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Court Affirms Dismissal of NRA Claims Of Retaliation, Selective Enforcement

Attorney General had probable cause to bring case and NRA failed to show disparate treatment
An appellate court in New York has affirmed the dismissal of counterclaims by the National Rifle Association seeking to throw out a suit by the state Attorney General for widespread and longstanding executive malfeasance. It has affirmed the traditional standard of needing only to show “probable cause” to overcome a defendant’s claim of retaliatory litigation. The Attorney General initiated her suit in August 2020 to impose sanctions on the Association and four of its top executives and to dissolve the corporation. A trial court has previously ruled that the AG did not have grounds to dissolve the Association ( See Nonprofit Issues® , Vol. XXXII, No. 2, “NY AG May Not Sue to Dissolve...

Grantee Can’t Force Grantor To Increase Endowment Distribution

Court says commitment is governed by contract and not under Uniform Trust Code
A nonprofit corporation that manages historical property for the National Trust for Historic Preservation in the United States cannot force the National Trust to increase the distribution from its endowment to cover costs of the work, a federal District Court in Virginia has held. The Court has said that the relationship is governed by the management contract and is not covered by the state’s Uniform Trust Code. Oatlands, Inc., a nonprofit corporation, originally entered into a cooperative agreement with the National Trust to manage the Oatlands Historic House & Gardens in Leesburg, VA, in 1984. In 2014, Oatlands acquired some adjacent historic property to generate income in support of...

Is Quorum Required for Election Of Directors by Written Ballot?

May non-member of homeowners’ association serve as director of association?
An appellate court in Georgia has held that a quorum is not required for election of the directors of a homeowners’ association when the election is conducted by written ballot as permitted by the association’s bylaws and not at a meeting of the members. It has also held, pursuant to a quirk in homeowners’ association law, that a non-member of the association may not serve as a director, even though the articles of incorporation of the association provide that directors need not be members of the association. The issues arose over contested elections at the Water’s Edge residential real estate community in DeKalb County. The community was built by the developer in 1987 with governing...

Court Dismisses Putative Class Action For “Fraud” in Store Checkout Fundraising

Donor claimed fraud for saying all gifts would go to charity when store had agreed it would make up deficit in campaign
A federal District Court in Brooklyn has dismissed a putative class action claiming “fraud” in a CVS drug store fundraising campaign in which patrons were offered the opportunity to contribute to the American Diabetes Association at the checkout register. It rejected the plaintiff’s claim that the failure of CVS to tell customers that it would make up the difference if the campaign fell short of its $10 million goal constituted a fraud on the public. CVS and the ADA had entered into a “Corporate Sponsorship Agreement” in April 2021 in which CVS agreed to “offer opportunities to its customers to make a donation to the ADA” through a nation-wide “in-store fundraising campaign.” It agreed to...

Court Allows Member of Church To Sue for Misrepresentation in Solicitation of Tithes

Divided 9th Circuit Court of Appeals permits member to contest use of tithes for shopping mall
In an unusual case involving the donation of charitable contributions to a church, a divided 9th Circuit Court of Appeals has permitted a member of the Mormon Church to sue for allegedly false and misleading statements by the Church about its use of tithing money. James Huntsman, whose father and grandfather served in high-ranking positions in Mormon Church leadership, annually fulfilled his church obligation to tithe until 2015. Church doctrine teaches that tithing is a commandment from God and members are asked to contribute 10% of their income or profits annually to the Church. Huntsman gave more than $1.4 million in cash between 2003 and 2011 and additional shares of corporate stock...

Director Does Not Lose Standing to Sue For Breach of Duty When Not Re-elected to Board

California Supreme Court reverses appellate court decision, and holds that “continuous relationship” is not required
The California Supreme Court has overruled an appellate court decision that said that a director of a charitable corporation suing other directors for breach of fiduciary duty lost her standing to sue when she was not re-elected to the board during the litigation. ( See Nonprofit Issues® Vol. XXXI, No. 3 .). The Supreme Court has unanimously held that “continuous relationship” is not required to continue the litigation under the state’s Nonprofit Corporation Law. The dispute arose when Debra Turner, one of the directors of the $1.3 billion Conrad Prebys Foundation, objected to the amount of a settlement made by the Foundation with Prebys’ son who was complaining that he had been improperly...

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