Justia Non-Profit Corporations Opinion Summaries

A religious nonprofit organization sought to purchase a former university campus property after being selected as the winning bidder in a competitive process conducted by a state university system. Following the public announcement of the award, there was significant public opposition to the sale, particularly due to the religious nature of the winning bidder. Two unsuccessful bidders filed administrative protests, raising both procedural and substantive objections, including criticism of the university's decision to sell to a religious organization. The university's designated official initially denied these protests, but upon further internal review, a higher-level administrator determined that a flaw in the bid evaluation process—specifically, the failure to consider cost-saving proposals for existing infrastructure—warranted rescinding the award and restarting the process. In the new round, the property was awarded to a different bidder who scored higher under revised criteria.The original winning bidder, the religious organization, challenged the university's decision in the United States District Court for the District of Maine, alleging violations of the Equal Protection and Free Exercise Clauses of the U.S. Constitution. The district court denied the plaintiff’s motions for a temporary restraining order and a preliminary injunction, finding that the plaintiff failed to show a likelihood of success on the merits of either claim. The court credited testimony that the university’s decision was motivated by cost-saving considerations rather than religious bias, and found no clear evidence of procedural irregularity or pretext.On appeal, the United States Court of Appeals for the First Circuit reviewed the denial of the preliminary injunction for abuse of discretion. The Court affirmed the district court’s decision, holding that the lower court applied the correct legal standards and did not clearly err in its factual findings. The Court concluded that the plaintiff failed to demonstrate a likelihood of success on the merits of its constitutional claims. View "Calvary Chapel Belfast v. University of Maine System" on Justia Law

The case centers on a lawsuit filed by the Attorney General of Florida against the American Academy of Pediatrics (AAP) and other organizations, alleging that their advocacy for gender-affirming care violated several Florida statutes, including the state's Deceptive and Unfair Trade Practices Act, RICO Act, and antitrust law. The Florida enforcement action targeted AAP's policy statements and legal filings that supported access to gender-affirming care for transgender youth, with the Attorney General seeking significant monetary penalties and organizational restrictions. Although the lawsuit was publicized, there was a three-month delay before the organizations were served.Following the initiation of the Florida state court action, AAP, an Illinois nonprofit, filed a separate suit in the United States District Court for the Northern District of Illinois. AAP claimed that the Florida enforcement proceeding was brought in bad faith to retaliate against its First Amendment–protected advocacy. The district court granted a preliminary injunction to prevent the Florida Attorney General from pursuing the enforcement action against AAP and denied the Attorney General’s motion to dismiss, finding that personal jurisdiction and venue in Illinois were supported, and that the facts suggested the Florida action was brought in bad faith.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed only whether to stay the district court’s injunction during the expedited appeal. The Seventh Circuit denied the motion for a stay, holding that the Attorney General did not make a strong showing of likely success on the merits or irreparable harm. The court found that the bad-faith exception to Younger abstention applied based on the district court’s factual findings, and that jurisdiction and venue in Illinois were appropriate given the circumstances. The injunction against the Florida enforcement action remains in effect pending appeal. View "American Academy of Pediatrics v Uthmeier" on Justia Law

