NC Supreme Court Intervenes in Church Employment Dispute

NC’s supreme court says a church employment dispute between a pastor and board of directors is not an expressly religious matter.

Richard R. Hammar, Attorney, CPA

Bio

State: North Carolina
Categories: Judicial Resolution of Church Disputes

Key point 9-07. The First Amendment allows civil courts to resolve internal church disputes so long as they can do so without interpreting doctrine or polity.

The North Carolina Supreme Court ruled that it could resolve an internal church dispute since it could do so without implicating church doctrine.

The court began its opinion by noting:

Churches exist primarily for the spiritual edification of the adherents of a faith tradition. They are established and operated in accordance with religious precepts. . . . Churches may build sites to house worship, fellowship, community, and teaching. They simultaneously have a secular existence. Many are registered with the state as nonprofit corporations and, by virtue of their status, enjoy exemption from state and federal taxes. They may enter into contracts, dispose of property, seek financing, and make employment decisions. Unsurprisingly, disagreements arise over matters both spiritual and secular. Occasionally, parties seek resolution in civil court.

The Court noted that the role of civil court under these circumstances is dictated by the nature of the dispute.

When the resolution of a dispute requires the interpretation of religious doctrine or spiritual practices, the court “must abstain from deciding purely religious questions.” However, when disputes arise which can be resolved solely through the application of “neutral principles of law” that are equally applicable to non-religious institutions and organizations, a court’s involvement in such a dispute does not “jeopardize values protected by the First Amendment.”

But spiritual and secular matters are often intertwined. When they are,

identifying the boundary between impermissible judicial entanglement and permissible judicial adjudication is a difficult but necessary task. The First Amendment requires us to preserve the exclusive autonomy of religious authorities to answer religious questions, but the State, the public, and religious organizations themselves all have an interest in the courthouse remaining open for the resolution of certain civil claims.

Basis of the church employment dispute

In 1988, a church formed as a nonprofit corporation under North Carolina nonprofit laws. The church’s elders and senior pastor were installed as the church’s board of directors.

The church’s articles of incorporation expressly prohibited the church from having corporate members. Instead, the articles gave the board exclusive authority to represent the church’s congregation.

In 1997, the board adopted a set of bylaws that reserved for itself sole governing authority over the church, including employment matters.

The church contends that these bylaws remain in effect to this day.

The pastor died in 2015. His son (“RJ”) accepted an offer letter to become senior pastor as an at-will employee. The offer letter provided that:

An “at-will” employment relationship has no specific duration. This means that an employee can resign their employment at any time, with or without reason or advance notice. The Church has the right to terminate employment at any time, with or without reason or advance notice as long as there is no violation of applicable state or federal law.

RJ conceded that when the church hired him, he believed the controlling bylaws gave the board “total control over the governance and operation of the church.”

Yet RJ alleged that sometime between 2004 and 2008, the board adopted new bylaws, which it later attached to a 2008 application for a bank loan.

This second set of bylaws provided that the pastor could be dismissed only by a 75 percent vote of the congregation attending a special general meeting called for that purpose.

Board terminates pastor

According to the church, RJ’s tenure was not successful.

Attendance fell by 60 percent and the board received numerous complaints about him from churchgoers.

In June 2019, the board voted unanimously to terminate RJ’s employment. Nevertheless, over the next few months, and against the wishes of the board, RJ continued to conduct services in church facilities.

He also allegedly collected and retained tithe money. When the church attempted to bar his entry, RJ allegedly broke the locks to access the sanctuaryto conduct unauthorized services.

In September 2019, the church asked a court to issue a preliminary injunction prohibiting RJ from entering the church or speaking with staff.

In response, RJ asked the court to issue a declaratory judgment establishing that:

he remained the “Bishop, Senior Pastor, and spiritual leader” of the church,
he “was not an ‘at-will’ employee,”
the bylaws included in the 2008 loan application controlled the terms of his employment,
his termination was unlawful, and
his appearances on church property were lawful.

RJ also asked the court to issue an injunction:

allowing him to resume his employment,
awarding him damages arising from the board’s breach of a fiduciary duty it owed him,
awarding him damages resulting from the board’s tortious interference with his employment relationship,
granting him access to the church’s financial records, and
establishing a constructive trust for funds the board had allegedly misappropriated.

The church also argued that the court lacked jurisdiction to resolve the dispute because resolving RJ’s claims would require it “to impermissibly review ecclesiastical matters.”

The church also alleged RJ violated the terms of the preliminary injunction by continuing to conduct unsanctioned services.

RJ later added a request for back pay from the date of his termination, and removed his request to be recognized as the church’s “spiritual leader.”

Trial court denies church’s employment dispute claim

In July 2020 the trial court entered an order denying the church’s claims. The church appealed.

A state appeals court noted that the principal issue was “whether the resolution of [RJ’s] claims would require [it] to interpret religious matters in violation of the ecclesiastical abstention doctrine which stems from the First Amendment to the United States Constitution.”

The church appealed this ruling to the state supreme court, which began its opinion by noting that “the principle that civil courts lack subject matter jurisdiction to resolve disputes involving ‘purely ecclesiastical questions and controversies’ has long been recognized by this Court.”

However, the court recognized that the First Amendment “does not provide religious organizations absolute immunity from civil liability… . When the State has a legitimate interest in resolving a secular dispute, a civil court is a proper forum for that resolution.”

The Court noted that

the public at large and religious organizations also have an interest in the courthouse remaining open for the resolution of civil disputes: the contractors, vendors, lenders, and employees upon whom religious organizations depend to assist in the more prosaic elements of operating a nonprofit corporation might think twice about providing their services if there were no neutral forum for resolving the kinds of disputes that inevitably arise in the course of everyday business.

The state supreme court noted that the

impermissible entanglement doctrine precludes judicial involvement only in circumstances involving “disputes [that] implicate controversies over church doctrine and practice…. We have previously identified such ecclesiastical matters to include those concerning (1) religious doctrines or creeds; (2) the church’s form of worship; (3) the adoption of regulations concerning church membership; and (4) the power to exclude from membership or association those whom duly authorized church officials deem unworthy of membership… . In addition, impermissible entanglement may arise either when a court resolves an underlying legal claim or when it issues a form of relief.”

Still, civil courts do not inhibit free exercise of religion merely by opening their doors to disputes involving church property. Thus, to determine whether a civil court has jurisdiction to entertain a dispute, the dispositive question is whether resolution of the legal claim requires the court to interpret or weigh church doctrine… . If a claim can be resolved solely by applying neutral principles of law, there is no impermissible entanglement.

State supreme court’s conclusion

The state supreme court concluded:

The impermissible entanglement doctrine limits a court’s authority to resolve disputes involving religious organizations. Courts possess jurisdiction over only those claims that can be resolved through application of neutral principles of secular law that govern all similar organizations and entities. A court must carefully distinguish between claims that will necessarily require it to become entangled in spiritual matters and those that can potentially be resolved purely on civil grounds. Essentially, if the issues raised in a claim can be “resolved on the basis of principles of law equally applicable to” an ”athletic or social club,” then the court has jurisdiction to proceed. If the issue raised in a claim requires the court to “determine ecclesiastical questions” or wade into “a controversy over church doctrine,” then a court may not proceed because doing so would be “wholly inconsistent with the American concept of the relationship between church and state.

In this case [the pastor’s] claim for a declaratory judgment establishing which bylaws apply, whether the Church procedurally followed those bylaws, and whether there was an employment contract between [him] and the Church incorporating the applicable bylaws can potentially be resolved solely by application of neutral principles of corporate, contract, and employment law. At this stage of the litigation, that conclusion is sufficient to allow him to proceed. By contrast, First Amendment principles require the dismissal of the Pastor’s other claims which challenge the Board’s judgment on grounds necessarily implicating Church doctrine and practice.

What this church employment dispute means for pastors, board members, elders and churches

Internal church disputes can arise in several ways. As this case illustrates, the civil courts are barred from resolving some of these cases, if doing so would implicate church doctrine.

Church leaders sometimes find it surprising that internal church disputes not involving doctrinal issues are not necessarily barred by the First Amendment guarantee of religious freedom.

Civil courts have reached differing conclusions regarding the kinds of cases the constitution prohibits them from resolving.

The court in this case concluded that the following internal church disputes ordinarily cannot be resolved by civil courts because they involve doctrine:

disputes involving “purely ecclesiastical questions and controversies,”
disputes involving religious doctrine or creeds,
disputes over a church’s music or form of worship;
the adoption of regulations concerning church membership, and,
disputes involving the power to exclude from membership or association those whom duly authorized church officials deem unworthy of membership.

On the other hand, the civil courts ordinarily may resolve the following kinds of internal church disputes, provided no issue of doctrine or polity is involved:

disputes with contractors, vendors, lenders, and non-clergy employees “upon whom religious organizations depend to assist in the more prosaic elements of operating a nonprofit corporation,” and,
identification of a church’s current bylaws and other organizational documents.

Nation Ford Baptist Church Inc. v. Davis, 876 S.E.2d 742 (N.C. 2022).

Legal Developments

Pastor Who Revealed Child’s Suicide During a Funeral Sermon Can’t Be Sued

Court: Ecclesiastical abstention doctrine bars lawsuit from the mother of deceased son.

Richard R. Hammar, Attorney, CPA

Bio

State: Michigan
Categories: Invasion of Privacy, Judicial Resolution of Church Disputes

Key point 4-04. Many states recognize “invasion of privacy” as a basis for liability. Invasion of privacy may consist of any one or more the following: (1) public disclosure of private facts; (2) use of another person’s name or likeness; (3) placing someone in a “false light” in the public eye; or (4) intruding upon another’s seclusion.

A Michigan appellate court affirmed a lower court’s ruling that the mother (the “plaintiff”) of a suicide victim was barred by the ecclesiastical abstention doctrine from suing a pastor who, contrary to her insistence upon confidentiality, still disclosed the suicide during the victim’s funeral homily.

Background

In early December 2018, a young man committed suicide. This fact was not publicly disclosed or known to anyone but close family and friends.

