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Owen v. Board of Directors of the Washington City Orphan Asylum

December 22, 2005

THORNTON W. OWEN, JR., JAMESG. MERSEREAU, E. TILLMAN STIRLING, CHARLESC. WILKES AND THE BOARD OF TRUSTEES OF THE WASHINGTON CITY ORPHAN ASYLUM, APPELLANTS,
v.
BOARD OF DIRECTORS OF THE WASHINGTON CITY ORPHAN ASYLUM, APPELLEE.



Appeal from the Superior Court of the District of Columbia. (CA-4613-00). (Hon. Zoe Bush, Trial Judge).

The opinion of the court was delivered by: Newman, Senior Judge

Argued October 12, 2005

Before TERRY and RUIZ, Associate Judges, and NEWMAN, Senior Judge.

This case has been here before. Washington City Orphan Asylum v. Board of Trustees of the Washington City Orphan Asylum, 798 A.2d 1068 (D.C. 2002) (WCOA I). There, we reversed the two rulings of the Superior Court which were challenged on appeal and remanded the case to the trial court for further proceedings. Dissatisfied with the results of the remand, the Trustees of the Washington City Orphan Asylum (WCOA) (who had prevailed in the Superior Court in the original proceedings) bring this appeal. Being satisfied that the rulings of the trial court on remand were correct, we affirm.

I. SUMMARY

In WCOA I, the Directors of WCOA challenged certain actions of the Trustees of WCOA by suing in Superior Court. That court ruled that the Directors lacked standing to bring the actions. In the alternative, the trial court ruled for the Trustees on the merits, concluding that as a matter of law, the plain language of the governing statutory provisions authorized the challenged actions of the Trustees. The trial court granted the Trustees' motion for judgment on the pleadings. On appeal, we reversed both rulings of the trial court. First, we held that the Directors did have standing because: (1) they, as well as the community interest they served, would suffer a cognizable injury from the Trustees' actions; and (2) the Directors had a "special interest" in enforcing the provisions of the charitable trust at issue. WCOA I, supra, 798 A.2d at 1075-76.

Second, we held that the trial court erred in ruling that the language of the statutory provisions was "unambiguous" and authorized the challenged actions of the Trustees. Id. at 1079. Holding that the statutory provisions were in fact ambiguous, we remanded the case to the trial court to construe the provisions of WCOA's statutory charter, applying the appropriate rules of statutory construction and considering specified extrinsic evidence. The trial court did so and ruled in favor of the Directors, and held the actions of the Trustees to be unauthorized; accordingly, it entered judgment in favor of the Directors. It is from this ruling that the Trustees bring the present appeal.

II. FACTUAL AND PROCEDURAL BACKGROUND

WCOA*fn1 was founded in 1815 by First Lady Dolley Madison and other prominent women in the District of Columbia. In 1816, these women attempted to incorporate. Because coverture laws prevented married women from holding and managing property, the legislators apparently considered that it would be imprudent (or impractical) to make the founders -- all married women -- the incorporators. Consequently, the women continued to operate the orphanage as a non-incorporated entity for approximately thirteen years.

On May 24, 1828, Congress adopted "[a]n Act to incorporate the trustees of the Female Orphan Asylum in Georgetown,*fn2 and the Washington City Orphan Asylum in the District of Columbia" ch. 88, 6 Stat. 381, (1828) [hereinafter the WCOA Charter].*fn3

The WCOA Charter consists of an introduction and seven enumerated sections. Section 2 of the WCOA Charter provides that five men, as well as their successors, would form a Board of Trustees constituting a "corporation and body politic in law." All but one of the five named Trustees was married to a "lady manager" of the asylum.

The WCOA Charter further specifies that the "female directresses and managers" and their successors, shall continue to superintend and manage the internal affairs of the asylum. See WCOA Charter, supra note 3, § 6. The current Board of Directors succeeds the Board of Lady Managers. Correspondingly, the present Trustees are the successors of that predecessor all-male board.

