Kentucky

Legal Developments

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

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

Richard R. Hammar, Attorney, CPA
Bio


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

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

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

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

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

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

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

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

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

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

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

The court concluded that neither doctrine applied to this case:

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

What this means for churches

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

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

Legal Developments

Release Form Does Not Prohibit Minor from Suing Church After Summer Camp Injury

Minor who was injured while participating in a church’s summer camp program was not barred from suing the church by a release form signed by her mother.

Richard R. Hammar, Attorney, CPA
Bio


Key point 10-16.6. A release form is a document signed by a competent adult that purports to relieve a church from liability for its own negligence. Such forms may be legally enforceable if they are clearly written and identify the conduct that is being released. However, the courts look with disfavor on release forms, and this has led to several limitations, including the following: (1) release forms will be strictly and narrowly construed against the church; (2) release forms cannot relieve a church of liability for injuries to minors, since minors have no legal capacity to sign such forms and their parents’ signatures do not prevent minors from bringing their own personal injury claims after they reach age 18; (3) some courts refuse to enforce any release form that attempts to avoid liability for personal injuries on the ground that such forms violate public policy; and (4) release forms will not be enforced unless they clearly communicate that they are releasing the church from liability for its negligence.

A Kentucky court ruled that a minor who was injured while participating in a church’s summer camp program was not barred from suing the church by a release form signed by her mother.

A 16-year-old girl (the “victim”) attended a church and was a member of the church youth group. The youth group was planning a five-day summer camp, and in advance of the camp, it sent information packets to parents that included a “medical permission and release form” that asked for the minor participant’s name and address, the guardian’s name and phone number, as well as information regarding immunizations, allergies, any medications taken by the participant, and childhood diseases. On the same form, in a clause titled “Permission For Medical Treatment, Photography/Video Notice, and Release and Indemnity,” the form states:

My permission is granted for the camp or event director, church official, any camp or event staffer, or adult present or in charge of First Aid, to obtain necessary medical attention in case of sickness or injury to my child. Also, I understand that as a participant, my child may be photographed or videotaped during normal camp or event activities and these photos/videos may be used in promotional materials.

I, the undersigned, do hereby verify that the above information is correct and I do hereby release and forever discharge [the church], camp or event sponsors, or state conventions and their employees from any and all claims, demands, actions, or causes of actions, past, present, or future arising out of any damage or injury while employed by or participating in this camp or event. I agree to indemnify [the church] from any and all claims, demands, damages, injuries, cost, suits or causes of action, past, present, or future arising out of or caused by my child while participating in this camp or event or while on property leased or owned by [the church].

The victim’s mother completed and signed the forms.

The youth group departed the church on July 9, 2007, and, upon arriving at a nearby college, were assigned dorm rooms. Three female youth-group members were assigned to a room across the hall from the victim. On July 10, 2007, a group of five girls received permission to return to their dorm rooms to change clothes before the afternoon session. No chaperones accompanied the girls.

The victim claimed that she went to her room and then proceeded to the room across the hall and entered in order to ask whether the girls needed to take their Bibles to the worship center. Upon entering, she was told to leave but proceeded inside. Once inside, she was again told to leave and then one of the other girls hit her nose. The victim returned to her room, observed blood coming from her nose and called her mother. Chaperones who examined her face and nose did not see any signs of injury.

Later that evening, the victim’s mother drove the victim to a hospital where she was x-rayed and offered pain medication. Several days later, after the pain did not subside, she was seen by her family physician, who referred her to an ear, nose, and throat specialist. In December 2007, she underwent nose surgery.

Upon turning 18, the victim sued the church, claiming that it negligently failed to supervise the youth group during the camp and failed to have proper access to medical care. She alleged she suffered severe physical injuries, emotional distress, lost wages, and destruction of her power to work and earn money. She also sought punitive damages.

The church asked the court to dismiss the case on the ground that the release was valid and enforceable under Kentucky law. It argued that the release was clear and unambiguous, that the family was not compelled to execute it, and that public policy favored protecting charitable organizations. The victim countered that the release was “buried” in language permitting medical treatment and did not release the church for its own negligence and that the mother was not in an equal position when signing the forms. The trial court granted summary judgment in favor of the church, and the victim appealed.

A state appeals court ruled that the release form signed by the mother was unenforceable. It observed:

Although releases for exemption from future liability for negligence are not invalid per se, such contracts are disfavored and are strictly construed against the parties relying upon them … . Because the law disfavors such contractual provisions, the wording of the release must be so clear and understandable that an ordinarily prudent and knowledgeable party to it will know what he or she is contracting away; it must be unmistakable.

The court concluded that the release signed by the mother was unenforceable for the following reasons:

  • The release did not mention “negligence.”
  • The release did not explicitly release the church from liability for personal injuries caused by its own conduct.
  • The release could reasonably be construed to only release the church from vicarious liability in connection with any medical treatment rather than for its own conduct. Such a construction “was particularly reasonable where, as here, the language relied upon by the church was included within the medical permission form and ‘buried’ in small print within that provision.”
  • There was no specificity in the release “regarding the type of harm contemplated by the release, and, in fact, it was broadly written to purport to cover all claims, past and future, from whatever source or of whatever nature.”

What this means for churches

A release form is a document signed by a competent adult that purports to relieve a church from liability for its negligence. The courts look with disfavor on release forms, and this has led to several limitations, including:

1. Release forms will be strictly and narrowly construed against the church.

2. Release forms will not be enforced if they are ambiguous.

3. Release forms cannot relieve a church of liability for injuries to minors, since minors have no legal capacity to sign such forms and in most states their parents’ signatures do not prevent minors from bringing their own personal injury claims after they reach age 18.

4. Some courts refuse to enforce any release form that attempts to avoid liability for personal injuries on the ground that such forms violate public policy.

5. Some courts refuse to enforce release forms that attempt to avoid liability for intentional acts, gross negligence, or willful or wanton conduct. If a release form does not explicitly exclude such conduct from its terms, the form may be invalidated by a court.

6. Release forms will not be enforced unless they clearly communicate that they are releasing the church from liability for its negligence.

7. Some courts refuse to enforce release forms if they are “contracts of adhesion” based on a gross disparity in bargaining power between the releasor and releasee. To illustrate, if the person signing a release form has no ability to change it, this may suggest an unenforceable adhesion contract. On the other hand, some courts have ruled that a release form is not an unenforceable contract of adhesion if the party signing the form could walk away from the transaction and do business elsewhere. This exception may or may not apply to a church, depending on the circumstances. After all, is it realistic to say that a church member has the right to walk away and attend another church, and therefore a release form is not a contract of adhesion?

8. Some courts refuse to enforce a release if the release language is inconspicuous. To illustrate, if the language of release is buried in another, larger document, without a bold heading, larger font, and other features to draw attention to it, it may be unenforceable.

9. Some courts have ruled that release forms that do not contain a signature by the releasor are unenforceable. To illustrate, if the language of release is contained in a larger document, a signature line should appear directly after the language of release as well as at the end of the document.

Churches should not use releases without legal counsel. Grego v. Jenkins, 2017 WL 127729 (Ky. App. 2017).

TIP. Churches that send groups of adults on short-term missions projects should consider having each participating adult sign an assumption of risk form. So long as these forms clearly explain the risks involved, and leave no doubt that the signer is assuming all risks associated with the trip, they may be enforced by the courts. This assumes that the signer is a competent adult. Churches should consult with an attorney about the validity of such forms under state law. Also, see “Parental Permission and Medical Consent Forms.”

Legal Developments

“Ecclesiastical Abstention Doctrine” Preserved in Kentucky Church Governance Lawsuit

Church Law and Tax Report “Ecclesiastical Abstention Doctrine” Preserved in Kentucky Church Governance Lawsuit Key

Church Law and Tax Report

“Ecclesiastical Abstention Doctrine” Preserved in Kentucky Church Governance Lawsuit

Key point 6-06.4. Church officers and directors can be removed from office in the manner authorized by the church’s governing documents. It is common for church bylaws to give the membership the authority to remove officers and directors who engage in specified misconduct or change their doctrinal position.

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

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

The Kentucky Supreme Court ruled that it was barred by the “ecclesiastical abstention doctrine” from resolving a lawsuit brought by dismissed board members of a church-affiliated agency challenging the legality of their dismissal. A church-affiliated children’s services ministry attempted to remove a board member for repeated acts of harassment. The ministry’s board of trustees voted by majority vote to remove the director, but failed to achieve the two-thirds vote required by the ministry’s bylaws to remove a director. As a result, several trustees resigned in disgust and protest. Six months later, at the ministry’s annual business meeting, several members proposed a resolution replacing the existing board with a new board, and amending the bylaws to include measures to protect against misconduct by board members. The resolution passed overwhelmingly by a vote of 113 to 8.

The ousted board members filed a lawsuit challenging the resolution that removed them from office. The ousted board members asked the court to invalidate the bylaw amendment on the ground that the notice requirement prescribed by the bylaws was not followed, and reinstate them as the lawful board.

The ministry asked the court to dismiss the lawsuit, claiming that the courts lacked jurisdiction over the matter based on the “ecclesiastical abstention doctrine” which generally bars the civil courts from meddling in internal church disputes. A trial court ruled that it could resolve the controversy on the basis of “neutral laws” that would not trigger the ecclesiastical abstention doctrine. The state supreme court, on appeal, disagreed. It began its ruling with this observation:

The concept of ecclesiastical abstention or church autonomy has long been recognized as a necessary corollary to the First Amendment’s religion clauses. To protect the rights embodied in the Free Exercise and Establishment Clauses of the First Amendment, ecclesiastical abstention provides “a spirit of freedom for religious organizations, an independence from secular control or manipulation—in short, power to decide for themselves, free from state interference—matters of church government as well as those of faith and doctrine.”

Thus, when resolution of a case is “dependent on the question of doctrine, discipline, ecclesiastical law, rule, or custom, or church government,” secular courts must abstain from hearing the case. Put differently, “where resolution of the disputes cannot be made without extensive inquiry by civil courts into religious law and polity, the First and Fourteenth Amendments mandate that civil courts shall” not act.

“At bottom, the ecclesiastical-abstention doctrine is primarily interested in preventing any chilling effect on church practices as a result of government intrusion in the form of secular courts.” But churches are not the only benefactors of ecclesiastical abstention. All religious organizations are entitled to protection under the First Amendment, so all suits that present an ecclesiastical character, those “which concern theological controversy, church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required of them” fall within the scope of the ecclesiastical-abstention doctrine. [Quotations are from the following decisions by the United States Supreme Court: Watson v. Jones, 80 U.S. (13 Wall.) 679 (1871); Kedroff v. St. Nicholas Cathedral of Russian Orthodox Church, 344 U.S. 94 (1952); Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976).]

The court conceded that “the mere inclusion of a religious organization as a party to a suit does not necessarily implicate the ecclesiastical-abstention doctrine.” Secular courts “are not prohibited from hearing cases involving religious organizations where the dispute can be resolved by the application of neutral principles of secular law.” But this was not such a case since “the neutral principles doctrine should not be extended to religious controversies in the area of church government.” The court concluded: “It is axiomatic that the underlying dispute is about the internal governance of [a religious ministry]. The crux of the controversy revolves around who is entitled to govern [the ministry] by way of their position on the board of trustees. It could not be clearer that this suit concerns the internal governance of [a church agency].”

What This Means For Churches:

This case is an excellent example of the impact of the ecclesiastical abstention doctrine (sometimes called the “church autonomy” doctrine) on church disputes. Internal church disputes that concern “theological controversy, church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required of them” are beyond the reach of the civil courts, and cannot be revived by appeals to “neutral principles of law.”

