Interesting Lawsuit Involving The Catholic Church

From the Las Vegas Sun: "A judge has tossed out a Roman Catholic priest's lawsuit against the Diocese of Reno and its bishop, saying the First Amendment prevents a court from becoming involved in a contractual dispute involving a church.
Washoe County District Judge Patrick Flanagan granted the diocese's motion to dismiss the suit filed Sept. 30 by Richard DeMolen, the former pastor of Our Lady of Tahoe Catholic Church in Zephyr Cove.
DeMolen claims he was unjustly fired after he obtained a protective order against a deacon he believes made a death threat against him. He also contends Bishop Randolph Calvo failed to investigate the death threat and defamed him when he sent a letter to parishioners about the pastor and deacon.
DeMolen's attorney, Jeffrey Dickerson, said he intends to appeal Tuesday's ruling.
"The Nevada Supreme Court has never addressed whether a diocese and its bishop should be exempt from lawsuits," Dickerson told the Reno Gazette-Journal. "It presents a very interesting appeal, which we look forward to prosecuting."" http://www.lasvegassun.com/news/2010/apr/08/judge-tosses-out-nev-priests-lawsuit-vs-bishop/
I can see why a court would not want to intervene in Church issues. You are dealing with belief issues among other things.
But this case seems to be more about regular case law rather than Church law. This case also has implications if a lay person wanted to sue the Church for something. Could the Church use this defense if there was a case of child molestation?
It will be interesting to see how Nevada Supreme Court rules.