California

Legal Developments

Church Property and Denominational Ownership

A California court ruled that a provision in a church’s deed that required church property to revert to a denominational agency was legally enforceable by the civil courts.

Richard R. Hammar, Attorney, CPA
Bio

Key point 7-04. Churches and denominational agencies can avoid church property disputes by adopting appropriate nondoctrinal language in deeds, trusts, local church bylaws, or denominational bylaws .

A California court ruled that a provision in a church's deed that required church property to revert to a denominational agency in the event that the agency determined that the church no longer was in fellowship with it, was legally enforceable by the civil courts.

For many years, a church was affiliated with the Church of God denomination, and one of its regional associations ("regional church"). The church acquired property by a deed containing the following provision: "To have and to hold, so long as [the church] maintains fellowship and doctrinal unity with [the regional church] and the property remains in use by said church. If this property falls into disuse or, if in the opinion of said [regional church] the church is no longer in fellowship and doctrinal unity with the [denomination] this property shall go to, vest in and become the property, in fee simple, of the [regional church]."

In 2004, the regional church revoked the ordination of the church's senior pastor. The regional church's administrative board adopted a resolution stating that: (1) the pastor's credentials had been revoked; (2) the church's board of trustees had voted to retain him as pastor, despite his removal from the approved list of ministers; and (3) therefore, the church no longer was in fellowship and doctrinal unity with the denomination. As a result, the regional church filed a lawsuit in which it asked a court to rule that it was the lawful owner of the church's property by reason of the above-quoted clause in the church's deed.

The church claimed that the deed restriction was "no longer in accord with the policies or best interests" of the church since its board of directors have "ratified the use of the property for the general purposes of the corporation as an independent church rather than for the specific purpose for which it was [acquired]."

The regional church presented evidence that the church intended to include the reverter clause in the deed. It introduced an affidavit signed by the previous pastor, who was employed by the church for 27 years. The former pastor's affidavit established the church's lengthy affiliation with the regional church and the history of its governing documents.

He testified that the church's board of trustees intended to protect its property from unscrupulous church leaders and groups within the church by preventing them from taking control of the church's property. Indeed, he testified the purpose of the deed was to prevent the very situation that had occurred in this case.

A trial court ruled in favor of the regional church on the ground that it had established that the parties had intended to create a reversionary interest that was triggered by the church's acts. The church appealed.

A state appeals court affirmed the trial court's ruling in favor of the regional church. It began its opinion by noting that "the deed's language provided that the property was to go to the [regional church] upon the happening of a certain event subsequent to the deed's recordation." Specifically, if in the opinion of the regional church, the church was no longer in fellowship and doctrinal unity with the parent denomination, the property would revert to the regional church. The court concluded that this language created a "power of termination."

The church claimed that the language in the deed regarding "fellowship and doctrinal unity" is too ambiguous to be enforceable. The court agreed that it would be "both improper and impossible" for it to determine whether the church remained in "fellowship and doctrinal unity," but it concluded that the deed did not require such a determination.

Under the deed's plain language, this issue was clearly left in the hands of the regional church: "If in the opinion of said [regional church] the church is no longer in fellowship and doctrinal unity …." The court noted that "just as a contract that permits a buyer to unilaterally determine whether goods are of a sufficient quality is proper, so is the language of the deed. Its language places the issue squarely in the hands of the regional church, and as it offered evidence that it reached a determination on this matter, that opinion is sufficient to invoke the termination clause. We therefore find that the regional church established by sufficient evidence that under the deed, it was the legal owner of the property."

The court also addressed the church's argument that the trial court wrongfully interjected itself into ecclesiastical matters in violation of the First Amendment. Specifically, the church claimed that the trial court considered whether or not the church and regional church were in fellowship or doctrinal unity with each other. The court found this argument to be "an improper attempt to create a constitutional issue where none exists.

The trial court was not required to, and did not, make any factual finding as to whether it believed the church and regional church continued to be in fellowship or doctrinal unity. Under the plain language of the deed, all the trial court was required to find was whether the regional church believed that was no longer the case: "If in the opinion of said [regional church] the church is no longer in fellowship and doctrinal unity with the [denomination] this property shall go to, vest in and become the property, in fee simple, of the [regional church]."

As a result, the trial court "had no reason to determine whether the parties were in fellowship and doctrinal unity. It made no such finding, which would have been legally improper and irrelevant in any event. The terms of the deed did not call for the court to determine that issue; it was the regional church's opinion that mattered." New Hope Community Church of God v. Association of Church of God Southern California, 2007 WL 1493806 (Cal. App. 2007).

Legal Developments

Delegation of Trusts

The decisions of trustees regarding the distribution of trust income or principal ordinarily will be upheld by the courts.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

Delegation of Trusts

The decisions of trustees regarding the distribution of trust income or principal ordinarily will be upheld by the courts.

Richard R. Hammar, J.D., LL.M., CPA

Key point. The decisions of trustees regarding the distribution of trust income or principal ordinarily will be upheld by the courts, especially where the trust confers upon them the sole discretion to make such decisions and they act in good faith.

* A California court ruled that a trust that was created by a church member to benefit elderly members of the church did not act improperly in rejecting a request by the church to distribute $300,000. A church member (Ruth) created a trust that directed the trustees to pay her church so much of the income and principal “as is necessary for the benefit of senior citizens, whether to improve the church for their comfort, or to assist programs started through the church for the benefit of senior citizens, or for such other needs of the church as the trustees shall, in their sole discretion, determine. At the time of Ruth’s death, the trust was valued at more than $1 million. The trust named two individuals to serve as co-trustees.

The church asked the trustees to distribute $300,000 from the principal of the trust to help pay the cost of a $3 million remodeling project that had gone several hundred thousand dollars over budget. The church claimed that it would use the $300,000 in accordance with the terms of the trust by paying for things that benefited seniors, such as benches in the reception area and more comfortable seating in the church, a new sound system, brighter lighting, better heating and air conditioning, and a new drive-through area to give seniors better access. However, the church did not give the trustees a breakdown of how the church intended to spend the $300,000. The trustees rejected the church’s request because they believed that it was inconsistent with Ruth’s intent in creating the trust.

The church asked a court to order the trustees to distribute the $300,000. A member of the church and a self-avowed “senior,” testified at a hearing that she was a member of the “Pioneer Club,” which is an organization of church seniors that met twice a month at the church. She testified that the seniors appreciated the new cushioned church pews and improved lighting that were “just so conducive to an elder to be relaxed and enjoy the service.” She also appreciated the improved air conditioning and heating in the new church, as well as the new sound system. Another benefit of the new building was the addition of a ramp from the parking lot to the church.

Another church member prepared a spreadsheet of the costs of the items included in the church remodeling which he believed benefited seniors. Many of these items involved making the church compliant with the American with Disabilities Act. The member concluded that $50,835 of the cost of the reconstruction directly benefited seniors.

A court ruled in favor of the trustees, and denied the church’s request to compel a distribution of $300,000 from the trust principal. The court based its ruling on two considerations. First, the trust gave the trustees “sole discretion” to determine any distributions of principal or income from the trust. The trust did not give the church, as beneficiary, “an unfettered right to demand distributions of principal.”

Second, while there was evidence that the church remodeling project had some benefits to seniors, “there was no evidence that the benefits to seniors had a value of $300,000—the amount the church was requesting. In fact, [a church member] testified that he created a spread sheet analyzing what parts of the construction project favored seniors. He concluded that $50,835 was spent on items that particularly benefited seniors. Since the trustees had discretion to invade principal as necessary to assist the church in benefiting seniors, and there was no evidence that seniors would derive a $300,000 benefit from the reconstruction project, the trustees had a rational basis to conclude that a $300,000 principal distribution was not necessary to benefit seniors.”

The court conceded that “we can imagine situations where the trustees would not be fulfilling their fiduciary duties by refusing to invade principal,” but concluded that “the evidence does not support such a conclusion in this case.” Gordon v. Holy Redeemer Church, 2006 WL 1330916 (Cal. App. 2006).

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Legal Developments

Child Abuse Reporting

A California court ruled that the “ecclesiastical privilege” prevented it from resolving a pastor’s lawsuit against his denomination.

Richard R. Hammar, Attorney, CPA
Bio


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 California court ruled that the "ecclesiastical privilege" prevented it from resolving a pastor's lawsuit against his denomination in which he claimed that a denominational officer "barred" him from preaching in a church in order to prevent him from learning of and reporting an incident of child abuse allegedly perpetrated by the officer.

James was ordained as an elder in the United Methodist Church in 1951. This ordination enabled him to preach, conduct weddings and funerals, and provide all other sacraments recognized by the church. In 1994 he was acting as an associate pastor in a church when the senior pastor became incapacitated. Pastor James applied for the senior pastor position, but his application was "derailed" by his district superintendent. Instead, a new pastor was appointed. The church membership rejected the new pastor's appointment and Pastor James remained as the interim pastor for an additional year until his retirement. Shortly after Pastor James' retirement, the district superintendent issued a "barring order" preventing him from preaching or worshipping at the church. Pastor James did not learn of the barring order until 2002 when the church's senior pastor invited Pastor James to conduct worship services while he was out of town. The senior pastor was informed by denominational officials of the barring order, and he rescinded his invitation.

Pastor James later sued his annual conference as a result of the barring order and rescission of the invitation to preach. Pastor James' lawsuit claimed that after he was rejected as senior pastor at the church in 1994 the district superintendent appointed another pastor who was rejected by the congregation; and, that the superintendent thereafter sent a letter to a 16-year-old youth leader who was a member of the church's pastor-parish relations committee regarding her participation in the rejection of the new pastor. In the letter, the superintendent charged the youth leader with "knowingly becoming involved in a smear campaign" against the pastor, being involved in "unchristian behavior" by acting on gossip, and "undermining the ministry of a pastor," which was a "chargeable offense" that risked one's standing in the denomination as well as possible legal repercussions.

The youth leader was extremely upset as a result of this letter. Pastor James' lawsuit alleged that the letter constituted "emotional child abuse" and was viewed as such by church leaders. The superintendent knew that Pastor James was a psychologist and, therefore, a mandatory reporter of child abuse, and he feared that if he became senior pastor he would discover that the superintendent had been accused of the abuse of a minor church member and that as a mandatory reporter he would have been obliged to report the alleged abuse to the authorities. To prevent this, Pastor James alleged, the superintendent embarked upon a plot to prevent him from learning about the abuse, and this included the issuance of the secret barring order.