A woman visited a federally qualified health center in East Orange, New Jersey, for medical treatment in 2019. After her appointment, she slipped on water as she was leaving the examination room and suffered serious injuries. She was insured by Medicare at the time. The health center, Newark Community Health Centers, Inc. (NCHC), is a nonprofit entity with a mission to provide affordable, quality healthcare to underserved populations. Its organizational documents reference charitable, educational, and healthcare purposes, and its revenue is derived mostly from government grants and service fees, with only a very small portion from charitable contributions.The plaintiff sued NCHC for negligence. The Superior Court of New Jersey, Law Division, granted summary judgment to NCHC, finding it immune from liability under the New Jersey Charitable Immunity Act (CIA) as an entity organized exclusively for religious, charitable, or educational purposes. The Appellate Division affirmed, emphasizing the educational aspects of NCHC’s mission and activities, and did not conduct a detailed funding source analysis.The Supreme Court of New Jersey reviewed the case to determine whether NCHC qualified for complete charitable immunity or was instead subject to the statutory cap on damages applicable to organizations organized exclusively for hospital purposes. The Supreme Court held that NCHC is organized exclusively for hospital purposes under the CIA, given its dominant motive and primary activity of providing healthcare services, not education or charity. Because almost none of NCHC’s revenue comes from charitable donations, it does not qualify as exclusively charitable. As a result, NCHC is not fully immune from liability, but its liability for damages is capped at $250,000 as provided by the statute. The Court reversed the Appellate Division’s judgment and remanded the case for further proceedings. View "Smith v. Newark Community Health Centers, Inc." on Justia Law

A nonprofit religious corporation, incorporated under Missouri law, sought to restore its governance authority over a university in Texas that was established as an agency of the church. The university, although separately incorporated, was subject to church governance under its charter and bylaws. In 2022, the university’s regents unilaterally amended their governing documents to reject the church’s authority. The church’s internal adjudicatory body declared these amendments void, and the church’s convention directed action to restore church control. The university refused to recognize church-appointed regents as its governing body.Litigation ensued in the United States District Court for the Western District of Texas. The church, through its corporate body, sued the university and its leaders in federal court, asserting diversity jurisdiction. The university counter-sued in Texas state court, naming the church as an unincorporated association. The federal actions were consolidated. The district court, adopting a magistrate judge’s report, held that the church was an unincorporated association and the real party in interest, and that joining the church as a plaintiff destroyed diversity jurisdiction because its members included Texas citizens. The court dismissed the federal suit and remanded the state suit to state court.The United States Court of Appeals for the Fifth Circuit reversed the district court’s dismissal. The appellate court held that the district court’s approach violated the church autonomy doctrine under the First Amendment by imposing secular interpretations on the church’s governance structure and disregarding the church’s own description of its internal polity. The court found that the nonprofit corporation is the appropriate party for civil litigation and that diversity jurisdiction exists. The case was remanded for further proceedings. View "Lutheran Church v. Christian" on Justia Law

The defendants in this case are a Massachusetts-based nonprofit organization and three individual unpaid volunteers. The plaintiff, a member of the organization, sought to run for its presidency in 2023. He filed suit in the Superior Court, alleging that the defendants planned to conduct the election in violation of the organization’s bylaws. After a hearing, the court issued a preliminary injunction barring certain voting procedures. Following the election, the plaintiff filed a civil contempt complaint, claiming the defendants had disregarded the injunction. The trial judge found, by clear and convincing evidence, that the defendants violated the injunction, causing the election results to be unreliable, and ordered a new election. The court also invited the plaintiff to apply for attorney’s fees and costs.After the parties settled the underlying election dispute but not the fees issue, the plaintiff applied for attorney’s fees and costs totaling over $134,000. The defendants opposed, arguing that Massachusetts’ charitable immunity statute, G. L. c. 231, § 85K, capped their liability at $20,000 and that the fee request was unreasonable. The motion judge rejected the statutory cap argument, found the fee request reasonable, and awarded the full amount. Judgment was entered, and the defendants appealed. The Supreme Judicial Court transferred the appeal from the Appeals Court.The Supreme Judicial Court held that the charitable immunity statute’s $20,000 cap applies only to actions based on tort, and that a civil contempt action for violating a court order is not a tort action within the statute’s meaning. The court also concluded that the motion judge did not abuse her discretion in awarding the requested attorney’s fees and costs, finding the fees reasonable given the nature and complexity of the case. Accordingly, the Supreme Judicial Court affirmed the fee award and judgment. View "Khoda v. Bangladesh Association of New England, Inc." on Justia Law

