NC Supreme Court Intervenes in Church Employment Dispute

NC’s supreme court says a church employment dispute between a pastor and board of directors is not an expressly religious matter.

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

The North Carolina Supreme Court ruled that it could resolve an internal church dispute since it could do so without implicating church doctrine. 

The court began its opinion by noting:

Churches exist primarily for the spiritual edification of the adherents of a faith tradition. They are established and operated in accordance with religious precepts. . . . Churches may build sites to house worship, fellowship, community, and teaching. They simultaneously have a secular existence. Many are registered with the state as nonprofit corporations and, by virtue of their status, enjoy exemption from state and federal taxes. They may enter into contracts, dispose of property, seek financing, and make employment decisions. Unsurprisingly, disagreements arise over matters both spiritual and secular. Occasionally, parties seek resolution in civil court. 

The Court noted that the role of civil court under these circumstances is dictated by the nature of the dispute. 

When the resolution of a dispute requires the interpretation of religious doctrine or spiritual practices, the court “must abstain from deciding purely religious questions.” However, when disputes arise which can be resolved solely through the application of “neutral principles of law” that are equally applicable to non-religious institutions and organizations, a court’s involvement in such a dispute does not “jeopardize values protected by the First Amendment.” 

But spiritual and secular matters are often intertwined. When they are, 

identifying the boundary between impermissible judicial entanglement and permissible judicial adjudication is a difficult but necessary task. The First Amendment requires us to preserve the exclusive autonomy of religious authorities to answer religious questions, but the State, the public, and religious organizations themselves all have an interest in the courthouse remaining open for the resolution of certain civil claims.

Basis of the church employment dispute

In 1988, a church formed as a nonprofit corporation under North Carolina nonprofit laws. The church’s elders and senior pastor were installed as the church’s board of directors. 

The church’s articles of incorporation expressly prohibited the church from having corporate members. Instead, the articles gave the board exclusive authority to represent the church’s congregation. 

In 1997, the board adopted a set of bylaws that reserved for itself sole governing authority over the church, including employment matters. 

The church contends that these bylaws remain in effect to this day.

The pastor died in 2015. His son (“RJ”) accepted an offer letter to become senior pastor as an at-will employee. The offer letter provided that: 

An “at-will” employment relationship has no specific duration. This means that an employee can resign their employment at any time, with or without reason or advance notice. The Church has the right to terminate employment at any time, with or without reason or advance notice as long as there is no violation of applicable state or federal law.

RJ conceded that when the church hired him, he believed the controlling bylaws gave the board “total control over the governance and operation of the church.” 

Yet RJ alleged that sometime between 2004 and 2008, the board adopted new bylaws, which it later attached to a 2008 application for a bank loan. 

This second set of bylaws provided that the pastor could be dismissed only by a 75 percent vote of the congregation attending a special general meeting called for that purpose.

Board terminates pastor

According to the church, RJ’s tenure was not successful. 

Attendance fell by 60 percent and the board received numerous complaints about him from churchgoers. 

In June 2019, the board voted unanimously to terminate RJ’s employment. Nevertheless, over the next few months, and against the wishes of the board, RJ continued to conduct services in church facilities. 

He also allegedly collected and retained tithe money. When the church attempted to bar his entry, RJ allegedly broke the locks to access the sanctuaryto conduct unauthorized services.

In September 2019, the church asked a court to issue a preliminary injunction prohibiting RJ  from entering the church or speaking with staff. 

In response, RJ asked the court to issue a declaratory judgment establishing that:

  • he remained the “Bishop, Senior Pastor, and spiritual leader” of the church, 
  • he “was not an ‘at-will’ employee,” 
  • the bylaws included in the 2008 loan application controlled the terms of his employment,
  • his termination was unlawful, and 
  • his appearances on church property were lawful.

RJ also asked the court to issue an injunction:

  • allowing him to resume his employment, 
  • awarding him damages arising from the board’s breach of a fiduciary duty it owed him, 
  • awarding him damages resulting from the board’s tortious interference with his employment relationship,
  • granting him access to the church’s financial records, and 
  • establishing a constructive trust for funds the board had allegedly misappropriated.

The church also argued that the court lacked jurisdiction to resolve the dispute because resolving RJ’s claims would require it “to impermissibly review ecclesiastical matters.” 

The church also alleged RJ violated the terms of the preliminary injunction by continuing to conduct unsanctioned services. 

RJ later added a request for back pay from the date of his termination, and removed his request to be recognized as the church’s “spiritual leader.” 

Trial court denies church’s employment dispute claim

In July 2020 the trial court entered an order denying the church’s claims. The church appealed. 

