Donors Can Sue for Improper Use of Restricted Funds

Contributions were not used as per their wishes, say donors.

Key point. Donors who make restricted contributions to a church may be legally entitled to a return of their contributions if not used for the donor-restricted purpose.

A federal district court in Arkansas allowed a group of 185,000 donors to move forward with a class-action lawsuit against a missions agency for allegedly violating its repeated assurance to donors that their restricted contributions would be spent “100%” for the designated purposes chosen by the donors.

Background

A US-based Christian missionary organization (the “defendant”) worked mostly in Asia. To fulfill its charitable purposes, the defendant solicits donations from donors across the world. Each year more than one million unique donations are made to the defendant from tens of thousands of donors in the United States. The defendant then works with its overseas agents to ensure that the donor-restricted money reaches its intended purposes in Asia (the “field”).

To maintain its ability to send sufficient funds to the field, the defendant arranges fundraising pitches in several mediums, including in-person solicitations at churches in the United States, on its own website, and through advertising efforts on social media and in various mailings and radio broadcasts.

Because the needs of the poor in Asia are so many, the defendant allows potential donors to specify for what purpose their field donations will be spent. For instance, donors who give online or in response to catalogs may direct their donations to any of 179 different donation categories. Donors make these designations by either checking boxes on order forms or, if ordering online, by adding the item (which lists the corresponding price) to their shopping cart. At other times, the defendant directly solicits donations for particular items, such as “emergency grams” sent in the wake of natural disasters and advertisements sent around the holidays asking for donations for blankets.

Funds not used as per donors’ wishes, claim donors

Several donors (the “donors”) sued the defendant in a federal district court in Arkansas, claiming that the defendant was not spending restricted contributions consistently with donors’ designations. The donors alleged that whether solicitations for contributions were made by the defendant or its agents at in-person church presentations, through catalog mailings, on its website, or in radio presentations, the defendant included a similar promise to its donors that 100 percent of the money given by donors would be sent to the field and spent in accordance with the donors’ wishes, rather than being applied to cover administrative costs or overhead. Moreover, every donor received receipts that contained a representation that “100% of all contributions designated for use on the mission field are sent to the mission field.”

The lawsuit centers on claims that, despite these numerous representations, the defendant did not, in fact, spend donor-restricted funds in accordance with the donors’ wishes or with the defendant’s representations. The parties agree that approximately $375 million in donations are at issue. As a result, the donors asserted a number of claims against the defendant, including Civil RICO (the Racketeer Influenced and Corrupt Organizations Act), fraud, unjust enrichment, and a state law claim. For its Civil RICO, fraud, and unjust enrichment claims, the donors attempted to bring a class-action lawsuit seeking monetary damages for about 185,000 donors nationwide who were affected by the alleged failure of the defendant to apply restricted contributions in the manner specified by donors.

The court certified the donors’ proposed nationwide class for the Civil RICO claim but limited the class for the fraud and unjust enrichment claims to donors residing in Arkansas.

What this means for churches

It is common for church members to make “donor-restricted” charitable contributions to their church specifying that their contributions be used for a specified purpose. What happens if a church board applies such contributions to some other purpose? Are there legal consequences for either the church or the church board? Consider the following rules based on a comprehensive review of all relevant precedent:

Restricted contributions—project not abandoned

Donors who make donor-restricted contributions to their church may have a legal right to a refund of their contributions if the church fails to use the contributions for the designated purpose. This may occur because the church board simply ignores donors’ designations and applies the funds to other uses. Or, it may occur because a church has failed to use the funds for the designated purpose within a reasonable amount of time.

But, so long as a specified project for which contributions are solicited has not been abandoned by a church, then donors who made contributions restricted for the specified project generally have no legal right to a refund of their contributions.

However, at some point, a church’s delay in using restricted funds for a specified purpose may be so substantial that it amounts to an abandonment of the project entitling donors to a refund of their donor-restricted contributions. As the Maine Supreme Court has noted: “Where no particular time is mentioned for the performance of a condition attached to a charitable grant, devise, or bequest, the law requires that it should be done in a reasonable time, to be determined from all the surrounding circumstances, and unreasonable delay may be considered as a refusal of the gift. . . . In light of . . . the fact that nearly forty years has passed . . . a reasonable amount of time has expired.” Estate of Champlin, 684 A.2d 798 (Me. 1996).

Restricted contributions—project abandoned

What if a donor contributes money for a designated church project (e.g., a new building) that the church abandons? Should the church refund contributions to donors who stipulated that their contributions were for the donor-restricted project? A number of possibilities exist, including the following:

Donors can be identified. If donors can be identified, they should be asked if they want their contributions to be returned or retained by the church and used for some other purpose. As one court noted: “Where a religious society raises a fund by subscription for a particular purpose, it cannot divert the funds to another purpose, and, if it abandons such purpose, the donors may reclaim their contributions.” Schmidt v. Catholic Diocese, 18 So.3d 814 (Miss. 2009).

A church should send a letter to donors who request a refund of a prior donor-restricted contribution informing them that (1) there may be tax consequences; (2) they may want to consider filing an amended tax return to remove any deduction claimed in previous years as a result of their restricted contribution; and (3) they should discuss the options with their tax advisor.

Some churches have issued donors a Form 1099-MISC under these circumstances to reduce the church’s risk of liability for aiding and abetting in the substantial understatement of tax. IRC 6701(b). But this approach presents two problems.

First, it assumes that the donor claimed a charitable contribution deduction for the donor-restricted gift and will not file an amended tax return. In fact, some donors did not get a tax deduction for their gifts because they could not itemize their deductions on Schedule A. Others received a “discounted” deduction because of the amount of their income (prior to 2018, high-income taxpayers only received a partial deduction for their charitable contributions). A church treasurer would have to inspect the actual tax return of each donor who requests a return of his or her contribution. Most church leaders consider such precautions excessive and unnecessary, especially for smaller contributions.

Second, Form 1099-MISC is not designed to report this kind of income. It is designed for nonemployee compensation. In what sense have these donors performed services for the church for which they are being compensated?

In summary, the best approach is for the church to inform donors who request a refund of a donor-restricted contribution to address the tax consequences with their tax advisor. They can either do nothing, report the amount of the returned contribution as “other income” on line 21 of Schedule 1 (Form 1040), or file an amended return for the year the restricted contribution was made, which removes the prior contribution from Schedule A. Keep in mind that amended returns can be made for only one of the previous three years.

Donors cannot be identified. A church may not be able to identify all donors who contributed to a specified project, such as a building fund. This is often true of donors who contributed small amounts, or donors who made anonymous cash offerings to a project. In some cases, donor-restricted contributions were made many years before the church abandoned its planned project, and there are no records that identify donors. Under these circumstances, the church has a variety of options.

One option is to address the matter in a membership meeting. Inform the membership of the amount of donor-restricted contributions that cannot be traced to specific donors, and ask the membership to adopt a resolution with regard to the disposition of the fund. Members often will authorize the transfer of the funds to the general fund. Note that this procedure is appropriate only for contributions that cannot be traced to specific donors. If donors can be identified, use the procedure described above.

Another option is to ask a court for authorization to transfer the building fund to another church fund. Most states have adopted the Uniform Prudent Management of Institutional Funds Act (UPMIFA), and this Act permits churches to ask a civil court for authorization to remove a restriction on charitable contributions to permanent endowment funds in some situations.

Other options are available. Churches should consult with an attorney when deciding how to dispose of donor-restricted funds if the specified purpose has been abandoned or is no longer feasible.

Some donors can be identified, and some cannot. In most cases, some donor-restricted contributions can be traced to specific donors, but some cannot. Both of the procedures summarized above may apply.

Key point. Some courts have ruled that a donor has no legal standing to enforce a donor-restricted gift to charity, but this doesn’t mean that a church or charity can ignore it. Some courts have ruled that the state attorney general can enforce a trust created by a donor-restricted gift, and so can any other person with a “special interest” in the trust. While this does not ordinarily include donors, their families, their heirs, or even beneficiaries of the gift or trust, it may include fiduciaries (such as a trustee of a written trust).

Class-action lawsuits

The case summarized above demonstrates another vulnerability of churches that divert donor-restricted funds to a restricted purpose—a class-action lawsuit by donors seeking a return of their contributions. There were 185,000 donors whose common interests were being advanced by the class action described in this case. About $375 million of donations was at issue. These numbers were inflated because a national ministry was involved. But the same principle can apply to church members seeking redress for a church’s violation of donors’ designations. 2018 U.S. Dist. LEXIS 155586; 2018 WL 4323938.

Workers’ Compensation Sole Remedy for Sexually Assaulted Employee

In many states, workers’ compensation is the sole remedy available to an employee in such cases so long as the injury is work related and no exception applies.

Key point 8-07.2. All states have enacted workers’ compensation laws to provide benefits to employees who are injured or become ill in the course of their employment. Benefits generally are financed through insurance premiums paid by employers. Churches are subject to workers’ compensation laws in most states.

The Arkansas Supreme Court ruled that the exclusive remedy of a female employee who was sexually assaulted by a manager was workers’ compensation, and accordingly the woman’s lawsuit for monetary damages based on her employer’s negligence had to be dismissed.

A woman claimed she was sexually assaulted by a store manager where she worked. She sued her employer alleging that it was negligent in its supervision, retention, and hiring of the manager. The store filed a motion to dismiss the complaint on the basis of the “exclusive remedy” afforded by the state workers’ compensation law. The state supreme court agreed that the lawsuit had to be dismissed:

An employer who has secured for its employees the benefits of workers’ compensation is immune from liability for damages in a tort action brought by an injured employee. This rule, known as the exclusivity doctrine, arises from [the state workers’ compensation law] which provides that “the rights and remedies granted to an employee subject to the provisions of this chapter, on account of injury or death, shall be exclusive of all other rights and remedies of the employee, his legal representative, dependents, [or] next of kin.” Essentially, if an employee is granted a right or remedy under the Workers’ Compensation Act, the employee is limited to the relief provided under the Act.

What this means for churches

Many churches have been sued by an employee for emotional or physical injuries stemming from the sexual harassment, sexual assault, or other sexual offense by a supervisor or fellow employee. In many states, workers’ compensation is the sole remedy available to an employee in such cases so long as the injury is work related and no exception applies.

Some church leaders wrongly assume that churches are exempt from workers’ compensation law, exposing their church to potentially sizable uninsured claims and eliminating the exclusive remedy of workers’ compensation benefits for work-related injuries. Truman Arnold Companies v. Circuit Court, 513 S.W.3d 838 (Ark. 2017).