The day after their son’s death, the decedent’s parents went to their church and spoke with the pastor to plan their son’s funeral. The pastor informed them that he could conduct a funeral service just a few days later and discussed the format of the service with them.

The parents advised the pastor that they “wanted to celebrate their son’s life and asked that the homily be positive, uplifting, and focused on the importance of kindness.” The pastor agreed to conduct the service in the manner the parents requested.

At no point did the parents inform the pastor that their son had committed suicide, nor did the pastor state he was aware of their son’s cause of death.

On the day of the funeral, “numerous family members, friends, classmates, and community members were in attendance.” The service began and continued as expected until the pastor gave his homily. At that point, the pastor informed those in attendance that the deceased had committed suicide.

According to the plaintiff, “[m]any in attendance . . . immediately became upset and burst out crying.” The pastor’s discussion of suicide stated that it was “condemned by the Church,” a “secular crime,” and “a sin against God with dire eternal consequences.”

As the pastor’s sermon progressed, the deceased’s father approached the pulpit and “pleaded” with the pastor to stop his discussion of suicide. But the pastor did not relent and “openly questioned the eternal fate” of the deceased.

The ecclesiastical abstention doctrine

The plaintiff sued the pastor, church, and archdiocese (the “church defendants”) alleging five bases of liability: (1) intentional infliction of emotional distress; (2) misrepresentation; (3) invasion of privacy; (4) vicarious liability; and (5) negligent hiring, supervision, or retention.

The church defendants asked the court to dismiss the case, arguing that the plaintiff’s claims were barred by the ecclesiastical abstention doctrine because they involved questions of ecclesiastical polity. The church defendants also argued that the pastor’s homily constituted protected speech and, even if the plaintiff’s claims could be adjudicated, they failed as a matter of law.

The plaintiff insisted that the ecclesiastical abstention doctrine did not apply because this case concerned the pastor’s conduct, “not the Church’s creed,” his speech was not protected, and the plaintiff sufficiently stated valid claims against each defendant. The trial court concluded the ecclesiastical abstention doctrine “clearly” applied to the pastor’s sermon and dismissed the lawsuit. The plaintiff appealed.

The appeals court noted this about the ecclesiastical abstention doctrine:

Our Supreme Court has stated that the applicability of the ecclesiastical abstention doctrine in Michigan

reflects [the] Court’s longstanding recognition that it would be “inconsistent with complete and untrammeled religious liberty” for civil courts to “enter into a consideration of church doctrine or church discipline,” to “inquire into the regularity of the proceedings of church tribunals having cognizance of such matters,” or “to determine whether a resolution was passed in accordance with the canon law of the church, except insofar as it may be necessary to do so, in determining whether or not it was the church that acted therein.”

Under the ecclesiastical abstention doctrine, a civil court cannot “substitute its opinion in lieu of that of the authorized tribunals of the church in ecclesiastical matters.” Therefore, the ecclesiastical abstention doctrine “operates to ensure that, in adjudicating a particular case, a civil court does not infringe the religious freedoms and protections guaranteed under the First Amendment.” But the doctrine does not “purport to deprive civil courts of the right to exercise judicial power over any given class of cases.” . . . “What matters instead is whether the actual adjudication of a particular legal claim would require the resolution of ecclesiastical questions; if so, the court must abstain from resolving those questions itself, defer to the religious entity’s resolution of such questions, and adjudicate the claim accordingly.” Thus, the ecclesiastical abstention doctrine “requires a case-specific inquiry that informs how a court must adjudicate certain claims within its subject matter jurisdiction; it does not determine whether the court has such jurisdiction in the first place” [citations omitted].

The appeals court concluded that the trial court did not err when it decided the ecclesiastical abstention doctrine barred the plaintiff’s claims. Any attempt to resolve the plaintiff’s claims would require decisions regarding matters of church doctrine and polity, which the doctrine prohibits.

The plaintiff had argued that her lawsuit did not seek resolution of religious issues. Rather, she asserted her claims “concern an agreement by [the pastor] to preside over the funeral service for her son—for which [the pastor] was compensated through a donation—in accordance with requests from the family regarding the content of the funeral service.”

But the actual adjudication of each of the plaintiff’s claims “would require an inquiry into religious doctrine and practices regarding sermons and funeral services, suicide, as well as why [the pastor] chose the words that he did, and personnel issues regarding hiring practices of the Catholic Church,” the appeals court said.

The appeals court addresses each claim

The appeals court still briefly addressed each of the plaintiff’s claims.

Infliction of emotional distress

In the trial court, the plaintiff had argued that the pastor’s behavior at the funeral amounted to an “intentional infliction of emotional distress.”

To establish a claim for intentional infliction of emotional distress, a plaintiff must prove that: (1) the conduct giving rise to the claim was intentional or reckless; (2) the conduct was extreme and outrageous; (3) the conduct caused emotional distress; and (4) the emotional distress was severe.

The defendant’s conduct must be “so extreme in degree,” as to go “beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” The trial court concluded that the church’s conduct did not meet this strict standard. It also ruled that this claim was barred by the ecclesiastical abstention doctrine.

The appeals court concluded that the trial court properly applied the ecclesiastical abstention doctrine to bar the plaintiff’s claim for intentional infliction of emotional distress.

It stressed that “to find that the content of [the pastor’s] homily at the funeral regarding the suicide of the plaintiff’s son was ‘extreme’ or ‘outrageous’ would require the trial court to evaluate Catholic philosophy and doctrine regarding suicide, and whether [the pastor] complied with it.” It would also require “evaluation of procedures for developing and providing religious sermons, which are unequivocally ecclesiastical in nature.”

Misrepresentation and invasion of privacy

The appeals court said the trial court had not erred “when it concluded the ecclesiastical abstention doctrine barred plaintiff’s claims of misrepresentation and invasion of privacy.”

The plaintiff’s claim alleged, in part, that the pastor agreed to deliver a positive, uplifting sermon but, instead, spoke about “the nature of her son’s death,” and how it constituted a sinful act that brought into question “her son’s eternal salvation.”

Further, the plaintiff asserted the pastor “should have known that the cause of death ‘was a personal matter and not of public concern,’ and disclosure of the cause of death ‘was not consistent with any legitimate pastoral duty and/or concern to the public.’”

In rejecting both the misrepresentation and invasion of privacy claims, the appeals court stated:

[A]s with plaintiff’s claim of intentional infliction of emotional distress, evaluation of her misrepresentation and invasion-of-privacy claims requires an inquiry into the decision-making process behind drafting and giving religious sermons, as well as into Catholic doctrine and teachings regarding suicide. . . . [T]he trial court properly concluded that resolution of these claims would require evaluating religious doctrines and, by extension, trigger the ecclesiastical abstention doctrine.

Additionally, regarding the invasion of privacy claim, the appeals court referenced a 1991 Michigan Supreme Court opinion that cited this passage from the Restatement Torts, 2d:

The right protected by the action for invasion of privacy is a personal right, peculiar to the individual whose privacy is invaded. The cause of action is not assignable, and it cannot be maintained by other persons such as members of the individual’s family, unless their own privacy is invaded along with his.

The appeals court then stated it agreed with the trial court’s conclusion:

Consequently, the trial court was correct in concluding that the plaintiff had no cognizable privacy interest in the fact that her son committed suicide.

Vicarious liability and negligent hiring, supervision, or retention

The appeals court concluded that the ecclesiastical abstention doctrine also precluded the plaintiff’s claims for vicarious liability and negligent hiring, supervision, or retention.

Under the claim of vicarious liability, the plaintiff alleged, in part, that the pastor was under the supervision and control of the archdiocese and he “act[ed] in his special role of priest and adviser, using the premises of the Archdiocese’s parish,” and the “trust, power and the authority his position granted him.”

And, under the claim for negligent hiring, supervision, and retention, the plaintiff alleged that the pastor was “unfit and/or incompetent to perform” his pastoral duties and that the archdiocese “knew, or should have known, that he previously engaged in similar conduct as that alleged [by the plaintiff].” The plaintiff alleged that despite the archdiocese’s knowledge of the pastor’s incompetence, it still “hired, supervised, and retained him as the pastor of [the church].”

In response, the appeals court stated:

As [the church] defendants point out, however, “[t]he Roman Catholic Church is an hierarchical organization and the Bishop’s power to make assignments of ministers to a parish is certainly a matter of ecclesiastical polity in which the courts may not interfere.” . . . This point has been repeatedly reaffirmed by other Courts. . . . [T]he “authority to select and control who will minister to the faithful—a matter strictly ecclesiastical—is the church’s alone.”

As a result, the appeals court said, the trial court properly dismissed the plaintiff’s claim involving the hiring, supervision, and retention of the pastor “as those decisions by the Church are constitutionally protected.”

The appeals court also rejected the vicarious liability claim, noting the pastor’s “actions were constitutionally protected, and there can be no liability for a principal if the agent has committed no actionable wrong.”

Final conclusion

In sum, the appeals court concluded:

[The pastor’s] conduct was protected by the ecclesiastical abstention doctrine. As such, we cannot pass judgment on the content of his sermon. Consequently, all of plaintiff’s claims necessarily fail.

What this means for churches

Pastors sometimes say things in a sermon that offend some listeners. This case demonstrates that such offenses generally will not expose the pastor or church to liability because of the ecclesiastical abstention doctrine, which bars the civil courts from resolving internal church disputes involving doctrinal issues.

It is also important to note, as this appeals court observed, that “invasion of privacy” is a personal right, “peculiar to the individual whose privacy is invaded,” and therefore “cannot be maintained by other persons such as members of the individual’s family, unless their own privacy is invaded along with his.”

Hullibarger v. Archdiocese, 2021 WL 2877973 (Mich. App. 2021)

Legal Developments

Appellate Court: Age Discrimination Claim Against Church May Proceed

Lower court instructed to evaluate merits of dismissed employee’s lawsuit, suggesting possible vulnerability for churches.

Richard R. Hammar

State: Michigan
Categories: Judicial Resolution of Church Disputes

Key point 9-07 . The First Amendment allows civil courts to resolve internal church disputes so long as they can do so without interpreting doctrine or polity.

A Michigan appeals court ruled that a trial court was not barred by the “ecclesiastical abstention doctrine” from resolving a dismissed church employee’s age discrimination claim against her former church if it could do so without resorting to church doctrine.

