McKnight v. Wakefield Missionary Baptist Church, Inc., 2022 NCBC 10.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION WAKE COUNTY 20 CVS 8299
CHARLOTTE MCKNIGHT and AUDREY FOSTER, in their official capacities as Trustees for and on behalf of WAKEFIELD MISSIONARY BAPTIST CHURCH, AN UNINCORPORATED ASSOCIATION,
Plaintiffs,
v. ORDER AND OPINION ON MOTIONS WAKEFIELD MISSIONARY FOR SUMMARY JUDGMENT BAPTIST CHURCH, INC.; BARBARA WILLIAMS; APRIL HIGH; ALTON HIGH; EKERE ETIM; ROSALIND ETIM; HOUSTON HINSON; NATALIE HARRIS; and DARRYL HIGH,
Defendants.
WAKEFIELD MISSIONARY BAPTIST CHURCH, INC.,
Counterclaim Plaintiff,
v.
CHARLOTTE MCKNIGHT; AUDREY FOSTER; LEROY JEFFREYS; and JULIUS MONTAGUE, in their official capacities as Trustees and/or Officers for and on behalf of WAKEFIELD MISSIONARY BAPTIST CHURCH, AN UNINCORPORATED ASSOCIATION,
Counterclaim Defendants. 1. This case arises out of a dispute between two factions of the congregation of
Wakefield Missionary Baptist Church. Pending are the parties’ cross-motions for
summary judgment.
Michael A. Jones & Associates, P.L.L.C., by Michael A. Jones, for Plaintiffs/Counterclaim Defendants Charlotte McKnight and Audrey Foster and for Counterclaim Defendants Leroy Jeffreys and Julius Montague.
Kitchen & Turrentine, PLLC, by S.C. Kitchen, for Defendant/Counterclaim Plaintiff Wakefield Missionary Baptist Church, Inc. and for Defendants Barbara Williams, April High, Alton High, Ekere Etim, Rosalind Etim, Houston Hinson, Natalie Harris, and Darryl High.
Conrad, Judge. I. BACKGROUND
2. The Court does not make findings of fact when deciding motions for
summary judgment. This background describes the evidence, noting relevant
disputes, to provide context for the Court’s analysis and ruling.
3. Wakefield Missionary Baptist Church (“Wakefield”) was formed as an
unincorporated association over 150 years ago. It is a congregational church,
meaning that it is self-governing and not controlled by any higher ecclesiastical body.
Since 2016, Wakefield has had a written constitution and bylaws 1 with provisions
that vest its members with all governing authority and that direct its board of
trustees to hold church property in trust and to supervise the collection and
1 There are two versions of the constitution and bylaws in the record. (See ECF Nos. 33.1, 67.1.) Although the parties dispute which is the correct version, that dispute is immaterial because the relevant parts of each are identical. disbursement of church funds. (See generally Aff. A. High Ex. 1, ECF No. 67.1
[“Bylaws”].)
4. Plaintiffs Charlotte McKnight and Audrey Foster are church members and
claim to be trustees as well. They have sued eight other trustees (“Trustee
Defendants”) for allegedly taking actions that were either without the congregation’s
approval or contrary to its will, thus violating Wakefield’s bylaws.
5. The troubles began in mid-2019 after a controversial membership meeting
to elect signatories for Wakefield’s bank account. Senior pastor Cory Benson
moderated the meeting and named McKnight, Foster, and Leroy Jeffreys as the
winners of the election. (See Aff. A. High Ex. 2, ECF No. 67.2.) The Trustee
Defendants rejected the result, protesting what they viewed as irregularities in how
the meeting and vote were conducted. (See Aff. A. High ¶ 5, ECF No. 67.) Caught in
the middle, the bank froze the church’s account and filed an interpleader suit—a suit
that remains pending in Wake County Superior Court. See generally United Cmty.
Bank v. Wakefield Missionary Baptist Church, 2021-NCCOA-89, 855 S.E.2d 300
(unpublished).
6. More controversy followed in the wake of the bank’s actions. The Trustee
Defendants terminated Benson’s employment contract, accusing him of meddling in
church finances and other malfeasance. (See Hr’g Tr. 72, ECF No. 66.1. 2) They also
locked the church building and notified members that, “until the church’s funds are
2 This document is a transcript of an evidentiary hearing in a third litigation between these
parties. See Wakefield Missionary Baptist Church, Inc. v. Benson, No. 19-CVS-13269 (Wake Cnty.). released, regular services will not be held.” (Notice Dated 10 Aug. 2019, ECF No.
