Piercing A Church's Corporate Veil
I am not a lawyer, I am a debt and judgment matchmaking specialist (Judgment and Collection Agency Broker)
. This article is my opinion, based on my experience in California, and laws are different in each state. If you need legal advice or a strategy to use, please contact an attorney. There are bad apples in every group, and pastors and churches get their share. When you have a civil money judgment against a pastor or a church, there may be two extra challenges:
First, there may be a hesitation by some to enforce a judgment against a religious person or entity. This should not be a problem, because the bible reminds us, in Romans 13:8, that we all reap what we sow, and "Let no debt go unpaid".
Next, there can be the problem of most churches are tax-exempt LLC or corporate entities that sometimes hide the assets of their Pastor and other important staffers of churches.
For example, what if you have a landlord/tenant (also known as unlawful detainer) judgment against a pastor of his own church. The church is a corporation, and the pastor's wife works there, and even their children work there as "contract labor". The church owns several properties including the big house the pastor and his family live in.
If you tried to levy the pastor's wages by serving the church corporation, they might likely answer that the pastor is a volunteer, not a paid employee. This now becomes a tough judgment, because only the pastor is named as a judgment debtor, not the church itself.
Even if the church corporation itself was named a debtor on the judgment, there might be corporate shenanigans that could make a judgment collection difficult. If your judgment was against the church, one could have the sheriff garnish the collection plates as they are brought into the back of the church. You could also pay the sheriff garnish other assets of the corporation.
However, if the judgment is only against the pastor, and the judgment is small, one could be better off to give up, unless they are willing to invest a lot of money and time, or for the "principal of it", or to make it a learning experience.
If one performed debtor exams, with document production requests on the judgment debtor and the officers of the entity, one might discover interesting things. Perhaps, the church is paying the paster's credit cards, cable bill, car payments,insurance, and more - rather than paying him a conventional wage.
It is not cheap or easy to pierce a corporate veil. One may need a lawyers's help to prove this in court. If the pastor is using the corporation as their personal piggy bank, then the corporate assets may be subject to a levy.
If the pastor has "imputed income", where payments of his costs and expenses of living are considered income attributable to him, they probably have a monetary value. If so, 25% of that value could be going to you through the sheriff, the same 25% that a California wage levy could produce, or a reasonable percentage to request for on an assignment order.
Corporate entities cannot simply pay for a debtor's expenses and support him and his lifestyle, and then successfully claim that he is just a volunteer, because that would be considered imputed income for the debtor.
In theory, a lawsuit could make the church (or any company paying a debtor with imputed income) pay what they would have paid on a successful wage levy. Of course, when served with a new creditor's lawsuit, most corporate entities would encourage the debtor to pay off the judgment immediately.
If you have time and money, or wish to make it a learning experience, you can attempt to make the judgment debtor, or their imputed income employer, pay off the judgment by proving that the corporate entity is a sham, imputed income, or a personal piggy bank for the debtor.
Visit your law library, or research your state case law or codes on the subjects. You might find motions or pleadings that could easily become a template for your case. If you do this Pro Per, have a lawyer review your motions, to reduce the chance of a judge's objection.
by: Mark Shapiro
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