The Penalties for Failing to Report Abuse “Immediately”

Church Law and Tax Report The Penalties for Failing to Report Abuse “Immediately” Key point

Church Law and Tax Report

The Penalties for Failing to Report Abuse “Immediately”

Key point 4-08. Every state has a child abuse reporting law that requires persons designated as mandatory reporters to report known or reasonably suspected incidents of child abuse. Ministers are mandatory reporters in many states. Some states exempt ministers from reporting child abuse if they learned of the abuse in the course of a conversation protected by the clergy-penitent privilege. Ministers may face criminal and civil liability for failing to report child abuse.

An Arkansas appeals court ruled that a school counselor who reported a case of child abuse 14 days after learning about it had not reported the abuse “immediately” as required by the state child abuse reporting law, and therefore was properly convicted for the crime of failing to report abuse immediately and sentenced to one-year probation and payment of a $2,500 fine. An 18-year-old woman (the “victim”) informed her father that she had been involved in a sexual relationship with her high school volleyball coach for two years beginning when she was 16 years of age. The victim was extremely distressed over the break-up of her relationship with the coach, and did not want her parents to report the affair to the authorities. The victim’s parents met with the coach two days later and insisted that she resign. Later that day the parents received a call from the school counselor (the “defendant”) who convinced the parents that, for the good of the school and their relationship with their daughter, they should not report the inappropriate relationship to the police. Instead, the defendant told the parents that they should view the incident as a “bad breakup” and wait until the end of the school year when the coach would quietly resign her position.

The parents agreed to wait one week to report the relationship, and at the end of the week they informed the defendant that they would wait an additional week. At the end of the second week, or 14 days after the defendant first learned of the abuse, she made an anonymous report to the child abuse hotline upon learning that the parents planned to do so.

The defendant was prosecuted for the crime of failing to report child abuse “immediately” as required by the child abuse reporting law. She was found guilty of “first-degree failure to notify by a mandated reporter,” and was sentenced to one year of probation and a $2,500 fine. The defendant appealed on two grounds. First, that the child abuse reporting statute did not define the term “immediately,” and that her report filed within 14 days was “immediate.” Second, she claimed that mandatory reporters have no duty to report cases of child abuse when the victims are 18 years of age or older. Both contentions are addressed below.

The duty to report “immediately”

The Arkansas child abuse reporting law requires persons classified as mandatory reporters to “immediately” notify the hotline if he or she reasonably suspects child maltreatment has occurred. The parties agreed that the defendant, as a school counselor, was a mandatory reporter. The defendant argued on appeal that this term was unconstitutionally vague. In several cases, the United States Supreme Court has ruled that criminal statutes that do not provide persons of ordinarily intelligence with fair notice of what conduct is prohibited violate the Constitution’s guaranty of due process. The defendant insisted that the word “immediately” was unconstitutionally vague since it failed to provide fair notice of what was expected. The court disagreed, noting:

If a person’s conduct clearly falls within what is prohibited, that person cannot complain that a statute is vague … . [The defendant] cannot complain that inclusion of the word “immediately” renders the statute vague, since her conduct of purposely delaying making a report to the child abuse hotline for more than two weeks after acquiring direct knowledge of the child maltreatment clearly did not satisfy the requirement of immediacy that is placed on a mandated reporter.

Reporting child abuse when a victim has reached adulthood

Church leaders often are unsure if they are required to report child abuse after a victim of abuse has reached adulthood. Very few courts have addressed this question, so this aspect of the court’s opinion is significant. The court concluded that the fact that the victim was 18 (an adult) when she disclosed her abuse as a minor did not affect the duty of the defendant, as a mandatory reporter, to report the abuse. It stressed that the child abuse reporting statute requires mandatory reporters to report child abuse if they have “reasonable cause to suspect that a child has been subjected to child maltreatment.” The court noted that the statute “is written in the past tense to include a child who has been subjected to child maltreatment.” Therefore, “by its plain language, the statute includes the situation here, where the defendant discovered that the victim had been subjected to child maltreatment when she was in high school and under the age of eighteen.”

In responding to the defendant’s argument that it would be absurd to interpret the child abuse reporting law to require mandatory reporters to report incidents of child abuse when the victim has reached adulthood, since this would require the reporting of abuse that in some cases happened “decades in the past,” the court noted that the purpose of the child abuse reporting law “is not only to protect a maltreated child, but also to protect any other child under the same care who may be in danger of maltreatment.”

What This Means For Churches:

Every state has a child abuse reporting statute that requires persons designated as “mandatory reporters” to report known or reasonably suspected incidents of child abuse to a designated state agency. These reporting laws typically require mandatory reporters to report abuse “immediately,” within a specified time (i.e., 24 hours or 48 hours). As this case demonstrates, mandatory reporters who fail to report abuse by the deadline prescribed by law face criminal penalties, which may include prison or a fine. As a result, it is imperative for church leaders to be familiar with the definition of “mandatory reporter” under state law, and the time period for reporting abuse (for more help, please see the 2015 Child Abuse Reporting Laws for Churches resource on ChurchLawAndTaxStore.com).

We recommend that legal counsel be retained to assist church leaders with understanding two important issues under state law: First, the time period for reporting child abuse; and second, the duty to report child abuse when the victim is now an adult. Griffin v. State, 4543 S.W.3d 262 (Ark. App. 2015).

Injuries on the Playground

Court rules church not liable for injuries based on gross negligence.

KEY POINT 6-08 State and federal laws provide limited immunity to uncompensated officers and directors of churches and other charities. This means that they cannot be personally liable for their ordinary negligence. However, such laws contain some exceptions. For example, officers and directors may be personally liable for their gross negligence or their willful or wanton misconduct.

* An Arkansas court ruled that a church was not liable on the basis of gross negligence for injuries to a young child who was pushed off a piece of playground equipment by another child. A mother was required to sign a release when she enrolled her 3-year-old daughter (the "victim") in a church's preschool program. The release specified that the church would be liable only for gross negligence. The victim was injured when she was shoved off a piece of elevated playground equipment by a 3-year-old boy. The mother sued the church, claiming that it was responsible for her daughter's injuries on the basis of its gross negligence in failing to adequately supervise children playing on the elevated equipment. A trial court dismissed the case on the ground that the church had not been grossly negligent. A state appeals court affirmed this ruling. It defined gross negligence as "the intentional failure to perform a manifest duty in reckless disregard of the consequences as affecting the life or property of another," and concluded that the church's acts did not satisfy this definition. It concluded: "Under this analysis, we cannot say that the trial court erred by granting summary judgment on the grounds that there was no evidence of an intentional failure on the part of the daycare to perform a manifest duty. There was evidence that the three-year-old who pushed [the victim] off of the playground equipment had behavioral problems involving aggression toward daycare personnel and other children, but there was nothing to show that these problems were so unusual or severe that there was a manifest duty on the part of the daycare to segregate the boy from the other children during supervised play."

The court referred to an earlier case in which a school was found not to have been grossly negligent as a result of a bus driver's failure to prevent a girl from being raped by a male student. The court in the previous case concluded:

We cannot say that [the bus driver's] conduct rose to the level of gross negligence or reckless indifference. There is no evidence showing that he intentionally failed to perform a manifest duty in reckless disregard of the consequences as affecting the life of [the victim] nor that he intentionally performed an act of an unreasonable character in disregard of a risk to [the victim] that was known to him or so obvious that he must be taken to have been aware of it, and so great as to make it highly probable that harm would follow …. The [victim alleged that the bus driver] was grossly negligent or recklessly indifferent because he knew that [the assailant] was a problem student that he had to keep his eye on and failed to do so. However, [the victim] failed to provide any evidence that such a failure was in any way intentional …. [The victim] also asserted that [the driver] was grossly negligent or recklessly indifferent because of his knowledge of an incident during the prior year when Mary complained to Baum that another student, Kenny, had improperly touched her. Appellants contended that such earlier incident put him on notice that inappropriate sexual conduct had occurred on the bus. However, there was no evidence of an intentional failure to perform a manifest duty or intentional performance of an act with disregard of a known or obvious risk as a result of the earlier incident. Appellant does not cite any authority, and we know of none, that holds that an incident involving another student during the previous year establishes that a failure to observe or respond to an unobserved incident a year later rises to the level of gross negligence or reckless indifference. Appellants have failed to provide evidence to support the allegation that Baum intentionally failed to perform a manifest duty or act with disregard of a known or obvious risk on the day the incident occurred with regard to James. Applying our standard of review of summary-judgment cases to the present case, we hold that there exists no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law on the issues of gross negligence and reckless indifference. Doe v. Baum, 72 S.W.3d 483 (Ark. 2004).

Application. This case is important because of the court's definition of gross negligence. Church leaders should be familiar with the concept of gross negligence, since such behavior not only exposes a church to punitive damages in most states, but it also exposes members of the church board to personal liability. While the definition of gross negligence varies slightly from state to state, this court stressed the necessity of intentionality in failing to perform a duty to protect others from injury. While the church's preschool workers may have been inattentive, and even negligent, in their supervision of the young children on the elevated playground equipment, their conduct did not rise to the level of an intentional failure to perform their duty of care in supervising the children. On the other hand, it is possible, if not likely, that church board members who refuse to implement a policy for the screening of children's workers would be deemed grossly negligent in the event that a registered sex offender is hired to work with children and later molests one or more of them. The board's refusal to implement such a policy might well be deemed by a jury to constitute an intentional breach of the duty of care the church owes to children, thereby exposing the board members to individual liability. The same might be true if a church board allows minors to be transported to an off-campus activity in a fully loaded church-owned 15- passenger van. In either case, the actions of the church board might be deemed to be grossly negligent, thereby eliminating the limited immunity from personal liability that is otherwise enjoyed by uncompensated board members of nonprofit corporations. 2007 WL 1277900 (Ark. App. 2007).

Clergy and Sexual Assault

Ministers who engage in sexual contact with church employees or church members expose their church to potentially substantial liability.

Church Law & Tax Report

Clergy and Sexual Assault

Ministers who engage in sexual contact with church employees or church members expose their church to potentially substantial liability.

Key point 4-11.1. Clergy who engage in sexual contact with an adult or minor are subject to civil liability on the basis of several legal theories. They also are subject to criminal liability.