33.3.) This prompted Benson and a dozen or so members—including McKnight and
Foster—to begin holding weekly worship services at an off-site location. (See Foster
Resp. to Interrogs. 4–5, ECF No. 66.4; see also Hr’g Tr. 10.)
7. Over the next few months, the Trustee Defendants took steps to reorganize
Wakefield as a corporation called Wakefield Missionary Baptist Church, Inc.
(“WMBC, Inc.”). Among other things, they approved a plan of conversion, filed
articles of incorporation, adopted new bylaws, and obtained a new employer
identification number for tax purposes. (See Aff. A. High Ex. 3, ECF No. 67.3.) When
the Trustee Defendants reopened the church for worship after the new year, they put
these actions to the congregation for a vote. At a business meeting in February 2020,
all thirty-seven members in attendance voted to ratify the corporate conversion and
to transfer Wakefield’s property to WMBC, Inc. At the same time, the members in
attendance also unanimously ratified the termination of Benson’s contract. (See
Church Resolution, ECF No. 33.8; see also Hr’g Tr. 116, 118.)
8. This litigation began when McKnight and Foster filed suit on behalf of the
unincorporated association to recover damages and to unwind the transfer of its
property to WMBC, Inc. 3 McKnight and Foster dispute the legitimacy of the
February 2020 ratification vote and assert that the Trustee Defendants overstepped
their authority by rejecting the elected slate of bank-account signatories, closing the
3 McKnight and Foster also oppose the termination of Benson’s employment contract as senior pastor. In an earlier decision, the Court held that they lack standing to pursue relief related to his dismissal. church building, and reorganizing Wakefield as a corporation. The amended
complaint includes claims against the Trustee Defendants for breach of fiduciary duty
and constructive fraud and a claim against WMBC, Inc. for unjust enrichment.
9. In response, the Trustee Defendants and WMBC, Inc. assert that the
congregation ratified their actions and, thus, that the unincorporated association no
longer exists. WMBC, Inc. has also brought counterclaims against McKnight, Foster,
and two others, alleging that they have used the name “Wakefield Missionary Baptist
Church” without permission to open a new bank account, advertise their services on
the internet, and make contracts with third parties. These allegations are the basis
for counterclaims for trade name infringement, conversion, and civil conspiracy.
10. Three motions for summary judgment are pending: one by McKnight and
Foster; another by McKnight, Foster, and their fellow counterclaim defendants; and
a third by the Trustee Defendants and WMBC, Inc. (See ECF Nos. 66, 69, 71.)
Together, the three motions cover all pending claims. After full briefing and a hearing
on 28 October 2021, the motions are ripe.
II. ANALYSIS
11. Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that
there is no genuine issue as to any material fact and that any party is entitled to a
judgment as a matter of law.” N.C. R. Civ. P. 56(c). In deciding a motion for summary
judgment, the Court views the evidence in the light most favorable to the nonmoving
party and draws all inferences in its favor. See Vizant Techs., LLC v. YRC Worldwide, Inc., 373 N.C. 549, 556 (2020); N.C. Farm Bureau Mut. Ins. Co. v. Sadler, 365 N.C.
178, 182 (2011).
12. “When the party with the burden of proof moves for summary judgment, a
greater burden must be met.” Almond Grading Co. v. Shaver, 74 N.C. App. 576, 578
(1985). The moving party “must show that there are no genuine issues of fact, that
there are no gaps in his proof, that no inferences inconsistent with his recovery arise
from the evidence, and that there is no standard that must be applied to the facts by
the jury.” Parks Chevrolet, Inc. v. Watkins, 74 N.C. App. 719, 721 (1985); see also
Kidd v. Early, 289 N.C. 343, 370 (1976). For that reason, “rarely is it proper to enter
summary judgment in favor of the party having the burden of proof.” Blackwell v.
Massey, 69 N.C. App. 240, 243 (1984).
A. Claims by McKnight and Foster
13. The Court begins with the claims asserted by McKnight and Foster (breach
of fiduciary duty, constructive fraud, and unjust enrichment). Each side has moved
for summary judgment.
14. All three claims raise a common question: who is the rightful owner of
Wakefield’s property? The unincorporated association is, according to McKnight and
Foster. In their view, the Trustee Defendants usurped the authority of the
congregation by claiming control of Wakefield’s grounds and bank account, taking
steps to reorganize the church as a corporation, and then transferring its property to
WMBC, Inc. The Trustee Defendants and WMBC, Inc. respond that the congregation
ratified the corporate conversion and authorized the property transfer. These votes, they contend, not only confirm WMBC, Inc.’s title to church property but also
extinguish all claims by McKnight and Foster.