Note that the court concluded that the ecclesiastical abstention doctrine deprived the civil courts of authority to decide not only the ousted board members’ claim that their ouster was unlawful, but also that the notice requirement in the ministry’s bylaws had not been followed. St. Joseph Catholic Orphan Society v. Edwards, 449 S.W.3d 727 (Ky. 2014).

See also “Charters, constitutions, and bylaws,” Kamchi v. Weissman, 1 N.Y.S.3d 169 (N.Y. App. 2014), in the Recent Developments section of this newsletter.

Legal Developments

Seminary Professor Unable to Sue for Racial Discrimination

Ministerial exemption keeps court from getting involved in discrimination claims.

Church Law and Tax Report

Seminary Professor Unable to Sue for Racial Discrimination

Ministerial exemption keeps court from getting involved in discrimination claims.

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

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

The Kentucky Supreme Court ruled that the “ministerial exception,” which bars the civil courts from resolving employment discrimination claims between churches and clergy, prevented a seminary professor from suing his seminary for racial discrimination, but did not prevent him from suing the seminary for breach of contract. Founded in 1865, originally as the College of the Bible on the campus of Transylvania University, Lexington Theological Seminary is “an accredited graduate theological institution of the Christian Church (Disciples of Christ).” The stated mission of the Seminary is “to prepare faithful leaders for the church of Jesus Christ and, thus, to strengthen the church’s participation in God’s mission for the world.” In executing its mission, the aim of the Seminary is “to prepare women and men of varied backgrounds and traditions for ordained and other forms of ministry.” Consistent with this mission and the tenets of the Christian Church (Disciples of Christ), the Seminary is intentionally ecumenical with nearly half of its enrollment coming from other Christian denominations.

The Seminary’s Faculty Handbook detailed the procedure for termination of tenured faculty. Proceedings to dismiss a tenured professor could only be instituted by the president, the dean, or a member of the faculty. “The only grounds for dismissal of a tenured faculty member are moral delinquency, unambiguous failure to perform the responsibilities outlined in this Handbook, or conduct detrimental to the Seminary.” Employed on an annual probationary basis, non-tenured faculty members may only be dismissed for cause, as well.

The Seminary began experiencing severe financial problems in 2009 amidst a nationwide economic downturn. During the period of July 2007 to January 2009, the Seminary saw its endowment shrink from roughly $25 million to $16 million. At that time, the Seminary had 10 full-time professors, 21 other full-time staff members, and a number of part-time instructors. To survive this “tsunami of economic disasters,” the Seminary decided to abolish a number of faculty and staff positions. The Board of Trustees approved eliminating tenured faculty. One of these was a tenured professor (the “plaintiff”) who had taught at the seminary for 15 years. Before terminating his employment, the Seminary offered him a severance package which offered an additional year’s employment with a year’s salary, conditioned upon the release of all potential claims against the Seminary. The plaintiff declined the offer. The Seminary restructured its curriculum and mission in an attempt to weather the financial chaos, opting to “emphasize practical training for clergy in areas such as financial management, conflict resolution and the use of technology … rather than … theology and biblical studies.”

Following his termination in 2009, the plaintiff sued the Seminary for breach of contract, breach of the implied duty of good faith and fair dealing, and discrimination based on race. The trial court dismissed all claims on the ground that they were barred by the “ministerial exception.” A state appeals court agreed, and the plaintiff appealed to the state supreme court.

The ministerial exception
The court began its ruling by affirming the ministerial exception: “Simply stated, the ministerial exception is a judicially created principle whereby the secular courts have no competence to review the employment-related claims of ministers against their employing faith communities.” The court noted that the ministerial exception has been applied to lay employees, seminary professors, hospital workers, press secretaries, musicians, and many others. It further noted that the United States Supreme Court, in a case unanimously affirming the ministerial exception in 2012, declined “to adopt a rigid formula for deciding when an employee qualifies as a minister.” Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C., 132 S.Ct. 694 (2012). The Court concluded that a called teacher in a Lutheran school was a minister under the ministerial exception in light of “the formal title given her by the church, the substance reflected in that title, her own use of that title, and the important religious functions she performed for the church.”

The plaintiff was a ministerial employee to whom the ministerial exception applied
In deciding whether the plaintiff was a ministerial employee, the court applied the four-factor test applied by the United States Supreme Court in the Hosanna-Tabor case:

1. the formal title given by the religious institution,
2. the substance reflected in that title,
3. her own use of the title, and
4. the important religious functions performed for the religious institution.

The court declined to “adopt a categorical rule regarding Seminary professors or any other class of individuals who may be considered ministers under the ministerial exception.” But, it concluded that the plaintiff was a minister: “[The plaintiff] is not ordained … but that is not dispositive. Given his extensive involvement in the Seminary’s mission, religious ceremonies, and the subject matter of his teaching, it is clear that he is a ministerial employee.” The court pointed to the following facts:

  • As a member of the faculty, the plaintiff was tasked with carrying out the mission of the Seminary to prepare students for the ministry of Jesus Christ.
  • The plaintiff’s teaching focused on “helping students understand what the basic socio-ethical issues are and the nature of the Christian (or Christ-like) response.” Some of the courses he taught included “Introduction to Christian Social Ethics,” “The Church and the Urban Poor,” “The Cultural Context of Ministry,” and “The Black Religious Experience in America.”
  • During his employment at the Seminary, the plaintiff participated in chapel services, convocations, faculty retreats, and other religious events. He preached on numerous occasions at both his own CME congregation and various Christian Church (Disciples of Christ) congregations.

The court concluded that the plaintiff “was closely connected to the tenets of the faith espoused by the Seminary and actively involved in the promotion of the Seminary’s mission. As a professor at an ecumenical Seminary, instructing on Christian principles, he served as a representative of the Seminary’s message. He has, on multiple occasions, served as the Seminary’s official representative, ambassador, and voice to the faithful.”

Discrimination claim
The court concluded that the ministerial exception barred the plaintiff’s race discrimination claim: “In Hosanna-Tabor, the Supreme Court made clear that the ministerial exception bars employment discrimination suits. And, in addition, the pre-Hosanna-Tabor case law regarding the interplay between anti-discrimination statutes and the ministerial exception is clear: these claims are barred. As a result, the plaintiff’s claim [of race discrimination] ends with the determination that he is a ministerial employee.”

The court observed, “Employment discrimination laws require employers to meet certain fairness standards in hiring and firing employees. Enforcing these laws on religious institutions, possibly against the religious institution’s sincerely held beliefs, goes to the core of the purpose behind the ministerial exception because the government would deprive the church of control over the selection of those who will personify its beliefs. A religious institution may hold beliefs that are discriminatory under a particular anti-discrimination statute and the ministerial exception acts to protect the religious freedom of those institutions no matter how distasteful society may find it or how strong the societal interest may be.”

Breach of contract claim
The court ruled that the plaintiff could pursue his breach of contract claim against the Seminary since: “(1) the enforcement of the contractual arrangement between the Seminary and the plaintiff does not arouse concerns of government interference in the selection of ministers, and (2) the contract does not involve any matters of ecclesiastical concern that would otherwise bar the suit under the ecclesiastical abstention doctrine.”

The court noted that “when deciding whether a claim is barred by the ministerial exception, it is important to remain mindful of the ministerial exception’s underlying purpose: to allow religious institutions, free from government interference, to exercise freely their right to select who will present their faith tenets. Although state contract law does involve the governmental enforcement of restrictions on a religious institution’s right or ability to select its ministers, those restrictions are not governmental restrictions. Simply put, the restrictions do not arise out of government involvement but, rather, from the parties to the contract, namely, the religious institution and its employee.”

The court stressed that “we are not presented with a situation where the government is inappropriately meddling in the selection of who will minister to the congregation. Limits on a religious institution’s ability to choose—or the criteria for choosing—who will minister to its faithful are not being foisted on the religious institution. The government had no role in setting the limits on how the Seminary’s tenured professors may be terminated. Instead, this is a situation in which a religious institution has voluntarily circumscribed its own conduct, arguably in the form of a contractual agreement, and now that agreement, if found to exist, may be enforced according to its own terms. That cannot breach church autonomy. Arguably, instead, this exemplifies religious autonomy because religious institutions are free to set forth policies that align with their respective mission.”

The court concluded:

The Seminary “willingly made a decision to offer tenure—a wholly secular concept—in exchange for professorial services. Providing substance to the offer of tenure, the Seminary explicitly stated in writing that it would only terminate a tenured professor on three grounds: (1) “moral delinquency,” (2) “unambiguous failure to perform the responsibilities outlined in [the Faculty] Handbook,” and (3) “conduct detrimental to the Seminary.” Of course, under the First Amendment, and the ministerial exception for that matter, the Seminary enjoys the right to excuse ministers as it sees fit. But here, the Seminary circumscribed its right to excuse faculty, ministers or not. The Seminary agreed to only express its First Amendment right under limited conditions.”

While the court permitted the plaintiff to pursue his breach of contract claim, it stressed that “reinstatement is an unavailable remedy because that would entail a secular court deciding who speaks for the church. That we cannot do.”

What This Means For Churches:

This case is relevant for two reasons. First, the court applied a four-factor test, first announced by the United States Supreme Court in the Hosanna-Tabor case, in determining if a person is a “minister” to whom the ministerial exception applies.

Second, the court concluded that while the ministerial exception bars discrimination claims by current or dismissed ministers, it does not bar breach of contract claims. The court concluded that the provisions of the Seminary’s Faculty Handbook pertaining to tenured positions was a “contract” between the plaintiff and Seminary, and the Seminary could be liable on the basis of breach of contract for violating its provisions. This, the court concluded, was not a matter of a civil court meddling in employment decisions between a Seminary and its faculty. Instead, it was simply a civil court enforcing the agreement privately entered into between the Seminary and plaintiff.

Not all courts will agree that breach of contract claims between churches and clergy are not barred by the ministerial exception. But, this possibility will exist in some states, which makes it imperative for church leaders to obtain legal review of employment handbooks and other contractual documents to ensure that they will not give rise to breach of contract claims that the civil courts may agree to adjudicate. Through careful drafting, this risk can be significantly reduced, if not eliminated. Kirby v. Lexington Theological Seminary, 426 S.W.3d 597 (Ky. 2014).

Legal Developments

Performing “Religious” Marriage Ceremonies

Risks of officiating at “religious” marriages that don’t comply with state law.

Richard R. Hammar, Attorney, CPA
Bio


Key point 3-04. All states permit clergy to perform marriage ceremonies. However, some states permit only "ordained" or some other classification of clergy to perform marriage ceremonies. It is important for clergy to determine if they are legally authorized to perform marriages under applicable state law, and, in addition, to be aware of the legal qualifications for marriage and any license and reporting requirements prescribed by state law.

A Kentucky court ruled that a couple who participated in a "religious marriage" without obtaining a marriage license from the county clerk were not legally married. After dating for nearly a year, a Jewish couple asked their rabbi if he could perform a Jewish marriage ceremony consistent with the laws, customs, and traditions of the Jewish faith, but without a "secular, legal marriage contract." In particular, the parties did not wish for any civil marriage license or marriage certificate to be executed or filed. Neither person was an American citizen, and the rabbi understood that their desire to avoid a civil marriage was based upon immigration concerns and a need to remain legally free to marry American citizens for the purpose of applying for citizenship.

The rabbi confirmed that Jewish religious law does not require that a civil marriage license be obtained and executed, or that certification of the marriage ceremony be filed with a governmental clerk, for the establishment of a valid marriage. Even so, his attempts to convince the couple to be married in accordance with both the mandates of Jewish religious law and civil law were unsuccessful.

