Intellectual Property — Trade Name Infringement – Church Factions – Tort/Negligence – Corporate

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A breakaway faction of a church may not continue to use the church’s name to solicit donations or to contract with third parties. The right to use the name Wakefield Missionary Baptist Church inheres in Wakefield Missionary Baptist Church, Inc., which is the lawful successor to the previously unincorporated association. The dissenters are not allowed to confuse the public or appropriate the standing and good will of this still-existing church by holding their own services under the same name.

The court grants summary judgment for Wakefield Missionary Baptist Church, Inc. (WMBC, Inc.), on its claim of trade name infringement. The court defers ruling on the issue of remedies for trade name infringement. The court grants summary judgment for WMBC, Inc., and its trustees on plaintiff-dissenters’ claims of breach of fiduciary duty, constructive fraud and unjust enrichment. The court grants summary judgment for plaintiffs on defendants’ counterclaims for conversion and conspiracy.

Wakefield Missionary Baptist Church (Wakefield) is a congregational church governed by bylaws. This dispute started with a congregational vote to elect signatories for the church bank account. The end result was two church factions: the plaintiff-trustees started holding meetings off-site (after defendants changed the locks), and the defendant-trustees held a congregational meeting to ratify their incorporation of the church and adoption of new bylaws.

Breach of Fiduciary Duty

Plaintiffs’ claims of breach of fiduciary duty, constructive fraud and unjust enrichment are based on their assertion that the unincorporated association is the rightful owner of the church’s property. In their view, the trustee defendants usurped the authority of the congregation by claiming control of the church’s grounds and bank account.

This inquiry implicates the First Amendment. Court review must be limited to questions that can be resolved on the basis of neutral principles of law such as (1) who constitutes the governing body of this particular church, and (2) who has that governing body determined to be entitled to use the properties.

On these narrow questions, the evidence is undisputed and favors the trustee defendants and WMBC, Inc. Wakefield’s governing body is its congregation. In February 2020, members of the congregation met to decide whether to ratify the actions of the trustee defendants—specifically including the incorporation of the church—and to authorize the transfer of church property to WMBC, Inc. Attending members unanimously voted yes.

Plaintiffs offer no contrary evidence and no constitutionally permissible reason to upset the congregation’s decisions.

Wakefield’s congregation has the right to control the church, including the right to forgive or to endorse actions previously taken by church leaders. The congregation, as the governing body, has had its referendum on these disputes and has declared the matter closed. Neither the court nor a jury can overrule the congregation’s edict.

The court therefore enters summary judgment in favor of defendants as to the claims for breach of fiduciary duty, constructive fraud, and unjust enrichment.

Conversion & Conspiracy

Defendants allege that plaintiffs have converted donations that belong to WMBC, Inc. However, the donations came from unknown sources, at unknown times, and in unknown amounts. At no point did WMBC, Inc. have possession of all or part of the donations. Nor has WMBC, Inc. offered any evidence to show that donors intended their money to go to it rather than to the faction led by defendants McKnight and Foster. In addition, WMBC, Inc. did not then and does not now control the bank account in which the donations were deposited; McKnight and Foster created that account after the church split.

No reasonable jury could conclude that the funds in question are capable of being identified and described with specificity or that they were owned by WMBC, Inc.

Consequently, defendants cannot prove conversion of the donations. Because there can be no conspiracy to commit conversion without an underlying claim for conversion, defendants have also failed to make out a claim for civil conspiracy.

Trade Name Infringement

Few North Carolina cases address the trademark and trade name rights of churches. Although a religious body may claim such rights, it is unclear how far a civil court may go in adjudicating the use of similar or identical names by two unaffiliated churches. What a church or other house of worship chooses to call itself is, after all, an expression of its religious identity. Perhaps for that reason, our Supreme Court has left open the question of whether an injunction may be issued to forbid one church to use a name similar to that of another church.

However, though few in number, the cases in this area do offer clear guidance when dealing with factional disputes within a church. Our Court of Appeals has stressed that the right to use the name inheres in the institution, not in its members; and, when they cease to be members of the institution, use by them of the name is misleading and, if injurious to the institution, should be enjoined. No question of religious liberty is involved because dissident members have no right to make use of a name which will enable them to appropriate the good will which has been built up by an organization with which they are no longer connected.

The right to use the name Wakefield Missionary Baptist Church inheres in WMBC, Inc., which is the lawful successor to the unincorporated association for the reasons discussed above. Yet the estranged faction has continued to use the church’s name—to advertise online, to collect donations, and to make contracts with third parties—while choosing to worship apart from the rest of Wakefield’s congregation.

It follows that WMBC, Inc. is entitled to summary judgment and an appropriately tailored injunction. The dissenters are not allowed to confuse the public or appropriate the standing and good will of this still existing church by holding their own services under the same name.

Motions granted in part; ruling deferred in part.

McKnight v. Wakefield Missionary Baptist Church, Inc. 2022 NCBC 10.pdf (nccourts.gov) (Lawyers Weekly No. 020-010-22, 16 pp.) (Adam Conrad, J.) Michael Jones for plaintiffs; S.C. Kitchen for defendants. 2022 NCBC 10