A state appeals court began its opinion by noting that when a dispute involves the employment or termination of employment of clergy, the "ecclesiastical privilege" applies barring the civil courts from intervening. The rule "is about as absolute as a rule of law can be—the first amendment guarantees to a religious institution the right to decide matters affecting its ministers' employment, free from the scrutiny and second-guessing of the civil courts." And, this is true "regardless of whether the termination, or other adverse action, was taken for theological reasons. The fact that the employee was a clergyperson is enough to trigger the privilege."

The court noted that Pastor James was claiming that the barring order was part of an attempt to prevent him from discovering and reporting an act of reportable child abuse. Reportable child abuse, under the applicable reporting law, includes "a situation where any person willfully causes or permits any child to suffer, or inflicts thereon, unjustifiable physical pain or mental suffering." The court rejected Pastor James' argument that the superintendent's letter to the youth leader constituted a willful infliction of unjustifiable mental suffering. It observed, "[The superintendent] wrote a single letter to the official youth member of a church pastor-parish relations committee expressing his displeasure at the member's participation in the rejection of a pastor. While the letter may have caused the youth leader to experience some feelings of guilt, anxiety, or remorse, the letter does not constitute child abuse. A youth leader who participates in a church committee and is reprimanded by a member of the church hierarchy for decisions made by that committee regarding church leadership is not a victim of child abuse."

The court concluded that Pastor James' lawsuit was subject to the ecclesiastical privilege, and that he was attempting "to circumvent the bar of the ecclesiastical privilege by arguing [that the superintendent] barred him from the church in order to prevent him from discovering and reporting an act of child abuse. Even if he were barred to prevent his discovery of the letter to the youth leader, the letter was not an act of child abuse. Therefore, there is no compelling governmental interest at issue in this case sufficient to override application of the ecclesiastical privilege."

Application . Note that clergy were not mandatory reporters of child abuse in California in 1994 when the alleged abuse in this case occurred. But, Pastor James was a mandatory child abuse reporter because he was a psychologist. As a result, it was Pastor James' contention that the superintendent attempted to bar him from serving as pastor of the church in order to prevent him from learning of and reporting the "abuse" of the youth leader. The court rejected this argument as nothing other than an attempt to avoid the dismissal of his claims against the church on the basis of the ecclesiastical privilege. The court concluded that the child abuse reporting law could not be used in this manner. Johnson v. California-Pacific Annual Conference of the United Methodist Church, 2004 WL 2474437 (Cal. App. 2004).

Legal Developments

Are Accusations of Embezzlement Defamatory?

Not if they are in the course of litigation, a court rules.

Richard R. Hammar, Attorney, CPA
Bio


Miller v. Second Baptist Church, 2004 WL 1161653 (Cal. App. 2004)

Background. A church's senior pastor believed that certain members of the church board (including the chairman) had diverted $94,000 of church funds earmarked for a remodeling project to other uses. He expressed his concerns at meetings of the church board, and to the entire congregation at a special business meeting. He informed the congregation that he wanted an "accounting" of the funds to determine if they had been used improperly, and he insisted that the board chairman resign his position.

The chairman claimed that the pastor's acts amounted to a "false accusation" that he and other board members had embezzled church funds. The pastor retained an attorney who wrote the board chairman a letter demanding that he "immediately cease and desist from [his] unlawful threats, harassment, blackmail and extortion of the pastor." The attorney's letter continued:

It is a disgrace that a man who holds himself out to be a Christian engages in such conduct. You are upset that the pastor has requested an accounting of the church monies which you have controlled for years and, rather than provide the information, you have launched a personal attack on him. The only conclusion one can reach from such behavior is that you have, in fact, embezzled money from the church. The pastor has referred this matter to the appropriate church board as well as governing bodies. We are confident that they will pursue actions against you to recover all church property.

The deposed board chairman sued the church for defamation. A trial court dismissed the lawsuit and a state appeals court affirmed the trial court's ruling. It noted that the pastor's expressing concerns about the use of designated church funds was not defamatory, and the attorney's letter that accused the board chairman of "embezzlement" was not defamatory since it was protected by the "litigation privilege" (good faith statements made in contemplation of litigation generally cannot be defamatory).

What this means for churches

This case demonstrates an important point. Church leaders should not be dissuaded from asking questions about the appropriate use of designated church funds out of a fear of being liable for defamation. Not only are such inquiries legally appropriate in most cases, but they are essential to the proper discharge of church board members' fiduciary duties.

It is also worth noting that letters written by attorneys on behalf of church clients generally cannot be defamatory if written in good faith and in the course of litigation or in contemplation of litigation.

Legal Developments

Personal Injuries on Church Property and During Church Activities – Part 3

A California court ruled that a church was not responsible on the basis of either “premises liability” or negligent supervision for injuries suffered by a volunteer worker.

Richard R. Hammar, Attorney, CPA
Bio

Key point 10-11. A church may be legally responsible on the basis of negligent supervision for injuries resulting from a failure to exercise adequate supervision of its programs and activities.
Negligence as a Basis for Liability

A California court ruled that a church was not responsible on the basis of either "premises liability" or negligent supervision for injuries suffered by a volunteer worker who fell while on a ladder repainting the church.

A church building needed repainting. A church member ("Jerry") had been self-employed doing maintenance and repair work for many years, and had done previous maintenance work at the church on a volunteer basis. Because of Jerry's experience, the pastor asked him to repaint the building as an unpaid volunteer. Jerry agreed, but told the pastor that the building must first be sandblasted to remove the old paint. The pastor agreed to supply a sandblaster. Jerry, who had used a sandblaster more than 50 times in the past, asked the pastor to supply scaffolding for him to use while sandblasting. The pastor said the church could not afford scaffolding, but offered to provide a ladder instead. Jerry had never sandblasted from a ladder before, but knew other people safely did so, and agreed. Jerry informed the pastor that he would need assistants, including someone to hold the ladder, and asked the pastor for permission to hire the men who usually worked with him. The pastor again responded by saying that the church did not have the funds to pay for these workers, and said that he would ask fellow church members to help out. Jerry agreed to this arrangement. A short time later, Jerry showed up at the church to perform the sandblasting. The church supplied a sandblaster, ladder, and three workers. One worker put the sand in the sandblaster. The others were to hold the ladder. While Jerry was sandblasting the church building from atop the ladder, the pressure from the sandblaster moved the ladder away from the building and he fell, sustaining injuries. He assumed that the ladder fell because the two workers had let go of it.

Jerry sued his church claiming that it was liable for his injuries on two grounds: (1) "premises liability" (the church, as the owner of the premises, was liable for injuries caused by dangerous conditions on its property, and allowing unskilled workers to assist Jerry constituted a dangerous condition); and (2) negligent supervision. The trial court dismissed the case, concluding that there was no evidence that the church controlled the work and there was therefore no duty owed to Jerry to provide a safe worksite. The case was appealed.

premises liability

The appeals court concluded that the church could not be liable for Jerry's injuries on the basis of premises liability since it was Jerry, and not the church, that maintained control over the sandblasting operation. The court concluded,

It is undisputed that Jerry was an experienced sandblaster. It does not appear that the pastor even knew sandblasting was required. The pastor was not at the jobsite. Jerry admitted he was the only person at the jobsite who gave direction to [the two volunteers who were holding the ladder]. While Jerry may have believed he was not supervising the work of [the two volunteers], there is no dispute that he, and no one else, gave direction to [the volunteers] at the jobsite. Jerry, and no one else, told [them] to hold the ladder so he would not fall …. The pastor and Jerry agreed the work would be done with a church-provided sandblaster, on a church-provided ladder, with church-provided volunteer assistants. Jerry agreed to perform the work under those conditions and directed the assistants as he felt necessary at the worksite. The evidence is undisputed that the church did not control [the volunteers] at the worksite; Jerry did. Therefore, he cannot pursue a claim against the church for [premises liability] based on [the volunteers'] conduct at the worksite.

negligent supervision

Jerry alleged that the church was liable for his injuries on the basis of negligent supervision because it knew or should have known that the volunteers who held the ladder had poor judgment and would act with reckless disregard for his safety, and failed to sufficiently investigate the volunteers before assigning them to the work. The court rejected this basis of liability, noting that "holding a ladder is unskilled work" and that Jerry produced no evidence showing that the volunteers "were somehow incapable of properly holding the ladder." Further, Jerry admitted that the volunteers had held the ladder correctly for a significant length of time prior to the accident. The mere fact that Jerry fell "is not sufficient to show that the volunteers let go of the ladder because they were somehow incapable of the job and the church should have known it." Amarra v. International Church of the Foursquare Gospel, 2003 WL 254023 (Cal. App. 2003).

Legal Developments

Child Abuse

A California court ruled that a 6-year-old child could not be sued by an adult male against whom she made false accusations of child abuse.

Richard R. Hammar, Attorney, CPA
Bio

• Key point 4-02.03. A number of defenses are available to one accused of defamation. These include truth, statements made in the course of judicial proceedings, consent, and self-defense. In addition, statements made to church members about a matter of common interest to members are protected by a "qualified privilege," meaning that they cannot be defamatory unless they are made with malice. In this context, malice means that the person making the statements knew that they were false or made them with a reckless disregard as to their truth or falsity. This privilege will not apply if the statements are made to nonmembers.

A California court ruled that a 6-year-old child could not be sued by an adult male against whom she made false accusations of child abuse. It is every youth worker's worst fear—being falsely accused of molesting a child. What recourse does a person have in such a case? Can a child be sued who makes a knowingly false accusation of child abuse? That was the issue in a recent California case. A 6-year-old child made a false accusation of child abuse against an adult acquaintance. The child accused the adult of performing various sexually deviant acts upon her person. She made her initial accusations to her grandmother, and then to her parents. After her parents reported the accusations to the police, the child was interviewed by police officers. She repeated the accusations to the police. The child knew that the accusations she was making were false.

As a result of the false accusations, the alleged offender was arrested, booked and jailed. It was later determined that the child had fabricated her allegations, and the alleged offender was released and all charges were dropped. He sued the child for defamation. He conceded that the state child abuse reporting law gave mandatory and permissive child abuse reporters "limited" immunity from liability, but only if their reports were not "malicious" (knowingly false). Since the child in this case was a permissive reporter, and she knew her allegations of abuse were false, she was not protected from personal liability. A trial court dismissed the lawsuit, and a state appeals court upheld this disposition. The court concluded that children who are victims of abuse are neither mandatory nor permissive child abuse reporters, and so they have much broader protection from liability than what is provided under the child abuse reporting law.

The court concluded that the statements the child made to the police were "absolutely privileged," meaning they could not be the basis for liability even if she knew they were false. This is because of a state law that provides absolute immunity to any statement made in "an official proceeding authorized by law." The court noted that other courts in California had reached different conclusions as to whether allegations of child abuse made to the police are statements made in "an official proceeding authorized by law." It concluded, however, that they fit within this rule of immunity, and therefore the child could not be liable. It also concluded that the statements she made to her grandmother were also privileged, since they were directly related to the allegations that were later made to the police.