The rabbi presided over a highly ritualistic orthodox Jewish wedding ceremony for the couple, in the presence of more than 100 family, friends, and guests, and in accordance with all laws, customs, and traditions of their faith. During the ceremony, the couple signed a "Ketubah"—a formal Jewish marriage contract that provides for a money settlement payable to the wife in the event of divorce or at the husband's death. Thereafter, the assembly joined in other traditional Jewish acts related to marriage at a reception.

Though he is a person authorized to solemnize civil marriages under state law, the rabbi testified he did not solemnize a civil marriage for the couple, at their insistence.

Both "spouses" acknowledged that they did not apply for, or obtain, a civil marriage license or cause a marriage license or marriage certificate to be executed and filed with the county clerk. The rabbi confirmed that the couple directed him not to sign or file documentation with the county clerk's office certifying that a marriage of any kind had taken place and, in keeping with their instructions, he did not do so. Thereafter, a son was born to the parties, and they continued to live together.

Two years later, the "husband" filed a divorce petition with a civil court. The "wife" opposed the petition, and a trial court ruled that the couple had entered into a legally valid "de facto marriage." The court found "no statutes relating to marriage that would indicate that the legislature intended that the validity of a marriage is conditioned on applying for, obtaining, signing, or filing a certificate of marriage license" and held "a failure to obtain or return for filing with the county clerk a license or certificate of marriage does not void or invalidate an otherwise valid marriage." Further, even though the couple had failed to obtain a marriage license and had excluded solemnization of a civil marriage from their religious marriage ceremony, the trial court held they had nevertheless established a valid and legally recognized de facto marriage.

On appeal, the "husband" claimed that the trial court erred in holding that a legally valid de facto marriage had been established because the term "de facto marriage" is synonymous with a common-law marriage and Kentucky does not recognize common-law marriage. A state appeals court began its opinion by observing:

The issues confronting us in the present case arise in the context of parties who knowingly and intentionally evaded and disregarded statutory mandates for establishing a legally valid civil marriage, particularly including their duty to initially obtain a license to be civilly married within Kentucky. Instead, they opted to participate in a purely religious marriage ceremony celebrated by their rabbi before a gathering of family and friends. Contrary to the explicit advice of their rabbi, the parties chose not to secure the requisite civil marriage license in advance of their marriage ceremony. For whatever reason, they demanded their rabbi solemnize a marriage ceremony solely in accordance with the laws of their Jewish faith, with no reference to, witnessing, or certification of, a civil marriage. They further insisted their rabbi sign and file no certification or recording of any marriage ceremony with any civil authority. The trial court found the parties thereafter cohabited, gave birth to a son, and held themselves out to their community as husband and wife, prior to the souring of their relationship. Based on these facts, the trial court determined the parties had established a valid "de facto marriage" under Kentucky law.

The court noted that the legal requirements for a valid marriage in Kentucky are "concise and unambiguous." Section 402.080 of the Kentucky Revised Statutes specifies that "no marriage shall be solemnized without a license therefore." The court interpreted this language as imposing two requirements for a valid marriage: "First, the parties intending to be married must obtain a marriage license from a county clerk. Second, having obtained a marriage license, the parties intending to be married must solemnize their intent to be married before a person or society believed in good faith to possess authority to solemnize the marriage." The court concluded that strict compliance with these requirements "is necessary for the establishment of a legally valid and binding civil marriage."

In the present case, it was undisputed that the couple did not apply for, or obtain, a marriage license from the county clerk prior to their religious ceremony. The court noted that both "spouses" were aware of the license requirement, but intentionally disregarded it. Because they both "flagrantly disregarded the statutory requisites, neither can now reasonably argue that a legally valid civil marriage was ever intended, effectuated or supposed. Though a purely religious marriage ceremony was solemnized by [the rabbi] the uncontroverted proof establishes that no marriage license was ever obtained, and on that basis alone any presumption of a legally valid civil marriage is entirely negated."

The court concluded that "where parties fail to obtain the requisite marriage license prior to the solemnization of their intent to be joined in marriage, there is nothing of a civil nature for an otherwise authorized officiant to solemnize, no legally valid civil marriage can arise, and there is no civil marriage to be otherwise prohibited, voided, or declared invalid."

The court acknowledged that the rabbi was authorized by state law to solemnize civil marriages in Kentucky, but it concluded that "no minister, priest, rabbi, justice, judge, or religious society is authorized to solemnize a civil marriage absent the parties thereto first obtaining a marriage license."

What This Means For Churches:

Pastors occasionally are called upon by parishioners to perform a "religious" marriage ceremony without complying with the legal requirements for a valid marriage prescribed by state law. There are many reasons for doing so. Consider the following examples:

  • One or both spouses is an undocumented alien.
  • Compliance with one or more of the civil law requirements is not possible. For example, a couple failed to obtain a license within the time prescribed by law, or one of the spouses is underage.
  • A pastor is asked to perform a marriage in another state in which nonresident pastors are not authorized to perform marriages.
  • A divorced spouse will lose alimony from her former husband if she remarries.
  • A divorced spouse will lose insurance or other benefits in the event of remarriage.
  • A couple believes that their Social Security retirement benefits will be higher if they are not legally married.
  • A couple regards the civil law requirements for marriage as an unnecessary nuisance, or even an unwarranted government intrusion into an essentially religious ceremony.

Whatever the reason, pastors should understand that officiating at a religious marriage that intentionally fails to comply with the civil law requirements for a marriage may not be treated as a valid marriage under state law, and this can have several unintended consequences, including the following:

  • Pastors may be subject to criminal penalties (typically a misdemeanor involving a fine or short prison sentence) under state law for performing a marriage that does not comply with state law. It is imperative for pastors to understand the possible application of such penalties before performing a religious marriage.
  • A religious marriage that does not comply with civil law requirements may preclude one spouse from suing for money damages based on "loss of consortium" for injuries sustained by the other.
  • In general, your tax filing status depends on whether you are considered unmarried or married. For federal tax purposes, a marriage means only a legal union between a man and a woman as husband and wife. You are considered unmarried for the whole year if, on the last day of your tax year, you are unmarried. State law governs whether you are married or legally separated under a divorce or separate maintenance decree. An unmarried couple may not file a joint tax return as a married couple. Each files an individual tax return.
  • If a couple is "considered married" for the whole year, they can file a joint return, or separate returns. A couple is "considered married" for the whole year if, on the last day of the tax year, they were living together in a common law marriage recognized in the state where they live, or in the state where the common law marriage began. Only nine states currently recognize common law marriages, and in many of these states, only some common law marriages are recognized.
  • An unmarried couple cannot claim each other as an exemption on their individual tax returns.
  • An unmarried couple can claim each other as a dependent on their individual tax returns, unless certain conditions are met.
  • Unmarried persons cannot combine tax deductions, and cannot claim expenses paid by their partner.
  • The phaseout for an IRA deduction begins at a lower amount of income for unmarried persons than for married persons.
  • Married spouses generally avoid estate taxes upon the death of the first spouse. This is not necessarily the case with unmarried partners.
  • Married spouses generally can transfer property back and forth without gift taxes due to the unlimited marital deduction. This is not the case with unmarried partners.
  • If an employer provides health benefits to employees and their "domestic partners," the amount paid by the employer is generally a tax-free fringe benefit to employees but is taxable to unmarried partners.
  • An unmarried partner generally cannot receive death benefits payable as a result of the death of the other partner. There is an exception for couples who have a "common law marriage" recognized under state law. However, these marriages are recognized in only nine states, and conditions apply.
  • Unmarried partners can execute wills (or other legally enforceable instruments) that leave some or all of their estate to a surviving partner. However, without a will, a deceased partner's estate that is not otherwise disposed of will be distributed according to the law of intestacy. Unmarried partners have no rights under intestacy laws. A few states have passed laws that permit domestic partners to receive a share of a deceased partner's estate.
  • If an unmarried couple ends their relationship, there generally is no right of alimony or support from one former partner to the other. A few states have enacted legislation that in some circumstances permits the provision of support (sometimes called "palimony") from one former partner to the other. Conditions apply. Pinkhasov v. Petocz, 331 S.W.3d 285 (Ky. App. 2011).

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Legal Developments

Statute of Limitations Prevents Church from Being Sued

Court rules statute of limitations prevents 23-year-old male from suing a church six years after abuse from youth pastor took place.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax Report

Statute of Limitations Prevents Church from Being Sued

Court rules statute of limitations prevents 23-year-old male from suing a church six years after abuse from youth pastor took place.

Richard R. Hammar

Sexual misconduct by clergy, lay employees, and volunteers

Key point 10-16.4. The statute of limitations specifies the deadline for filing a civil lawsuit. Lawsuits cannot be brought after this deadline has passed. There are a few exceptions that have been recognized by some courts: (1) The statute of limitations for injuries suffered by a minor begins to run on the minor’s 18th birthday. (2) The statute of limitations does not begin to run until an adult survivor of child sexual molestation “discovers” that he or she has experienced physical or emotional suffering as a result of the molestation. (3) The statute of limitations does not begin to run until an adult with whom a minister or church counselor has had sexual contact “discovers” that his or her psychological damages were caused by the inappropriate contact. (4) The statute of limitations is suspended due to fraud or concealment of a cause of action.

* A Kentucky court ruled that the statute of limitations barred a victim of child sexual abuse from suing a church that employed the molester as its youth pastor. In 2007, a 23-year-old man (the “victim”) sued his former church, alleging that he had been sexually molested while a minor by the church’s youth pastor. The victim claimed that the church was legally responsible for the youth pastor’s acts on the basis of negligent hiring, negligent supervision, and a failure to warn. The alleged molestation occurred when the victim was 14 and 15 years of age. The victim attained age 18 in 2001, and the following year informed his father of the abuse. This disclosure resulted in a report being made with the police. Following an investigation, the youth pastor was charged with felony child abuse, and later pled guilty to his crimes and was sentenced to prison.

The plaintiff sued the church in 2007, when he was 23 years old. The church asked the court to dismiss the lawsuit on the ground that it had been filed after the statute of limitations for personal injuries had expired. The trial court agreed that the lawsuit was barred by the statute of limitations, and dismissed the case. It applied the one-year statute of limitations under state law that applies to personal injuries. In cases involving personal injuries to minors, the one-year period for filing a lawsuit does not commence until the minor’s 18th birthday. In this case, that meant that the plaintiff should have filed his lawsuit prior to his 19th birthday. By the time he filed the lawsuit, at age 23, the limitations period had expired.

The plaintiff appealed, claiming that the one-year limitations period had been “tolled” or suspended by a state law allowing the period to be tolled if a defendant “obstructs” the filing of a lawsuit. The plaintiff claimed that the limitations period was tolled because the church either concealed or obstructed the filing of the lawsuit by concealing knowledge of the youth pastor’s propensities for sexual abuse. He produced three affidavits to support his claim of concealment. One affidavit, signed by a married couple, stated that they had been informed by the victim’s father that “he felt there was a problem with the way the youth pastor was interacting with his son.” A second affidavit by another church member contained a vague assertion that she believed that another church member was aware of “problems” with the youth pastor. In the third affidavit, another member stated that he approached the pastor and indicated that he believed “something strange” was going on with the youth pastor.

The victim claimed that the church was legally responsible for the youth pastor’s acts on the basis of negligent hiring, negligent supervision, and a failure to warn …. Following an investigation, the youth pastor was charged with felony child abuse, and later pled guilty to his crimes and was sentenced to prison.

