate law, if applicable.

The winner will be ultimately determined in the trial court on remand. However, such litigation can generally be avoided if bylaws, or other governing documents regardless of what they are named, are routinely reviewed and authenticated by the corporate secretary. The original and copies should be separately stored. Digital copies are acceptable, but the only copy should not be on the computer sitting in the church office. Indeed, the membership should have a digital copy. In the reported case, the original bylaws, thought to be lost, were only located because by happen stance someone filed a set as an attachment to incorporation documents. Succession of leadership procedures should be clearly set forth, easily enacted by a congregation, and easily documented. Membership rolls should reviewed and authenticated annually. Likewise, copies should be stored.

LEADERSHIP SUCCESSION FIASCOS

The court decision reported below started with the summary, “a dying bishop, a simmering feud over his successor, and allegations of misappropriated assets provide the backdrop to this church property dispute.” Orderly succession, especially anticipating the unexpected passing of a founder, can only be achieved by adopting and following governance documents that provide a clear process. The “Insurrection of the Bubbas” on January 6, 2021 notwithstanding, succession has been a hallmark of the democracy since inception much to the surprise, and envy, of much of the world in different eras. Thus, it would seem succession at the local denominational or local church level should be easier to implement. Apparently, that is not always so.

In Early Church of God v Jackson, 2022-Ohio-4034 (Slip Op.) (Ohio App. 2022), the appellate court reversed the dismissal of the case by the trial court on two of the three theories for relief or recovery submitted by the Plaintiff. The theory upon which the trial court dismissal was affirmed was pled in “trespass.” The allegation was that the Defendants were trying to conduct an unauthorized ordination of one of the Defendants to be a successor bishop. The trial court held the alleged basis of the claim to be an ecclesiastical issue. The Plaintiffs claims for breach of fiduciary duty and demand for an accounting regarding church bank accounts and other property were held to be viable using Neutral Principles of Law. The appellate court held allegations of embezzlement or misappropriation are secular issues for which ecclesiastical claims need not be considered.

The ”trespass” claim should have been pled as a “trespassing” claim after the locks were changed and if defendants tried to use Plaintiff’s facilities without authorization regardless of the event contemplated. If the financial transactions complained of were unauthorized by the governing documents or the authorized leadership, then such claims can be proven. Once the denomination or church becomes aware of a problem, the banks and other property custodians should be notified so that access to the funds or property can be regulated.

THE THIRTY YEARS WAR

History taught us about the folly of wars that lasted decades; The Hundred Years War is an example heard at least passing mention of in some long ago school room. In these reports we have included cases arising from disputes caused by the failure of church founders or long time senior pastors to have succession plans. The resulting battle for control of church assets is always unseemly and inconsistent with the departed leader’s vision. Worse, these types of disputes often involve surviving family members that believe they inherited an entitlement to assets but no corresponding duty to develop the skill sets needed to lead. The problem is worse at the denominational level.

In Trustees of the General Assembly, etc. v Patterson, Memorandum [Opinion] (ED Pa., 2021), the federal district court recited the “almost thirty-year dispute in state court that resulted from the lack of succession planning. The church consisted of 50 satellite churches in the United States, 6,000 members of which 3,000 member were resident in Philadelphia. The church founder was the “bishop” and held a lifetime appointment. The first successor likewise held a lifetime appointment. The “bishop” had unilateral authority over membership rolls. The first successor had seven sons and a daughter, some of whom became clergy or trustees. The battle over succession “created a schism in the church.” Two factions formed around competing family members. The majority faction “disfellowshipped” the minority faction. Each faction claimed they had elected the next “bishop.” Lawsuits followed that were decided in various courts and forums, including mandatory arbitration. The arbitration award was set aside by a state court and then later by that state court held to be a final adjudication. Based on that ruling, the minority faction sought to evict the majority faction from the main church building and the leader of the minority was faction was declared to be the “receiver” of all church assets. However, the leader of the majority faction was left in office as “bishop,” and would also ostensibly have control. Thus, the federal court held it was not possible to determine who had control of the church assets based on the arbitration award and enjoined the eviction. It took the federal court 84 pages and 61 footnotes to navigate the litigation history and reach a conclusion. The federal court left the factions where they were at the end of the arbitration.

The amazing thing to gain from this report and this court’s opinion was that the membership tolerated this and financed it through a generation and a half of members. Another amazing thing is that an arbitrator would enter a decision guaranteed to perpetuate the schism by dividing the authority between the factions. The last amazing thing is that the state judiciary did not make definitive rulings based on the governing documents in the first instance or based on the arbitration award in the second. The receivership should have been quickly administered and wound up with no delay accepted. There were either financial irregularities or there were not.

CHURCH SUCCESSION TITLE BOUTS

When the founding pastor fails to have in place prior to need a written succession plan adopted by the governing authority, words like coup d’etat can become applicable. A church split can result that impairs the legacy of the founding pastor.

In Elglise Baptiste v Seminole Tribe, Omnibus Order (SD FL, 2020), the founding pastor died. A battle for control of the church erupted that was marked by a congregational meeting that turned into a brawl that required police intervention to restore order. Apparently, a congregational vote survived the brawl and the wife of the late pastor led the winning faction elected by the congregation to succeed. The following week the worship service led by the losing faction was interrupted by the widow and her faction. They retook the church building from the “losing” faction accompanied by “six armed officers from the Seminole [Tribal] Police Department.” The widow’s faction’s opponents were removed from the church property, the locks changed, and the gates to the property locked. The “losing” faction sued the Seminole Tribe but could not defeat the tribe’s sovereign immunity. The widow and her faction were also dismissed from the lawsuit because the Plaintiff’s claims represented “non-justiciable questions of church governance” excluded from review by the Ecclesiastical Abstention Doctrine.

Most courts will not play referee in a title bout between factions in a church split. If there is a documented congregational vote in congregational churches or a hierarchical action in denominational churches, and if the vote or action is arguably consistent with organizational governing documents, such as bylaws, even should a court need to address property ownership or control, usually those are the facts that will control the decision. A written succession plan adopted by the governing authority of the church or the denomination, or both may, if drafted with sufficient clarity and due regard for other laws, such as rules against perpetuities which may or may not apply to churches, be a determinative piece of evidence.