<html><body><div style="font-family: Arial; font-size: 12pt; color: #000000"><div aria-label="Compose body">Are you tilting at windmills? When have you seen such a situation where members of a non-profit tried to take it over absent major dereliction by the existing board? Here the board was whittled down by Happy Nelson and Mary Matthews to just the 2 of them. They either forced off the other members or they resigned in disgust at the governance of the non-profit by Matthews and Nelson. Thankfully equity provides for solutions that lead to just outcomes.<br></div><div aria-label="Compose body"><br></div><div aria-label="Compose body">I am not involved in this case professionally. But as a resident of Vashon I have followed this sad saga by Nelson and Matthews for years.<br></div><div><br></div><div><span name="x"></span><div>
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<div><strong><em>__________________________________<br>Edward L. Clabaugh</em></strong>
<div><strong><em>The Clabaugh Law Firm<br>P.O. Box 333<br>10217 SW Burton Drive, Suite 100<br>Vashon Island, Washington 98070<br>Tel: (206) 463-1500<br>Fax: (206) 463-5806</em></strong>
<div><strong><em>Mobile: (206) 498-0761</em></strong>
<div>IRS CIRCULAR 230 DISCLOSURE: To ensure compliance with Treasury Department and IRS regulations, we inform you that, unless expressly indicated otherwise, any federal tax advice contained in this communication (including any attachments) is not intended or written by The Law Offices of Edward L. Clabaugh to be used, and cannot be used by the taxpayer, for the purpose of (i) avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein (or any attachments).<br>* * * * * * * * * * <br>NOTICE: This communication may contain privileged or other confidential information. If you have received it in error, please advise the sender by reply email and immediately delete the message and any attachments without copying or disclosing the contents. Thank you.<br><span name="x"></span><br></div><br><hr id="zwchr"><div style="color:#000;font-weight:normal;font-style:normal;text-decoration:none;font-family:Helvetica,Arial,sans-serif;font-size:12pt;" data-mce-style="color: #000; font-weight: normal; font-style: normal; text-decoration: none; font-family: Helvetica,Arial,sans-serif; font-size: 12pt;"><b>From: </b>"Doug Schafer" <schafer@pobox.com><br><b>To: </b>"WSBA Probate & Trust Listserv" <wsbapt@lists.wsbarppt.com><br><b>Cc: </b>"Solo & Small Firm WSBA Listserv" <solo-and-small-practice-section@list.wsba.org><br><b>Sent: </b>Monday, May 23, 2016 12:46:15 PM<br><b>Subject: </b>Re: [WSBAPT] Harmful nonprofit governance opinion<br><div><br></div><span style="font-family: Times New Roman,Times,serif;" data-mce-style="font-family: Times New Roman,Times,serif;" face="Times New Roman, Times, serif">"Bad facts make bad law?" I'm indifferent about the facts/allegations in the particular case, but I am quite concerned that the opinion will be a template for hostile takeovers of small nonprofit groups by dissidents. Unfortunately, while the leading WA supreme court case (Anderson v. Enterprise Lodge No. 2, 80 Wn.App. 41, 906 P.2d 962 (1995)) on judicial deference to nonprofit boards on governance disputes has been cited and applied muliple times by the COA (and likely by trial courts) to nonprofits that were not local chapters of national organizations, those all were unpublished opinions.<br> <br> Concerning the proposed rule change re citation of unpublished opinions, see:<br> <a class="moz-txt-link-freetext" href="http://www.courts.wa.gov/court_rules/?fa=court_rules.proposedRuleDisplay&ruleId=496" target="_blank" data-mce-href="http://www.courts.wa.gov/court_rules/?fa=court_rules.proposedRuleDisplay&ruleId=496">http://www.courts.wa.gov/court_rules/?fa=court_rules.proposedRuleDisplay&ruleId=496</a><br> <br> Doug Schafer, sitting at Seatac airport<br> <br> </span><br><div class="moz-cite-prefix">On 5/23/2016 8:33 AM, Edward Clabaugh wrote:<br></div><blockquote cite="mid:A4E056D9-FB1B-4377-AC39-45B831DF92B3@comcast.net"><div>I strongly disagree. </div><div id="AppleMailSignature"><br></div><div id="AppleMailSignature">If you read the facts the non-profit was a sham that did not operate Mukai Gardens on Vashon Island as it was supposed. It was a vehicle to enrich the Nelsons. Other non-profits that contributed to the worthwhile cause of restoring the lovely Japanese garden and home found their funds diverted. The Nelsons