Missouri

Legal Developments

Church’s Failure to Cooperate Results in Loss of Insurance Coverage for Storm Claim

The church never submitted proof of loss form or other required supporting information.

Richard R. Hammar, Attorney, CPA
Bio

Key point 10-16.07. A liability insurance policy provides a church with a legal defense to lawsuits claiming that the church is responsible for an injury, and it will pay any adverse settlement or judgment up to the limit specified in the policy. Liability insurance policies exclude a number of claims. For example, some policies exclude injuries based on criminal or intentional acts and claims for punitive damages. A church has an obligation to promptly notify its insurer of any potential claim, and to cooperate with the insurer in its investigation of claims.

A federal court in Missouri ruled that a church’s failure to timely return a proof of loss form and provide other information to its insurance company excused the insurer from any duty to provide the church with coverage for repair costs stemming from damage sustained by a storm.

Background

An insurance company (the “insurer”) issued an insurance policy to a church (the “church”) to insure its properties. The church claimed it sustained substantial property damage after a severe storm on March 27, 2020.

The insurer received the claim on March 31, 2020. On April 2, 2020, and April 13, 2020, the insurer’s third-party adjuster met with the church’s representative to inspect the damage to the property. On May 26, 2020, the adjuster issued an estimate based on the engineering report completed after the inspections.

As a result, the insurer issued two partial payments to the church totaling $237,852.24. Once the payments were issued, a disagreement arose between the parties as to the amount of loss.

On June 3, 2020, the church sent a demand for appraisal to reevaluate the damage to its property. On June 9, 2020, the insurer acknowledged the demand for appraisal and requested that the church submit any documents supporting its claim.

On November 24, 2020, after the church informed its insurer that the appraiser would be reappraising the entire claim, including damages that the insurer had already issued partial payments for, the insurer requested that the church submit a revised demand for appraisal. The church also suggested to the insurer that its appraiser’s estimate would be more than $2 million. On December 3, 2020, the church submitted a revised demand for appraisal.

Insurer: The church didn’t comply with the “cooperation agreement”

On December 4, 2020, the insurer notified the church that to move forward in the appraisal process it would require a proof of loss form, supporting documents, and a representative to submit to an examination under oath (EUO). The insurer reiterated its requests in a letter dated December 10, 2020, after the church did not respond.

On February 18, 2021, the church filed a lawsuit against the insurer, alleging one count of breach of contract and one count of “vexatious refusal.” (Under Missouri law, an insured can bring a vexatious refusal claim if it believes an insurer refused to pay a claim “without reasonable cause or excuse.”)

The insurer alleged that the church failed to comply with the “cooperation agreement” in its policy, and so the court should dismiss the case. The court noted that cooperation clauses in insurance policies are valid and enforceable in most states. Such clauses obligate the insured to cooperate fully with the insurer in its investigation of a claim. An insured’s failure to assist in the investigation “precludes any coverage.”

To deny coverage, an insurer must prove: “(1) a material breach of the cooperation clause; (2) the existence of substantial prejudice as a result of the breach; and (3) the exercise of reasonable diligence to secure the insured’s cooperation.”

The court concluded that all three elements were established.

1. Material breach of the cooperation clause

The court concluded that “the failure to provide, or the untimely submission of, a proof of loss form constitutes a material breach of the [policy’s] cooperation agreement” and so there was “a material breach of the cooperation agreement because [the church] did not submit a proof of loss form within sixty days of [the insurer’s] request.”

The court observed:

On December 4, 2020, [the insurer] requested that [the church] submit a proof of loss form within sixty days. [The insurer] reiterated its request for a proof of loss form on December 10, 2020. … Since [the church] did not submit a proof of loss form within sixty days, there was a material breach of the cooperation agreement. …

[The church] also breached the cooperation agreement when it did not submit to an EUO. [The insurer] requested an EUO in its letters dated December 4, 2020, and December 10, 2020. … [The insurer] stated that it would schedule an EUO after it received [the church’s] proof of loss form. However, [the church] did not submit to an EUO, but filed suit instead. Therefore, there was a material breach of the cooperation agreement when [the church] did not submit to an EUO.

2. The insurer suffered substantial prejudice when the church breached the cooperation agreement

Quoting two different cases, the court stressed:

“Once a material breach has been established, an insurer must prove that it was substantially prejudiced by the insured’s breach in order to be excused from covering the loss.” … “Prejudice can be established when the insured fails to comply with a reasonable examination request because the insured has perhaps the greatest knowledge of the circumstances[.]”

The court continued:

[W]hen [the church] failed to submit the proof of loss form and to an EUO[,] it substantially prejudiced [the insurer]. [The insurer] had finalized its estimate and issued payments for the damages to [the church’s] property. However, [the church] submitted a demand for appraisal, with estimates that its appraiser would be submitting a claim for over $2,000,000. Thus, … ­[the insurer] naturally requested more information to effectively evaluate the demand for appraisal, including the proof of loss form, supporting documents, and an EUO. When [the church] did not comply, it substantially prejudiced [the insurer] because it could not possess all the information needed to investigate the claim.

3. The exercise of reasonable diligence to secure the insured’s cooperation

Lastly, the insurer must prove that it exercised reasonable diligence to secure the cooperation of the insured. The court stated:

Here, [the insurer] … exercised reasonable diligence in attempting to secure [the church’s] cooperation. As soon as [the insurer] received [the church’s] revised demand for appraisal[,] it sent a letter the next day requesting that [the church] submit a proof of loss form, supporting documents and comply with an EUO. [The Insurer] enclosed the proof of loss form in its letter. [The church] did not respond. [The insurer] followed up by sending another letter on December 10, 2020, reiterating its request for a proof of loss form, supporting documents, and an EUO. [The church] once again failed to respond or submit the documents. Instead of responding or submitting documents to [the insurer], [the church] filed suit. Based on these facts, [the insurer] exercised reasonable diligence to secure the cooperation of [the church].

What this means for churches

More on Liability Insurance

Along with the “duty to cooperate,” leaders should be familiar with several other aspects related to church insurance. The “Insurance” section of the Legal Library covers these aspects, along with providing helpful tips, examples, case studies, a checklist to evaluate your church’s coverage, and more.

Most insurance policies impose a “duty to cooperate” on the insured. This means that a church, as the insured, must cooperate with its insurance company in any investigation, or in responding to reasonable requests for information. Church leaders should be aware of this requirement and understand that a failure to cooperate in a timely manner may result in the denial of insurance benefits, including both a legal defense and indemnification (coverage for damages and other costs associated with the claim).

There are limits to the authority of an insurance company to investigate. However, churches should never delay or decline an insurance company’s request for information concerning a potential claim without the advice and counsel of an attorney.

Concord Church, 2021 WL 6095643 (W.D. Mo. 2021)

Legal Developments

Court Rejects Man’s Attempt to Claim an Invalid Marriage

What ministers who officiate weddings should know about their responsibilities ahead of a ceremony.

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 man who in all respects lived with his wife for 27 years as husband and wife was barred from claiming that the marriage was invalid and therefore his scheme to avoid alimony payments to her did not work.

Background

On October 25, 1991, a couple held a formal wedding ceremony in Jackson County, Missouri, attended by approximately 100 guests, including both the husband’s and wife’s families. At that time, the wife was 19 years old and the husband was 29 years old.

The ceremony was held in a church and officiated by a minister who was authorized by law to solemnize marriages. During the ceremony, the couple exchanged vows and wedding rings.

The church provided the couple with a “Marriage Covenant,” which was signed by both spouses, witnesses, and the minister who officiated the ceremony. After the ceremony, the wife changed her surname on her driver’s license and Social Security card using the marriage covenant as proof of the marriage as she believed in good faith that she was lawfully married.

Although the husband told his wife that he would file the marriage covenant, he never did or sought any marriage licensing documentation from the state of Missouri.

In February of 2017, the wife discovered that her husband was having an affair with another woman, and on December 2, 2018, the couple separated.

The couple had remained together for 27 years. They lived together, acquired property together, held themselves out as married, and had three children.

The warranty deed to their family home granted them ownership as husband and wife. The deed of trust they executed to obtain a mortgage on their family home was granted to them as husband and wife, and so too were subsequent deeds of trust they obtained to refinance their mortgage.

The wife was the primary beneficiary of her husband’s life insurance policy and “children of marriage” were named as the contingent beneficiaries of the same life insurance policy.

The couple celebrated wedding anniversaries of their October 25, 1991, wedding ceremony. And they represented on tax filings to the state of Missouri and the United States Internal Revenue Service that they were husband and wife.

Husband: There was no “valid” marriage

In 2019, the wife filed a petition for dissolution of the marriage. For the first time since their church wedding in 1991, the husband asserted the position in this litigation that there was no “valid” marriage. Instead, the husband challenged the trial court’s jurisdiction to dissolve the marriage on the grounds that no marriage license was ever obtained or filed by the parties and, accordingly, the marriage was invalid from its inception.

The trial court ruled that, notwithstanding any purported invalidity of the marriage, the husband was prevented from denying its validity.

The trial court reasoned that because he engaged in a marriage ceremony, cohabited, bore children with his wife, enjoyed numerous benefits of marriage for 27 years, and at all relevant times held himself out as married to banks, governmental agencies, and all others, he could not now disavow the marriage.

On appeal, the husband sought a reversal of the trial court’s judgment and continued his attack on the trial court’s authority to issue any judgment relating to an “invalid” marriage.

Appeals court: the presumption that a ceremonial marriage exists

The appeals court began its opinion by addressing the central issue of whether the couple’s marriage was legally valid:

Since 1921, Missouri has prohibited residents of this state from entering into common-law marriages. … “To eliminate common-law marriages, the legislature implemented solemnization and license requirements,” otherwise known as a ceremonial marriage. … The law governing ceremonial marriages in this state has, for the last century, required that a marriage license be obtained from an authorized officer and that the marriage be solemnized by a person authorized by law to solemnize marriages. …

Despite the abolition of common-law marriage in Missouri, “a presumption of a ceremonial marriage arises upon a showing of open cohabitation, declaration and conduct by the parties and general reputation, despite [an] inability to show a marriage license or any record of the issuance of one.” … (“[T]he ordinary presumption of marriage that obtains where parties have cohabited together and have held themselves out as man and wife” is not destroyed by the abolition of common-law marriages.) This presumption is one of the strongest in the law. … This presumption applies in any case where the validity of the marriage is challenged.

The court concluded that the presumption that a ceremonial marriage exists is applicable in this case:

[The husband and wife] held a wedding ceremony attended by upwards of 100 attendees including their family and friends; they cohabited for twenty-seven years; they obtained title to and a mortgage for their family home as husband and wife; subsequent mortgages on the home were also acquired as husband and wife; over the years they filed tax returns under the category of “married filing jointly” and “married filing separately”; the couple’s children, family, and friends believed them to be married; and they held wedding anniversaries commemorating their 1991 wedding ceremony.

But, it is undisputed, in fact agreed, that the parties did not obtain a marriage license prior to the October 25, 1991 wedding ceremony or at any time during their relationship. The unambiguous language of [the marriage statute] that declares that no marriage shall be recognized as valid unless a license has been obtained makes the license requirement mandatory and not merely directory. … By failing to obtain a marriage license, the parties did not comply with the law of this state … to establish a valid marriage.

