Brazauskas v. Fort Wayne-South Bend Diocese

• Decision Date: 25 September 2003
• Docket Number: No. 71S03-0205-CV-268.,71S03-0205-CV-268.
• Parties: Beverly M. BRAZAUSKAS, Appellant (Plaintiff below), v. FORT WAYNE-SOUTH BEND DIOCESE, INC., Sacred Heart Parish, and Jose Martelli, Appellees (Defendants below).
• Court: Indiana Supreme Court

796 N.E.2d 286

Beverly M. BRAZAUSKAS, Appellant (Plaintiff below), v. FORT WAYNE-SOUTH BEND DIOCESE, INC., Sacred Heart Parish, and Jose Martelli, Appellees (Defendants below).

No. 71S03-0205-CV-268.

Supreme Court of Indiana.

September 25, 2003.

Stephen M. Terrell, Landman & Beatty, Indianapolis, IN, Edward N. Kalamaros & Associates, South Bend, IN, Attorneys for Appellant.

William T. Hopkins, Jr., Michael A. Scheer, Barnes & Thornburg, Fort Wayne, IN, Attorneys for Appellee.

ON PETITION TO TRANSFER FROM THE INDIANA COURT OF APPEALS, NO. 71A03-0102-CV-55

SHEPARD, Chief Justice.

Appellant Beverly Brazauskas sued Father Jose Martelli and the Fort Wayne-South Bend Catholic Diocese for blacklisting and tortious interference with a business relationship. She claims that after Father Martelli terminated her employment at Sacred Heart Church, he and Bishop John D'Arcy of the Diocese prevented her from obtaining a position at the University of Notre Dame by truthfully informing University President Father Edward Malloy that Brazauskas was suing them over this termination decision. We conclude that even if this scenario occurred as she describes, her suit fails under the First Amendment's Free Exercise Clause.

Facts and Procedural History

Sacred Heart Parish, a part of the Diocese, is located on the campus of the University of Notre Dame near South Bend. In August 1992, Parish pastor Father Martelli dismissed Brazauskas from her position as Director of Religious Education and Liturgy at Sacred Heart Church.

Brazauskas sued the Diocese (which includes the Parish) and Father Martelli on a variety of grounds, including breach of contract, breach of the covenant of good faith and fair dealing, wrongful discharge, fraud, defamation, promissory estoppel, and infliction of emotional distress. All these claims were eventually dismissed in various proceedings.

While her employment lawsuit was pending, Brazauskas applied for a position as Acting Director of Notre Dame's Program for Church Leaders (PCL), a sabbatical program. In June 1993, a search committee recommended her for the job.

Father Malloy rejected the recommendation, believing that Notre Dame "should not hire someone who has an active lawsuit against the local bishop until that matter [is] resolved." (Id. at 422.) He explained, "I consider a[C]atholic university to desirably have a positive and respectful relationship to the [C]atholic church community, including the local bishop," and hiring someone who had a pending lawsuit "would be a gesture of ill will until such a matter was resolved by the courts." (Id. at 423.)¹

This view is consistent with Ex Corde Ecclesiae, a 1990 directive of Pope John Paul II based on Roman Catholic canon law that addresses the relationship between Catholic universities and local diocesan bishops. Ex Corde Ecclesiae encourages "close personal and pastoral relationships between university and Church authorities characterized by mutual trust, close and consistent cooperation and continuing dialogue." (Appellant's App. at 1013.)

After she failed to receive the PCL position, Brazauskas added claims for blacklisting and tortious interference with a business relationship to her lawsuit against Father Martelli and the Diocese. See Ind. Code Ann. §§ 22-5-3-1, 2 (West 1991).² Brazauskas did not challenge Father Malloy's or Notre Dame's legal right to deny her the PCL position for the reason Father Malloy gave.

In February 2001, the trial court dismissed both of these claims for lack of subject matter jurisdiction. The Court of Appeals affirmed. Brazauskas v. Fort Wayne-South Bend Diocese, Inc., 755 N.E.2d 201 (Ind.Ct.App.2001). We granted transfer, and now affirm, concluding that the trial court had jurisdiction over the matter but that the Diocese defendants were entitled to judgment on the merits.

I. The Procedural Posture

As a preliminary matter, we address the appropriate procedure for seeking dismissal of a suit by asserting a Free Exercise Clause defense.

In 1997, the trial court denied the Diocese defendants' motion for summary judgment on the tortious interference and blacklisting claims. On appeal of this ruling, the Court of Appeals noted sua sponte that the Diocese defendants should have challenged subject matter jurisdiction via motions to dismiss for lack of subject matter jurisdiction under Indiana Trial Rule 12(B)(1) rather than via summary judgment motions. See Brazauskas v. Fort Wayne-South Bend Diocese, Inc., 714 N.E.2d 253, 259 (Ind.Ct.App.1999). Following that guidance, the Diocese defendants accordingly argue that the trial court lacked subject matter jurisdiction over the tortious interference and blacklisting claims under Rule 12(B)(1).