A female employee (the “plaintiff”) had worked for a church for over 30 years. At the time of her termination, she was employed as the church’s business manager. In 2012, the church hired a new senior pastor. Shortly thereafter, the plaintiff claimed that the new pastor began asking her “when are you going to retire,” and generally treating her with disdain and hostility.

In 2015, the tensions between the plaintiff and the pastor came to a head when the pastor discovered that the plaintiff was receiving an additional five weeks of vacation pay in addition to her regular weekly salary.

The plaintiff claimed that a previous pastor had authorized the five weeks of vacation pay for all tenured employees in 1999. The new pastor believed that this agreement was unenforceable because it was made verbally, and he convened a panel to investigate the plaintiff’s salary.

In May 2016, following the investigation, the plaintiff was given two options: continue her employment with the church without the extra five weeks of vacation pay or retire. The plaintiff found neither option acceptable. The plaintiff was ultimately placed on a two-week administrative leave, but was notified on July 28, 2016, that her employment status had been converted to a discharge, effective July 25, 2016.

The plaintiff sued the church and its pastor, alleging age discrimination, hostile work environment, retaliation, wrongful discharge, breach of contract, defamation, and intentional infliction of emotional distress.

The defendants asked the court to dismiss the case on the ground that the lawsuit “seeks intervention by the court on matters that are at the heart of internal church governance.” Accordingly, the defendants sought dismissal of the plaintiff’s complaint on the basis that allowing the trial court to decide her claims would result in the trial court becoming “entangled in ecclesiastical questions of church governance.”

The trial court agreed, and dismissed the case on the basis that it lacked jurisdiction “because resolution of the claims would involve an impermissible inquiry into the church’s internal procedures.” Accordingly, the trial court’s jurisdiction was “prohibited by the First Amendment [of the United States Constitution] and summary disposition is appropriate.” The plaintiff appealed.

The appeals court noted that the trial court’s conclusion that it lacked jurisdiction over the plaintiff’s complaint was based on the ecclesiastical abstention doctrine. This doctrine, and its boundaries, were explained in a recent ruling by the Michigan Supreme Court:

The ecclesiastical abstention doctrine arises from the Religion Clauses of the First Amendment of the United States Constitution and reflects this Court’s longstanding recognition that it would be inconsistent with complete and untrammeled religious liberty for civil courts to enter into a consideration of church doctrine or church discipline, to inquire into the regularity of the proceedings to church tribunals having cognizance of such matters, or to determine whether a resolution was passed in accordance with the canon law of the church, except insofar as it may be necessary to do so, in determining whether or not it was the church that acted therein. Accordingly, we have consistently held that the court may not substitute its opinion in lieu of that of the authorized tribunals of the church in ecclesiastical matters, and that judicial interference in the purely ecclesiastical affairs of religious organizations is improper.

However, simply because a religious organization may be a defendant in a civil action, the ecclesiastical abstention doctrine does not divest the trial court’s jurisdiction. Rather, the “doctrine informs how civil courts must adjudicate claims involving ecclesiastical questions; it does not deprive those courts of subject matter jurisdiction over such claims.” Winkler v. Marist Fathers, 901 N.W.2d 566 (Mich. 2017).

As a result, “when a claim is brought against a religious entity, the relevant inquiry becomes whether the actual adjudication of a particular legal claim would require the resolution of ecclesiastical questions; if so, the court must abstain from resolving those questions itself, defer to the religious entity’s resolution of such questions, and adjudicate the claim accordingly.”

The court concluded that the trial court erred in dismissing the plaintiff’s clams without evaluating whether they could be resolved without recourse to church doctrine. The court remanded the case back to the trial court “in order for the trial court to determine whether and to what extent the adjudication of the legal and factual issues presented by the plaintiff’s claims would require the resolution of ecclesiastical questions.”

What this means for churches

This case illustrates what many courts call the “ecclesiastical abstention” doctrine. Under this doctrine the civil courts are barred by the First Amendment religion clauses from resolving most internal church disputes.

While not using the terminology “ecclesiastical abstention,” the United States Supreme Court described the basic principle in a 1976 ruling in which it noted that the civil courts lack jurisdiction over internal church disputes that are

strictly and purely ecclesiastical in [their] character . . . a matter which concerns theological controversy, church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required of them. Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976).

Even so, as one court has noted:

Plaintiffs are not categorically prohibited from ever seeking redress from the courts solely because a religious organization is somehow involved in the dispute. When a church-related dispute can be resolved by applying neutral principles of law without inquiry into religious doctrine and without resolving religious controversy, the civil courts may adjudicate the dispute. Gilmore v. Trinity Church, 2018 Mich. App. LEXIS 3258 (Mich. App. 2018), quoting Bendross v. Readon, 89 So.3d 258 (Fla. App. 2012).

Court Barred by First Amendment from Resolving a Dismissed Minister’s Terminated Retirement Benefits

The court concluded that the plaintiff “sought review of the procedures that resulted in ecclesiastical decisions and necessitated a review of religious law and practice, which is exactly the inquiry that the First Amendment prohibits civil courts from undertaking.”

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: First Amendment, Judicial Resolution of Church Disputes, Retirement Plans

Key point. Breach of contract claims by dismissed ministers, no matter how meritorious, cannot be resolved by the civil courts if doing so would require an interpretation of religious doctrine, or involves a claim that a decision by the highest ecclesiastical tribunal of a hierarchical denomination did not comply with the church’s laws and regulations.

A federal appeals court ruled that it was barred by the First Amendment religion clauses from resolving a dismissed minister’s claim that a denominational pension board acted improperly in terminating his retirement benefits pursuant to denominational rules when he was “defrocked” and ceased to be a minister in good standing.

An ordained minister (the “plaintiff”) began collecting benefits in 2009 after fulfilling the three conditions identified in his human resource manual for eligibility: (1) he had remained as a member in good standing of the denomination, (2) completed 10 years of full-time paid service for the denomination, and (3) had reached or exceeded retirement age.

The plaintiff’s retirement benefits were terminated for not “remaining as a member of good standing of the denomination” after being defrocked and dismissed from the denomination. The plaintiff sued the denomination, claiming that the termination of his retirement benefits constituted a breach of contract and a violation of the denomination’s covenant of good faith and fair dealing. A federal district court ruled that the lawsuit turned on an “interpretation of what constitutes a ‘member in good standing’ under denominational rules of governance, custom, and faith” and any ruling by the court would violate the religious freedom guaranteed by the First Amendment.

A federal appeals court affirmed the trial court’s dismissal of the case. The court observed:

The [trial] court correctly dismissed the lawsuit. A dispute involving the application of church doctrine and procedure to discipline one of its members is not appropriate for secular adjudication. The plaintiff’s claims, which were predicated on his defrocking, his excommunication, and the termination of his retirement benefits due to a “theological disagreement” would have required encroachment into matters of church dogma and governance. Based on “the separation of church and state principles required by the … First Amendment … the [trial] court could not interfere with the purely ecclesiastical decisions of the [denomination] regarding the plaintiff’s fitness to serve in the clergy or to remain a member of the denomination.

Civil courts may apply neutral principles of law to decide church disputes that involve no consideration of doctrinal matters, but the plaintiff’s lawsuit required examination of church doctrine and polity. His claims … turned on whether he was entitled to retirement benefits. And his entitlement to retirement benefits was conditioned on, among other things, that he remain as a member in good standing of the church. As the trial court stated, it could not “define ‘member’ for a specific church or denomination … because that would require defining the very core of what the religious body as a whole believes.” Likewise, to determine if the plaintiff had remained in good standing, the trial court explained, it would have had to “scrutinize documents related to church rules and discipline and … apply its interpretation of those rules to the plaintiff’s conduct. In other words, the court would have had to determine whether [the denomination] exercised its religion in accordance with the doctrine, faith, custom, and rules of governance” of the church. Because the plaintiff’s claims required an examination of doctrinal beliefs and internal church procedures, the trial court had no power to entertain his controversy with the denomination.

The court noted that the plaintiff’s claim that the denomination breached its implied covenants of good faith and fair dealing also would require review of a decision about internal church governance. The plaintiff alleged that he had been defrocked, excommunicated, and had his retirement benefits cancelled in violation of church procedural rules and the process afforded other ministers. But, the court noted, the United States Supreme Court issued a ruling in 1976 “prohibiting civil courts from undertaking an inquiry into whether the decisions of the highest ecclesiastical tribunal of a hierarchical church complied with church laws and regulations.” Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976). Such an inquiry by a civil court “would undermine the general rule that religious controversies are not the proper subject of civil court inquiry, and that a civil court must accept the ecclesiastical decisions of church tribunals as it finds them.”

In conclusion, the plaintiff “sought review of the procedures that resulted in ecclesiastical decisions and necessitated a review of religious law and practice, which is exactly the inquiry that the First Amendment prohibits civil courts from undertaking.”

What this means for churches

This case illustrates the view of many courts that breach of contract claims by dismissed ministers, no matter how meritorious, cannot be resolved by the civil courts if doing so would require an interpretation of religious doctrine, or, as in this case, involves a claim that a decision by the highest ecclesiastical tribunal of a hierarchical denomination did not comply with the church’s laws and regulations. 719 Fed.Appx. 926 (2018).

Legal Developments

‘Ecclesiastical Abstention’ Fails to Prevent School Employee’s Discrimination Lawsuit

The “ecclesiastical abstention doctrine,” which bars the courts from resolving issues of internal church governance, did not prevent a church’s preschool director from suing the church for disability discrimination.

Richard R. Hammar, Attorney, CPA

Bio

State: Kentucky
Categories: Employment Practices, Judicial Resolution of Church Disputes, Schools

Key point 9-07. The First Amendment allows civil courts to resolve internal church disputes so long as they can do so without interpreting doctrine or polity.

A Kentucky appeals court ruled that the “ecclesiastical abstention doctrine,” which bars the courts from resolving issues of internal church governance, did not prevent a church’s preschool director from suing the church for disability discrimination.

