Nation Ford Baptist Church Inc. v. Davis, 390A21

Docket Nº390A21
Citation2022 NCSC 98
Case DateAugust 19, 2022
CourtUnited States State Supreme Court of North Carolina


NATION FORD BAPTIST CHURCH INCORPORATED d/b/a Nations Ford Community Church, Plaintiff

PHILLIP RJ DAVIS, Defendant / Third-Party Plaintiff


No. 390A21

Supreme Court of North Carolina

August 19, 2022

Heard in the Supreme Court on 10 May 2022.

Appeal pursuant to N.C. G.S. § 7A-30(2) from the decision of a divided panel of the Court of Appeals, 279 N.C.App. 599, 2021-NCCOA-528, affirming an order entered on 22 July 2020 by Judge Carla N. Archie in Superior Court, Mecklenburg County.

Knox, Brotherton, Knox &Godfrey, by Lisa G. Godfrey, H. Edward Knox, and J. Gray Brotherton, for plaintiff-appellant and third-party defendantappellants.

Nexsen Pruet, PLLC, by James C. Smith, for defendant/third-party plaintiff appellee.

EARLS, Justice.

¶ 1 Churches exist primarily for the spiritual edification of the adherents of a faith tradition. They are established and operated in accordance with religious precepts.


See Bd. of Provincial Elders. v. Jones, 273 N.C. 174, 188 (1968) ("[C]hurches are established for the promulgation of faith under the regulations of definite religious organizations . . ." (cleaned up)). Churches may build sites to house worship, fellowship, community, and teaching. They simultaneously have a secular existence. Many are registered with the state as nonprofit corporations and, by virtue of their status, enjoy exemption from state and federal taxes. They may enter into contracts, dispose of property, seek financing, and make employment decisions. Unsurprisingly, disagreements arise over matters both spiritual and secular. Occasionally, parties seek resolution in civil court. See, e.g., Atkins v. Walker, 284 N.C. 306 (1973) (examining a dispute over who was entitled to possession of church property). The role of the court under these circumstances is dictated by the nature of the dispute.

¶ 2 When the resolution of a dispute requires the interpretation of religious doctrines or spiritual practices, the court must abstain from deciding purely religious questions. "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.'" Harris v. Matthews, 361 N.C. 265, 270 (2007) (citing Erwin Chemerinsky, Constitutional Law: Principles and Policies 1218 n.129 (2d ed. 2002)).

¶ 3 By contrast, when disputes arise which can be resolved solely through the application of "neutral principles of law" that are equally applicable to non-religious


institutions and organizations, a court's involvement in such a dispute does not "jeopardize[ ] values protected by the First Amendment." Presbyterian Church in U.S. v. Mary Elizabeth Blue Hull Mem'l Presbyterian Church, 393 U.S. 440, 449 (1969). But spiritual and secular matters are often intertwined. When they are, identifying the boundary between impermissible judicial entanglement and permissible judicial adjudication is a difficult but necessary task. The First Amendment requires us to preserve the exclusive autonomy of religious authorities to answer religious questions, but the State, the public, and religious organizations themselves all have an interest in the courthouse remaining open for the resolution of certain civil claims.

¶ 4 The issue in this appeal is whether any aspects of the claims brought by Pastor Phillip R.J. Davis (Pastor Davis or RJ) against Nation Ford Baptist Church Incorporated (Church), and Nation Ford's Board of Directors (Board) require delving into ecclesiastical matters in violation of the First Amendment. According to Pastor Davis, the Board exceeded its authority under the Church's corporate bylaws when it purported to terminate him by vote of the Board; Pastor Davis contends that the governing bylaws allowed termination only by vote of the Church's congregation at a "Special General Meeting." The Church and the Board assert that the bylaws upon which Pastor Davis relies are not actually the governing bylaws; instead, the Church and the Board contend that pursuant to the terms of the real bylaws, Pastor Davis was an at-will employee who could be terminated by the Board at any time.