Other courts have resolved this procedural question differently. In Bryce v. Episcopal Church, 289 F.3d 648 (10th Cir. 2002), the Tenth Circuit dealt with an analogous claim brought by two church members claiming sexual harassment in the form of remarks made during parish meetings about homosexuals and the two members' homosexual activities. Id. at 651-53. The church responded that the remarks were part of ecclesiastical discussions on church policy, so the claims were barred. Id. at 651.

Applying rules of federal procedure, the Tenth Circuit treated the church's challenge as a Rule 12(B)(6) motion to dismiss for failure to state a sufficient claim. Id. at 654. It found no abuse of discretion by the trial court in considering evidence beyond the pleadings, thereby converting the motion to dismiss into a summary judgment motion, and affirmed judgment for the church. Id. at 654, 660. See also McKelvey v. Pierce, 173 N.J. 26, 800 A.2d 840, 844 (2002) (applying state rules of procedure and treating contract and tort suit by former seminarian claiming damages stemming from unwanted homosexual advances as motion for judgment on the pleadings that effectively became a summary judgment motion).

We agree with the approach taken by these two courts, and hold that the trial court erred in concluding that it lacked jurisdiction over this matter. A court with general authority to hear matters like employment disputes is not ousted of subject matter or personal jurisdiction because the defendant pleads a religious defense. Rather, pleading an affirmative defense like the Free Exercise Clause may under certain facts entitle a party to summary judgment.

We will proceed with our review using the standard applicable to summary judgment, as the trial court did not exclude matters submitted outside the pleadings. See Ind. Trial R. 12(B), 56. We will therefore consider whether there is any genuine issue of material fact and whether the Diocese defendants as the moving parties are entitled to judgment as a matter of law. T.R. 56. In doing so, we construe all facts and reasonable inferences in the light most favorable to Brazauskas as the nonmoving party. See State Farm Fire & Cas. Co. v. T.B., 762 N.E.2d 1227 (Ind. 2002).

II. The Changed Landscape of Blacklisting Law

Had these events occurred two years later, our disposition would be quite simple. In 1993, Indiana's blacklisting statute read about the same as it had upon initial enactment in 1889, namely:

A person who, after having discharged any employee from his service, prevents the discharged employee from obtaining employment with any other person commits a Class C infraction, and is liable in penal damages to the discharged employee, to be recovered by a civil action; but this section does not prohibit a person from informing, in writing, any other person to whom the discharged employee has applied for employment, a truthful statement of the reasons for discharge.

If any railway company or any other company or partnership or corporation in this state shall authorize, allow or permit any of its or their agents to black-list any discharged employees, or attempt by words or writing, or any other means whatever, to prevent such discharged employee, or any employee who may have voluntarily left said company's service, from obtaining employment with any other person, or company, said company shall be liable to such employee in such sum as will fully compensate him, to which may be added exemplary damages.

Ind.Code Ann. §§ 22-5-3-1, 2 (West 1991).

In 1995, however, the General Assembly added an important exception:

An employer that discloses information about a current or former employee is immune from civil liability for the disclosure and the consequences proximately caused by the disclosure, unless it is proven by a preponderance of the evidence that the information disclosed was known to be false at the time the disclosure was made.

Ind.Code Ann. § 22-5-3-1(b) (West 2002).

Brazauskas does not claim that any of the alleged disclosures that led to her denial of the PCL position were false. She would therefore have no claim for blacklisting under the revised statute.

She would likewise not have a claim for tortious interference, because in Indiana this tort requires some independent illegal action. See, e.g., Watson Rural Water Co., Inc. v. Ind. Cities Water Corp., 540 N.E.2d 131 (Ind.Ct.App.1989). Brazauskas' only other allegation of illegal conduct is the blacklisting claim (Appellant's Br. at 18) so both would fail with no need to reach the Diocese defendants' constitutional argument.

III. The Factual Premise

Notwithstanding subsequent legislative action, we must apply the statute as it existed in 1993. Brazauskas' complaint alleges that the Bishop and Father Martelli prevented her from obtaining employment at Notre Dame.³ She bases her claim primarily on a letter Father Martelli wrote more than six months before she applied for the PCL job and on influence allegedly exerted by the Bishop that prompted Father Malloy to deny Brazauskas the position.

Father Martelli's writing was a response to two letters he received from one of Brazauskas' supporters, Notre Dame Theology Department Assistant Chairman Kern Trembath. In...