• A New York court ruled that a “charitable immunity” law granting limited legal immunity to the uncompensated directors of a nonprofit organization did not protect a church’s trustees from liability for the sexual misconduct of their minister. An unincorporated church and its trustees were sued as a result of their minister’s alleged rape of a number of minor females in the church. Among other things, the lawsuit alleged that the church and trustees were responsible for the victims’ suffering as a result of their “negligent supervision” of the minister’s actions. In their defense, the trustees relied on a state law granting uncompensated directors of nonprofit organizations limited immunity from liability for their actions. The court rejected this defense for two reasons: “The [trustees] did not present presumptive evidence of uncompensated status in that they did not present an affidavit of a chief financial officer of the [church]. Further, there is a reasonable probability that the specific conduct of such [trustees] constitutes gross negligence. If the [trustees] did act as the [victims] allege, they may be found to have proceeded in reckless disregard of the consequences of their acts.” This case illustrates two very important limitations associated with many state laws conferring immunity on the directors of nonprofit organizations. First, such laws typically only apply to uncompensated directors. This case illustrates that directors must be prepared to submit appropriate evidence to a court of their uncompensated status (such as an affidavit of the church treasurer). Second, the case illustrates that director immunity laws generally do not apply to “gross negligence” or “reckless conduct.” Finally, it is interesting to note that the court ruled that the unincorporated church should be dropped as a defendant in the lawsuit, presumably because or its unincorporated status. This probably explains why the church’s trustees were sued personally. Church officers and directors should keep in mind this potential basis of liability when considering the unincorporated form of organization. Karen S. v. Streitferdt, 568 N.Y.S.2d 946 (A.D. 1 Dept. 1991).

See Also: Personal Liability of Officers, Directors, and Trustees | Theories of Legal Liability | Immunity Statutes

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