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Bishop Macram Max Gassis v. Corkery

Court of Chancery of Delaware

May 28, 2014

BISHOP MACRAM MAX GASSIS, for himself and derivatively on behalf of BISHOP GASSIS SUDAN RELIEF FUND, INC., a Delaware charitable nonstock corporation, Plaintiff,
v.
NEIL CORKERY, ANN CORKERY, JOHN KLINK, STEVEN WAGNER, KATHLEEN HUNT, FR. RODGER HUNTER-HALL, and DAVID COFFEY, Defendants, and BISHOP GASSIS SUDAN RELIEF FUND, INC., a Delaware charitable nonstock corporation, Nominal Defendant.

Submitted: May 9, 2014

David A. Dorey and Elizabeth A. Sloan, of Blank Rome LLP, Wilmington, Delaware, Attorneys for the Plaintiff.

Elena C. Norman, Timothy Jay Houseal, Kathaleen St. J. McCormick, Elisabeth S. Bradley, and Lakshmi A. Muthu, of Young Conaway Stargatt & Taylor LLP, Wilmington, Delaware; OF COUNSEL: Scott J. Ward and Stephen H. King, of Gammon & Grange, P.C., McLean, Virginia, Attorneys for the Defendants.

MEMORANDUM OPINION

GLASSCOCK, Vice Chancellor

Sudan is a country shattered by sectarian civil war. Particularly harshly affected have been the regions in central Sudan, where the conflict between the Islamic government and its Christian citizens has been keen. The southern portion of Sudan has recently seceded and formed a new nation, South Sudan. Unfortunately, conflict persists, both there and in what was the central—now the southern—regions of Sudan itself.

This unfortunate litigation involves a struggle over a charitable corporation founded to help the oppressed people described above, particularly but not exclusively the people of the Nuba Mountain region of what is now the southern part of Sudan. The charity, now known as Sudan Relief Fund, Inc. (the "Fund"), consisted of two very different but indispensable elements: organizers and fundraisers in the United States, and those guiding the use of charitable funds on the ground in one of the more remote and dangerous areas of the world. Although the Fund is not officially associated with the Catholic Church, its board members are all congregants of that Church, and the Fund has distributed its charity through a Catholic group—the Comboni Missionary organization—and the Catholic Diocese of El Obeid, which encompasses the Nuba Mountain region. The Bishop of El Obeid, from the time of the Fund's creation until recently, was Macram Max Gassis. Bishop Gassis was the face of the charity, which for many years bore the name Bishop Gassis Sudan Relief Fund. He directed the charitable works on the ground in Sudan. Bishop Gassis was also the designated Chairman of the Board of the Fund. Both his status as board member and Chairman were largely honorific, however; he devoted little effort towards operating or overseeing the charity. His Fund-related time was spent on the ground in Sudan, doing the work for which the charity was organized.

On August 23, 2013, the Fund's board of directors voted to remove Bishop Gassis from the board. This litigation resulted, with the Plaintiff, Bishop Gassis, alleging that the board breached its fiduciary duties, misappropriated his name and likeness and committed other actionable wrongs. The Amended Complaint also seeks a determination that Bishop Gassis and two other board members were not validly removed from, and thus still serve on, the board. This Memorandum Opinion addresses that summary proceeding under Section 225 of the DGCL. I find that Bishop Gassis was validly removed by a two-thirds vote of directors, as provided in the Fund's Bylaws, effective September 21, 2013; that he ceased to be a member, officer, or director of the Fund at that time; and that he therefore lacks standing to challenge the current composition of the board. The other issues will be addressed by separate Opinion.

I. FACTS

1. Bishop Macram Max Gassis

In order to understand the issues before me, it is necessary to know something of the history of the remarkable individual who is the Plaintiff in this action, Bishop Gassis, and the diocese he administered for many years. Bishop Gassis is a former Catholic Bishop of the El Obeid Diocese. He was born in the city of Khartoum, located in northeastern Sudan. In 1957, Bishop Gassis joined the Comboni Missionary, and in 1964, after attending seminary in Italy, he was ordained.[1] Bishop Gassis was elected Apostolic Administrator of the El Obeid Diocese in October 1983 and, in 1988, he was nominated Bishop of that diocese.[2]

The El Obeid Diocese is one of two dioceses in Sudan; the other is the Archdiocese of Khartoum.[3] The El Obeid Diocese, which covers a geographic area two-and-a-half times the size of Italy, is located predominately in western Sudan but also extends into portions of newly-independent South Sudan.[4] The diocese includes the areas of "North and South Darfur, North and South Kordofan (the Nuba Mountains) and [the] Abyei region."[5]

