Articles Posted in Religious Corporation Law

pope.jpgPope Francis’ first visit to the United States has managed to inspire numerous people. Yesterday’s speech before Congress mesmerized all of those in attendance, regardless of their religious or political affiliation. The Pope’s message has been unifying to all witnesses, which is why many people have been so excited by his visit, even though many of us are not Catholic and may not agree with his specific positions.

What happens when a religious leader is divisive instead? This post will examine the legal ramifications when the leader of a religious institution is the source of conflict among congregants. It is not unusual for clients to consult us concerning disputes within their religious institutions.

In the event that the congregants choose to continue to worship together under the leadership of another clerical leader, steps may need to be taken to legally terminate the relationship with the spiritual leader. As we discussed in a prior post , the spiritual leader may be classified as an independent contractor or employee, depending upon the circumstances. An independent contractor may be dismissed more readily.

rabbi.jpg Our firm is often retained to represent parties relating to their employment at religious institutions. Such employment refers to, among other persons, the clergy, whether it is a Rabbi or Cantor at a Synagogue, a Minister or Reverend at a Church, or an Imam at a Mosque. A dispute may arise between a clergyperson and the institution at which they officiate. Such disputes may be the result of the termination of said employment, the interpretation of an employment agreement, or the failure of the institution to make payments pursuant to a retirement agreement or pension. This blog post will discuss the various legal issues relating to such disputes.

The first issue relating to a clergy’s employment is whether the individual at issue is an independent contractor or an employee. An exact legal definition of these categories is beyond the scope of this post. However, many smaller institutions attempt to categorize their clergy as independent contractors. This usually means that no taxes are withheld from their pay, and they are free to set their own hours and employment conditions. An employee is subject to W-2 tax withholding, and must generally keep regular hours and is subject to a greater degree of control by the institution in question.

If the individual clergy is classified as an employee, the next question is whether there is a written legal contract for their employment. Most clergy will have a written agreement with the religious institution which sets forth their terms of employment, salary (including any bonuses or pensions), benefits, renewal terms, and duties which they are expected to perform. Such agreement will usually be for a set period of time (for example, five years), and may contain provisions for renewal after expiration.

sages.jpgNews outlets have recently reported a case involving a dispute over the sale of a synagogue located on the Lower East Side of New York City. Certain individuals, claiming to be members of the Board of Trustees, have submitted a petition to the New York State Attorney General seeking approval for a sale in the amount of Thirteen Million Dollars.

At issue is a dispute over whether the individuals who claim to be Board Members are, in fact, legally elected Board Members of the institution in question. Since the synagogue has been in existence for seventy-six years, there are many legal issues related to the authority of any individuals may have the authority to petition the Court to allow a sale of the property, which is also being used as a nursing home for the aged. An excellent overview of this highly contentious case to date may be found by reviewing a recent article in the New York Observer.

Readers of this blog may recall that this subject has been written about by us previously. A dispute involving a Hindu temple was analyzed in a recent post. Of course, every case has its own unique set of facts, but it is important to note that Courts are reluctant to intervene in decisions that are essentially religious in nature, for example, if a spiritual leader decides to excommunicate certain members. Such excommunicated members will have a difficult time finding a Court to overturn such a decision, due to First Amendment concerns.

buddha.jpg A recent case decided by a New York Appellate Court relates to a dispute over governing and control of a Buddhist Temple. To summarize, the Master of the Temple, Mew Fung Chen, excommunicated 517 members over a dispute relating to control of the Temple, which had locations in both Brooklyn and Manhattan. At a special meeting, the Board of the Temple voted to close the Manhattan Temple and excommunicate the followers of an alleged “rogue monk,” Master Ming Tung. Ming Tung’s followers constituted a majority of the congregation at the time of the excommunication.

Ming Tung filed a lawsuit in Supreme Court, New York County seeking to invalidate the results of the special meeting. The lawsuit also sought to have a Court-ordered new meeting, which would be monitored by a Court-appointed official. Obviously, with a majority of the membership, Ming Tung’s followers would likely have taken control of the Buddhist Temple had such a new meeting been ordered.