This is the crux of the husband’s claim. He asserts that because Missouri does not recognize common-law marriage and a marriage license was never obtained, there was never a valid marriage. … And, therefore, the trial court erred in “dissolving” a marriage that never validly existed and distributing property that was never marital.

The court concluded that what the husband failed to appreciate was that

his claims do not prevail simply by demonstrating the absence or non-issuance of a marriage license. For, [he] is not in a position to challenge the trial court’s authority based on the assertion that his presumptive ceremonial marriage … was invalid [from the beginning] because [the couple] failed to obtain a marriage license. Indeed, [he] is equitably estopped from lodging such a challenge.

The court continued:

“[E]ven if it were conceded that no [marriage] license was obtained before the ceremony, [the husband’s] efforts to argue there was no marriage must fail. The record shows that [he] does not stand before the court as a party entitled to deny the marriage. [He] engaged in a marriage ceremony, cohabitation, and other conduct consistent with the existence of a marriage relationship. He obtained the benefits of marriage … and lived the life of a married man. He participated in bringing children into the marriage and did not disavow the existence of a marriage. … [He] never, until after [his wife] decided to seek dissolution, informed [her] that he would take the position that there was no marriage. He now seeks to avoid the marriage only to deprive [his wife] of the relief which the law would provide her. He has no equitable basis to seek to avoid the marriage; therefore, he is precluded by equitable estoppel from raising an objection to the court’s … jurisdiction. …”

Despite [the husband’s] current claim that he was never married … he did not challenge the validity of the marriage at any point preceding the commencement of this litigation. In fact, [he] held himself out as married and fully availed himself of the many benefits of marriage—for twenty-seven years. He enjoyed the intimate bond between spouses, brought children into the marriage, and had a devoted spouse who left her career behind to raise their children. He also enjoyed the protections of holding property as tenants by the entirety. And, as the primary wage earner of the household, he took full advantage of the tax deductions afforded a married couple by filing as “married” instead of “single.”

At all relevant times, [the wife] believed herself to be lawfully married and acted in good faith on that belief. She changed her surname using the marriage covenant to effectuate that change. She testified at trial that she relied on the validity of the marriage when entering into loan contracts that could be accelerated or defaulted if a misrepresentation was later discovered. [She] relied on the validity of the marriage when, for twenty-seven years, she did not enter the workforce full-time or pursue educational opportunities. [She] testified that she would not have cohabited nor bore children … if they were not married, and these assertions are supported by the fact that the couple did not cohabit or have children until after their wedding ceremony. And, but for her good-faith belief that she was married, [she] would not have represented on tax filings to the State of Missouri and the United States government that she was married.

Despite the many benefits that he garnered, [the husband] declares that a marriage never existed between [the parties]; that is, now that it is advantageous for him to so claim. If [the husband] is allowed to disavow the twenty-seven-year presumed marriage he shared with [his wife], it would not only deprive her of certain financial awards that she received in the judgment of dissolution and for which she is entitled but would effectively denominate their children as illegitimate, expose them to criminal and civil liability for income tax fraud, and place them in default with their creditors.

What this means for churches

This case illustrates two important points regarding marriage licenses.

First, most states forbid a minister from performing a marriage unless the couple has obtained a marriage license. In many states, such licenses are obtained from the county recorder’s office.

Licenses are obtained by completing and submitting an application to the appropriate government office, along with the applicable fee. License applications generally ask for biographical and residential information.

Licenses usually are valid for only a specified period of time, and only in the county in which they were issued. Many states impose a “waiting period” of a few days after an application for a license has been submitted until the license may be issued.

The Legal Requirements for Performing Marriages

The two important points outlined here are adapted from the “Performance of Marriage Ceremonies” section of the Legal Library. Turn to this section for additional insights, guidelines, and cautions.

Second, in most states, procedural defects associated with a marriage ceremony do not necessarily invalidate the legal validity of the marriage. Rather, the consequence for such defects is criminal sanctions on the officiating minister. Despite the fact that a marriage license had not been completed or filed with the state, the court in this case concluded that the marriage was valid because the couple had lived together as husband and wife for 27 years.

Ministers should be familiar with the license requirements under local law and share this information with engaged couples. Many counties publish pamphlets for engaged couples that summarize the license requirements. It would be a good practice for ministers to have a supply of these publications on hand.

As noted above, ministers may be criminally liable for marrying couples who cannot produce a valid and unexpired marriage license. In general, however, the courts are inclined to validate a marriage despite procedural defects and hold the officiating minister liable for the error.

Well in advance of a marriage, the minister should request a copy of the marriage license and ensure that it does not expire prior to the wedding date.

Aldrich v. Aldrich, 637 S.W.3d 485 (Mo. App. 2021)

Legal Developments

A Church’s Insurance Did Not Provide Coverage for Its Pastor’s Sexual Abuse of a Minor

Policy exclusion of criminal and intentional acts superseded its limited coverage of sexual misconduct claims, says court.

Richard R. Hammar, Attorney, CPA
Bio

Key point 10-16.07. A liability insurance policy provides a church with a legal defense to lawsuits claiming that the church is responsible for an injury, and it will pay any adverse settlement or judgment up to the limit specified in the policy. Liability insurance policies exclude a number of claims. For example, some policies exclude injuries based on criminal or intentional acts and claims for punitive damages. A church has an obligation to promptly notify its insurer of any potential claim, and to cooperate with the insurer in its investigation of claims.

A federal court in Missouri ruled that a church’s insurance company was not obligated to provide a defense or indemnification to the national offices of a church denomination in the event of a sexual misconduct claim because of an exclusion in the policy or intentional acts.

Background

An adult male (the “plaintiff”) sued his pastor, his church, and regional and national denominational offices with which the church was affiliated, claiming that his pastor groomed him for future sexual abuse beginning in late 2008 when he was 13 years old and continuing through 2010. The plaintiff alleged that the pastor groomed him by complimenting and touching him, and by hugging him “for long periods of time.”

Following the grooming, the plaintiff claimed that the pastor engaged in sexual contact with him. The plaintiff claimed that the national church “knew that harm was certain or substantially certain to result from its failure to supervise” the pastor. The national church denied all the plaintiff’s “allegations of knowledge and liability,” and denied that the pastor was its employee.

The plaintiff’s lawsuit alleged that the national church was responsible for the pastor’s acts on the basis of its “intentional failure to supervise clergy.”

The national church turned the lawsuit over to its insurance company (the “insurer”) for both a legal defense and indemnification. The insurer had issued an insurance policy to the national church with multiple coverages. The general commercial liability coverage included additional coverage for sexual acts.

This case centered on the “sexual-acts-liability coverage,” which obligated the insurer to pay

all sums which a covered person becomes legally obligated to pay as damages due to bodily injury, personal injury or emotional injury to which this coverage applies. The event or events causing the bodily injury or emotional injury must constitute a sexual act arising out of the operation of your organization; and must take place in the coverage territory during the policy period.

However, many exclusions applied to this coverage. Some exclusions applied only to the sexual-acts-liability coverage, and these appear on the sexual-acts-liability-coverage form itself, but the coverage form also incorporates various exclusions from other parts of the policy.

The court explained:

For example, the top of the sexual-acts-liability-coverage form includes a text box set off from all of the other text; in that box, a disclaimer appears, stating that the coverage “is subject to the terms of” other coverages, and the text box includes in bold and all caps “PLEASE READ THIS CAREFULLY.”

Similar language appears for a second time at the top of the list of exclusions on the sexual-acts-liability-coverage form:

Each of the exclusions set forth in the Exclusions section of the Commercial Liability Coverage Form (GL-100) and the Liability and Medical Coverage Form (BGL-11) apply to each of the Additional Coverages provided by this endorsement, unless otherwise modified herein.

One of the exclusions listed on form BGL-11 excludes “loss of any kind that is expected by, directed by, or intended by any insured or by any covered person” (italics added). The national church and the insurer referred to this as the “expected-or-intended exclusion,” and they disputed whether the exclusion applies at all to the sexual-acts-liability coverage

The insurer claimed that the insurance policy does not cover acts that are “expected, directed, or intended” by the insured. Since the only claim the plaintiff brought against the national church was an intentional tort, and insurers generally owe no duty to defend when no potential for coverage of the claim asserted against the insured exists, the insurer argued that it had no duty to defend or indemnify the national church.

The court concluded that the text of the policy “plainly and unambiguously provides that the expected-or-intended exclusion applies to the sexual-acts-liability coverage,” and so there was no coverage for the national church under the policy for the pastor’s sexual misconduct.

The court also concluded that while the insurer did not have a duty to indemnify the pastor, it had a limited duty to provide him with a legal defense.

What this means for churches

This case presents important lessons for church leaders regarding insurance coverage for sexual misconduct claims. Note the following.

1. Intentional or criminal acts

Many church insurance policies provide limited coverage for sexual misconduct, although significant conditions and exceptions often apply. In addition, church insurance policies ordinarily exclude coverage for criminal or intentional acts. The coverage of sexual misconduct claims and the exclusion of criminal or intentional misconduct creates a conflict.

The federal court in this case concluded that a church insurance policy’s exclusion of criminal and intentional acts superseded the policy’s limited coverage of sexual misconduct claims. The court reached this conclusion based on a careful reading of the insurance policy.

The takeaway point is that church leaders should not assume that their general liability insurance policy covers sexual misconduct claims, even if there is language in the policy to that effect. In this case, the court noted that the sexual misconduct coverage was subject to the general exclusion in the policy for intentional and criminal acts. The court observed:

[T]he top of the sexual-acts-liability-coverage form included a text box set off from all of the other text; in that box, a disclaimer appears, stating that the coverage “is subject to the terms of” other coverages, and the text box includes in bold and all caps “PLEASE READ THIS CAREFULLY.”

Similar language appears for a second time at the top of the list of exclusions on the sexual-acts-liability-coverage form:

Each of the exclusions set forth in the Exclusions section of the Commercial Liability Coverage Form (GL-100) and the Liability and Medical Coverage Form (BGL-11) apply to each of the Additional Coverages provided by this endorsement, unless otherwise modified herein.

Church leaders whose church is sued as a result of sexual misconduct often assume that the church’s insurance policy will provide a legal defense and pay for any judgment or settlement up to the policy limits. Such an assumption may be incorrect, since most insurance policies exclude coverage for any “intentional” or criminal acts, and some specifically exclude coverage for sexual misconduct.

As a result, some churches, like the one in this case, end up having to retain and compensate their own attorney and pay any judgment or settlement that is rendered against them. The financial impact of such unbudgeted expenses can be substantial.

2. Negligence

Note that the plaintiff in this case only sued the national church for an intentional failure to supervise clergy. In most sexual misconduct cases, plaintiffs sue churches and denominational agencies for negligence (i.e., negligent selection, negligent retention, or negligent supervision).

Such claims are not necessarily barred by an intentional misconduct exclusion in a church’s liability insurance policy, since an argument can be made that since the church is being sued for negligence, and not an intentional act, the policy’s intentional acts exclusion should not apply. After all, it was an individual perpetrator, not the church, that engaged in the intentional or criminal misconduct.