15. This inquiry implicates the First Amendment, which “severely
circumscribes the role that civil courts may play in resolving church property
disputes.” Harris v. Matthews, 361 N.C. 265, 271 (2007) (quoting Presbyterian
Church in the U.S. v. Mary Elizabeth Blue Hull Mem’l Presbyterian Church, 393 U.S.
440, 449 (1969)). Under no circumstances may a civil court “resolve ecclesiastical
questions” or decide “controversies over religious doctrine and practice.” Id. (quoting
Presbyterian Church in the U.S., 393 U.S. at 449). Rather, “court review should be
limited to questions that can be resolved on the basis of neutral principles of law such
as (1) who 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 272
(cleaned up).
16. On these narrow questions, the evidence is undisputed and favors the
Trustee Defendants and WMBC, Inc. Wakefield’s governing body is its congregation.
(See Bylaws Art. III, § 1.) In February 2020, members of the congregation met to
decide whether to ratify the actions of the Trustee Defendants—specifically including
the incorporation of the church—and to authorize the transfer of church property to
WMBC, Inc. Attending members unanimously voted yes. (See Church Resolution.)
17. McKnight and Foster offer no contrary evidence and no constitutionally
permissible reason to upset the congregation’s decisions. They assert, without
citation, that the ratification meeting lacked proper notice and that they were prevented from attending and voting. But the evidence shows that the meeting was
properly called and conducted. (See Hr’g Tr. 116; Church Resolution; see also Bylaws
Art. X § 2 (“Notice of [a business] meeting and the purpose for which it is called shall
be given on the Sunday preceding the date of the meeting.”).) McKnight and Foster
also assert that all thirty-seven individuals who voted for ratification had ceased to
be church members. Again, the undisputed evidence contradicts that assertion and
shows no change in Wakefield’s membership. 4 (See Hr’g Tr. 160 (“The Court: How
have they lost membership? Have people resigned their membership? The Witness:
No, they are just not attending.”).)
18. Throughout their briefs, McKnight and Foster urge the Court to look past
the congregation’s ratification of the Trustee Defendants’ actions and instead
consider whether those actions were valid at the time they were made. To do so would
be error. Wakefield’s “congregation has the right to control the church,” including
the right to forgive or to endorse actions previously taken by church leaders. Graham
v. Lockhart, 42 N.C. App. 377, 379 (1979) (observing that congregation had the power
to change customs and to approve or overturn earlier decisions). Put simply, the
congregation, as the governing body, has had its referendum on these disputes and
has “declared the matter closed.” Harris, 361 N.C. at 273–74 (deferring to decision of
internal governing body in dispute about use of church funds).
4 Perhaps McKnight and Foster believe that those who voted for ratification forfeited their
membership by supporting the Trustee Defendants. If so, entertaining that argument would undoubtedly run afoul of the First Amendment. The Court has no business rendering a decision that would, in effect, excommunicate church members for siding with one faction over another in matters of church governance. 19. Moreover, peeking behind the ratification vote would lead to a dead end.
The parties dispute, for example, the validity of the voting procedures used during
the mid-2019 meeting to elect bank-account signatories. But even McKnight and
Foster see that as an ecclesiastical question that the Court cannot answer. 5 The
parties also dispute whether the Trustee Defendants’ reasons for closing the church
building and suspending worship services were pretextual. That, too, is off limits
because it cannot be resolved based on neutral principles: the bylaws supply no ready
answer, and the Court would therefore have “to interpose its judgment as to both the
proper role of these church officials and whether” closure of the church building “was
proper in light of [Wakefield’s] religious doctrine and practice.” Harris, 361 N.C. at
273 (declining to address claim that church officials “breached their fiduciary duties
by improperly using church funds”); see also Davis v. New Zion Baptist Church, 258
N.C. App. 223, 227 (2018) (declining to address matters not specified in church
bylaws); Davis v. Williams, 242 N.C. App. 262, 266 (2015) (same).