A nonprofit organization, dedicated to supporting children with cancer, constructed several buildings on land owned by a married couple. The couple later decided to sell the property as part of their divorce. During the process, the nonprofit was misinformed by the couple, who were also involved in the nonprofit’s board, about the value of its buildings and the contents of an appraisal report. Acting on these representations, the nonprofit agreed to accept a fixed percentage of sale proceeds. It was only after the sale closed that the nonprofit discovered the buildings had been undervalued and that the appraisals had, in fact, specified higher values for the structures.The nonprofit sued the couple in the District Court of the Seventh Judicial District of Idaho, asserting claims of constructive fraud, breach of fiduciary duty, and unjust enrichment. The district court ruled in favor of the nonprofit, finding the couple liable but reduced the damages by 50% based on comparative negligence and failure to mitigate damages. It denied attorney fees and prejudgment interest to both parties. After the nonprofit satisfied the judgment, it appealed the damage reduction and denial of fees, while the couple cross-appealed on several grounds, including the application of the election-of-remedies doctrine, various defenses, and the finding of fiduciary breach.The Supreme Court of the State of Idaho held that the election-of-remedies doctrine did not bar the nonprofit’s appeal. It found the district court erred in reducing the damage award by applying comparative negligence and the duty to mitigate, as those doctrines did not apply to the equitable and fiduciary claims at issue. The Supreme Court affirmed the district court’s rulings on the other affirmative defenses, the finding of fiduciary breach, and the denial of prejudgment interest. The court remanded for entry of a judgment for the full damages and for reconsideration of prevailing party status and attorney fees, awarding the nonprofit its appellate costs. View "Camp Magical Moments, Cancer Camp for Kids, Inc. v. Walsh" on Justia Law

A nonprofit organization was formed to privately fund, design, develop, and construct a state-of-the-art medical education building for a public university’s medical school in Nevada. The organization, established by a coalition of charitable foundations and individuals, entered into an agreement with the university and the Nevada System of Higher Education to manage the project using private donations. The arrangement included transferring land to the nonprofit, which would oversee construction and, upon completion, lease the facility back to the university for a nominal fee before transferring ownership outright. The nonprofit received federal and state property tax-exempt status and then applied to the Nevada Department of Taxation for a state sales and use tax exemption, initially as an educational organization, later clarifying it was seeking exemption as a charitable organization.The Nevada Department of Taxation denied the application, reasoning that the nonprofit did not meet the criteria for an educational organization and, under its interpretation of NRS 372.340, was ineligible as a charitable organization because it was a government contractor. The Nevada Tax Commission upheld this denial, and the Eighth Judicial District Court affirmed, agreeing with the Department’s reliance on NRS 372.340 to deny tax-exempt status.The Supreme Court of Nevada reversed and remanded, holding that the Department erred by failing to evaluate the application under the statutory criteria for charitable organizations in NRS 372.3261. The court clarified that NRS 372.340 does not disqualify otherwise-eligible charitable organizations from receiving tax-exempt status merely because they contract with the government. The court directed that the nonprofit qualifies for the sales and use tax exemption as a charitable organization and ordered the district court to instruct the Department to approve the application and issue a letter of exemption. View "NEV. HEALTH AND BIOSCIENCE ASSET CORP. VS. STATE" on Justia Law

