Churches’ Liability After Out-of Court Settlements

If a pastor is released from liability for sexual misconduct, his denomination cannot be liable.

Church Law and Tax 1997-11-01

Sexual Misconduct-by Clergy and Church Workers

Key point. A church or denominational agency cannot be liable for a pastor’s sexual misconduct if the victim enters into a settlement releasing the pastor from liability.

Key point. A denomination’s bylaws do not impose a fiduciary duty upon the denomination to protect church members from sexual misconduct.

! The North Dakota Supreme Court ruled that a denominational agency could not be liable for a pastor’s sexual misconduct since the victim had entered into an agreement releasing the pastor from liability. A police officer was killed in the line of duty. His widow sought out her pastor for counseling. Within a few months, the pastor initiated a sexual relationship with the widow. The affair lasted for nearly a year, at which time the pastor was assigned to a position in another state. The couple continued their relationship for seven years, meeting four or five times each year at “workshops” around the country. Eventually, the widow informed a denominational official about the pastor’s relationship with her. The pastor was promptly removed from his position within the church. The widow later sued the pastor, claiming that he breached a “fiduciary duty” he owed to her as a result of the counseling relationship and her vulnerable position following the tragic death of her husband. The widow eventually reached an out—of—court settlement with the pastor which included a release of liability. The widow also sued the denominational agency, claiming that it was legally responsible for the pastor’s acts. She alleged that the agency, and at least one official, had been informed about the sexual relationship on two different occasions and failed to take appropriate action. For example, she alleged that on one occasion a denominational official was informed by a church member of the relationship, and responded by warning the member that “you could get yourself in a whole lot of trouble spreading rumors like that.” The widow claimed that the agency and its official owed her a fiduciary duty after they learned of the affair, and that they breached this duty by failing to intervene or respond appropriately. A trial court dismissed the lawsuit against the agency, and the widow appealed.

effect of a settlement releasing the pastor from liability

The court noted that the widow had entered into an out—of—court settlement with the pastor that released him from any liability. By releasing the pastor from liability, the widow could not sue the denomination on the basis of respondeat superior (a legal theory imposing liability on an employer for the wrongs of employees committed within the scope of their employment). However, the widow could still sue the denomination for its own wrongdoing. She chose to sue the denomination on the basis of a breach of a fiduciary duty.

fiduciary duty-review of other cases

The court acknowledged that “in some cases involving counseling and sexual relations between clergy and parishioners, some courts have allowed claims against the offending clergy or the church hierarchy for breach of a fiduciary duty.” The court referred to the following four cases (three of which occurred in Colorado), each of which is fully addressed in prior issues of this newsletter: (1) Colorado: Destefano v. Grabian, 763 P2d 275 (Colo. 1988) ; (2) Colorado: Erickson v. Christenson, 781 P.2d 383 (Colo. 1989) ; (3) Colorado: Moses v. Diocese of Colorado, 863 P.2d 310 (Colo. 1993) ; (4) Texas: Sanders v. Casa View Baptist Church, 898 F. Supp. 1169 (N.D. Tex. 1995).

On the other hand, the court noted that other courts have refused to find a fiduciary duty under the same circumstances: (1) Nebraska: Schieffer v. Catholic Archdiocese of Omaha, 508 N.W.2d 907 (Okla. 1993); (2) New York: Schmidt v. Bishop, 779 F. Supp. 321 (S.D.N.Y. 1991); (3) Ohio: Strock v. Pressnell, 527 N.E.2d 1235 (Ohio 1988); (4) Oklahoma : Bladen v. First Presbyterian Church, 857 P.2d 789 (Okla. 1993).

fiduciary duty-this case

The court concluded that the widow had failed to prove that the denominational agency owed her a fiduciary duty. It observed that a fiduciary duty is based on the existence of a fiduciary relationship, and it concluded that such a relationship exists “when one is under a duty to act or give advice for the benefit of another upon matters within the scope of the relationship.” It further noted that a fiduciary relationship “generally arises when there is an unequal relationship between the parties.” Did the widow have a fiduciary relationship with her denominational agency on the basis of its alleged knowledge of the affair? No, concluded the court. It observed: “Although there was evidence [the agency and one of its officials] were informed about the intimacy between the [pastor and widow], we are not persuaded that knowledge, by itself and without some other action to assume control of the matter, raises an inference that the [agency] assumed a fiduciary duty to [the widow].” The court also stressed that there was no evidence that the widow “relied” on the agency in any way.

relevance of the Book of Discipline

The widow insisted that the denomination’s official “Book of Discipline” imposed a fiduciary duty on the denomination and its officials to investigate and confront clergy for sexual misconduct. The court disagreed. It quoted from an affidavit signed by a denominational official that explained the Book of Discipline. The affidavit asserted, in part:

The Book of Discipline … contains the constitution, doctrine and general rules of our church. It defines the duties and responsibilities of [denominational agencies and officials] and local ministers. [Denominational officials] have no responsibility for the direct pastoral care of parishioners in individual congregations. Such functions are the responsibility of the local church minister.

Application. This case is important for the following reasons: (1) It illustrates that churches cannot be liable on the basis of respondeat superior for an employee’s wrongdoing if the employee is not found liable or is released from liability as part of an out—of—court settlement. (2) The court gave a useful review of cases that have addressed the question of whether a church can be liable on the basis of a breach of fiduciary duty for a pastor’s sexual misconduct. (3) The court concluded that knowledge of wrongdoing alone may not impose a fiduciary duty upon denominational officials-unless there is evidence of some active assumption of control over the matter. (4) The court rejected the widow’s argument that a denomination’s Book of Discipline imposed a fiduciary duty upon denominational officials to investigate and remove ministers who engage in sexual misconduct. The court concluded that the Book of Discipline did not create any fiduciary duties since it did not give denominational officials any authority to assume direct pastoral care of church members in individual congregations. As a result, denominational officials did not create a fiduciary relationship with the widow. L.C. v. R.P. 563 N.W.2d 799 (N.D. 1997). [Seduction of Counselees and Church Members, Negligence as a Basis for Liability, Denominational Liability]

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