¶ 5 Which set of corporate bylaws were in effect at the relevant time, whether the Church and Board followed the procedures set forth in the bylaws, and whether there was a contract of employment between Pastor Davis and the Church that was breached are factual and legal questions that are appropriately answered by reference to neutral principles of corporate, employment, and contract law. Thus, the Court of Appeals was correct to affirm the trial court's denial of the Church's motion to dismiss with respect to Pastor Davis's claim for a declaratory judgment. Nonetheless, other claims raise questions that cannot be answered without considering spiritual matters. These claims must be dismissed for lack of subject matter jurisdiction. Accordingly, for the following reasons, we affirm in part and reverse in part the decision of the Court of Appeals affirming the trial court's denial of the Church's motion to dismiss.

I. Background

¶ 6 In 1988, Nation Ford Baptist Church was created as a North Carolina nonprofit corporation. The Church's Elders and the Church's Senior Pastor, Phillip M. Davis (Pastor Davis's father), were installed as the Church's Board of Directors. The Church's Articles of Incorporation expressly prohibited the Church from having corporate members. Instead, the Articles gave the Board the exclusive authority to represent the Church's congregation. In 1997, the Board adopted a set of bylaws that reserved for itself sole governing authority over the Church, including employment


matters. The Church contends that these bylaws remain in effect to this day.

¶ 7 After Phillip Davis's death in August 2015, his son, RJ, was hired to serve as Senior Pastor. The offer letter accepted by Pastor Davis stated that he was an "at- will" employee. Specifically, the letter provided that

[a]n "at[-]will" employment relationship has no specific duration. This means that an employee can resign their employment at any time, with or without reason or advance notice. The [C]hurch has the right to terminate employment at any time, with or without reason or advance notice as long as there is no violation of applicable state or federal law.

Pastor Davis concedes that at the time he was hired by the Church, he believed that the controlling bylaws gave the Board "total control over the governance and operation of the Church." Yet Pastor Davis alleges that, at some point between 2004 and 2008, the Board adopted new bylaws which it later attached to an application for a bank loan it submitted in 2008. The purported second set of bylaws provided that the Bishop of the Church could be dismissed only by a 75% vote of the congregation attending a Special General Meeting called for that purpose.

¶ 8 According to the Church, Pastor Davis's tenure was not a successful one: church attendance reportedly fell by approximately 60% and the Board received numerous complaints about him from churchgoers. On 17 June 2019, the Board voted unanimously to terminate Pastor Davis's employment. Nevertheless, over the next few months and against the wishes of the Board, Pastor Davis continued to conduct


services in church facilities. He allegedly collected and retained tithe money and, when the Church attempted to bar his entry, broke the locks to access the sanctuary in order to conduct unauthorized services.

¶ 9 On 17 September 2019, the Church filed suit in Superior Court, Mecklenburg County seeking a preliminary injunction prohibiting Pastor Davis from entering the Church or speaking with staff. In response, Pastor Davis filed an answer, counterclaim, third-party complaint, and motion for injunctive relief seeking (1) a declaratory judgement establishing that he remained the "Bishop, Senior Pastor, and spiritual leader" of the Church, that he "was not an 'at-will' employee," that the bylaws included in the 2008 loan application controlled the terms of his employment, that his termination was unlawful, and that his appearances on church property were lawful; (2) injunctive relief allowing him to resume his employment; (3) damages arising from the Board's breach of a fiduciary duty it owed him; (4) damages resulting from the Board's tortious interference with his employment relationship; and (5) access to the Church's financial records and establishment of a constructive trust for funds the Board had allegedly misappropriated.

¶ 10 The trial court granted the Church's preliminary injunction on 30 October 2019. On 22 April 2020, the Church filed a motion to dismiss Pastor Davis's counterclaim and third-party complaint, arguing that the trial court lacked subject matter jurisdiction because resolving Pastor Davis's claims would require the court


to impermissibly review ecclesiastical matters. The Church also alleged that Pastor Davis had violated the terms of the preliminary injunction by "bully[ing] and harass[ing]" church employees and continuing to conduct unsanctioned services. Shortly thereafter, Pastor Davis filed a motion to amend his answer, counterclaim, and third-party complaint. His amended filing largely mirrored its previous iterations but added defenses based on quasi estoppel and ratification. Pastor Davis also added a request for back pay from the date of his termination, removed his request to be recognized as the Church's "spiritual leader," and included a new claim based on allegations that the Board had engaged in a civil conspiracy.

¶ 11 On 22 July 2020, the trial court entered an order denying the Church's motion to dismiss and granting Pastor Davis's motion to amend his counterclaim and third-party complaint. The Church appealed. See Nation...

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