The court acknowledged that its decision prevented a wrongfully accused adult "from any relief or compensation for the grievous injury which we must assume resulted from intentionally false and malicious acts on the part of [the child]. We do so because we are obligated to honor the determination of the legislature that protection of one innocent segment of society warrants occasional injury to another."

Application. As this case illustrates, persons who are falsely accused of child molestation by a minor may have no legal recourse. This is a compelling reason why church leaders should implement appropriate policies and procedures to reduce the likelihood of innocent volunteer workers being falsely accused of child abuse. For a summary of preventive policies and procedures, see chapter 10 in Richard Hammar's book, Pastor, Church & Law (3rd ed. 2000). Smith v. M.D., 105 Cal.App.4th 1169 (Cal. App. 2003).

© Copyright 2001 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m10 m53 c0303

Legal Developments

Child Abuse Reporting

A California court ruled that a school counselor who reported suspected child abuse to civil authorities could not be sued for defamation and emotional distress.

Richard R. Hammar, Attorney, CPA
Bio


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 California court ruled that a school counselor who reported suspected child abuse to civil authorities could not be sued for defamation and emotional distress as a result of his disclosure to the victim's mother that he had reported the abuse.

The victim's mother informed the school counselor that her son had been molested by another student. The counselor reported the abuse to civil authorities, and then informed the victim's mother that he had done so. The molester's parents sued the counselor and the school, claiming that the counselor unlawfully disclosed the report to the victim's mother, a person "not authorized to receive the report." A trial court dismissed the lawsuit, and a state appeals court affirmed this result.

The court noted that a school counselor was a mandatory child abuse reporter under state law; that he was required to report the abuse reported to him by the victim's mother; and, that he had immunity from liability under the state child abuse reporting law, and this immunity prevented the molester's parents from suing him for informing the victim's mother that he had reported the alleged abuse.

The court concluded, "In exchange for imposing a mandatory duty to report instances of suspected child abuse, the law provides these individuals with absolute immunity from civil liability for making such reports." The child abuse reporting law specifies that no mandatory reporter who reports a known or suspected instance of child abuse "shall be civilly or criminally liable for any report required or authorized" by law. This immunity from liability "protects both initial and subsequent communications related to the reporting of suspected child abuse. Here [the counselor's] disclosure of the report was a subsequent communication, and she is absolutely immune from liability." The school was also immune, since it could not be liable if the counselor was not.

Application . Pastors often are presented with allegations of child abuse. This case suggests that pastors who are mandatory reporters cannot be sued by the alleged abuser if they inform a victim's parents that they have reported the abuse as required by law. Of course, there is no guaranty that the courts in other states will follow this ruling, so pastors should check with an attorney before informing victims' parents that they have reported allegations of child abuse. However, this case is one of the only cases that addresses this issue, and so it may be given special consideration by courts in other jurisdictions. Shryer v. Carmel Unified School District, 2002 WL 32556 (Cal. App. 2002).

Legal Developments

Sexual Misconduct by Clergy and Church Workers

A California court ruled that the Boy Scouts was legally responsible for the molestation of a scout by a scout leader.

Richard R. Hammar, Attorney, CPA
Bio

Juarez v. Boy Scouts of America, Inc., 97 Cal.Rptr.2d 12 (Cal. App. 2000)

Key point 10-04.2. Some courts have found churches not liable on the basis of negligent selection for the molestation of a minor by a church worker since the church exercised reasonable care in the selection of the worker.

Key point 10-09.2. Some courts have found churches not liable on the basis of negligent supervision for a worker's acts of child molestation on the ground that the church exercised reasonable care in the supervision of the victim and of its own programs and activities.

A California court ruled that the Boy Scouts was legally responsible for the molestation of a scout by a scout leader because the victim and his parents had not been trained to recognize and defend against sexual assaults.

This case is of direct relevance to any charity, including churches, having youth programs. An adult male (Mario) sued the Boy Scouts of America (BSA) and the San Francisco Bay Area Council (BAC) alleging that when he was a scout he was repeatedly molested by his scoutmaster. The sexual acts were committed during officially sanctioned scouting events, such as overnight camping trips, and at the scoutmaster's home. Mario also sued the church where his troop held its meetings.

The scoutmaster was later found guilty of the molestation of Mario and several other minors, and was sentenced to prison. Mario claimed that the Scouts and the church were responsible for the damages he sustained as a result of the scoutmaster's actions on the basis of negligence in (1) hiring the scoutmaster without conducting a proper background check; (2) failing to monitor and supervise him so that young male scouts would be protected from sexual molestation; (3) failing to properly manage, oversee, and educate the troop; and (4) doing nothing to stop the scoutmaster from engaging in inappropriate sexual conduct with young male scouts even after they knew or should have known of his deviant propensities.

The scoutmaster had been employed by a public school district as an instructional aide for 18 years without incident. Moreover, he had no prior criminal record or documented history of sexual misconduct. Nor did anything become known during his service as assistant scoutmaster that raised questions about his fitness.

A trial court dismissed the lawsuit against the Scouts and the church, noting that Mario had failed to demonstrate that the Scouts or the church had any notice of the scoutmaster's propensities, or that any such evidence was available to them. Therefore, because the scoutmaster's propensity to molest children "was not discoverable before he molested plaintiff," the alleged "inadequacy of background investigation, supervision, training" was not a legal cause of Mario's harm. Mario appealed.

Negligent Hiring

A state appeals court agreed with the trial court that the Scouts and the church could not be liable for the scoutmaster's acts on the basis of negligent hiring. It noted that "an employer can be held liable for negligent hiring if he knows the employee is unfit, or has reason to believe the employee is unfit or fails to use reasonable care to discover the employee's unfitness before hiring him."

Mario cited evidence demonstrating the scoutmaster's "deviant sexual proclivities." This evidence included the scoutmaster's entertaining members of the troop at his home and the alleged suspicion of one of his neighbors that something inappropriate was going on. However, the court concluded that "it is undisputed that none of these incidents resulted in any complaints or reports being made to the Scouts that would have alerted them that [the scoutmaster's] continued retention as a scoutmaster might pose an unreasonable risk of harm to minors."

The court quoted from a previous case, "It is not enough to allege that the sexual misconduct was conceivable. The plaintiff must allege facts showing that it was foreseeable, i.e., facts from which it can be inferred that the [church] must have known that [the molester] was engaging in, or wished to engage in, acts of sexual misconduct with a minor." The court concluded, "While the undisputed facts show with certainty that [Mario] was seriously harmed by [the scoutmaster's] misconduct, those same undisputed facts establish that there was nothing in [the scoutmaster's] background and nothing that was made known to the Scouts during his tenure as scoutmaster … that could be deemed a specific warning that [he] himself posed an unreasonable risk to minors."

Negligent Supervision

The court noted that "there can be no liability for negligent supervision in the absence of knowledge by the principal that the agent or servant was a person who could not be trusted to act properly without being supervised."

Duty to train Youth Leaders, Minors, and Parents

Mario claimed that if the adult leaders in his troop had received training on how to prevent and detect sexual abuse, and if he had been warned and educated about how to handle such a situation, the sexual molestations would have been prevented. The court agreed that the Scouts had a duty to train both leaders and minors concerning the risks of sexual molestation, and the failure to do so could be a basis for legal liability.

The court acknowledged that the Scouts had established a comprehensive "Youth Protection Program" designed to educate adult volunteers, parents, and the scouts themselves in the detection and prevention of sexual molestation by volunteers associated with scouting. This program contained many components, including a video and a 24-page removable insert in the Boy Scout Handbook entitled "How to Protect Your Children from Child Abuse and Drug Abuse: A Parent's Guide."

Mario's troop never received a copy of the video, and the Boy Scout Handbook that was given to Mario when he joined the troop was in English, not Spanish. Since Mario had recently moved to the United States from Honduras and could not read English, the handbook was unintelligible to him. Mario testified that "no one from [the Scouts] ever talked to me or other Boy Scouts in my presence about how to protect ourselves from sexual molestation from our scoutmaster …. I did not know the proper responses to repel and rebuff my scoutmaster's illegal sexual advances." The court concluded:

With the privilege of being able to contribute directly to the moral and spiritual development of millions of American youths comes some legal responsibility. In light of the record in this case, we soundly reject any contention that the Scouts could avoid all legal responsibility to incorporate into their program information designed to prevent a significant risk of harm to the youths it serves on the ground that any burden imposed would be too onerous. We are persuaded that recognizing a legal duty of care will have beneficial consequences for the community as a whole, which vastly outweighs the slight burden imposed on the Scouts.

Special Relationship

The court also ruled that a "special relationship" existed between the Scouts and the minors they serve, and that this relationship imposed upon the Scouts a duty to prevent "harms caused by the intentional or criminal conduct of third parties." The court quoted with approval from a previous case: "The mission of youth organizations to educate children, the naivetéof children, and the insidious tactics employed by child molesters dictate that the law recognize a special relationship between youth organizations and the members such that the youth organizations are required to exercise reasonable care to protect their members from the foreseeable conduct of third persons."

Application. What is the relevance of this case to church leaders? Consider the following points:

1. The decision of a California appeals court is not binding in any other state, and is not binding on trial courts in California that are in a different "district." Further, it is not binding on other California appeals courts, or the California Supreme Court. However, note the following: (1) A case such as this will be seized upon by plaintiffs' attorneys as a new and promising way to hold churches and other charities absolutely liable for any act of sexual misconduct, no matter how unforeseeable and regardless of the care exercised in the selection and supervision of the perpetrator. After all, few if any churches train children to resist sexual assaults by their Sunday School teachers or other adult leaders, and so if such a duty is recognized by the courts it would have the effect of making churches liable no matter how careful they were in selecting and supervising workers. (2) The California Supreme Court may reverse or modify this case on appeal.

2. If your church is currently providing training to children and their parents concerning how to respond to attempted molestation, continue doing so. Of course, very few churches provide this kind of training. If you are not doing so now, then you should follow the progress of the California case on appeal. If your church is in California, then you should check with an attorney to see if the ruling summarized in this article applies to you.

3. If other courts recognize a duty to train minors and their parents concerning the appropriate response to sexual assaults, then church leaders should be prepared to begin offering this training. Initially, the best place to look for resources will be other local charities, including Boys and Girls Scouts, Big Brothers, Big Sisters, and the public schools. If you base your training on the training provided by one or more of these organizations, this will be evidence that you satisfied your duty to train.

4. The California ruling is an important development with a potentially huge impact on churches. We will be monitoring the progress of this case on appeal, and the reaction of courts in other states. At some point our review of existing precedent may prompt us to recommend that churches engage in the kind of training mandated by the California court.

