Harris v. Matthews

643 S.E.2d 566, 361 N.C. 265, 2007 N.C. LEXIS 414

• Court: Supreme Court of North Carolina
• Decided: May 4, 2007
• Docket: 479PA05-2
• Status: Published

Opinions

NEWBY, Justice.

This case, involving an internal church governance dispute, presents two issues. First, we must decide whether defendant has the right to immediately appeal the trial court’s interlocutory order denying his motion to dismiss for lack of subject matter jurisdiction. Because we hold defendant can appeal the interlocutory order, we also address whether the restraints of the First Amendment of the United States Constitution, as applied to the states through the Fourteenth Amendment, preclude judicial intervention in this internal church controversy.

I. BACKGROUND

Saint Luke Missionary Baptist Church (“Saint Luke”), an unaffiliated congregational church, was formed in 1950 as an unincorporated association. Like most congregational churches, Saint Luke’s governing authority resides in a majority of the membership. Reverend L.D. Parker served as Saint Luke’s pastor from the church’s formation until his death in 1998. Defendant Clifford J. Matthews, Jr. (“Matthews”) became Saint Luke’s interim pastor in October 1999 and, following a congregational vote, was installed as pastor in May 2000.

After defendant Matthews’ installation, Saint Luke underwent several changes to its organizational structure. At a congregational meeting on 9 December 2001, Saint Luke’s members approved a new set of bylaws for the church. The bylaws created an internal governing body, the “Council for Ministry,” with broad authority to manage the “business and affairs” of the church. On 13 March 2002, Saint Luke transferred its assets to Saint Luke Missionary Baptist Church, Inc., a North Carolina nonprofit corporation.

Some members of Saint Luke, including the named plaintiffs, expressed concern over the changes. On multiple occasions, they requested access to the church’s financial records, but were denied. On 3 July 2002, plaintiffs Joseph B. Kinard and John S. Eagle filed suit pursuant to N.C.G.S. § 55A-16-4 for production of Saint Luke’s legal and financial records. On 23 July 2002, the trial court entered an order requiring Saint Luke to produce the documents. After reviewing the documents, plaintiffs believed that church funds had been misappropriated by Saint Luke’s pastor (defendant Matthews), secretary (defendant Sharia Byrd), and chairman of the Board of Trustees (defendant Aaron Moore).

On 16 July 2003, pursuant to N.C.G.S. § 55A-7-40, plaintiffs filed suit, as members, on behalf of Saint Luke, alleging conversion of funds, breach of fiduciary duty, and civil conspiracy by defendants. The plaintiffs sought return of the disputed funds and punitive damages on behalf of Saint Luke. A somewhat lengthy procedural process ensued. Defendants moved to dismiss the complaint pursuant to N.C.G.S. § 55A-7-40(b), alleging that plaintiffs failed to demand an investigation by the church’s governing body before filing suit, but the trial court denied the motions on 5 November 2003. Defendant Matthews, through new counsel, moved on 1 September 2004 to dismiss the complaint for lack of subject matter jurisdiction. The trial court denied this motion on 6 October 2004. Defendant Matthews appealed, and plaintiffs filed a motion to dismiss the appeal, alleging in part that the appeal was interlocutory. On 18 August 2005, the Court of Appeals allowed plaintiffs’ motion to dismiss defendant’s appeal. On 1 December 2005, we dismissed defendant’s notice of appeal and denied his petition for discretionary review, but allowed his petition for writ of certiorari “for the limited purpose of remanding this case to the Court of Appeals for more thorough consideration in light of Tubiolo v. Abundant Life Church, Inc., 167 N.C. App. 324, 605 S.E.2d 161 (2004), disc. rev. denied, 359 N.C. 326, 611 S.E.2d 853, cert. denied, [546] U.S. [819], 126 S. Ct. 350, 163 L. Ed. 2d 59 (2005).” Harris v. Matthews, 360 N.C. 175, 626 S.E.2d 297 (2005). The Court of Appeals again dismissed defendant’s appeal on 21 February 2006, holding that defendant had not obtained Rule 54(b) certification from the trial court and that defendant did not possess a substantial right that would be irreparably damaged if his interlocutory appeal was delayed. Defendant again sought review by this Court, which allowed his petition for discretionary review on 17 August 2006.