would not account for them. They did not open the garden and home to the public. This situation has been on-going for years. So people who wanted to see the non-profit fulfill its mission finally had to take action. It has been a long battle but finally after many years the Nelsons are out and the non-profit is fulfilling its mission of restoring the property and opening it to the public. <br> <br> Sent from my iPhone</div><div><br> On May 23, 2016, at 8:11 AM, Doug Schafer <<a class="moz-txt-link-abbreviated" href="mailto:schafer@pobox.com" target="_blank" data-mce-href="mailto:schafer@pobox.com">schafer@pobox.com</a>> wrote:<br> <br></div><blockquote><div><span style="font-family: Times New Roman,Times,serif;" data-mce-style="font-family: Times New Roman,Times,serif;" face="Times New Roman, Times, serif">Please carefully read the attached WA Court of Appeals, Div. I, opinion. Though "unpublished," it provides a template for hostile dissidents to takeover a membership-based nonprofit corporation by secretly collecting member applications and dues, then, </span><span style="font-family: Times New Roman,Times,serif;" data-mce-style="font-family: Times New Roman,Times,serif;" face="Times New Roman, Times,
serif"><span style="font-family: Times New Roman,Times,serif;" data-mce-style="font-family: Times New Roman,Times,serif;" face="Times New Roman, Times, serif">on the day that the dissidents deposit the dues (without authority) in the corporate bank account,</span> sending a 10-day notice for a membership meeting . At that meeting, the "new members" remove the incumbent directors. The corporate directors and officers were unaware of the "new members" until the meeting occurred. Our state supreme court appears close to adopting a rule that will permit citation to "unpublished" opinions such as this one.<br> <br> My fear is that this case will be used disrupt the governance of too many nonprofit corporations.<br> <br> The Court of Appeals declined to apply the well-established doctrine that courts refrain from interfering in the internal affairs of such associations and defer to the association's own interpretation of its rules unless that interpretation is arbitrary or unreasonable, by asserting that such doctrine applied only to local chapters of national organizations. Case law is otherwise, however.<br> <br> When I read this opinion, I emailed one of the lawyers for the losing parties and urged them to petition for state supreme court review. I hear nothing back until last Thurday, when Ms. Matthews phoned me. I spoke Friday with her and her NYC lawyer husband, Mr. Nelson, who reported that the COA denied their motion for reconsideration on May 2, so the deadline for a petition for review is June 2. They are, however, "tapped out" and I sense some despair.<br> <br> I'm within minutes of departing on a family trip this week, so I'm not available to assist.<br> <br> I write in the hope that other lawyers interested in maintaining strong nonprofit corporations will consider helping Ms. Matthews and Mr. Happy to petition for review. That will allow time for them to negotiate with the prevailing group, and possible reach a settlement whereby they might ask Division I to withdraw its opinion. I've seen that is another case.<br> <br> Nelson Happy: <a class="moz-txt-link-abbreviated" href="mailto:jnelsonhappy@gmail.com" target="_blank" data-mce-href="mailto:jnelsonhappy@gmail.com">jnelsonhappy@gmail.com</a><br> Mary Matthews: <a class="moz-txt-link-abbreviated" href="mailto:matthewshistpres@gmail.com" target="_blank" data-mce-href="mailto:matthewshistpres@gmail.com">matthewshistpres@gmail.com</a><br> <br> Doug Schafer, lawyer in Tacoma.<br> </span></div></blockquote><blockquote><div><2016_IslandLandmarks_2.pdf></div></blockquote><blockquote><div><span>_______________________________________________</span><br> <span>WSBAPT mailing list</span><br> <span><a href="mailto:WSBAPT@lists.wsbarppt.com" target="_blank" data-mce-href="mailto:WSBAPT@lists.wsbarppt.com">WSBAPT@lists.wsbarppt.com</a></span><br> <span><a href="http://mailman.fsr.com/mailman/listinfo/wsbapt" target="_blank" data-mce-href="http://mailman.fsr.com/mailman/listinfo/wsbapt">http://mailman.fsr.com/mailman/listinfo/wsbapt</a></span><br data-mce-bogus="1"></div></blockquote><br><fieldset class="mimeAttachmentHeader"></fieldset><br><pre>_______________________________________________
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