Religious Institutions - February 2014

by Holland & Knight LLP

Who owns the "church?" For most, this is an odd question. As children, many of us folded our hands and repeated a rhyme: "Here is the church. Here is the steeple. Open the doors and see the people." Nevertheless, for well over a century now courts have been asked to determine who owns the property of a church in various contexts, including theological controversies; disputes about assets; and disagreements with pastors, deacons and members. In the seminal case on church property disputes, Watson v. Jones, 80 U.S. (13 Wall.) 679, 20 L. Ed. 666 (1871), the U.S. Supreme Court ruled that the lower court lacked subject matter jurisdiction to decide whether the pro-slavery or anti-slavery faction of Walnut Street Presbyterian Church in Louisville, Kentucky "owned" the church. Adopting a "hierarchical deference" approach, the court decided that the highest ecclesiastical judicatory of the church should have the final word in the matter.

Gradually, in some jurisdictions involving particular church disputes, courts have adopted another approach known as the "neutral principles of law" approach when convinced that they will not be required to interpret religious doctrine or practice. Under this approach, courts examine realty records (e.g., warranty deed, mortgage, etc.), church and denominational governance documents, actual policy and practice, and donor intent to determine who should prevail, commonly siding with the denomination. Under the ecclesiastical abstention doctrine, courts typically will not decide cases involving employment disputes with ministers or quasi-ministers, but in some jurisdictions in the event of allegations of fraud, collusion or arbitrary conduct courts may decide other intrachurch controversies relying on "secular" documents.

In the event of serious church or denominational disputes involving property, it is best to consult with church-state counsel at an early stage. For more on this subject and a variety of other risk management subjects, a link to a related webinar follows:

Property Dispute Remanded for Application of Neutral Principles of Law Approach

In Windwood Presbyterian Church, Inc. v. Presbyterian Church (U.S.A.), No. 01-10-00861-CV, 2014 WL 47750 (Tex. App.-Hous. Jan. 7, 2014), the court ruled that the "neutral principles of law" approach, rather than the "hierarchical deference" approach, applies in resolving church property disputes. The court reversed summary judgment for the denomination and remanded the case for application of the correct approach to the facts.

When the plaintiff was incorporated, it became a member of the Presbyterian Church of the United States (PCUS), which had no trust provision in its constitution. But in 1983, PCUS merged with another group of Presbyterian churches to form the Presbyterian Church (USA) (PSUSA). As part of the reunification, PCUSA amended its church constitution, the Book of Order, to include a trust provision, as well as a provision allowing a local church to opt out within eight years. The property at issue was donated to the church after it joined the PCUSA and more than eight years after the amendments to the Book of Order. The general warranty deeds did not reference a trust in favor of PCUSA. In 2007, the church amended its articles of incorporation to declare that all of its real property constituted a trust held for the benefit and enjoyment only of the members of the local church, then filed suit in 2008 seeking a declaration that the denomination had no legal interest in its property.

The trial court granted PCUSA's motion for summary judgment under the hierarchical deference approach on the theory that Texas courts must defer to the governing church authority for resolution of property issues. Reviewing this decision, the court of appeals ruled that the Supreme Court of Texas had determined that the correct approach is the neutral principles of law approach, which permits state courts to examine legal documents of title, state statutes governing the holding of church property and the secular provisions of church documents, including the terms of the local church charters and provisions of the constitution of the general church concerning the ownership and control of church property. The appellate court disagreed with the denomination that the summary judgment record was broad enough to affirm the trial court's grant of summary judgment under the neutral principles of law approach, reversed and remanded for further proceedings.

Lawsuit against Pastor for Alleged Wrongdoing Dismissed under Ecclesiastical Abstention Doctrine

In Smith v. White, No. 25622, 2014 WL 201523 (Ohio App. 2 Dist. Jan. 17, 2014), the court ruled that the trial court did not err in dismissing for lack of subject matter jurisdiction pursuant to the ecclesiastical abstention doctrine a lawsuit alleging that the pastor engaged in wrongdoing. The counts were for breach of fiduciary duty, conversion, civil conspiracy, unjust enrichment, breach of contract, fraud and a demand for an accounting. Against the plaintiffs' protestations, the trial court concluded that the dispute ultimately requires it to answer questions as to who should preach from the pulpit and whether the committee members' performance of their duties met the standards of the congregation. The court of appeals affirmed. It had trouble affirming dismissal of the demand for an accounting as potentially secular, but considered itself bound by precedent to do so.

