Lead Stories

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.)

A federal District Court in Colorado has refused to dismiss claims against volunteers of a 501(c)(3) charitable food bank who were sued personally for violation of the federal Perishable Agricultural Commodities Act (PACA”).  Although the officers claimed that they were protected by the federal Volunteer Protection Act of 1997, the Court held that the Act did not protect them from claims under federal law.  (American Produce v. Harvest Sharing, D. CO., No.

A member’s claim against a golf and beach club for violation of the Americans with Disabilities Act has been dismissed by a federal District Court in Hawai’i because the Act applies only to public accommodations and the Court ruled that the club is private.  (Reimer v. Kuki’o Golf and Beach Club, D. HI, No. 12-00408, 4/11/13.)

The test, the Court said, is whether the facility is open indiscriminately to other members of the general public.  Among the factors considered are the selectivity of the group in admitting members, the members’ control over the operations of the club, the history of the organization, the use by nonmembers, whether it advertises to the public, its nonprofit status, and the formalities observed in club procedures.

An appellate court in Tennessee has held that a decedent’s estate cannot be charged with costs of environmental remediation on property that the estate did not own when the expenditure would reduce the residual amount given to charity.  The Court ruled that a hospital administrator who consented to the transaction had no authority to act on behalf of a related charity of which he was not a trustee.  (Estate of Ledford, Ct. of App. TN, No E2012-01269-COA-R3-CV, 4/11/13.)

Hazel Ledford, second wife of Wilson Ledford, died in 1991, but the issue did not arise until her step-daughter filed her first accounting as personal representative of the estate in 2009.  The accounting showed that the estate had paid about $350,000 to remove and remediate contamination caused by underground tanks at a gas station that Mr. Ledford owned and conveyed before his death to a family trust for the benefit of his children and grandchildren.

The New York State Attorney General has standing to sue the president of a nonprofit club for waste and breach of fiduciary duty in an independent action, despite a similar claim by the Club in pending litigation with the officer.  A trial court in New York City has ruled that the Attorney General has statutory authority and that there was no identity of the parties or claims in the separate action.  (People v. James, Supreme Ct., New York County, NY, No. 451488/2012, 4/3/13.)