* The Arkansas Supreme Court upheld a 40-year prison sentence for a pastor who engaged in sexual relations with a church secretary and a church member. A church secretary alleged that the church’s senior pastor called her into his office at the church during lunch and sexually assaulted her. A second incident occurred a few months later when the pastor took her to a motel where he again assaulted her. The secretary testified that she was afraid to resist on both occasions. She testified that she saw the pastor as a “father figure” and looked up to him as a preacher. A second woman also claimed that the pastor engaged in sexual contact with her. The pastor was arrested and charged with sexual assault in the third degree. The third-degree sexual assault statute states: “A person commits sexual assault in the third degree if the person … engages in sexual intercourse or deviate sexual activity with another person who is not the actor’s spouse, and the actor is … a member of the clergy and is in a position of trust or authority over the victim and uses the position of trust or authority to engage in sexual intercourse or deviate sexual activity.” A jury convicted the pastor and sentenced him to a prison sentence of forty years. The pastor appealed on several grounds, including those summarized below.

(1) Sufficiency of the evidence

The pastor claimed that there was insufficient evidence to sustain his conviction for third-degree sexual assault. He argued that the state’s evidence proved nothing more than a consensual sexual relationship with both women, and that there was no evidence that he was in a position of trust or authority over either woman or that he used that position to engage in a sexual relationship with either. The court disagreed. It concluded:

Our review of whether a crime was committed does not end with the fact that the pastor had sex with the two victims. Both victims testified that they looked up to him as a preacher and trusted him. [The church secretary] testified that she was afraid of what might happen to her if she did not comply with his sexual requests. She further testified that she was not attracted to him. [The other woman] stated that she told the pastor, regarding sex, “No, you’re a preacher. It’s not proper. It’s not right.” This testimony does not indicate a consensual relationship. It indicates that the [pastor] used his position of trust and authority over these two victims to engage in unwanted sexual activity with them. The evidence was sufficient to sustain his conviction for third-degree sexual assault.

(2) Constitutional issues

The pastor claimed that the Constitution guarantees the right to engage in private, consensual sex. The court agreed, but concluded that the pastor had no right “to engage in sexual activity by abusing his position of trust and authority.”

The pastor also claimed that the third-degree sexual assault statute violated his rights under the Equal Protection Clause of the United States Constitution since it singled out ministers and prohibited them from engaging in consensual sex with other adults. The court disagreed: “Once again, [the pastor] misconstrues the statute as one that prohibits purely consensual conduct. As previously discussed, he was not prosecuted for purely consensual acts but rather for using his position of trust and authority to engage in sexual activity.” In addition, the court noted that several other professions are mentioned in the third-degree sexual assault statute, including child-care workers, dentists, judges, law enforcement officials, medical personnel, teachers, and prosecuting attorneys.

The court concluded: “Members of the clergy are highly respected and trusted by most people. People specifically seek out their ministers and clergyman when they are especially vulnerable and in time of need. Because the clergy is held in such a high regard, there is a legitimate reason for the state to criminalize a clergyman’s abuse of this trust and authority to procure sex.”

Application. Ministers who engage in sexual contact with church employees or church members expose their church to potentially substantial liability. Many of these cases have been reported in this newsletter. But, such behavior has other consequences. One of them is criminal liability for the minister. Several states have enacted laws that make sexual misconduct by clergy a crime punishable by imprisonment. Talbert v. State, 2006 WL 2699903 (Ark. 2006).

Resource. A feature article in the July-August 2006 edition of Church Law & Tax Report (“Criminal Liability of Clergy for Sexual Misconduct Involving Adults”) addresses the criminal liability of clergy for engaging in sexual misconduct.

* See also the feature article “The Bar Association Analogy,” in this newsletter.

Civil Liability for Failure to Report Child Abuse

Mandatory reporters who fail to report abuse can be subject to possible criminal liability and can be sued for money damages by the victims of abuse.


Key point 4-08. Every state has a child abuse reporting law that requires persons designated as mandatory reporters to report known or reasonably suspected incidents of child abuse. Ministers are mandatory reporters in many states. Some states exempt ministers from reporting child abuse if they learned of the abuse in the course of a conversation protected by the clergy-penitent privilege. Ministers may face criminal and civil liability for failing to report child abuse.

A federal court in Washington ruled that a mandatory child abuse reporter’s failure to report the abuse of a minor by a church worker could result not only in criminal liability for the reporter, but also civil liability for the reporter and his employing church. A minor (the “plaintiff”) who was sexually molested by a church worker sued the church, claiming that it was liable for the worker’s acts on the basis of its failure to comply with the state child abuse reporting statute.

The church insisted that the state child abuse reporting law imposes criminal liability on mandatory reporters who fail to report abuse, but does not explicitly impose civil liability, and therefore the plaintiff could not sue the church for monetary damages in a civil lawsuit. The court conceded that courts in other states have generally refused to allow victims of child abuse to sue mandatory reporters who fail to report, but it noted that all of those rulings were in other states.

The plaintiff acknowledged that the reporting statute did not explicitly authorize civil lawsuits for failure to report, but argued that such a right could be “implied” from the statute. It pointed to a Washington Supreme Court case that articulated three factors for the courts to consider in deciding if a statute creates a civil remedy: “First, whether the plaintiff is within the class for whose benefit the statute was enacted; second, whether legislative intent, explicitly or implicitly, supports creating or denying a remedy; and third, whether implying a remedy is consistent with the underlying purpose of the legislation.”

The court concluded that these factors supported a finding in this case that the state child abuse reporting law created a civil remedy in favor of abused minors and against mandatory reporters who fail to report abuse:

The plaintiff, a victim of childhood sexual abuse, certainly falls within the class of persons the statute is designed to protect. Washington courts have clearly stated that the mandatory reporting statute is designed “to secure prompt protection or treatment for the victims of child abuse ….” Second, the legislative intent behind the statute supports the creation of a civil remedy. It is true that [the statute] provides a penal remedy, but not a civil remedy. [The church] asserts that such a penal remedy indicates that the legislature did not intend to imply a civil remedy also. However, this court recognizes, just as Washington state courts have recognized, that when a statute is enacted for the protection of a particular class of individuals, a violation of its terms may result in civil as well as criminal liability, even though the former remedy is not specifically mentioned therein …. The logical conclusion is that the legislative intent supports the creation of a civil remedy for victims of child sexual abuse when those mandated to report the abuse fail to do so. Likewise, the Court finds that implying a civil remedy is consistent with the underlying purpose of the statute. The declared intent of the statute is “to prevent further abuses, and to safeguard the general welfare of such children.” RCW 26.44.010. Implying a civil cause of action against those who are mandated to report child abuse, but fail to do so, will motivate those required to report to take action, and furthers the goals of the statute itself. Accordingly, the Court finds that there is an implied private cause of action stemming from the statutory requirement to report child abuse.

Application. Eight states (Arkansas, Colorado, Iowa, Michigan, Montana, New York, Ohio, and Rhode Island) have enacted laws that create civil liability for failure to report child abuse. In these states victims of child abuse can sue adults who failed to report the abuse. Not only are adults who fail to report abuse subject to possible criminal liability (if they are mandatory reporters), but they also can be sued for money damages by the victims of abuse. In each state, the statute only permits victims of child abuse to sue mandatory reporters who failed to report the abuse. No liability is created for persons who are not mandatory reporters as defined by state law.

Most state child abuse reporting laws do not specifically authorize victims of abuse to sue mandatory reporters who failed to report the abuse. Several courts have addressed the issue of whether to recognize such a civil remedy apart from any specific language in the statute creating one. Most have not. The decision of the Washington federal court reflects the minority position. As a result, mandatory reporters in Washington may be subject to both criminal and civil liability for failing to report known or reasonably suspected incidents of child abuse. Fleming v. Corporation of the President of the Church of Jesus Christ of Latter Day Saints, 2006 WL 753234 (W.D. Wash. 2006).

See a summary of the child abuse reporting laws of all 50 states.

Bankruptcy

A bankruptcy court in Arkansas ruled that a bankruptcy trustee could not object to a couple’s bankruptcy plan on the ground that they proposed to continue making contributions to their church.

Key point 9-09. Bankruptcy trustees are prohibited by the federal Religious Liberty and Charitable Donation Protection Act from recovering contributions made by bankrupt debtors to a church or other charity prior to declaring bankruptcy, unless the contributions were made with an intent to defraud creditors. This protection extends to any contribution amounting to less than 15 percent of a debtor's gross annual income, or more if the debtor can establish a regular pattern of giving more. In addition, the Act bars bankruptcy courts from rejecting a bankruptcy plan because it allows the debtor to continue making contributions to a church or charity.

* A bankruptcy court in Arkansas ruled that a bankruptcy trustee could not object to a couple's bankruptcy plan on the ground that they proposed to continue making contributions to their church. A married couple filed a bankruptcy petition under Chapter 13 of the Bankruptcy Code. The couple's bankruptcy plan called for the payment of $879 per month for 36 months to secured and unsecured creditors, which would satisfy less than 1% of unsecured creditors' claims. Their plan also called for the payment of monthly contributions to their church of $416, representing 9.8% of their monthly gross income. The bankruptcy trustee opposed the plan on the basis of the charitable contributions. The trustee insisted that the contributions should be redirected to the creditors.

Section 1325 of the Bankruptcy Code specifies that if a bankruptcy trustee objects to the confirmation of the plan, then the court may not approve the plan 'unless, as of the effective date of the plan … the plan provides that all of the debtor's projected disposable income to be received in the three year period beginning on the date that the first payment is due under the plan will be applied to made payments under the plan.' Disposable income is defined as income which is received by the debtor and which is not reasonably necessary for the maintenance or support of the debtor or a dependent of the debtor.

The Religious Liberty and Charitable Donation Protection Act of 1998 amended the Bankruptcy Code to define disposable income to exclude charitable contributions 'in an amount not to exceed 15 percent of the gross income of the debtor for the year in which the contributions are made.' While the couple's charitable contributions amounted to less than 15 percent of their gross income, the trustee insisted that this did not automatically require their plan to be accepted. Rather, the trustee insisted that the plan as a whole must still be 'reasonable,' and he concluded that it was not.

The bankruptcy court noted that the Code recognizes that 'charitable contributions that do not exceed 15 percent of a debtor's gross income may be excluded from the debtor's disposable income,' and that 'the Code makes clear that a court is not supposed to engage in a separate analysis to determine whether charitable contributions up to 15 percent are reasonably necessary for the debtor's maintenance and support.'

