The Michigan Court in the consolidated cases of Pilgrims Rest Baptists Church v. Pearson, SR., No 318797 and Pilgrims Rest Baptists Church v. Mayfield, No. 319571 held that in cases dealing with a religious entity, (i) claims for conversion are justiciable (ii) employment claims against a church are non-justiciable, and (iii) claims involving membership and property rights of members of a church board of directors may be justiciable if the issues do not involve the interpretation of religious doctrines and religious polity.
Defendant Arthur Pearson was a pastor and the president of the Pilgrims Rest Baptist Church. In 2011, the board of trustee and the board of deacons of the Church learned that Pearson had authorized pay raises for himself. Further, after an accounting investigation it was revealed that over $200,000 from Church funds were used in "questionable transactions" by Pearson. Pearson later pled nolo contendere and was convicted for embezzlement greater than $50,000 but less than $100,000. Several civil claims arose from these events.
First, the Church sued Pearson for conversion and requested money damages and the Court determined that this claim was justiciable. It held that although a church was involved, ”a claim of conversion against an individual facially does not cause the court to ‘stray into questions of religious doctrine of ecclesiastical polity,’ where the court would lose jurisdiction.” Thus, this issue was remanded to the lower court for a determination on the merits.
Next, the Court considered whether Pearson's counterclaims were justiciable under the ecclesiastical abstention doctrine. It held that they were not. Pearson’s claims were breach of contract, promissory estoppel and other claims dealing with his employment contract with the Church. The Court held, quoting precedent that, ”When the claim involves the provision of the very services . . . for which the organization enjoys First Amendment protection, then any claimed contract for such services likely involves its ecclesiastical policies, outside the purview of the civil law.” Thus, the Court upheld the lower courts determination that Pearson’s counterclaims were non-justiciable.
Lastly, the Court considered whether the membership and property interests of the board of directors of the Church were justiciable., It left this determination to the trial court. The Court held that these issues may be justiciable if neither the claims nor any defenses to the claims lead the court to “stray into questions of religious doctrine or ecclesiastical polity.”