Legal Developments

Child Abuse

A California court ruled that an associate pastor who was suspended for reporting a suspected incident of child abuse involving his senior pastor could sue his church for “retaliation.”

Richard R. Hammar, Attorney, CPA
Bio


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 California court ruled that an associate pastor who was suspended for reporting a suspected incident of child abuse involving his senior pastor could sue his church for "retaliation."

An associate pastor saw his senior pastor engage in an incident of suspected child abuse. He reported the incident to church and law enforcement officials. The associate pastor later sued the church, claiming that it "retaliated" against him for reporting the incident. Among other things, he claimed that the church relieved him of his duties; placed him on administrative leave; falsely reported to other clergy that he had committed inappropriate conduct; and demanded that he submit to a psychological evaluation.

The associate pastor's lawsuit alleged that the church's actions were defamatory, and caused him emotional distress. The church claimed that its treatment of its associate pastor was protected by the first amendment guaranty of religious freedom.

Clergy as Mandatory Child Abuse Reporters

The court began its opinion by observing that

While … civil courts may not involve themselves in reviewing the termination of clergy for theological or disciplinary reasons … churches and their congregations and hierarchy are as amenable as other societal entities to rules governing property rights, torts and criminal conduct. Here, the issue is whether the court may enforce the legislature's mandate that clergy members are not subject to sanction for making reports of suspected child abuse …. We conclude that the issues posed by [this lawsuit] are subject to judicial review. To hold otherwise … would be contrary to the legislative intent in amending the statute to include clergy within its ambit.

The court noted that the state child abuse reporting law reflects the state's compelling interest in preventing child abuse and protecting children. The objective of the reporting requirement is to identify victims and bring them to the attention of the authorities. The court stressed that the legislature

consistently has increased, not decreased, reporting obligations and has afforded greater, not less, protection to mandated reporters whose reports turn out to be unfounded. To that end, in 1996, the legislature [added] clergy members to those mandated to report known or suspected instances of child abuse to child protective agencies. In adding clergy to the list of mandated reporters, the legislature intended to address the reluctance of some religious institutions to report child abuse, to train clergy to recognize and address child abuse, and to afford clergy the immunity of mandated reporters. Section 11166, subdivision (c)(1) thus provides in pertinent part that "any clergy member who has knowledge of or observes a child, in his or her professional capacity or within the scope of his or her duties, whom he or she knows or reasonably suspects has been the victim of child abuse, shall report the known or suspected instance of child abuse to a child protective agency immediately or as soon as practically possible by telephone and shall prepare and send a written report thereof within 36 hours of receiving the information concerning the incident."

The court rejected the church's claim that including clergy on the list of mandatory child abuse reporters violated the first amendment guaranty of religious freedom:

In amending the Act to include clergy members as mandated reporters, the legislature determined that requiring clergy members to report suspected cases of child abuse was necessary to further the Act's purpose of protecting children from abuse …. [T]he statute as applied does not violate the free exercise clause of the first amendment nor does it constitute an excessive government entanglement with religion. The Act clearly applies to clergy members, is limited in scope and furthers the compelling state interest of protecting children from abuse. This interest is significant and outweighs the burden on [the church's] free exercise rights. Moreover, [the church], by seeking to shield its actions from scrutiny, would prevent [the associate pastor] from obtaining the benefit of the protections afforded mandatory reporters under [the Act]. A critical component of the statutory scheme is to require mandatory reporting but to protect those reporters from being subject to any sanction for their reports. To permit [the church] to escape scrutiny for its actions would be contrary to the legislative intent in [including] clergy members as mandatory reporters.

Retaliation Prohibited

The California child abuse reporting statute prevents employers from retaliating against employees who report child abuse. It specifies that "[t]he reporting duties under this section are individual, and no supervisor or administrator may impede or inhibit the reporting duties, and no person making a report shall be subject to any sanction for making the report."

The court concluded that a church that sanctions or retaliates against a pastor or other employee for reporting a suspected incident of child abuse may be legally liable on the basis of intentionally inflicting emotional distress. The court noted that the intentional infliction of emotional distress consists of: (1) extreme and outrageous conduct by the defendant with the intent to cause, or reckless disregard for the probability of causing, emotional distress; (2) suffering of severe or extreme emotional distress by plaintiff; and (3) plaintiff's emotional distress is the result of defendant's outrageous conduct. For conduct to be "outrageous," it must "be so extreme as to exceed all bounds of that usually tolerated in a civilized community." The court concluded that the associate pastor's allegation that the church sanctioned him because he reported suspected child abuse "is clearly an act which would reasonably support a finding of outrageous conduct." Similarly, the court ruled that the church could be sued on the basis of defamation since its public comments concerning the associate pastor were "not directed to any decision by [the church] to discipline or terminate [him] but to [its] exercise of his duty as a mandatory reporter."

Application. Clergy are mandatory reporters under some state laws. (Review the child abuse reporting laws in all 50 states). In several other states clergy are mandatory reporters if they are employed as teachers, school administrators, or counselors. In most of these states, clergy cannot be punished or "retaliated" against for discharging their legal duty to report a known or suspected incident of child abuse. To illustrate, assume that an adolescent female informs her youth pastor that her stepfather has been sexually abusing her. The youth pastor, who is a mandatory child abuse reporter, immediately reports this allegation to a state agency that investigates child abuse. When the church's senior pastor learns that the youth pastor reported the allegation without informing him, he dismisses the youth pastor. According to this case, the dismissal of the youth pastor could be viewed as prohibited retaliation that could expose the senior pastor and the church to liability. Conley v. Roman Catholic Archbishop, 2000 WL 1880609 (Cal. App. 2000).

Legal Developments

Employment Practices

A California court ruled that the first amendment prevented it from resolving a lawsuit brought by an ordained chaplain who claimed that she had been discriminated against by her employer.

Richard R. Hammar, Attorney, CPA
Bio

Schmoll v. Chapman University, 83 Cal.Rptr.2d 426 (Cal. App. 1999)

Key point 8-06. The civil courts have consistently ruled that the first amendment prevents the civil courts from applying civil rights laws to the relationship between a church and a minister.

A California court ruled that the first amendment prevented it from resolving a lawsuit brought by an ordained chaplain who claimed that she had been discriminated against by her employer, a church-affiliated university.

Chapman University (Chapman) is affiliated with the Christian Church, Disciples of Christ. In 1991, Chapman hired a full-time chaplain and director of campus ministry. In 1994, the school informed the chaplain that budget constraints required a 50 percent reduction of her hours. The chaplain sued Chapman for damages, alleging the university's action was not financially motivated, but rather was discriminatory and retaliatory.

She claimed she was being punished for telling school administrators about some student complaints of sexual harassment by two faculty members. She further alleged Chapman had known about the problem "for many years," but had failed to take any disciplinary action. When she reported the complaints, she was told nothing could be done if the students themselves would not "personally confront the faculty members against whom they had complaints." The chaplain then "began to experience some negative reactions toward her employment, in retaliation for her advocacy for the students, culminating in the termination of her full-time employment status."

The chaplain's lawsuit alleged breach of implied employment contract to terminate only for good cause, sex discrimination in violation of a state civil rights law, and violation of public policy. She did not seek to have her full-time schedule reinstated. In its response, Chapman did not assert that it is wholly exempt from the state civil rights law under the exemption for certain religious entities. Rather, it contended the first amendment protections of religious freedom and the nonestablishment of religion bar civil court review of an employment dispute between a religious organization and its ministerial employee.

Chapman presented undisputed facts demonstrating its church affiliation. In particular, it submitted its most recent formal covenant with the Christian Church in 1993, in which Chapman pledged to (1) "reflect a Judeo-Christian tradition in its leadership and in its life"; (2) "provide … on-campus curricular opportunities for spiritual understanding, worship, and sharing, including Biblical studies"; (3) "use the services of the Church … as a resource for locating prospective students, administrators, faculty, trustees and staff"; (4) "provide on-campus voluntary worship services and other opportunities for the moral and ethical development of persons within its collegiate community"; (5) "cultivate a service relationship by offering the resources of its personnel, programs and facilities to congregations, regions, and general administrative units of the Church"; (6) "seek to understand and share in the life of the [C]hurch at the local, regional and general level"; (7) "include in its structure a means of preserving its Christian Church (Disciples of Christ) heritage and [to] pursue the vital relationships, goals and purposes common to Chapman and the Church"; and (8) "state in its catalog and all appropriate documents and literature its relationship with the Christian Church (Disciples of Christ)."

Chapman also established facts regarding the chaplain's employment as a member of the clergy. It showed that the chaplain had been hired as a minister of the gospel of Jesus Christ, to serve the total campus community as a pastor, and perform the duties of leading worship, directing a team of student ministers, and assisting in the recruitment of students "in the area of ministry as [a] vocation." The identified goals of the chaplaincy position included: "(a) raising the level of awareness of the spiritual dimension of life; (b) interpreting God at work in current affairs; (c) bringing awareness of the eternal to the temporal; (d) influencing the design of the new chapel through programs of ministry; (e) bringing together religious and secular leaders to develop an understanding of their ability to use their resources to build a better world; and (f) lifting up the Disciples [of Christ] church-relatedness of the college."

A trial court dismissed the chaplain's lawsuit, finding the university constitutionally protected against state interference with its employment decision affecting its chaplain. The chaplain appealed, and a state appeals court affirmed the trial court's ruling. The court began its opinion by observing: "The religion clauses of the first amendment provide that Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof. In light of that broad prohibition, the courts have developed a general rule barring judicial review of employment disputes between religious organizations and their clergy employees." The court noted that in religious matters such as employment decisions involving clergy, the first amendment "protects the act of a decision rather than a motivation behind it. In these sensitive areas, the state may no more require a minimum basis in doctrinal reasoning than it may supervise doctrinal content."

The court concluded that "judicial review of Chapman's employment decision would absolutely result in excessive entanglement with religion. We would have to inquire into the good faith of the university's reasons for cutting back [the chaplain's] hours and adjudge the legitimacy of the church-affiliated institution's own perception of its ministerial needs. Such a review is constitutionally forbidden." This was so despite the chaplain's argument that the decision to reduce her hours was an "economic" rather than a spiritual decision. The court noted simply that "the dispositive fact is the existence of an employment decision by a religious institution about a clergy employee. The courts do not cross that threshold."

The court concluded:

It matters not whether such an employment decision is based on doctrine or economics. It is irrelevant whether the action involves hiring, firing or discipline or simply changes the terms and conditions of the employment. The rule is about as absolute as a rule of law can be: The first amendment guarantees to a religious institution the right to decide matters affecting its ministers' employment, free from the scrutiny and second-guessing of the civil courts. This case is no exception ….