20. In sum, the Court must limit its review to issues that can be resolved based
on neutral principles. Here, the undisputed evidence shows that Wakefield’s
congregation ratified the corporate conversion and approved the transfer of property
to the newly incorporated WMBC, Inc. Neither the Court nor a jury can overrule the
congregation’s edict. The Court therefore enters summary judgment in favor of the
Trustee Defendants and WMBC, Inc. as to the claims for breach of fiduciary duty,
5 (See ECF No. 78 at 12 (stating “that inquiries into how the disputing Church factions interpret and apply Roberts Rules of Order [at] their meetings runs the risk of ecclesiastical entanglement concerning Church governance and customary practices”).) constructive fraud, and unjust enrichment. See, e.g., Atkins v. Walker, 284 N.C. 306,
321 (1973) (concluding that vote “taken at a meeting of the congregation duly called,
convened and conducted according to the properly established procedures of the
church then in effect” was controlling); Graham, 42 N.C. App. at 379 (affirming
summary judgment based on decision of congregation when undisputed evidence
showed “that the meetings were properly called and properly conducted”).
B. Counterclaims by WMBC, Inc.
52. WMBC, Inc. has asserted three counterclaims (conversion, conspiracy, and
trade name infringement). Again, each side has moved for summary judgment.
53. Conversion and Conspiracy. The claims for conversion and conspiracy
relate to donations that McKnight, Foster, and others have collected from worshipers
online and at off-site religious services. WMBC, Inc. contends that it is entitled to
these amounts because they were collected by a dissident faction in the name of the
church but without permission.
54. Conversion is the “unauthorized assumption and exercise of the right of
ownership over goods or personal chattels belonging to another, to the alteration of
their condition or the exclusion of an owner’s rights.” Peed v. Burleson’s, Inc., 244
N.C. 437, 439 (1956) (citation and quotation marks omitted). “[T]he general rule is
that money may be the subject of an action for conversion only when it is capable of
being identified and described.” Variety Wholesalers, Inc. v. Salem Logistics Traffic
Servs., LLC, 365 N.C. 520, 528 (2012) (citation and quotation marks omitted). Thus, to maintain a claim of conversion, WMBC, Inc. must identify and describe the funds
at issue and also “establish that it retained ownership” of them. Id. at 523.
55. WMBC, Inc. has not presented enough evidence to create a genuine issue of
material fact. Its “conversion claim is not one for a specific amount” given by one or
more individuals but instead “for a category of monies” (all donations collected by the
opposing faction). Wake Cnty. v. Hotels.com, L.P., 235 N.C. App. 633, 653 (2014). The
donations came from unknown sources, at unknown times, and in unknown amounts.
At no point did WMBC, Inc. have possession of all or part of the donations. Nor has
WMBC, Inc. offered any evidence to show that donors intended their money to go to
it rather than to the faction led by McKnight and Foster. In addition, WMBC, Inc.
did not then and does not now control the bank account in which the donations were
deposited; McKnight and Foster created that account after the church split. (See
Foster Resp. to Interrogs. 2.) From this evidence, no reasonable jury could conclude
that the funds in question are capable of being identified and described with
specificity or that they were owned by WMBC, Inc. See Hotels.com 235 N.C. App. at
653 (affirming entry of summary judgment and dismissal of conversion claim on
similar grounds); see also Variety Wholesalers, 365 N.C. at 529 (holding that claim for
conversion of money requires “evidence of the specific source, specific amount, and
specific destination of the funds in question”).
56. The Court therefore grants summary judgment in favor of McKnight,
Foster, and the other counterclaim defendants as to WMBC Inc.’s claim for
conversion. Because there can be no conspiracy to commit conversion without an underlying claim for conversion, the Court also grants summary judgment as to the
claim for civil conspiracy. See, e.g., Esposito v. Talbert & Bright, Inc., 181 N.C. App.
742, 747 (2007).
57. Trade Name Infringement. This claim concerns the use of the name
Wakefield Missionary Baptist Church. It is undisputed that the church has used this
name without interruption since at least the 1990s. WMBC, Inc. contends that, as
the successor to the unincorporated association, it has the right to keep a dissident
faction from using the name. McKnight, Foster, and the other counterclaim
defendants contend that the church’s name is generic and therefore not protectable
as a trade name.
58. Few North Carolina cases address the trademark and trade name rights of
churches. Although there is little doubt that a religious body may claim such rights,
just as private businesses do, it is unclear how far a civil court may go in adjudicating
the use of similar or identical names by two unaffiliated churches. What a church or
other house of worship chooses to call itself is, after all, an expression of its religious
identity. Perhaps for that reason, our Supreme Court has left open the question
“whether an injunction may be issued to forbid one church to use a name similar to
that of another church.” Bd. of Provincial Elders v. Jones, 273 N.C. 174, 184 (1968).
