Key point 10-13.2. Several courts have refused to hold churches and denominational agencies liable on the basis of a breach of a fiduciary duty for the sexual misconduct of a minister. In some cases, this result is based on First Amendment considerations.
An Indiana court ruled that an Archdiocese was not liable on the basis of breach of contract for reducing the amount of counseling fees it paid on behalf of a woman who had been sexually molested by a priest when she was a minor. In 1999, a 37-yearold woman (the “plaintiff”) and her husband met with several officials of a Roman Catholic Archdiocese to discuss alleged sexual abuse of the plaintiff by a priest when she was a minor. During the meeting, church officials discussed the Archdiocesan policy that provides for the payment of counseling fees and therapy sessions for victims of childhood sexual abuse.
A few months later the plaintiff and her husband again met with church officials and made a demand for $200,000 to compensate for her injuries. In response, the Archdiocese denied liability, but its representatives again explained that it would pay for the plaintiff’s out-of-pocket counseling and treatments. The Archdiocese wrote a letter to the plaintiff indicating that it would pay for therapist and counseling fees as a result of “abuse by a minister of the church.” At some point, the Archdiocese received treatment plans from the plaintiff’s medical providers, and began making payments to them in accordance with church policy. The entire amount of each provider’s bill was paid based on the plaintiff’s representation that she had no health insurance and that she, personally, had paid 100 percent of those expenses. The Archdiocese continued to pay the plaintiff’s counseling fees for many years. On at least one occasion, the church rejected the plaintiff’s claims for additional compensation, but it continued paying her counseling and therapy expenses.
Eight years later, the Archdiocese became concerned that the plaintiff had been in treatment for several years, but, apparently, the treatment plans demonstrated no signs of recovery. As a result, the Archdiocese contacted the plaintiff’s providers and inquired about the treatment plans and the possibility of limiting future payments. A letter from the Archdiocese stated, among other things, that after paying fees of nearly $100,000 for the plaintiff’s care over a period of eight years, a new plan should be implemented. That provider agreed to begin a reduction in the frequency of the plaintiff’s therapy sessions. The Archdiocese mandated that the plaintiff’s psychotherapy sessions be reduced from twice weekly to one session per month.
After the reduction in her counseling sessions, the plaintiff sued the Archdiocese, alleging, among other things, that the Archdiocese was in breach of contract. The plaintiff asserted that the reduction in the therapy sessions was against the medical advice of her psychiatrist and therapist. As a result, she maintained that, as a consequence of the Archdiocese’s breach of its agreement to pay for necessary therapy, she suffered pain and suffering, mental anguish, and increased medical expenses. She further claimed that the Archdiocese breached its fiduciary duty to her by failing to fulfill its alleged unconditional promise to pay for her psychological testing in accordance with its own written church policy. As a result, the plaintiff maintained that the Archdiocese should be compelled to continue to pay the amounts that it had initially and voluntarily agreed to make.
A trial court dismissed the case on the ground that the Archdiocese had no legal responsibility to continue paying all of the therapy costs. Instead, it was voluntarily paying for the counseling sessions out of a “moral obligation” to do so. A state appeals court agreed. The court acknowledged that the Archdiocese had a “Policy on Care of Victims Sexual Misconduct” that provided for “appropriate counseling and spiritual direction, as needed” for victims of sexual abuse. However, a portion of the Policy makes it clear that
This statement of policy does not constitute a contractual undertaking of any nature of the payment of any amount to any person, but is an exoteric statement for guidance of the resource team of the Archdiocese. In all cases, the Archdiocese expressly reserves the right to withhold or change the terms of any benefits payable pursuant to this statement of policy or any other arrangement with victims, in the sole discretion of the Archdiocese.
The court noted that one of the requirements of an enforceable contract is “consideration,” meaning that each party receives something of value from the other party in exchange for its agreement to do something. And “a moral obligation to perform an agreement does not provide sufficient consideration to support the enforcement of an agreement nor does it create an enforceable contract.” In this case, “while the letters that the Archdiocese sent to the plaintiff express an intent to assist her with counseling costs, that correspondence does not amount to a contract to provide her unlimited care and treatment at its expense. Therefore, the designated evidence establishes that there was no enforceable contract in this instance, and the plaintiff’s claim fails on this basis.”
The court also rejected the plaintiff’s claim that the Archdiocese breached its fiduciary duty to pay the full amount of her counseling and therapy fees. She asserted that a fiduciary relationship was created when the Archdiocese undertook a duty to pay for the therapy sessions, and the Archdiocese breached its fiduciary duty when it arbitrarily decided that it would no longer pay the entire amount of the counseling sessions. The court disagreed: “Nothing in the record supports a conclusion that there was a fiduciary relationship between Doe and the Archdiocese. The plaintiff did not place any special confidences in the Archdiocese or otherwise seek out a confidential relationship. In fact, she maintained an adversarial relationship and consulted with attorneys to provide her with guidance concerning her dealings with the Archdiocese. Therefore, because no fiduciary relationship existed, there can be no breach of fiduciary duty. As a result, the trial court properly entered summary judgment for the Archdiocese with regard to this claim.”
What This Means For Churches:
Churches occasionally offer to pay counseling expenses of victims of sexual misconduct. This case illustrates that such agreements may be subject to modification or termination if based entirely on moral consideration. The unique facts and circumstances of each case may alter this result, however, and so churches should never modify or terminate an agreement to provide counseling fees without the advice of legal counsel. Doe v. Roman Catholic Archdiocese of Indianapolis, 958 N.E.2d 472 (Ind. App. 2011).