NonProfit Governance

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7^th Circuit Court of Appeals

Case Name: Richard Doermer v. Kathryn Callen, et al

Case No.: 15-3734

Officials: WILLIAMS and HAMILTON, Circuit Judges, and CHANG, District Judge.*

Focus: NonProfit Governance

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

Affirmed

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Attorney Derek A. Hawkins is the managing partner at Hawkins Law Offices LLC, where he heads up the firm’s startup law practice. He specializes in business formation, corporate governance, intellectual property protection, private equity and venture capital funding and mergers & acquisitions. Check out the website at www.hawkins-lawoffices.com or contact them at 262-737-8825.