The court acknowledged that 'despite the plain meaning of the statute, some courts have interpreted the Code to subject charitable contributions to two limitations. First, that the amount of the contribution cannot exceed 15 percent of the debtor's gross income, and, second, that the amount of the contribution itself is reasonable.' The court concluded that such an interpretation of the Bankruptcy Code

obviates the goal of the Code, namely to protect certain charitable contributions from the consideration-based, cost/benefit oriented disposable income test. Allowing a court to apply a 'reasonably necessary" qualification to the charitable contributions provision would thwart that stated purpose of [the Code]. Courts would be compelled by precedent and common sense to conclude that a religious gift could never be reasonably necessary for support in the same economic sense as food expenditures or the cost of transport to a place of employment. The only lasting effect of [the Code] would be to deprive courts of the power to find all such contributions unnecessary as a matter of law and thus provide a debtor with a futile evidentiary hearing at which to defend his contributions as reasonably necessary. Surely Congress did not intend [the Code] to serve such a limited purpose ….The debtors' proposed charitable contributions fall within the amount allowed by [the Code] and will not be included in the debtors' disposable income for the purpose of plan confirmation.

The bankruptcy trustee also argued that the plan must be rejected on the ground that it was not made in 'good faith.' The Bankruptcy Code specifies that for a court to confirm a plan, it must find that the plan 'has been proposed in good faith and not by any means forbidden by law." In rejecting this argument, the court noted that the couple had regularly tithed to their church.


Application
. The Religious Liberty and Charitable Donation Protection Act of 1998 provides important protections to churches and church members. This historic legislation is addressed fully in a feature article in the May-June 1999 issue of this newsletter. One of the key protections of the Act prevents bankruptcy trustees from objecting to bankruptcy plans on the ground that the debtor proposes to continue making charitable contributions so long as the amount of the contributions does not exceed (1) 15 percent of the debtor's income or (2) more than 15 percent of the debtor's income if the contributions were 'consistent with the practices of the debtor in making charitable contributions.' In re Petty, 338 B.R. 805 (E.D. Ark. 2006).

Sexual Misconduct by Clergy, Lay Employees, and Volunteers

The Arkansas Supreme Court ruled that a company was not liable on the basis of negligent hiring or negligent supervision.

Key point 10-05.2. Some courts have found churches not liable on the basis of negligent selection for the sexual misconduct of a minister or other church worker involving another adult since the church exercised reasonable care in the selection of the worker.

Key point 10-10.1. Some courts have found churches liable on the basis of negligent supervision for a minister's acts of sexual misconduct involving adult church members on the ground that the church failed to exercise reasonable care in the supervision of the minister.
Negligence as a Basis for Liability

* The Arkansas Supreme Court ruled that a company was not liable on the basis of negligent hiring or negligent supervision for a sexual assault committed by one it is employees. While the case involved a for-profit business, the court's conclusions are applicable to churches. An employee (Greg) of a cable company entered a female customer's home to adjust her cable connection. While inside the home he produced a knife and forced the woman into a bedroom where he raped her. He then unsuccessfully attempted to kill her by slitting her throat with the knife, and holding her head under water in a bathtub. Miraculously, the woman survived, and Greg was convicted of rape, kidnapping, arson, and attempted murder. The woman later sued the cable company, claiming that it was legally responsible for Greg's acts on the basis of negligent hiring and negligent supervision. A trial court ruled in favor of the company on the ground that it could not have known that Greg had a propensity for violence. The woman appealed to the state supreme court.

negligent supervision

Employers can be liable in most states on the basis of negligent supervision for the acts of their employees. However, the court noted that "the employer's liability rests upon proof that the employer knew or, through the exercise of ordinary care, should have known that the employee's conduct would subject third parties to an unreasonable risk of harm. As with any other negligence claim, a plaintiff must show that the employer's negligent supervision or negligent retention of the employee was a cause of the injury and that the harm to third parties was foreseeable. It is not necessary that the employer foresee the particular injury that occurred, but only that the employer reasonably foresee an appreciable risk of harm to others."

The court noted that the employer was aware that Greg had made offensive sexual remarks to another female customer a year earlier, and had unlocked some of her windows before leaving her home (apparently so he could enter the home that night), and therefore the trial court erred in dismissing the negligent supervision claim.

negligent hiring

The victim claimed that employers have a duty to conduct a reasonable reference check of their employees, citing other cases in which courts found employers liable for the criminal actions of their employees because sufficient checks were not made before hiring the employees. The court rejected this claim. The court concluded,

[The victim states that the company's] background check was inadequate, and yet she offers no evidence for this conclusion …. It is irrelevant to the negligent hiring claim that Greg might not have been up to the level of expected performance in his previous jobs or in his position [with the company]. The victim had to present proof of something in Greg's history that (1) would have been found by an "adequate" background check, and (2) would have put the company on notice that Greg was predisposed to commit a violent act. No such proof was offered. There must be a direct connection between an inadequate background check and the criminal act for which the victim is attempting to hold the employer liable …. The company provided documentation that Greg had passed a pre-employment drug screen and had been honorably discharged from the military. Further, its background check of Greg showed experience in wiring and pole climbing, and checks with two previous employers gave no indication that he might be a risk to customers. The victim … has shown nothing in Greg's background that could have alerted the company to the possibility that he was predisposed to commit a sexual assault. Thus, we affirm the trial court's grant of summary judgment on the negligent hiring claim.

Application. Note the following:

1. An employer may be liable on the basis of negligent supervision for an employee's sexual assaults, but only if it had reason to foresee that the employee created "an appreciable risk of harm to others." An employer need not be able to foresee the specific offense that its employee commits. As a result, churches that have no reason to suspect that an employee or volunteer creates an appreciable risk of harm to others cannot be liable on the basis of negligent supervision for that person's criminal acts.

2. The court concluded that an employee's offensive sexual remarks, plus unlocking a woman's windows, may have made it reasonably foreseeable to his employer that he presented an appreciable risk of harm to others.

3. The court rejected the victim's claim that the company was liable for Greg's acts on the basis of negligent hiring. It noted that the victim failed to prove that an "adequate" background check would have uncovered any evidence placing the company on notice of any dangerous propensities on the part of Greg. Note that this conclusion implies that a church can be liable on the basis of negligent hiring if it failed to conduct a background check and it can be shown that an adequate check would have disclosed evidence that the person was a risk to others. Saine v. Comcast Cablevision of Arkansas, 126 S.W.3d 339 (Ark. 2003).

Clergy—Removal – Part 1

An Arkansas court ruled that a church congregation lawfully removed a pastor from office.

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.
Termination

* An Arkansas court ruled that a church congregation lawfully removed a pastor from office. A church's pastor and 70 members left to form a new church. At that time, a majority of the congregation voted that the departing pastor and members would be allowed to take half of the church's funds with them. An interim pastor was selected, and the church appointed a pastoral search committee to find a permanent pastor. Conflict arose almost immediately between the interim pastor and members of the congregation. Chief among the problems was the interim pastor's decision to file a lawsuit to recover the money that had been given to the departing pastor and former members of the church. Another matter of concern was the interim pastor's decision to open another church bank account without consulting the membership or seeking its approval. A church meeting was held to address these and other concerns. A majority of those present voted to dismiss the interim pastor and to write the attorneys he hired to inform them that the church had not authorized him to institute the litigation.

The interim pastor called a "special meeting" of the congregation that was conducted by a denominational officer. The officer informed the congregation that the actions it took to dismiss the interim pastor and drop the lawsuit were not legally valid because the meeting and its purpose were not announced for two weeks prior to its being held. As a result, the members voted to rescind the interim pastor's dismissal.

A few weeks later members of the church attempted to call another meeting, but the interim pastor declared it to be "out of order." As a result, 37 members met in the church parking lot on the proposed date of the meeting and unanimously voted to remove the interim pastor. The interim pastor, however, refused to vacate the pulpit, and a few days later during a Bible study class he "silenced" those members who had been present at the meeting in the parking lot. It was said that a member who has been "silenced" is stripped of his or her voice in the church and is not allowed to vote on church matters.

A few months later a meeting was called for the purpose of selecting a permanent pastor. Some 45 members were in attendance, and the interim pastor was one of two candidates on the ballot. The interim pastor refused those members who had been "silenced" the opportunity to vote. Of the remaining 20 members who were permitted to vote, 13 voted for the interim pastor.

Some of the silenced members asked a civil court to forbid the interim pastor from serving as pastor of the church on the ground that he was not the lawful pastor. The members also asked the court to order an accounting of church funds. A trial court ruled that the meeting in the parking lot was valid, and so the interim pastor had been properly dismissed. The court also ruled that any acts taken by the interim pastor after this meeting, including the silencing of the members and his calling of the meeting during which he was "elected" as permanent pastor, were null and void. The interim pastor appealed.

A state appeals court began its ruling by noting that "our courts have followed the rule that where a minister of a congregational church is dismissed by the action of the majority of the church, and thereafter usurps the pastoral duties, the majority is entitled to an injunction to restrain him and to prevent him and his adherents from occupying and using the church without the consent of the majority."

The court rejected the interim pastor's argument that the congregational meeting in the church parking lot was invalid because it had not been properly called. It observed, "The trial court found that the meeting was properly called because the place, time, and purpose of the meeting were announced two weeks in advance and that this was the only requirement the majority deemed necessary to call a meeting …. Therefore, even accepting the interim pastor's view as to proper procedure, there was testimony that the procedure was followed …. We further observe that the interim pastor was elected to temporarily fill the vacancy in the pulpit. There was testimony that in that capacity he only had so much authority as the majority saw fit to give him. As shown by their actions, it is clear that the majority did not grant him the authority to prevent the calling of meetings and thereby allow him to occupy that position indefinitely, despite the will of the majority." McCree v. Walker, 2003 WL 1289845 (Ark. App. 2003).

Related Topics:

Church Meetings

An Arkansas court dismissed a lawsuit brought by the former members of a church’s board of deacons challenging their removal from office and dismissal from membership.

Key point 6-12.1. Church membership meetings must be conducted in accordance with the procedural requirements ordinarily specified in the church's governing documents. The most common requirements pertain to notice, quorum, and voting.

Key point 6-12.4. Most courts refuse to intervene in church disputes concerning the validity of a membership meeting that was not conducted in accordance with the procedural requirements specified in the church's governing documents. However, some courts are willing to intervene in such disputes if they can do so without inquiring into religious doctrine or polity.

