Harris v. The Southern Christian Leadership Conference Inc.

The Court affirmed the permanent injunction entered against six current or former board members of a non-profit corporation, enjoining them from interfering with corporate governance and use of the non-profit's property and assets, and from holding themselves out as corporate officers.

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The Southern Christian Leadership Conference, Inc. “SCLC”, its Board of Directors, and three individuals1 collectively, “SCLC” sued six former or current members of its Board of Directors2 “the Defendants”, seeking an order enjoining them from interfering with the SCLC’s corporate governance or with its use and enjoyment of the corporate headquarters. The SCLC also sought a declaratory judgment identifying its board members and officers, alleging that the Defendants had breached their fiduciary duty to the corporation, and seeking the repayment of corporate money the Defendants used to pay legal fees in a previous lawsuit. The SCLC also sued Wachovia Bank, N.A., and Citizens Trust Bank, seeking an injunction directing that the SCLC accounts be controlled by the Board of Directors. Following a lengthy hearing, the trial court issued a thoughtful, detailed, 37-page order granting a permanent injunction against the Defendants from interfering with the SCLC’s governance, from interfering with the SCLC’s use of its property and assets, and from holding themselves out as corporate officers unless they are re-elected, reinstated, or appointed by the Board. The court also declared the identity of the members of the Board of Directors as of June 1, 2010, and held that acts taken by that board and its successors in accordance with the SCLC’s constitution and bylaws were binding on the corporation.

The trial court found that the bank accounts at Wachovia and Citizens Trust should be managed and controlled by the Board of Directors, and ordered the banks to lift any freezes on the accounts and to grant access to authorized representatives of the Board. The court then found that the Defendants breached their fiduciary duties to the SCLC by using corporate funds to pay for the previously-dismissed lawsuit, the institution of which was not approved by the Board of Directors, and entered judgment against all four of the Defendants for $12,240.

Harris v. The Southern Christian Leadership Conference Inc.

The Court affirmed the permanent injunction entered against six current or former board members of a non-profit corporation, enjoining them from interfering with corporate governance and use of the non-profit's property and assets, and from holding themselves out as corporate officers.

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