59. On the other hand, though few in number, the cases in this area do offer
clear guidance when dealing with factional disputes within a church. Our Court of
Appeals has stressed that “[t]he right to use the name inheres in the institution, not
in its members; and, when they cease to be members of the institution, use by them of the name is misleading and, if injurious to the institution, should be enjoined.”
Daniel v. Wray, 158 N.C. App. 161, 173 (2003) (quoting Purcell v. Summers, 145 F.2d
979, 987 (4th Cir. 1944)). “No question of religious liberty is involved” because
dissident members “have no right . . . to make use of a name which will enable them
to appropriate the good will which has been built up by an organization with which
they are no longer connected.” Id. (quoting Purcell, 145 F.2d at 987). This is the
prevailing view around the country. See Christian Sci. Bd. of Dirs. of the First Church
of Christ v. Evans, 105 N.J. 297, 315 (1987) (collecting cases “in which dissident
church groups were enjoined from using identical or near-identical names as those
they held when formerly affiliated with their adversaries”).
60. Daniel’s holding governs here; indeed, the issues in that case and this one
are virtually identical. The right to use the name Wakefield Missionary Baptist
Church inheres in WMBC, Inc., which is the lawful successor to the unincorporated
association for the reasons discussed above. (See Church Resolution.) Yet McKnight,
Foster, and the other estranged members in their faction have continued to use the
church’s name—to advertise online, to collect donations, and to make contracts with
third parties—while choosing to worship apart from the rest of Wakefield’s
congregation. (See, e.g., Foster Resp. to Interrogs. 4–5.) It follows that WMBC, Inc.
is entitled to summary judgment and an appropriately tailored injunction. The
dissenters are not “allowed to confuse the public or appropriate the standing and good
will of this still existing” church by holding their own services under “the same name.”
Daniel, 158 N.C. App. at 174 (affirming entry of summary judgment and injunction). The Court will therefore direct the parties to confer regarding the form of an
injunction, to submit a jointly proposed order if they reach an agreement, and to brief
any disagreements if not.
61. All that remains for trial is WMBC, Inc.’s demand for damages. Two
threshold matters must be addressed before a damages trial, however. The first is
N.C.G.S. § 61-1(b), which immunizes church officials from individual liability for
monetary damages in certain circumstances. See Daniel, 158 N.C. App. at 174–75
(reversing award of damages under section 61-1(b)). The second, more fundamental
issue is potential encroachment on religious freedom. WMBC, Inc. does not sell goods
or services; it has no lost profits. Its damages case instead consists of tithes and
offerings that dissenting members gave to an opposition faction of the church. A
judgment that, in effect, awards to one religious body funds that worshipers gave to
another would surely raise grave constitutional questions.
62. Efficiency demands that these issues should be aired and resolved, as far as
possible, before the parties incur the time and expense of trial. The Court will
therefore set a briefing schedule. In addition, the Court defers consideration of the
parties’ arguments concerning punitive damages and will address them in connection
with these other damages-related issues. See N.C.G.S. § 1D-15(a) (“Punitive damages
may be awarded only if the claimant proves that the defendant is liable for
compensatory damages . . . .”). III. CONCLUSION
63. For all these reasons, the Court GRANTS summary judgment in favor of
the Trustee Defendants and WMBC, Inc. as to the claims for breach of fiduciary duty,
constructive fraud, and unjust enrichment asserted against them. These claims are
DISMISSED with prejudice.
64. In addition, the Court GRANTS summary judgment in favor of WMBC, Inc.
as to its counterclaim for trade name infringement, limited to the issue of liability.
The Court DEFERS consideration of remedies, including the form of an appropriate
injunction and the parties’ arguments regarding WMBC, Inc.’s demand for punitive
damages.
65. The Court also GRANTS summary judgment in favor of McKnight, Foster,
and their fellow counterclaim defendants as to the counterclaims for conversion and
conspiracy against them. These counterclaims are DISMISSED with prejudice.
66. In all other respects, the Court DENIES the motions.
67. No later than 4 March 2022, the parties shall meet and confer to discuss the
form of a permanent injunction against further trade name infringement. No later
than 11 March 2022, the parties shall jointly tender either a proposed order
containing agreed language or a proposed schedule for briefing disputes concerning
the scope of an injunction. In addition, no later than 11 March 2022, the parties shall
jointly tender a proposed briefing schedule to address outstanding issues relating to
WMBC, Inc.’s demand for compensatory damages, including immunity under section
61-1(b) and constitutional limitations. SO ORDERED, this the 18th day of February, 2022.
/s/ Adam M. Conrad Adam M. Conrad Special Superior Court Judge for Complex Business Cases