The courts have reached mixed results on the application of an insurance policy’s intentional acts exclusion to negligence claims against a church or denominational agency.

It is important for church leaders to resolve this ambiguity by retaining legal counsel to review all insurance coverages and by seeking clarification from the church’s insurance agent. The agent should be asked, “If our church is sued for negligence in a lawsuit brought by a victim of sexual misconduct, does our general liability insurance policy provide a legal defense and indemnification (up to the policy limits), or is coverage barred by the intentional acts exclusion?” Ask the insurance agent to respond to this question in writing.

3. Policy selection and renewal

Sexual misconduct claims, particularly those involving minor victims, represent one of the most common sources of church litigation.

Because of the frequency of such claims, and their potential for significant damages, it is imperative for church leaders to know if their church’s insurance policy will provide both legal defense and indemnification in the event of an adverse judgment or settlement. This should be a major consideration when shopping for insurance coverage or deciding whether to renew existing coverage. In fact, what other consideration would be more important?

4. Coverage for the perpetrator

What about the perpetrator? Does the church insurance policy provide for a legal defense? Does it provide for indemnification (payment of a settlement or judgment up to the policy limits)?

The court concluded that while the insurer did not have a duty to indemnify the pastor, it had a limited duty to provide him with a legal defense.

This conclusion, based on the language of the insurance policy, means that the perpetrator was personally responsible to pay any portion of a settlement or judgment applicable to his wrongful acts. Such a result often comes as a shock to perpetrators of sexual misconduct, and, if known, can serve as a useful deterrent to such behavior.

5. Riders

If a church’s insurance policy does not provide coverage, then ask your insurance agent if you can purchase a rider that does.

2021 U.S. Dist. LEXIS 219029, 2021 WL 5279574 (E.D. Mo. 2021)

Legal Developments

Christian College Not Liable for Sexual Misconduct of Former Student Hired by a Church

Churches should be aware that states are divided on liability based on recommendations related to hiring.

Richard R. Hammar, Attorney, CPA
Bio

Key point. While employers may not have a duty to provide a reference about a former employee, if they choose to do so they may be liable if they fail to disclose information suggesting that the individual may pose a risk of harm to others.

A Missouri court ruled that a religious school was not liable for the sexual misconduct of a former student on the ground that it provided a positive reference to a church on the offender.

Church sues college over positive recommendation

A Christian college (the “College”) is an independent college that prepares students for ministry. On occasion, individual churches needing to fill open positions contact the College for recommendations. However, the individual churches, and not the College, make the ultimate hiring decisions.

Based upon the College’s positive recommendation, a church hired an employee (the “offender”) in 2004. As a result of that employment, the offender allegedly sexually abused a minor (the “victim”) from 2006 through 2010. The victim thereafter sued the College for negligence in providing a positive reference leading to the offender’s employment at the church.

The College asked the trial court to dismiss the case on the ground that the act of providing the church with an employment recommendation did not create a duty to the victim to exercise reasonable care. The court agreed, and the victim appealed.

A recommendation is not a proper basis for asserting negligence

On appeal, the victim argued that once a defendant undertakes to provide a recommendation to a prospective employer, the defendant has a duty to provide a nonnegligent recommendation if the defendant knows or has reason to know that a negligent recommendation involves an unreasonable risk of injury to the prospective employer or third parties. According to the victim, such a “duty” arises because of the fact that “other states have recognized . . . a duty to not provide negligent recommendations.”

In support of this claim, the victim cited cases in New Mexico, Texas, and California. But the court pointed out that the victim “has completely omitted, however, any citation to cases from other states rejecting the existence of such a duty.”

The court cited cases from Indiana, Kentucky, Washington, Illinois, and New York rejecting “the existence of a generalized duty to exercise care in making employment references.” To illustrate, it cited a New York case in which a court concluded that “the mere recommendation of a person for potential employment is not a proper basis for asserting a claim of negligence where another party is responsible for the actual hiring.”

The appeals court concluded:

In light of these contrary cases from Indiana, Kentucky, Washington, Illinois, and New York, the victim’s mere citation to supporting cases from New Mexico, Texas, and California fails to analytically support or persuade us that such a duty . . . exists in Missouri’s common law.

What this means for churches

Church leaders often are asked to provide a reference on a former employee. This case illustrates that states are divided on whether former employers are liable for injuries inflicted by an employee for whom they provided a positive reference despite knowledge of wrongdoing. It cited cases in New Mexico, Texas, and California recognizing liability, and cases in Indiana, Kentucky, Washington, Illinois, and New York that did not recognize liability.

Key point. Providing references on former employees is fraught with risk, and should not be undertaken without legal counsel. Doe v. Ozark Christian College, 579 S.W.3d 220 (Mo. App. 2019).

Legal Developments

Church Not Liable in Suit for Failing to Inform Parents of Child Pornography on Pastor’s Laptop

Church Law and Tax Report Church Not Liable in Suit for Failing to Inform Parents

Church Law and Tax Report

Church Not Liable in Suit for Failing to Inform Parents of Child Pornography on Pastor’s Laptop

Key point 10-04. Churches can reduce the risk of liability based on negligent selection for the sexual molestation of minors by adopting risk management policies and procedures.

A Missouri court ruled that a church was not liable for failing to inform parents that large amounts of child pornography was found on the pastor’s laptop computer. A minor female (the “victim”) was born in 2001. She and her parents (the “Doe Family”) joined a Catholic church in the summer of 2009. A priest (the “defendant”) became the pastor of the church at about the same time. In December 2010, a computer technician who worked for the church was asked to look at the priest’s laptop because it was running slow. The technician determined that the hard drive was full, and in the process of deleting files, saw pictures of young girls stored on the hard drive with numbers assigned, indicating the pictures had been taken by a camera. The technician reported his discovery to the church’s office manager, and thereafter brought the laptop to the church office to meet with a church deacon. The technician assisted the deacon in navigating to one particular picture he had found of a young girl with her pants pulled down. The deacon immediately contacted an official of the Diocese. On December 16, 2010, the deacon delivered the laptop to the official who asked the Diocese’s Director of Management Information Systems to look at the laptop. On December 17, 2010, this person copied photographs she found on the laptop to a flash drive. On the same day, she and her supervisor prepared a memorandum to the Diocese regarding their findings and attached copies of some of the images found on the laptop. On the same day, the bishop of the Diocese contacted its outside legal counsel for an opinion about whether the images found on the priest’s laptop constituted child pornography. A few days later, outside legal counsel advised the bishop that in his legal opinion, the images on the priest’s laptop were not child pornography.

On December 17, 2010, the priest failed to report to work at the church. The church contacted the police, who discovered the priest unconscious in his garage with his motorcycle running. During Mass on the following Sunday, someone announced that the priest had an “accident” while working on his motorcycle, that those attending Mass should pray for his recovery, and that cards could be placed in a basket at the back of the church. In January 2011, the Diocese sent the priest to a doctor for a psychiatric evaluation.

In February 2011, the bishop assigned the priest to a limited ministry as chaplain for the Sisters of St. Francis. The bishop imposed written restrictions on the priest with which he agreed to comply. The restrictions included that the priest would avoid contact with children, would not use a computer, would use a camera only in limited circumstances, and would not take any photos of children. Neither the bishop nor any other representative of the Diocese told the church’s deacon about the restrictions.

Between March 2011 and April 2011, the Doe Family had three interactions with the priest. In March 2011, the Doe Family arranged to meet with him at a park where the Doe Family was playing softball. The parents saw the priest take a picture of their 10-year-old daughter with his cell phone while she was sitting in the “V” between two branches of a tree. Later that same day, the Doe Family and the priest ate together at a pizza restaurant. The priest sat on the opposite side of the table from the child. The parents observed that the priest had his phone in his lap. On Easter Sunday in April 2011, the Doe Family attended Easter Mass at the priest’s invitation, and spoke briefly with him before and after Mass. He did not take pictures of the child on this date.

In May 2011, the priest was arrested and charged with possession of child pornography. None of the charges related to the victim. The arrest occurred within days of the delivery to the police of a CD and a flash drive containing photographs that had been copied from the priest’s laptop. At about the same time, the priest’s brother gave the police CDs and other media he had found in his brother’s residence around the time the priest attempted suicide.

After the priest’s arrest, the Doe Family began to worry that the priest had taken pictures of their 10-year-old daughter. Investigators could find no pictures on the priest’s laptop computer depicting the victim, but the parents insisted that they did exist but had been erased from the laptop’s hard drive by the priest’s brother.

On November 16, 2011, the Doe Family filed a lawsuit naming the priest, the Diocese, and bishop as defendants. A trial court dismissed the lawsuit, and the parents appealed.

The appellate court agreed with the trial court’s dismissal of all claims against the church defendants, noting that, even though the Diocese failed to tell the parents about potentially pornographic images of children found on the pastor’s laptop, there was no evidence that the pastor would have had the opportunity to allegedly take obscene photos of the victim, as would be required to support the parents’ fraudulent misrepresentation claim.

What This Means For Churches:

The most noteworthy aspect of this case was the priest’s preoccupation with photographing children. The FBI profile of child molesters (Child Molesters: A Behavioral Analysis 3rd ed. 1992) lists several characteristics of pedophiles. One of these is described as follows:

Photographing of children

This includes photographing children fully dressed. One pedophile bragged that he went to rock concerts with thirty or forty rolls of film in order to photograph young boys. After developing the pictures, he fantasized about having sex with them. Such a pedophile might frequent playgrounds, youth athletic contests, child beauty pageants, or child exercise classes with his camera.

The FBI profile adds that “collecting child pornography or child erotica is one of the most significant characteristics of pedophiles.”

The takeaway point for church leaders is to watch for adults (especially males) who frequently take pictures of unrelated children at church or during church activities. According to the FBI profile, this is a characteristic of pedophilia. That’s not to say that every adult who takes pictures of unrelated minors at church events is a pedophile, but it does suggest that such persons are exhibiting one of the identifying characteristics of pedophilia according to the FBI profile, and as a result, they need to be confronted about their interest in taking pictures of unrelated minors, and monitored. Doe v. Ratigan, 481 S.W.3d 36 (Mo. App. 2015).

Legal Developments

Child Abuse Reporting

The Missouri Supreme Court refused to rule that the first amendment guaranty of religious freedom prohibits states from applying child abuse reporting laws to ministers who learn of incidents of child abuse.

Richard R. Hammar, Attorney, CPA
Bio


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

The Missouri Supreme Court refused to rule that the first amendment guaranty of religious freedom prohibits states from applying child abuse reporting laws to ministers who learn of incidents of child abuse in the course of communications protected by the clergy-penitent privilege.

Two pastors of a local church were served with subpoenas by a local prosecutor. The subpoenas ordered the pastors to appear at the prosecutor's office and to bring "any and all relevant materials, including personal knowledge" regarding a criminal defendant who attended their church. The defendant was being prosecuted for sexually molesting his stepdaughters, and the prosecutor issued the subpoenas in order to obtain information about a confession that the defendant allegedly made to the two pastors.

The pastors asked the court to "quash" the subpoenas on the ground that the subpoenas required them to disclose a privileged communication made to them in their capacity as ministers providing spiritual advice and counseling. They claimed that compelling them to disclose this information would violate their first amendment right to freely exercise their religion.