The Nuba Mountain region—"located between Arab Sudan and the Christian South Sudan"—is of particular interest to the Bishop.[6] In fact, he contends that he was "exiled from much of his El Obeid diocese, and even from his family, after speaking out against the Islamist regime centered in Khartoum and aiding the suffering Nuba people [whom] the regime indiscriminately bombed, enslaved, and killed."[7] The Plaintiff's Amended Complaint explains that, in this region:

Sudanese planes routinely drop bombs on schools and huts. Starvation is as rampant as medical care is sparse. Many victims flee the conflict and concentrate in the nearby Yida refugee camp in Unity State in South Sudan. In addition, refugees from Abyei in the Nuba mountain conflict area of the El Obeid Diocese have fled to Twic County in the Diocese of Wau in South Sudan.[8]

The Plaintiff also explains that "[t]here is a sharp divide between the violent Nuba Mountain region in [Christian] southern Sudan, where Bishop Gassis has always focused his humanitarian and awareness efforts, and the Arab-northern part of Sudan."[9] Notably, Bishop Gassis was the only Arabic-speaking member of the Sudan Catholic Bishops' Conference.[10]

According to the Amended Complaint, "[t]hrough his tireless and selfless work, Bishop Gassis has developed tremendous international recognition as a humanitarian, bringing the conflict and his people's plight to the world's consciousness."[11] He has testified before the United States Congress, the State Department, and the United Nations Human Rights Commission, and met with members of the German Bundestag and of the European Parliament, as well as other world leaders.[12] Bishop Gassis has been recognized with various accolades, including the William Wilberforce Award, the A. Philip Randolph-Bayard Freedom Award, an Honorary Doctorate Degree in Human Letters from San Francisco University, and the Catholic University of America's President's Medal.[13] In 2012, Bishop Gassis was nominated for a Nobel Peace Prize by Portuguese MP José Ribeiro e Castro, [14]

in recognition of his courage in the struggle against the discrimination of Christians in the Sudan. Mr[.] Castro said Bishop Gassis is a witness of the great dramas, the great sufferings of his Christian people and he himself experienced persecution. He added that the Sudanese bishop deserves the award due to his long stand of consistency, tenacity and courage during many years in favour of the persecuted Christians in the Sudan.[15]

The Defendants also recognize that Bishop Gassis "has worked tirelessly for decades to give voice to the victims of the war-torn region of Sudan, " and that "[i]n doing so, [he] has encountered great hardship."[16]

In accordance with canon law, Bishop Gassis submitted his resignation to Pope Francis on September 21, 2013, his seventy-fifth birthday.[17] The Pope accepted the Bishop's resignation on October 28, 2013.[18] Following his resignation, Bishop Gassis "continues to work in Southern Kordofan and Twic County following requests from the respective [Bishops of those dioceses]."[19]

2. Bishop Gassis Sudan Relief Fund

In an effort to bring some relief to his diocese, Bishop Gassis became involved with the formation of Sudan Relief and Rescue, Inc., a Delaware nonprofit, nonstock corporation, in 1999;[20] in 2001, the corporation's Certificate of Incorporation was amended to change the corporation's name to Bishop Gassis Sudan Relief Fund, Inc.[21] The Plaintiff contends that the Fund's charitable purpose at its incorporation was limited to providing relief to the Nuba Mountain region of Sudan. Indeed, the Fund's Certificate of Incorporation states that the Fund's purpose "includ[es], but [is] not limited to, " "providing the people of Sudan's Nuba Mountain region with food, clothing, medical supplies, farming equipment, books, and other educational materials, " in addition to "developing, establishing, and supporting educational facilities in the Nuba Mountains to teach residents husbandry techniques as well as basic reading, writing, and mathematics skills . . . ."[22] The Fund has raised over $25 million throughout its fifteen-year history.[23] As of August 2013, the Fund maintained a cash balance of approximately $6.4 million, funded by donors.[24]

3. The Directors' Relationships Break Down

In 2010, the Fund's seven-member board of directors consisted of Bishop Gassis, his supporters David Forte and Nina Shea, and Defendants Ann Corkery, John Klink, Steven Wagner, and David Coffey. At that time, Neil Corkery, Ann's husband, acted as the Fund's "Executive Director, " a full-time management position. The Plaintiff contends that in 2010, Defendants Neil, Ann, [25] Klink, Wagner, and Coffey hatched a plan to force the Bishop out of the Fund. The

Plaintiff suggests that the rift in the board was primarily caused by differing opinions among directors as to how donors' funds should be distributed among projects in and outside of the Nuba Mountain region. Throughout the Fund's history, the board had largely deferred to Bishop Gassis as to how donor funds would be spent. Beginning in 2010, however, the board began to fund projects not approved by the Bishop, in regions of Sudan Bishop Gassis contends did not comply with the Fund's charitable mission to bring relief to the people of the Nuba Mountains.[26] While Ann testified at trial that the Fund began to support projects outside the Nuba Mountain region only because that region did not have the infrastructure, and therefore the capacity, to accept all the capital the Fund was willing to donate[27]—and although the Fund continued to spend ninety percent of its donations on projects chosen by Bishop Gassis[28]—the Plaintiff contends that disagreements regarding how to allocate the Fund's donations caused the Defendants to conspire to remove him.