Church Business Meetings

* An Arkansas court dismissed a lawsuit brought by the former members of a church's board of deacons challenging their removal from office and dismissal from membership on the ground that the courts cannot interfere with majority votes of the members of congregational churches. A church's board of deacons dismissed the senior pastor without a vote of the church membership. In response, the church members convened two meetings. In the first, they voted to remove the deacons from office. In the second, they voted to dismiss the deacons as members of the church. The church did not notify the deacons or any other church member by letter regarding the two meetings. Instead, the deacons and the church members were informed of the meeting by a phone call or a personal visit. The deacons were absent from the first meeting, but they attended the second meeting. The dismissed deacons filed a lawsuit in which they asked a court to invalidate the actions taken by the church in the two meetings on the ground that written notice was not given as required by church procedure. The trial court dismissed the lawsuit on the ground that a majority of the congregation is entitled to the management and control of the church's affairs. The court did not find that the church had any formal set of rules or regulations concerning matters of governance. The dismissed deacons appealed.

A state appeals court ruled that the trial court properly dismissed the deacons' lawsuit. It concluded,

Arkansas law reflects that the rights of different factions forming a religious body under the congregational form of church government are to be determined by the membership where a majority controls. This statement, of course, assumes that the vote has been cast according to established rules. It also presupposes that from a doctrinal standpoint there has not been such an abrupt departure from congregational principles as to discredit the prevailing group as a matter of law …. [A]t a minimum, before a member can be expelled from a religious society, notice must be given him to answer the charge made against him and an opportunity offered to make his defense. Without such notice and an opportunity to be heard, the order of expulsion is void. [The pastor and church secretary] testified that the deacons were given an opportunity to speak at the [second] meeting. In addition [they] were given notice of both meetings. Moreover, all of the deacons were present at the [second] meeting.

Application. This case illustrates the view of many courts that issues of governance and administration in a "congregational" church are determined by majority vote of the membership if there is no controlling provision in the church's governing documents. Jones v. Bethlehem Baptist Church, 57 S.W.3d 217 (Ark. App. 2001).

Church Property – Part 2

The Arkansas Supreme Court ruled that a local church maintained ownership of its property following its disaffiliation from a parent denomination.

Key point 7-03.3. Most courts apply the "neutral principles of law" rule in resolving disputes over the ownership and control of property in "hierarchical" churches. Under this rule, the civil courts apply neutral principles of law, involving no inquiry into church doctrine, in resolving church property disputes. Generally, this means applying neutral legal principles to nondoctrinal language in any one or more of the following documents: (1) deeds to church property; (2) a church's corporate charter; (3) a state law addressing the resolution of church property disputes; (4) church bylaws; or (5) a parent denomination's bylaws.

State Court Rulings Regarding Church Property Disputes

* The Arkansas Supreme Court ruled that a local church maintained ownership of its property following its disaffiliation from a parent denomination since it had acquired title prior to the effective date of an amendment in the national church's governing document imposing a trust in its favor over the property of all affiliated churches. A church was organized in 1949 as a member of the National Cumberland Presbyterian Church ("national church"), a hierarchical church that is governed in Arkansas by a state agency (the "state church"). The national church has a written constitution contained in the Confession of Faith. The local church purchased property and constructed a sanctuary without any financial assistance from either the national or state church. However, title to this property (tract A) was vested in the state church by the previous owner. In 1968, the state church executed a deed conveying the property to the local church. The deed did not contain any trust language or reverter clause in favor of either the national church or state church. In 1968 the church purchased additional property (tract B) with its own funds, without any assistance from the national church or state church. Title to this property was vested in the local church. It purchased another tract (tract C) in 1977, again without any financial assistance and with title vested in its own name.

At the time of the conveyances of tracts A and B, the national church constitution contained the following language: "We further recommend that the following additional provisions be adopted regarding the legal steps to be taken by presbyteries for the protection, transfer, or sale of church property: (1) Church property should be deeded to the trustees of the local presbytery for the benefit and use of the local church, which local trustees will be in complete charge so long as the church remains organized." This language is also found in the Cumberland Presbyterian Digest of 1975, the church law in effect at the time of the 1977 conveyance of tract C.

In 1979, the United States Supreme Court determined that civil courts faced with issues of ownership of church property could properly apply "neutral principles of law" in resolving disputes as to the ownership of church property. Jones v. Wolf, 443 U.S. 595 (1979). Following the Jones case, the national church adopted in 1984 an amendment to its constitution to replace the constitutional language endorsing the principle of local ownership of church property. The 1984 amendment provides,

The Cumberland Presbyterian Church is a connectional church and all lower judicatories of the church to-wit: synod, presbytery, and the particular churches are parts of that body and therefore all property held by or for a particular church, a presbytery, a synod, the General Assembly, or the Cumberland Presbyterian Church, whether legal title is lodged in a corporation, a trustee, or trustees, or an unincorporated association, and whether the property is used in programs of the particular church or of a more inclusive judicatory or retained for the production of income, and whether or not the deed to the property so states, is held in trust nevertheless for the use and benefit of the Cumberland Presbyterian Church.

The local Arkansas church was aware of the 1984 constitutional amendment because it sent a delegate to the national meeting where the amendment was approved. The delegate voted "no" to the amendment. In 1995, the local church submitted a formal, written notice that indicated its intent to withdraw from the state church. The local, 20-member congregation unanimously agreed to the withdrawal. The state church appointed a commission, pursuant to the church constitution, that recommended the dissolution of the church and a merger with a nearby Cumberland Presbyterian Church for those members who wished to remain affiliated with the national church.

Members of the local church refused to vacate their property or surrender the church records. The state church filed a lawsuit seeking to establish its rights to the property pursuant to the 1984 amendment to its constitution.

The Arkansas Supreme Court began its opinion by noting that in the Jones case the United States Supreme Court had ruled that civil courts may resolve church property disputes not involving issues of "religious doctrine or polity" by applying "neutral principles of law." Under the "neutral principles" approach, the courts determine the property owner of disputed church property by examining nondoctrinal language in deeds, local church charters and bylaws, denominational bylaws, and state statutes governing the holding of church property. The Arkansas Supreme Court officially adopted the neutral-principles approach for resolving church property disputes in that state. The court then applied this approach to the facts of this case:

In our application of the neutral-principles approach, we must refrain from resolving the dispute on the basis of "religious doctrine and practice" and must rely "exclusively on objective, well-established concepts of trust and property law …." Any documents, such as the church constitution, pertinent to the dispute, must be scrutinized in purely secular terms. If these documents "incorporate religious concepts in the provisions relating to the ownership of property" and if the interpretation of those instruments requires the resolution of a religious matter, then we "must defer to the resolution of the doctrinal issues by the authoritative ecclesiastical body …."

The court first examined the deeds to the church property, and concluded that they clearly vested title in the local church without any trust or reversionary interest in favor of the state or national church. Further, the court pointed out that the national and state churches "did not contribute to the acquisition of the property." The court then noted that neither party had referenced any provision in the local church's charter or bylaws that addressed the ownership of property. It further noted that no state statute addressed the ownership of church property. Next, the court considered the national church's constitution that was in effect at the time of the conveyances, and found no provision that created a trust in favor of the national church.

The court rejected the national church's argument that the 1984 constitutional amendment imposed a trust in its favor on the property of all local churches. It pointed out that all of the church's property had been acquired prior to the 1984 amendment, and noted that the national church cited no cases "that allow a grantor to impose a trust upon property previously conveyed without the retention of a trust …. We have long held that parties to a conveyance have a right to rely upon the law as it was at that time."

Application. The court correctly noted that most church property disputes are resolved on the basis of neutral principles of law contained in deeds, local church charters and bylaws, and denominational bylaws. So long as a civil court can resolve such a dispute by referring to neutral provisions in these documents, without any inquiry into doctrine or polity, it may do so. It is worth observing that the United States Supreme Court has noted that one of the principal advantages of the neutral principles of law approach to resolving church property disputes is that it permits religious organizations to "order their affairs" in advance of a property dispute through "appropriate reversionary clauses and trust provisions" that could reflect the intentions of a church and its members. Many churches and denominational agencies have done so. Several examples are cited in section 7-04 of Richard Hammar's book, Pastor, Church & Law (3rd ed. 2000). It should be noted that three of the Arkansas Supreme Court justices dissented from the court's decision. They noted that the local church had continued to operate as a member of the denomination for several years after the 1984 amendment, and therefore the amendment should have been applied to the facts of this case. Arkansas Presbytery of the Cumberland Presbyterian Church v. Hudson, 40 S.W.3d 301 (Ark. 2001).

Sexual Misconduct by Clergy and Church Workers – Part 1

The Arkansas Supreme Court ruled that a charity could not be liable for an employee’s sexual assault because it had no knowledge of any prior misconduct.

Key point 10-10.2. Many courts have ruled that the first amendment prevents churches from being legally responsible on the basis of negligent supervision for the sexual misconduct of ministers.

Negligence as a Basis for Liability

* The Arkansas Supreme Court ruled that a charity could not be liable for an employee's sexual assault because it had no knowledge of any prior misconduct indicating that he posed a risk of harm to others. A nurse's aide employed by a nursing home ("John") sexually assaulted a female quadriplegic accident victim who was a patient at the facility. John's actions were observed by another employee ("Ann") who immediately informed a senior certified nurse who told her to "wait to see if it happened again." Ann was uncomfortable with this response, and reported the incident to the charge nurse. The charge nurse attempted to call the director of nursing and the nurse administrator. Although she tried repeatedly, she was unable to contact either of them. The charge nurse did not contact the police. Instead, a few days later she reported the incident to a senior administrator at the facility who reported the incident to the police and to the victim's family. John was then suspended from employment.