A state appeals court noted that the principal issue was “whether the resolution of [RJ’s] claims would require [it] to interpret religious matters in violation of the ecclesiastical abstention doctrine which stems from the First Amendment to the United States Constitution.” 

The church appealed this ruling to the state supreme court, which began its opinion by noting that “the principle that civil courts lack subject matter jurisdiction to resolve disputes involving ‘purely ecclesiastical questions and controversies’ has long been recognized by this Court.”

However, the court recognized that the First Amendment “does not provide religious organizations absolute immunity from civil liability… . When the State has a legitimate interest in resolving a secular dispute, a civil court is a proper forum for that resolution.” 

The Court noted that 

the public at large and religious organizations also have an interest in the courthouse remaining open for the resolution of civil disputes: the contractors, vendors, lenders, and employees upon whom religious organizations depend to assist in the more prosaic elements of operating a nonprofit corporation might think twice about providing their services if there were no neutral forum for resolving the kinds of disputes that inevitably arise in the course of everyday business.

The state supreme court noted that the 

impermissible entanglement doctrine precludes judicial involvement only in circumstances involving “disputes [that] implicate controversies over church doctrine and practice…. We have previously identified such ecclesiastical matters to include those concerning (1) religious doctrines or creeds; (2) the church’s form of worship; (3) the adoption of regulations concerning church membership; and (4) the power to exclude from membership or association those whom duly authorized church officials deem unworthy of membership… . In addition, impermissible entanglement may arise either when a court resolves an underlying legal claim or when it issues a form of relief.” 

Still, civil courts do not inhibit free exercise of religion merely by opening their doors to disputes involving church property. Thus, to determine whether a civil court has jurisdiction to entertain a dispute, the dispositive question is whether resolution of the legal claim requires the court to interpret or weigh church doctrine… . If a claim can be resolved solely by applying neutral principles of law, there is no impermissible entanglement. 

State supreme court’s conclusion

The state supreme court concluded:

The impermissible entanglement doctrine limits a court’s authority to resolve disputes involving religious organizations. Courts possess jurisdiction over only those claims that can be resolved through application of neutral principles of secular law that govern all similar organizations and entities. A court must carefully distinguish between claims that will necessarily require it to become entangled in spiritual matters and those that can potentially be resolved purely on civil grounds. Essentially, if the issues raised in a claim can be  “resolved on the basis of principles of law equally applicable to” an ”athletic or social club,” then the court has jurisdiction to proceed. If the issue raised in a claim requires the court to “determine ecclesiastical questions” or wade into “a controversy over church doctrine,” then a court may not proceed because doing so would be “wholly inconsistent with the American concept of the relationship between church and state.

In this case [the pastor’s] claim for a declaratory judgment establishing which bylaws apply, whether the Church procedurally followed those bylaws, and whether there was an employment contract between [him] and the Church incorporating the applicable bylaws can potentially be resolved solely by application of neutral principles of corporate, contract, and employment law. At this stage of the litigation, that conclusion is sufficient to allow him to proceed. By contrast, First Amendment principles require the dismissal of the Pastor’s other claims which challenge the Board’s judgment on grounds necessarily implicating Church doctrine and practice. 

What this church employment dispute means for pastors, board members, elders and churches 

Internal church disputes can arise in several ways. As this case illustrates, the civil courts are barred from resolving some of these cases, if doing so would implicate church doctrine. 

Church leaders sometimes find it surprising that internal church disputes not involving doctrinal issues are not necessarily barred by the First Amendment guarantee of religious freedom. 

Civil courts have reached differing conclusions regarding the kinds of cases the constitution prohibits them from resolving. 

The court in this case concluded that the following internal church disputes ordinarily cannot be resolved by civil courts because they involve doctrine:

  • disputes involving “purely ecclesiastical questions and controversies,” 
  • disputes involving religious doctrine or creeds, 
  • disputes over a church’s music or form of worship; 
  • the adoption of regulations concerning church membership, and,
  • disputes involving the power to exclude from membership or association those whom duly authorized church officials deem unworthy of membership.

On the other hand, the civil courts ordinarily may resolve the following kinds of internal church disputes, provided no issue of doctrine or polity is involved:

  • disputes with contractors, vendors, lenders, and non-clergy employees “upon whom religious organizations depend to assist in the more prosaic elements of operating a nonprofit corporation,” and,
  • identification of a church’s current bylaws and other organizational documents.

Nation Ford Baptist Church Inc. v. Davis, 876 S.E.2d 742 (N.C. 2022).

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