II. INTERLOCUTORY APPEAL

Defendant’s appeal from the trial court’s denial of his motion to dismiss for lack of subject matter jurisdiction is interlocutory. See Veazey v. City of Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950) (“An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.”). “Generally, there is no right of immediate appeal from interlocutory orders and judgments.” Goldston v. Am. Motors Corp., 326 N.C. 723, 725, 392 S.E.2d 735, 736 (1990). This general prohibition against immediate appeal exists because “[t]here is no more effective way to procrastinate the administration of justice than that of bringing cases to an appellate court piecemeal through the medium of successive appeals from intermediate orders.” Veazey, 231 N.C. at 363, 57 S.E.2d at 382. However, interlocutory orders are immediately appeal-able if they: “(1) affect a substantial right and (2) [will] work injury if not corrected before final judgment.” Goldston, 326 N.C. at 728, 392 S.E.2d at 737.¹

Defendant asserts that the trial court’s order affects substantial First Amendment rights. We agree. The First Amendment provides that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” U.S. Const, amend. I. Likewise, the “comparable provision” in the North Carolina Constitution declares that “[a]ll persons have a natural and inalienable right to worship Almighty God according to the dictates of their own consciences, and no human authority.shall, in any case whatever, control or interfere with the rights of conscience.” N.C. Const, art. I, § 13 (“Religious liberty”); see Atkins v. Walker, 284 N.C. 306, 318, 200 S.E.2d 641, 649 (1973).

The United States Supreme Court has found First Amendment rights to be substantial, Frisby v. Schultz, 487 U.S. 474, 479, 108 S. Ct. 2495, 2499, 101 L. Ed. 2d 420, 428 (1988) (noting that First Amendment right to picket is substantial), and has held the First Amendment prevents courts from becoming entangled in internal church governance concerning ecclesiastical matters, Presbyterian Church in the U.S. v. Mary Elizabeth Blue Hull Mem’l Presbyterian Church, 393 U.S. 440, 451-52, 89 S. Ct. 601, 607, 21 L. Ed. 2d 658, 666-67 (1969). When First Amendment rights are asserted, this Court has allowed appeals from interlocutory orders. Priest v. Sobeck, 153 N.C. App. 662, 571 S.E.2d 75 (2002), rev’d per curiam, 357 N.C. 159, 579 S.E.2d 250 (2003) (for reasons stated in the dissenting opinion, thus finding in a defamation action that a trial court order concerning actual malice affected a substantial First Amendment right and was therefore immediately appealable). Accordingly, we reaffirm our stance that First Amendment rights are substantial and hold that First Amendment rights are implicated when a party asserts that a civil court action cannot proceed without impermissibly entangling the court in ecclesiastical matters.

Further, we are unpersuaded by plaintiffs’ suggestion that defendant cannot raise entanglement concerns. The constitutional prohibition against court entanglement in ecclesiastical matters is necessary to protect First Amendment rights identified by the “Establishment Clause” and the “Free Exercise Clause.” See Erwin Chemerinsky, Constitutional Law: Principles and Policies 1218 n.129 (2d ed. 2002) (“Analytically, it does not seem to matter whether this [court involvement in internal church disputes] issue is characterized as a free exercise clause issue or one involving the establishment clause.”). These rights are not held by church bodies alone. They have been consistently asserted by individuals to challenge administrative, legislative, and-judicial actions. See, e.g., Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 124 S. Ct. 2301, 159 L. Ed. 2d 98 (2004); Wallace v. Jaffree, 472 U.S. 38, 105 S. Ct. 2479, 86 L. Ed. 2d 29 (1985); Jones v. Wolf, 443 U.S. 595, 99 S. Ct. 3020, 61 L. Ed. 2d 775 (1979); Lemon v. Kurtzman, 403 U.S. 602, 91 S. Ct. 2105, 29 L. Ed. 2d 745 (1971); Watson v. Jones, 80 U.S. (13 Wall.) 679, 20 L. Ed. 666 (1871).

It is not determinative that the trial court’s order affects a substantial right. The order must also work injury if not corrected before final judgment. “The loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury.” Elrod v. Burns, 427 U.S. 347, 373, 96 S. Ct. 2673, 2690, 49 L. Ed. 2d 547, 565 (1976) (plurality). In Elrod, the United States Supreme Court held injunctive relief appropriate in situations in which “First Amendment interests were either threatened or in fact being impaired at the time relief was sought.” Id. Likewise, when First Amendment rights are threatened or impaired by an interlocutory order, immediate appeal is appropriate.

In short, we find, defendant’s substantial First Amendment rights are affected by the trial court’s order denying his motion to dismiss. Further, these rights will be impaired or lost and defendant will be irreparably injured if the trial court becomes entangled in ecclesiastical matters from which it should have abstained. Therefore, defendant has the right to immediately appeal the trial court order denying his motion to dismiss for lack of subject matter jurisdiction on impermissible entanglement grounds.