Although the court of appeals ruled there is a fraud or collusion exception to the ecclesiastical abstention doctrine in "extraordinary circumstances," it held that this case did not involve them. The fraudulent conduct alleged was wrongful concealment of financial misappropriation of the church's funds; in essence, a claim of misconduct on the part of the pastor. The court found that if the members of the church are aggrieved by the pastor's conduct, their governing documents provide a remedy of initiating charges against the pastor and calling a special meeting to consider the pastor's termination. The court ruled that the plaintiffs have a duty to exhaust this remedy before initiating court action. Judge Froelich concurred in part and dissented in part, favoring reversal of the dismissal of the fraud count and the demand for an accounting.

Spot Zoning Decision Indirectly Benefiting Diocese Does Not Violate Establishment Clause

In Foothill Communities Coalition v. Cnty. of Orange, No. G047326, G048024, 2014 WL 107975 (Cal. App. 4 Dist. Jan. 13, 2014), the court ruled that the County Board of Supervisors' decision to create a new zoning definition for senior residential housing in order to allow the Roman Catholic Diocese of Orange to construct a senior citizens living community did not violate the Establishment Clause, notwithstanding that it fulfills a faith-based objective of the diocese. The court applied the Lemon test and determined that the enactment of the zoning change and approval of the project: (1) has the secular purpose of providing needed housing alternatives for senior citizens; (2) has the primary effect of creating a senior residential facility, rather than advancing religion; and (3) does not foster entanglement between government and religion. The court rejected the plaintiff's argument that: (1) a land use approval constitutes an unlawful preference if the landowner is a religious organization, and (2) the zoning creates a monopoly because the new zoning district has applicability in the entire plan area enabling others to apply.

Court Rules PPACA's Self-Certification Requirement for Religious Organizations Unconstitutional

In Catholic Diocese of Beaumont v. Sebelius, Case No. 1:13-cv-709, 2014 WL 31652 (E.D. Tex. Jan. 2, 2014), the court ruled that requiring the plaintiff to sign a putatively correct statement of religious belief, which the government has defined to authorize a third party to take an action that is contrary to those religious beliefs, imposes a substantial burden on the free exercise of religion. The Catholic Church teaches that material cooperation with evil is wrong. Catholic Charities of Southeast Texas, Inc. is a faith-based non-profit. Bishop Guillory has the primary responsibility for determining whether programs administered by Catholic Charities comport with Catholic teachings, and as such is an entity of the Catholic Diocese of Beaumont. The Patient Protection and Affordable Care Act (PPACA) provides an "accommodation" for "eligible organizations," such as Catholic Charities, which oppose providing coverage for contraceptive services, operate as a nonprofit entity, hold themselves out as religious organizations and self-certify that they satisfy these requirements. ACA regulations provide that "the self-certification will be treated as a designation of the third party administrator(s) as plan administrator and claims administrator for contraceptive benefits...." Put more simply, the self-certification causes the organization's insurer to bear the cost of the contraceptive benefits. The government contends that: (1) any burden of the self-certification requirement is de minimis; (2) the form contains a true statement of the Church's objection to contraceptive services; and (3) the government lacks the power to actually compel the third-party administrator to provide the coverage. The court disagreed, finding that the self-certification affidavit enables the exact harm that plaintiffs seek to avoid, plaintiffs face fines if they do not complete it, and the government is not in fact powerless to require coverage. Besides imposing a substantial burden on religious exercise, the court ruled that PPACA lacks a compelling interest pursued in the least restrictive manner. It observed that the government's position that the administrator could not be required or mandated to provide coverage for contraceptive services "fatally undermines any claim that imposing the mandate on these plaintiffs serves a compelling governmental interest."

Medical Providers Not Liable for Malpractice when Life-Saving Blood Transfusion Refused on Religious Grounds

In Braverman v. Granger, No. 309528, 2014 WL 92243 (Mich.App. Jan. 9, 2014), the court ruled that the estate of the deceased must bear the legal burden when, because of her religious convictions, the deceased refused to accept a blood transfusion that likely would have saved her life, where her doctors, through their assumed breach of the applicable standard of care, allegedly put her in the position to need the blood transfusion with knowledge of her religious convictions. It is contrary to the Jehovah's Witnesses faith to permit blood transfusions, blood products or any derivatives of blood for medical treatment. The plaintiff filed suit against the defendants alleging various breaches of the standard of care, including improper prescription of various blood-thinning medications and daily plasmapheresis, as well as a failure to timely recognize signs of internal bleeding. The defendants requested summary judgment, arguing that the doctrine of avoidable consequences bars the plaintiff's damages for wrongful death. The plaintiff responded that application of the doctrine would violate the Free Exercise and Establishment Clauses by incidentally hindering a Jehovah's Witness's exercise of her religion and allowing a jury to consider the reasonableness of the religion.