The victim died shortly after this incident, and her estate sued the nursing home alleging that it was liable for John's behavior on the basis of the legal doctrine of respondeat superior (employers are responsible for the negligent acts of their employees committed within the scope of their employment). The lawsuit also alleged that the nursing home was liable for negligently hiring and supervising John. The nursing home asked the court to dismiss the case. It insisted that it could not be found liable on the basis of respondeat superior since John's acts were outside of the scope of his employment. Further, it argued that it could not be liable on the basis of negligent hiring since it checked John's personal references and the national sex abuse registry at the time it hired John, and there was no evidence that a further criminal background check would have indicated a propensity to commit sexual assault. In rejecting the negligent supervision claim, the court pointed out that there was no evidence that the nursing home knew (or in the exercise of ordinary care, should have known) that John's conduct would expose patients or residents to an unreasonable risk of sexual assault. The nursing home had no knowledge or information of any history of similar sexual misconduct by John. The trial court agreed with the nursing home, and dismissed the case. The victim's estate appealed. A state appeals court ruled that the nursing home could not be responsible for John's acts on the basis of respondeat superior, but it could be liable on the basis of negligent supervision. The case was appealed to the state supreme court.

respondeat superior

The supreme court noted that an employer's liability under the doctrine of respondeat superior occurs "when an employee commits a foreseeable act within the scope of his employment at the time of the incident." Since sexual assaults rarely if ever are in the scope of an employee's employment, and are not performed by any desire to serve the employer, they cannot serve as the basis for liability under respondeat superior.

negligent hiring

The court ruled that the nursing home had exercised sufficient screening procedures when it hired John to avoid liability on the basis of negligent hiring.

negligent supervision

The court reversed the appeals court's ruling that the nursing home was liable for John's acts on the basis of negligent supervision. It observed,

Negligent supervision of employees creates a limited duty to control an employee for the protection of third parties even where the employee is acting outside the scope of employment. However, an employer is not liable for negligently supervising an employee whose conduct is outside the scope of the employment unless the employer knew or, in the exercise of reasonable care, should have known that the employee presented a risk of danger to others. Our own court of appeals has also found that to recover under a theory of negligent supervision, a plaintiff must show that an employer knew or, through the exercise of ordinary care, should have known that its employee's conduct would subject third parties to an unreasonable risk of harm. This is required because foreseeability must be established …. In Arkansas, negligence is the proximate cause of an injury only if the injury is the natural and probable consequence of the negligent act and ought to have been foreseen in the light of attending circumstances.

To find a cause of action under negligent supervision of an employee, one must find that the natural and probable consequence of negligent supervision in allowing a newly hired and untried nurse's aide to care for an immobile, semi-comatose female patient is sexual abuse by that nurse's aide. As discussed, absent some form of notice that the employee posed a danger, such an act is not foreseeable. Here, there was no indication of a prior criminal record or patient abuse. There was nothing to put [the charity] on notice that [John] might do such a thing as sexually assault a patient. The fact that he was an inexperienced employee does not give rise to a reasonable probability that he would commit criminal sexual assault. On this basis, it was not foreseeable that he would commit criminal sexual assault.

Application. According to this court, a church cannot be liable on the basis of negligent supervision for the sexual assaults of employees unless such assaults were foreseeable based on information known to the church. This is another example of the importance of not ignoring information suggesting that an employee or volunteer poses a risk of harm to others. Regions Bank & Trust v. Stone County Skilled Nursing Facility, Inc., 49 S.W.3d 107 (Ark. App. 2001).

Resource. For specific recommendations on supervising church staff, see section 10-09.3 in Richard Hammar's book, Pastor, Church & Law (3rd ed. 2000).

Church Property – Part 1

An Arkansas court ruled that a neighboring landowner had a legal right to use a roadway across church property to access a public road.

Key point 7-18. Churches can lose a portion of their property to a neighboring landowner as a result of "adverse possession," if the neighbor openly and adversely occupies church property for the length of time prescribed by state law.

An Arkansas court ruled that a neighboring landowner had a legal right to use a roadway across church property to access a public road because he and his family had used the roadway for a sufficient length of time without objection by the church. In 1984 a family purchased a home on property adjacent to a church. The only access the property had to a road was a gravel driveway across the church's property. In 1996, the family attempted to make some improvements to their property but were unable to acquire financing for the project without receiving a written easement from the church recognizing their right to use the driveway. When the church refused to grant an easement, the neighboring family filed a lawsuit in which it asked a court to recognize that they had a legal right to use the driveway. At trial, the family testified that when they acquired the property they assumed that the gravel driveway came with the land and that they had not asked anyone for permission to use it. The husband testified that the driveway was the only access to the property that he had ever used. He also stated that he had assumed that he had acquired the right to use the driveway along with the property and had not believed that he needed permission to use it. He said that no one from the church had ever indicated that he needed permission to use this driveway nor had anyone from the church given him permission to do so; that visitors and anyone providing services to their house had used this driveway; that he maintained the driveway and kept it clear of debris; that he put gravel on the driveway and a member of the church graded it for him; and that he had continuously used the driveway since 1984 in the presence of church members and that no one from the church had ever mentioned the subject to him.

A church trustee testified that no one from the church had ever informed the family that they needed permission to travel across the church's property for access to the county road. He further testified that although he had observed the family and their guests using the driveway, he had never done anything to prevent such use and had never personally communicated to them that their use was allowed.

A trial court ruled that the neighboring family had a legal right to use the driveway on the basis of an "easement by prescription." Such an easement arises by operation of law after a landowner uses a roadway across another's property for a sufficient length of time. A state appeals court agreed. It conceded that Arkansas does not have a statute specifying the length of time needed to establish an easement by prescription, but it noted that the state supreme court had applied the 7-year period for acquiring title to land by adverse possession. The court noted that

where there is usage of a passageway over land, whether it began by permission or otherwise, if that usage continues openly for seven years after the landowner has actual knowledge that the usage is adverse to his interest or where the usage continues for seven years after the facts and circumstances of the prior usage are such that the landowner would be presumed to know the usage was adverse, then such usage ripens into an absolute right.

The court noted that persons claiming a prescriptive easement are not required to "openly communicate their intention to use the road adversely before permissive use can ripen into an adverse right," and that the length of time and the circumstances under which the roadway was opened and used are sufficient to establish an adverse claim, when those circumstances indicate that the true owner knew or should have known that the road was being used adversely. Further, one's use of a roadway "may ripen into an easement by prescription even if the initial usage began permissively, if it is shown that the usage continued openly for the statutory period after the landowner knew that it was being used adversely, or under such circumstances that it would be presumed that the landowner knew it was adverse to his own interest."

The court concluded:

It is clear that the driveway is the only means of access to [the neighbor's] home. [The neighbors] assumed that they had acquired a right to use the driveway along with title to their property. [The church was] aware that [the family] had acquired title to the property in 1984 and that they had consistently used and maintained the driveway since that time. It is clear from the testimony that [the family] had used the driveway under a claim of right for over twelve years and that [the church] had never attempted to limit their access or to inform them that their use was permissive.

Application. It is common for churches to permit neighboring landowners to use a roadway across church property. This case illustrates that a church that tolerates such use for a sufficient length of time may later be precluded from objecting to it. Johnson v. Jones, 977 S.W.2d 903 (Ark. App. 1998).

Recent Developments in Arkansas Regarding Church Property

An Arkansas court ruled that a church that occupied a building for several years failed to establish ownership through adverse possession since it did not prove that it occupied the building with an intent to displace the true owner.

Church Law and Tax1999-11-01

Church Property

Key point. A church may become the legal owner of property that it occupies through “adverse possession” if it occupies the property for a sufficient length of time both openly and with an intent to claim ownership adverse to the true owner.

An Arkansas court ruled that a church that occupied a building for several years failed to establish ownership through adverse possession since it did not prove that it occupied the building with an intent to displace the true owner. A private individual purchased a 4.5 acre tract of land in 1949. A single-story church building was located on the property. In 1985, a congregation began using the church building without obtaining permission from the owner. Shortly after occupying the church building, the congregation began cleaning up the premises, which the pastor described as a “wilderness” and “dumping site.” The land was overgrown with vines and littered with storm debris, and the church building was infested with snakes. They cut down trees, cleared out debris, and cleaned up the highway frontage so that the building became visible from the road. They repaired the building by installing central heat and air, and by replacing the roof, siding, windows, and floor. They added a 40-foot building and office. After two years, the property was in “immaculate” condition, and the congregation received compliments for their efforts from the local community. When asked whether he had treated the property as his own, the pastor asserted, “There’s no way that I would have gone to this property and cleared it by hand … if I had assumed we didn’t have business being there, the right to be there, or if the church didn’t have the needed possession.” It was not until 1992 that the landowner informed the congregation that he owned the land and was willing to negotiate a lease with the church. When the parties were unable to negotiate a lease, the landowner sent the pastor a letter demanding that he and the church congregation immediately vacate the property. The church did not vacate the premises. Several months later, the landowner asked a court to eject the congregation from his property. The church asked the court to dismiss the lawsuit, claiming that it owned the church building and surrounding grounds on the basis of “adverse possession.” The court agreed with the church, and the landowner appealed.

The appeals court explained the law of adverse possession in Arkansas as follows:

It is well settled that, in order to establish title by adverse possession [the church] had the burden of proving that [it] had been in possession of the property continuously for more than seven years and that [its] possession was visible, notorious, distinct, exclusive, hostile, and with intent to hold against the true owner. The proof required as to the extent of possession and dominion may vary according to the location and character of the land. It is ordinarily sufficient that the acts of ownership are of such a nature as one would exercise over [his] own property and would not exercise over that of another, and that the acts amount to such dominion over the land as to which it is reasonably adapted. Whether possession is adverse to the true owner is a question of fact…. For possession to be adverse, it is only necessary that it be hostile in the sense that it is under a claim of right, title, or ownership as distinguished from possession in conformity with, recognition of, or subservience to the superior right of the holder of title to the land. Possession of land will not ordinarily be presumed to be adverse, but rather subservient to the true owner of the land. Therefore, mere possession of land is not enough to adversely possess the land, and there is every presumption that possession of land is in subordination to the holder of the legal title to the land.The intention to hold adversely must be clear, distinct, and unequivocal. Moreover, it is well settled that the trustees of a religious society may acquire title to real property by adverse possession.

The court stressed that the “intent” required for adverse possession is “the intention to claim the land at issue under right, title, or ownership as distinguished from possession in conformity with, recognition of, or subservience to the superior right of the true owner of the land.” The court concluded that from the time the congregation first occupied the church building in 1985, the congregation “was unsure of the precise nature of its interest in the land and, moreover, recognized that [the landowner] owned the land.” The court noted that the pastor testified that in 1990 he first realized that the church did not have a deed to the land. He testified further that, prior to this time, he made no assumptions about whether the church was on the land with permission or whether the church had purchased the land. He stated, “I didn’t know how or what kind of possession we had.” In order to clarify the matter of the church’s right to occupy the land, the pastor contacted the landowner and asked for a quitclaim deed. The landowner refused, and informed the congregation that he owned the land. The pastor “accepted that as a fact.” The pastor also testified that the congregation first formed an intent to occupy the building in a manner adverse to the landowner’s legal ownership in 1994 when the landowner attempted to evict the congregation from the property.

The court concluded, “Given this testimony by [the pastor], given that a possessor of land does not possess adversely if, while in possession, he recognizes the ownership right of the titleholder to the land, and given that proof of the possessor’s intention to hold adversely must be clear, distinct, and unequivocal and must have lasted seven years, we conclude that the … [church did not have] for seven years the requisite intent to possess the land at issue adversely to [the true landowner] …. Because the church congregation did not possess the land with the requisite intent for seven years, the church congregation did not adversely possess the land.”

