Khalilah Shabazz v. Osman Ahmed

• Court: New Jersey Superior Court Appellate Division
• Decided: March 20, 2024
• Docket: A-1000-22
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-1000-22

KHALILAH SHABAZZ,

Plaintiff-Appellant,

v.

OSMAN AHMED, AHMED AZMY, OMAR RIAD, and ATTIA SWEILLAM,

Defendant-Respondents. _______________________________

Submitted February 7, 2024 – Decided March 20, 2024

Before Judges Currier and Susswein.

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-6150-21.

Law Office of Eric J. Warner, LLC, attorney for appellant (Eric James Warner, of counsel and on the brief).

Pashman, Stein, Walder & Hayden, PC, attorneys for respondents (Deanna L. Koestel, of counsel and on the brief; Matthew Edward Frisch, on the brief).

PER CURIAM This case involves a dispute between plaintiff, Khalilah Shabazz, and the

governing body of The Islamic Society of Essex County (ISEC). Plaintiff is a

longtime worshipper who participates in the religious and cultural activities of

ISEC. Defendants, Osman Ahmed, Ahmed Azmy, Omar Riad, and Attia

Sweillam, are members of ISEC's board of trustees (the Board). The Board sold

the building where ISEC provided religious and cultural services for many years.

The Board purchased another building and moved ISEC's activities to the new

location. Plaintiff opposed the move, claiming the sale and purchase were ultra

vires.

Plaintiff appeals an October 26, 2022 Law Division order issued by Judge

Thomas A. Callahan granting defendants' motion to dismiss her derivative

action, breach of charitable trust, and a direct cause of action against defendants.

Judge Callahan found plaintiff did not have standing to sue on behalf of ISEC

because under its incorporation status, it has "no members" for purposes of a

derivative action. The trial court also ruled plaintiff does not have standing to

sue as a beneficiary of an irrevocable trust, nor does she have individual standing

because that claim was an "unspecified cause of action." After carefully

reviewing the record in light of the governing legal principles, we affirm.

A-1000-22 2 I.

We discern the following pertinent facts from the record. ISEC is a

non-profit corporation formed in May 2003 pursuant to the New Jersey

Nonprofit Corporation Act, N.J.S.A. 15A:1-1 to 16-2. ISEC's purpose is "the

establishment, advancement and perpetuation of an Islamic educational,

religious, and charitable organization."

The record includes several corporate documents that bear on the question

of whether plaintiff is a member for purposes of standing to bring a derivative

action on behalf of the corporation. The 2003 Articles of Incorporation, which

are signed and dated, state "[t]he Corporation shall have no members" under a

section labeled "[m]embership." The 2003 Articles of Incorporation nonetheless

includes a section that refers to "members" in a string list of persons, providing

"[n]o part of the net earnings of the corporation shall [inure] to the benefits of,

or be distributable to its members, trustees, officers or other private

persons. . . ." (emphasis added).

Plaintiff relies on a document titled "By-laws amendment for the Islamic

Society of Essex County" dated September 30, 2018 (2018 By-laws). This

document is not signed. Under Article 1 of this document, it states "[ISEC] will

be the name of the non-member, non-political, non-profit religious, charitable,

A-1000-22 3 and educational corporation. . . ." (emphasis added). However, Article 10 of

the unsigned document also provides an oath of fidelity, stating "I . . . hereby

proclaim and declare that I am a practicing member of ISEC and agree[]

to. . . ." (emphasis added). Section 5.2.1 of the unsigned 2018 By-laws further

provides "[t]he services, facilities and resources of the Society shall be available

to those community members of ISEC who follow its code of ethics and respect

its values[]. . . ." (emphasis added).

The Branford Building—the building where ISEC previously provided

religious and cultural services—is located on Branford Place in Newark. Under

the 2018 By-laws, Section 2.1 provides, "[t]he fundamental objectives of the

society will be: [m]aintaining and preserving the building as an Irrevocable

Trust/Endowment and property in which the Society is located" and

"[k]eeping/maintaining the well-being of the building from the structural/

architectural points of views."

The record also includes by-laws that were adopted in June 2019 (2019

By-laws), which are signed by five Trustee members. The 2019 By-laws

confirm ISEC was organized under Title 15A and provide, in pertinent part:

At least a majority of the Trustees in office shall be present at each meeting in order to constitute a quorum for the transaction of business. Every Trustee shall be entitled to one vote. Except as otherwise specified in

A-1000-22 4 the articles or these [b]y[-]laws or provided by statute, the acts of a majority of the Trustees present at a meeting at which a quorum is present shall be the acts of the Board.