The appeals court ruled that the affidavits failed to show that anyone at the church had knowledge or reason to believe that the youth pastor had behaved inappropriately with the church’s youth or had any propensities to sexually abuse the youth, and as a result it refused to toll the limitations period. The court concluded:

In [a prior case] this court found that the limitations period was tolled where evidence showed that the church had received reports of sexual abuse and concealed them and had further maintained files documenting the reports of abuse. There is no such evidence in this case …. The affidavits here provide no information, even when taken in a light most favorable to the victim, which would allow this court or a jury to find that the church had any knowledge of the abuse.

Application. This case illustrates an important point. In many states, the statute of limitations is “tolled” in cases involving the sexual molestation of a minor in a church if it can be established that church leaders “obstructed” the victim’s filing of a lawsuit by “concealing” evidence or knowledge of the abuse. This is a strong argument against denying or ignoring credible evidence of inappropriate conduct by staff members, especially in cases involving minors, since such a response may expose the church to liability long after the statute of limitations would otherwise have barred a lawsuit. 2010 WL 476046 (Ky. App. 2010).

Church Law & Tax Report is published six times a year by Christianity Today International, 465 Gundersen Dr. Carol Stream, IL 60188. (800) 222-1840.© 2011 Christianity Today International. editor@churchlawandtax.com All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold 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. “From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.” Annual subscription: $69. Subscription correspondence: Church Law & Tax Report, PO Box 37012, Boone, IA 50037-0012.

Legal Developments

The “Single Employer” Doctrine

Determining the degree of separateness between a church and an affiliated ministry.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

The “Single Employer” Doctrine

Determining the degree of separateness between a church and an affiliated ministry.

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

Key point 8-05.1. Many federal employment and civil rights laws apply only to those employers having a minimum number of employees. In determining whether or not an employer has the minimum number of employees, both fulltime and part-time employees are counted. In addition, employees of unincorporated subsidiary ministries of a church are counted. The employees of incorporated subsidiary ministries may be counted if the church exercises sufficient control over the subsidiary.

Key point 8-12. Title VII of the Civil Rights Act of 1964 prohibits employers engaged in commerce and having at least fifteen employees from discriminating in any employment decision on the basis of race, color, national origin, gender, or religion.

A federal district court in Kentucky ruled that only employers with at least fifteen employees are subject to the nondiscrimination provisions of Title VII of the Civil Rights Act of 1964, and that the fifteen-employee requirement could not be achieved by combining a church’s employees with the employees of a retirement home that it owned. A male employee (the “plaintiff”) of a church-affiliated retirement home sued his employer, alleging sexual harassment and discrimination in violation of Title VII of the Civil Rights Act of 1964. Title VII prohibits any employer, including a church, that is engaged in commerce and that has fifteen or more employees from discriminating in any employment decision as a result of a person’s race, color, national origin, sex (including sexual harassment), or religion. The plaintiff alleged he was sexually harassed over a period of five years by a female supervisor.

The retirement home employed no more than six employees for twenty weeks or more during the years of the alleged harassment. Its board of directors consisted of eleven unpaid volunteers with paid occupations separate from their volunteer duties on the board. The plaintiff sued the retirement home, claiming that the supervisor’s acts constituted sexual harassment in violation of Title VII for which the home was liable. The home asked the court to dismiss the case on the ground that it did not employ a sufficient number of employees to satisfy either the fifteen-employee requirement for Title VII or the eight-employee requirement under a similar state civil rights law. In response, the plaintiff insisted that the retirement home and church are so “interrelated” that they were a “single employer” with a sufficient number of employees to satisfy the employee requirements.

the “single employer” doctrine

The court noted that the single employer doctrine has been applied in Title VII employment discrimination cases “often as a back-door means of satisfying the statute’s numerosity requirement.” It explained the doctrine as follows:

In determining whether to treat two entities as a single employer, courts examine the following four factors: (1) interrelation of operations; i.e., common offices, common record keeping, shared bank accounts and equipment; (2) common management, common directors and boards; (3) centralized control of labor relations and personnel; and (4) common ownership and financial control. None of these factors is conclusive, and all four need not be met in every case. Nevertheless, control over labor relations is a central concern. Quoting Swallows v. Barnes and Noble Book Stores, Inc., 128 F.3d 990 (6th Cir. 1997).

The burden is on a plaintiff to present facts that satisfy this four-part “single employer” test.

The court agreed with the church that “there is no evidence that the operation of the [home] and the church are interrelated.” It concluded:

The home maintains its own offices, records, bank accounts and equipment which is physically separate from the church. The day-to-day operations of the home are not run by the church, but by [an outside company] pursuant to a management plan …. [The outside company] did not contract with, or answer to, the church for the services it provides to the home. Nor does it provide any services to the church.

Moreover, there is no centralized control of labor relations between the home and the church. The church is governed by a majority vote of its entire membership on all church matters, including personnel issues, while the home is governed by a board of directors consisting of eleven unpaid volunteers. Although the bylaws of the home dictate that the pastor of the church also serve as chairman of the home’s board, his position represents only one out of eleven votes on the board. The remaining ten board members are volunteers. These board members have occupations separate and apart from their volunteer obligations to the home. Despite the fact that all the board members attend the church, there is no evidence that the home’s board members are required to consult with or seek approval of the church when making operational decisions affecting the home. Importantly, there is no evidence that the church has any authority to terminate or affect the employment of the home’s employees.

Finally, there is no evidence of common ownership or financial control between the church and the home. The assets of the home are owned by the individual “members” of the home’s board—the church has no “ownership” stake in the home. The home’s board, without input or approval of the church, approves an annual budget for the home, and [the outside company] provides management assistance in daily operations. The home’s revenues are not from the church, but result from rent receipts and government subsidies.

The court concluded, in light of these facts, that the church and home were not a “single employer” according to the four-factor test that it applied. It conceded that “there is indeed overlap” between the two due to the fact that the home’s board of directors consists solely of church members, but this fact alone did not “overcome the lack of evidence with respect to interrelation of operations, centralized control of labor relations, or common financial control.”

Application. Many churches operate affiliated entities. Common examples include schools and preschools. It is important for church leaders to understand that the courts in some cases may treat a church and an affiliated ministry as a “single employer” in deciding if the church has the requisite number of employees for a federal nondiscrimination law to apply, meaning that the employees of the church and the affiliate will be combined in making this determination. However, the employees of both entities will not be combined in all cases. The courts generally consider the following four factors in deciding whether or not to combine employees: (1) interrelation of operations; i.e., common offices, common record keeping, shared bank accounts and equipment; (2) common management, common directors and boards; (3) centralized control of labor relations and personnel; and (4) common ownership and financial control. Note that none of these factors is conclusive, and all four need not be met in every case.

The court concluded that the church and its retirement home were not a single employer, even though the members of the home’s board were church members. It based this conclusion on the following analysis:

Interrelation of operations

Common management, common directors and boards

Centralized control of labor relations and personnel

Common ownership and financial control

Resource. The degree of separateness between a church and an affiliate that is required to build an effective liability firewall is a complex question that is addressed fully in chapter 10 of Richard Hammar’s four-volume set, Pastor, Church & Law (4th ed. 2008), available by calling 1-800-222-1840 or visiting ChurchLawAndTaxStore.com, or through a membership on our website, ChurchLawAndTax.com.

This Recent Development first appeared in Church Law & Tax Report, May/June 2011.

Legal Developments

Tax Exemptions for Infrequently Used Property

Court rules that church-owned vacant land is eligible for property tax exemption.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

Tax Exemptions for Infrequently Used Property

Court rules that church-owned vacant land is eligible for property tax exemption.

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

Key point. Undeveloped church-owned property generally is not exempt from property taxation. However, some courts have ruled that such property may be exempt from taxation if its sole, though infrequent, use is for religious purposes.

The Kentucky Supreme Court ruled that church-owned vacant land was entitled to a property tax exemption despite infrequent religious use. The Kentucky Supreme Court ruled that a 10-acre tract of largely vacant property that a church had acquired for future expansion was exempt from property taxation due to its occasional use for church purposes. A church purchased ten acres of land, including two houses. The acreage was divided into two parcels, each consisting of approximately five acres, with a single family dwelling located on each parcel. It was the stated purpose of the church to build a new, larger facility on this property, as well as to provide for an activity center and other related church facilities as soon as finances allowed. The two houses were rented to individuals for residential purposes, with the rental income being used by the church building fund to service a mortgage on the property. The field on the side of these houses is used by the church for recreational purposes about once a year. On two occasions, the church has held an annual church picnic on the property. And while there have been no improvements or permanent structures erected by the church, a cross and bench were erected on a small portion of the property with permission of the tenants. This area is used for meditation by some of the parishioners.

The tax assessor determined that the property was subject to taxation. The church appealed to the state supreme court, claiming that the property was exempt on the basis of a provision in the state constitution exempting from taxation “property owned and occupied by … institutions of religion.” The court, in concluding that the property was entitled to exemption, observed:

While the evidence does not indicate a continuous use of these grounds by [the church] it does support the finding of the trial court as to periodic use, such as horseshoe pitching, volleyball, softball, and tugs of war during the occasional outings by the church membership. There is also a portion used as a prayer and meditation area, including a bench and a large wooden cross. In essence, the congregation has used this property like a park, although not on either a daily or weekly basis. However, it would seem that it has been utilized by the church with the same frequency as many, if not most, churches use outdoor land that adjoins their main sanctuaries. Therefore, we find that substantial evidence supports the findings by the trial court that the land owned by the church, but not occupied by the tenants, is, in fact, occupied by the church for purposes of the Kentucky Constitution.

The court then made the following significant comment:

We recognize that churches are unique. For the most part, they are never “occupied” in the conventional sense. A vast majority of properties owned by “institutions of religion” such as churches, mosques, tabernacles, temples, and the like, are used for places of worship at specified times and may remain vacant for substantial periods during the week. We further recognize that adjacent facilities, such as activity buildings, gymnasiums, even shelters, may be owned by religious institutions, but perhaps utilized irregularly on an as needed basis. School buildings owned by religious institutions may, in fact, sit idle for a great deal of time. This would not preclude these buildings from being “occupied” … It is precisely for these reasons that we find that the trial court’s findings were supported substantially by the evidence in this case as to the property not being rented out as residences. Freeman v. St. Andrew Orthodox Church, Inc. 294 S.W.3d 425 (Ky. 2009).

This Recent Development first appeared in Church Law & Tax Report, January/February 2011.

Legal Developments

Church Held Liable for Coach’s Sexual Misconduct

Don’t ignore warning signs of potential misconduct.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

Church Held Liable for Coach’s Sexual Misconduct

Don’t ignore warning signs of potential misconduct.

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

Key point. A church may be liable on the basis of negligent selection for a worker’s molestation of a minor if the church was negligent in the selection of the worker. Negligence means a failure to exercise reasonable care, and so negligent selection refers to a failure to exercise reasonable care in the selection of the worker. Liability based on negligent selection may be imposed upon a church for the acts of employees and volunteers.

Key point. Some courts have found churches liable on the basis of negligent retention for the sexual misconduct of ministers and other church workers on the ground that the church was negligent in retaining the offender after receiving credible information indicating that he or she posed a risk of harm to others.

A Kentucky court ruled that a church could be liable for an employee’s sexual molestation of two minor girls since church leaders had sufficient evidence of inappropriate conduct by the offender to make it foreseeable that he would molest the two girls. The principal of a church-operated private high school appointed a 23-year-old church member (“Eric”) as the girls’ basketball team coach. Pursuant to school policy, a criminal background check was performed prior to Eric’s appointment. Although Eric previously resided in Ohio, only a Kentucky background check was performed, which did not reveal his criminal history for drug and traffic offenses in Ohio. Prior to his appointment, he told members of the congregation, including the principal, about his prior drug use, and several church members confirmed that he had “testified” in church regarding his drug use.