From 1828 until 2000, the two boards appeared to function cooperatively in facilitating the charitable endeavors of WCOA, and its successors. Pursuant to internal corporate documents called "Constitutions," the Directors managed the internal affairs of the orphan asylum, and subsequently, the HCC. The Trustees, on the other hand, invested the endowment and managed the property of the corporation. See WCOA Const., art. II (1897); WCOA Const., art. II (1948); WCOA Const., art. II (1958). The Board of Trustees remained exclusively all-male and the Board of Directors was all-female until 1958, when the newly amended WCOA Constitution reflected a Board of Directors comprised of seventeen women and thirteen men. See WCOA Const., art. II (1958).

In 1998, the Trustees informed the Directors that they intended to cease funding HCC. Two years later, the Trustees repealed the WCOA Constitution, replacing it with a new set of by-laws that eliminated the role of the Board of Directors. The Trustees then advised the Directors that they would discontinue funding HCC beginning June 30, 2000.

The Directors challenged the Trustees' decision to oust them, filing a complaint in the Superior Court for injunctive relief and enforcement of trust. The Directors asserted that the Trustees had engaged in breach of fiduciary duty, arbitrary and capricious action, diversion of funds, conversion of funds and ultra vires acts in their management of the corporation and, as a result, demanded an accounting. The Trustees moved for judgment on the pleadings, contending the Directors lacked standing. The trial court agreed and awarded judgment on the pleadings. Alternatively, the trial court granted a judgment for the Trustees on the merits. We reversed, holding that the Directors possessed standing to sue, but remanded the case for the Superior Court to construe the ambiguous WCOA Charter. WCOA I, 798 A.2d at 1081.

We held that the Directors had standing to sue under two different theories. First, the Directors had an independent basis sufficient to satisfy standing requirements because the Directors, as well the community served by HCC, would suffer a cognizable injury should the Trustees terminate financial support. We further noted that the Directors asserted more than a generalized grievance because they would no longer be able to fulfill their role described in the WCOA Charter. Id. at 1074-75. Second, we held that rules governing charitable trusts could be applied to charitable corporations, thus giving the Directors standing to sue. Id. At 1075. As such, the Directors had a "special interest" in either the enforcement of a trust or as intermediate beneficiaries of a trust, distinct from that of the public, because the WCOA Charter assigned specific responsibilities to the directresses and managers. Id. at 1075-76.

We remanded the case to the Superior Court for it to construe the WCOA Charter. Noting that the WCOA Charter, in particular section 6, is ambiguous, we directed the trial court to determine the legislature's intent behind the WCOA Charter's enactment. We instructed the Superior Court to consider: (1) the respective powers and responsibilities of the Trustees and the Directors; (2) the merits of the Directors' specific claims for relief; and (3) if necessary, any outstanding factual or legal issues relating to the various counts of the complaint that required resolution prior to entering judgment. We noted that legislative history, background information leading to the enactment of the statute as well as events surrounding the enactment, the parties' course of conduct, and the WOCA Constitutions in effect near or at the time of enactment might prove useful when determining the WCOA Charter's meaning. Id. at 1081-82.

On remand, the trial court entered a Declaratory Judgment Order*fn4 construing the WCOA Charter to set forth a dual-board structure, with neither the Trustees nor the Directors enjoying plenary authority.*fn5 After construing the statute, the trial court ordered the parties to identify the remaining factual and legal issues to be resolved. At the same time, the trial court also granted the Board of Directors leave to amend the complaint so that they could name each trustee, in his individual capacity, as a defendant. The court also granted a motion for limited intervention purportedly filed by WCOA, but denied the intervenor's motion to dismiss on the same grounds it denied the Trustees' earlier motion to dismiss.*fn6 The Trustees petitioned this court for a writ of mandamus which was denied.

The Directors then sought summary judgment. The Directors sought an order compelling restitution of the monies spent by the Trustees on their defense in this litigation. In response, the Trustees moved for summary judgment and filed a motion under Super. Ct. Civ. R. 10, in which they sought to compel the individual Directors to be named as plaintiffs to facilitate any later court-awarded fees and costs.

While these motions were pending, the Trustees filed a second motion for summary judgment, asserting their immunity under the Volunteer Protection Act of 1997 (VPA). 42 U.S.C. ยง 14501 et seq. (2000). In its opposition, the Directors contended that this new defense was untimely and, ...


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