Lead Stories

The members of a Michigan nonprofit corporation have no authority to remove directors when the corporation’s articles of incorporation provide that it will be governed by the board alone, the Michigan Court of Appeals has held.  It has nevertheless upheld a trial court’s contempt citation against directors who refused to turn over corporate records after they were improperly ousted.  (Michigan Military Moms v. VanHooser, Ct. of App., MI, No. 306553, 1/24/13.)

A federal District Court in Pittsburgh has refused to disturb jury verdicts imposing personal liability for $5.75 million in compensatory and punitive damages against 15 officers and directors of a bankrupt nursing home. The Court found that there was sufficient evidence in the trial record to justify the verdicts.  (Official Committee of Unsecured Creditors v. Baldwin, W.D. PA, No. 10cv800, 5/17/13.)

Former trustees of a private foundation are entitled to indemnification for their legal fees in defending a suit for breach of fiduciary duty, the federal District Court in the District of Columbia has held, despite the fact that the suit was prompted as a type of counterclaim to their own lawsuit to protect their interest in foundation property.  (Armenian Assembly of America v. Cafesjian, D. D.C., No. 07-1259, 08-1254, 2/20/13.)

Pennsylvania’s newly inaugurated Attorney General, less than five months after taking office, has entered into a “reform agreement” with the trustees of the Hershey School Trust, absolving them of charges of breach of fiduciary duty but requiring a range of different practices in the future.  Attorney General Kathleen Kane has issued a statement in connection with filing a notice of no objection to confirmation of the trust account in the Dauphin County Orphans’ Court.  (Re: Trust under deed of Milton and Catherine S. Hershey, No. 712 of 1963.)

When convicted sex offender Gerald Sandusky was first charged with sexually abusing several young men he met through the activities of his Second Mile youth services organization, he asked the nonprofit’s D & O insurer to cover his expenses.  A federal District Court in Pennsylvania had previously ruled that it would be against Pennsylvania public policy to provide an indemnification for any liability.  It had withheld a ruling on whether it would be against public policy to provide a defense.

A federal District Court in Florida has allowed the largest single contributor to a charitable trust operating an historic plantation site to sue to remove two trustees who, he claimed, had misused the property for their own benefit and had retaliated against him when he supported an African American employee in a discrimination dispute with the trustees.  (Milton v. Milligan, N.D. FL, No. 4:12cv384, 3/5/13.)