Director Removal – Page 2 – Delaware Docket

Gassis v. Corkery, C.A. No. 8868-VCG (Del. Ch. May 28, 2014)

May 29 2014

In Gassis v. Corkery, Civil Action No. 8868, Bishop Macram Max Gassis challenged his removal as Chairman of the Board and as a director of the Bishop Gassis Sudan Relief Fund, Inc., a Delaware charitable nonstock corporation (the “Fund”) dedicated to helping the people of southern Sudan. The Bishop also challenged the previous removal of two directors from the Fund’s board and the elections of two directors who replaced them.

Bishop Gassis’ removal at a 2013 board meeting came after years of friction with other board members, who contended that the Bishop was difficult to work with, negatively interacted with the Fund’s beneficiaries in Sudan, spent extravagantly on travels, invested in suspicious projects, and acted as though he had a personal interest in the Fund’s assets. These board members further argued that a provision of the Fund’s bylaws providing that the Bishop “shall serve [as Chairman of the Board] until his retirement or resignation” required him to be removed from the board upon his retirement as a Catholic Bishop, which was to occur on his seventy-fifth birthday on September 21, 2013.

Flaa v. Montano, Civil Action No. 9146-VCG (February 24, 2014) (Glasscock, V.C.)

Feb 25 2014

By Ashley Galston

In this opinion, Vice Chancellor Glasscock considered Defendants’ motion to dismiss on ripeness grounds in a DGCL Section 225 action. In 2013, certain stockholders of CardioVascular BioTherapeutics, Inc. (the “Company”) executed written consents purporting to remove the Defendant directors, including Daniel Montano, from the Company’s board of directors. A Status Quo Order, typical in a Section 225 action, put in place an interim board, of which Daniel Montano and the other individual Defendant directors were not members. The written consent was found to be invalid, the Plaintiff appealed, and the parties agreed to maintain the interim board pending appeal. However, before the Supreme Court heard the appeal, certain stockholders initiated a second written consent action, again, seeking to remove the Defendant directors. The Plaintiff then filed this Section 225 action seeking to confirm the second written consent. The Defendants moved to dismiss the second action for “lack of ripeness and other grounds”.

Section 225 provides that “upon application of any stockholder or director, or any officer whose title to office is contested, the Court of Chancery may hear and determine the validity of any election, appointment, removal or resignation of any director or officer of any corporation, and the right of any person to hold or continue to hold such office….” 8 Del. C. § 225(a). V.C. Glasscock noted that “the statute imposes no explicit requirement that a director must hold office before this Court may determine her right to a seat.” And, further, he held that “even under a quo warranto analysis, the action is ripe…as Montano and the other Defendants remained on the de jure board.” Therefore, V.C. Glasscock found that the action was ripe. V.C. Glasscock declined to address the question raised by the Defendants of the “procedural efficacy of a written consent purporting to remove a director who is not a member of an interim board created by a status quo order.” V.C. Glasscock invited the Defendants to make that argument, along with other procedural challenges they raised in this motion, at a future evidentiary hearing related to the effectiveness of the second written consent.

Flaa v. Montano

Catagory:Director Removal