In 2000, a woman (the “plaintiff”) was named director of a preschool and daycare center operated by a church. In her role as director, the plaintiff oversaw operation of the center on a daily basis; she was responsible for purchasing food, classroom materials, and toys using an account set up specifically for the center and separate from the church’s operating accounts; and she managed the center’s employees, including all scheduling, discipline, training, and payroll tasks in accordance with the center’s employee handbook, which was written separately from any church directive or policy.

As a condition for receiving federal education funds, the center was prohibited from posting religious materials and artifacts in the classrooms. Throughout her tenure, the plaintiff had no association with the church, had no religious duties, and made no religious decisions of any kind.

Beginning in June of 2009, the plaintiff was supervised by the church’s newly appointed head pastor. The pastor did not attend functions, teach, or have any connection with the center apart from his supervisory role over the church. He indicated that the plaintiff ran the center “in isolation” from the church, did not have a religious education, was not a minister, did not teach the Methodist faith, and was not involved with the church’s governance or any church committee.

On December 31, 2009, the plaintiff’s husband passed away. The church permitted her to take an extended leave of absence to grieve for her husband. She struggled with bouts of depression and anxiety. When she returned to the center, she initially worked part-time, occasionally arriving late, leaving early, or missing whole days. The church continued paying her full-time salary. Between February and November 2010, the pastor and an associate pastor often spoke with the plaintiff regarding her absences, tardiness, and other issues stemming from her depression and anxiety. No disciplinary actions were instituted or documented.

On November 9, 2010, the pastor summoned the plaintiff to a meeting regarding an injury sustained by one of the center’s students the previous day. Following the meeting, the plaintiff was placed on suspension. This was the first adverse employment action against the plaintiff in her 20 years with the center. On November 15, 2010, the pastor signed a letter on behalf of the church terminating the plaintiff’s employment. As reasons for her firing, the church alleged the plaintiff had forced children to go through a drain pipe resulting in injury to a child, frequently yelling at the children, physically grabbing and poking the children, and leaving the children unsupervised. Believing these allegations were demonstrably false and merely pretexts for her dismissal, on January 25, 2011, the plaintiff sued the church, alleging disability discrimination in violation of state law. At trial, the jury found in favor of the plaintiff and awarded her damages for lost wages and emotional distress. In addition, the plaintiff’s motion for attorney’s fees was granted.

The church appealed the decision on two grounds. First, it claimed the trial court erred in not dismissing the case on the basis of the ecclesiastical abstention doctrine, which generally bars the civil courts from interfering with internal church disputes pertaining to issues of faith, polity, and doctrine. And second, it claimed the trial court erred in failing to dismiss the case on the basis of the church’s discovery following the plaintiff’s termination of misconduct that would have warranted her termination had it been known.

The appellate court ruled that the ecclesiastical abstention doctrine did not require a dismissal of the plaintiff’s lawsuit:

That a church is a party to a suit does not immediately deprive our courts of the ability to adjudicate the dispute. The mere inclusion of a religious organization as a party to a suit does not necessarily implicate the ecclesiastical-abstention doctrine. Secular courts are not prohibited from hearing cases involving religious organizations where the dispute can be resolved by the application of neutral principles of secular law. We reiterate that the intent of ecclesiastical abstention is not to render civil and property rights unenforceable in the civil court simply because the parties involved might be the church and members, officers, or the ministry of the church.

The court noted that the related “ministerial exception” applies to “employment claims—especially discrimination claims—asserted against a religious institutional employer by an employee who is directly involved in promulgating and espousing the tenets of the employer’s faith.”

The court concluded that neither doctrine applied to this case:

[This] case involves nothing more than an employment termination dispute which can be easily and fully resolved by resort to neutral principles of secular law. No internal church governance is at issue. Further, as previously stated, the church utterly failed to present an adequate basis upon which the trial court could rely to rule in its favor. Even today, no evidence exists that the daycare center was a religious institution nor that the plaintiff was involved in promulgating and espousing the tenets of the employer’s faith. In fact, the proof is just the opposite—the two entities were separate. The church’s tardy attempt to support its position is unavailing. Timing is everything, and the church has been late to the ball since it first received the invitation. We will not accept the request to save it from its own mistakes. The trial court did not err in denying the motion to dismiss.

What this means for churches

This case illustrates what many courts call the “ecclesiastical abstention” doctrine. Under this doctrine the civil courts are barred by the First Amendment religion clauses from resolving most internal church disputes. While not using the terminology “ecclesiastical abstention,” the United States Supreme Court described the basic principle in a 1976 ruling in which it noted that the civil courts lack jurisdiction over internal church disputes that are “strictly and purely ecclesiastical in [their] character … a matter which concerns theological controversy, church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required of them.” Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976).

As this case demonstrates, the “ecclesiastical abstention” doctrine does not preclude civil courts from resolving all internal church disputes. While the courts may not exercise jurisdiction “over matters concerning theological controversy, church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required of them,” many courts have ruled that they can resolve internal church disputes so long as no inquiry into church doctrine is involved. United Methodist Church v. the plaintiff, 2018 WL 480532 (Ky. App. 2018).

Legal Developments

Pastor’s Age Discrimination Claim Against a Denominational Agency Was Barred by the “Ministerial Exception.”

The “ecclesiastical abstention doctrine” does not necessarily preclude resolution of pastor’s claims of breach of contract, wrongful eviction, and defamation, so long as doing so would not implicate religious doctrine.

Richard R. Hammar, Attorney, CPA

Bio

State: District of Columbia
Categories: Breach of Contract, Defamation, Judicial Resolution of Church Disputes

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

Key point 9-07. The First Amendment allows civil courts to resolve internal church disputes so long as they can do so without interpreting doctrine or polity.

A federal district court for the District of Columbia ruled that a pastor’s age discrimination claim against a denominational agency was barred by the “ministerial exception,” but the court could resolve the pastor’s claims of breach of contract, wrongful eviction, and defamation, so long as doing so would not implicate religious doctrine.

A pastor and his wife organized a church (the “local church”) in 1995. The local church affiliated with a Protestant denomination (the “national church”) and one of its subdivisions (the “regional church”), but retained its organizational, administrative, and pastoral independence. Despite that independence, the local church entered into an agreement with the regional church with the following terms: (1) the regional church agreed to arrange financing to purchase property for the local church’s use; (2) the local church agreed to be responsible for repaying the loan; (3) the regional church held title to the property while the loan was being paid “to protect against the church’s default on the loan”; and (4) when the loan was repaid, the regional church would “relinquish the title to the property to the church free and clear of any encumbrances.” By 2005, the local church, using “the funds of the church membership without any contribution from the regional church,” had fully repaid the loan, but the regional church refused to transfer title to the local church.

In 2011, an officer of the regional church formally appointed the pastor as lead pastor of the local church. Although the pastor insisted that the regional church had no authority to determine who was the church’s pastor, he accepted the appointment and accepted a stipend of $1,500 per month. The regional church discontinued the stipend in 2012.

In 2015, an officer of the regional church informed the pastor that it was time for him to retire because the regional church had “younger people” capable of taking his place and that his last day as pastor would be May 31, 2015. The pastor ignored this ultimatum and continued to assert his authority to act as the church’s pastor. The regional church responded by changing the locks to the church without notifying the pastor, and by informing local law enforcement personnel that the pastor “had made illegal and unauthorized entry onto the properties.” The pastor was warned that he would be subject to arrest if he attempted to enter the property again.

The pastor sued the regional church, asserting the following claims:

age discrimination based on the regional church’s attempt to remove the pastor so that a younger pastor could be chosen;

breach of contract to pay a monthly stipend of $1,500 after 2012;

breach of contract based on the regional church’s failure to convey title to the local church pursuant to the agreement to carry out such a transfer upon the church’s repayment of the loan;

wrongful eviction based on the regional church’s changing the locks to the church in order to prevent the pastor from entering the building; and

defamation based on the letter the regional church disseminated to law enforcement authorities stating that the pastor had illegally entered onto the property.

The regional church asked the court to dismiss the lawsuit on the ground that it was an internal church matter over which the civil courts have no jurisdiction.

Ecclesiastical abstention and ministerial exception

The ecclesiastical abstention doctrine is based on a “long line of Supreme Court cases that affirm the fundamental right of churches to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine.” The related ministerial exception “precludes application of [employment discrimination laws] to claims concerning the employment relationship between a religious institution and its ministers.” As the United States Supreme Court noted in a unanimous ruling in 2012: “The exception … ensures that the authority to select and control who will minister to the faithful—a matter strictly ecclesiastical—is the church’s alone.” Hosanna-Tabor Evangelical Lutheran Church and Sch. v. EEOC, 132 S. Ct. 694 (2012).

The court noted that “the Supreme Court has expressed no view on whether the ministerial exception bars claims other than employment discrimination claims,” and it noted that a prior federal appeals court ruling had concluded that the exception “did not bar a breach of contract claim when resolution of such a claim is subject to entirely neutral methods of proof.” Minker v. Baltimore Annual Conference of United Methodist Church, 894 F.2d 1354 (D.C. Cir. 1990).

Age discrimination

The pastor claimed that the regional church discriminated against him on the basis of age because its officer forced him to retire from his position as pastor by telling him that he needed “to retire” because there were “younger people” to take his place. The court noted that the pastor had abandoned this claim on appeal, but even if he had not done so, the ministerial exception would have barred the claim:

His allegation is that the officer “forced him to retire because of his age,” thereby ending his tenure as pastor. The age discrimination claim before the court thus “is an employment discrimination [claim] brought on behalf of a minister, challenging his church’s decision to fire him.” The ministerial exception bars such a claim. That bar is in place because the court’s involvement in assessing the propriety of a pastor’s termination would improperly entangle it in “an internal church decision that affects the faith and mission of the church itself.”

Breach of contract to pay a stipend

The pastor claimed that the regional church’s discontinuation of his monthly $1,500 stipend amounted to a breach of contract. The court noted that in the District of Columbia, the elements of a breach of contract claim are: “(1) a valid contract between the parties; (2) an obligation or duty arising out of the contract; (3) a breach of that duty; and (4) damages caused by breach.”

