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</o:shapelayout></xml><![endif]--></head><body bgcolor=white lang=EN-US link=blue vlink=purple><div class=WordSection1><p class=MsoNormal><span style='font-size:14.0pt;color:#1F497D'>In my private response to Doug after his first post, I told him about a hostile takeover of a longstanding rural community church and all its assets. For many decades, it was a </span><span style='font-size:14.0pt;color:#1F497D'>nondenominational middle of the road Christian congregation. It generally ignored its governing documents for many years. A group of other-minded Christians figured out that whoever showed up at the annual meeting would be able to vote, they organized and overwhelmed the usual congregation, voted themselves in, and essentially stole the entire church for their much more fundamentalist congregation. Out went the church property, the long-time pastor and all of the church board, and soon enough, all of the former members. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:14.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:14.0pt;color:#1F497D'>I have no idea what the proper remedy is, other than small nonprofits creating and following reasonable and fair rules to undertake the business of fulfilling their purposes, but we all know that is not likely to happen with many small nonprofits. <o:p></o:p></span></p><p class=MsoNormal><span style='font-size:14.0pt;color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:14.0pt;color:#1F497D'>Rob<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif";color:windowtext'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif";color:windowtext'> wsbapt-bounces@lists.wsbarppt.com [mailto:wsbapt-bounces@lists.wsbarppt.com] <b>On Behalf Of </b>Doug Schafer<br><b>Sent:</b> Monday, May 23, 2016 12:46 PM<br><b>To:</b> WSBA Probate & Trust Listserv<br><b>Cc:</b> Solo & Small Firm WSBA Listserv<br><b>Subject:</b> Re: [WSBAPT] Harmful nonprofit governance opinion<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><p class=MsoNormal style='margin-bottom:12.0pt'>"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 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><o:p></o:p></p><div><p class=MsoNormal>On 5/23/2016 8:33 AM, Edward Clabaugh wrote:<o:p></o:p></p></div><blockquote style='margin-top:5.0pt;margin-bottom:5.0pt'><div><p class=MsoNormal>I strongly disagree. <o:p></o:p></p></div><div id=AppleMailSignature><p class=MsoNormal><o:p> </o:p></p></div><div id=AppleMailSignature><p class=MsoNormal>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<o:p></o:p></p></div><div><p class=MsoNormal style='margin-bottom:12.0pt'><br>On May 23, 2016, at 8:11 AM, Doug Schafer <<a href="mailto:schafer@pobox.com">schafer@pobox.com</a>> wrote:<o:p></o:p></p></div><blockquote style='margin-top:5.0pt;margin-bottom:5.0pt'><div><p class=MsoNormal>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, on the day that the dissidents deposit the dues (without authority) in the corporate bank account, 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 href="mailto:jnelsonhappy@gmail.com">jnelsonhappy@gmail.com</a><br>Mary Matthews: <a href="mailto:matthewshistpres@gmail.com">matthewshistpres@gmail.com</a><br><br>Doug Schafer, lawyer in Tacoma.<o:p></o:p></p></div></blockquote><blockquote style='margin-top:5.0pt;margin-bottom:5.0pt'><div><p class=MsoNormal><2016_IslandLandmarks_2.pdf><o:p></o:p></p></div></blockquote><blockquote style='margin-top:5.0pt;margin-bottom:5.0pt'><div><p class=MsoNormal>_______________________________________________<br>WSBAPT mailing list<br><a href="mailto:WSBAPT@lists.wsbarppt.com">WSBAPT@lists.wsbarppt.com</a><br><a href="http://mailman.fsr.com/mailman/listinfo/wsbapt">http://mailman.fsr.com/mailman/listinfo/wsbapt</a><o:p></o:p></p></div></blockquote><p class=MsoNormal><br><br><br><o:p></o:p></p><pre>_______________________________________________<o:p></o:p></pre><pre>WSBAPT mailing list<o:p></o:p></pre><pre><a href="mailto:WSBAPT@lists.wsbarppt.com">WSBAPT@lists.wsbarppt.com</a><o:p></o:p></pre><pre><a href="http://mailman.fsr.com/mailman/listinfo/wsbapt">http://mailman.fsr.com/mailman/listinfo/wsbapt</a><o:p></o:p></pre></blockquote><p class=MsoNormal><o:p> </o:p></p></div></body></html>