The prosecutor insisted that the pastors were mistaken. He noted that the Missouri child abuse reporting law contains the following provision: "Any legally recognized privileged communication, except that between attorney and client, shall not apply to situations involving known or suspected child abuse or neglect and shall not constitute grounds for failure to report … to cooperate with the division … or to give or accept evidence in any judicial proceeding relating to child abuse." This provision, the prosecutor argued, nullified the clergy-penitent privilege in the context of child abuse reporting.

A trial court agreed with the pastors, and quashed the subpoenas on the ground that they violated the first amendment. The prosecutor appealed this ruling to the state supreme court. The supreme court concluded that it did not have to address the constitutional claim made by the pastors since it could dispose of the case on "nonconstitutional" grounds. Specifically, it noted that the state law under which the subpoenas had been issued only authorized the inspection of books and records, and not conversations or personal recollections. Therefore, the court refused to address the question of whether the child abuse reporting law "abrogates the minister-communicant privilege in situations involving child abuse or neglect" as the prosecutor insisted, or "violates the pastors' right to free exercise of religion."

Application. Several states have child abuse reporting laws containing the following contradictory provisions: (1) ministers are not included within the definition of a "mandatory reporter," and so they are permitted to report incidents of child abuse to civil authorities but they are not legally required to do so; and (2) the law specifies that "legally recognized privileged communications" (including the clergy-penitent privilege) do not excuse a failure to report child abuse. Why are these provisions contradictory? Because if ministers are not mandatory child abuse reporters then why does the statute say that the clergy-penitent privilege does not excuse the reporting of child abuse? There is only one logical way to resolve this contradiction. Ministers in these states are not mandatory reporters in their role as ministers, but they may be mandatory reporters because of some other status (e.g., a professional counselor, teacher, school administrator), and while acting in that other status they cannot excuse a failure to report child abuse on the basis of the clergy-penitent privilege.

Let's illustrate this with an example. Assume that ministers are not mandatory reporters in a particular state, and that the state child abuse reporting law specifies that the clergy-penitent privilege does not excuse a failure to report abuse. Pastor Ken is a full-time pastor of a church who learns of child abuse during a conversation protected by the clergy-penitent privilege. While the child abuse reporting law provides that the clergy-penitent privilege does not excuse a failure to report child abuse, the fact remains that Pastor Ken is not a mandatory child abuse reporter and therefore is not required to report the abuse. Now, let's assume the same facts except that Pastor Ken is also a licensed professional counselor. If professional counselors are mandatory child abuse reporters, and Pastor Ken was acting in his role as a professional counselor when he learned of the child abuse, then he would be legally required to report the abuse despite the fact that the conversation was protected by the clergy-penitent privilege. This may not be the interpretation that the courts will give to these contradictory provisions, but it certainly is the most reasonable and likely interpretation. Unfortunately, no court has ever addressed this issue.

There is one other possible explanation for these contradictory provisions. In some states, such as Missouri, ministers were included on the list of mandatory child abuse reporters in the past. It made sense for the statute to clarify that the clergy-penitent privilege would not excuse a failure to report abuse. However, the legislature later removed ministers from the list of mandatory reporters, but failed to delete the provision barring the clergy-penitent privilege from excusing a failure to report abuse. In other words, the contradictory provisions were the result of legislative oversight. If this is the case, then this supports the interpretation of these provisions set forth above. State v. Eisenhouer, 40 S.W.3d 916 (Mo. 2001).

Legal Developments

Recent Developments in Missouri Regarding Employment Practices

A Missouri court ruled that a charity could be sued by a bookkeeper who was dismissed as a result of her reporting financial improprieties by her supervisor.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax1999-11-01

Employment Practices

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

• Key point. Churches that dismiss an employee for reporting financial improprieties may be liable for wrongful dismissal.

A Missouri court ruled that a charity could be sued by a bookkeeper who was dismissed as a result of her reporting financial improprieties by her supervisor. A bookkeeper became aware that her supervisor was engaged in a number of financial improprieties, including (1) stealing money from his employer; (2) charging personal expenses to his employer and not paying these charges back; (3) keeping some of the cash sent to his employer in the mail; and (4) obtaining reimbursements for travel expenses that were never incurred. She reported her findings to a member of the charity’s personnel committee who told her to “get more evidence.” She continued to gather evidence, and spoke with two other members of the personnel committee. She was later dismissed. The reason for her dismissal was hotly contested. The charity insisted that her dismissal had nothing to do with her accusations against her supervisor. Rather, it insisted that she had been fired for missing several days of work, failing to perform assigned duties, and arriving late to work. The bookkeeper claimed that she had been dismissed because of her “whistleblowing.” She sued her former employer, and a jury awarded her $100,000 in damages.

A state appeals court upheld the trial court’s ruling. It conceded that employees (such as the bookkeeper in this case) “who have no contract for a certain term of employment are employees-at-will. An employee-at-will normally has no right to sue for wrongful discharge even if the employee was terminated without cause.” However, the court pointed out that there are limited exceptions to this rule. The so-called “whistleblower” exception protects employees who report “wrongdoing or violations of law or public policy by the employer or fellow employees to superiors or third parties.” Such persons cannot be dismissed without cause, even though they are “at will” employees hired for an unspecified term.

The court rejected four defenses asserted by the charity. First, the charity argued that the whistleblower exception does not apply to simple acts of theft of an employer’s own property. The court rejected this argument, noting that “it is a strong mandate of Missouri public policy to prevent theft of charitable donations to and funds of a nonprofit organization.” Second, the charity argued that the bookkeeper’s actions in telling three members of the personnel committee about her supervisor’s stealing did not constitute whistleblowing because she never reported her suspicions to the police or other civil authorities. Such “internal” reporting, the charity insisted, does not “blow the whistle” on the alleged wrongdoer. The court rejected this argument, noting simply that there is no requirement under the whistleblower exception that a report be made “to outside, as opposed to internal, authorities.” Third, the charity claimed that it did not “know” of the bookkeeper’s whistleblowing activities at the time she was dismissed. In rejecting this argument, the court noted that the bookkeeper’s statements to three members of the personnel committee had the effect of putting her employer on notice of her actions. Fourth, the charity argued that it could not be liable for dismissing the bookkeeper on account of whistleblowing unless this was the “exclusive” basis for its action. The court concluded that there was no such requirement, and that all an employee has to prove is that his or her dismissal was based in part on whistleblowing activities.

Application. Unfortunately, financial improprieties can occur in a church. These may take the form of embezzlement, theft, or improper or unauthorized reimbursements. In some cases, an employee becomes aware of these activities and reports them to one or more church leaders. Church leader must understand that a decision to terminate such an employee will expose the church to potential legal liability based on wrongful termination, even if the employee is an “at will” employee who ordinarily could be dismissed for any or no reason. As this case demonstrates, this is true even if the employer has legitimate grounds to terminate the employee. The fact that the termination comes close in time to an employee’s “whistleblowing” activities may well convince a jury that the employer’s alleged grounds for dismissal were a “pretext.” Brenneke v. Department of Veterans of Foreign Wars, 984 SW.2d 134 (Mo. App. 1999). [Termination of Employees]

© 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: m43 m42 m86 c0699

Legal Developments

Charity liable for injuries sustained by an adult while bungee jumping.

Liability could not be avoided even if an independent contractor ran the “inherently dangerous activity.”

Richard R. Hammar, Attorney, CPA
Bio

Key point. A church cannot avoid liability for injuries caused by an "inherently dangerous activity" by hiring an independent contractor to operate or conduct it.

A Missouri court found a charity liable for injuries sustained by an adult while bungee jumping at a charity-sponsored event.

The charity hired an independent contractor to set up and operate a bungee jumping attraction. A 39-year-old male (the "victim") was the first to purchase a bungee jump ticket. He was weighed, and was then required to sign a "release and waiver of liability" form that stated:

The participant is fully aware that bungee jumping . . . is a calculated risk sport and contains inherent risk and dangers (including serious injury or death) that no amount of care, caution, instruction, or expertise can eliminate.”

An employee of the bungee jump company placed a harness around the victim's waist and ankles, and fastened the bungee cord to the harness. The victim and a "jumpmaster" entered the bungee cage which was then lifted by a crane to a height of 170 feet above the ground. The jumpmaster opened the cage door and told the victim that it was "safe to jump."

Unfortunately, no one remembered to attach the bungee cord to the crane. As a result, the victim began freefalling head-first to the ground, oblivious to his precarious position. On the way down, he noticed the end of the bungee cord falling beside him. He was able to reverse his position so that he hit the ground feet first. He survived the fall, but sustained serious and permanent injuries.

The victim sued the bungee jump company and the charity. The jury found both defendants to be responsible for the victim's injuries, and ordered the charity to pay $5 million in damages on the ground that bungee jumping is an "inherently dangerous activity."

A state appeals court upheld the verdict against the charity. The court began its opinion by noting that a landowner owes a duty of "ordinary and reasonable care" to persons it invites onto its property. It acknowledged that an exception to this rule exists when a landowner hires an independent contractor: "A landowner is not vicariously liable for injuries to third parties caused by negligence of the independent contractor or his employees."

Did this mean that the charity was not liable, since the accident was caused by the negligence of an independent contractor (the bungee jump company)? No, concluded the court. It noted that a non-negligent landowner may be liable for the negligence of an independent contractor hired to perform an "inherently dangerous activity." It explained this exception as follows:

[A] landowner who hires an independent contractor to perform an inherently dangerous activity has a nondelegable duty to take special precautions to prevent injury from the activity. The landowner remains liable for the [negligence] of the contractor, simply for commissioning the activity. The liability attaches without any need for showing that the employer is in any respect negligent.

The court concluded that the charity was independently liable for the victim's injuries on the basis of this rule.

What this means for churches

Many churches have engaged in inherently dangerous activities as a way to amuse adolescents, and in some cases adults. Bungee jumping is an obvious example of such an activity.

This case is important because it illustrates that a church cannot avoid liability associated with an inherently dangerous activity by hiring an independent contractor to operate or conduct it. There is one other aspect of this case that should be noted. The court ignored the "release form" that the victim signed prior to his injury. It observed, "one may never exonerate oneself from future liability for intentional torts or for gross negligence, or for activities involving the public interest." Hatch v. V.P. Fair Foundation, Inc., 990 S.W.2d 126 (Mo. App. 1999). [Premises 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: m58 m86 c0699

Legal Developments

Recent Developments in Missouri Regarding Sexual Misconduct

A Missouri court ruled that a public school board acted properly in dismissing a teacher for immoral conduct rendering him unfit to teach.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax1999-03-01

Sexual Misconduct

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

A Missouri court ruled that a public school board acted properly in dismissing a teacher for immoral conduct rendering him unfit to teach. A father called the police when his 14-year-old daughter did not return home one evening. The police suspected that the girl was in the home of one of her teachers. They went to the home, saw no lights or movement in the home, and rang the doorbell. A few moments later the teacher appeared, wearing only his underpants. When asked if the girl were in his home, the teacher replied that she was not. The police officers asked if they could come in an look around, but the teacher refused. After the officers left, they remained in a location where they could observe the home. A short time later they saw a girl run out of the home. One of the officers apprehended her, and returned her to her family. The school board later voted to dismiss the teacher for immoral conduct. He appealed his dismissal, and a state appeals court ruled that the school board acted properly in dismissing him. The court noted that state law permits public school teachers to be dismissed for a number of grounds, including “immoral conduct.” The court concluded:

Immoral conduct has been held to be conduct that renders a teacher unfit for the performance of his duties; conduct rendering a teacher unfit to teach. The school board could have concluded that [the teacher’s] actions in hiding the presence of a 14-year-old girl in a darkened residence in the … early morning hours, and in denying her presence when confronted by the police, did not demonstrate the morals required of a person employed to teach and coach children of the same approximate age. The board had reason to question the teacher’s motives in view of his dress when confronted by police ….