The regional church argued that the ministerial exception barred this claim, but the court disagreed. The court quoted from the Minker case (see above): “A church is always free to burden its activities voluntarily through contracts, and such contracts are fully enforceable in civil court.” In Minker, the court considered a breach of an oral employment contract claim asserted by a minister. The court recognized that “it could turn out that in attempting to prove his case, the minister will be forced to inquire into matters of ecclesiastical policy even as to his contract claim,” which would require a dismissal of this claim.

The same analysis is warranted here, the DC court concluded:

If it turns out that resolution of the pastor’s claim that the regional church breached a contract to pay him a stipend requires excessive entanglement with religious doctrine, the court can grant summary judgment in favor of the regional church. But because at this early stage it is not entirely clear that resolution of [the pastor’s breach of contract claim] will require anything other than “neutral methods of proof,” dismissal on ministerial exception grounds is not warranted.

Breach of contract to convey title to property

The pastor claimed that the regional church breached its agreement to return title to the church property to the local church when it paid off the underlying loan in full. The regional church claimed that the ecclesiastical abstention doctrine prevented the court from resolving this breach of contract claim because resolution of that claim would require the court “to delve into the doctrinal beliefs of [the national church]. Specifically, the regional church explained that the property deed states that the property is to be held by the regional church in trust for the use and benefit of the national church,” and subject to The “Discipline” (the foundational document of the national church). And, of utmost importance according to the regional church, was the fact that The Discipline states that the regional church can only convey property “as may be deemed necessary or convenient for the purpose of [the regional church].” And, The Discipline describes those purposes as “religious, benevolent, charitable and educational in keeping with the purposes of national church as set forth in its Discipline.”

Therefore, the regional church reasoned, since any conveyance of real property by the regional church must be consistent with the religious “purpose” of the national church, the court was barred from resolving the breach of contract claim since doing so would directly entangle the court in the internal doctrine and practice of a religious denomination.

The court again disagreed:

Assuming the regional church is correct that terms in The Discipline are relevant to resolution of a claim that it breached a contract to convey title to the local church, it is still not apparent that resolution of the claim would require the court to assess religious doctrine or policy. The fulcrum of the regional church’s religious entanglement argument is the provision in The Discipline that states that the regional church can only convey property “as may be deemed necessary or convenient for the purpose of [the regional church].”

The regional church argues that this provision mandates that any contract to convey title must be consistent with the religious “purpose” of the national church and the court, in making that assessment as part of the breach of contract analysis, would be impermissibly assessing religious doctrine. Not so. The provision does not require that any conveyance of real property actually be consistent with the church’s religious “purpose.” Instead, it states that any conveyance must have been “deemed necessary or convenient” for that religious purpose by the appropriate individuals acting on the regional church’s behalf. An assessment of whether the regional church deemed conveyance of its property to the local church necessary or convenient for its religious purpose is a neutral determination that would not involve the court in determining what the church’s religious principles actually are. Thus, assuming the terms of The Discipline are relevant to this breach of contract claim, the regional church has not demonstrated that resolution of that claim will require the court to undertake an assessment of religious doctrine or policy. Again, to the extent that it becomes apparent that the court would be required to make such an assessment as this case progresses, the court at that time can grant summary judgment on the ground that resolution of the claim would create an excessive entanglement with religion. But, at this early stage, with that entanglement not yet apparent, dismissal on ecclesiastical abstention grounds would be premature.

Wrongful eviction

The pastor alleged that the regional church wrongfully evicted him by changing the locks on the church so that he was unable to access the building. Once again, the regional church insisted that resolution of this claim would involve impermissible religious entanglement. The court concluded that there was no evidence that this would be the case, and so it declined to dismiss this claim.

Defamation

The pastor claimed that the regional church defamed him when it disseminated a letter to law enforcement officers stating that he had made illegal and unauthorized entry onto church property. The regional church claimed that the ecclesiastical abstention doctrine prevented the court from resolving this claim since any attempt by the court to address this claim would impermissibly implicate this court in matters of religious doctrine and policy. Again, the court disagreed, noting that it “was not convinced that resolving the property-related claims will necessitate inappropriate judicial meddling in religious matters.”

What this means for churches

This case illustrates an important principle: While the “ecclesiastical abstention doctrine” prevents the civil courts from resolving internal church disputes involving “matters of church government as well as those of faith and doctrine,” it does not necessarily preclude resolution of such disputes on the basis of strictly neutral principles requiring no recourse to faith or doctrine. Gregorio v. Hoover, 238 F.Supp.3d 37 (D.D.C. 2017).

Legal Developments

Ministerial Exception Prevents Court from Resolving Discrimination Lawsuit

The court ruled that the “ministerial exception” prevented it from resolving a lawsuit of a former principal at a Catholic high school claiming that the school’s failure to renew her employment contract amounted to unlawful sex, age, and disability discrimination.

Richard R. Hammar, Attorney, CPA

Bio

State: Indiana
Categories: Employment Practices, Judicial Resolution of Church Disputes

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 court in Indiana ruled that the “ministerial exception” prevented it from resolving a lawsuit of a former principal at a Catholic high school claiming that the school’s failure to renew her employment contract amounted to unlawful sex, age, and disability discrimination.

A woman (the “plaintiff”) served as a public elementary school principal for 17 years. In late July 2012, she was hired as the principal of a Catholic high school for the 2012-2013 school year. In late spring 2013, she was offered, and accepted, the position of school principal for the 2013-2014 school year. On March 3, 2014, the plaintiff was informed that her contract would not be renewed for the following year. The plaintiff sued the Diocese for employment discrimination based on sex, age, and disability as well as various state-law claims.

The plaintiff had signed a written one-year contract for each of the 2012-2013 and 2013-2014 school years. The contract for the 2013-2014 school year included a “Ministerial Duties/Morals Clauses” that provided, in part:

To be [the] Principal in a Catholic school is to accept a ministry. The ministry of the Principal must clearly reflect the Catholic Christian spirit of love, understanding, and humility. This ministry is witnessed not only in the manner in which the Principal performs his/her tasks, but also in the example the Principal sets for the teachers and students both in and outside the School and parish, and including everyone associated with the School, parish, and diocese … . Furthermore, in carrying out his/her duties under this agreement, the Principal agrees to faithfully reflect the teachings of the Roman Catholic Church, in mind and in deed, and at all times, both in and out of School, to abide by the official teachings of the church, as interpreted by the Bishop of the Diocese. [The] Principal understands that every subject taught in the School is embedded in Catholic theology and that part of the Principal’s ministry in the School is to apply the theology, doctrine, and teachings of the Catholic Church in every aspect of the School and in every duty of a principal. Failure to comply with the terms of the Part A “Ministerial Duties/Morals Clauses” may result in the immediate termination of this contract.

The Diocese asked the court to dismiss the lawsuit on the basis of the “ministerial exception,” which generally bars the civil courts from resolving employment disputes between churches and ministers.

The plaintiff insisted that the ministerial exception did not bar her claims, since: (1) she was an educator in a Catholic environment, and most of her job responsibilities were similar to the 17 years she spent as a principal in a public school; (2) while the school where she was employed was a Catholic high school, it had multiple students who were not Catholic, including Baptist, Lutheran, and Jewish students; and (3) there were only two persons at her former school that held “ministry” titles: a chaplain, and the head of campus ministry.

The court agreed with the diocese that the plaintiff’s claims were barred by the ministerial exception. It noted that the United States Supreme Court recognized the ministerial exception in a 2012 ruling. Hosanna-Tabor Evangelical Lutheran Church and Sch. v. EEOC, 132 S. Ct. 694 (2012). The Supreme Court reasoned:

The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action 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. 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 Supreme Court held that the exception “is not limited to the head of a religious congregation” and declined “to adopt a rigid formula for deciding when an employee qualifies as a minister” for purposes of the exception. Rather, the Court found the following four factors indicated that the plaintiff, who was a “called teacher” at a Lutheran Church and School, qualified as a minister under the facts of that case: (1) the Church held the plaintiff out as a minister; (2) the title reflected a significant degree of religious training; (3) the plaintiff held herself out as a minister; and (4) the plaintiff’s job duties included important religious functions.

The Indiana court considered these four factors in finding that the plaintiff, as the principal of a Catholic high school, was a “minister” for purposes of the ministerial exception.

(1) The Diocese held the plaintiff out as a minister

In concluding that this factor was met, the court referred to the “Ministerial Duties/Morals Clauses” in the plaintiff’s employment contract, which affirmed that “to be Principal in a Catholic school is to accept a ministry,” and that “in carrying out his/her duties under this agreement, the Principal agrees to faithfully reflect the teachings of the Roman Catholic Church, in mind and in deed, and at all times, both in and out of School, to abide by the official teachings of the church.”

(2) A title that reflects religious training

The court noted that this factor weighed against ministerial status since there was nothing “inherently religious about the title of Principal.”

(3) Plaintiff held herself out as a minister

In concluding that the plaintiff held herself out as a minister of the church, the court noted that she had accepted the principal position, which was explicitly described as one of ministry in the Employment Agreement that she signed. As a result, she knew that she was expected to “faithfully reflect the teachings of the Roman Catholic Church, in mind and in deed, at all times, both in and out of School,” and she agreed that “part of the Principal’s ministry in the School is to apply the theology, doctrine, and teachings of the Catholic Church in every aspect of the School and in every duty of a principal.” In other words, “she accepted that she would be seen as a ministerial leader.”

The court concluded that this third factor was neutral in applying the ministerial exception.

(4) Important religious functions

The court conceded that there was no evidence that the plaintiff “performed religious functions such as leading daily prayers or teaching religion lessons,” and concluded that this factor “weighs against applying the ministerial exception.”

In attempting to refute her status as a minister, the plaintiff cited a dictionary definition of “minister” as a person whose job involves leading church services, performing religious ceremonies, and providing spiritual or religious guidance. The court countered: “It is irrelevant that she is not a member of the clergy and that she would not be considered a minister for purposes of Church governance” because “the issue here is one of civil, not canon, law, and ‘minister’ for purposes of the ministerial exception has a far broader meaning than it does for internal church purposes … . In determining whether an employee is considered a minister for the purposes of applying this exception, we do not look to ordination but instead to the function of the position,” citing Alicea-Hernandez v. Catholic Bishop, 320 F.3d 698, 703 (7th Cir. 2003).

