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Mosque Members’ Lawsuit Concerning Financial Improprieties Must Be Resolved By Binding Arbitration Due to Mosque Bylaws’ Arbitration Clause
New Jersey
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Key point 10-16.8. Churches have various defenses available to them if they are sued as a result of a personal injury. One such defense is an arbitration policy. By adopting an arbitration policy, a church can compel members to arbitrate specified disputes with their church rather than pursue their claim in the civil courts.

A New Jersey court ruled that a lawsuit that members of a mosque brought against other members as a result of alleged financial improprieties had to be resolved by binding arbitration as a result of an arbitration clause in the mosque's bylaws. In 1989, a mosque was incorporated under the New Jersey Nonprofit Corporation Act. The mosque is a nonprofit charitable, religious, and educational organization. Its certificate of incorporation asserts its purpose is, among other things, to serve members of the Islamic faith by providing a house of worship, and its bylaws provide the different types of membership one may have in the mosque. One type is to be a member of the general assembly. The general assembly is composed of all "active members," defined as those who attend prayers regularly, participate "actively" in mosque "activities," abide by the bylaws, pay dues, and practice Islam daily. The general assembly is the highest authority in the mosque, although the Board of Trustees (board), which represents the general assembly, is the highest policy-making authority.

Several members of the mosque's general assembly sued the mosque and other members (the "defendants") alleging mishandling of mosque funds. Specifically, the lawsuit alleged that one defendant used the mosque's credit cards to pay for some of his personal expenses and the legal expenses of the mosque's imam. The plaintiffs also claim that the mosque retained a member as an insured on its health insurance plan after he ceased working for the mosque, and arranged to have the mosque pay for his children's school tuition.

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