Narrative Opinion Summary
In a case involving the Omar Ibn El Khattab Mosque, Inc., the Tenth District Court of Appeals addressed a protracted internal conflict over corporate governance, leading to a quo warranto proceeding initiated by the Ohio Attorney General. The case arose from the mosque's failure to adhere to corporate formalities, including maintaining accurate membership records and holding required elections for board directors, as stipulated by Ohio statutes R.C. 1702.13(A) and R.C. 1702.16. The dispute resulted in two competing boards, with each faction claiming legitimacy, leading to the freezing of the mosque’s charitable funds. The attorney general sought dissolution of the corporation under R.C. 2733.02, arguing that statutory violations rendered the corporation defunct. The appellate court granted the writ of quo warranto, mandating the dissolution of the corporation and the appointment of trustees to manage the winding down process and establish a successor entity. The Reash/Brey faction, representing the initial board, appealed the decision, asserting that the procedural failures did not cause the governance breakdown. However, the court affirmed the necessity of dissolution due to the corporation's inability to function effectively. Chief Justice O'Connor dissented, questioning the causal link between the statutory violations and the internal schism, highlighting the potential implications for nonprofit governance.
Legal Issues Addressed
Quo Warranto and Corporate Dissolution under R.C. 2733.02subscribe to see similar legal issues
Application: The court held that failure to adhere to corporate formalities warranted the issuance of a writ of quo warranto to dissolve the corporation.
Reasoning: The appellate court concluded that the initial board’s failures constituted a surrender of corporate rights, warranting dissolution.
Standing in Quo Warranto Actionssubscribe to see similar legal issues
Application: Only a public official, such as the attorney general, can initiate a quo warranto action, and the court dismissed the Khan/Ball faction’s attempt due to lack of standing.
Reasoning: The Khan/Ball faction attempted to initiate a quo warranto action but was dismissed for lack of standing, as such actions can only be initiated by a public official.
Statutory Compliance for Corporate Governancesubscribe to see similar legal issues
Application: The failure to hold annual meetings and maintain accurate membership records as required under R.C. 1702.16 and R.C. 1702.13(A) contributed to the dysfunction and eventual dissolution of the corporation.
Reasoning: The corporation failed to hold required annual meetings to conduct director elections for 2009 and 2010. R.C. 1702.16 mandates such meetings, either according to the corporation's articles or, if unspecified, on the first Monday of the fourth month after the fiscal year ends.
Trustee Appointment and Corporate Winding Downsubscribe to see similar legal issues
Application: The court ordered the appointment of a trustee to oversee the winding down of the corporation and the establishment of a successor entity.
Reasoning: The magistrate's recommendation included issuing the writ of quo warranto, appointing a trustee or receiver, and referring the case to the common pleas court for the creation of a successor entity.