The court added that the school board was understandably concerned “about the possibility of similar future conduct with other students.”

Application. This case suggests that employees and volunteers may be dismissed for suspected but not proven inappropriate sexual contact with minors. The teacher adamantly denied any inappropriate contact with the girl, but the school board and court both concluded that even if no improper sexual contact could be proven, the teacher was properly dismissed for his indiscretion in having a 14-year-old girl alone in his home late at night with the lights out while he was wearing only his underwear. Hamm v. Poplar Bluff School District, 955 S.W.2d 27 (Mo. App. 1997). [Termination of Employees, Negligence as a Basis for 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: m43 m65 m67 c0299

Legal Developments

Recent Developments in Missouri Regarding Officers, Directors, and Trustees

A Missouri court ruled that it was prevented by the first amendment guaranty of religious freedom from resolving a lawsuit brought by ousted church officers challenging the legal validity of their removal.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax1999-03-01

Officers, Directors, and Trustees

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

• Key point. The first amendment guaranty of religious freedom protects internal church decisions regarding the removal of officers from being reviewed or overturned by the civil courts.

A Missouri court ruled that it was prevented by the first amendment guaranty of religious freedom from resolving a lawsuit brought by ousted church officers challenging the legal validity of their removal. As a result of internal conflicts a church amended its bylaws so that it was governed by six officers. These six persons soon divided into two opposing groups of three officers, which led to a stalemate on many issues. One of these groups attempted to appoint a seventh member to the board, and then these four persons ousted the other three officers. The three ousted officers sued the remaining officers, claiming that their ouster was invalid. They argued that the contest was between two factions within a nonprofit corporation disagreeing over which group was the duly elected and qualified officers of the church, and this issue was not a “purely ecclesiastical” matter that was off limits to the civil courts. The matter could be resolved simply by reviewing the church’s bylaws. The other group of officers insisted that the dispute was an ecclesiastical matter. They asserted that whether an individual is properly appointed or removed as an officer of a church is subject to ecclesiastical, not corporate, law and therefore “callings, ordinations and removals” of such positions are not within the jurisdiction of the civil courts. A trial court agreed with this position, and dismissed the case. The ousted officers appealed. They claimed that when the church incorporated under state law it submitted to the state courts’ jurisdiction in all matters of a corporate nature. As a result, the courts could determine if the four officers who ousted them did so in accordance with the church’s bylaws. They insisted that they were raising questions of authority to act, and whether proper corporate procedure were followed in accordance with the bylaws. The other group of officers claimed that the act of ousting the leaders of a religious body has long been an ecclesiastical matter because “the officers of a religious society are to be determined according to the discipline of that society, and civil courts will not review the decision of a competent ecclesiastical body upon a question involving the election of officers.” This group also asserted that it is inconsistent with the American concept of the relationship between church and state to permit civil courts to determine ecclesiastical questions.

A state appeals court concluded that the first amendment prevents the civil courts from resolving the ousted members’ claims. It relied on a landmark case in which the United States Supreme Court addressed an almost identical question-which of two competing factions within one church had the “power to exercise religious authority” over the church building. The Supreme Court held that “judges of the civil courts [are not] as competent in the ecclesiastical law and religious faith of all these bodies as the ablest men in each are in reference to their own.” As such:

where a subject-matter of dispute, strictly and purely ecclesiastical in its character-a matter over which the civil courts exercise no jurisdiction-a matter which concerns theological controversy, church discipline, ecclesiastical government, or the conformity of its members of the church to the standard of morals required of them … no jurisdiction has been conferred on the tribunal to try the particular case before it. Watson v. Jones, 80 U.S. 679 (1871).

The court concluded that this dispute was far more than a disagreement over the meaning and application of corporate bylaws. The “ultimate issue” was whether or not the ouster of church officers was proper. The court noted that “there is no way that can be a non-ecclesiastical issue.”

Application. This case illustrates the scope of the universally recognized rule that the civil courts will not interfere with internal church disputes involving “purely ecclesiastical disputes.” The United States Supreme Court has ruled that these disputes include those involving “theological controversy, church discipline, ecclesiastical government, or the conformity of [church] members to the standard of morals required of them.” This case demonstrates that disgruntled officers or members cannot avoid this rule by characterizing a dispute as a matter of corporation law or the interpretation of bylaws. Rolfe v. Parker, 968 S.W.2d 178 (Mo. App. 1998). [Church Officers, Directors, and Trustees, The Establishment Clause]

© 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: m56 m34 m47 c0299

Legal Developments

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

The Missouri Supreme Court ruled that a diocese could not be liable for the sexual misconduct of a priest.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax1999-01-01

Sexual Misconduct By Clergy And Church Workers

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

• Key point. A religious denomination is not necessarily legally responsible for the acts of sexual misconduct that occur in affiliated churches.

• Key point. Several courts have concluded that churches and denominational agencies cannot be legally responsible for a minister’s sexual misconduct, since allowing such organizations to be sued for failing to exercise sufficient care in the selection, training, or supervision of its ministers would violate the first amendment guaranty of religious freedom.

• Key point. Most courts have rejected “breach of a fiduciary duty” as a basis for holding a church or denominational agency liable for a minister’s sexual misconduct.

• Key point. Most courts have rejected “agency” as a basis for holding a church or denominational agency liable for a minister’s sexual misconduct.

The Missouri Supreme Court ruled that a diocese could not be liable for the sexual misconduct of a priest. A Catholic priest served as associate pastor of a church. He invited a young boy and one of the boy’s friends to spend the night and watch movies in the church parsonage. One of the boys later alleged that the priest sexually molested him. When the boy’s parents learned of the allegations, they immediately notified the diocese. Officials of the Diocese allegedly told them that “this happens to young men all the time” and that their son “would get over it.” Diocese employees urged the parents to meet with the priest to resolve the situation. After hearing of similar incidents between the priest and other young boys, the parents “expressed their concerns to the diocese.” They were told that the incident with their son was “an innocent pat on the butt” and that they should “forgive and forget” and get on with their lives. According to the parents, the diocese continued to ignore them until the priest eventually was removed from the diocese. The parents sued the diocese, alleging breach of fiduciary duty, conspiracy, agency, negligent hiring, negligent ordination, negligent retention, negligent failure to supervise, intentional failure to supervise, negligent infliction of emotional distress, intentional infliction of emotional distress, and independent negligence of the diocese. The trial court dismissed all claims against the diocese for “failure to state a claim upon which relief can be granted and because such claims … infringe upon its rights provided by the first amendment to the United States Constitution.” The parents appealed. The Missouri Supreme Court upheld the trial court’s dismissal of all claims against the diocese. Its reasoning is summarized below.

Breach of Fiduciary Duty

The parents alleged that the diocese “stood in a fiduciary relationship” with them and their son because they were the recipients of services that were directed and monitored by the diocese. Further, the diocese “held a fiduciary relationship of trust and confidence” with the family. The court concluded that these “general conclusions” were not sufficient to support the parents’ claim.

Conspiracy

The parents alleged that the diocese “conspired” with the priest to commit acts of sexual misconduct and intentional infliction of emotion distress, because it (1) knew or should have known that the priest was committing sexual misconduct and failed to take any action to prevent it or to warn them; (2) failed to remove him from his position; (3) hid the priest’s conduct from the public; (4) refused to acknowledge the problem or educate the public; (5) ignored the problem; and (6) obtained confidentiality agreements from sex abuse victims.

The court noted that a civil conspiracy is an “agreement or understanding between persons to do an unlawful act, or to use unlawful means to do a lawful act.” A plaintiff must establish that “two or more persons with an unlawful objective, after a meeting of the minds, committed at least one act in furtherance of the conspiracy, damaging the plaintiff.” The parents’ lawsuit did not demonstrate such a meeting of the minds.

Agency

The parents asserted that the priest was “acting in the course and scope of authority given him by [the diocese] when he committed the acts alleged.” The court noted that “under the doctrine of respondeat superior, a principal is liable for its agent’s acts that are (1) within the scope of employment and (2) done as a means or for the purpose of doing the work assigned by the principal.” Intentional sexual misconduct and intentional infliction of emotional distress “are not within the scope of employment of a priest, and are in fact forbidden.” As a result, the diocese could not be liable for the priest’s actions on the basis of agency.

Negligent Hiring, Ordination, and Retention of clergy

The parents claimed that the diocese was negligent in “hiring or ordaining” and then retaining the priest. Negligence is “conduct which falls below the standard established by law for the protection of others against unreasonable risk of harm.” To establish a claim for negligent hiring or retention, a plaintiff must show: (1) the employer knew or should have known of the employee’s dangerous proclivities, and (2) the employer’s negligence was the proximate cause of the plaintiff’s injuries. The court noted that “religious organizations are not immune from civil liability for the acts of their clergy,” and that “if neutral principles of law can be applied without determining questions of religious doctrine, polity, and practice, then a court may impose liability.” For example, “a church can be vicariously liable for the negligent operation of a vehicle by a pastor in the scope of employment.” However, the court cautioned that

[q]uestions of hiring, ordaining, and retaining clergy, however, necessarily involve interpretation of religious doctrine, policy, and administration. Such excessive entanglement between church and state has the effect of inhibiting religion, in violation of the first amendment. By the same token, judicial inquiry into hiring, ordaining, and retaining clergy would result in an endorsement of religion, by approving one model for church hiring, ordination, and retention of clergy. A church’s freedom to select clergy is protected “as a part of the free exercise of religion against state interference.” Kedroff v. St. Nicholas Cathedral of Russian Orthodox Church, 344 U.S. 94 (1952). Ordination of a priest is a “quintessentially religious” matter, “whose resolution the First Amendment commits exclusively to the highest ecclesiastical tribunals of this hierarchical church.” The trial court did not err in dismissing the claims of negligent hiring/ordination/retention.

Negligent Failure to Supervise Clergy

The parents asserted that after the priest was ordained, the diocese had a duty to supervise his activities, which it failed to do. The parents claimed that the diocese “knew or reasonably should have known of prior sexual misconduct and a propensity to such conduct” by the priest. Once again, the court disagreed:

Adjudicating the reasonableness of a church’s supervision of a cleric-what the church “should know”-requires inquiry into religious doctrine …. [T]his would create an excessive entanglement, inhibit religion, and result in the endorsement of one model of supervision. Not recognizing the cause of negligent failure to supervise clergy is not an establishment of religion because it is a “nondiscriminatory religious-practice exemption.” Employment Division v. Smith, 494 U.S. 872, 879 (1990). It achieves “a benevolent neutrality which will permit religious exercise to exist without sponsorship and without interference.” Nonrecognition of this negligence tort preserves “the autonomy and freedom of religious bodies while avoiding any semblance of established religion.” Walz, 397 U.S. at 672.

