Daily Development for Thursday, February 27, 2003

By: Patrick A. Randolph, Jr.
Elmer F. Pierson Professor of Law
UMKC School of Law
Of Counsel: Blackwell Sanders Peper Martin
Kansas City, Missouri
prandolph@cctr.umkc.edu

LANDOWNER LIABILITY; CHARITABLE IMMUNITY: For an organization organized for charitable purposes to enjoy charitable tort immunity, it must receive most of its funding from private, not government, sources.

Abdallah v. Occupational Center of Hudson County, Inc., 351 N.J. Super. 280, 798 A.2d 131 (App. Div. 2002).

A participant in a vocational training center was sexually abused by a fellow participant and sued the center for negligence. The center moved for summary judgment dismissing the complaint based on the charitable immunity statute. The lower court concluded that center was entitled to immunity and dismissed the complaint. On appeal, the Appellate Division found that the lower court failed to address properly the requirements for charitable immunity and the Court reversed the lower court's decision.

In order to be eligible for charitable immunity, an organization must be organized exclusively for religious, charitable, or educational purposes. The Court held the center was not exclusively devoted to religious or educational purposes, but may have been devoted to charitable purposes. It pointed out that the purpose of affording immunity to charitable organizations is to ensure that donations are used for charitable purposes as intended by the donors. To determine whether or not the center was exclusively devoted to charitable purposes, the Court examined the funding sources for the center's activities. An organization that receives funds from private donors, solicits donations, and engages in fund- raising activities may be considered a charitable organization entitled to immunity.

If, however, a majority of the organization's funding comes from the government and the organization does not actively solicit contributions, it may not be entitled to immunity. In this case, the Court found that the center's funding came mostly from government grants and from fees charged to private companies for work performed by center participants.

The donations received were an insignificant part of the center's annual revenue. Therefore, since the center did not receive most of its funding from private donations, the center was not entitled to immunity.

Comment: Not every jurisdiction recognizes charitable tort immunity, of course, but undoubtedly this distinction would have a major impact on insurance decisions in those jurisdictions that do have such immunity where there is a possibility that a significant amount of the institution's funding comes from governmental sources. These days, this would be a pretty significant percentage of institutions that we might normally regard as "charitable." If the President's current initiatives permitting government support for religious based charities take effect, the percentage will be even larger.