Application. Church leaders should recognize that a church can gain, or lose, title to property through adverse possession. If a church openly uses property with an intent to claim an ownership interest superior to the true owner, and does so for the period of time specified by state law, then it may become the lawful owner of the property. Mere possession is not enough. The church must be able to prove that its possession was “adverse.” In many if not most cases, church leaders only intend to occupy property that rightfully belongs to the church. They have no desire to assert a claim to the property that is superior to the interests of the true landowner. Under these circumstances, there is no adverse possession no matter how long a church uses the property. It is also important to note that a church may lose property to a neighboring landowner through adverse possession, if the neighboring landowner occupies a portion of the church’s property for the required length of time both openly and with an intent to claim an ownership interest superior to any lawful owner. Fulkerson v. Van Buren, 961 S.W.2d 780 (Ark. App. 1998). [Corporations]

Recent Developments in Arkansas Regarding the Taxation of Church Property

An Arkansas court ruled that a church and its surrounding grounds, including a parking lot, were exempt from property tax.

Church Law and Tax1998-07-01

Taxation of Church Property

Taxation-church property

Key point. Property tax exemptions for churches generally apply not only to the ground occupied by the church building, but also surrounding grounds, driveways, and parking lots.

An Arkansas court ruled that a church and its surrounding grounds, including a parking lot, were exempt from property tax. The church was established in 1991 and owned a 1.05 acre tract upon which is located a 6,800 square foot building containing a sanctuary, chapel, Sunday School classrooms, a religious lending library, fellowship areas, administrative offices, and guest quarters for visiting pastors and missionaries. The balance of the property consists of landscaped grounds, approach roads, and a parking area. The church qualifies as a church for federal tax purposes. It is governed by a three—member board, elected by the congregation upon the recommendation of the pastor. Sunday worship service attendance varies between twenty—five and thirty—eight. All services are advertised and open to the public. The 1.05 acre tract occupied by the church is part of a larger fifty—five acre tract that had been acquired by the pastor in 1975 and deeded to the church in 1991. The entire property is subject to a mortgage securing a $750,000 debt owed to the pastor. This debt arose as a result of the pastor’s advancing to the church more than $100,000 per year to support its television ministry. The church has never made payments on this debt, and the pastor has never foreclosed on the mortgage. When the county rejected the church’s application to have the entire fifty—five acres declared exempt from property tax in 1994, the church deeded the 1.05 acre tract (including the church building) back to the pastor. The same day the pastor deeded the property back to the church.

A tax assessor determined that the 1.05 acre tract was subject to property tax even though it contained the church building. She insisted that the pastor should be viewed as the owner of the property, and not the church, because of his “self—dealing” with respect to the property. Further, the assessor pointed out that the pastor’s “ownership” was confirmed by the fact that he failed to foreclose on the large debt owed to him by the church. A state appeals court disagreed. It acknowledged that “tax exemptions must always be strictly construed against the exemption,” but it concluded that the entire 1.05 acre tract qualified for exemption. It noted that state law exempted from property taxation “all dedicated church property, including the church building used as a place of worship, buildings used for administrative or missional purpose, the land upon which the church buildings are located, all church parsonages, any church educational building operated in connection with the church, including a family life or activity center, a recreation center, a youth center, a church association building, a day care center, a kindergarten, or a private church school shall be exempt.”

The court noted that ownership is not a requirement for exempt status, and so even if it accepted the tax assessor’s argument that the pastor “owned” the property this would not be relevant. The only question is whether or not the property is “dedicated” to church use. This test clearly was met.

The assessor insisted that if the church property was exempt from tax, the exemption applied only to the small portion of the property on which the sanctuary was located. The exemption did not apply to the parking lot or surrounding grounds since they were not dedicated to church use. Once again the court disagreed. It noted simply that the “plain language” of the exemption law “specifically grants an exemption to all dedicated church property. Nowhere in the record is there proof that the adjacent land in the 1.05 acre plot was used for any other purpose.”

Application. Most importantly, this case will be a helpful precedent for church leaders to share with a tax assessor who claims that a church’s driveways, parking lots, and surrounding grounds are subject to property tax. Phillips v. Mission Fellowship Bible Church, 955 S.W.2d 917 (Ark. App. 1997).
[State Taxes]

Recent Developments in Arkansas Regarding Homosexuality and the Risk of Sexual Assault

The Arkansas Supreme Court ruled that homosexuality “in no way” indicates that a person is a higher risk of committing a sexual assault.

Church Law and Tax1998-05-01

Homosexuality and the Risk of Sexual Assualt

Key point. Some courts have ruled that homosexuality does not render a person a greater risk of sexual assault.

The Arkansas Supreme Court ruled that homosexuality “in no way” indicates that a person is a higher risk of committing a sexual assault. While this case involved an employee of a medical clinic, the court’s ruling is relevant to all employers including churches and other religious organizations. A radiologist hired a male medical technician to work in his clinic. The technician sexually assaulted a male patient while performing an ultrasound examination for possible gallbladder problems. The patient sued the doctor, claiming that he was responsible for the technician’s actions on the basis of negligent hiring, retention, and supervision.

Negligent hiring

In rejecting the negligent hiring claim the court relied on one of its previous rulings in which it found that a hospital was not liable on the basis of negligent hiring for a sexual assault committed by an employee. The victim in that case claimed that the hospital was liable because its background check on the employee was “very inadequate” and a “proper investigation” would have shown that he was not suitable. The court pointed out that the hospital’s background check revealed that the employee had no criminal record or history of violent acts or sexual misconduct. As a result, the court concluded that the hospital had not been guilty of negligent hiring. On the contrary, it noted that “it would take a vivid imagination to glean from this evidence any predisposition to … commit sexual assault.”

In the present case, the victim insisted that the doctor was guilty of negligent hiring since he (1) failed to contact the hospital where the technician previously had worked to find out why he left; and (2) was aware that the technician was a homosexual. The court ruled that this evidence was not enough to make the doctor guilty of negligent hiring. It noted that the doctor hired the technician after working with him for 8 years in a hospital, and that the victim had not produced “any evidence to show what, if anything, [the doctor] would have discovered had he conducted a background check that would have led him to believe that [the technician] was predisposed to commit sexual assault.” The court also ruled that “we know of no” connection “between sexual orientation and a predisposition to commit sexual assault.”

Negligent retention

The victim claimed that the technician had in engaged in previous homosexual misconduct and had a prior sexual assault complaint. The court concluded that this evidence did not make the doctor guilty of “negligent retention” since there was no evidence that he was aware of this information. It added that “the fact that [the technician] had engaged in homosexual conduct in no way indicates that he would commit a sexual assault.”

Negligent supervision

The victim claimed that the doctor was legally responsible for the technician’s acts on the basis of negligent supervision. He noted that it was the doctor’s policy to have a female employee in an examination room whenever a female patient was being examined by a male employee. He insisted that the same “third person” policy should have applied when male employees were examining male patients, especially since the doctor knew that the technician was a homosexual. The court disagreed, noting simply that the victim had presented “no convincing legal authority or argument.”

Application. This case is instructive for a couple of reasons. First, it demonstrates that a reasonable background check is all that is required, not an exhaustive investigation. Second, the court concluded that an employer cannot be guilty of negligent hiring for failing to contact a prior employer for a reference if such a contact would not have demonstrated that the person “was predisposed to commit sexual assault.” Third, the court repeatedly rejected the victim’s assertion that homosexual orientation renders a person a higher risk of committing sexual assaults. Fourth, the court rejected the notion that a third person should be present when male employees (including those with a known homosexual orientation) are examining male patients, even though a third person must be present when male employees examine female patients. This suggests that male clergy who insist on having a third person present when they counsel with females need not apply this policy when counseling with males. It is doubtful that many courts will agree with this remarkably inconsistent conclusion. Porter v. Harshfield, 948 S.W.2d 83 (Ark. 1997). [Negligence as a Basis for Liability]

Review Deed Before Conveying Property

Be familiar with restrictions in your church’s deed.

Key point. Some deeds to local church property contain restrictions on the conveyance of the property. In some cases, a violation of these restrictions may result in a reversion of the property to a state or national church agency.

An Arkansas court ruled that title to a church's property reverted to a national church when local church trustees attempted to convey the property without permission of the national church as required by a restriction in the deed to the property.

In 1973, a couple transferred real estate to the trustees of a Church of God congregation. The deed stated that the trustees could not "sell, convey or encumber" the real estate without the written consent of the national church. In 1993, the trustees conveyed the property by quitclaim deed to a second group of trustees acting on behalf of the local church, and a month later this group of trustees conveyed the property by quitclaim deed to themselves as trustees for an independent church.

This conveyance was made for the sole purpose of separating the congregation from the national church. The national church sued the trustees, claiming that their actions amounted to a breach of the restrictions in the church's original deed. The trustees conceded that the language of the original deed explicitly provided that the property could not be sold or reconveyed without written authorization from the national church.

The trustees also conceded that the national church never gave written consent to the local trustees to convey the property. However, the trustees insisted that (1) they had the right to secede from the national church because it had changed its doctrine on the exclusive nature of the Body of Christ; and (2) the Church of God is not a "hierarchical" church and as a result it could not prevent a local congregation from conveying its property. A trial court declared the two deeds to be void and ruled that the national church owned legal title to the church property. A state appeals court agreed with the trial court's ruling. It observed:

In the case at bar, it is undisputed that a deed was executed in 1973 which prohibited any conveyance of the subject property without written approval from [the national church]. Even if the [trial] court had found the church to be congregational, there would still be no material issue as to whether the property could be conveyed. This is because, by the plain language of the deed, the [trustees] were not authorized to make any conveyances inasmuch as they never obtained the necessary approval to do so.

The court disagreed with the trustees that the trial judge erred by not giving the following jury instruction:

An individual church is free to secede from any denomination if it elects to do so, but cannot take the church property with it where the effect of that action would be to devote the church property to doctrines fundamentally different from those to which the property was dedicated. Conversely, if it is the parent organization that has departed from the basic articles of faith, the local church has a right not only to secede, but also to retain the property.

