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Ousted Directors Must Join Nonprofit in Suit to Recover Seats

Corporation is deemed a “necessary and indispensible” party for declaratory judgment

A suit invalidating the ouster of two directors of a nonprofit corporation has been reversed because the ousted directors sued only the other directors individually and did not join the corporation itself as a party to the action.  An appellate court in Missouri has held that the corporation was a “necessary and indispensible” party to the declaratory action and failure to join it as a party to the suit required reversal of the trial court’s decision.

Court Affirms Removal of Trustees, Order for Exec to Repay $2 million

Charitable nursing home failed to file required reports, or document exec’s claimed loans to the corporation

Several officers and directors of a failed nonprofit nursing home in Illinois have been removed from their positions upon suit by the state Attorney General, and the executive director has been ordered to return $2 million paid to her after sale of the home as a purported repayment of loans.  The Appellate Court of Illinois has affirmed a series of summary judgment rulings sought in long-standing litigation brought against the corporation and its leaders by the state Attorney General.  (

Lack of Members’ Approval Scuttles Sale of Facilities

Organization’s “survival plan” is ineffective without compliance with state law and bylaws
The failure to follow the state nonprofit corporation law and an organization’s bylaws in obtaining members’ approval for the sale of substantially all of the group’s facilities has rendered the sale ineffective and scuttled a “survival plan” to save the organization. A Court of Appeals in Ohio has held that the sale is invalid without compliance with the procedural requirements. (Niehaus v. The Columbus Maennerchor, Ct. of App. OH, Tenth App. Dist., No.

Parents May Not Waive Child’s Claim for Possible Injuries

Michigan court says it has no authority to uphold waiver; concurring judges call for change in the law
The Court of Appeals of Michigan has reluctantly ruled that it has no authority to uphold a parent’s pre-event waiver of claims for his 5-year old child’s injuries at his birthday party. Reviewing the changing law among the states, the Court said it is inconsistent to provide that a parent may not unilaterally settle a claim for actual damages but may waive a claim in advance of participating in the activity that causes the injury. (Woodman v. Kera, LLC, d/b/a Bounce Party, No.

Insurer Must Defend All Claims If Any Is Covered by Policy

Carrier is not required to cover legal fees incurred before claim was tendered by insured
An insurance carrier has a duty to defend its insured against all claims contained in a complaint if any one of them is potentially covered by the insurance policy, the Ninth Circuit Court of Appeals has affirmed. But the carrier is not obligated to pay damages imposed by the trial court on its own initiative or to pay legal fees incurred by the insured in the six months before it tendered the claim to the carrier. (Research Corporation v. Westport Insurance Corporation, 9th Cir., No.

Court Acquits Jihadists Of Some False Reporting Charges

Executives not guilty of failing to report successor status on Form 1023, but are guilty of other false statements
Despite a jury verdict convicting three nonprofit executives of a series of crimes involving false filings with the IRS and false statements to other governmental agents, the federal District Court in Massachusetts has acquitted the defendants on certain charges involving improper reports or statements. (U.S. v. Mubayyid, Crim. No.
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