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Church Members Sue for Breach of Fiduciary Duties

Court rules that the First Amendment bars it from resolving the complaint.

Key Point 6-07.03 Church board members have a fiduciary duty to use reasonable care in the discharge of their duties, and they may be personally liable for damages resulting from their failure to do so.

The North Carolina Supreme Court ruled that it was barred by the First Amendment from resolving a complaint by church members that their pastor and two other church officials had breached their fiduciary duties by improperly using church funds. An independent church hired a new pastor. Shortly after being installed, the pastor began recommending various changes in church government. At a congregational meeting, the members approved a new set of bylaws for the church. The bylaws created an internal governing body, the "council for ministry," with broad authority to manage the business and affairs of the church. Some members expressed concern over the changes. On several occasions they requested ...

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Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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  • January 1, 2008

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