III. IMPERMISSIBLE ENTANGLEMENT

Having determined that defendant has a right to immediately appeal, we now address the merits of defendant’s impermissible entanglement argument. We review Rule 12(b)(1) motions to dismiss for lack of subject matter jurisdiction de novo and may consider matters outside the pleadings. 2 James Wm. Moore et al., Moore’s Federal Practice §§ 12.30[3], .30[5] (3d ed. 2006); see also Tubiolo v. Abundant Life Church, Inc., 167 N.C. App. at 327, 605 S.E.2d at 163.

“[T]he First Amendment severely circumscribes the role that civil courts may play in resolving church property disputes.” Presbyterian, 393 U.S. at 449, 89 S. Ct. at 606, 21 L. Ed. 2d at 665. In Presbyterian, two local Presbyterian churches withdrew from a hierarchical general church organization, and a dispute arose over who owned the local churches’ properties. Id. at 441-43, 89 S. Ct. at 602-03, 21 L. Ed. 2d at 661-62. Under Georgia law, resolution of the property ownership turned on a jury’s decision as to whether the general church’s actions which caused the local church withdrawals, “ ‘amount[ed] to a fundamental or substantial abandonment of the original tenets and doctrines of the [general church].’ ” Id. at 443-44, 89 S. Ct. at 603, 21 L. Ed. 2d at 662 (second alteration in original). The United States Supreme Court held this to be an improper inquiry for a court.

Although “[c]ivil courts do not inhibit free exercise of religion merely by opening their doors to disputes involving church property^] . . . First Amendment values are plainly jeopardized when church property litigation is made to turn on the resolution by civil courts of controversies over religious doctrine and practice.” Id. at 449, 89 S. Ct. at 606, 21 L. Ed. 2d at 665. Civil court intervention into church property disputes is proper only when “relationships involving church property [have been structured] so as not to require the civil courts to resolve ecclesiastical questions.” Id. When a congregational church’s internal property dispute cannot be resolved using neutral principles of law, the courts must intrude no further and must instead defer to the decisions “by a majority of its members or by such other local organism as it may have instituted for the purpose of ecclesiastical government.” Watson, 80 U.S. (13 Wall.) at 724, 20 L. Ed. at 675.

This Court applied Presbyterian to a church property dispute in Atkins v. Walker, 284 N.C. 306, 200 S.E.2d 641 (1973). A minority of the members of a Missionary Baptist Church congregation argued they were entitled to possession of church property as a result of several improper actions taken by the church and its leaders. We recognized the constitutional boundaries set by Presbyterian, concluding that court review should be limited to questions that can be “resolved on the basis of [neutral] principles of law” such as “(1) [w]ho constitutes the governing body of this particular [church], and (2) who has that governing body determined to be entitled to use the properties.” Id. at 319, 200 S.E.2d at 650.

In Atkins, the plaintiffs could have challenged the validity of church action “by showing that such action was not taken in a meeting duly called and conducted according to the procedures of the church.” Id. at 320, 200 S.E.2d at 651. However, because nothing in the record suggested that any actions of which the plaintiffs complained were not properly taken at a meeting of the church’s governing body (the congregation), we concluded the trial court’s decision could only have been based on factors that it was constitutionally prohibited from considering. Id. at 321, 200 S.E.2d at 651.

As in Atkins, we again must decide whether certain claims brought by a minority faction of a congregational church fall under the severely circumscribed role of the courts or whether the allegations must be addressed by the church itself through its own internal governing body. And, as in Atkins, we conclude that the civil courts are constitutionally prohibited from addressing plaintiffs’ claims.

Plaintiffs first allege that defendant Matthews has usurped the governmental authority of the church’s internal governing body. The remainder of plaintiffs’ causes of action seek damages for the church as a proximate result of defendants’ breach of fiduciary duty and conversion of church funds, stemming from defendants’ civil conspiracy to convert funds. Based on these claims, plaintiffs also seek punitive damages on behalf of the church.

Plaintiffs do not ask the court to determine who constitutes the governing body of Saint Luke or whom that body has authorized to expend church resources. Rather, plaintiffs argue Saint Luke is entitled to recover damages from defendants because they breached their fiduciary duties by improperly using church funds, which constitutes conversion. Determining whether actions, including expenditures, by a church’s pastor, secretary, and chairman of the Board of Trustees were proper requires an examination of the church’s view of the role of the pastor, 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.

