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Multiple Breaches of Trust Can Constitute "Significant Breach” to Remove Trustee

Court affirms removal of private foundation trustee even though some events, alone, might not have caused the action
The Supreme Court of Minnesota has affirmed two lower court decisions holding that a series of incidents involving a breach of trust can cumulatively justify removal of the trustee for “significant” breach of trust, even though some of the breaches alone might not justify removal. It has affirmed the removal of one of the trustees of the Otto Bremer Trust, a $2 billion private foundation located in St. Paul, under the state’s version of the Uniform Trust Code. The Trust was created by Otto Bremer in 1944 and funded with shares of the financial institution he founded, now known as the Bremer Financial Corporation (called the “Bank” in the Supreme Court opinion). He transferred the remaining...

NAACP May Suspend “Life” Membership Of Former Board Member

Court says directors followed the procedures spelled out in the Constitution and Bylaws
An appellate court in Louisiana has held that the National Association for the Advancement of Colored People has appropriately followed its own internal rules in suspending a “lifetime” member for five years for conduct “inimical to the best interests” of the Association. The Court upheld the action to suspend the rights of Ernest L. Johnson, a former member of the national board of directors. According to the Court’s opinion, the NAACP was originally incorporated as a nonprofit corporation in New York in 1911 and was exempt from federal income tax as a charity under section 501(c)(3) of the Tax Code. In 2019, the 501(c)(3) organization changed its name to NAACP Empowerment Programs, Inc...

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...

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