After his appointment as coach, Eric began telephoning a 14-year-old team member (the “victim”) late at night. Upon learning of the contact between her daughter and Eric, the girl’s mother informed the principal about the phone calls and stated that she found his conduct inappropriate. The principal assured the mother that Eric would be supervised. Subsequently, the principal met with Eric and instructed him to stop calling the team member and giving her rides in his car.

Despite this admonition, Eric had sexual intercourse with the victim on two occasions. He also attempted to sexually assault a second team member in a school van, but ceased his advances when other team members approached the van.

Several team members later testified that Eric made sexual advances toward the girls and that he was “weird” and “creepy.” There was also testimony that a student who knew of Eric’s calls to the one victim suspected a possible sexual relationship between the two and informed the principal regarding his suspicions.

The parents of Eric’s two victims sued the church and school claiming that they were legally responsible for his actions on the basis of negligent hiring and negligent retention. The trial court dismissed the lawsuit on the ground that negligence-based liability requires proof of foreseeable harm, and there was nothing in Eric’s background to suggest that he would sexually molest minors in his care. The parents appealed.

A state appeals court noted that liability for negligent hiring and retention “can be imposed on an employer who knew or should have known that an employee was unfit for the job in which he was employed and that his placement or retention in that job created an unreasonable risk of harm.” The court agreed with the trial court that liability for negligent hiring or retention requires proof that the victims’ injuries were reasonably foreseeable. The court conceded that the school’s failure to conduct an Ohio criminal records check was evidence of negligent hiring or retention since such a check would have only uncovered drug and traffic offenses in that state which “did not render it foreseeable that Eric would commit criminal sexual acts.” While his drug-related convictions “did not render him a desirable athletic coach, there was nothing in his criminal history to suggest that he had a propensity to sexually abuse children.”

However, the court concluded there was additional evidence of foreseeability that required it to reverse the trial court’s dismissal of the case. It observed:

The principal was warned by students and [one victim’s mother] that Eric had engaged in inappropriate behavior toward girls at the school. As a result, the principal verbally reprimanded him and instructed him to cease further contact with [that victim]. Furthermore, students informed the principal that they believed Eric’s conduct toward female students was inappropriate.

Although the principal and other school personnel may not have known that he would commit or was committing criminal acts, the law only requires that it be reasonably foreseeable that there was a risk of harm. It is not beyond reason for a jury to conclude that the principal’s knowledge of Eric’s late night phone calls to female students, providing transportation to [one of his victims] in his private vehicle, and information gained from [that victim’s] mother and other sources, make it foreseeable that he would commit the acts alleged by the [parents].

Application. This case is instructive for three reasons. First, it demonstrates that the shortcomings of local or in-state criminal records searches. The church only conducted a search of Kentucky criminal records, and as a result was unaware of drug and traffic offenses Eric had committed in Ohio.

Second, since the Ohio offenses did not involve sexual crimes, they did not make it reasonably foreseeable that Eric would molest minors, and therefore the church’s failure to uncover these offenses was not negligent. Of course, had Eric’s offenses in Ohio (or in any other state) included sexual offenses, then the church’s failure to discover those offenses could have made his molestation of the two victims in this case reasonably foreseeable and therefore negligent.

Third, the court concluded that the foreseeability that an employee or volunteer will molest minors is not limited to the results of criminal records searches. It also can be based on any other credible evidence that is known to church leaders. The court concluded that the school principal in this case had sufficient warnings (from one victim’s mother, and other team members) of Eric’s inappropriate conduct to make it reasonably foreseeable that he would molest the victims. The lesson is clear—church leaders who ignore credible allegations of inappropriate sexual conduct by an employee or volunteer are exposing their church to potential liability based on negligence for that person’s future misconduct. 2009 WL 3320924 (Ky. App. 2009).

This Recent Development first appeared in Church Law & Tax Report, November/December 2010.

Legal Developments

National Church Not Liable for Missionary’s Molestation of a Minor

Churches liable for employees’ misdeeds if they were negligent in selecting, retaining or supervising staff members.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

National Church Not Liable for Missionary’s Molestation of a Minor

Churches liable for employees’ misdeeds if they were negligent in selecting, retaining or supervising staff members.

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

Key Point 10-05. A church may be liable on the basis of negligent selection for a worker’s molestation of an adult if the church was negligent in the selection of the worker. Negligence means a failure to exercise reasonable care, and so negligent selection refers to a failure to exercise reasonable care in the selection of the worker. Liability based on negligent selection may be imposed upon a church for the acts of employees and volunteers.

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

A federal court in Kentucky ruled that a national church was not liable on the basis of negligent hiring or supervision for the sexual molestation of a minor by one of its missionaries since it exercised sufficient care in evaluating the missionary’s fitness for service when he was selected. An adult male (the “defendant”) was selected by a national church as a missionary following a rigorous vetting process that included: (1) a detailed application form; (2) an initial interview with his local pastor regarding his worthiness to serve, qualifications, and physical and emotional capability to serve; (3) a second, more detailed interview with his local pastor that included questions about his sexual history and any attraction to or improper conduct with children; (4) a third interview with a regional church official to determine his fitness to serve, sexual history, and attraction to children; (5) an evaluation of all the evidence by the national church’s missions department; (6) a missionary training school that lasted for two months that covered numerous topics including the importance of avoiding any form of sexual conduct outside of marriage; (7) periodic interviews following his appointment as a missionary with missions officials regarding his continuing fitness to serve. No evidence surfaced during any of these interviews that gave missions officials the slightest concern regarding the defendant’s fitness to serve, or any propensity to molest children.

The girl’s mother sued the national church … on the basis of negligent hiring and supervision.

Despite all of these precautions, the defendant sexually molested a teenage girl. The girl’s mother sued the national church, alleging that it was responsible for the defendant’s behavior on the basis of negligent hiring and supervision. The court noted that “an employer can be held liable when its failure to exercise ordinary care in hiring or retaining an employee creates a foreseeable risk of harm to a third person.” Was the defendant’s behavior foreseeable? No, the court concluded:

The evidence of record of this matter demonstrates that the [national church] required candidates for its missionary program to complete an involved application process and undergo multiple levels of screening by various church officers. The evidence further reveals that missionaries, once selected, continued to meet regularly for interviews with church officers during their tenure in the missionary program. Finally, the unrefuted evidence shows that [the national church] did not receive information at any time during the application or training process or prior to [the defendant’s misconduct] that would lead them to believe that he had ever or would ever commit a sexual act with a child. Plaintiff has marshaled no evidence to suggest that the [national church] knew or should reasonably have known that he was somehow unfit to serve as a missionary or that his placement or retention of a missionary created an unreasonable risk of harm to [the victim] or that any such information came to light prior to the [church] learning of the events alleged [in this case] at which time the church terminated his service as a missionary

Application. This case illustrates an important point. Churches are not guarantors of the conduct of their employees and volunteers. Rather, they are liable to the misdeeds of such persons only if they were negligent in selecting, retaining, or supervising them. In this case, the extensive screening conducted by the church resulted in the court’s denial of the victim’s allegation of negligence. Olinger v. Corporation of the President of the Church of Jesus Christ of Latter- Day Saints, 521 F.Supp.2d 577 (E.D. Ky. 2007).

* See also “Sexual harassment,” 2007 WL 3170999 (D. Or. 2007), in the recent developments section of this newsletter. Despite all of these precautions, the defendant sexually molested a teenage girl.

This Recent Development first appeared in Church Law & Tax Report, November/December 2008.

Legal Developments

Missionary Molests Minor: Is the National Church Liable?

Court rules that crime was not reasonably forseeable.

Richard R. Hammar, Attorney, CPA
Bio


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


Key Point 10-18.2. Most courts have refused to hold denominational agencies liable for the acts of affiliated ministers and churches, either because of first amendment considerations or because the relationship between the denominational agency and affiliated church or minister is too remote to support liability.

A federal court in Kentucky ruled that a national church was not liable for a missionary's sexual molestation of a minor. A mother sued a national church claiming that one of its missionaries sexually molested her minor son. She alleged that the church was liable for the missionary's acts on the basis of negligent selection and supervision. The court noted that "an employer can be held liable when its failure to exercise ordinary care in hiring or retaining an employee creates a foreseeable risk of harm to a third person." It concluded that the national church was not negligent since the missionary's wrongful acts were not foreseeable:

The mother insisted that the national church was negligent in supervising the missionary as a result of provisions in its missionary handbook forbidding sexual misconduct of any kind, and urging missionaries to avoid being alone with a child or any other person. The court was not persuaded:

The presence of this language in the handbook does not support a finding that the national church was negligent in hiring and supervising [the missionary]. Even if he did not follow the instruction to never be separated and committed an act of sexual abuse while serving as a missionary in violation of the handbook's prohibition of the same, it is not enough to establish negligence on the part of the national church without anything more. Plaintiff has failed to provide any evidence that anyone associated with the church … had reason to believe that he was unfit to serve as a missionary or posed a danger to [the victim] or anyone else. It is ludicrous to suggest that, because the church chose to caution its missionaries against sex outside of marriage and to avoid criminal misconduct or the appearance of impropriety, that it had knowledge that [this missionary] might conceivably engage in sexual abuse and should be liable for such actions.

Application. The court reached the important conclusions that a church cannot be liable for negligent selection of a person who molests a child if it exercised reasonable care in the selection of that person, and cannot be liable on the basis of negligent supervision if the molestation was not reasonably foreseeable based on one or more previous similar incidents. It is worth noting that the court characterized as "ludicrous" the mother's argument that the church was guilty of negligent supervision because of provisions in its missionary manual calling for missionaries never to be alone with a child and to avoid any form of sexual misconduct. Olinger v. Corporation of the President, 521 F.Supp.2d 577 (E.D. Ky. 2007).

This Recent Development first appeared in Church Law & Tax Report, September/October 2008.

Legal Developments

Accusations of Defamation

Statements concerning the discipline of members cannot be defamatory unless made with malice.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

Accusations of Defamation

Statements concerning the discipline of members cannot be defamatory unless made with malice.

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

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 Kentucky court ruled that two dismissed church members could not sue the church and board of deacons for defamation as a result of statements made about them in the course of a disciplinary proceeding, since such statements were protected by a “qualified privilege.” A church established a “disciplinary committee” comprised of the deacons and senior pastor to address disciplinary matters involving members. If the disciplinary committee was unable to resolve an issue, the matter was referred to the congregation. The congregation could either admonish the offender or strip the offender of church membership.

A group of church members formed a “concerned members” group after a female member alleged that she had an extramarital affair with the pastor. The group wrote letters to the disciplinary committee demanding action, held meetings, and sent letters to members of the church. The disciplinary committee called a membership meeting to address the pastor’s alleged affair, and to recommend that the congregation terminate the membership of two members of the “concerned members” group. The disciplinary committee claimed that these two members spearheaded the “concerned members” group; encouraged the woman involved in the affair with the pastor to expose the relationship; and sent unauthorized mailings to church members. At the membership meeting, the deacons also made allegations of financial impropriety against the two members. The membership voted to expel the two members. In addition to holding the congregational meeting, the disciplinary committee sent out a letter to every person on the church’s mailing list containing the allegations made against the two members in the meeting.

The two dismissed members sued the church, the senior pastor, and the deacons, for defamation. A trial court dismissed the lawsuit, and the dismissed members appealed.

The appeals court began its opinion by noting that “issues of faith, internal organization, and church discipline are governed by ecclesiastical rule, custom, and law, and civil courts generally have no role in deciding such ecclesiastical questions.” The court also ruled that the “qualified privilege” that applies to statements made in the context of church discipline was recognized under Kentucky law. It quoted from an earlier Kentucky case: “Words spoken or written in the regular course of church discipline, or before a tribunal of a religious society, to or of members of the church or society, are as among the members themselves privileged communications, and are not actionable without express malice …. The courts appear to agree that in the absence of malice, members may discuss the character of their pastor, communicate rumors of misconduct to each other, and prefer charges whenever there appears to be any foundation therefor.”