After reviewing other approaches to the legal question at hand, such as the "reasonable believer" test or "case-by-case" approach, the court rejected them and upheld the trial court's application of a "purely objective approach, which eliminates from consideration all subjective reasons for the plaintiff's decision, to determine whether the blood transfusion was an objectively reasonable means to avoid or minimize damages." The court found no genuine issue of material fact that the blood transfusion was a reasonable procedure under the circumstances to minimize damages following the plaintiff's original injury. Although the court acknowledged an "incidental burden" on religious exercise as a result, it was more concerned about the requirement implicit in the other tests for the trier of fact to judge either the reasonableness of the tenets of the person's religion or the reasonableness of her decision to abide by her religious beliefs in the face of death. Concurring, Judge Boonstra observed that, however tragic was the consequence of the deceased's religiously principled decision, "it does not provide a basis for shifting responsibility for the consequence ... to others."

Township's Investigation and Threatened Enforcement of Noise Ordinance against Church Not a Civil Rights Violation

In Faith Baptist Church v. Waterford Twp., No. 08-11028, 2014 WL 256285 (E.D. Mich. Jan. 23, 2014), the court granted the defendant's motion for summary judgment and denied the plaintiffs' in relation to the church lawsuit against the Township and various police officers for violations of the plaintiffs' free exercise, free speech and free association rights. Responding to neighbors' noise complaints, township police entered the plaintiffs' sanctuary three times and took down names of band members, asked them to respond to questions and threatened to enforce the township's noise ordinance. The court dismissed claims against various police supervisors in the absence of allegations that they encouraged or implicitly authorized the actions that the plaintiffs claimed violated their constitutional rights. The court ruled that respondeat superior liability is not enough for section 1983 liability. Likewise, the court ruled that the plaintiffs' request for injunctive relief against the then-prosecutor was moot because the individual was no longer serving in that capacity. Likewise, the court dismissed the plaintiffs' claim for declaratory judgment against the township as a result of the actions of the then-prosecutor and Deputy Chief for lack of any legal authority for the proposition that these individuals were "final decision makers" or had final policymaking authority for the township under Michigan or local law. Last, the court ruled that the noise ordinance that the township sought to enforce was not void for vagueness.

Assessor Not Entitled to Late Fee for Placing Lot on Tax Roll

In New Beginnings Christian Cntr., Inc. v. Multnomah Cnty. Assessor, No. TC-MD 130347D, 2014 WL 108731 (Or. Tax Mag. Div. Jan. 13, 2014), the presiding magistrate granted the plaintiff's motion for summary judgment, ordering the defendant to reinstate tax exemption for certain largely unimproved real estate for multiple tax years and to promptly refund with statutory interest all related property taxes and any late filing fee paid. The subject lot was approximately two acres without any buildings, but in one corner a large, lighted sign was erected with an electronic reader board that displays church announcements. The defendantdisqualified the property from exemption after the plaintiff failed to respond to the defendant's inquiries about the subject property's use. The defendant subsequently submitted an application for exemption in response, to which the defendant conceded the exempt purposes of the lot. The defendant offered to reinstate the property's tax exemption and cancel its assessment for the years at issue if the plaintiff paid a late filing fee. The magistrate required return of the fee and found that there was no authority to require religious organizations to provide additional information to assessors to justify continued exemption; thus, it was error to add the property to the tax roll for any of the years at issue.

Plaintiff's Challenge to Cadet's Prayer Dismissed

In Spadone v. McHugh, No. 11-01601, 2014 WL 46456 (D. D.C. Jan. 7, 2014), the court ruled that the plaintiff lacks standing to allege that by requiring him to recite the Cadet's Prayer, a monotheistic prayer, the Commandant of Cadets at the United States Military Academy violated the Establishment Clause. The plaintiff had been disenrolled from West Point. The court was not persuaded that it was enough for standing that the plaintiff was required to serve two years of active duty as an enlisted soldier and could be ordered to pray in the future without evidence of a policy or practice on the part of the defendant requiring it.

Religious Institutions in the News

The Department of Justice appealed a ruling that the ministerial housing allowance is unconstitutional.;

Global religious hostilities allegedly reached a six-year high in 2012.

The University of Michigan released its study on Muslim attitudes toward religious tolerance and democracy in bellwether Middle Eastern countries.

Researchers contend that living in an area with a large concentration of conservative Protestants increases the chances of divorce.;

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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