Here, for example, in order to address plaintiffs’ claims, the trial court would be required to interpose its judgment as to both the proper role of these church officials and whether each expenditure was proper in light of Saint Luke’s religious doctrine and practice, to the exclusion of the judgment of the church’s duly constituted leadership. This is precisely the type of ecclesiastical inquiry courts are forbidden to make. See Jones v. Wolf, 443 U.S. at 602, 99 S. Ct. at 3025, 61 L. Ed. 2d at 784 (“Most importantly, the First Amendment prohibits civil courts from resolving church property disputes on the basis of religious doctrine and practice.” (citing Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696, 710, 96 S. Ct. 2372, 2381, 49 L. Ed. 2d 151, 163 (1976); Md. & Va. Eldership of Churches of God v. Church of God at Sharpsburg, Inc., 396 U.S. 367, 368, 90 S. Ct. 499, 500, 24 L. Ed. 2d 582, 583 (1970) (per curiam); Presbyterian, 393 U.S. at 44989 S. Ct. at 606, 21 L. Ed. 2d at 665)).

Because no neutral principles of law exist to resolve plaintiffs’ claims, the courts must defer to the church’s internal governing body, the Council for Ministry, thereby avoiding becoming impermissibly entangled in the dispute.² See Watson, 80 U.S. (13 Wall.) at 724, 20 . Having been delegated broad oversight authority by the congregation, the Council for Ministry has already considered some of expenditures challenged by plaintiffs, taken action, and declared the matter closed. Plaintiffs’ complaint does not challenge the authority of the Council for Ministry or argue that the Council did not follow its own internal governance procedures.³ Plaintiffs simply object to the Council’s determination that the expenditures were proper. Although it has not specifically considered every issue raised by plaintiffs, as Saint Luke’s internal governing body, the Council for Ministry is the only authority constitutionally permitted to decide matters that cannot be resolved using neutral principles of law. Unless Saint Luke, through its congregation and following proper internal procedures, revokes the Council for Ministry’s authority to resolve church disputes, plaintiffs must raise their concerns with the Council for Ministry and accept the resolutions reached by that governing body.

Plaintiffs make the broad assertion that, because Saint Luke is a nonprofit corporation, the North Carolina Nonprofit Corporation Act can be used to resolve the dispute. N.C.G.S. §§ 55A-1-01 to -17-05. (2005). However, a church that incorporates under the North Carolina Nonprofit Corporation Act does not forfeit its fundamental First Amendment rights. Regardless of a church’s corporate structure, the Constitution requires courts to defer to the church’s internal governing body with regard to ecclesiastical decisions concerning church management and use of funds.

Finally, we are unpersuaded by plaintiffs’ argument that defendants’ motion to dismiss should not be allowed because discovery is incomplete. The trial court properly opened its door to this church property dispute. However, once it became clear that no neutral principles of law existed to resolve plaintiffs’ lawsuit, continued involvement by the trial court became unnecessary and unconstitutional. Additional discovery will only further entangle the trial court in ecclesiastical matters, notwithstanding that there is no issue it can constitutionally decide.

When a party brings a proper complaint, “ ‘[w]here civil, contract^] or property rights are involved, the courts will inquire as to whether the church tribunal acted within the scope of its authority and observed its own organic forms and rules.’ ” Atkins, 284 N.C. at 320, 200 S.E.2d at 650 (quoting W. Conference of Original Free Will Baptists v. Creech, 256 N.C. 128, 140-41, 123 S.E.2d 619, 627 (1962)). But when a party challenges church actions involving religious doctrine and practice, court intervention is constitutionally forbidden.

IV. DISPOSITION

The decision of the Court of Appeals is reversed and this case is remanded to that court for further remand to the trial court for proceedings not inconsistent with this opinion.

REVERSED AND REMANDED,

Justice MARTIN did not participate in the consideration or decision of this case.

1 . An interlocutory order is also immediately appealable if the trial court certifies that: (1) the order represents a final judgment as to one or more claims in a multi-claim lawsuit or one or more parties in a multi-party lawsuit, and (2) there is no just reason to delay the appeal. N.C.G.S. § 1A-1, Rule 54(b) (2005). Rule 54(b) is not applicable to this case because the trial court’s denial of defendant’s motion to dismiss was not a final judgment as to any party or claim.

2 . Concluding that the trial court’s adjudication of plaintiffs’ conversion claim would constitute impermissible entanglement, necessarily precludes adjudication of plaintiffs’ civil conspiracy claim since civil conspiracy is premised on the underlying act. See Muse v. Morrison, 234 N.C. 195, 198, 66 S.E.2d 783, 785 (1951). Similarly, once plaintiffs’ other claims are dismissed, their punitive damages claim fails.

3 . Although plaintiffs, in their appellate briefs and through affidavits, have challenged the authority of the Council for Ministry and suggested that the Council for Ministry did not follow its internal governance procedures, plaintiffs have not attempted to amend or supplement their complaint to include these allegations, and as such the allegations-are not properly before this Court or the trial court. N.C.G.S. § 1A-1, Rules 8(a), 15 (2005).