Thursday, June 8, 2017
In LACBA Controversy:
Plaintiffs Invoke Maxim in Urging Validation of Election
They Ask Chalfant to Deem Results As Certified Although LACBA President Refused to Order That Done
By a MetNews Staff Writer
Efforts to block a second election this year of Los Angeles County Bar Association officers and trustees is continuing, with plaintiffs—who are seeking a judicial validation of the first election—relying on an ancient maxim that equity regards as done that which ought to be done.
The six plaintiffs, including two officers, two trustees, and a past president, are arguing that the March election should be deemed final although LACBA President Margaret Stevens refused to perform her mandatory, ministerial duty of causing the results to be certified.
The latest court filing came Tuesday, with the plaintiffs’ reply to opposition arguing that Los Angeles Superior Court Judge James Chalfant should issue a preliminary injunction next Tuesday because the calling of a new election, to end on June 30 if there are contested seats, was done by a “rogue board” under the pretext of authority from an invalid bylaw, purportedly enacted April 26.
Although there are differing views among the 11 trustees who were at the closed-door session as to whether an enactment actually took place, it appears that if it did, no particular wording was agreed upon. There was no prior notification that such an action was contemplated.
A new election because of alleged breaches of confidentiality on the part of members of the Nominating Committee.
No Nominating Petitions
The plaintiffs point out that no nominating petitions for officer and trustee posts were filed by the 5 p.m. deadline on March 22. Under a bylaw, LACBA President Margaret Stevens was obliged the following day to instruct one of the two acting co-CEOs to cast a ballot for the Nominating Committee’s slate, causing the nominees—headed by litigation attorney Brian Kabateck, as president-elect—to be automatically elected.
However, Stevens did not do so.
At the March 23 Board of Trustees meeting, she passed out photocopies of a March 1 MetNews article reporting that Immediate Past President Paul Kiesel had unsuccessfully lobbied the Nominating Committee to choose the 2015-16 Senior Vice President/Treasurer Michael Lindsey as president-elect over Kabateck, who was favored by the current president-elect, Michael Meyer. (He will ascend to the presidency July 1, the date all officers and trustees are to take office.)
Stevens declared that there had been a leak from the Nominating Committee; introduced a lawyer, Matthew D. Umhofer, who she said specializes in board conflicts; declared herself recused, having served on the Nominating Committee, and left; the board went into executive session; other members of the board voluntarily or under pressure from Umhofer withdrew; a three-person task force was formed to investigate whether there had been a breach of confidentiality.
At an executive session following the April 26 board meeting—with additional recusals and one member attending by telephone being cut off—there was a 6-5 vote in favor of holding a new election, with Treasurer Duncan Crabtree-Ireland, who was chairing, casting the deciding vote. That action has been challenged in Los Angeles Superior Court in Booth v. LACBA.
At a hearing on a temporary restraining order on May 16, Chalfant denied the TRO on the ground that an emergency was lacking, and declined to set a hearing pursuant to Corporations Code §7616—to confirm or invalidate a nonprofit mutual benefit corporation’s election—because, as he saw it, no election had been completed owing to Stevens’ failure to cause certification of the results.
The First Amended Complaint sets forth:
“Plaintiffs request that the Court issue a temporary restraining order, a preliminary injunction, and a permanent injunction ordering Defendant to direct its President, Margaret Stevens, to instruct Defendant’s CEO to cast a ballot for those nominated by the NomCom.”
Writ Relief Mentioned
In a brief in support of the action, the plaintiffs alluded to the prospect of a writ being issued. The brief says:
“A court may intercede to void the actions of a private association where the action plainly contravenes an unambiguous bylaw….A Court may issue a writ of mandate to any [‘]corporation, board, or person, to compel the performance of an act which the law specifically enjoins, as a duty resulting from an office...’ (Code Civ. Proc. § 1085, subs, (a).)”
However, LACBA pointed out in its opposition:
“[E]ven if a substantive showing justifying such a writ could be made, there has not been compliance with the requisite procedures….They have not filed a writ petition….”
The MetNews queried the plaintiffs’ lawyer, Joel Goldman, by email on June 1, as to whether a writ petition would be filed. He has not responded.
However, rather than seeking a writ to force Stevens to cause certification of the March election results, he is relying on a maxim, that has been codified in California. In Tuesday’s reply to opposition, he wrote:
“But for the President’s willful dereliction of duties under the Bylaws, Plaintiffs—and the other nominees—would have already been elected. Civil Code Section 3529 provides: ‘That which ought to have been done is to be regarded as done, in favor of him to whom, and against him from whom, performance is due.’ Pursuant to this principle, Plaintiffs request the Court deem the first election complete and final, as if the President did what she was required to do by the Bylaws. For this reason alone, the Court should issue the preliminary injunction.”
Business Judgment Rule
The brief continues:
“Defendant’s sole response to the showing that Plaintiff will prevail is an erroneous claim that the Business Judgment Rule allows Defendant’s rogue board members to ignore the Bylaws when they purportedly acted in good faith. However, as discussed below, the Business Judgment Rule does not grant Defendant absolute immunity from the relief sought by Plaintiffs. The presumption created by the business judgment rule can be rebutted by affirmative allegations of facts which, if proven, would establish fraud, bad faith, overreaching or an unreasonable failure to investigate material facts.”
Goldman’s brief contends that LACBA’s opposition is predicated on two contentions: “First, that a purported ‘breach of confidentiality’ occurred during the initial nomination process…and second, that this purported ‘breach’ warranted a second election.”
These claims are the sole bases of the dubious excuse for Defendant’s subsequent violations of the Bylaws. Defendant’s opposition amounts to nothing more than a plea that the Court blindly trust it and allow it to run roughshod over its Bylaws. But Defendant has demonstrated, now as it did before, that it cannot be trusted.”
The plaintiffs in the action are Real Property Section Chair Susan J. Booth, a candidate for an at-large trustee seat; San Fernando Valley attorney Tamila Jensen, currently vice president and running for senior vice president; Philip Lam, now senior vice president and a candidate for vice president; Trustees William L. Winslow and Edwin C. Summers III; and Past President Harry L. Hathaway.
Candidates for trustee seats, in addition to Booth, are Tanya Forsheit, and Jennifer W. Leland (at large members); Kristin Adrian, Matthew W. McMurtrey, and Kevin L. Vick, (representing sections); and Firoozeh “Faye” Nia, Michael R. Sohigian, and Felix Woo (representing affiliated bar associations).
A second nominating committee nominated the same persons as the initial panel. Unless Chalfant grants relief, additional candidates may run.
Nominating petitions are due June 15.
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