The two dismissed members insisted that the oral and written statements concerning them were not privileged because they did not involve any church doctrine. The court disagreed: “This case involves statements made by the church’s disciplinary committee in the course of a church disciplinary matter. Specifically, this controversy requires the interpretation of the Discipline section of the church’s bylaws. Therefore, this controversy rests upon the interpretation of ecclesiastical matters, and thus the statements are privileged communications if made in the absence of express malice.”

The court noted that the qualified privilege does not confer absolute protection for statements made in the course of disciplinary matters. Rather, it protects statements only if they are not made with “malice.” In this context, malice means actual knowledge that a statement was false, or a “reckless disregard” regarding its truth or falsity. The two dismissed members asserted that the statements made by the disciplinary committee were malicious since they were designed to “send a warning of silence to other members of the church who were questioning the actions of the pastor.” The court concluded that the dismissed members “presented no evidence, apart from conclusory allegations based on suspicion and conjecture, indicating that the defendants were motivated by malice.”

Application. Many states recognize the qualified privilege defense to defamation. As this court noted, this defense applies to statements concerning the discipline of members. The court applied the defense to statements made by the disciplinary committee in the membership meeting as well as in letters sent to active voting members. According to the qualified privilege, statements concerning the discipline of members cannot be defamatory unless made with malice. This is a very difficult standard to prove, which means that communications addressing such matters generally will be defamatory only in exceptional cases. Note that several courts have restricted the qualified privilege to statements made to members, and that the privilege is lost if statements are made in a meeting or mailing to persons who are not members in good standing. So, to ensure the maximum application of the qualified privilege, church leaders should take steps to ensure that any statements concerning the discipline of a member are directed only to members, either in a membership meeting or in letters. If statements are communicated via letter, the letters should be addressed to active voting members on the church’s official membership roll; the envelope and letter should include the words “privileged and confidential”; and the letter should include a warning that the contents are to be read only by the member to whom it is addressed, and are not to be shared by the member with any non-member. Cargill v. Greater Salem Baptist, 2006 WL 1950663 (Ky. App. 2006).

Legal Developments

Recent Developments in Kentucky Regarding Sexual Misconduct by Clergy and Church Workers

A Kentucky court ruled that an adult who had been sexually molested as a minor by a teacher at a parochial school could sue the diocese that operated the school for negligent hiring, supervision, and retention

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax1999-03-01

Sexual Misconduct by Clergy and Church Workers

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

• Key point. Minors who are sexually molested by church workers may not sue their church after the statute of limitations has expired. Generally, the statute of limitations begins to run on a minor’s 18th birthday. In some states the statute of limitations is suspended if a church “actively conceals” the basis for a lawsuit from a victim. This may occur if church leaders fail to comply with child abuse reporting requirements under state law.

• Key point.. Minors who are sexually molested by church workers may not sue their church after the statute of limitations has expired. Generally, the statute of limitations begins to run on a minor’s 18th birthday. In some states the statute of limitations does not begin to run until an adult survivor of child sexual molestation “discovers” that he or she has experienced physical or emotional suffering as a result of the molestation. Other states do not recognize this so-called “discovery rule.”

A Kentucky court ruled that an adult who had been sexually molested as a minor by a teacher at a parochial school could sue the diocese that operated the school for negligent hiring, supervision, and retention. A boy (the “victim”) attended a parochial school for five years. On several occasions during that time he was molested by a teacher. The victim never reported the incidents nor discussed them with anyone until 1992 (when he was 32 years old), due to feelings of shame and embarrassment. In 1992, the victim learned from television reports that the teacher had sexually abused other students. These reports brought back memories of his own abuse, and he was hospitalized three days for emotional trauma several months after the programs aired. The programs also prompted him to have several conversations with the diocese concerning the incidents and how they could have occurred. A criminal investigation resulted in the teacher being arrested and convicted of twenty-eight counts of sexual abuse of minors, as well as the filing of several civil suits by the victim and others. The victim filed his suit against the teacher and diocese in 1993. He alleged that the teacher sexually assaulted him and that the diocese negligently hired, supervised, and retained the teacher.

While the lawsuit was pending, the trial court ordered the diocese to turn over the teacher’s personnel file which contained information of a sensitive nature. The files revealed that the diocese had received reports of the teacher sexually abusing students at its schools prior to the time the victim attended school. In the early 1960’s, the teacher was sent out-of-state for a period of four years after reports of sexual abuse surfaced. Upon his return, the bishop placed him back in the diocese’s schools, despite the bishop’s expressing concerns in his correspondence that the teacher’s pedophilia had not been cured and that he would continue to be “a problem.” The diocese received additional reports of sexual assaults of students by the teacher in the late 1960’s and early 1970’s. Other than transferring his residence, the diocese did not discipline or sanction the teacher, did not inform other students, parents, or employees, and did not report the incidents to state authorities.

The diocese asked the trial court to dismiss the lawsuit on the ground that it was barred by the statute of limitations. The court declined to do so, and the case proceeded to trial. A jury awarded the victim $50,000 in compensatory damages and $700,000 in punitive damages, and it apportioned fault seventy-five percent to the diocese and twenty-five percent to the teacher. The diocese appealed, arguing that the victim’s lawsuit was barred by the statute of limitations since it had been brought some 17 years after the teacher’s last act of molestation. The victim insisted that his lawsuit was filed on time due to the “discovery rule,” and the fact that the diocese “fraudulently concealed” relevant information.

Discovery Rule

Kentucky law specifies that a personal injury action must be commenced within one year “after the cause of action accrued.” Generally, a cause of action is said to accrue when the injury occurs. However, in certain cases, a cause of action does not necessarily accrue when the injury occurs, but rather when the plaintiff first discovers the injury or should have reasonably discovered it. However, the discovery rule has been applied only in cases involving medical malpractice or exposure to harmful substances. The court declined to apply it to repressed memories of child molestation. It noted that the victim had not alleged memory loss but was well aware of his injury.

Fraudulent Concealment

Kentucky law specifies that the statute of limitations is extended during the time that one party through concealment or otherwise “obstructs the prosecution” of the lawsuit. The victim claimed that the diocese should be barred from relying on the statute of limitations due to its failure to report the teacher’s multiple acts of child abuse to the authorities, as well as its failure to inform students, faculty, and staff of the teacher’s behavior. The diocese vigorously disagreed. It insisted that concealment alone is not enough to suspend the statute of limitations. Rather, the concealment must mislead or deceive the plaintiff so that he or she is lulled into inaction or is otherwise obstructed from investigating or instituting a lawsuit during the limitations period.

The court noted that the diocese knew prior to the time when the victim was abused that the teacher had sexually abused students and would continue to be “a problem” and continued to receive reports of his sexually abusing students during at least part of the time period in which the victim was being abused. Nevertheless, the diocese took no action to discipline or sanction him, to inform other students, parents, or employees, or to report the incidents to state authorities. The information was kept secret and confidential in a personnel file, and the victim had no idea that the diocese had prior knowledge of the teacher’s propensities until 1992. Until that time, the victim neither knew nor had reason to know that he had a potential cause of action against the diocese for causing injury to him due to its concealment of its knowledge of the teacher’s actions toward other students. The court concluded: “The diocese clearly obstructed the prosecution of [the victim’s] cause of action against it by continually concealing the fact that it had knowledge of [the teacher’s] problem well before the time [the victim] was abused as well as the fact that it continued to receive reports of sexual abuse of other students during part of the time period in which [the victim] was abused. Furthermore, where the law imposes a duty of disclosure, a failure of disclosure may constitute concealment … . ” The child abuse reporting statute in effect when these incidents occurred imposed a legal duty on “any person” to report child abuse to law enforcement authorities. The diocese failed to comply with this duty, “and such failure constitutes evidence of concealment.”

The court rejected the claim of the diocese that the jury erred in awarding $700,000 in punitive damages against it. Kentucky law provides that “[a] plaintiff shall recover punitive damages only upon proving, by clear and convincing evidence, that the defendant from whom such damages are sought acted toward the plaintiff with oppression, fraud or malice.” The diocese argues that by the plain language of the statute, punitive damages are available only upon a showing that it acted with fraud, malice, or oppression toward the victim and that there was no evidence that it acted in this manner since it had no way of knowing that the teacher had abused the victim or would likely do so. The court rejected this argument.

The court rejected the victim’s argument that the jury erred in apportioning fault between the diocese (75%) and teacher (25%). He insisted that in the case of an intentional tort, such as child molestation, no apportionment is required. The court disagreed. It noted that with the adoption of comparative fault, defendants cannot be liable for more than the degree of fault apportioned to them by the jury. The court saw no reason to deviate from this principle because an intentional wrong was involved.

Application. This case is important for two reasons. First, it illustrates the legal risks that are assumed by a church that ignores the dangerous propensities of a volunteer or employee. By failing to discipline or sanction the offender, or warn other students, parents, or employees, a church may be found liable on the basis of negligent retention or negligent supervision for the worker’s future acts of sexual misconduct. Also, the church’s failure to act may greatly extend the statute of limitations, meaning that victims may sue the church many years after they were molested. These are very serious consequences.

A second aspect of the court’s ruling that will be of interest to church leaders was the conclusion that the statute of limitations may be suspended if church leaders fail to report known or reasonably suspected incidents of child abuse. Let’s illustrate this with an example. Assume that the pastor and board of a church are mandatory child abuse reporters under state law, and that they learn that a church worker has abused a 10-year-old child during a church activity. Rather than report the abuse to the authorities, the pastor and board decide to handle the matter “internally”. Assume further that the statute of limitations for injuries to minors is two years-beginning on their eighteenth birthday. This means that a minor who is sexually abused must file a lawsuit by his or her twentieth birthday. However, this deadline is “suspended,” perhaps for many years, if the church failed to report the abuse as required by state law. This is another potentially serious risk that church leaders face when a decision is made not to report child abuse. Roman Catholic Diocese v. Secter, 966 S.W.2d 286 (Ky. App. 1998). [Negligence as a Basis for Liability, Denominational Liability]

© Copyright 1999 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: m67 m65 m40 c0299

Legal Developments

Recent Developments in Kentucky Regarding Zoning

A federal court in Kentucky ruled that a church’s constitutional rights were not violated by a new city ordinance that prohibited the use of a sign the church had used for ten years.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax1998-03-01

Zoning

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

Key point. City ordinances that restrict the use of signs by churches do not necessarily violate the constitutional guaranty of free speech, or constitute an unlawful “taking” of church property without just compensation.

A federal court in Kentucky ruled that a church’s constitutional rights were not violated by a new city ordinance that prohibited the use of a sign the church had used for ten years. For nearly ten years a church maintained a small sign on its front lawn to promote services and special events. In 1992, the city council enacted an ordinance that restricted the use of “small freestanding signs.” The ordinance reduced the size of allowable signs from 32 to 8 square feet; reduced the maximum height above ground from 9 feet to 4 feet; and limited the hours of display to the site’s “business hours.” The purpose of the ordinance was to “enhance and protect the community from visual nuisances and safety hazards to vehicular traffic caused by the currently permitted larger signage.” The church challenged the constitutionality of the sign ordinance, claiming that it was a violation of free speech and amounted to an unconstitutional “taking” of church property without just compensation. The court rejected both arguments, and upheld the constitutionality of the ordinance. In rejecting the church’s claim that the ordinance violated the constitutional guaranty of free speech, the court noted that “where a regulation indirectly affects speech, without reference to the content of the speech, the court must inquire as to whether the ordinance (1) is in furtherance of substantial state interests; (2) directly advances those interests; (3) has an effect on speech no greater than necessary to accomplish the city’s purpose; and (4) leaves open alternate modes of communication.