Additionally, Section 3.01.1 of the 2019 By-laws provides, "[t]he board

shall have full power to conduct, manage, and direct the business and affairs of

the Society; and all powers of the Society are hereby granted to and vested in

the Board."

The 2019 By-Laws do not refer to "members." Nor does the document

refer to an irrevocable charitable trust.

Publicly filed deeds show that on September 15, 1981, the City of Newark

deeded the Branford Building to the American-Arab Chamber of Industry and

Development. Ownership was transferred several times between 1981 and 2006.

On May 5, 2006, the Islamic Cultural Center, Inc. deeded the building to ISEC.

On November 5, 2020, plaintiff filed a verified complaint and an order to

show cause application in the Chancery Division seeking temporary restraints

and a preliminary injunction enjoining ISEC from selling the building. On

November 12, 2020, Judge Jodi Lee Alper granted plaintiff's request for a

temporary restraining order and set a December 8, 2020 hearing for the

preliminary injunction. Judge Alper permitted both parties to serve limited

document requests and required certified responses to the discovery.

A-1000-22 5 By order dated December 9, 2020, Judge Alper lifted the temporary

restraints and determined ISEC was not restrained or enjoined from selling the

Branford Building. Judge Alper also denied the Board's cross-motion to dismiss

the complaint without prejudice.

On December 16, 2020, we denied plaintiff's request for leave to appeal

on an emergent basis. The next day, the Supreme Court denied plaintiff's

emergent application.

On December 18, 2020, ISEC sold the building. Three days later, ISEC

purchased a new building and transferred its operations and facilities to the new

site.

Plaintiff filed her initial verified amended complaint on December 20,

2020. In March 2021, defendants filed a motion for summary judgment.

Plaintiff cross-moved to amend her complaint and transfer the matter from the

Chancery Division to the Law Division. On June 30, 2021, Judge Alper denied

defendants' motion for summary judgment without prejudice, transferred the

matter to the Law Division, and granted leave for plaintiff to file a second

amended complaint. The second amended complaint alleged defendants

violated the terms of an irrevocable trust, engaged in ultra vires acts, and

committed violations under Title 16.

A-1000-22 6 In August 2021, defendants filed a motion to dismiss the complaint. On

March 1, 2022, Judge Stephen L. Petrillo dismissed plaintiff's claims for

punitive damages without prejudice. The judge ordered plaintiff to amend her

complaint "to more clearly articulate her claims and causes of action . . . that set

forth the elements of the causes of action and basis for relief. . . ."

On March 23, 2022, plaintiff filed a third amended complaint, naming four

of the Board's members as defendants. The complaint asserted a derivative

action, breach of charitable trust, and a direct cause of action.

In April 2022, defendants moved to dismiss the third amended complaint.

On October 26, 2022, Judge Callahan granted defendants' motion. In his oral

opinion, Judge Callahan addressed the membership issue, holding:

[S]ince . . . ISEC has complied with the requirements to be incorporated as a non-member entity under Title 15[]A, [p]laintiff cannot acquire standing to sue over an alleged ultra vires transaction by alleging membership status since ISEC has no members. It is for the above reasons that count one of [p]laintiff's complaint should be dismissed and will be dismissed.

With respect to the breach of charitable trust count, Judge Callahan

determined:

According to deeds to the Branford Property, the Islamic Cultural Center, Inc., rather than . . . [ISEC], owned the Branford Building in 2005. ISEC did not take ownership until 2006, therefore, the document

A-1000-22 7 [p]laintiff identifies as the 2005 Constitution could not have created the trust since ISEC did not own the subject property at the time. Therefore, count two of [p]laintiff’s complaint is dismissed.

Lastly, with respect to the direct action, Judge Callahan described the

complaint as an "unspecified cause of action" that was "unactionable." He

reasoned plaintiff

has not actually listed intentional infliction of emotional distress as a cause of action she is pursuing. Instead, neither following Judge Petrillo's order to quote, "[m]ore clearly articulate her claims and causes of action and titled and numbered counts that set forth the elements of the cause of action," nor meeting the requirement that, quote, "[p]leadings must fairly apprise the adverse party of the claims and issues to be raised at trial." See Spring Motors Distrib. [v.] Ford Motor Co[.], 191 N.[J.] Super[.] 22, 29[], App[.] Div[.], 1983, aff[']d in part and rev[']d in part on other grounds, 98 N[.] J[.] 555, [(1985)].

