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Krackeler Scientific, Inc. v. Ordway Research Institute, Inc.
Citations: 97 A.D.3d 1083; 949 N.Y.2d 286
Court: Appellate Division of the Supreme Court of the State of New York; July 26, 2012; New York; State Appellate Court
In March 2011, the plaintiff initiated a breach of contract lawsuit against the defendant, Ordway Research Institute, Inc., for nearly $97,000 related to products delivered under an alleged oral contract. In April 2011, the plaintiff amended the complaint to include Richard C. Liebich, chair of Ordway’s board, and added a fraud claim. Ordway subsequently filed for bankruptcy. Liebich moved to dismiss the case against him under CPLR 3211(a)(11), which protects uncompensated directors of not-for-profit corporations from litigation. The plaintiff opposed the motion, relying solely on the amended verified complaint. The Supreme Court granted Liebich's motion to dismiss, leading to the plaintiff's appeal. The relevant statute, N-PCL 720-a, provides qualified immunity to uncompensated directors in not-for-profits. The court must determine if the director is entitled to this immunity and if there is a reasonable probability that the director's conduct fell outside this protection. The burden is on the plaintiff to present evidentiary proof indicating that the director acted with gross negligence or intent to cause harm. In this case, the plaintiff alleged that Liebich falsely indicated Ordway could pay for the products, but failed to provide specific details or affidavits from the representatives who allegedly met with him. The court found that the plaintiff did not meet the burden of proof required under CPLR 3211(a)(11) and N-PCL 720-a, leading to the dismissal of the complaint against Liebich. The order was affirmed with costs.