Under the religion clauses of the first amendment, Chapman was entitled to summary judgment as a matter of law. Even "apparently arbitrary decisions" of religious organizations affecting the status of their clergy employees must be free from judicial oversight. An investigation and review of such matters of church administration and government as a minister's salary, his [or her] place of assignment and his [or her] duty, which involve a person at the heart of any religious organization, could only produce by its coercive effect the very opposite of that separation of church and state contemplated by the first amendment. The employment decisions of religious organizations about their clergy employees are "per se" religious matters and cannot be reviewed by civil courts.


Application.
 This case forcefully affirms the general rule that the first amendment prohibits the civil courts from resolving lawsuits brought by clergy who claim that they were wrongfully terminated or discriminated against by their church or church-affiliated employer.

Legal Developments

Recent Developments in California Regarding Spoliation of Evidence

A California court ruled that a church could be sued for “spoliation of evidence” because it destroyed a vehicle that had been involved in an accident.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1998-07-01

Spoliation of Evidence

Richard R. Hammar, J.D., LL.M., CPA

Church property

• Key point. A church may be liable on the basis of “spoliation of evidence” if it intentionally or negligently destroys a vehicle or other property that may be relevant in pending or future litigation.

A California court ruled that a church could be sued for “spoliation of evidence” because it destroyed a vehicle that had been involved in an accident. A woman passenger in a church van was injured when the van rolled over. She sued the church. The church claimed that the accident was due to a tire blowout rather than any negligence on the part of the church or its driver. Further, the church argued that the passenger had not been wearing her seatbelt and this was the primary cause of her injuries. About six months after the accident the church destroyed the van. A few years later the passenger sued the church in a second lawsuit. This time she alleged that the church was liable for negligently and intentionally “spoiling” or destroying evidence. She asserted that the church knew that she was investigating her legal claims arising from the accident, and that the van “represented valuable and irreplaceable physical evidence in the investigation and litigation concerning the accident and to refute [the church’s] assertion that she did not have her seatbelt on at the time of the accident.” She insisted that the church had a duty to maintain and preserve the van until the litigation was resolved. A state court agreed that the church could be sued for “spoliation of evidence.” It defined “spoliation of evidence” as “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence, in pending or future litigation.” The court acknowledged that “liability for spoliation of evidence is a developing body of law,” but it referred to several other cases in which California courts have recognized this basis of liability for both intentional and negligent acts. However, the court concluded that the church could not be liable because the passenger filed her lawsuit after the statute of limitations had expired. This result in no way minimizes the court’s recognition of “spoliation of evidence” as a basis of liability.

Application. This case should be carefully considered by all church leaders. It is common for churches to be sued as result of accidents involving church vehicles. If the damage to the church vehicle is severe, church leaders often make provision for the destruction of the vehicle. Such a decision may lead to unexpected liability, as this case reveals. The same may be true if the church repairs or sells such a vehicle. Also note that this kind of liability may not be covered under the church’s general liability insurance policy. The lesson is clear-church leaders should not sell, destroy, repair, or otherwise alter or dispose of a vehicle that was involved in an accident without first seeking the advice of an attorney. The same recommendation applies to any other church—owned property that may be relevant in the pending or future litigation. Fuller v. Bethany Apostolic Church, 71 Cal. Rptr. 915 (Cal. App. 1998).

© Copyright 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m86 m90 m58, m45 c0498

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Legal Developments

Definition of “Church” for Purposes of Civil Law

Some organizations may be labeled “religious” even if they exist for charitable purposes.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1997-11-01

Church—Definition

Richard R. Hammar, J.D., LL.M., CPA

• Key point. Some organizations affiliated with a church or denominational agency may be deemed “religious organizations” for purposes of civil law even though they were organized for charitable purposes.

! A California court ruled that a hospital affiliated with the Methodist church was a “religious corporation” for purposes of a state civil rights law banning discrimination in employment on the basis of age. A 50—year—old nurse was dismissed by her employer (a hospital) for exceeding four months of medical leave in the same year. She sued the hospital, claiming that it was guilty of age discrimination in violation of a state civil rights law. The hospital claimed that the law exempted “religious corporations” and that it was therefore exempt because of its affiliation with the Methodist church. A state appeals court agreed, on the basis of the following factors: (1) the hospital was “created, organized, and is governed (at least partially) by members of the United Methodist Church”; (2) its articles of incorporation state that upon dissolution, its assets will revert to the United Methodist Church; (3) its bylaws require that a majority of its board members belong to the United Methodist Church, and that at least one other board member must be a Methodist minister; (4) its directors are elected annually by a Methodist agency; (5) it is accredited by the United Methodist Church; (6) a Methodist chaplain ministers to patients, and the hospital broadcasts daily sermons to patients’ rooms.

The nurse claimed that these factors are insufficient to make the hospital a “religious corporation.” She noted that (1) the hospital’s corporate charter stated that it was created for the purpose of operating a hospital, which is not a religious purpose; (2) the hospital’s main purpose is charitable, not religious; (3) the hospital’s federal income tax exemption is based on charitable, rather than religious, purposes.

The court agreed with the hospital that it was a religious corporation and therefore was exempt from the state age discrimination law. It observed:

[I]t is far from clear that religiously affiliated hospitals serve a primarily secular purpose, as the [nurse] contends. To many religious adherents, the healing of the sick is closely associated with faith in a divine being. Many hospitals, even those without an official religious affiliation, offer on—site chapels and chaplains for the spiritual comfort of their patients and their families. This hospital, in particular, broadcasts daily religious sermons to its patients’ rooms. We are not prepared to hold, as a matter of law, that a religiously affiliated hospital may not define and carry out its mission of healing the sick as a primarily religious mission.

Application. Many laws refer specifically to “religious organizations.” Examples include zoning ordinances, tax laws, civil rights laws, and copyright law. This case illustrates that an organization may be deemed “religious” for purposes of these laws even though it was created for charitable purposes-so long as it is affiliated with a church and furthers the church’s religious mission. Kelly v. Methodist Hospital of Southern California, 52 Cal. Rptr.2d 177 (Cal. App. 1996). [ Title VII of the Civil Rights Act of 1964]

© Copyright 1997, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m15 m43 c0697

Legal Developments

Mandatory Reporters and the Clergy-Penitent Privilege

Are confessions of abuse protected?

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1997-03-01

Child Abuse

Richard R. Hammar, J.D., LL.M., CPA

• Key point. Ministers who enage in pastoral counseling are not necessarily subject to a state law that makes “counselors” mandatory reporters.

• Key point. Ministers who are not mandatory reporters of child abuse, and who do not report known or suspected abuse, are not necessarily liable for a minor’s continued abuse.

The Iowa Supreme Court ruled that a priest was not legally responsible for damages suffered by a victim of child abuse as a result of his decision not to report the abuse to civil authorities. A child (the victim) and her parents met with their parish priest on a number of occasions for family counseling. The priest was not a licensed counselor. The victim did not tell the priest that her father had sexually abused her but did tell him that he had “hurt” her. The physical and sexual abuse of the victim stopped when her father left home when she was in eighth grade. The victim attempted suicide a month later. The victim later sued her former priest and church. She claimed that the priest failed to report her abuse to the civil authorities, and that as a result the abuse continued and her injuries were aggravated. She conceded that the priest was not aware that abuse had occurred, but she insisted that he should have been aware of the abuse based on her statement to him that her father had “hurt her”. The victim also sued her former church, claiming that it was responsible for the priest’s failure to report the abuse. She also alleged that the church negligently failed to provide training in child abuse detection for its pastor and the teachers at the church—operated school the victim attended. A trial court dismissed the claim against the priest on the ground that he was not a mandatory child abuse reporter under state law and as a result had no duty to report the abuse even if he suspected it. The court also dismissed the claim against the church. The victim appealed. The state supreme court agreed with the trial court’s decision. With regard to the victim’s claims against the priest, the court observed:

The [priest] met with the family on several occasions for purposes of assisting them in their familial relationship. It appears, however, that his role in these discussions was that of a clergyman counseling the family to work out their differences in accordance with the teachings of the church. We agree with the conclusions of the district court that this involvement in … familial conflicts did not render him a mandatory reporter of suspected child abuse under [state law]. To the extent that [the] statute makes a “counselor” a mandatory reporter of child abuse, this is limited to a reasonable belief actually formed by the counselor “in the scope of professional practice.” [The priest’s] professional practice, as it related to the [victim’s] family, was that of clergyman ….

The legislature did not include members of the clergy among those that are required to report child abuse under [the statute]. Because it is common knowledge that clergymen engage in activities within a religious context that might unearth abusive situations, that omission must be deemed to have been a conscious choice to exclude this profession from the reporting requirements of the statute. The district court was correct in concluding that [the priest] had no statutory duty to report child abuse visited upon [the victim].

The court also rejected the victim’s allegation that the church was negligent in failing to properly train the pastor or its teachers in the detection and reporting of child abuse. It observed:

When [the priest and teachers] were selected by [the church] they were each college trained and professionally licensed in their respective fields. There is nothing in the record … that would permit a finding that [the church] antecedently had reason to believe that these individuals were not properly trained in the requirements of their professional undertakings or, in particular, that there was any risk associated with the manner in which they would perceive situations involving child abuse. There is thus no liability on [the church’s] part for a failure to train these persons or to adopt special procedures dealing with the unperceived risk.

This case is significant for the following reasons: First, it demonstrates the members of the clergy are not necessarily mandatory child abuse reporters under a state law that makes “counselors” mandatory reporters. This is an important interpretation that will be useful to ministers in other states. Of course, other states may interpret the term “counselor” differently, and may include ministers. The Iowa Supreme Court’s ruling will be helpful in contending for a more narrow definition. In the final analysis, as has often been stated in this newsletter, ministers should be aggressive in reporting known or reasonably suspected incidents of child abuse whether or not they are mandatory reporters under state law. This is especially true in the case of young children who are powerless to defend themselves or seek help. Second, the court concluded that ministers who are not mandatory reporters of child abuse under state law cannot be sued for failing to report. And third, the court refused to find a church liable on the basis of its allegedly negligent failure to train its professional staff (a minister and teachers) in the detection of child abuse. Wilson v. Darr, 553 N.W.2d 579 (Iowa 1996). [Failure to Report Child Abuse]

© Copyright 1997, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m10 c0297

Legal Developments

Sexual Harassment as Sex Discrimination

Female minister sues denominational agency for sexual harassment.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1997-01-01

Sexual Harassment

Richard R. Hammar, J.D., LL.M., CPA

• Key point. Sexual harassment is a form of “sex discrimination” prohibited by Title VII of the Civil Rights Act of 1964, and by several state laws. It occurs when (1) an employee’s job or other privileges of employment are conditioned upon submitting to sexual demands, or (2) an employee is exposed to a “hostile work environment” involving unwelcome verbal or physical conduct of a sexual nature that is sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment.