This appeal follows. Plaintiff raises the following issues for our

consideration: (1) plaintiff, as a member of the society, has standing to sue

defendants for illegal ultra vires acts and omissions under Title 16; (2) plaintiff,

as a member of the society, has standing to sue defendants on behalf of the

society for illegal ultra vires acts under Title 15A; (3) Title 16 and Title 15 A are

not mutually exclusive; (4) the requirements for derivative suits on behalf of

for-profit corporations are different than that of Title 15A non-profit

A-1000-22 8 corporations; (5) plaintiff possesses standing to sue as a beneficiary of an

irrevocable charitable trust; (6) plaintiff possesses individual standing to sue;

and (7) plaintiff has the remedy of seeking monetary damages from the trustees.

II.

We begin our analysis by acknowledging the legal principles governing

this appeal. We review an order granting a motion to dismiss for failure to state

a claim "de novo, applying the same standard under Rule 4:6-2(e) that governed

the motion court." Wreden v. Twp. of Lafayette, 436 N.J. Super. 117, 124 (App.

Div. 2014). That standard is whether the pleadings even "suggest[ ]" a basis for

the requested relief. Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J.

739, 746 (1989).

We "must examine 'the legal sufficiency of the facts alleged on the face

of the complaint,' giving the plaintiff the benefit of 'every reasonable inference

of fact.'" Baskin v. P.C. Richard & Son, LLC, 246 N.J. 157, 171 (2021) (quoting

Dimitrakopoulos v. Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, P.C., 237

N.J. 91, 107 (2019)). To determine the adequacy of a pleading, we must decide

"whether a cause of action is 'suggested' by the facts." Printing Mart-

Morristown, 116 N.J. at 746 (quoting Velantzas v. Colgate-Palmolive Co.,109

N.J. 189, 192 (1988)).

A-1000-22 9 III.

Plaintiff relies on Title 16 to support her contention the sale of the

Branford Building was ultra vires. More specifically, N.J.S.A. 16:1-6 provides:

The trustees of any church or religious society and their successors in office or a majority of them are authorized and empowered to sell at public or private sale and convey in fee simple or otherwise all the church and parsonage property of such church or religious society together with all the estate, right, title and interest which the said trustees or stewards or other officers now have or may have in the same by virtue of any deeds of conveyance or otherwise, if the sale is authorized and directed by a majority of the members present at any meeting called by the trustees and held at its usual place of public worship, after at least ten days' notice of the time and place and object of such meeting, by advertisement set up in open view at or near the place of meeting, which notice shall be signed by the president and secretary of the board of trustees or by a majority of the trustees.

[(N.J.S.A. 16:1-6).]

Plaintiff's reliance on Title 16 in misplaced, however, because it is undisputed

ISEC was incorporated under the authority of Title 15A, not Title 16.

The case law makes clear the two statutory frameworks are independent,

indeed mutually exclusive. As a matter of law, therefore, it is unavailing for

plaintiff to rely on language governing a Title 16 corporation and apply it to a

corporation formed under Title 15A.

A-1000-22 10 In Bible Presbyterian Church, Inc. v. Harvey Cedars Bible Conf. Inc., 84

N.J. Super. 441 (App. Div. 1964), the plaintiff asserted the defendant was a

religious society "subject to the laws relating to such societies" such as N.J.S.A.

16:1—25, which forbade "the diversion of property 'to any purpose other than

the support and maintenance of the church or religious or benevolent institution

or object connected with the church or denomination to which the corporation

belongs.'" Id. at 449-450. We rejected the plaintiff's argument, reasoning the

"[d]efendant chose to incorporate under Title 15, which contains no provision

corresponding to [N.J.S.A.] 16:1—25. . . ." Id. at 450. We further explained

"[s]ince corporate powers of non-profit corporations are derived from their

articles of incorporation and the law under which the corporation came into

being . . . the actions of the defendant's board of trustees should be measured by

the standards set in [N.J.S.A.] 15:1—1 et seq. . . ." 1 Ibid. We thus held

"[N.J.S.A] 16:1—25, . . . [was] not applicable to defendant, a Title 15

corporation." Id. at 451.