The court concluded that "the proposed instruction was an incorrect statement of the law, and therefore should not have been given to the jury." It observed:

In Belin v. West, 864 S.W.2d 838 (1993), the Arkansas Supreme Court held that, if a civil court must resort to the interpretation of church doctrine, the court's exercise of jurisdiction in this regard is in violation of the first amendment. The court … quoted the United States Supreme Court as follows: "[T]he first amendment permits hierarchical religious organizations to establish their own rules and regulations for internal discipline and government, and to create tribunals for adjudicating disputes over these matters. When this choice is exercised and ecclesiastical tribunals are created to decide disputes over the government and direction of subordinate bodies, the Constitution requires that civil courts accept their decisions as binding upon them" (quoting from Serbian Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976)).

The proposed jury instruction in [this] case could only have been applicable if the jury found that the local church was under a hierarchical structure because the instruction refers to a parent organization. Had the jury made such a finding, the instruction would have been erroneous because the evidence clearly demonstrated that the Church of God, as a parent organization, established its own rules and regulations. Pursuant to Belin v. West, a civil court is without authority to interpret the doctrines of a hierarchical church which has its own rules for establishing internal discipline and government. Therefore, it was not for the jury to determine whether the parent organization had departed from its basic articles of faith …. In the case before us, the proposed instruction would have presented the jury with an incorrect statement of the law. Therefore, the trial court did not err in refusing the instruction.

The court also rejected the trustees' claim that the deed restriction was invalid on the basis of lack of consideration (that is, the national church gave nothing in exchange for the restrictions imposed on the local church) and a misrepresentation by the national church that the property would be subject to local church control. The court observed that the trustees "have no standing to assert that [the national church] failed to give consideration for the deed because [they] were not the ones who made the conveyance. Similarly, [their] misrepresentation argument fails because any representations made by [the national church] at the time of this conveyance were made to the conveyors of the property, not the [church trustees]."

What this means for churches

This case illustrates once again the importance of being familiar with restrictions contained in deeds. Before considering a sale or conveyance of church property, church leaders should carefully review all deeds to the property to confirm whether or not any restrictions exist. Conway v. Church of God of Prophesy, 1996 WL 617274 (Ark. App. 1996).

Related Topics:

Priest Seduces Married Woman

Court dismissed husband’s lawsuit.

Church Law and Tax 1997-01-01

Sexual Misconduct by Clergy and Other Church Workers

Key point. Many states have repealed laws that once permitted a person whose spouse was seduced by another individual to sue for “alienation of affections.” Husbands whose wives are seduced by clergy may be barred from suing for damages in such states.

The Arkansas Supreme Court ruled that a man could not sue a priest and bishop as a result of the priest’s seduction of his wife. A couple were married in 1972. Five children were born to the marriage. In 1986, the wife (Susan) became employed with the local Roman Catholic Diocese. In 1988, a new priest arrived at the Diocese. The priest was placed in charge of the Diocese Marriage Tribunal, having authority over Catholic marriages in the Diocese. Shortly after his assumed his new duties, he began spending his days off with Susan, taking all day trips out of town with her, and staying at her residence several nights a week until late in the evening, drinking alcohol to the point of intoxication. On one occasion, while Susan’s husband was stranded out of town in an ice storm, the priest spent the night with Susan at her home. On another occasion, the priest stayed the night with Susan and her family at their lake house. The priest and Susan stayed up until the “wee hours drinking and cavorting in the bedroom,” and Susan did not come to bed that evening with her husband. While her husband felt that the priest’s conduct “seemed highly improper,” he had no proof that he was having an affair with Susan. Over the next several months the husband became increasingly concerned over the accelerating “friendship” between Susan and the priest. In 1989, Susan sued her husband for divorce and moved into a home owned and furnished by the Diocese. The husband thereafter tried unsuccessfully to enlist the assistance of the bishop in removing the priest from his family life (although the bishop had no recollection of ever discussing the matter with him).

Susan and her husband were granted a divorce and Susan was awarded custody of the couple’s five children. Within a few days of the divorce, Susan and the priest were married. This “chain of events” confirmed what the husband had long suspected but could not prove. The husband sued the priest and bishop for breach of fiduciary duty, clergy malpractice, intentional infliction of emotional distress, and negligence. Specifically, the husband alleged that the bishop had a fiduciary duty to promote his spiritual well—being and to refrain from taking any action that would interfere with his spiritual well—being. He further alleged that the bishop breached this duty, committed clergy malpractice, and was negligent in allowing various rendezvous between Susan and the priest to take place at the expense of the Diocese when he was fully aware of their relationship. It was also alleged that the bishop, who had supervisory authority over the priest, was negligent in failing to supervise and shepherd his actions. The husband also claimed that the priest, as head of the Diocesan Marriage Tribunal, and as priest of his church, had a fiduciary duty to promote his spiritual well—being and to refrain from taking any action that would interfere with his spiritual well—being. The husband claimed that the priest’s actions amounted to a breach of fiduciary duty, negligence, and intentional infliction of emotional distress.

The state supreme court dismissed the husband’s lawsuit against both the priest and bishop. It concluded that the claims against the bishop were barred by the statute of limitations, and that the claims against the priest were barred by the state legislature’s abolition (in 1989) of lawsuits based on “alienation of affections.” Under prior law, the husband could have sued the priest for “alienating the affections” of his wife. With the abolition of any liability based on this theory, the court reasoned, it was not possible for the husband to accomplish the same result by asserting a breach of fiduciary duty, clergy malpractice, or infliction of emotional distress. As a result, the court upheld the trial court’s dismissal of the husband’s claims. Cherepski v. Walters, 913 S.W.2d 761 (Ark. 1996). [ Seduction of Counselees and Church Members, Negligence as a Basis for Liability, Denominational Liability]

Court Jurisdiction Over Church Disputes

Civil courts will not intervene in ecclesiastical matters.

Church Law and Tax 1994-05-01 Recent Developments

Church Membership

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

The Arkansas Supreme Court ruled that the civil courts have no authority to intervene in internal church disputes, but it upheld a trial court’s civil contempt order against a bishop for refusing to acknowledge the trial court’s jurisdiction. In 1990, an elder in a local African Methodist Episcopal (AME) church sued a bishop for violating AME bylaws. Specifically, the elder alleged that the bishop was improperly threatening to remove him from his office within the church, and that he was improperly receiving monies. A trial judge asserted jurisdiction over the elder’s lawsuit and issued an order prohibiting the bishop from removing the elder from his office and from obtaining any monies from the church. The bishop claimed that this order was improper and refused to acknowledge it. The elder then asked the court to find the bishop to be in contempt of court (for willfully refusing to obey the court’s order). The bishop again responded by insisting that the trial court had no jurisdiction over an internal church dispute. The trial court again ruled that it had jurisdiction over this case, and found the bishop in contempt of court. The judge sentenced the bishop to 30 days in prison and fined him $1,000. The bishop failed to challenge this contempt order. Several months later the bishop obtained a new attorney and renewed his challenge to the original court order. Another judge reviewed the case and agreed with the bishop that the trial court had no jurisdiction over the dispute since it involved religious doctrine and practices and also since the elder had failed to pursue remedies available to him within the AME church. The judge also dismissed the bishop’s prison sentence and fine since they were based on an order that the trial court had no authority to issue. The elder appealed this decision. The state supreme court ruled that the civil courts lack jurisdiction over internal church disputes: “[T]he general rule is that religious controversies are not a proper subject for inquiry by civil courts, and that ecclesiastical decisions of church tribunals are binding on a civil court ….” However, the court upheld the bishop’s prison sentence and fine since he had not properly challenged the trial court’s order. A dissenting judge pointed out the absurdity of this result: “I question, though, whether we should uphold the contempt sanction against the [bishop], thereby affirming a fine and jail sentence, when the [trial court] lacked jurisdiction over this matter.” West v. Belin, 858 S.W.2d 97 (Ark. 1993).

See Also: Removal of Officers, Directors, and Trustees | Judicial Resolution of Church Disputes

Minister Sues Denomination Over Broken Promise

He claimed a bishop had promised to appoint him to a particular church.

Church Law and Tax 1994-03-01 Recent Developments

Clergy – Removal

Key point: The civil courts cannot resolve disputes over the appointment or removal of ministers if those disputes cannot be resolved without inquiring into doctrine and polity.

The Arkansas Supreme Court dismissed a lawsuit brought by a minister claiming that a denominational official broke a promise to appoint him to a particular church. A minister of the African Methodist Episcopal Church (A.M.E. Church) filed a lawsuit claiming that his bishop failed to honor a promise to appoint him to a particular church. The minister claimed that when other ministers became aware that the bishop was going to appoint him as pastor of the church, they contacted the bishop and persuaded him not to follow through on his promise. The minister sued the other ministers for interfering with a contract, and the bishop for breaking his promise. A trial court ruled in favor of the minister, and awarded him $75,000. The case was appealed, and an appeals court reversed the trial court’s decision. The appeals court acknowledged that one commits interference with a contract relationship when the following four conditions are satisfied: (1) the existence of a valid contractual relationship or business expectancy; (2) knowledge of the contract or business expectancy on the part of the interfering party; (3) intentional interference causing a breach of the contract or expectancy; and (4) damage to the party whose contract or expectancy has been disrupted. The appeals court dismissed the interference with contract claim since the minister did not bring it in a county with proper venue. The court then addressed the remaining question of whether or not the minister could sue the bishop for breaking his promise. The court began its analysis by noting that “it is not unconstitutional for civil courts to resolve legal disputes involving a church or minister so long as the court is not required to interpret church doctrine to render a decision.” The minister claimed that he was asking a civil court to render a decision on the merits of his case without consulting A.M.E. doctrine or polity. The court concluded that a court could not resolve the minister’s claim against the bishop without consulting church doctrine:

It is true that the United States Supreme Court has said that if a dispute involving a church can be resolved without addressing ecclesiastical questions, the first amendment does not prohibit consideration by the civil courts. However, whenever a civil court must resort to the interpretation of church doctrine or polity, the Supreme Court has held that the civil court exercises its jurisdiction in violation of the first amendment ….

It is impossible to decide the [claim against the bishop] without inquiring in to A.M.E. Church doctrine and polity and drawing conclusions as to what those doctrines provide. In order to [prevail the minister] must prove reasonable reliance on the alleged promise of [the bishop] to appoint him to the pastorship of [the church]. This necessarily requires inquiry into A.M.E. Church doctrine and polity to determine whether it is reasonable to rely on the promise of an A.M.E. Church bishop that he is going to appoint one to a specific pastorship. This requires the court to determine whether church doctrine gives bishops authority to promise appointments. Such an inquiry is impermissible under the first amendment. Therefore … the claim is dismissed. Belin v. West, 864 S.W.2d 838 (Ark. 1993).

See Also:

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