The court concluded:

Having considered all the evidence of record in light of the factors applied by the United States Supreme Court in Hosanna-Tabor, the Court finds that the ministerial exception applies to the plaintiff’s role as principal of [the] High School. As noted in Hosanna-Tabor, a core value of the Free Exercise Clause is to “protect a religious group’s right to shape its own faith and mission through its appointments.” Although the plaintiff’s title and training and the lack of evidence of involvement in religious activity weigh against applying the ministerial exception, the ministerial role assigned to and accepted by the plaintiff as the head of the Catholic High School are sufficient for the Court to apply the ministerial exception in this case … . Requiring [the] High School to reinstate the plaintiff as principal or by punishing it for not renewing her contract would violate the School’s freedom under the [Constitution] to select its own ministers.

Thus, because the plaintiff was a minister within the meaning of the ministerial exception, her federal employment claims must be dismissed.

What this means for churches

This case is important for two reasons.

First, the court applied the four-factor test enunciated by the Supreme Court in Hosanna-Tabor in deciding if the plaintiff was a “minister” subject to the ministerial exception. Note that the court concluded that the plaintiff was a minister, though only one of the four factors supported minister status (one was neutral, and two did not support minister status).

Second, the court declined to follow a dictionary definition of the term “minister” in evaluating the application of the ministerial exception. Instead, it noted that the term “minister” for purposes of the ministerial exception “has a far broader meaning than it does for internal church purposes.” Ginalski v. Diocese, 2016 WL 7100558 (N.D. Ind. 2016).

Legal Developments

State Supreme Court Addresses Pastor’s Rescinded Resignation

The central issue was the pastor’s status, a question the court was barred from resolving by the constitutional protection of religious liberty.

Richard R. Hammar, Attorney, CPA

Bio

State: Alabama
Categories: Breach of Contract, Clergy - Removal, Judicial Resolution of Church Disputes

Key point 2-04.1. Most courts have concluded that they are barred by the First Amendment guarantees of religious freedom and nonestablishment of religion from resolving challenges by dismissed clergy to the legal validity of their dismissals.

The Alabama Supreme Court addressed the question of whether a pastor who had resigned his position could later retract his resignation.

At a church business meeting in 1995, a church appointed a new pastor. The church operated with its new pastor for a number of years without conflict. By 2012, however, a rift had formed between the pastor and board of deacons which led to the pastor’s termination, as described in a letter to him from the board:

The listed deacons called the meeting for the purpose of informing the body of some of their concerns regarding the welfare of the church that need immediate attention. A few of the things that were discussed were the falling off of member attendance, the falling off of tithes and offerings, the incorporation of the church being ignored, your lack of spiritual and financial leadership, the $187,000 [of] steel that is lying in the parking lot, and your holding a grudge against us that has not been revealed to us. Your consistently refusing to meet with the board of deacons has brought us to where we are today.

After discussing these topics and a few others, there was a motion from the floor for your termination, which was seconded. After putting this to a vote, the majority present voted for your termination. Regretfully, this is to inform you that your services to St. Union as pastor are no longer needed as of Monday, August 13, 2012. We hope you will accept the majority vote and move on pleasantly.”

The pastor declined to leave his position, however, and, on October 13, 2012, held another church meeting at which he asked those present to vote whether they wanted “the pastor to stay” or “for the deacons to remain.” The minutes of that meeting indicate that 37 members voted for the pastor and 10 members voted for the deacons.

For two years this situation remained at a stalemate, with the pastor continuing to serve as pastor and the deacons continuing to perform at least some of their traditional duties. The conflict between them continued, however, and eventually the deacons, who continued to administer the church’s finances, at some point stopped paying the pastor’s salary. Thereafter, the pastor told the congregation that he would resign if he was paid the money he was owed consisting of the salary that had been withheld by the deacons. The pastor and board began negotiations, and, on November 30, 2014, the pastor submitted his resignation. The pastor signed an “agreement” with the church in which he agreed to resign as pastor of the church in exchange for $16,600. He thereafter negotiated a check in that amount issued to him by the church.

A few weeks later, the pastor rescinded his resignation, stating that he was doing so at the request of the members of the church who had, he stated, told him that they would not accept his resignation. However, the pastor did not repay the $16,600 the church had paid him to resign. The next day, the church sent the pastor a letter reminding him of their agreement and advising him that legal action would be taken if he did not honor the agreement. On December 23, 2014, the threatened legal action was commenced when the church, acting through the five deacons who were now serving as its officers and directors, sued the pastor, alleging breach of contract and trespass and asking the trial court to issue a restraining order banning him from the church premises. On December 24, 2014, the trial court entered the requested restraining order. The court explained its judgment as follows:

The heart of the dispute and litigation in the present case is whether the pastor is or is not the pastor of the church. The choice of a pastor for a church is based wholly on Biblical principles for which a court cannot interfere without violating the United States Constitution and the Constitution of the State of Alabama. All cases adjudicated by the Alabama Supreme Court throughout its history have respected this principle. The congregation … by majority vote must choose or terminate its pastor. This court nor the legislature through its business organization statutes nor any church member or minority group of members can alter this principle.

The dispute over whether the pastor resigned or not and if he did whether he may be rehired as pastor is for the majority of the congregation to decide …. The central, substantive dispute is whether the pastor is or is not the pastor and such is wholly spiritual and ecclesiastical in nature and the court cannot interfere (emphasis added).

The state supreme court agreed with the trial court that the central issue was the pastor’s status, a question it was barred from resolving by the constitutional protection of religious liberty. It concluded: “As the trial court implicitly recognized … even if the pastor had resigned, there is still the question whether he could rescind his resignation or be rehired as pastor if that was the desire of the majority of the church’s members. Ultimately, only the congregation, not this court, can answer that question.”

The supreme court noted that the pastor had countersued the church for conversion, breach of fiduciary duty, unjust enrichment, breach of contract, and conspiracy, and sought an accounting of church funds from 2005 to the present, a temporary restraining order enjoining the church and its directors from expending any church funds, and an order requiring the church to turn over to the pastor all funds held on behalf of the church. The supreme court concluded that the gist of the pastor’s claims “is that the corporation and its directors have wrongfully refused him access to financial records of the church and to church funds, and he also makes vague allegations that the church and its directors have misused church funds. The church denies that the pastor has been refused access to any records, denies any misuse of church funds, and maintains that it is the proper party to control the church’s finances. Unlike the selection of a pastor, these are not ecclesiastical issues that a court lacks jurisdiction to consider.”

What this means for churches

Many courts have concluded that for-profit employers are under no legal obligation to rehire an employee who previously resigned his or her employment. Few courts have addressed this question in the context of church employment. This is one of the few courts to do so. The court’s conclusion was that the status of ministers, unlike most lay employees, implicates constitutional considerations, and that when a pastor resigns “there is still the question whether he could rescind his resignation or be rehired as pastor if that was the desire of the majority of the church’s members. Ultimately, only the congregation, not this court, can answer that question.”

It is possible, though unlikely, that one or more of the following resources may address an employee’s right to revoke a resignation, and so they should be consulted whenever a former employee seeks to revoke a prior resignation:

A church’s constitution, bylaws, or other governing document

The state nonprofit corporation law under which a church is incorporated

Robert’s Rules of Order Newly Revised

A policy manual

An employee handbook

One additional point: in order to avoid a discrimination claim under state or federal law, it is important for churches, like any employer, to treat members of a protected class under state or federal civil rights laws the same as other employees. So, for example, if a church has allowed some employees to revoke a resignation from employment, but has not offered this same accommodation to a member of a protected class, this could be the basis for an unlawful discrimination claim. St. Union Church v. Howard, 2016 WL 2848391 (Ala. 2016).

Legal Developments

Ecclesiastical Abstention Doctrine Bars Court from Intervention in Dispute over Church Bylaw Compliance

Court could not adjudicate this case without interfering in inherently ecclesiastical matters of pastoral selection and church discipline.

Richard R. Hammar, Attorney, CPA

Bio

State: Texas
Categories: Church Members, Clergy - Selection, Judicial Resolution of Church Disputes

Key point 2-01.4. The selection of a minister is an ecclesiastical decision that the civil courts ordinarily will not review—even when it is alleged that a church failed to follow its own internal procedures in the selection of a minister, or the selection process was discriminatory.

Key point 6-10.1. According to the majority view, the civil courts will not resolve disputes challenging a church’s discipline of a member since the First Amendment guaranty of religious freedom prevents them from deciding who are members in good standing of a church.

Key point 9-07. The First Amendment allows civil courts to resolve internal church disputes so long as they can do so without interpreting doctrine or polity.

A Texas court ruled that the “ecclesiastical abstention” doctrine prevented it from resolving an internal church dispute regarding a church’s compliance with its bylaws in selecting a new pastor and dismissing several dissident members.

In January 2012, a pastor died and a dispute arose over the church’s efforts to fill the pastoral vacancy. With respect to a vacancy, the church’s bylaws provided:

In the event of a vacancy, a pulpit committee composed of Deacons and members (five people on the committee) shall be appointed by the church to seek out a suitable Pastor and their recommendations will constitute a nomination though any member has the privilege of naming other nominations according to the policy established by the church. The committee shall bring to the consideration of the church one minister at a time. Elections shall be by secret ballot; an affirmative vote of three-fourth of those present being necessary for a choice. The Chairman of Deacons and Trustees shall have the right to meet with the Pulpit Committee at any time.

The secretary of the church board convened a meeting to elect a pulpit committee. The pulpit committee was comprised of the board secretary and other individuals and eventually selected a nominee for pastor. However, other members of the church, including the Chairman of the Deacons and the Chairman of the Trustees, opposed the actions of the pulpit committee.

On October 13, 2012, a meeting was held at which the deacons, trustees, and congregation voted to adopt a “resolution to restore order in the church.” The resolution found that the pulpit committee “has engaged in a campaign of intimidation, threats, assault, falsehoods, and manipulation.” The resolution expelled from church membership persons involved with the pulpit committee on the grounds that they “have hurt the Church, decreased its membership, distracted from its Christian mission, and continue to cause damage to the Church.” A new pastor was elected and installed a month later, on November 17, 2012.