1 Repealed by the New Jersey Nonprofit Corporation Act, N.J.S.A. 15A:1-1 to :16-2. A-1000-22 11 IV.

Having determined this litigation is governed by Title 15A, not Title 16,

we next consider the text of the governing statutory framework. N.J.S.A.

15A:2-8(a)(5) provides unequivocally, "[t]he certificate of incorporation shall

set forth: [i]f the corporation is to have no members, that there shall be no

members."

In the matter before us, Article VII of the Articles of Incorporation

explicitly "set[s] forth" that "[t]he Corporation shall have no members."

Plaintiff nonetheless asks us to disregard that clear declaration because another

section in the Articles of Incorporation has a passing reference to "members" in

a string site of persons to whom net earnings may not be distributed. Applying

de novo review, we are satisfied the Articles of Incorporation, read in their

entirety and in a commonsense fashion, satisfy the requirement in N.J.S.A.

15A:2-8(a)(5) and set forth that ISEC has no members for purposes of its

governance structure. We conclude the clear declaration in Article VII takes

precedence over the passing reference to members in the section prohibiting the

distribution of net earnings to various persons.

We likewise reject plaintiff's argument that other corporate documents

contradict the Articles of Incorporation and show that ISEC has members that

A-1000-22 12 might bring a derivative lawsuit on behalf of the non-profit corporation. As we

have noted, plaintiff cites the unsigned 2018 By-laws which provide:

The services, facilities and resources of the Society shall be available to those community members of ISEC who follow its code of ethics and respect its values, and who have been satisfactorily accepted by the Board or its designees, and who follow the principles and guidelines which are implemented by the Society.

Relatedly, Article 10 of the 2018 By-laws provides for an oath of fidelity for

"practicing members."

We interpret the terms "community members" and "practicing members"

to refer to worshippers, not to members as that term is used in Title 15A and

Article VII of the Articles of Incorporation to refer to the equivalent of

shareholders for purposes of corporate governance.

In sum, applying de novo review, we agree with Judge Callahan that ISEC

does not have members who might be authorized to bring a derivative action on

behalf of the corporation. We therefore affirm Judge Callahan's decision to

dismiss the first count of the third amended complaint. Because we determine

plaintiff does not have standing to bring a derivative action on behalf of ISEC,

we need not address defendants' contention plaintiff has failed to comply with

procedural prerequisites to a derivative suit set forth in Rule 4:32-3.

A-1000-22 13 V.

We next address whether plaintiff has standing to bring a direct suit

challenging the Board's decision to relocate to a new facility. "A shareholder

may maintain a direct action against a corporation or its directors if the

shareholder suffers a '"special injury."'" Tully v. Mirz, 457 N.J. Super. 114,

124-125 (App. Div. 2018) (quoting Strasenburgh v. Straubmuller, 146 N.J. 527,

550 (1996)). There is special injury when "'there is a wrong suffered by [the]

plaintiff that was not suffered by all stockholders generally. . . .'" Ibid. (quoting

Strasenburgh, 146 N.J. at 550). Here, there is no special injury to plaintiff other

than her contention she was the "Mother of the Mosque" and prayed there for

forty years. The change of location affected all worshippers, not just plaintiff.

VI.

We need only briefly address plaintiff's contention an irrevocable trust in

the Branford Building was created in the unsigned 2018 By-laws, and the Board

breached that trust by selling the building rather than maintaining and preserving

it. Even accepting for the sake of argument duly issued 2 by-laws evince an intent

to preclude the Board from ever selling the building, nothing in the unsigned

2 We note the 2019 By-laws, which are signed, do not include any reference to maintaining and preserving the Branford Building as an irrevocable trust. A-1000-22 14 2018 By-laws on which plaintiff relies makes her a beneficiary entitled to

enforce any such irrevocable trust. As we held in the preceding sections,

plaintiff does not have standing to bring a derivative action on behalf of ISEC.

Nor does she have individual standing to bring this lawsuit. We therefore affirm

the dismissal of the count alleging the Board breached an irrevocable trust.

To the extent we have not specifically addressed them, any remaining

arguments raised by plaintiff lack sufficient merit to warrant discussion. R.

2:11-3(e)(1)(E).

Affirmed.

A-1000-22 15