Obligation to Pay Benefits to Pastor or Widow Is Unenforceable

Thursday, November 9, 2017

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Obligation to Pay Benefits to Pastor or Widow Is Unenforceable—C.A.

Ashmann-Gerst Sees No Evidence of Mutual Assent, Consideration

By a MetNews Staff Writer

A church’s promise to pay $500,000 to its pastor upon his retirement, or to his widow upon his death, was unenforceable, the Court of Appeal for this district has held, because it was not contractual in nature.

The opinion, by Acting Presiding Justice Judith Ashmann-Gerst of Div. Two, was filed Tuesday and not certified for publication. It affirms in part, and reverses in part, a $863,833.33 judgment by Los Angeles Superior Court Judge John Shepard Wiley Jr. in favor of the widow.

The portion it reverses relates to an April 21, 1996 commitment by the Executive Board of Double Rock Baptist Church of Compton to make a $500,000 payment to the pastor, Joseph L. Holmes, or his widow. Holmes was, at that point, contemplating retirement, after 36 years at the pulpit.

He was founding pastor of the church in 1960.

When Holmes did retire in 1998, he was not paid the sum allotted. Promises of other monetary benefits—including a $5,000 monthly pension allowance—were only partially honored in the years that followed.

Settlement Agreement Forged

In 2006, Holmes entered into a settlement agreement with the church in connection with it being in arrears in making pension allowance payments. The church agreed to pay $108,000 through monthly installments of $500.

The accord provided:

“This Agreement has no bearing/effect on the retirement Agreement dated April 21, 1996.”

Payments ceased in 2010.

Not reflected in the opinion is that faltering resources were a reason for the church’s nonpayment. Holmes’ successor, Eugene Joshua Sims, allegedly embezzled from the church $1.6 million from 2000-09, pleading no contest on Feb. 2, 2010 to the theft of $874,000.

Holmes and his wife, Cynthia Holmes, sued on Dec. 23, 2011. Joseph Holmes died on Nov. 23, 2012, and his widow carried on the action.

The portion of the judgment that the Court of Appeal affirmed Tuesday was an award based on Wiley’s determination that the 2006 settlement agreement was enforceable.

Tentative Views

At a hearing on Nov. 6, 2015, Wiley provided his tentative views on the case. He said that “the plaintiff has established liability against Double Rock...on the basis of two contracts,” alluding to “the 1996 contract and then the 2006 settlement agreement.”

He found that there was mutual assent, saying that the pastor “consented by not resigning after he’s got this package, but continuing in his work,” elaborating:

“The way I interpret this mutual consent, I believe, is the proposal in writing from one side and then consistent accepting conduct on the other. Common for a contract. It’s just as if somebody mows my front lawn, and I go out and look at that and say, ‘That’s a good job. You do that every week, I’ll pay you [a] [hundred] bucks.’ And the mower says nothing, but comes back the next week and mows. If I then say, ‘Well, the mower just made a gift to me because she never said, ‘I accept your proposal,’ that would be nonsense. That would be contrary to Hornbook contract law. So in essence [Dr. Holmes] kept mowing the lawn. So there is mutual consent unquestionably. Another way to think of the same thing is this is a proposal by the board to retain an aging employee. And there was plenty of consideration.”

Ashmann-Gerst Differs

Ashmann-Gerst rejected that reasoning. She said, in a footnote:

“Without explanation, the trial court concluded that the 1996 Plan was designed to retain an aging employee. There was no evidence to support this finding. Nor did the facts support a reasonable inference that the Executive Board’s intent was to give Dr. Holmes an incentive to stay. Based on the terms of the 1996 Plan, he had every incentive to leave because, if Double Rock had honored its internal decision to give Dr. Holmes a gift for his past service, Dr. Holmes would have immediately received a $500,000 payment plus $5,000 a month.”

Her view was:

“There is no evidence that the 1996 Plan signed by the Executive Board was communicated to Dr. Holmes and presented as an offer. Moreover, there is no evidence of Dr. Holmes accepting an offer either verbally or in writing. The trial court based its contract formation finding on Dr. Holmes performing the terms of the contract, i.e., staying on as pastor. Even if the 1996 Plan required Dr. Holmes to keep working as a condition of getting his retirement package, and even if he could accept by continuing to work rather than communicating acceptance, there was no evidence that Dr. Holmes was aware of the offer when he kept working as a pastor. In any event, the 1996 Plan did not require Dr. Holmes to continue working….Thus, as a matter of law, Dr. Holmes continued work as pastor until 1998 cannot constitute acceptance based on performance.”

She went on to say:

“A contract requires consideration….Good consideration for a promise is any benefit conferred, or agreed to be conferred, upon the promisor….The 1996 Plan did not seek bargained consideration from Dr. Holmes….The 1996 Plan was signed by the Executive Board to reward Dr. Holmes for his past service. His past service was insufficient to support a contract.”

Statute of Limitations

Given that Ashmann-Gerst determined there was no contract, she did not discuss an issue that was considered below as to whether the four-year statute of limitations on contracts had expired, barring the widow’s action. Joseph Holmes, having been denied a $500,000 payment upon his retirement in 1998, did not sue within that period, and lived beyond it.

Wiley initially expressed the view that a new limitations period did not commence upon his death because the provision for a payment upon his retirement or death envisioned a death while he was still acting as pastor. He later changed his mind.

The case is Holmes v. Double Rock Baptist Church of Compton, B277503

Matthew L. Kinley represented the church and Barbara A. Jackson acted for the widow.

On Feb. 7, Div. Two, in an opinion by Ashmann-Gerst, affirmed a summary judgment granted by Wiley against Joseph and Cynthia Holmes’s son, Michael Holmes, who sued the church based on the church’s alleged violation of the 1996 agreement. Wiley found that Michael Holmes was “not a primary beneficiary” under that agreement and lacked standing to maintain the action.