• Key point. Title VII only applies to employers that (1) have 15 or more employees, and (2) are engaged in interstate commerce. Accordingly, it does not apply to most churches (it does apply to many denominational agencies engaged in interstate sales).

• Key point. Title VII does not apply to most churches. However, most states have enacted their own civil rights laws that often ban sex discrimination and sexual harassment, and it is much more likely that these state laws will apply to churches. As a result, sexual harassment is a theory of liability that all churches should take seriously.

• Key point. Employers who dismiss employees for sexual harassment may face wrongful dismissal lawsuits.

A federal court in California ruled that a female minister failed to prove that her denominational agency had engaged in sexual harassment. A woman (the victim) was employed as national director of a department of a denominational agency (the Buddhist Churches of America or BCA). She is ordained as a Buddhist minister. She alleged that in 1991 she began receiving a series of heavy breathing telephone calls at her residence. She says that her phone number was not listed in the local telephone directory, but was published in the BCA directory. She claims that the heavy breathing calls continued for the next few years, even though she changed her unlisted phone number several times. In 1993, she went to an annual meeting of Buddhist minister at a hotel in California. On the first evening of the meeting, after midnight, she was awakened by a telephone call very similar in character and nature to the harassing telephone calls she had been receiving at her home since 1991. The caller spent several seconds breathing heavily and then whispered, “I want you” over and over. The victim asked, “Who is it?” and, when she received no response, hung up the phone. After hanging up the phone, she immediately called the management of the hotel, reported the call and asked if the hotel could identify the caller. The next morning, the hotel management called the victim and told her they had traced the call to another room in the hotel and said they would put the party in that room on the line. A Buddhist minister then came on the line. The minister claimed that he did not place the call and asserted that several people had been in his room. The victim reported the entire incident to her bishop.

After the incident was reported, several meetings were held between the bishop and the victim, the accused minister and other BCA staff members in an attempt to get a complete story and to take responsive action. An investigative report of the incident was rendered by members of a specially designated committee of the BCA. The committee found that the accused minister had attempted “to obscure the truth in a serious investigation while performing as a minister of the BCA.” The report concluded that “sufficient facts supported a finding of misconduct to warrant certain specific sanctions” against the accused minister. A short time later, the victim filed a complaint with the Equal Employment Opportunity Commission (EEOC) regarding the harassing call she had received at the hotel. She was issued a “right to sue letter” by the EEOC, indicating that the EEOC felt she had a viable claim. She later filed a lawsuit in federal court, claiming that (1) BCA engaged in unlawful sex discrimination by paying her less than comparable male employees; (2) she had been a victim of sexual harassment by the actions of the minister and BCA, and (3) BCA had engaged in unlawful “retaliation” against her by cutting off all funding of her department following the filing of her EEOC claim.

Wage discrimination

The court began its opinion by ruling that BCA was an “employer” subject to Title VII of the Civil Rights Act of 1964. Title VII prohibits employers from discriminating against employees on the basis of several factors, including sex. Sexual discrimination includes wage discrimination, sexual harassment, and employer retaliation against employees who exercise their right to be free from unlawful discrimination.

The victim alleged that her position was budgeted at an annual salary of $24,700, but that the bishop told her she would not be paid this amount because a comparable male employee’s “feelings would be hurt.” The court concluded that “a comparison between plaintiff’s salary and the salary of male ministers with the BCA would be improper, as infringing on the church’s autonomy in an area of prime ecclesiastical concern.”

Quid pro quo sexual harassment

The court pointed out that there are two types of sexual harassment-quid pro quo and hostile environment. To prove quid pro quo sexual harassment a plaintiff must show by a preponderance of the evidence that she was forced to choose between an economic loss or an economic benefit by submitting to the sexual demands of a person within the employer’s organization who is in a position to affect her employment. The victim claimed that BCA engaged in quid pro quo harassment by “the defunding of her department because of her refusal to quietly allow [the accused minister] to talk dirty to her.” She claimed that her employment was conditional upon allowing this “sexual favor.” BCA insists that the victim could not have suffered quid pro quo harassment because the accused minister did not hold any position where he had the power to affect the terms of her employment with BCA. BCA also argues that even if the minister held such a position, the contents of the harassing telephone call made at the hotel could not be construed as conditioning job benefits upon the victim’s submission to the minister’s sexual demands. The court agreed with BCA.

[The victim] fails to submit any evidence of a causal connection between the defunding of her department and the allegedly harassing phone call by [the minister]. She does not submit any evidence that [the minister] was involved in the decision to defund her department, or had any influence over the decision at all. Instead, she argues that the action was taken by other members of the BCA organization in retaliation for her filing this suit. A quid pro quo action, however, is premised upon coercive sexual conduct. Without evidence that BCA’s retaliation in defunding [the victim’s] department was somehow influenced by [the minister], [she] cannot present a … case of quid pro quo harassment.

Hostile environment sexual harassment

The court noted that to support a “hostile work environment” claim of sexual harassment, a plaintiff must show that: (1) she was subject to verbal or physical conduct of a sexual nature, (2) this conduct was unwelcome, and (3) the conduct was sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment. Further,

[w]hether the conduct complained of by a plaintiff was sufficiently pervasive to create a hostile work environment is determined by the totality of the circumstances. Factors which the court may consider in evaluating the totality of the circumstances include (1) the frequency of the offensive encounters; (2) the severity of the offensive conduct; (3) whether the conduct was physically threatening or humiliating, or a mere offensive utterance; and (4) whether it unreasonably interfered with the employee’s work performance.

The court acknowledged that the United States Supreme Court has taken a “middle path” approach to hostile environment claims by noting that “coworkers’ occasional annoying or merely offensive comments do not create a hostile environment.” The court noted that most of the harassing telephone calls occurred at the victim’s home, and not at work. However, the one call she received at the hotel arguably could be construed as “work related” since she was attending a convention. The court pointed out that this one work—related call

was not physically threatening or humiliating. It was not repeated at plaintiff’s place of employment and was not accompanied by any other sexual conduct in the workplace. Moreover, the alleged co—employee who made the phone call was not a person who plaintiff was forced to work with on a daily basis …. This single isolated incident does not rise to the level of seriousness required to establish an abusive working environment.

The victim also claimed that her employer (BCA) created a hostile environment by (1) failing to follow up on an earlier charge of sexual harassment made by another employee; (2) failing to require the accused minister to follow through with the imposed sanctions; (3) failing to conclude that the accused minister’s misconduct constituted sexual harassment; (4) defunding her department after she filed a complaint with the EEOC. The court disagreed that these allegations proved that BCA had committed hostile environment sexual harassment.

Although [the victim’s] evidence suggests that BCA’s response to [the accused minister’s] conduct was dilatory at best, this evidence, standing alone, does not create a hostile environment claim. Although employers are liable for failing to remedy or prevent a hostile or offensive work environment of which management—level employees knew, or in the exercise of reasonable care should have known, an employer’s lack of remedial action is not itself evidence of the hostile work environment. A hostile environment claim requires wrongful verbal or physical conduct of a “sexual nature.” Thus, although the action or inaction of an employer in response to an allegation of sexual harassment may be probative on the issue of the employer’s liability, this evidence is relevant only if the plaintiff first establishes that that incident created a hostile work environment. Because [the victim] has failed to make this … showing [a dismissal] of this claim is proper.

Retaliation

Finally, the victim claimed that the decision by BCA to cut off funding of her department amounted to unlawful retaliation for filing a sex discrimination claim in violation of Title VII. The court noted that to prove a “prima facie case” of unlawful retaliation, a plaintiff must establish that she acted to protect her Title VII rights, that an adverse employment action was thereafter taken against her, and that a connection exists between these two events. At that point, the burden of production then shifts to the employer to advance legitimate, non—retaliatory reasons for any adverse actions taken against the plaintiff.

The court concluded that it could not resolve the victim’s retaliation claim, since

[i]f plaintiff makes out a prima facie case of retaliation, the court would be placed in the position of evaluating whether BCA had any legitimate, non—retaliatory reasons for the defunding of [her] department …. Although the financial decisions of a church are not, strictly speaking, part of the church’s “spiritual function,” these decisions remain vital to a religious organization’s ministerial and religious planning. Determining whether the decision to eliminate funding from [the victim’s] department-a religious education department-was “legitimate” seems likely to draw this court into judgments on matters of faith and doctrine, as well as matters of general church governance. Because it appears that plaintiff’s retaliation claim would result in “an intolerably close relationship between church and state both on a substantive and procedural level,” plaintiff’s retaliation claim is dismissed without leave to amend, on first amendment grounds. Himaka v. Buddhist Churches of America, 917 F.Supp. 698 (N.D. Cal. 1995). [ Title VII of the Civil Rights Act of 1964]

© Copyright 1997, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m66 m40 m43 c0197

Legal Developments

Instructional Purposes as “Fair Use” of Copyrighted Materials

Making copies of works for this purpose does not constitute “fair use”.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1994-05-01 Recent Developments

Copyright Law

Richard R. Hammar, J.D., LL.M., CPA

• Key point: Making copies of copyrighted religious works for instructional purposes does not constitute permissible “fair use.”