Intentional Failure to Supervise Clergy

The court ruled that allowing religious organizations to be sued for “intentional failure to supervise clergy” does not offend the first amendment. A cause of action for intentional failure to supervise clergy is stated if a supervisor knows that a minister is likely to harm others but disregards the risk. The court cautioned that this basis of liability requires a supervisor, and that the first amendment does not allow a court “to decide issues of church government-whether or not a cleric should have a supervisor.” The parents in this case alleged that the diocese knew that harm was certain or substantially certain to result from its failure to supervise the priest, and as a result “have stated a cause of action for intentional failure to supervise clergy.”

Negligent Infliction of Emotional Distress

The parents claimed that after they reported the sexual misconduct, the diocese negligently inflicted emotional distress on them by failing to investigate, covering up the incident, and making the statements “this happens to young men all the time,” this was “an innocent pat on the butt” and they should “forgive and forget” and get on with their lives. The court pointed out that “to prevail under negligent infliction of emotional distress, a plaintiff must show: (1) the defendant should have realized that its conduct involved an unreasonable risk of causing the distress, and (2) the emotional distress or mental injury must be medically diagnosable and sufficiently severe to be medically significant.” The court concluded that allowing the parents to sue the diocese on this basis would violate the first amendment:

The [parents’] claim is related not to the relationship between the diocese and its clergy, but rather to the relationship between the diocese and its parishioners. To determine whether the diocese’s responses to its members’ claims were “reasonable,” a court would inevitably judge the reasonableness of religious beliefs, discipline, and government. Applying a negligence standard to the actions of the diocese in dealing with its parishioners offends the first amendment. “In short, the [first amendment permits] hierarchical religious organizations to establish their own rules and regulations for internal discipline and government, and to create tribunals for adjudicating disputes over these matters. When this choice is exercised and ecclesiastic tribunals are created to decide disputes over the government and direction of subordinate bodies, the Constitution requires that civil courts accept their decision as binding upon them.” Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976).

Intentional Infliction of Emotional Distress

The parents claimed that the diocese’s conduct was extreme and outrageous in “allowing the assault to happen, and in covering up the incident and other such incidents by [the priest involved and by other priests], by failing to properly investigate, and in their treatment of the [family] after the assault.” They further allege that the Diocese “acted intentionally.” The court noted that “to state a claim for intentional infliction of emotional distress, a plaintiff must plead extreme and outrageous conduct by a defendant who intentionally or recklessly causes severe emotional distress that results in bodily harm. The conduct must have been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” This standard was not met, the court concluded. “Intentional infliction of emotional distress requires not only intentional conduct, but conduct that is intended only to cause severe emotional harm. The [parents’] allegations do not support the inference that the diocese’s sole purpose in its conduct was to invade the [parents’] interest in freedom from emotional distress.”

Independent Negligence by the Diocese

The parents pointed to several acts of negligence by the diocese: (1) failing to have a policy to prevent sexual abuse of minors; (2) concealing unlawful sexual acts and abuse by failing to educate and accurately inform the public; (3) ignoring and failing to investigate complaints; (4) trying to silence claims and prevent members and the public from discovering priests accused of sexual misconduct; and (5) failing to evaluate the propensity of priests to engage in improper sexual conduct. The court noted that whether or not negligence exists in a particular situation “depends on whether or not a reasonably prudent person would have anticipated danger and provided against it.” Yet, in order to determine how a “reasonably prudent diocese” would act, a court would have to “excessively entangle itself in religious doctrine, policy, and administration.” Church members give their “implied consent” to be “subject only to such appeals as the organism itself provides for.” Gibson v. Brewer, 952 S.W.2d 239 (Mo. 1997). [Seduction of Counselees and Church Members, Negligence as a Basis for Liability, Denominational Liability]

© 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: m67 m40 c0199

Legal Developments

Recent Developments in Missouri Regarding Schools

A Missouri court ruled that a religious school was not a “church” and accordingly was not exempt from local zoning restrictions.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax1998-05-01

Schools

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

• Key point. Religious schools that are not operated by a church are not necessarily treated as a “church” for purposes of zoning law.

A Missouri court ruled that a religious school was not a “church” and accordingly was not exempt from local zoning restrictions. The school was established to further the educational objectives of the Roman Catholic Church, although it was not operated or controlled by any specific church or congregation. The school wanted to erect lights to illuminate its soccer field so that it could conduct 20 night soccer games each year. A zoning commission denied the school’s request after several neighbors complained about the negative impact on surrounding properties. The school appealed, claiming that it was a “church” and as such was entitled to erect the lights despite the objections of neighbors. A state appeals court disagreed, noting that the school was not a church. The court rejected the school’s argument that it should be treated like a church because of its “religious mission.” Such special treatment, noted the court, would create constitutional problems by favoring religious private schools over secular ones.”

A number of courts have treated church—operated schools as part of the church for purposes of zoning laws. This case demonstrates that this conclusion will not necessarily be applied to private schools with a “religious mission” that are not operated or controlled by a church. Chaminade College v. City of Creve Coeur, 956 S.W.2d 440 (Mo. App. 1997). [Zoning Law for 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 m65 m15 c0398

Legal Developments

Recent Developments in Missouri Regarding Church Property

A Missouri court ruled that a church had a legal right to use a roadway across a neighboring property since an “easement by implication” had been created.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax1998-03-01

Church Property

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

• Key point. A church may have a legal right to use a road across adjoining property if it is the only means of access.

A Missouri court ruled that a church had a legal right to use a roadway across a neighboring property since an “easement by implication” had been created. Many churches use roads or driveways across adjoining property. Problems sometimes occur when the adjoining property owner sells the property and the new owner does not want to honor the arrangement. This is exactly what happened to a church in a recent case. In 1981 a husband and wife owned a 13 acre tract adjoining a state highway. They conveyed 2 acres of this tract to a church, which immediately began construction of a building. At the time of the conveyance there was a gravel roadway providing access to the state highway. The deed did not mention an easement, but the sellers advised the pastor that members and guests of the church could use the roadway as they needed it. The roadway has been used for access to the church up to the present time. The sellers later sold their property to another couple, who complained about the roadway and threatened to revoke the church’s authority to use it. An agreement was negotiated between the parties in 1988 which gave the church the right to use the roadway with an obligation to maintain it. This agreement expired after 12 months and was never extended or renewed. The couple later sold the property to another party, who insisted that he had the right to deny the church the right to use the roadway. He erected fence posts along their common boundary line, effectively cutting off access to the church over the roadway. The church asked a court to order the adjoining landowner to open up the roadway and allow the church to use it. A trial court issued an order as requested by the church, noting that the “easement” was visible, open, beneficial, and reasonably necessary at the time the current owners bought the adjoining property, and that the easement provided the church and others “the only reasonable and safe means of ingress and egress to [the state highway].” The case was appealed, and a state appeals court upheld the trial court’s ruling. It summarized the legal requirements for an “easement by implication”:

(1) A separation of the title; (2) necessity that, before the separation takes place, the use which gives rise to the easement shall have been so long continued and obvious or manifest as to show that it was meant to be permanent; and (3) necessity that the easement be essential to the beneficial enjoyment of the land granted or retained. Another essential is sometimes added to these-namely, that the servitude be continuous, as distinguished from temporary or occasional.

The court noted that the requirement of “necessity” is not “absolute necessity” but rather “reasonable necessity”. The court concluded that the church met this standard: “The roadway provided the only access from the highway to the improvements on the property. It is of no significance that the church did not exist at the time it acquired the property, because the roadway was being used and access to the highway was necessary for any use of the parcel conveyed.” The court concluded with the following advice:

There is a lesson in the entire record, which bears witness to the problems that people often face when they proceed informally in entering into important real estate transactions without the benefit of legal counsel. People who do this often find themselves in expensive and protracted litigation over matters which might have been settled at the outset by the payment of modest fees.

Application. The lesson of this case is clear-church leaders should retain an attorney to commit to writing any agreement with a neighoring property owner concerning the right of church members to use a roadway across the neighbor’s property. Oral understandings with the current owner may mean nothing to a future owner. Full Gospel Fellowship v. Stockwell, 938 S.W.2d 677 (Mo. App. 1997). [ Property of Corporations]

© 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: m21 c0298

Legal Developments

Court To Determine Whether Board Members May Serve

In a few cases, a court may resolve such disputes.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1997-05-01

Officers, Directors, and Trustees

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

• Key point. The civil courts have consistently ruled that they cannot resolve disputes concerning the eligibility and status of church board members if any consideration of religious doctrine would be required. However, a small minority of courts have ruled that they can resolve such disputes if they can do so without considering religious doctrine.

A Missouri court ruled that it could determine whether two board members of a religious organization were qualified to serve, since it could do so without considering religious doctrine. A synagogue created a subsidiary corporation and transferred all of its property to the subsidiary in an attempt to protect its assets from liability. The subsidiary was incorporated as a nonprofit corporation under state law. Its bylaws specified that board members had to be members of the synagogue. A dispute arose among members of the subsidiary’s board, and two board members filed a lawsuit against other board members, and attempted to oust other board members and install new ones. In response to these actions, the board voted to expel the two dissident members. The two dissidents refused to honor this vote, but they did nothing to challenge it. The board then asked a court to determine that the dissidents were not qualified to serve as directors since they were no longer members of the congregation as required by the bylaws, and to remove them from office. A trial court refused, noting that this case involved “an ecclesiastical matter not to be decided by this court.” The board appealed, and a state appeals court ruled that it did have the authority to resolve the dispute. The court acknowledged that it had no authority to resolve ecclesiastical matters, and that “the removal or expulsion from a congregation is a matter for an ecclesiastical tribunal to decide and its decision thereon is binding and not reviewable by the civil courts.” However, in this case the two dissidents had already been removed, and their removal was not the issue. Rather, the court was asked to determine whether or not the dismissed board members were eligible to continue serving on the board. The court observed that “the true issue raised and presented for review is whether [the two dissidents] qualify to continue as directors of the board .” It then referred to state nonprofit corporation law:

When the incorporators decided to incorporate under the not for profit laws of Missouri, they submitted it to the state courts’ jurisdiction in all matters of a corporate nature. Under the not for profit corporation laws in Missouri, the corporation is authorized to promulgate bylaws for the administration and regulation of its affairs …. Under the laws of Missouri, the directors of the not for profit corporation are authorized to manage the corporation [and their] qualifications as directors may be prescribed by the articles or bylaws.

