United States District Court, W.D. Virginia, Harrisonburg Division
PHILIP A. CHARLES, et al., Plaintiffs,
FRONT ROYAL VOLUNTEER FIRE AND RESCUE DEPARTMENT, INC., et al., Defendants.
MICHAEL F. URBANSKI, District Judge.
Pending before the court are post-trial motions for judgment as a matter of law as to Count II of the amended complaint, Dkt. Nos. 86 & 87, and defendants' bill of costs, Dkt. No. 85. Following a jury trial, the defendants, Front Royal Volunteer Fire and Rescue Department, Inc. ("the Fire Department") and David Santmyers ("Santmyers"), prevailed as to Counts I and III of the plaintiffs' amended complaint. After considering the applicable law, evidence presented at trial, and the parties' respective briefs, the court is now prepared to rule. For the reasons that follow, the court will enter judgment in favor of the defendants as to Count II.
In Count II, plaintiffs, Philip A. Charles ("Charles") and David M. Ellinger ("Ellinger"), allege that the Fire Department, a Virginia non-stock corporation organized in the Commonwealth of Virginia, violated its bylaws in the removal of Charles from its membership and suspension of Ellinger. Plaintiffs claim these acts constitute ultra vires acts by the corporation and bring this cause of action pursuant to Va. Code section 13.1-828. Plaintiffs seek injunctive relief, damages suffered due to the alleged unauthorized acts, costs, and attorneys fees. The court dismissed Charles' claim under Count II in its May 13, 2014, Order, Dkt. No. 30, because Charles was not a member of the Fire Department and therefore lacked standing to bring a claim under Va. Code § 13.1-828.
The evidence related to Count II is as follows. Plaintiffs grew concerned about reductions in Fire Department resources and particularly with a "Cost-Recovery Program" designed to allow Warren County to recover funds for use of Fire Department resources. Under that program, the Fire Department was entitled to a share of those funds, and plaintiffs noticed that the Fire Department received less money from the county each year. When plaintiffs raised these concerns, they faced resistance from some other Board members, including Santmyers. As a result, Charles resigned from his position on the Board in the summer of 2012. In March of 2014, Charles invited a local newspaper reporter to attend a public meeting of the Fire Department during which board members discussed the Department's funding and resources. Charles and Ellinger also approached a member of the Front Royal Town Council about the Fire Department's funding and resource issues. Additionally, Charles, with Ellinger's assistance, sent a Freedom of Information Act ("FOIA") request to Warren County seeking information related to the Cost Recovery Program.
Subsequently, the membership voted by an overwhelming majority to remove Charles from its membership role. The Fire Department suspended Ellinger on May 24, 2014, and extended that suspension for sixty days after he failed to appear at the Board of Directors' meeting. The Fire Department extended the suspension for another nine days thereafter to coincide with the next membership meeting. No further action was taken as to Ellinger.
At the close of the presentation of Plaintiffs' evidence, the Fire Department and Santmyers moved for judgment as a matter of law as to all of the claims pursuant to Federal Rule of Civil Procedure 50(a). The plaintiffs opposed, and the court took the motion under advisement. Defendants renewed the motion after presenting their case, and, again, the court took the motion under advisement. The court submitted Count I and III to the jury in the form of special interrogatories, and the jury returned verdicts in favor of the defendants on both counts. Finding Count II concerned a pure question of law and without objection by the parties, the court did not submit that count to the jury. After trial, Charles and Ellinger filed a motion for entry of judgment as to Count II, and the Fire Department and Santmeyers filed their opposition.
The standard for granting judgment as a matter of law pursuant to Rule 50(a) "mirrors'" the standard for granting summary judgment "such that the inquiry under each is the same.'" Reeves v. Sanderson Plumbing Prods., Inc. , 530 U.S. 133, 150 (2000) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 250-51 (1986)); see also Fed.R.Civ.P. 50 advisory committee's note (1991) ("judgment as a matter of law" appears in both Rule 50 and Rule 56 to "call[ ] attention to the relationship between the two rules.") Thus, whether proceeding under Rule 56(a) or Rule 50(a), the court must "grant [the motion] if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986); Glynn v. EDO Corp. , 710 F.3d 209, 213 (4th Cir. 2014). When making this determination, the court should consider "all of the evidence in the record." Reeves , 530 U.S. at 150.
Under Virginia law, as set forth in Va. Code § 13.1-828(B), a corporate act may be challenged on the ground that the corporation lacked the power or authority to do the act. See Va. Code § 13.1-828(A) ("Except as provided in subsection B, corporate action may not be challenged on the ground that the corporation lacks or lacked power to act."). One permissible method is "in a proceeding by a member or a director against the corporation to enjoin the act." Va. Code § 13.1-828(B)(1). In the context of corporate acts, Virginia law distinguishes between those acts which are void and those which are merely voidable. In order to be ultra vires the act must be void, or in other words, the corporation must have lacked the power to do the challenged act altogether. See Kappa Sigma Fraternity, Inc. v. Kappa Sigma Fraternity , 266 Va. 455, 467, 587 S.E.2d 701, 708 (2003). Where a corporation has the power to do a particular act but fails to properly to do it, the act is voidable, not void. Princess Anne Hills Civic League, Inc. v. Susan Constant Real Estate Trust , 243 Va. 53, 61, 413 S.E.2d 599, 604 (1992).
Kappa Sigma involved a dispute between the national chapter of that fraternity and a foundation set up to hold a piece of property used as the fraternity's headquarters. Kappa Sigma , 266 Va. at 459-61. The foundation was a non-stock corporation. Id. at 459. The fraternity sought declaratory relief invalidating the foundation's 1974 amendments to its articles of incorporation because the foundation failed to have those amendments ratified by the fraternity's members. Id. at 462-63. The Supreme Court of Virginia agreed that the foundation failed to have the amendments ratified, but "because adoption of the 1974 amendments was within the Foundation's power conferred by statute, the Board's approval of those amendments was a voidable, rather than a void act of the corporation." Id. at 466. Likewise, in Princess Anne the Virginia Supreme Court decided a non-stock corporation's execution of a deed was not void, but voidable, where the president of the ...