The court concluded that each of these factors was met, since “the government has a substantial interest in promoting the safety and aesthetics of its cities”; the “most direct and perhaps the only effective approach to solving the problems [signs] create is to prohibit them”; the prohibited signs “were unattractive and constituted safety hazards,” and therefore “their prohibition is the most direct method of addressing the government’s interests in safety and aesthetics”; and the church has “adequate alternative modes of communication available,” including the distribution of flyers, mailing of leaflets, and use of smaller portable signs.

The court also rejected the church’s claim that the ordinance amounted to an unconstitutional “taking” of its property without just compensation. The constitution provides that “nor shall private property be taken for public use, without just compensation.” The church asserted that the ordinance amounted to a taking because it could not use the sign on its property. The court relied on a 1980 Supreme Court decision finding that a zoning ordinance amounts to a taking if: (1) it does not substantially advance legitimate state interests; or (2) it denies an owner economically viable use of his property. Agins v. City of Tiburon, 447 U.S. 255 (1980). The court noted that it already had ruled that the ordinance met the first part of this test. It conceded that application of the second part is more difficult, but it concluded that it too was met. It noted that “the church is left with at least one economically viable use for its sign-it can sell it to someone who lives outside of [the city] and who has some non—restricted use for it.” Other courts have ruled that as long as property remains “sufficiently desirable to permit its owner to sell it on the open market for its intended use, no regulatory taking has occurred.” Further, even if the church could not sell its sign, the court concluded that it would be doubtful that the ordinance would constitute a taking since there ordinarily is no taking of personal property if there is a reasonable expectation that use of the property may be regulated. Wilson v. City of Louisville, 957 F. Supp. 948 (W.D. Ky. 1997). [ Zoning Law and Churches]

© 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: m82 m88 c0298

Legal Developments

Liability for Asbestos Exposure on Church Property

Church not responsible for potential future asbestos-related health problems.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1995-01-01 Recent Developments

Personal Injuries – On Church Property or During Church Activities

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

• Key point: A church cannot be responsible for a child’s alleged increased risk of developing asbestos-related health problems associated with exposure to asbestos during church activities without observable physical problems associated with such exposure.

• A Kentucky court dismissed a lawsuit brought by parents against a church alleging that their children had an increased risk of cancer and other diseases as a result of their exposure to asbestos in church. The parents had 2 children who attended preschool, kindergarten, and church activities at their church. The parents sued their church seeking money damages (including punitive damages) for the church’s “negligent infliction of mental distress.” They claimed that the church negligently caused them to suffer “mental distress” as a result of their children’s exposure to asbestos on church property. In dismissing this claim the court noted that in order for the parents to recover for negligent infliction of emotional distress they are required to show some physical contact to themselves that caused the mental distress. The court concluded that “as the parents have not alleged that they were exposed to asbestos, they do not satisfy the contact requirement and cannot maintain a negligence claim for mental distress.” The court then addressed the parents’ claim that the church was legally responsible as a result of the children’s increased risk of disease caused by the presence of asbestos on church property. The parents claimed that even though the children did not presently manifest any physical symptoms from their alleged asbestos exposure, they should be able to maintain an action for increased risk of future illness. The parents relied on an affidavit from a medical doctor who stated that “the exposure to airborne asbestos fibers sustained by the [children] subjects them to an increased risk of contracting an asbestos-related malignancy, especially mesothelioma and lung cancer.” In rejecting this basis of liability, the court observed: “Given the [parents’] admission that they can prove only that the children possibly might contract an asbestos-related disease in the future, which risk they cannot quantify, it is apparent that damages for the increased risk would be based on conjecture or speculation. An award of damages based on speculation is not permitted …. [I]t must be shown by medical testimony that causation is probable and not merely possible. The [parents] cannot maintain an action … for increased risk of future consequences.” Michaels v. William T. Watkins Methodist Church, 873 S.W.2d 216 (Ky. App. 1994).

See Also: Premises Liability

© Copyright 1995, 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: m58 m86 c0195

Legal Developments

Discipline of Ministers

Courts cannot intervene in ecclesiastical matters.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1994-07-01 Recent Developments

Clergy – Removal

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

• Key point: The civil courts are prohibited by the first amendment guaranty of religious freedom from resolving lawsuits brought by disciplined clergy who claim that their discipline violated denominational procedures.

• The Kentucky Supreme Court dismissed a minister’s lawsuit alleging that his denomination violated the terms of his employment contract by failing to follow the denomination’s Book of Discipline when it placed him on a forced leave of absence. In 1991, a Methodist minister sued the United Methodist Church claiming that a contractual relationship had been established between himself and the Church by virtue of the Book of Discipline which the minister characterized as the “employment manual” of the Church. He further claimed that the church violated the terms of his “employment contract” by failing to follow its Book of Discipline when it placed him on a forced leave of absence. The minister sought money damages against the Church. The Church insisted that the dispute was an ecclesiastical dispute over which the civil courts have no jurisdiction. The minister countered by claiming that the dispute was not a church dispute but rather a simple contract case. The trial court agreed with the minister, concluding that the minister had merely asked the court to decide whether or not the “secular dictates” of the Book of Discipline had been followed. An appeals court reversed this decision, and the case was appealed to the state supreme court. The supreme court began its decision by observing that first amendment’s guaranty of religious freedom

permits hierarchical religious organizations to establish their own rules and regulations for internal discipline and government and to create tribunals for resolving disputes over these matters. Where this choice is exercised and ecclesiastical tribunals are created to decide disputes over the government and direction of subordinate bodies, the Constitution requires that civil courts accept their decisions as binding.

The court noted that decisions by the United States Supreme Court permit civil courts to resolve church property disputes on the basis of “neutral principles of law” (involving inspection of doctrinally neutral language in religious and legal documents). However, the court stressed that the neutral principles approach only applied to church property disputes and “should not be extended to religious controversies in the areas of church government, or order and discipline.” The court continued: “This case does not involve a dispute over church property, but relates to [the minister’s] status and employment as a minister of the church. It therefore concerns internal church discipline, faith, and organization, all of which are governed by ecclesiastical rule, custom and law.”

The minister argued that the Church’s decision to place him on a leave of absence was “arbitrary” in the sense that it was made in violation of the Book of Discipline, and accordingly it was not legally valid. In rejecting this position, the court quoted from a 1976 decision of the United States Supreme Court that prohibits clergy from challenging church decisions on the basis of “arbitrariness” (which it defined as a failure by the church to follow its own internal procedures or document):

We have concluded that whether or not there is room for “marginal civil court review” under the narrow rubrics of “fraud” or “collusion” when church tribunals act in bad faith for secular purposes, no “arbitrariness” exception—in the sense of an inquiry whether the decisions of the highest ecclesiastical tribunal of a hierarchical church complied with church laws and regulations—is consistent with the constitutional mandate that civil courts are bound to accept the decisions of the highest judicatories of a religious organization of hierarchical polity on matters of discipline, faith, internal organization, or ecclesiastical rule, custom or law. For civil courts to analyze whether the ecclesiastical actions of a church judicatory are in that sense “arbitrary” must inherently entail inquiry into the procedures that canon or ecclesiastical law supposedly require the church adjudicatory to follow, or else into the substantive criteria by which they are supposedly to decide the ecclesiastical question. But this is exactly the inquiry that the first amendment prohibits; recognition of such an exception would undermine the general rule that religious controversies are not the proper subject of civil court inquiry, and that a civil court must accept the ecclesiastical decisions of church tribunals as it finds them. Serbian Eastern Orthodox Diocese v. Milivojevich, 423 U.S. 696 (1976).

The court acknowledged that the United States Supreme Court has left open the question of whether disciplined clergy can sue their church as a result of decisions that are based on “fraud or collusion.” However, the court concluded (quoting from an earlier federal decision):

This court finds no basis for intervention in the instant case. There is no showing of such egregious action by the hierarchical authorities of the United Methodist Church to justify court interference, if such interference is even permitted under Milivojevich [quoted above]. Assuming, without deciding, that review is allowed for fraud or collusion, it is still only allowed for fraud or collusion of the most serious nature undermining the very authority of the decision-making body. Certainly there is no claim or showing of such fraud or collusion here. And we emphasize that we do not hold that such great fraud would be a basis for court interference. We merely state that possibility has been left open by the [United States] Supreme Court, but further state there is no showing whatever in this case that such egregious conduct occurred.

The court further observed that “[i]n determining the [minister’s] claim in the present case, it would invariably require interpretation of provisions in the Book of Discipline that are highly subjective, spiritual, and ecclesiastical in nature. Such [a lawsuit] necessarily involves interpretation of the minister’s occupational qualifications, and therefore forecloses any inquiry by the civil courts.” Music v. United Methodist Church, 864 S.W.2d 286 (Ky. 1993).

See Also: Termination

© 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: m31 m39 c0494

Legal Developments

Sexual Molestation Suit Against Priest, Church Dismissed

Statute of limitations had expired.

Richard R. Hammar, Attorney, CPA
Bio

Rigazio v. Archdiocese of Louisville, 1993 WL 153206 (Ky. App. 1993) (unpublished opinion)

Key point: Minors who are sexually molested by church workers may not sue their church after the statute of limitations has expired. Generally, the statute of limitations begins to run on a minor's 18th birthday. In some states the statute of limitations does not begin to run until an adult survivor of child sexual molestation "discovers" that he or she has experienced physical or emotional suffering as a result of the molestation. Other states do not recognize this so-called "discovery rule."

A Kentucky appeals court ruled that a 24-year-old adult was barred by the statute of limitations from suing a priest and his church on account of the priest's alleged acts of molestation.

A Catholic priest sexually molested a young boy who attended a parochial school. The acts of molestation occurred while the victim was between 10 and 13 years of age. When the boy was 13, the priest was reassigned to another parish and never saw the victim again. The victim turned 18 years of age on January 30, 1982, and later joined the army. He was discharged in 1985. On September 9, 1987, the victim attempted suicide. In a statement to a police officer investigating the suicide attempt, the victim (according to his testimony) for the first time revealed that he had been sexually abused.

On September 8, 1988, the victim sued the priest, the parochial school, and the archdiocese for battery, intentional infliction of emotional distress, and negligence. While there was medical testimony that Donald had suppressed the memory of the abuse into his subconscious mind and did not remember it until the suicide attempt, there was also medical testimony casting doubt on whether that had occurred.

On November 13, 1990, trial court dismissed the victim's lawsuit (against all of the defendants except the priest) on the ground that it was filed after the statute of limitations had expired. The victim appealed. A state appeals court agreed that the lawsuit was filed after the statute of limitations had expired. The statute of limitations specifies the time during which a lawsuit must be brought. Lawsuits commenced after the statute of limitations has expired are dismissed, no matter how meritorious the claim.

The statute of limitations in Kentucky for both battery negligence is one year. However, under Kentucky law (as is true in most states) the statute of limitations does not begin to run for injuries suffered by a minor until the minor's eighteenth birthday. In other words, the statute of limitations for battery and negligence expired one year after the victim's eighteenth birthday, or January 30, 1982, some six years before the lawsuit was filed. The statute of limitations for intentional infliction of emotional distress is five years in Kentucky, and this period expired one year before the lawsuit was filed.