The court noted that the subsidiary corporation’s bylaws specified that the board members were to be elected by the entire board, that eligible candidates included those persons who were members of the congregation, and that the board was empowered to remove directors. The court noted that even apart from a specific bylaw provision, “the body which appoints a director may remove a director.” It then concluded:

The bylaws herein at issue specify that the directors shall serve their term unless sooner removed or disqualified. A director is no longer qualified to serve if he is not a member of the congregation. Nothing in the statutes prevents [the board] from seeking to initiate the court’s jurisdiction to enjoin [the two dissident board members] from serving as directors …. Such a cause of action involves nothing of an ecclesiastical nature. Although this care arises out of a religious dispute, we are of the opinion that to resolve the matter does not require the court to become entangled in religious doctrine or unconstitutionally interfere with a religious body’s affairs. Here, the court has jurisdiction to inquire as to what the bylaws require and determine the degree of the parties’ adherence to them. The inquiry focuses on the parties’ in their capacity as directors of a not for profit corporation organized under the laws of Missouri, not as congregation members seeking rights under ecclesiastical law.

Application. Consider the following: (1) The court’s ruling represents a minority view. Most courts would have viewed this dispute as ecclesiastical in nature—concerning the status of board members of a religious organization—and would have refused to intervene. (2) The congregation incorporated a subsidiary corporation and transferred assets to it in order to protect the congregation’s assets from liability. A number of religious organizations have done the same thing. Unfortunately, such arrangements will not protect the congregation’s assets from liability if the congregation exercises control over the subsidiary (as is almost always the case). (3) Some religious organizations have attempted to establish self-perpetuating boards. The legal validity of such boards has been questioned by some. While the court in this case did not directly address this issue, it is perhaps worth noting that the court recognized that the subsidiary’s board was self-perpetuating but made no comments regarding the legality or propriety of such boards under nonprofit corporation law. (4) The court noted that religious organizations that incorporate under their state’s nonprofit corporation law “submit to the state’s jurisdiction in all matters of a corporate nature.” This means that those administrative or corporate matters that are not addressed in a church’s articles of incorporation or bylaws will be resolved on the basis of nonprofit corporation law. (5) The dismissed board members argued that their dismissal should not be recognized as final since they never “exhausted” or pursued their ecclesiastical remedies within the congregation. The court rejected this argument, noting that the civil courts ordinarily will not resolve church disciplinary decisions if the disciplined member failed to exhaust appeal remedies under the church’s bylaws. The court noted that “without an ecclesiastical remedy being initiated by them, we consider their expulsion from the congregation as final and binding.” (6) The court observed that “the body which appoints a director may also remove a director.” This principle will be relevant to those churches whose bylaws make no provision for the removal of officers or directors. Beth Hamedrosh Hagodol Cemetery v. Levy, 923 S.W.2d 439 (Mo. App. 1996). [Church Officers, Directors, and Trustees, Judicial Resolution of Church Disputes]

© Copyright 1997, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m56 c0397

Legal Developments

Man Sues Priest and Archdiocese Over Abuse Suffered as Teen

Court dismissed lawsuit due to lack of support for claims.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1997-01-01

Sexual Misconduct by Clergy and Other Church Workers

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

• Key point. Some courts refuse to hold churches liable for the sexual misconduct of clergy on the basis of respondeat superior, breach of fiduciary duty, or negligence.

A Missouri court ruled that a Catholic archdiocese could not be sued as a result of the molestation of a minor by a priest. A 34—year—old man sued a priest and archdiocese, claiming that the priest had molested him when he was 13 years of age while attending a Catholic parochial school. The victim claimed to have suffered numerous injuries as a result of the priest’s acts, including severe emotional distress, lost earnings, sexual addiction and dysfunction, depression, anxiety, and panic attacks. When the victim was 32, he unsuccessfully attempted to commit suicide and was hospitalized. During his hospitalization, he claimed that he discovered that his emotional problems were the result of the sexual abuse he suffered when he was 13. The victim’s lawsuit alleged that the archdiocese was responsible for his injuries on the following grounds: respondeat superior, breach of fiduciary duty, and negligent hiring and supervision of the priest. A trial court dismissed all claims against the archdiocese, and the victim appealed. A state appeals court upheld the trial court’s decision. It conceded that the statute of limitations may bar the victim’s lawsuit, but it concluded that the victim had alleged sufficient facts as to when he could have discovered the connection between the abuse and his emotional difficulties to avoid a dismissal of his lawsuit on this ground. However, the court concluded that the lawsuit had to be dismissed since the victim’s claims against the archdiocese were without any support.

Respondeat superior

Under the doctrine of respondeat superior, an employer is responsible for injuries caused by the negligence of an employee acting within the course and scope of his or her employment. An act is committed within “the scope and course of employment” if it is done by virtue of the employment and in furtherance of the business or interest of the employer, regardless of the time or motive of the conduct. The court concluded that the archdiocese could not be responsible for the victim’s injuries on this ground since the priest’s acts “clearly were not part of [his] duties as a priest or as a teacher, nor were they intended to further any religious or educational interests of the Catholic Church.”

Breach of fiduciary duty

The victim claimed that the relationship between an adolescent student and a parish priest and church school is a “fiduciary relationship” that demands the highest degree of ethical behavior, and that this duty was violated by the priest’s actions. The court noted that “Missouri courts have not addressed whether clergy and religious organizations can be held civilly liable in actions for breach of fiduciary duty with respect to sexual misconduct of clergy.” The court reviewed the law in other states, and noted that some courts had recognized such a theory of liability (Colorado, New York, Oregon) while others had not (Nebraska, New York, and Illinois).

The court chose to “align ourselves with the jurisdictions that have refused to recognize breach of fiduciary duty actions against clergy for sexual misconduct.” It noted that

[i]n those cases, the courts held that analyzing and defining the scope of fiduciary duty owed persons by their clergy (assuming pastoral relationships were “fiduciary”) would require courts to define and express the standard of care followed by reasonable clergy of the particular faith involved, which in turn “would require the court and the jury to consider the fundamental perspective and approach to counseling inherent in the beliefs and practices of that denomination. This is as unconstitutional as it is impossible. It fosters excessive entanglement with religion.” Schmidt v. Bishop, 779 F.Supp. 321 (S.D.N.Y.1991).

Further, while it may be argued that “it requires no excessive entanglement with religion to decide that reasonably prudent clergy of any sect do not molest children,” allowing actions for breach of fiduciary duty in such situations places courts “on the slippery slope and is an unnecessary venture, since existing laws … provide adequate protection for society’s interests.”

The court noted that victims of child sexual abuse can sue clergy on the basis of other theories of liability (such as intentional infliction of emotional distress) that do not require the courts to become involved in religious concerns.

Negligent hiring and supervision

The court concluded that the victim’s claims of negligence in the hiring and supervision of the priest “raise first amendment concerns which may need to be addressed” by the civil courts.

Conclusion

The court cautioned that “[c]lergy and religious organizations are not absolutely immune from civil liability. Tort actions against religious groups or persons are not offensive to the first amendment if based on purely secular activities, unrelated to their religious functions; if the alleged wrongdoing was clearly outside the tenets of the religion, notwithstanding its religious pretext, then it is actionable.” H.R.B. v. J.L.G., 913 S.W.2d 92 (Mo. App. 1996).

© Copyright 1997, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m67 m40 c0197

Legal Developments

Age Discrimination and Religious Organizations

Court says religious organizations not applicable to most religious organizations.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1995-01-01 Recent Developments

Employment Practices

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

• Key point: The federal age discrimination does not apply to most religious organizations.

• A federal district court in Missouri ruled that it could not resolve a lawsuit brought against a synagogue by a former business administrator who claimed that he had been dismissed on the basis of age. The federal Age Discrimination in Employment Act prohibits covered employers from discriminating in any employment decision (hiring, firing, etc.) on the basis of the age of any individual who is at least 40 years of age. The Act applies to any employer with 20 or more employees that is involved in interstate commerce. In deciding that the Act did not apply to the synagogue, the court relied on the Supreme Court’s 1979 decision in N.L.R.B. Catholic Bishop of Chicago, 440 U.S. 490 (1979). In the Catholic Bishop decision, the Supreme Court ruled that in deciding whether of not a federal law applies to religious organizations, a civil court first must ask if applying the law “would give rise to serious constitutional questions.” If it would, then the law cannot be applied to religious organizations without a “clear expression of an affirmative intention” by Congress to apply the law to such organizations. The district court concluded that applying the Age Discrimination in Employment Act to a church or synagogue would “give rise to serious constitutional questions.” In reaching this conclusion, the court quoted from the business administrator’s job description, and noted that his duties included “implementing Temple policies” and “having a positive attitude towards Jewish life and a Jewish background, enabling the administrator to understand the work of the Temple, its purposes and highest ideals and goals.” The court noted that the synagogue terminated the business administrator in part because he was “not properly performing the position of administrator.” It concluded:

If, as [the synagogue] has argued, [the administrator] was not properly performing the position of Temple administrator, and because every aspect of [his] job description includes the religious element set out in [the job description], there is the risk that this case would infringe on the first amendment by requiring this court to inquire into whether [the administrator] understood “the work of the Temple, its purposes and highest ideals and goals,” as he went about performing his duties. This case, accordingly, “gives rise to serious constitutional questions.”

The court then observed, again referring to the Supreme Court’s test in the Catholic Bishop decision, that “[h]aving identified the existence of a ‘serious constitutional question’ the court next must ascertain whether Congress has provided a ‘clear expression of an affirmative intention’ that the [Act] apply to religious institutions.” The court emphasized that this test “leaves no room for deduction or inference” and that “[a]bsent a congressional mandate that the [Act] apply to religious institutions, Catholic Bishop requires this court to hold that the [Act] does not extend to a Temple.” Since the Act did not specifically apply to churches of synagogues, the court concluded that this test was not met and accordingly the Act could not apply. On this basis it dismissed the lawsuit. Weissman v. Congregation Shaare Emeth, 839 F. Supp. 680 (E.D. Mo. 1993).

See Also: Age Discrimination in Employment Act

© 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: m43 c0195

Legal Developments

Bishop Sues Local Pastor for Refusing to Step Down

A denomination’s lawsuit against a minister cannot come from a denominational official.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1994-03-01 Recent Developments

Church Disputes

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

• Key point: A lawsuit by a denomination against an affiliated minister must be brought by the denomination itself and not a denominational official.