A nonprofit organization focused on reducing consumer exposure to chemical toxins alleged that two companies selling dietary supplements violated California’s Safe Drinking Water and Toxic Enforcement Act of 1986 (Proposition 65). The nonprofit, through its law firm, sent the required pre-suit notice to the companies, public prosecutors, and the Attorney General. The notice identified the nonprofit and its chief executive officer but did not expressly provide the address and telephone number of a responsible individual within the organization, instead listing only the law firm’s contact information. The nonprofit later filed suit seeking civil penalties and injunctive relief.The Superior Court of Alameda County granted the defendants’ motion for judgment on the pleadings, finding that the pre-suit notice did not strictly comply with the relevant regulation, which requires the name, address, and telephone number of the noticing individual or a responsible individual within the noticing entity. The trial court held that providing only an officer’s name and the law firm’s contact information was insufficient, and entered judgment for the defendants.The California Court of Appeal, First Appellate District, Division Two, reviewed the matter de novo. The appellate court concluded that the doctrine of substantial compliance applies to the statutory and regulatory pre-suit notice requirements under Proposition 65. The court held that, although the notice did not literally meet every technical requirement, it substantially complied by providing sufficient information for the defendants and public officials to assess and respond to the alleged violations. Accordingly, the appellate court reversed the judgment, directed the trial court to deny the motion for judgment on the pleadings, and ordered costs to the plaintiff. View "Chemical Toxin Working Group v. Best Naturals, Inc." on Justia Law

A man who founded a nonprofit community radio station in Wyoming contributed substantial sums of money to the station over several years. He claimed these were loans intended to support the station’s operations and expected repayment. Although he discussed loan terms with the station’s board and referenced a loan at a board meeting, no written agreement was ever executed, and he did not follow through on drafting a loan contract. Despite the lack of formal documentation, the station’s tax filings, prepared with his assistance, listed the contributions as loans, but other board members were not aware of or had not approved these filings until after he withdrew a significant amount as “repayment” and subsequently left the station.The District Court of Teton County reviewed the claims after the parties filed cross-motions for summary judgment. The plaintiff alleged breach of implied contract and unjust enrichment, asserting that the station’s tax filings and board members’ awareness supported his claims. The district court found no evidence of a written or oral agreement approved by the board, determined that the statute of frauds barred the implied contract claim, and granted summary judgment to the defendant. The court also found the unjust enrichment claim was barred by the statute of frauds.On appeal, the Supreme Court of Wyoming reviewed the district court’s judgment de novo. The Supreme Court affirmed the district court’s ruling that the breach of implied contract claim was barred by the statute of frauds, as no definite or certain terms existed to remove the agreement from the statute’s requirements. However, the Supreme Court clarified that Wyoming law does not bar unjust enrichment claims by the statute of frauds. Nevertheless, it held that the plaintiff failed to show the station was reasonably notified that repayment was expected, as required for unjust enrichment. The Supreme Court affirmed the district court’s grant of summary judgment for the defendant. View "Tallichet v. Jackson Hole Community Radio, Inc." on Justia Law

A religious nonprofit organization in New Jersey, active since 1985, provides counseling and resources to pregnant women but does not offer or refer for abortions due to its belief that life begins at conception. In 2022, the state’s Attorney General created a task force that accused groups like this one of spreading misleading information about abortion. Subsequently, the Attorney General issued a subpoena demanding the group turn over documents identifying many of its donors, except those who donated through one specific webpage. The subpoena warned that noncompliance could lead to contempt charges and other penalties.The organization responded by filing a lawsuit in the United States District Court, seeking to block enforcement of the subpoena and arguing that the compelled disclosure of its donor information would chill its First Amendment rights by deterring donors. The district court denied the group’s request for a preliminary injunction and dismissed the complaint, holding there was no justiciable claim because no court had yet ordered the group to comply with the subpoena, so no injury had occurred. The United States Court of Appeals for the Third Circuit affirmed, finding that the group lacked standing since any potential harm was not sufficiently concrete or imminent.The Supreme Court of the United States reversed the Third Circuit’s decision. The Court held that the subpoena itself, even before enforcement, constitutes an ongoing injury to the organization’s First Amendment associational rights by deterring donors and burdening protected association. The Court clarified that the injury arises when the government issues such a demand—not only if and when a court enforces it. The Court further held that the possibility of later confidentiality protections or limited exceptions in the subpoena did not eliminate the injury. The case was remanded for further proceedings. View "First Choice Women's Resource Centers, Inc. v. Davenport" on Justia Law