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Thursday, February 02, 2017

Ind. Decisions - Yet another 7th Cir. opinion yesterday, this one on Ind. Nonprofit Corp. Act of 1991

In Richard Doermer v. Kathryn Callen (ND Ind., Van Bokkelen), a 22-page opinion, Judge Hamilton writes:

This case poses several questions under the Indiana Nonprofit Corporation Act of 1991 about the governance of nonprofit corporations in Indiana. The case pits brother against sister in a long-running dispute over control of a small family foundation established by their parents. Plaintiff Richard Doermer is a member of the board of directors of the Doermer Family Foundation, Inc. (“the Corporation”). He asserts claims in his individual capacity and derivatively on behalf of the Corporation. The defendants include his fellow board members Kathryn Callen (his sister), John Callen (his nephew), and Phyllis Alberts. Richard also named as a defendant the University of Saint Francis of Fort Wayne, Indiana, Inc. Richard seeks injunctive relief against all other board members and a money judgment for the Corporation against Kathryn and Saint Francis.

The district court granted defendants’ motions to dismiss, and we affirm. Under Indiana law, only a shareholder or member of a corporation may bring a derivative action on the corporation’s behalf. Richard lacks standing to bring a derivative claim because he is neither a shareholder nor a member. In fact, the Corporation’s articles of incorporation provide that it “shall have no members.” Richard’s individual claims for money judgment likewise fail. They are properly understood as belonging to the Corporation (and so derivative in nature). Finally, all of Richard’s individual claims fail as a matter of law on their merits.

Posted by Marcia Oddi on February 2, 2017 09:20 AM
Posted to Ind. (7th Cir.) Decisions