• A Missouri court ruled that a lawsuit brought by a bishop against a local pastor who refused to obey the bishop’s order to step down as his church’s pastor had to be dismissed because the denomination was not a party to the lawsuit. A pastor of a local church affiliated with the Church of God in Christ (a denomination with national offices in Memphis, Tennessee) ignored an order from his jurisdictional bishop to step down as pastor of his church. The bishop sued the pastor, asking a trial court to forbid the pastor from exercising any further authority as pastor of the church. The pastor responded by asking the court to dismiss the lawsuit on the grounds that (1) the dispute was a private religious dispute over which a civil court lacks jurisdiction, and (2) the “real party in interest” (the national church) was not a party to the lawsuit. In support of its motion to dismiss, the pastor submitted an affidavit from the church secretary that read: “[The church] is and always has been an independent church. Although we follow the general doctrines and beliefs of the Church of God in Christ, headquartered in Memphis, Tennessee, we are and never have been subject to or bound by oversight of that national church organization. Accordingly, we hold title to all the church’s property in the church’s own name and we elect a board of trustees annually during our membership meeting in January.” The pastor also pointed out that the church’s articles of incorporation specify that “it is expressly understood that this corporation is not bound by or subject to oversight by any other ecclesiastical body, but will generally follow the doctrine of the Church of God in Christ.” The bishop did not submit any evidence controverting the affidavit of the church secretary or the above-quoted provision in the church’s articles of incorporation. He merely stated that as jurisdictional bishop he had sole authority to appoint or remove pastors pursuant to the procedures set forth in the Official Manual of the Church of God in Christ. He insisted that a local church can only express their preferences regarding pastors and enter into employment contracts with them. He also pointed out that the church had operated within the Church of God in Christ for more than 20 years, and had submitted to its jurisdiction without question until shortly after the appointment of the current pastor. The bishop failed to support these contentions with testimony or other evidence. The trial court ruled in favor of the pastor for two reasons. First, the evidence demonstrated that the church was independent of any ecclesiastical body and had not submitted to the governance of the Church of God in Christ. As a result, the denomination had no authority over the church or its pastor. Second, a lawsuit may only be brought by a “real party in interest,” and in this case the real party in interest was the denomination rather than the bishop. The bishop appealed this decision, claiming that as a jurisdictional bishop of the denomination he was its representative in all church matters within his jurisdiction and accordingly could bring the lawsuit on behalf of the denomination. He further insisted that the local church had submitted to the jurisdiction and discipline of the denomination. As support, he cited a provision in the Official Manual which reads: “Each jurisdictional bishop shall be the representative of the Church of God in Christ in respect to all church matters in his ecclesiastical jurisdiction and shall have general supervision over all departments and churches in his jurisdiction.” The appeals court rejected the bishop’s position, and upheld the trial court’s dismissal of the case. The court insisted that the real party in interest was the Church of God in Christ and not the bishop. In support of this conclusion, the court pointed out that the bishop had testified that he had traveled to the denominational headquarters in Memphis to persuade the denomination to become directly involved in the case. The fact that the bishop failed in this effort demonstrated conclusively that the real party in interest was the denomination and that it had no interest in pursuing the lawsuit. This case represents a crabbed interpretation of the real party in interest doctrine. It also reflects the importance of adequate presentation of evidence to a trial court. The trial court felt compelled to reach its decision in favor of the pastor in part because of the failure by the bishop to introduce any evidence supporting his allegations. The outcome of the case may have been different had evidence been introduced to support the bishop’s claims. Moore v. Graham, 863 S.W.2d 347 (Mo. App. W.D. 1993).

See Also: Authority

© 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: m16 m39 m31 c0294

Legal Developments

Retrospective Legislation

Legislation extending the time during which abuse victims can sue may violate state constitutional provisions.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1994-01-01 Recent Developments

Sexual Misconduct by Clergy and Church Workers

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

• Key point: A number of states have enacted laws extending the time during which adult survivors of child sexual abuse can file lawsuits seeking damages for their injuries. Some of these laws may violate state constitutional provisions prohibiting “retrospective legislation.”

• The Missouri Supreme Court ruled that a state law extending the time during which an adult survivor of child sexual abuse could sue for damages violated the state constitution. An adult male sued his former priest, church, and Catholic diocese alleging that he had been repeatedly molested while a minor by the priest. The alleged victim claimed that he was intimidated into silence because of his trust in the priest, his belief that the priest was a close family friend, his perception of the priest’s greater physical strength, and his young age. He also alleged that the abuse caused him to repress the incidents so that he was unable to know or perceive that he was a victim of sexual abuse or that he suffered injuries from that abuse. He further alleged that it was not until many years later (in 1989), with the aid of therapy, that he began to make the connection between physical and emotional injuries he suffered and the acts of abuse. A trial court dismissed the lawsuit on the ground that it had been filed after the statute of limitations expired. Under Missouri law, the general statute of limitations for personal injuries is five years (although for injuries occurring to minors, the statute does not begin to run until the minor’s eighteenth birthday). However, Missouri enacted a statute in 1990 that provides: “In any civil action for recovery of damages suffered as a result of childhood sexual abuse, the time for commencement of the action shall be within five years of the date the plaintiff attains the age of eighteen or within three years of the date the plaintiff discovers or reasonably should have discovered that the injury or illness was caused by child sexual abuse, whichever later occurs.” The parties to the case all agreed that the lawsuit had been filed within the extended period permitted by the 1990 statute since the alleged victim only “discovered” that his emotional problems were connected to the abuse in recent years. However, the church defendants maintained that this extended statute of limitations violated the Missouri Constitution, which prohibits the enactment of any law that is “retrospective in its operation.” They argued that the original statute of limitations period of five years had expired by the time the Missouri legislature enacted the extended limitations statute, and accordingly the new law could not be applied to them. The Missouri Supreme Court agreed:

This Court has held that once the original statute of limitation expires and bars the plaintiff’s action, the defendant has acquired a vested right to be free from suit, a right that is substantive in nature, and therefore, [the state constitution] prohibits the legislative revival of the cause of action …. Moreover, this appears to be the majority view among jurisdictions with constitutional provisions similar to [ours]. We see no reason to depart from our precedent …. In conclusion, we hold that the expiration of the … the five-year statute of limitation … created a vested right in favor of the defendants to be free from suit. Therefore, to the extent that [the extended limitations statute] authorizes causes of action that would have been barred under [the five year statute of limitations] it clearly contravenes the constitutional prohibition against retrospective laws. Doe v. Roman Catholic Diocese of Jefferson City, 1993 WL 379450 (Mo. September 29, 1993).

See Also: Negligence as a Basis of Liability – Defenses

© 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: m67 m39 m29 c0194

Legal Developments

National Organizations’ Liability for Accidents by Local Affiliates

Recent Boy Scouts case provides helpful guidance for churches.

Richard R. Hammar, Attorney, CPA
Bio

Wilson v. Boy Scouts of America, 784 F. Supp. 1422 (E.D. Mo. 1991)

Key point: National youth organizations are not necessarily legally responsible for injuries occurring to minors in the course of activities by local affiliates.

A federal court in Missouri issued a decision that will be of interest to denominational scouting and youth programs.

The parents of a boy scout who was electrocuted during a scouting activity sued the Boy Scouts of America (BSA). They alleged that their son's death was caused by the negligence of the local scout leaders, and that the BSA was legally responsible for this negligence on the basis of an "agency relationship" between local scout leaders and the national BSA. The court dismissed the case on the ground that there was no basis for imputing the negligence of a local leader to the national BSA organization.

The court began with a description of the organization of the BSA: "BSA issues charters to schools, churches, or civic organizations which authorize the organization to sponsor a local unit. Local volunteers form a patrol leaders' council to plan troop activities. BSA does not conduct or require any training for these adult volunteers. Troops do not need permission from BSA before undertaking activities."

In reaching its conclusion that the national BSA was not responsible for the alleged negligence of a local scout leader, the court quoted from a decision in another case: "[The BSA] is an umbrella organization; it charters individual troops and, as part of that annual process of initial chartering and charter renewal, tries to assure itself that the troop will have responsible adult leadership. But it does not choose or in any way directly supervise the scoutmaster, who is selected by the troop. In these circumstances, it is generally held that the [BSA] is not vicariously liable for the negligence of the scoutmaster." McGarr v. Baltimore Area Council, 536 A.2d 728 (Md. App. 1988). The court then concluded:

The national organization . . . does not choose or directly supervise the scoutmaster or other volunteers at the troop level. . . . Plaintiffs [i.e., the victim's parents] have cited no case law holding BSA vicariously liable for the negligent acts of an unpaid volunteer. When courts have found local councils liable, the negligence occurred at a function actually sponsored and supervised by the liable organization. . . . Plaintiffs have produced no evidence that BSA had the right to control the volunteers' activities on the trip [during which the boy was killed]. While the plaintiffs can produce evidence that the volunteers were serving the general goals of scouting, they have not produced any evidence that Boy Scouts of America agreed to or even knew of the purpose, destination, an details of this particular scouting activity. . . . Plaintiffs contend the use of common uniforms, emblems, books, awards, and the scouting programs; a national insurance program; issuance of the national membership card and other printed materials locally; as well as other indicia of a relationship between BSA and local councils create a manifestation of authority upon which an innocent third party might reasonably rely. Plaintiffs also attach affidavits asserting their reliance on the manifestation that there was a single organization—BSA. However, plaintiffs fail to produce any evidence that BSA manifested in any way that it had direct control over the specific activities individual troops chose to do. The Boy Scout Handbook clearly states, "What the troop does is planned by the patrol leaders' council."

The organizational structure of the BSA keeps control of specific activities at the level closest to the actual troop. Plaintiffs produce no direct or circumstantial evidence to suggest that in this case BSA manifested control. Therefore summary judgement for BSA is appropriate on the issue of liability . . . . Furthermore, plaintiffs have produced no evidence that the national organization had a duty to control, supervise, or train volunteer leaders for the activity [during which the boy was killed].

This ruling will be of direct relevance to the national scouting and youth programs of religious denominations. It suggests that national organizations will not necessarily be legally responsible for accidents and injuries occurring during the activities of local affiliates, so long as the local volunteers (who allegedly caused or allowed an accident to occur) are not chosen or directly supervised by the national organization.

The court rejected the parents' claim that local volunteers are "agents" of BSA, since agency is based on evidence of a "right of control" and no such right existed. The court acknowledged that agency can be established by implication, when an organization leads others to believe that a person is acting on its behalf and subject to its control. The parents argued that an "implied agency" or "apparent agency" was established by the use of common uniforms and awards, and by the scouting program itself.

The court disagreed, noting that the parents had failed to produce any evidence that "BSA manifested in any way that it had direct control over the specific activities individual troops chose to do." It also quoted a provision from the Boy Scout Handbook that demonstrates a lack of control by the national organization over the activities of the local affiliates. Accordingly, it is unreasonable for persons to presume that local volunteers and troops are "agents" of the national organization, and therefore the negligence of local volunteers cannot be imputed to the national organization.

See also Sexual misconduct by clergy and church staff, Gallas v. Greek Orthodox Archdiocese, 587 N.Y.S.2d 82 (Sup. 1989) and Samuels v. Southern Baptist Hospital 594 So.2d 571 (La. App. 4 Cir. 1992).

Legal Developments

Discrimination on the Basis of Alcohol and Tobacco Use

Churches are exempted from a Missouri ban on this type of discrimination.

Richard R. Hammar, Attorney, CPA
Bio

Church Law and Tax 1992-11-01 Recent Developments

Legislation

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

• A new law recently took effect in Missouri which makes it unlawful for employers to discriminate against an employee because the individual uses lawful alcohol or tobacco products off the premises during non-working hours. However, churches are specifically exempted from this provision. The law provides: “It shall be an improper employment practice for an employer to refuse to hire, or to discharge, any individual, or to otherwise disadvantage any individual, with respect to compensation, terms or conditions of employment because the individual uses lawful alcohol or tobacco products off the premises of the employer during hours such individual is not working for the employer, unless such use interferes with the duties and performance of the employee, his coworkers, or the overall operation of the employer’s business. Religious organizations and church-operated institutions, and not for profit organizations whose principal business is health care promotion shall be exempt from the provisions of this section. The provisions of this section shall not be deemed to create a cause of action for injunctive relief, damages or other relief.” (S.B. 442, 509, 679; approved June 11, 1992, effective August 28, 1992.)

© Copyright 1992, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m52 m43 c0692

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