Justia Non-Profit Corporations Opinion Summaries

The Caribe Resort Condominium Association Board of Directors, Larry Wireman, and Judy Wireman, along with Caribe Realty, Inc., Caribe, Inc., and Sentinels, LLC, sought a writ of mandamus to direct the Baldwin Circuit Court to dismiss derivative claims brought by Robert Simmons and other condominium-unit owners on behalf of the Caribe Resort Condominium Association. The claims included allegations of breaching duties, wasting corporate assets, entering into inflated self-dealing contracts, and misappropriating funds.The Baldwin Circuit Court denied the motion to dismiss, leading to the current petition. The petitioners argued that Alabama law does not recognize derivative actions on behalf of nonprofit corporations. They noted that while Alabama law allows derivative actions for for-profit corporations, limited-liability companies, and limited partnerships, it does not provide similar provisions for nonprofit corporations. They also pointed out that the Alabama Nonprofit Corporation Law, which adopted the Model Nonprofit Corporation Act, intentionally omitted the chapter on derivative proceedings.The Supreme Court of Alabama agreed that Alabama law does not generally recognize derivative actions for nonprofit corporations. However, it noted that under § 10A-3-2.44(2), Ala. Code 1975, members of a nonprofit corporation can bring a representative suit against officers or directors for exceeding their authority. The court found that the Caribe members' claims against the board defendants alleged that the board exceeded their authority, thus falling under this provision. However, claims against the Wireman companies did not fall under this provision and were due to be dismissed.The Supreme Court of Alabama granted the petition in part, dismissing the claims against the Wireman companies, and denied it in part, allowing the claims against the board defendants to proceed. View "Ex parte Caribe Resort Condominium Association Board of Directors" on Justia Law

Defendants Evelyn Quimby, Susan Quimby, and Christopher Quimby, appealed superior court orders denying their motion to dismiss the Weare Bible Baptist Church’s motion for contempt, finding the defendants in contempt, and imposing additional obligations upon the defendants. In 1985, Leland Quimby, the patriarch of the defendants’ family, became the pastor of the Church. In 2014, after Leland suffered a stroke, defendants decided to find an interim pastor. Calvin Fuller was voted in by the entire Church membership to become pastor. Thereafter, Fuller invited new members to join the Church, took several actions relating to the administration of the Church and its finances, amended the Church’s corporate charter, and replaced the members of the corporate board. Subsequently, defendants filed an action on behalf of the Church seeking to void the memberships of Fuller, his wife, and the new members he invited to join the Church, and the official acts Fuller took as pastor, due to an alleged failure to comply with the corporate charter. Following a bench trial, the trial court issued a final order in February 2016 (2016 order) in which it concluded that: (1) Fuller was duly elected as pastor with full authority; (2) Fuller, his wife, and the other new members of the Church were properly admitted; and (3) certain “official acts” taken by Fuller and the defendants following Fuller’s appointment were invalid for failure to follow the procedures set forth in the Church’s corporate charter. On appeal, defendants argued the trial court: (1) erred in denying their motion to dismiss because the Church’s contempt motion failed to identify a clear directive of the court that defendants violated; (2) committed an unsustainable exercise of discretion in finding defendants in contempt in the absence of a clear directive in the underlying order; and (3) lacked subject matter jurisdiction to render its findings and rulings because doing so required the court to consider ecclesiastical matters of the Church. Because the Church’s contempt motion asks the court to rule on ecclesiastical matters, the New Hampshire Supreme Court reversed the trial court’s denial of defendants’ motion to dismiss, and vacated and remanded the trial court’s additional rulings. View "Weare Bible Baptist Church, Inc. v. Fuller" on Justia Law

The Board of Directors of the Girl Scouts of the United States of America increased the amount of annual membership dues. Farthest North Girl Scout Council, its executive director, and the chair of its board of directors challenged this increase, claiming that the corporation’s governing documents did not give the Board authority to increase membership dues. The superior court denied Farthest North’s motion for summary judgment, ruling in favor of the Girl Scouts of the United States of America that the Board had such authority. The Alaska Supreme Court disagreed, finding the corporate governing documents vested authority to establish membership dues solely in the National Council of the Girl Scouts of the United States of America. View "Farthest North Girl Scout Council v. Girl Scouts of the United States of America" on Justia Law

This case involved questions of how the attorney-client privilege should apply in the context of derivative litigation. The nonprofit corporations involved in this matter were the Pittsburgh History and Landmarks Foundation (“the Foundation”) and its subsidiary, the Landmarks Financial Corporation (“the Corporation”), which managed the Foundation’s endowment. Plaintiffs were five former members of the Boards of Trustees of the Foundation and the Corporation who alleged they were improperly and ineffectively removed from the Boards in an attempt to thwart their oversight of the Foundation’s president, whom they believed was engaging in actions that were improper and not in accord with the Foundation’s mission. The Foundation’s Board created a Governance Task Force to review various practices of the Foundation; the Task Force recommended that both Boards be reduced substantially in number. The Foundation Board approved this recommendation and removed all trustees then serving from both Boards; significantly smaller boards were elected and as a result of these consolidations, and Derivative Plaintiffs lost their seats on the Boards. In accord with standard procedures for bringing a derivative action adopted by the Pennsylvania Supreme Court in Cuker v. Mikalauskas, 692 A.2d 1042 (Pa. 1997). The Supreme Court rejected the Commonwealth Court’s adoption of a qualified attorney-client privilege as set forth in Garner v. Wolfinbarger, 430 F.2d 1093 (5th Cir. 1970), which the Supreme Court viewed as inconsistent with prior Pennsylvania caselaw emphasizing predictability in the application of the attorney-client privilege. However, the Commonwealth Court’s decision not to apply the fiduciary or co-client exceptions to the attorney-client privilege under the facts of this case was affirmed. The matter was remanded for further al court and the Commonwealth Court and remanded the matter to the trial court for further proceedings. View "Pgh History v. Ziegler" on Justia Law