Lead Stories

Members of the Alpha Kappa Alpha Sorority, a District of Columbia nonprofit corporation with its principal place of business in Illinois, may sue individual members of the sorority’s “directorate” for breach of fiduciary duty in a District of Columbia court, the D.C. Court of Appeals has ruled.  But the court has no jurisdiction over the Sorority’s separate foundation, an Illinois nonprofit that had not done business in the District.  (Daley v. Alpha Kappa Alpha Sorority, No. 10-CV-220, 8/18/11.)

The Third Circuit Court of Appeals has reversed a trial court and allowed a committee of unsecured creditors to sue the directors of a nonprofit nursing home personally for breach of fiduciary duty in administering the home during insolvency prior to bankruptcy.  The federal District Court in Pittsburgh had ruled that the directors were protected by the business judgment rule and granted summary judgment against the creditors.  (See Nonprofit Issues®, 12/1/10.) The Court of Appeals has held that

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When the former executive vice president of the Fidelco Guide Dog Foundation sued the Foundation for its refusal to honor a deferred compensation agreement, the Foundation cross-claimed against the exec’s husband and his law firm which had been counsel to the Foundation at the time of the transaction.  A trial court in Connecticut has refused to grant summary judgment to the law firm to dismiss it from the case.  (Levin v. Fidelco Guide Dog Foundation, Superior Ct., CT, Hartford, No. CV 106008853S, 8/31/11.)

Can you follow the bouncing ball?  After more than seven years of litigation, an appellate court in Pennsylvania has decided who should receive the benefit of a trust left for a Philadelphia hospital that has gone through several reorganizations, bankruptcy, sale to a for-profit company, and dissolution since the donor’s death in 1919.  The Court has affirmed award of the income to one of the successor organizations created out of the bankruptcy of the Allegheny Health, Education and Research Foundation (“AHERF”) in 1998.  (Estate of Elkins, Pa. Superior Ct., No. 2147 EDA 2009, 9/1/11.)

A federal District Court in Ohio has dismissed a suit by the Mayor and City of Cleveland seeking to force the Cleveland Clinic Foundation to maintain its service and Level II trauma center at Huron Hospital in East Cleveland.  The Court has held that the City did not state a claim under Title VI of the federal Civil Right Act, did not have standing to claim a breach of charitable trust, and was not a party to tax-exempt bond financing documents that could claim a breach of contract.  (