The dismissed members (the “plaintiffs”) sued the church and sought monetary damages based on their expulsion. They argued that the church had failed to follow its bylaws in selecting a new pastor. The church claimed that the pulpit committee was properly constituted under the church’s bylaws and that the dismissed members had violated the church’s bylaws by interfering with the pulpit committee; holding unauthorized meetings; expelling the dismissed members from membership and changing the locks so that they could not access the church; and selecting the new pastor.

The church asked the court to dismiss the lawsuit on the ground that it lacked jurisdiction over the plaintiffs’ claims under the ecclesiastical abstention doctrine because adjudicating the claims would require the trial court to review the church’s discipline of the dismissed members and to impermissibly involve itself in the pastoral selection process. After a hearing, the court dismissed the case.

A state appeals court affirmed the trial court’s ruling. It began its decision by noting that the First Amendment’s guaranty of religious freedom “precludes civil courts from delving into matters focused on theological controversy, church discipline, ecclesiastical government, or the conformity of the members of a church to the standard of morals required of them.” The court continued: “Courts do not have jurisdiction to decide questions of an ecclesiastical or inherently religious nature, so as to those questions they must defer to decisions of appropriate ecclesiastical decision makers.”

The courts are not precluded from resolving all church disputes. They may, for example, “apply neutral principles of law to non-ecclesiastical issues involving religious entities in the same manner as they apply those principles to other entities and issues… . Thus, courts are to apply neutral principles of law to issues such as land titles, trusts, and corporate formation, governance, and dissolution, even when religious entities are involved.”

The court conceded that “the line between required judicial action and forbidden judicial intrusion will not always be distinct because many disputes require courts to analyze church documents and organizational structures to some degree.

The plaintiffs insisted that their claims arose solely from “the church’s failure to abide by non-ecclesiastical terms of the church’s bylaws and, therefore, the trial court had jurisdiction to adjudicate the case under neutral principles of law.” According to the plaintiffs, the questions they raised—including whether the church complied with church bylaws in electing the new pastor and whether the church acted properly in dismissing the plaintiffs—”were non-ecclesiastical because they are governed by non-ecclesiastical provisions in the church’s corporate documents.” The court disagreed:

The mere fact that a church’s corporate documents—here, its bylaws—prescribe a pastoral selection process does not make cases involving a pastoral selection dispute categorically reviewable by a civil court. Instead, whether neutral principles may be applied to a claim turns on the substance of the issues it raises. Consequently, the fact that the church’s bylaws in this case contain provisions governing the process for pastoral selection does not compel the conclusion that a dispute over that process is reviewable …. Here … [the plaintiffs’] claims are inextricably intertwined with the selection of the church’s new pastor and the church’s expulsion of members—two issues long recognized to be inherently ecclesiastical and of prime importance to the exercise of religious liberty ….

In sum, although plaintiffs characterize their claims as purely secular because they rest on provisions of the church’s corporate documents, the trial court could not adjudicate this case without interfering in inherently ecclesiastical matters of pastoral selection and church discipline. Therefore, we hold that the trial court correctly concluded that it lacked jurisdiction over the case under the ecclesiastical abstention doctrine.

What this means for churches

This case is important because of the court’s conclusion that the ecclesiastical abstention doctrine applies to the interpretation of a church’s governing documents if doing so would implicate “ecclesiastical matters of prime importance to the exercise of religious liberty,” which the court concluded, include pastoral selection and the discipline of members. Moultin v. Baptist Church, 498 S.W.3d 143 (Tex. App. 2016).

Legal Developments

Church Membership Lawsuit

Court rules that man cannot sue a church for refusing his membership.

Richard R. Hammar, Attorney, CPA

Bio

State: Pennsylvania
Categories: Judicial Resolution of Church Disputes

Key point. Most courts regard a church's membership determinations to be a purely ecclesiastical matter beyond the review of the civil courts.

Key point. The civil courts will not resolve lawsuits brought by dismissed church members challenging the validity of their dismissal.

A Pennsylvania court ruled that it was barred by the first amendment from resolving a lawsuit by an individual who wanted to be admitted as a member of a church.

Besides seeking a court order compelling him to be admitted as a church member, the plaintiff also asked the court to remove the pastor and board as a result of their failure to use appropriate texts for worship in the Episcopal Church. A state appeals court upheld a trial court's dismissal of the case on the ground that it involved issues of ecclesiastical law and doctrine which the civil courts are powerless to resolve. It relied upon what it called the "deference rule":

This prohibition on civil courts from deciding issues of ecclesiastical law and religious doctrine, custom, policy and practice is referred to as the "deference rule." The deference rule provides that civil courts are bound to accept the decisions of the highest judicatories of a religious organization of hierarchical polity on matters of discipline, faith, internal organization, or ecclesiastical rule, custom or law.

The court also ordered the plaintiff to pay the church's attorney fees since the case was so lacking in merit. The court pointed out that the civil courts have consistently followed the deference rule, and that there was no legal precedent in support of the plaintiff's claims.

What this means for churches

This case illustrates the nearly universal view that the civil courts are barred by the first amendment from resolving internal church disputes involving discipline, faith, internal organization, or ecclesiastical rule, custom or law. Further, the case suggests that churches should consider demanding payment of their attorney's fees in the event they are forced to defend a lawsuit that is dismissed as a result of the deference rule. In re St. Clement's Church, 687 A.2d 11 (Pa. Common. 1996).

Legal Developments

Church Liability for Accounting Irregularities

A court’s ruling provides important insight for all church leaders.

Richard R. Hammar, Attorney, CPA

Bio

State: District of Columbia
Categories: First Amendment, Judicial Resolution of Church Disputes

Background

A court in the District of Columbia ruled that the first amendment guaranty of religious freedom prevents the civil courts from resolving internal church disputes over accounting and reporting practices, except in limited circumstances. The court relied on principles that will be useful precedent to other churches in similar cases.

Can a church be sued by its own members as a result of sloppy accounting and reporting practices? This was the issue before a court in the District of Columbia in a recent case. A member sued her church on the basis of "negligent accounting and reporting to church members." The court's ruling will be instructive to all church leaders, particularly those with any concerns regarding the regularity of their church's accounting and reporting practices.

Facts

A woman who had served as a church's financial secretary for many years was dismissed as a result of an internal reorganization that eliminated her position. She later filed a class action lawsuit on behalf of herself and "all past and present members" against her church, claiming that it was guilty of negligent accounting and reporting in violation of various "standards" applicable to churches. In particular, the woman alleged the following church violations:

failing to monitor funds received from all sources for more than twenty years

permitting itself to "fall under the complete domination" of the pastor

failing to comply with social security and other federal and local tax laws

failing to separate the church's religious operations from its "purely secular" activities such as a child care center, an apartment complex, and a grocery store

failing to account for funds turned over to the wife of the founding pastor

failing for more than fifteen years to account for the receipts averaging over $150,000 from the annual church banquet

failing to provide annual financial reports to the members based on monthly statements prepared by the former financial secretary

failing to account for church funds collected from "annual rallies" of various groups within the church

failing to account for the "tithes" paid by "more than 3,000 dues paying members of the church

failing to maintain accurate records of funds received by the church prior to the time the former financial secretary was employed

The church asked the trial court to dismiss the lawsuit on the ground that it addressed matters of internal church governance. The trial court refused, and the church appealed.

The court's ruling

On appeal, the church argued that the civil courts have no jurisdiction to resolve internal church controversies. The woman claimed that the case could be resolved on the basis of neutral principles of law involving no inquiry into religious doctrine. She compared the case to a secular dispute over church property, which the civil courts have been able to resolve in some situations without offending the first amendment's guaranty of religious freedom.

The appeals court began its opinion by acknowledging that the first amendment "precludes civil courts from adjudicating church fights that require extensive inquiry into matters of ecclesiastical cognizance." However, "occasions can arise when civil courts are permitted to address church activity without running afoul of the first amendment." The central question, according to the court, was whether a lawsuit claiming negligent accounting and reporting by a church "can be decided, consistent with the [first amendment] by applying the objective, well—established concepts of accounting and recordkeeping …."

The court concluded that there are two possible circumstances that would permit a court to apply clear, objective accounting and reporting criteria to church financial practices without implicating church doctrine:

(1) if the principles are so universally … applicable to every organized church that they can, indeed must, be taken for granted without need for church action to adopt them; or

(2) even if these principles are not automatically applicable to every church, they are applicable in a particular case because the church has in fact adopted them

In either circumstance, "the court would not have a role in deciding what principles apply to the church; the court merely would be asked to apply, without ecclesiastical judgment or intrusion, a previously prescribed, authoritative, nondiscretionary, and clear, policy."

The court concluded that neither exception existed in this case, since there are no "universally accepted" principles of church accounting and reporting that apply to all churches, and the church in this case had never adopted a particular set of financial or reporting standards. It observed that "[t]he possibility of universal, indisputable accounting and reporting criteria for all churches is almost self—evidently contrary to reason." The court cautioned that if a church does adopt "clear, objective accounting and reporting standards" that do not involve the application of religious doctrine "then arguably a civil court can apply them-much as a court can resolve secular disputes over church property-because the church itself presumably has obviated all first amendment concerns." On the other hand, if a church has not adopted specific accounting and reporting standard then a court, "by having to decide whether particular principles should be applied, will inevitably have to exercise discretion over a matter that initially requires ecclesiastical judgment." The court added:

a church's financial regime, including any required reports to members, necessarily reflects an array of decisions about a member's obligation to pledge funds, and about the leaders' corresponding responsibility to account for those funds, that a civil court cannot arbitrate without entangling itself in doctrinal interpretations.

In support of its decision, the court pointed out that "accounting is an area riddled with major subjective decisions," and that when a church is involved "those subjective decisions raise questions of internal church governance which are often themselves based on the application of church doctrine."

To illustrate its point, the court noted several examples of questions that must be resolved by the church itself rather than by the civil courts:

What should be the collection, tithing, or offering practices of the church?

Should the church pursue pledges from-or take any other particular type of action affecting-members who neglect to remit their obligations?

