Opinion ID: 1560403
Heading Depth: 3
Heading Rank: 2

Heading: Whether subject matter jurisdiction exists to determine if donations made for the specific purpose of rebuilding the St. Paul Church are held in trust.[15]

Text: ¶ 38. Plaintiffs submit that Church Defendants hold any donations made for the purpose of rebuilding the St. Paul Church in trust. They argue that these funds were given based on Church Defendants' promise to rebuild the church, and that the funds may not be used for any other purpose. They assert that Church Defendants breached their fiduciary duties by merely contacting donors for permission to use the donors' contributions toward a different purpose. Plaintiffs thus seek to enjoin the diversion of the funds, and request an adjudication of whether Church Defendants' decisions have been fiscally irresponsible, and whether those funds must be used in a manner mutually agreeable to them or in their best interest. ¶ 39. The chancellor dismissed these particular claims based on an opinion from the Supreme Court of North Carolina. Harris v. Matthews, 361 N.C. 265, 643 S.E.2d 566 (2007). Harris states that: Determining whether actions, including expenditures, by a church's Father, secretary, and chairman of the Board of Trustees were proper requires an examination of the church's view of the role of the Father, staff, and church leaders, their authority and compensation, and church management. Because a church's religious doctrine and practice affect its understanding of each of these concepts, seeking a court's review of the matters presented here is no different than asking a court to determine whether a particular church's grounds for membership are spiritually or doctrinally correct or whether a church's charitable pursuits accord with the congregation's beliefs. None of these issues can be addressed using neutral principles of law. Id. at 571. ¶ 40. Generally, civil courts may not second-guess church administrative or management decisions, or substitute their judgment in place of the church's. See id.; but see Bible Way Church of Our Lord Jesus Christ of the Apostolic Faith of Washington, D.C. v. Beards, 680 A.2d 419, 428 (D.C.1996) (stating that if a church has adopted clear, objective accounting and reporting standards that do not implicate doctrinal decision-making in their enforcement, then arguably a civil court can apply them). We find that the chancellor correctly determined that our courts may not consider whether Church Defendants' management or administrative decisions were fiscally irresponsible, or whether those decisions were in the best interests of parishioners. But, for the reasons set forth below, we find that the chancellor erred in dismissing Plaintiffs' claim(s) that Church Defendants improperly diverted designated funds. ¶ 41. While churches have large, almost-unfettered discretion in their administrative decision-making, they are not entitled to violate recognized duties or standards of conduct. See Morrison, 905 So.2d at 1242. Morrison recognizes a church or religious organization's potential liability for diverting funds which have been solicited and accepted for a particular purpose, toward an unauthorized purpose. See id. In Morrison, in dictum, this Court stated that: [E]ach cause of action asserted against a religious organization claiming First Amendment protection, must be evaluated according to its particular facts. For instance, with respect to a claim of breach of fiduciary duty, a religious organization might enjoy First Amendment protection from claims of failure to provide a certain quantity or quality of religious instruction in exchange for tithes and offerings, but might not enjoy such protection from claims that it solicited and accepted funds to be held in trust for a specific, stated purpose, but spent the funds for an unauthorized purpose. Id. (emphasis added). ¶ 42. The general law of contributions has been stated to be: Where a religious society raises a fund by subscription for a particular purpose, it cannot divert the funds to another purpose, and, if it abandons such purpose, the donors may reclaim their contributions. Columbus Cmty. Hosp., Inc. v. Califano, 614 F.2d 181, 187 (8th Cir.1980) (quoting Barker v. The Wardens & Vestrymen of St. Barnabas Church, 176 Neb. 327, 337, 126 N.W.2d 170, 177 (1964)); Dunaway v. First Presbyterian Church, 103 Ariz. 349, 442 P.2d 93, 95 (Ariz.1968). This principle comports with canon law standards. Church Defendants readily acknowledge that, under canon law, [o]fferings given by the faithful for a certain purpose can be applied only for that purpose, and may not be used for any other purpose without the donor's consent. (quoting Canon 1267 § 3); see also 1 William W. Bassett, Religious Organizations and the Law § 5:34 (1997). ¶ 43. In Barker, St. Barnabas Church abandoned its new building project. Barker, 126 N.W.2d at 172. The executor of an estate filed suit against the Wardens and Vestrymen of St. Barnabas Church to recover $1,000 that plaintiff's decedent had given to the St. Barnabas Church New Building Fund. Id. The decedent had signed a pledge card which delineated the purpose and the amount of the contribution. Id. at 173. The Supreme Court of Nebraska found that the executor had a viable legal claim where (1) money was pledged and paid pursuant to a fund-raising drive to build a new church; (2) the plan was abandoned and the funds were diverted for a different purpose; (3) the plaintiff demanded that the contribution be returned; and (4) the church refused to refund the plaintiff's donation. [16] Id. at 177. ¶ 44. We find that subject matter jurisdiction exists over a claim that a religious entity breached a fiduciary duty by improperly diverting designated funds. In order to establish a viable claim, a plaintiff must prove certain facts. Both Morrison and Barker require that the funds be solicited by the church. See id.; Morrison, 905 So.2d at 1242. The donor must then pledge his or her contribution for the solicited purpose. See Barker, 126 N.W.2d at 177; Morrison, 905 So.2d at 1242. ¶ 45. We do not in any way suggest that Church Defendants have improperly diverted designated funds. The only issue before us is whether our courts may exercise subject matter jurisdiction over such claims. We simply find that a religious entity is not exempt from these types of suits in a court of law.