• A federal court in California ruled that an instructor who made copies of copyrighted religious books and tapes for instructional purposes was guilty of copyright infringement. The court rejected the instructor’s defense of “fair use.” The Copyright Act permits owners of copyrighted material to engage in the “fair use” of such material. The concept of fair use is a narrow one that should not be viewed as a form of blanket authorization to duplicate copyrighted materials. In determining whether a particular use of a copyrighted work is a “fair use,” four factors are considered. First, what is the purpose and character of the use? Second, what is the nature of the copyrighted work? Third, what is the “amount and substantiality” of the portion copied? That is, how much of the copyrighted work is used? The more of a copyrighted work that is copied, the less likely the copying will be considered a fair use. One thing is certain—verbatim or nearly verbatim reproductions of an entire copyrighted work will never be deemed a fair use. Fourth, what effect will the unauthorized use have upon the marketability of the copyrighted work? The court concluded that the instructor failed all four of these factors. The purpose of the copying was commercial (the copied materials were sold to students); the nature of the copyrighted works were creative and thus entitled to a higher degree of protection; the amount copied (the entire copyrighted works) was substantial; and, the impact of the copying on the copyright owner’s rights was significant since the instructor’s act of unauthorized copying “fulfilled the demand for the original works and [will] diminish or prejudice their potential sale.” Finally, the court rejected the instructor’s claim that her copying met the standards for “fair use” as set forth in the so-called “fair use guidelines” for classroom copying of educational materials. In 1975, groups of authors and publishers adopted guidelines for classroom copying in nonprofit educational institutions. The House Report on the Copyright Act of 1976 reprinted these guidelines in full, and further noted that they “are a reasonable interpretation of the minimum standards of fair use.” The guidelines apply only to educational copying of literary works (books, articles, poetry, charts, etc.). Among other things, the guidelines specify that a teacher may make a single copy of a chapter from a book or an article from a periodical for use in teaching or in preparing to teach. The court observed that the instructor’s copying in this case “was not restricted to one copy for her own use in teaching” and therefore was not eligible for a fair use exemption. The guidelines also permit teachers to make multiple copies of a copyrighted work for classroom use, but several restrictions apply. For example, a teacher may make multiple copies of an entire article of less than 2,500 words or an excerpt from a longer work so long as the excerpt is not more than the lesser of 1,000 words or 10 percent of the entire work. Further, the decision to use the work must be “spontaneous” in the sense that it is so close in time to the date the work is to be used that it would be unreasonable to expect a timely reply to a request for permission to reproduce it. There also are strict limitations on the number of times this exception can be used. The court concluded that this exemption did not apply: “[T]he undisputed evidence shows [that the instructor’s] copying was not limited and spontaneous, but was extensive and methodical, and consisted of copying from the same author, time after time. This is clearly not within the letter or spirit of the congressional guidelines.” Bridge Publications, Inc. v. Vien, 827 F. Supp. 629 (S.D. Cal. 1993).

See Also: Exceptions to Copyright Infringement

© Copyright 1994, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m36 c0394

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Legal Developments

Denominational Arbitration Procedures

Can arbitration procedures be enforced?

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1992-11-01 Recent Developments

Taxation – Church Property

Richard R. Hammar, J.D., LL.M., CPA

• A California appeals court refused to enforce a denomination’s binding arbitration procedure for resolving disputes with affiliated churches. A local Assemblies of God church in California voted in 1989 to disaffiliate from the denomination as a result of bylaw amendments adopted by the Southern California District Council of the Assemblies of God (the “District”). The church interpreted these amendments to adversely affect the sovereign rights of affiliated churches and allow the District to confiscate local church property at any time it chose. The District insisted that the church agree to arbitrate the dispute regarding the disaffiliation. It relied on the following arbitration provision in the District’s bylaws:

Any controversy or claim between any District Council member church … or any member or officer … for which either party may have a cause for legal action shall be submitted to binding arbitration by a panel of three arbitrators: one to be selected by the member church … [or] member or officer; one to be selected by the District Council … ; and one to be selected by the two previously selected arbitrators. Each arbitrator shall be selected from the panel of arbitrators elected in accordance with the bylaws.

To qualify as an arbitrator, the District bylaws require that an individual “be an ordained minister … [and] member in good standing in the District [who] has been so for at least two consecutive years … [and] who has been active and cooperative with the District … and is current with his financial responsibilities to the District.” The local church refused to arbitrate the dispute, and the District filed a petition with a civil court to compel arbitration. The church opposed the District’s petition, contending that the District’s arbitration clause was not enforceable since it required arbitration of disputes by “non-neutral arbitrators.” The trial court agreed with the church, and the District appealed.

The District argued on appeal that its arbitration procedure was fair and impartial and should be enforced by the civil courts. A state appeals court disagreed, relying on a 1981 decision of the California Supreme Court. In the 1981 decision, the state supreme court acknowledged that the civil courts favor arbitration, and that organizations generally can agree to any arbitrators they choose. However, “some minimum levels of integrity” are required for an arbitration procedure to be accepted and enforced by the courts. The supreme court observed:

[A] contract which purports to designate one of the parties as the arbitrator of all disputes arising thereunder is to this extent illusory—the reason being that the party so designated will have an interest in the outcome which, in the view of the law, will render fair and reasoned decision, based on the evidence presented, a virtual impossibility. Because, as we have explained, arbitration (as a contractually structured substitute for formal judicial proceedings) contemplates just such a decision, a contractual party may not act in the capacity of arbitrator—and a contractual provision which designated him to serve in that capacity is to be denied enforcement on the grounds of unconscionability. We have also indicated that the same result would follow, and for the same reasons, when the designated arbitrator is not the party himself but one whose interests are so allied with those of the party that, for all practical purposes, he is subject to the same disabilities which prevent the party himself from serving. Again, a contractual provision designating such an entity as arbitrator must be denied enforcement on the ground that it would be unconscionable to permit that entity to so serve.

The appeals court concluded that this language required it to disregard and not enforce the District’s arbitration procedure. It observed: “In this context, the provision for a panel of arbitrators comprised of the District’s loyal and ‘cooperative’ members in ‘good standing’ is patently unfair and unenforceable under [the supreme court’s 1981 ruling]. The District’s members are parties to the dispute and, as such, are presumptively unable to be disinterested and impartial toward this controversy.” The court also rejected the District’s claim that the failure to enforce the arbitration procedure was “an unconstitutional intervention into the District’s ecclesiastical governance procedures.” The court simply noted that this dispute was about the ownership of property and was not an ecclesiastical dispute.

This decision is very important since it represents one of the only court rulings to directly address the enforceability of a church arbitration procedure. The case illustrates that such procedures, to be legally enforceable, must satisfy “some minimum levels of integrity” including the selection of arbitrators who are impartial and not closely related to one of the parties. This requirement should present little difficulty to churches and denominational agencies desiring to implement an arbitration procedure. The California appeals court’s ruling should be viewed as an important clarification rather than as a setback for religious organizations desiring to implement arbitration policies. Southern California District Council of the Assemblies of God, Inc., v. Sonlite Tabernacle, Cal. App. 2 Dist. (unpublished decision, March 27, 1992).

See Also: Arbitration

© Copyright 1992, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m03 m16 c0692

Legal Developments

Workers’ Compensation and “Charitable Work Program” Employees

Who is an employee for purposes of workers’ compensation?

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1992-05-01 Recent Developments

Workers Compensation

Richard R. Hammar, J.D., LL.M., CPA

• Is a homeless person who is paid $5 per hour by a church for performing miscellaneous services as part of a “charitable work program” an employee covered by state workers compensation law? Yes, concluded a California appeals court. A Baptist church operated a charitable program for homeless or transient persons. Sometimes, the church made small payments directly to needy individuals. In other cases, when persons “wished to maintain their dignity and asked to do work,” the church would attempt to find work for them to do (generally at a rate of $5 per hour). Most persons worked at most a day. However, one individual worked for nearly 4 weeks, performing a variety of tasks including roofing, gardening, digging, drywall work, painting, and laying a carpet. This individual sustained serious injuries when he fell off a ladder while doing roofing work. The victim later asserted that he had been an “employee” of the church and accordingly was entitled to workers compensation benefits. The church vigorously rejected this position, claiming that the victim was a volunteer who was paid an “honorarium” for participating in the church’s charitable work program. It pointed out that it did not withhold any payroll taxes from the victim’s compensation, and in no sense considered him an employee. A state agency ruled in favor of the church, noting that private charities should not be discouraged from providing aid by requiring them to pay workers compensation. The agency noted that “in fact, [the church] has apparently discontinued its benevolence fund program due to the litigation and liability issues raised in this case.” The victim appealed, and a state appeals court concluded that he was an employee of the church, and as such was entitled to workers compensation benefits. The court observed that the question is “whether to characterize the work as donated services, not within the scope of a traditional work for hire relationship, or as payment within a true employment relationship where services are provided, not out of charitable generosity, but for a living wage.” The court concluded: “[The victim] worked shoulder to shoulder with covered employees, did the same work, received wages, and ran the same risks …. He worked at a set hourly rate, for cash wages …. They were hourly wages, indistinguishable in any way from the wages paid to any laborer, except that they were probably considered below the prevailing wage rate for the kind of work done …. Where the pay is above the minimum wage and is not gauged by the recipient’s necessities, we believe that it can logically only be wages.” The court acknowledged that its decision might deter churches and other charities from hiring the needy. However, it emphasized that this is not a relevant consideration in deciding whether or not such individuals are employees. The church had argued that the victim “bit the hand that fed him” and that he was responsible for the discontinuance of the church’s charitable work program. In responding to this claim, the court observed:

One is tempted to observe that the hand that fed him did not go empty; the church got some 160 hours of work at $5 an hour in return for its alleged charity to [the victim]. And as [the victim’s] attorney points out, the cost to the church of providing workers compensation insurance for an annual payroll of $5,000 would have been $553 in 1987 when [the victim] was hired. If that cost sufficed to discourage the church’s “charity,” the church was easily discouraged. But whether or not charity is easily discouraged, the law confers employee status under the [workers compensation law] when an employment relationship is fact exists, and an employer cannot escape the obligations of such a relationship by characterizing his hiring of an employe as “charitable,” by failing to report it to the Internal Revenue Service, nor by paying below-scale wages. Where, as here, the normal incidents of an employment relationship are present, the concomitant legal obligations follow.

This case illustrates the complications that may be associated with the payment of compensation to needy persons who perform work on behalf of a church. Attempting to avoid those obligations by characterizing such persons as volunteers, or by characterizing their compensation as “honorariums,” will not succeed, if the persons in fact meet the liberal definition of an “employee.” Hoppmann v. Workers Compensation Appeals Board, 277 Cal. Rptr. 116 (Cal. App. 1991).

See Also: Workers Compensation

© Copyright 1992, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m81 m43 c0392

Legal Developments

Property of Disaffiliated Churches

In some cases, a church’s property reverts to its former denomination when it secedes.

Richard R. Hammar, Attorney, CPA
Bio

A California state appeals court ruled that title to the properties of a local church that voted to disaffiliate from a parent denomination belonged to the denomination rather than to the church.

The local church was the oldest Korean immigrant congregation in the Presbyterian Church (U.S.A.) ("PCUSA"). It had participated actively in the Presbyterian Church for more than 80 years. PCUSA had assisted the church in acquiring its first properties, and in obtaining financing for various projects. A schism developed in recent years within the church, primarily over the views and leadership of the church's pastor. Attempts by the PCUSA to resolve the problems failed. As a result of the schism, a group (numbering up to 30% of the church's membership) left the church and formed a "church in exile."

The pastor thereafter had the remaining congregation vote to disaffiliate from the PCUSA. Acting in accordance with the Presbyterian Book of Order, the PCUSA designated the exiled congregation as the "true church," and as the rightful owner of the church properties. A lawsuit was filed to determine the ownership of the church properties.