The victim argued that there are certain exceptions to the statute of limitations that applied in this case. First, Kentucky law provides that the statute of limitations is suspended if a person is of "unsound mind" when a cause of action accrues. The victim claimed that he had suffered from post-traumatic stress disorder, and that he had repressed the memory of the abuse until September 9, 1987, the day of his attempted suicide. The court disagreed, noting that the term unsound mind under Kentucky law means that a person has been rendered incapable of managing his or her own affairs and accordingly "[t]he mere fact that [the victim] experienced a repression syndrome is not synonymous with being of unsound mind."

Further, the court pointed out that "at the time the acts of abuse occurred [when the victim was between 10 and 13 years of age] the victim's cause of action accrued and he was then well aware of the abuse. His memory of the abuse became suppressed only after he was older and in high school. Thus, he was not suffering from post-traumatic memory loss when the cause of action accrued as required by the statute." Second, the victim claimed that the statute of limitations should not begin to run until he "discovered" his injuries, and this did not occur until the day of his suicide attempt (which occurred less than one year before he filed the lawsuit).

The court acknowledged that Kentucky has adopted a "discovery rule" in the context of medical malpractice, but "[n]either the Supreme Court nor the General Assembly has further extended the discovery rule." Further, the court observed: "It should again be noted that at the time [the victim's] cause of action accrued, and for sometime thereafter, he was both aware of the abuse and past the age of reason. The fact that his memory of these events was thereafter suppressed, only to return years later, would not seem to present a circumstance falling within the discovery rule which relates to injuries which cannot be discovered with reasonable diligence."

Finally, the victim argued that the statute of limitations was suspended while he was in the army. The court agreed with this argument, but concluded that the allegations of battery and negligence were not filed within the statute of limitations, since the victim was discharged from the army three years before the lawsuit was filed.

The court conceded that the statute of limitations for intentional infliction of emotional distress is five years, and this period had not expired at the time the lawsuit was filed. However, the court noted that there was "no evidence whatsoever" to raise an inference that the school or archdiocese engaged in any extreme and outrageous conduct intentionally or recklessly inflicting emotional distress on the victim. While the priest's actions might be deemed sufficiently outrageous to constitute intentional infliction of emotional distress, the court concluded that such actions were "incident to the commission of the intentional torts of assault and battery."

The court concluded that the one-year statute of limitations applied rather than the five-year statute when the tort of intentional infliction of emotional distress is based on an underlying assault or battery (as occurs during sexual molestation). Therefore, the lawsuit against the priest was barred by the statute of limitations.

This case will be a useful precedent to churches that are sued many years after an incident of child sexual abuse. The court concluded that a victim's "suppressed memory" will not necessarily suspend the statute of limitations. This is particularly true when the victim is aware of his injuries at the time of the molestation, and for some thereafter, and only later represses the memory of the event.

As the court noted, "[t]he fact that [the victim's] memory of these events was thereafter suppressed, only to return years later, would not seem to present a circumstance falling within the discovery rule which relates to injuries which cannot be discovered with reasonable diligence."

See also Insurance, All American Insurance Company v. Burns, 971 F.2d 438 (10th Cir. 1992).

Legal Developments

Congregation Loses Property Upon Disaffiliation from Denomination

A local church may lose its property when it withdraws from its denomination.

Richard R. Hammar, Attorney, CPA
Bio

In a similar case, the Kentucky Supreme Court correctly ruled that a pastor and majority of members in a local Cumberland Presbyterian Church forfeited their right to use and occupy church property when they voted to withdraw from the parent church.

In 1987, while the pastor was under investigation by the denomination, he agreed to resign his ministerial credentials in return for the dropping of all charges against him by the denomination. Shortly after the pastor's ministerial credentials were revoked, the church membership voted (58 to 26) to withdraw from the Cumberland Presbyterian Church denomination. At its next meeting, the local presbytery removed the local church's leadership and appointed a commission to oversee the affairs of the church.

The commission asked the former pastor and the church board to turn over all funds and records of the church. Upon their refusal to do so, the presbytery sought a court order prohibiting the former pastor from conducting worship services, requiring the former pastor and board to turn over church funds and records, and prohibiting the former pastor and the majority of church members who supported him from exercising any control over the church's building and properties.

A trial court refused to issue such an order, and the presbytery appealed. A state appeals court also refused to grant the relief the presbytery had requested, and the presbytery thereafter appealed the case to the state supreme court. The state supreme court reversed the lower courts' judgments, and ruled in favor of the presbytery. The court based its decision on the so-called "compulsory deference rule." The compulsory deference rule is one method the United States Supreme Court has approved for resolving church property disputes. It was described by the Supreme Court in the landmark case of Watson v. Jones in 1871 as follows:

The case before us is one of this class, growing out of a schism which has divided the congregation and its officers, and the presbytery and synod, and which appeals to the courts to determine the right to the use of the property so acquired. Here is no case of property devoted forever by the instrument which conveyed it, or by any specific declaration of its owner, to the support of any special religious dogmas, or any peculiar form of worship, but of property purchased for the use of a religious congregation, and so long as any existing religious congregation can be ascertained to be that congregation, or its regular and legitimate successor, it is entitled to the use of the property.

In the case of an independent congregation we have pointed out how this identity, or succession, is to be ascertained, but in cases of this character we are bound to look at the fact that the local congregation is itself but a member of a much larger and more important religious organization, and is under its government and control, and is bound by its orders and judgments.

There are in the Presbyterian system of ecclesiastical government, in regular succession, the Presbytery over the session or local church, the Synod over the Presbytery, and the general assembly over all. These are called, in the language of the church organs, "judicatories," and they entertain appeals from the decisions of those below, and prescribe corrective measures in other cases …. In this class of cases we think the rule of action which should govern the civil courts, founded in a broad and sound view of the relations of church and state under our system of laws, and supported by a preponderating weight of judicial authority is, that, whenever the questions of discipline or of faith, or ecclesiastical rule, custom or law have been decided by the highest of these church judicatories to which the matter has been carried, the legal tribunals must accept such decisions as final, and as binding on them, in their application to the case before them.

The court also observed that the presbytery would prevail under the so-called "neutral principles" approach to resolving church property disputes. Under the neutral principles approach, church property disputes are resolved on the basis of neutral, nondoctrinal language in church deeds or bylaws, or denominational bylaws. The court noted that in the Jones v. Wolf decision in 1979 the United States Supreme Court urged denominations to avoid church property litigation through appropriate nondoctrinal provisions in deeds and bylaws. The Supreme Court observed:

At any time before the dispute erupts, the parties can ensure, if they so desire, that the faction loyal to the hierarchical church will retain the church property. They can modify the deeds or the corporate charter to include a right of reversion or trust in favor of the general church. Alternatively, the constitution of the general church can be made to recite an express trust in favor of the denominational church. The burden involved in taking such steps will be minimal. And the civil courts will be bound to give effect to the result indicated by the parties, provided it is embodied in some legally cognizable form.

The Kentucky Supreme Court noted that the Cumberland Presbyterian Church denomination amended its constitution in 1984 to include a provision subjecting all local church property to a trust in favor of the denomination. The amendment provides, in relevant part:

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

3.33 Whenever property of, or held for, a particular church of the Cumberland Presbyterian Church, ceases to be used by the church, as a particular church of the Cumberland Presbyterian Church in accordance with this Constitution, such property shall be held, used, applied, transferred or sold as provided by the presbytery in which that particular church is located. 3.34 Whenever a particular church is formally dissolved by the presbytery, or has become extinct by reason of dispersal of its members, the abandonment of its work, or other cause, such property as it may have shall be held, used, and applied for such uses, purposes, and trusts as the presbytery in which said particular church is located may direct, limit, and appoint, or such property may be sold or disposed of as the presbytery may direct, in conformity with the Constitution of the Cumberland Presbyterian Church.

3.35 A particular church shall not sell, nor lease its real property used for purposes of worship, nurture or ministry, without the written permission of the presbytery in which the particular church is located, transmitted through the session of the particular church.

The court emphasized that the Cumberland Presbyterian Church denomination, by amending its constitution, had done precisely what the United States Supreme Court urged religious organizations to do in its 1979 ruling in Jones v. Wolf. That is, it adopted a nondoctrinal provision to resolve church property disputes without the need for civil court involvement. Cumberland Presbytery v. Branstetter, 824 S.W.2d 417 (Ky. 1992).

Legal Developments

Church Property

Court rules that the property of a dissident church belonged to a national church body

Richard R. Hammar, Attorney, CPA
Bio

A Missouri court ruled that the property of a dissident church belonged to a national church body with which it was affiliated.

The local church opposed a 1984 resolution of the national church which permitted the ordination of women into the priesthood. After efforts to work out their differences failed, the national church attempted in install a new minister. When the congregation overwhelmingly voted to retain their original minister, the national church had the locks to the church property changed, barricades erected, and notices posted to keep people off the property. The congregation proceeded to have keys made to the new locks, removed the barricades, and held services on the premises.

The national church then sought and obtained a court order banning the minister "and those acting in concert with him" from entering onto church property and from in any way disrupting the worship services conducted on the property.

The congregation appealed this order, and a Missouri appeals court ruled in favor of the national church. With regard to the ownership of the church property, the court observed that "Missouri courts have adopted the neutral principles approach as the exclusive method for the resolution of church property disputes. Under this approach, the court must refrain from resolving the dispute on the basis of religious doctrine and must rely instead on general principles of state property and trust law to resolve a church property dispute.

The court may consider who holds record title, the language of deeds, any relevant state statutes, and both local and general church documents that provide guidance or instruction on the ownership of church property. The court must, however, in scrutinizing religious documents do so in secular terms, rather than relying on religious precepts or concepts."

Under this test, the court concluded that the national church owned the property, since the deed to the property created an express trust in favor of the national church, as did relevant documents of the national church. Further, such provisions did not require any inquiries into religious doctrine.

The congregation also claimed that the national church could not obtain judicial relief since it had failed to "exhaust" or pursue available ecclesiastical remedies. The court rejected this argument, since "questions of whether or not the [national church] had exhausted its remedies within the church and whether or not church procedures were followed are ecclesiastical in nature and require interpretation of authority within the church as well as interpretation of church practice and policy. Under the neutral principles approach such matters were irrelevant toward resolving the underlying property dispute."

For similar reasons, the court rejected the congregation's argument that the national church had deviated from established ecclesiastical procedures. Finally, the court rejected the congregation's arguments that it was entitled to the property in question on the basis of a "constructive trust" or "purchase money resulting trust."

Generally, when one pays the purchase price for land and has legal title vested in another, a presumption arises that the latter holds the property under a "resulting trust" in favor of the other party. Since the local congregation paid for its property, but had title vested in the national church, it argued that the national church held the title subject to a resulting trust in favor of the local congregation.

In rejecting this argument, the court emphasized that "the burden of proof to establish a resulting trust is an extraordinary one" that the local congregation failed to satisfy. The court concluded that the local church originally had intended to make a gift of the property to the national church. The court also upheld the trial court's injunction barring the minister and his supporters from entering onto church property, or from interfering in anyway with church services. Reorganized Church of Jesus Christ of Latter Day Saints v. Thomas, 758 S.W.2d 726 (Mo. App. 1988).

Legal Developments

Internal Revenue Service

Administration

Richard R. Hammar, Attorney, CPA
Bio

• Your chances of being audited by the IRS are highest (2.61%) in Nevada and lowest (0.47%) in Rhode Island, according to recently released IRS data. The five states with the highest audit risk are Nevada, Alaska, Utah, Wyoming, and California. The five states with the lowest risk are Rhode Island, Kentucky, Indiana, Massachusetts, and New Hampshire. The national average in 1986 was 1.1%, down from 2.3% in 1975. The IRS plans to audit 1.23% of all individual income tax returns in 1987, and 1.32% in 1988.

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