Harris v. Southern Christian Leadership Conference, Inc.

721 S.E.2d 906, 313 Ga. App. 363, 2012 Fulton County D. Rep. 7, 2011 Ga. App. LEXIS 1042
CourtCourt of Appeals of Georgia
DecidedNovember 22, 2011
DocketA11A1149
StatusPublished
Cited by7 cases

This text of 721 S.E.2d 906 (Harris v. Southern Christian Leadership Conference, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Georgia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harris v. Southern Christian Leadership Conference, Inc., 721 S.E.2d 906, 313 Ga. App. 363, 2012 Fulton County D. Rep. 7, 2011 Ga. App. LEXIS 1042 (Ga. Ct. App. 2011).

Opinion

BARNES, Presiding Judge.

The Southern Christian Leadership Conference, Inc. (“SCLC”), its Board of Directors, and three individuals1 (collectively, “SCLC”) sued six former or current members of its Board of Directors2 (“the Defendants”), seeking an order enjoining them from interfering with the SCLC’s corporate governance or with its use and enjoyment of the corporate headquarters. The SCLC also sought a declaratory judgment identifying its board members and officers, alleging that the Defendants had breached their fiduciary duty to the corporation, and seeking the repayment of corporate money the Defendants used to pay legal fees in a previous lawsuit. The SCLC also sued Wachovia Bank, N.A., and Citizens Trust Bank, seeking an injunction directing that the SCLC accounts be controlled by the Board of Directors.

Following a lengthy hearing, the trial court issued a thoughtful, detailed, 37-page order granting a permanent injunction against the Defendants from interfering with the SCLC’s governance, from interfering with the SCLC’s use of its property and assets, and from holding themselves out as corporate officers unless they are reelected, reinstated, or appointed by the Board. The court also declared the identity of the members of the Board of Directors as of June 1, 2010, and held that acts taken by that board and its successors in accordance with the SCLC’s constitution and bylaws [364]*364were binding on the corporation.

The trial court found that the bank accounts at Wachovia and Citizens Trust should be managed and controlled by the Board of Directors, and ordered the banks to lift any freezes on the accounts and to grant access to authorized representatives of the Board. The court then found that some of the Defendants breached their fiduciary duties to the SCLC by using corporate funds to pay for the previously-dismissed lawsuit, the institution of which was not approved by the Board of Directors, and entered judgment against three of the six Defendants for $12,240.

In a separate order, the trial court denied the Defendants’ motion to disqualify the SCLC’s attorney, their motion seeking a hearing on allegations of perjury, and the SCLC’s motion to disqualify the Defendants’ attorney. The Defendants enumerate seven errors on appeal, and for the reasons that follow, we affirm.

A permanent injunction is proper in “clear and urgent cases” to prevent a party from being damaged and left without an adequate legal remedy, and we review a trial court’s grant of a permanent injunction for a manifest abuse of discretion. (Citation omitted.) Smith v. DeKalb County, 288 Ga. App. 574, 576 (2) (654 SE2d 469) (2007). We review issues of law de novo, applying the “plain legal error” standard of review. Suarez v. Halbert, 246 Ga. App. 822, 824 (1) (543 SE2d 733) (2000). In contrast, with respect to factual issues we construe the evidence in favor of the trial court’s findings and affirm if there is any evidence to support them, regardless of whether the evidence would also support opposite findings. Cannon Air Transport Sues. v. Stevens Aviation, 249 Ga. App. 514, 516 (2) (548 SE2d 485) (2001). Guided by these principles, we turn to the record in the present case.

This dispute arose after two factions emerged following a disagreement among the members of the SCLC’s National Board of Directors (“Board Members”).

The SCLC is a nonprofit corporation, to which “the fundamental rules and principles of law of profit and business corporations are equally applicable,” unless otherwise specifically noted in the Georgia Nonprofit Corporation Code. Shorter College v. Baptist Convention of Ga., 279 Ga. 466, 469 (1) (614 SE2d 37) (2005). A nonprofit corporation must have a board of directors, and “all corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation managed under the direction of, its board.” OCGA § 14-3-801 (a), (b). A corporation’s bylaws “may authorize a person or persons to exercise some or all of the powers which would otherwise be exercised by a board.” OCGA § 14-3-801 (d).

The SCLC’s constitution and bylaws define which of the corpo[365]*365ration’s members are entitled to vote during the annual meeting to elect a Board of Directors, whose members serve staggered three-year terms. The Board Members then elect national officers, and six of those officers, in addition to five more members appointed by the Chair, constitute the Executive Committee. The bylaws also provide that the Executive Committee may act for the Board of Directors. Both sides agree that the SCLC held its Annual Convention and properly elected 44 Board Members in August 2009, who then elected national officers, including an interim president. The trial court found that the Board Members met on October 29, 2009, to elect an incoming president.3 During the meeting, allegations arose regarding sexual harassment claims against Board Member Raleigh Trammell, who had been elected Chair of the Board, and allegations of financial improprieties by both Trammell and Board Member Spiver Gordon, who had been elected Treasurer. Board Members called for an investigation, and an advisor to the Board recommended that Trammell and Gordon step aside as officers during the investigation.

The Board Members held several meetings in November 2009 to address the issue of Trammell and Gordon continuing to serve as the Chair and Treasurer while being investigated. During one meeting, a resolution was introduced seeking to remove the two men from their positions as officers until the investigation was completed, but it was apparently never put to a vote. Notice of a second meeting in November 2009 indicated that one purpose was to remove Trammell and Gordon from the Board of Directors until the investigation was complete. The Vice Chair testified that a quorum of the Board of Directors was present during the meeting, at which the Board Members voted to temporarily remove the two men from their positions as officers until the investigation was completed.

As the trial court put it, “[t]wo distinct factions [of the SCLC Board] developed in the November to December time frame.” One faction included Gordon and Trammell, and the other faction included Tucker. Members of Gordon and Trammell’s faction filed suit against members of Tucker’s faction on December 28, 2009 (“the 2009 lawsuit”), alleging that those defendants had conducted meetings without notice, sought to remove and replace Board Members improperly, changed locks on SCLC property, and improperly handled SCLC bank accounts.

The trial court issued three temporary consent orders providing, among other things, that the SCLC’s corporate structure would [366]*366remain as it was on October 29, 2009, with Trammell and Gordon serving as the Chair and Treasurer, respectively. In March 2010, the SCLC moved to intervene as a party, and in April 2010, the trial court granted the motion. The court ruled that the SCLC itself was an indispensable party, ordered it joined as a plaintiff, vacated all of its consent orders, held that all actions taken pursuant to those orders had no force or effect, and declared that the parties be returned to the status they held before entry of the now-void orders. Four days later, the 2009 lawsuit was dismissed.

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Bluebook (online)
721 S.E.2d 906, 313 Ga. App. 363, 2012 Fulton County D. Rep. 7, 2011 Ga. App. LEXIS 1042, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harris-v-southern-christian-leadership-conference-inc-gactapp-2011.