A trial court ruled that the dissident congregation that voted to disaffiliate from the PCUSA was the rightful owner of the church properties, and that the designation by the PCUSA of the "true church" was entitled to no consideration. The case was appealed to a state appeals court. The appeals court reversed the trial court's decision, and awarded the church properties to the "exiled" congregation designated by the PCUSA as the true church. The court based its decision on the following 3 considerations:

Mandatory deference by the civil courts to decisions of hierarchical denominations regarding the true identity of an affiliated church. The court emphasized that "on ecclesiastical issues, including matters of religious doctrine or polity, civil courts must defer to the highest judicatory of the hierarchical church hearing and addressing the matter." The court noted that "it has long been the law in California that the identification of a religious body as the true church is an ecclesiastical issue," and accordingly the civil courts must accept the decisions of hierarchical denominations that identify a particular faction as the true representatives of a local church.

"Neutral principles of law." The court concluded that the exiled congregation was entitled to the church properties under the neutral principles of law approach. Under this approach, a civil court reviews nondoctrinal language in deeds, charters, and bylaws (both of the local church and the parent denomination) and awards title based on general rules of property law. The court noted that the charter and bylaws of the local church specifically required adherence to the PCUSA and its Book of Order. The court continued: "At that moment [when the church voted to disaffiliate from the PCUSA] if not before, these members had renounced any further obligation to be subject to the doctrines or discipline of the PCUSA, and, in effect,renounced their membership in [the local church] since its articles of incorporation required adherence to the doctrines and disciplines of PCUSA as a condition of membership. Having abandoned their membership in [the local church], they lost all power and ability to determine its future status."

Express trust. Finally, the court concluded that the "exiled congregation" was the rightful owner of the church properties on the basis of an "express trust." The "express trust" approach to resolving church property disputes "relies on title deeds, articles of incorporation, canons and rules of the organizations concerned and statutes, to establish that a local church holds property under an express trust for the benefit of the general church membership as embodied in its regional and national organizations."

The court found that several considerations supported a finding that the local church's properties were subject to an express trust in favor of the faction loyal to the PCUSA. One consideration was the fact that title to a portion of the church's properties had been vested in the name of a Presbytery for more than 50 years. A second consideration was the fact that the PCUSA Book of Order (to which the local church pledged its allegiance in its charter and bylaws) contained several paragraphs subjecting local church properties to an express trust in favor of the PCUSA. These included the following:

All property held by or for a particular church … whether legal title is lodged in a corporation, a trustee or trustees, or an unincorporated association … is held in trust nevertheless for the use and benefit of the Presbyterian Church (U.S.A.). [G-8.0200]

Whenever property of, or held for, a particular church of the Presbyterian Church (U.S.A.) ceases to be used by that church as a particular church of the Presbyterian Church (U.S.A.) in accordance with this constitution, such property shall be held, used, applied, transferred, or sold as provided by the presbytery. [G-8.0300]

The relationship to the Presbyterian Church (U.S.A.) of a particular church can be severed only by constitutional action on the part of the presbytery …. If there is a schism within the membership of a particular church and the presbytery is unable to effect a reconciliation or a division into separate churches within the Presbyterian Church (U.S.A.), the presbytery shall determine if one of the factions is entitled to the property because of it is identified by the presbytery as the true church within the Presbyterian Church (U.S.A.). This determination does not depend upon which faction received the majority vote within the particular church at the time of the schism. [G-8.0600]

What this means for churches

This case is significant for several reasons, including the following:

  1. It recognizes the principle that decisions of hierarchical denominations on matters of doctrine or policy are binding on the civil courts. Few courts have reached the conclusion that a denomination's act of identifying the faction within a local church that represents the "true church" is a matter of doctrine or polity that is beyond the authority of the civil courts to affect. However, such a conclusion seems perfectly reasonable, particularly in view of the provisions of the Book of Order quoted above.
  2. The court reached the logical, but somewhat unique, conclusion that members who vote to disaffiliate from a parent denomination thereby lose their status as members of their church and have no legal authority to "determine the future status" of their former church. Such a conclusion assumes that the local church's charter or bylaws contains a provision binding members to the doctrine and practice of the denomination.
  3. The decision sets forth "express trust" provisions in the Presbyterian Book of Order that effectively subjected all local church properties to a "trust" in favor of the PCUSA. These provisions can be a useful guide to other religious organizations interested in obtaining the same kind of protection. Korean United Presbyterian Church v. Presbytery of the Pacific, 281 Cal. Rptr. 396 (Cal. App. 2 Dist. 1991).

Legal Developments

False Accusations of Child Abuse

Can reporters of child abuse be sued if the alleged abuse did not actually occur?

Richard R. Hammar, Attorney, CPA
Bio

• Can one who reports a suspected case of child abuse be sued by the alleged offender if the report later proves to have been false? That was the issue before a California state appeals court. A two-month old child suffering from a congenital defect (arteriovenous malformation of the brain) was taken to a local hospital, and then transferred to a regional children's hospital. A doctor employed by the children's hospital failed to recognize that the infant was suffering from a congenital defect, and instead diagnosed the child as suffering from injuries of a nonaccidental nature which could only have resulted from a violent shaking or a fall.

Because of the suspicion of child abuse, the doctor filed a report with the state. The infant died from the condition four days later, and his remains were transferred to the coroner for an autopsy. The autopsy described the cause of death as a "subdural hematoma" caused by a blunt injury to the side of the head. As a result of the doctor's report and the coroner's findings, the district attorney recommended that dependency proceedings be commenced with respect to another child in the same home.

Based on this recommendation, the police removed the other child from her parents' custody, and dependency proceedings were begun. The parents hired an attorney and their own medical expert to review the autopsy and the infant's remains to determine the true cause of death. This medical expert was able to convince the coroner that the true cause of death was the congenital defect. The coroner amended his autopsy report, and the parents were cleared of all charges. The parents then sued the doctor on a number of grounds, including medical negligence, infliction of emotional distress, and civil rights violations.

They also alleged that the doctor's false report caused the district attorney to initiate dependency proceedings, depriving them of their constitutional right to family unity undisturbed by unwarranted governmental interference. The doctor asked the court to dismiss the case no the ground that state law grants "immunity" to reporters of child abuse. The trial court agreed with the doctor's defense, and the parents appealed. The parents argued that state law grants immunity only to reporters who have a "reasonable suspicion" of child abuse, and not to reports that are made negligently or recklessly. The appeals court rejected the parents' claim, noting that state law granted absolute immunity to those reporters, including doctors, under a mandatory duty to report child abuse.

The court emphasized that mandatory reporters were given absolute immunity in order to encourage them to report without fear of being sued if their reports turned out to be false. The court acknowledged that its decision denied the parents "from any relief or compensation for the grievous injury" that they sustained. It concluded: "We do so because we are obligated to honor the determination of the legislature that protection of one innocent segment of society warrants occasional injury to another. The mute and powerless victims of child abuse have long suffered at the hands of their tormentors.

Society's protective voice, the legislature has found, has been silenced by the fear of retaliation. The protection of the young victims, the legislature has determined, requires that uncompensated injury occasionally result to an adult. In this war on child abuse the legislature selected absolute immunity as part of its arsenal …. The tragedy of war, whether it be against child abuse or between nations, is that the nature of its drastic measures is such as to inflict injury on some innocents while producing the general benefit of a desired end result."

Few states, like California, grant absolute immunity to mandatory reporters of child abuse. Most states provide only limited immunity—meaning that reporters can be sued only if they act "maliciously" in filing a knowingly false report. Even this limited form of immunity is quite extensive, and is intended to further the governmental objective of encouraging persons to report suspected cases of abuse without fear of being sued if their reports prove to have been false. Thomas v. Chadwick, 274 Cal. Rptr. 128 (Cal. App. 4 Dist. 1990).

Legal Developments

Failure to Renew Contracts

Can a school be sued for failing to renew an administrator’s contract?

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1991-01-01 Recent Developments

Employee Relations

Richard R. Hammar, J.D., LL.M., CPA

• Can a church school be sued for failing to renew an assistant principal’s one-year employment contract? No, concluded a California state appeals court. The assistant principal’s contract specified that “the term of the employment agreement shall be for a one-year period.” The contract further specified that “it is understood that [the assistant principal] is being employed for a one-year period and that there is no obligation on the part of the school [or the assistant principal] to renew this contract at the end of that term.” Prior to the expiration of the assistant principal’s one-year contract, the principal notified her in writing that her contract would not be renewed. She was offered and accepted a teaching position in the school, and she appealed her termination as assistant principal to the church. When her appeal was denied, she sued the church for actual and punitive damages. She alleged that due to her many years of faithful employment at the school (as both a teacher and assistant principal), her employment contract contained an “implied condition” to act in good faith that required the church to renew her contract unless it had “just reason” for not doing so. She also claimed that the church was guilty of “negligent discharge” because it failed to renew her contract without giving her any advance notice of any performance problems that she could correct. Finally, she claimed that the church had intentionally caused her emotional distress. A trial court granted the church’s request for a “summary judgment,” and the former employee appealed. A state appeals court upheld the trial court’s ruling in favor of the church. With regard to the former employee’s first claim, the court agreed that “the law imposes a duty of good faith and fair dealing in every contract.” However, it emphasized that this implied duty cannot be used to alter the terms of a clear, written agreement. The court observed: “Here, we are not confronted by a written employment contract which is uncertain in duration, or as to the parties’ obligation to renew. This written contract expressly limits the term of employment to one year and provides that neither party need renew the agreement. Consequently, by express language, the contract precludes the existence of any contrary implied agreement to employ [the former assistant principal] for more than a year or require renewal in the absence of good cause for not doing so.” Further, the court noted that the assistant principal had not been “fired.” Rather, her one-year contract had not been renewed. The court observed that “although termination contrary to the express terms of an employment contract may [be the basis of a lawsuit], a decision not to enter into a new contract or renew an expired one is not …. It is the general rule that when a contract specifies the period of its duration, it terminates on the expiration of such period.” The court also rejected the former employee’s claim that her long and faithful service prevented the church from not renewing her contract without good cause. It observed that “lengthy service combined by promotions and salary increases are natural occurrences for an employee who remains with an employer for a substantial length of time and does not create an implied agreement for permanent employment terminable within the context of nonrenewal only upon just cause.” The court also refused to recognize the former employee’s claim of “negligent discharge,” since no California court had ever recognized such a theory of liability. Finally, the court rejected the former employee’s claim that the church had intentionally caused her emotional distress. This would have required outrageous conduct on the part of the church, and this was something that the court refused to recognize. Tollefson v. Roman Catholic Bishop of San Diego, 268 Cal. Rptr. 550 (Cal. App. 1990).

© Copyright 1991, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m42 m65 c0191

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