The Supreme Court (in New York State, this is the trial court, or lowest level of Court) initially granted the motion of Ming Tung and his followers for injunctive relief. This relief stayed the excommunication and ordered that an annual membership meeting be held, at which all members, including the excommunicated members, could be present and vote on the future of the Temple. However, the defendant, the China Buddhist Association, appealed the decision to the Appellate Division of the Supreme Court, and the First Judicial Department reversed the trial Court’s decision.

shareholdermtg.jpgMay and June of each year tend to be “annual meeting season” for our cooperative and condominium clients. At such meetings, the shareholders of cooperatives and unit owners of condominiums elect their board of directors or board of managers. Those who serve on boards are hard working volunteers, participating on a weekly if not daily basis. Those who attend annual meetings may only attend one meeting a year to question and judge those who participate on their behalf on a constant basis. This blog post will address how to properly conduct annual meetings and why smoothly run annual meetings are important. Although our law firm also conducts annual meetings for condominiums and religious corporations, this post will be limited to cooperative corporation annual meetings.

Why do we have annual meetings? Such meetings are necessary to elect directors at regular intervals, so that the same people do not maintain their posts indefinitely contrary to the will of shareholders. An Offering Plan would have been filed by the sponsor of the cooperative with the New York State Attorney General Real Estate Finance Bureau when the building was converted to cooperative ownership. One of the documents contained in such Offering Plan is the By-Laws. As in any corporation, the By-Laws provide the roadmap for the governance of the corporation. It is common for By-Laws to provide that annual meetings for the election of directors are to be held in a particular month of a year. The cooperative need not hold its meetings in the specific month stated in the By-Laws (who wants to meet in January during a blizzard),blizzard.jpg it merely needs to hold its meetings at regular intervals each year. The By-Laws specify that the notice of annual meeting is to state that the business to be conducted is to elect directors and to conduct other business specifically identified in the notice, should state the time, date and place of the meeting, and who needs to sign the meeting notice. Our attorneys also pay careful attention to each client’s By-Laws provision regarding the number of days required for the advance notice of the meeting. Usually cooperative By-Laws require that written notice of the annual meeting be delivered at least “x” days but no more than “y” days in advance of the meeting. The By-Laws will also indicate how many directors are to be elected and if there are particular disqualifications (such as a director must also be a shareholder).

Once the meeting commences, the first step is to determine if there is a quorum, the proper number of shares represented for the decisions made at the meeting to be legally valid. The By-Laws identify how many shares constitute a quorum, perhaps a majority of shares issued or a majority of units are represented. Usually, shares can be represented by attending in person or by proxy (the delivery of a signed document instructing how one’s shares are to be voted or who may vote one’s shares on her behalf). It should be noted that certain legal acts or acts as identified by the certificate of incorporation may have a more stringent definition of quorum than the standard director election. As it is inconvenient to adjourn the meeting due to failure of quorum requirements, we encourage our clients to collect as many proxies as possible in case a shareholder cannot attend.

Fortress Bible School rendering.jpgIn 1999, the Town Board of Greenburgh, located in Westchester County, New York, reviewed an application of the Fortress Bible Church to build a church and school on land that it owned within the Town borders. After review by the Town Board, the Board rejected the application, claiming that there were safety concerns regarding inadequate stopping distance from the main road to the Church entrance, as well as general safety issues related to traffic entering and exiting the Church site.

After this refusal, the Church filed a lawsuit in the United States District Court for the Southern District of New York. The case went to trial, and witnesses on all sides were heard by Judge Stephen C. Robinson. The Church alleged that the Town’s refusal to grant a building permit violated the Religious Land Use and Institutionalized Persons Act, as well as the First Amendment, the Equal Protection Clause, and New York constitutional and statutory law.

Readers of this blog may ask what is the Religious Land Use and Institutionalized Persons Act. We will refer to this Federal Law by its acronym, RLUIPA. In short, RLUIPA’s main thrust is to protect religious organizations from government discrimination in zoning decisions. It states that no government shall impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person, including a religious assembly or institution, unless the government can demonstrate that the imposition of the burden is in further of a compelling government interest and is the least restrictive means of furthering that interest. [link to text of law].