What cash management and investment decisions should be made?

Who in the church establishes its spending priorities?

Should the pastor have one or more discretionary funds?

Should there be an audit committee, and if so, should its membership be internal, external, or both, and how many members of each type should there be?

Should the church maintain any of its funds as imprest accounts useable only for specified purposes, or should church finances be operated as a general account?

For each of the above questions, who makes the decision?

The court then ruled that a lawsuit alleging that a church has negligently failed to follow its own accounting or reporting procedures must specifically refer to the procedures that have been violated. Vague allegations that the church has disregarded such procedures are not enough, since the first amendment protects churches from having to defend against such possibly meritless charges. The court observed:

A mere reference to the existence of published accounting standards, without alleging that they … apply [or] that the church formally has adopted them, would leave the [lawsuit] too fuzzy for the court to be sure it constitutionally can rule. In short, because a [lawsuit] challenging church action is not easily cognizable in a civil court, there is a heightened pleading requirement to assure that the [church] will not be unduly burdened ….

[W]hen the first amendment casts a shadow over the court's … jurisdiction, the plaintiff is obliged to plead unqualified jurisdictional facts that clearly take the case outside the constitutional bar. There is no justifiable reason to make a church answer a complaint, let alone go through discovery, unless a plaintiff specifically and unequivocally pleads all facts necessary to establish the court's jurisdiction.

The court noted that the requirement that lawsuits brought against churches for negligent accounting or reporting refer to specific rules that have been violated is not new. It referred to the rule adopted in many states that lawsuits alleging fraud must specifically plead facts constituting fraud, and cannot rely on vague generalizations. Similarly, some states will not permit churches to be sued for negligent selection of clergy by victims of a minister's sexual misconduct unless the lawsuit pleads specific incidents of prior misconduct by the minister that were known to the church. The most prominent court to reach this result is the Ohio Supreme Court in Byrd v. Faber, 565 N.E.2d 584 (Ohio 1991), a case addressed fully in a feature article in the September—October 1991 edition of this newsletter.

The court acknowledged that "a church's very failure to adopt accounting and reporting standards effectively protects church leaders against civil court scrutiny that might well occur if the church, acting more responsibly, had adopted objective criteria that a court could apply without intruding on church doctrine." However, it insisted that this concern "overlooks the primacy of church tribunals for deciding such matters, consistent with the first amendment." It further noted that "absent an effective church tribunal or adoption of standards a civil court can apply without crossing an ecclesiastical line, a church member's only remedy for perceived financial irregularity appears to be cutting one's losses by leaving the membership."

What this means for churches

This case is highly relevant to all church leaders, and should be studied carefully. While it is not binding outside of the District of Columbia, the court's ruling represents one of the few attempts by a court to address church accounting practices. For this reason, the case may be given greater weight in other jurisdictions. Summarized below are the most significant aspects of the court's ruling.

1. When will a court review church accounting irregularities? Some of the alleged accounting and reporting irregularities in this case are not uncommon. For example, many churches have been accused of failing to comply with social security and other federal and state tax laws; failing to properly account for funds raised for a specific purpose; or failing to provide accurate financial reports to donors. Can concerned members have a civil court intervene and "correct" such irregularities if they are not happy with their church's response? This is an important question that few courts have addressed.

The court in this case acknowledged that the first amendment guaranty of religious freedom greatly restricts the authority of the civil courts to resolve internal church disputes, including those involving alleged accounting or reporting irregularities. However, the court concluded that the first amendment would not bar the civil courts from resolving such disputes if they could do so on the basis of clear, objective accounting and reporting criteria requiring no inquiry into religious doctrine-assuming that a church in fact had adopted them. A civil court could enforce such rules since it "would not have a role in deciding what principles apply to the church; the court merely would be asked to apply, without ecclesiastical judgment or intrusion, a previously prescribed, authoritative, nondiscretionary, and clear, policy."

Example. A church board adopts standards for handling designated contributions that were formulated for all charitable organizations. A donor questions whether the church is following the standards. When church leaders refuse to respond to the donor's concerns, she asks a civil court to intervene. A court may decide that it can do so since the issue of whether the church is complying with these standards involves no inquiry into religious doctrine.

Example. A member is concerned that his church board has spent some designated missions funds for general administrative purposes. When church leaders refuse to respond to the member's concerns, he asks a civil court to intervene. He is unable to point to any specific accounting principles the church has adopted that govern the dispute. According to the case discussed in this feature article, the court will not intervene since the first amendment guaranty of religious freedom protects internal church financial decisions from civil court review-if no set of accounting principles has been adopted by the church that can be enforced by a civil court without delving into church doctrine.

2. Questions the civil courts cannot resolve. The court gave eight examples of accounting and reporting irregularities that the civil courts cannot resolve: (1) What should be the collection, tithing, or offering practices of the church? (2) Should the church pursue pledges from-or take any other particular type of action affecting-members who neglect to remit their obligations? (3) What cash management and investment decisions should be made? (4) Who in the church establishes its spending priorities? (5) Should the pastor have one or more discretionary funds? (6) Should there be an audit committee, and if so, should its membership be internal, external, or both, and how many members of each type should there be? (7) Should the church maintain any of its funds as imprest accounts useable only for specified purposes, or should church finances be operated as a general account? (8) For each of the above questions, who makes the decision? The civil courts cannot resolve these questions since they cannot do so without delving into church doctrine and polity.

Example. A Minnesota court dismissed a lawsuit brought by Lutheran pastors against a denominational pension board for allegedly breaching their fiduciary duty to participants by not investing in companies that did business in South Africa. The Evangelical Lutheran Church in America (ELCA) established a board of pensions in 1988 to manage and operate a pension fund for Lutheran pastors and lay employees "exclusively for the benefit of and to assist in carrying out the purposes of the ELCA." The ELCA adopted the position that the system of apartheid in South Africa was so contrary to Lutheran theology that it had to be rejected as a matter of faith. The ELCA passed a resolution to "see that none of our ELCA pension funds will be invested in companies doing business in South Africa." The board of pensions enforced this policy from 1988 to 1993. A dissenting group of Lutherans opposed the ELCA's decision to use its assets as a political weapon and asked to withdraw their pension funds. When their request was denied they sued the board of pensions and the ELCA, claiming that both groups had violated their fiduciary duties to participants in the pension program by elevating social concerns over sound investment strategy. A state appeals court dismissed the lawsuit on the ground that a resolution of the lawsuit would require the court to interpret religious doctrine in violation of the first amendment's nonestablishment of religion clause. The court noted that "if a claim involves core issues of ecclesiastical concern, the potential for government entanglement in religious matters prevents judicial review." This was just such a case, the court concluded: "While the Board of Pensions is required to prudently invest its holdings, the ELCA created the Board to both provide for pastors' retirement needs and assist the ELCA in accomplishing doctrinal goals. The ELCA enacted the [apartheid] policy in an effort to further its social and doctrinal goals …. Accordingly, any review of the Board of Pensions' [investment policy] would entangle the court in reviewing church doctrine and policy." Basich v. Board of Pensions, 540 N.W.2d 82 (Minn. App. 1995).

3. Lawsuits alleging church accounting irregularities must be specific. Perhaps the most important aspect of the court's decision was its conclusion that lawsuits brought by persons alleging church accounting or reporting irregularities must specifically document that the church adopted accounting standards and that they were not followed. Vague allegations that a church's accounting practices were sloppy are not enough. The court observed:

A mere reference to the existence of published accounting standards, without alleging that they … apply [or] that the church formally has adopted them, would leave the [lawsuit] too fuzzy for the court to be sure it constitutionally can rule. In short, because a [lawsuit] challenging church action is not easily cognizable in a civil court, there is a heightened pleading requirement to assure that the [church] will not be unduly burdened.

The court insisted that this principle is required by the first amendment guaranty of religious freedom:

[W]hen the first amendment casts a shadow over the court's … jurisdiction, the plaintiff is obliged to plead unqualified jurisdictional facts that clearly take the case outside the constitutional bar. There is no justifiable reason to make a church answer a complaint, let alone go through discovery, unless a plaintiff specifically and unequivocally pleads all facts necessary to establish the court's jurisdiction.

The court insisted that this conclusion was not novel or unique. It cited the following examples of lawsuits that must specifically allege facts supporting a plaintiff's claims: (1) fraud; (2) ineffective assistance of counsel; and (3) allegations that a church is liable for a church worker's sexual misconduct since it was aware of similar incidents in the past. The court insisted that "no less should be required when the Constitution severely circumscribes the court's … jurisdiction over church controversies."

Key point.The court concluded that persons who sue churches are subject to a "heightened pleading requirement" if a resolution of the case would "unduly burden" the church's mission. This means that the lawsuit must plead specific facts which support the theory of liability. Vague or unsubstantiated allegations are insufficient, since they will force a church to divert resources from the prosecution of its religious mission to the defense of a potentially meritless lawsuit. Church leaders should be familiar with this principle, and be prepared to assert it in response to a lawsuit.

Example. A church is sued by a person claiming that he was discriminated against in an employment decision on the basis of his age. Since the church's defense of this lawsuit might burden the prosecution of its religious mission, the church should assert that the plaintiff must cite specific facts supporting the claim of discrimination. Vague generalizations of discrimination should not be enough.

Example. A church is sued by a person who claims that the church discriminates against women in its employment and disciplinary policies. Since the church's defense of this lawsuit might burden the prosecution of its religious mission, the church should assert that the plaintiff must cite specific facts supporting the claim of discrimination. Vague generalizations of discrimination should not be enough.

Key point. The court's decision may be summarized as follows:

A church does not have to adopt any particular set of accounting or reporting standards.

If a church does not adopt any set of accounting or reporting standards, the civil courts will not intervene in disputes alleging accounting or reporting irregularities. A court cannot apply standards that church leaders have not applied themselves.

If a church does adopt such standards, a civil court can resolve a dispute involving a violation of those standards only if it can do so without inquiring into religious doctrine. Further, such a lawsuit must recite facts demonstrating that the church adopted the standards, and that they were violated.

Bible Way Church v. Beards, 680 A.2d 419 (D.C. App. 1996).