COA upholds $80K judgment for pastor who wasn’t paid

An Indianapolis church must pay its former pastor $80,000 after the Indiana Court of Appeals upheld the enforcement a judgment stemming from the church’s failure to pay the clergyman his regular salary.

Kevin Grimes began a five-year term as pastor of Stewart Memorial Christian Methodist Episcopal Church in 2007. Stewart Memorial is the Indianapolis congregation of the Christian Methodist Episcopal Church, located within the CME’s Second District.

Under the terms of his employment with the church, Grimes was slated to earn $600 per week, plus 12 percent of his salary as a pension. However, when Grimes accepted the pastoral appointment in 2007, Stewart Memorial was in “significant financial trouble” because a previous pastor had established her own church, taking much of Stewart Memorial’s membership with her.

Thus, in August 2007, Grimes wrote a letter to a local bishop saying he would “defer the church pastoral salary obligations, until such time I determine we can recover from this desperate financial situation.” It wasn’t until a quarterly meeting in October 2011 that a presiding elder told the Stewart Memorial leadership that it was the church’s duty to pay Grimes his salary and pension, even in light of the difficult financial situation.

Based on that direction, Grimes told church staff to draft checks made out to him for his service dating back to June 2007. The pastor also maintains that the elder who spoke at the quarterly meeting likewise directed the church to draft checks to Grimes.

Stewart Memorial did draft $165,276 in check to Grimes, though the checks were not intended to be cashed and were left with the recording steward until Grimes requested them. Grimes did attempt to collect on the checks in July 2012, when he had turned down two job offers and was not reappointed to Stewart Memorial. He attempted to cash two $600 checks, but the church stopped payment on the other checks after an overdraft.

Grimes then filed a complaint against Stewart Memorial, CME and its Second District, moving for summary judgment and arguing his claims were not barred by the First Amendment. The church defendants responded with cross-motions for summary judgment arguing the pastor’s claims were barred by the First Amendment, but the Marion Superior Court denied all motions.

In its decision, the trial court said it could “apply neutral principles of law without becoming excessively entangled in religion affairs in violation of the First Amendment.”

Settlement talks then began, and the parties initially agreed the church would pay Grimes $80,000 if he would agree to a confidentiality provision, though the church’s counsel later claimed he only had authority to offer $50,000. The trial court granted a motion to enforce the settlement agreement, ordering the church defendants to pay $80,000 plus reasonable attorney fees. The court later issued garnishment orders allowing Grimes to collect $56,693.20 now held in his attorney’s trust account.

The court also denied the church’s motion to vacate the order enforcing the settlement agreement, and the Indiana Court of Appeals upheld that decision in a Monday memorandum opinion, Christian Methodist Episcopal Church and Second Episcopal District of the Christian Methodist Episcopal Church, Inc. v. Kevin P. Grimes, Sr., 18A-PL-2346.

Judge James Kirsch, writing for the unanimous appellate panel, first rejected the church’s subject matter jurisdiction claims.

Relying on Brazauskas v. Fort Wayne-South Bend Diocese, Inc., 796 N.E.2d 286 (Ind. 2003), Kirsch said courts with general authority over employment disputes are not deprived of subject matter jurisdiction just because the defendant “pleads a religious defense.” Further, the church rules at issue in this case are “procedural and administrative,” Kirsch said, and “do not concern church doctrine or religious law.”

The COA also rejected the church’s argument that the trial court erred in entering judgment on Grimes’ motion to enforce the settlement agreement because it did so without first holding an evidentiary hearing. But noting the evidentiary hearing was discretionary, Kirsch said the church “failed to file a response in opposition to Grimes’ motion, and then again failed to file a response or objection when Grimes filed a motion to vacate the hearing set for the initial motion to enforce the settlement agreement.”

“Although the church’s contentions appear to indicate that they did not believe it was necessary to file a response to Grimes’s motions because it planned to argue its position at the scheduled hearing,” Kirsch wrote, “if this were true, the trial court’s order vacating the hearing should have prompted them to file an objection.”

The church also argued on appeal that no settlement agreement actually existed, but the appellate panel pointed to evidence that even after the church’s counsel stated he could only offer $50,000, counsel also acknowledged Grimes’ right to enforce the $80,000 agreement. Further, the panel rejected the claim that the agreement was unenforceable under the Statute of Frauds.

Finally, the COA rejected the argument that the trial court erred in awarding Grimes $6,456.71 in attorney fees, finding the award reasonable.