Oklahoma American Legion Corp. v. American Legion

24 F. Supp. 3d 1082, 2014 WL 2504518, 2014 U.S. Dist. LEXIS 75092
CourtDistrict Court, W.D. Oklahoma
DecidedJune 3, 2014
DocketCase No. CIV-14-356-D
StatusPublished
Cited by1 cases

This text of 24 F. Supp. 3d 1082 (Oklahoma American Legion Corp. v. American Legion) is published on Counsel Stack Legal Research, covering District Court, W.D. Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Oklahoma American Legion Corp. v. American Legion, 24 F. Supp. 3d 1082, 2014 WL 2504518, 2014 U.S. Dist. LEXIS 75092 (W.D. Okla. 2014).

Opinion

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

TIMOTHY D. DeGIUSTI, District Judge.

Before the Court is Plaintiffs’ Motion for Preliminary Injunction [Doc. No. 10]. Plaintiffs seek relief pursuant to Fed. R.Civ.P. 65(a) from actions taken by Defendant to suspend the charter of the corporate plaintiff, take control of its property and assets, relieve the individual plaintiffs of their duties, and assume responsibility for local operations. The Motion is fully briefed and at issue, and was the subject of a hearing held May 21, 2014.

Background

Plaintiff Oklahoma American Legion Corporation is an Oklahoma corporation and a state chapter of Defendant The American Legion, which is a federally chartered corporation organized pursuant to 36 U.S.C. § 21701 et seq. Under Defendant’s constitution and by-laws, the corporate plaintiff is chartered as a department known as the Department of Oklahoma (hereafter, the “Department”). Plaintiff George T. Nonamaker is an elected officer, known as the Department Commander. Plaintiff Fredrick L. Speir is an appointed officer, known as the Department Adjutant. In March, 2014, Defendant suspended the Department, removed its elected and appointed officers, and took control of its property and operations. Plaintiffs immediately brought suit in state court seeking declaratory and injunctive relief from Defendant’s actions, as well as compensatory and punitive damages. The claims asserted in Plaintiffs’ pleading include breach of contract (violation of contractual [1085]*1085due process rights under Defendant’s constitution, by-laws, and code), intentional interference with contractual or business relations, and conversion. Petition [Doc. No. 1-3], ¶¶ 15-17. Plaintiffs also claim that Defendant’s conduct violated a federal statute. See id., ¶ 11. Defendant timely removed the case to federal court based on jurisdiction under 28 U.S.C. § 1331.

Plaintiffs’ Motion seeks a preliminary injunction based on a likelihood of success on two claims: 1) Defendant’s alleged violation of 36 U.S.C. § 21704(5); and 2) Defendant’s alleged denial to the Department of contractual due process. Plaintiffs ask that the Department “be restored to its property and allowed to operate.” See Motion at 12. Specifically, Plaintiffs ask the Court to issue an injunction “restoring the status quo. and requiring the defendant to remove itself from the property of the [Department]; to return to the [Department] ... all property which it has confiscated and converted; to suspend any and all orders, resolutions and directives which purport to terminate the employment of Fredrick L. Speir ...; to restore Georgé T. Nonamaker and all officers of [the Department] to their respective offices; and to restrain the defendant from interfering with the operations of the [Department] ....”■ See id. at 1.

Findings of Fact

Many facts relevant to the Court’s analysis of the Motion are undisputed, including the background facts stated supra, and facts regarding the corporate parties and the general state of the Department’s affairs prior to its suspension. Additional facts were established by the testimony of witnesses and documentary evidence received during the May 21 hearing. The Court summarizes here only the facts necessary to its decision.

1. Defendant is governed both by federal statutes and by a constitution originally adopted in 1919 that expressly authorizes the suspension of a department’s charter after notice and a hearing “for any good and sufficient cause appearing.” See Pis.’ Motion, Ex. 3 [Doc. No. 10-3], Nat’l Const., art. XI, § l.1 Defendant’s constitution expressly provides that upon suspension of a department’s charter, the national executive committee (NEC) “is authorized, empowered and directed ... to take possession, custody and control of all of the records, property and assets of and belonging to such Department, and to provide for the government and administration of such Department during said suspension.” Id. § 4. Defendant’s bylaws direct the NEC to provide “a code of procedure for the revocation, cancellation or suspension of Department charters.” See id., By-Laws, art. Ill, § 4. The NEC adopted such a code in 1940, the provisions of which will 'be discussed infra as pertinent to the Court’s decision. See id., Uniform Code of Procedure for the Revocation, Cancellation or Suspension of Department Charters (hereafter, “Code of Procedure”).

2. Prior to suspension, the Department was controlled by an executive committee (DEC) chaired by a commander, Mr. No-namaker, who was elected at the annual convention in July, 2013. Day-to-day operations of the Department were managed by an adjutant selected and appointed by the DEC. A prior adjutant, Lance Rooms, was terminated in June, 2013. Following the annual convention, the DEC interviewed applicants and hired Mr. Speir in August, 2013. Mr. Speir’s employment was effective September 1, 2013. A past adjutant who was still a DEC member, [1086]*1086David Kellerman, was available to assist Mr. Speir in learning the duties of the position.

3. Mr. Speir assumed control of an office run by two long-time employees, a bookkeeper and an administrative assistant. The employees were women related to each other as mother and daughter. They were responsible for maintaining membership records and processing financial transactions. The administrative assistant was authorized to sign checks drawn on the Department’s bank accounts. Mr. Speir became dissatisfied with the employees’ performance, and terminated both women on December 9, 2013. Mr. Speir subsequently learned that the office filing system was unorganized, records were missing, the financial system lacked adequate controls, and the Department had numerous unpaid debts. Suspicious entries in an electronic bookkeeping system led Mr. Speir to believe that embezzlement had occurred. Mr. Speir informed Mr. Nonamaker and consulted legal counsel, and with DEC approval, the Department filed suit against the former employees.

4. In January, 2014, Mr. Speir and other officers received a letter from the National Adjutant dated January 13, 2014, regarding the Department’s outstanding invoices. The letter stated that the National Commander had appointed an ad hoc committee to investigate and that the committee would arrive in Oklahoma on February 5, 2014, to review the Department’s financial records. The letter included a list of requested records, including audit materials, tax forms, monthly financial statements, bank and investment account statements, and minutes of finance committee meetings. Mr. Speir and Mr. Nonamaker met with the committee members on that date but could produce only one bank statement. Mr. Speir informed the committee that no other records existed, the Department had not conducted a financial audit in the past ten years, and there was no functioning finance committee. The committee informed Messrs. Speir and Nonamaker of the amount of the Department’s existing debt to Defendant ($50,000).

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24 F. Supp. 3d 1082, 2014 WL 2504518, 2014 U.S. Dist. LEXIS 75092, Counsel Stack Legal Research, https://law.counselstack.com/opinion/oklahoma-american-legion-corp-v-american-legion-okwd-2014.