600px-Religious_symbols-300x300.jpeg Our firm is often retained to represent parties in disputes regarding the control of religious institutions. Such disputes are usually governed by the New York Religious Corporation Law. The law governs all religious institutions, including the so-called “major” religions, Christianity, Judaism, Islam, and Hindu.

Religious institutions in New York are generally formed as non-profit religious corporations. This provides tax-exempt status under state and federal law. A religious institution may encompass more than just a place of worship. Many religious institutions also run parochial schools, summer camp programs, pre-schools, and cemeteries. Although these programs may turn a profit over time, they are still considered as part of the religious institution and are considered non-profit and tax-exempt.

In certain situations, disputes may arise over the legal control of such religious corporations. For example, our firm has handled cases in which a dissident group has challenged the Board of Trustees who were in control of the institution. Under the Religious Corporation Law, the Board of Trustees is generally manages the temporal (non-spiritual) business of the institution. This would include the hiring of employees, and business decisions relating to the Church, Synagogue, or Mosque in question. The Board of Trustees is usually elected by the congregation. However, the “devil” may be in the details. Disputes can arise over who is a member, and thus allowed to vote in any such elections. Congregants or members are usually defined under the law as those who are over 18 years old, and who worship regularly at the institution in question. Certain Churches may define congregants as those who receive communion regularly at the Church. If there are disputes, Courts may appoint an independent mediator to determine who is a member.

polish.jpegA recent article in the Journal News discusses the sale of the Yonkers Polish Community Center to the Church of Jesus Christ of Latter Day Saints. As the author has enjoyed many events at this Center, and will certainly miss attending events if the center is sold, this article discusses the possible legal remedies when one of the parties to a real estate contract will not complete the transaction.

In the situation discussed in the article, the buyer has given the seller a downpayment in the amount of $120,000.00. Although we are not familiar with the specific facts of this transaction, a downpayment is generally held in escrow by the seller’s attorney until the sale closes or the transaction is cancelled because the purchaser could not obtain a loan commitment, or for another contractual reason.

There may be certain situations in which a seller wishes to transfer title to a property, but encounters legal difficulties in doing so. For example, a Religious Corporation, such as a Church or Synagogue, may seek to sell certain property. This subject was addressed in a previous blog post. Such a transaction must be approved by the New York State Attorney General. In addition, our firm has encountered situations where certain congregants challenge the decision to purchase or sell certain Church or Synagogue property in New York Supreme Court.

church.jpgOften the most significant asset owned by a religious corporation such as a church, synagogue or mosque in New York is real estate. For a variety of reasons, the religious institution may wish to sell, mortgage or lease its property. New York’s Religious Corporation Law prescribes the procedure to be followed in order to legally complete such a transaction. For the purposes of our discussion in this blog post, we will be discussing a sale by a religious corporation.

New York’s Religious Corporation Law declares that “[a] religious corporation shall not sell, mortgage or lease for a term exceeding five years any of its real property without applying for and obtaining leave of the court…”. In layman’s terms, the New York Statute requires that the religious corporation apply by Petition to the Supreme Court of the county in which the property is located for an order permitting the sale. Without the Supreme Court’s consent, the transaction will be void. The purpose of the statute is to prevent the congregational leadership from dissipating congregational assets.

Prior to submitting the Petition, we will assume that the following steps will have already occurred. The congregation must enter into a contract of sale with the party purchasing the property. The Constitution and By-Laws of the congregation will specifically detail the notice and quorum requirements for voting to approve the transaction as a congregation. Our firm will analyze the organizational documents and draft the required documents to hold the vote to approve the transaction as well as conducts the meetings where such vote takes place. In many cases, the Board of Trustees will be required to vote on the matter before the entire congregation also votes to approve the transaction. Written evidence of the congregational vote to approve the transaction will be submitted with the Petition. The Petition will describe the nature of the transaction and indicate that same was approved pursuant to the congregation’s organizational documents. Attached to the Petition will also be a Verification of the President or other lay leader of the congregation certifying the authenticity of the contents of the documents, our attorney’s Affidavit of Regularity confirming the proper procedures were followed with respect to the congregational vote and other aspects of the transaction, a Certification of Authentication of the organizational and other congregational documents submitted, and the proposed Order.