The Defendants, on the other hand, resist the Plaintiff's characterization that there existed an insidious plot to remove the Bishop, but contend that, motivated by their fiduciary duties to the Fund's beneficiaries, Ann, Klink, Wagner, and Coffey began to plan what they hoped would be a smooth transition when Bishop Gassis ultimately left the Fund, which they expected to happen at the time of his mandatory retirement as bishop on his seventy-fifth birthday. The Defendants point to four sources of conflict that led to their decision to phase out the Bishop's participation in the Fund. First, the Defendants suggest that personality conflicts made it difficult to work with Bishop Gassis, particularly in light of what they characterize as his aggressive communication style[29] and lack of interest in the Fund's management, [30] as well as their concern that he may not have treated the Fund's beneficiaries in the Sudan as gently as they would have preferred.[31]Second, the Defendants explain that they were concerned by what they considered to be extravagant spending of donor funds by the Bishop throughout his travels.[32]Third, the Defendants believed that certain projects the Fund supported at Bishop Gassis's request had been double-funded by other charities, raising questions of accounting for funds spent.[33]

Finally, and perhaps most importantly, the Defendants contend that they were troubled by Bishop Gassis's attitude that the Fund was his personal property.[34] Significantly, the Defendants were alarmed by, and strongly disagreed with, former director Nina Shea's assertion at a 2010 board meeting that "when [Bishop Gassis] retired or became inactive, the Fund should 'sunset' and distribute its remaining assets" to the Bishop personally.[35] Because the Defendants believed that the Fund would continue even after Bishop Gassis's resignation[36]—or removal, if necessary[37]—they began to plan for that transition, which they hoped would occur without scandal, and consequently without a marked decrease in donations. Further, avoiding conflict appeared to the Defendants a distinct possibility, as Ann, Wagner, Klink, and Coffey understood that, in accordance with applicable canon law, Bishop Gassis would be required to resign from his status as bishop with the Catholic Church on his seventy-fifth birthday, in September 2013, [38] and that, upon the Bishop's retirement with the Church, he would, in accordance with the Fund's Bylaws, also be required to retire from the Fund.

Because the Defendants believed the Fund would continue, rather than inure to the benefit of the Bishop personally, after Bishop Gassis retired, they began to evaluate what would become of donations after Bishop Gassis's exit. As part of that effort, Neil, Ann, Klink, Wagner, and Coffey, without Bishop Gassis's knowledge, "developed a survey in the fall of 2012 that was sent out to a sampling of donors to determine whether they would continue to give to the [Fund] if Bishop Gassis was not involved."[39] They also ran tests to determine whether letters sent to donors signed by Neil, or in the name of the "Sudan Relief Fund, " received fewer responses than those signed by Bishop Gassis, in the name of "Bishop Gassis Sudan Relief Fund."[40] Ultimately, the Defendants determined to remove the Bishop from the board, regardless of whether the Fund could continue to use his name going forward.

4. The Board Holds Annual Elections

Prior to May 2011, the Fund had not in recent years conducted a meeting to re-elect directors, despite requirements in the Fund's Bylaws that a director election be held annually.[41] Specifically, the Bylaws provide that "[t]he [Fund's] Board shall be self-perpetuating with elections to be held at the Annual Meeting, and the Board members and Officers shall serve concurrently."[42] The Bylaws also specify that "[t]he members of the Corporation . . . shall be the members of the Board of Directors and each Member shall remain a Member so long as, and only so long as, such person continues to be a Director. A person shall cease to be a Member at such time as such person ceases to be a Director."[43] In addition, "Members, in their capacity as Members, shall have no right to vote for the election of members of the Board of Directors or in connection with any other matter except as may be required by law."[44]

The Plaintiff contends that in 2011, the board began to hold annual elections in an effort to replace Shea and Forte, who were aligned with Bishop Gassis, with directors who would support the Bishop's removal from the Fund. By contrast, Ann testified at trial that the decision to hold annual elections was a result of (1) conversations with legal counsel, who had explained that the Fund's Bylaws required annual elections;[45] (2) ongoing attempts at "professionalizing" the Fund;[46]and (3) concerns that arose when Shea expressed her belief that the Fund would "sunset" and assets would be distributed to Bishop Gassis personally when he eventually exited the Fund.

Elections held in 2011 and 2012, as well as a special board meeting held in 2013, form the basis of this Section 225 ...


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