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Court Can’t Resolve a Dismissed Minister’s Breach of Contract Claim

The ministerial exception “bars the government from interfering with the decision of a religious group to fire one of its ministers.”

Last Reviewed: March 22, 2021

Key point 8-10.1 . The civil courts have consistently ruled that the First Amendment prevents the civil courts from applying employment laws to the relationship between a church and a minister.

A federal appeals court ruled that it was barred by the “ministerial exception” from resolving a dismissed minister’s breach of contract claim against his former church despite his insistence that the dispute could be resolved without the need for the court to interpret or apply church doctrine.

In December 2012, a church’s deacon board recommended, and the church voted unanimously to accept, a candidate for the position of church pastor. In March 2013, the pastor and church officials executed an employment contract (“the Agreement”) establishing that the pastor would serve as the church’s pastor for a 20-year term, beginning December 2012 and subject to termination “for cause.” If the church removed him without cause before the 20-year term expired, it would be required to pay him the salary and benefits he would have received for the unexpired term of the Agreement. The Agreement specified that the pastor could be terminated for cause if he “commits any serious moral or criminal offense (“serious offense”) including, but not limited to, adultery, embezzlement, or fraud, is convicted of a felony, or commits any other act which is a violation of applicable law” or if he became incapacitated through illness or injury.

The Agreement also allowed either party to terminate upon “material breach” of the Agreement and specified that the enumerated rights of termination existed in addition to “any other rights of termination allowed . . . by law.” Under the Agreement, the pastor agreed to “abide by the employment policies and procedures existing or established by the church from time to time.” This provision incorporated the church’s constitution and bylaws and was a “material term” of the Agreement. Furthermore, the Agreement required the pastor to “lead the pastoral ministries of the church and . . . work with the deacons and church staff in achieving the church’s mission of proclaiming the Gospel to believers and unbelievers.”

All parties understood that the congregation was required to approve the Agreement for it to become effective. During an April 2013 congregation meeting, the pastor acknowledged that his failure to perform his job “would constitute cause for termination under the Agreement.” He also said that “just cause” would occur if the church “was not growing . . . was stagnant, . . . or was not a better place,” and that “if he did not perform his duties well, he would be out.” Based on these statements, the congregation approved the Agreement.

Twenty months later, in December 2014, church leaders gathered the congregation and recommended that the church “vacate the pulpit immediately, void the pastor’s employment contract,” and approve the severance terms. They presented three reasons for their recommendation: (1) Failures in financial stewardship, (2) failures in spiritual stewardship, and (3) failure to respond to church leaders.

Specifically, the church reported that from 2013 to 2014, there were:

  • a 39% decline in tithes and offerings,
  • a 32% drop in Sunday morning worship attendance,
  • a 61% decrease in registered members,
  • a doubling of church expenditures, and
  • a decline in the quality of the church’s community outreach.

Furthermore, according to the church, the pastor scheduled, but then canceled, several meetings to discuss these financial and ministerial issues between June 2014 and December 2014. Based on the recommendations of church leaders, the congregation voted in January 2015 to terminate the pastor’s employment.

The pastor sued the church and 11 of its deacons in federal district court, alleging breach of contract due to termination without cause and seeking $2.6 million in damages. The court dismissed the pastor’s claims against the individual deacons because they were not parties to the Agreement. The court also dismissed the claims against the church on the ground that they were barred by the “ministerial exception,” which generally bars the civil courts from resolving employment disputes between churches and clergy. The pastor appealed.

The appeals court’s ruling

The appeals court concluded that the ministerial exception compelled it to affirm the district court’s dismissal of the pastor’s lawsuit. The ministerial exception “bars the government from interfering with the decision of a religious group to fire one of its ministers” (quoting the United States Supreme Court’s unanimous ruling in Hosanna-Tabor Evangelical Lutheran Church & School v. E.E.O.C., 565 U.S. 171 (2012)). The Supreme Court added:

The members of a religious group put their faith in the hands of their ministers . . . and requiring a church to accept or retain an unwanted minister . . . interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. . . . By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments . . . and according the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions.

The federal appeals court noted that the Hosanna-Tabor case involved an employment discrimination claim, and that the Supreme Court explicitly declined to state whether the ministerial exception “bars other types of suits, including actions by employees alleging breach of contract . . . by their religious employers.” The court referred to another federal appeals court opinion noting that “a church is always free to burden its activities voluntarily through contract, and such contracts are fully enforceable in civil court” because “enforcement of a promise, willingly made and supported by consideration, in no way constitutes a state-imposed limit upon a church’s free exercise rights.” Petruska v. Gannon University, 462 F.3d 294 (3rd Cir. 2006). But the court cautioned that “even assuming a church can contractually limit its free exercise rights, a court nonetheless must be cognizant of the ministerial exception when asked to adjudicate a contractual dispute, as a court’s resolution of the dispute may involve excessive government entanglement with religion, and thereby offend the Establishment Clause. . . . Thus, a court may resolve only disputes that turn on a question devoid of doctrinal implications . . . employ[ing] neutral principles of law to adjudicate.” The court concluded that this was not such a case:

The church argues that the plaintiff materially breached the Agreement by failing to provide adequate spiritual leadership, as reflected in decreased church contributions and attendance during the plaintiff’s tenure. In particular, the church cites a report by a joint board of Deacons and Trustees discussing, among other things, the plaintiff’s “failures in spiritual stewardship” reflected by a “drop in the number of registered members,” “drop in the number of Sunday morning worshippers,” and “drop in the level of tithes and offerings,” and concludes that the church’s “capacity to cultivate new ambassadors for Christ has grown progressively more negative than positive over the two years of the pastor’s leadership,” “he diminished the church’s capacity to fulfill the great mission” described in “Matthew 28:19–20,” and “under his leadership we were unable to launch and sustain the type of ministries likely to promote the spiritual health of families, neighborhoods, and the city.” . . .

While the amount of church contributions and members is a matter of arithmetic, assessing the pastor’s role, if any, in causing decreased giving and reduced membership in the church requires a determination of what constitutes adequate spiritual leadership and how that translates into donations and attendance—questions that would impermissibly entangle the court in religious governance and doctrine prohibited by the Establishment Clause.

What this means for churches

This case illustrates the vitality of the ministerial exception. While the Supreme Court’s ruling in the Hosanna-Tabor case recognizing the ministerial exception involved an employment discrimination claim, and the Court declined to rule on the validity of breach of contract or other claims, the federal appeals court in this case extended the ministerial exception to breach of contract claims that implicate church doctrine. The court noted that every other federal appeals court addressing this issue had reached the same conclusion. Lee v. Baptist Church, 903 F.3d 113 (3rd Cir. 2018).

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  • April 30, 2019
  • Last Reviewed: March 22, 2021