Hockessin Community Center, Inc. v. Swift, 2012 WL 4789686 (Del. Ch. October 5, 2012)

Brian M Gottesman

Case Conclusion Date:October 11, 2012

Practice Area:Corporate / Incorporation

Outcome:Verdict in favor of Berger Harris's clients. Verdict set standards for governance of nonstock corporations.

Description:Berger Harris obtained a successful outcome today in Hockessin Community Center, Inc. v. Swift, C.A. No. 7789-VCL (Del. Ch.), an action filed against eight individual defendants to determine the identity of the duly-elected and constituted Board of Directors of Hockessin Community Center, Inc. ("HCC"), a Delaware nonprofit corporation. Berger Harris represented the defendants Francis Swift, Christopher DiMarco, Lillian Nichols, Nicole Hughes, Syl Woolford, Robert Fleming, Ken Henderson, and Gerald Lucas, all HCC directors, on a pro bono basis. The dispute arose over the stewardship of historic property owned by the HCC, which includes Hockessin Colored School # 107, a Segregation-era schoolhouse on Millcreek Road. The school was one of two at issue in the case of Gebhart v. Belton, 87 A.2d 862 (Del. Ch. 1952), aff'd, 91 A.2d 137 (Del. 1952), in which Chancellor Collins Seitz held that segregation in public schools as practiced in Delaware was a violation of the state and federal constitutions. Gebhart was one of five cases later reviewed by the U.S. Supreme court in Brown v. Board of Education, 347 U.S. 483 (1954), one of the most pivotal cases in American history. In late 2011 and early 2012, the HCC's president, Leslie Cammock, entered into a series of contracts (most of which were not approved by the Board of Directors) with HWI Partners, LLC and its principal, Martin Hunt, who promised to raise funds for the restoration and preservation of the schoolhouse. When those funds never materialized, four directors (Swift, DiMarco, Nichols, and Hughes) raised questions. Cammock promptly purported to remove them from the Board of Directors and to appoint Hunt and a number of his designees to replace them. Swift, DiMarco, Nichols and Hughes held subsequent Board meetings in May and June at which they appointed Woolford, Fleming, Henderson and Lucas to the Board. Fleming, who had served as the HCC's president in the 1990s, was re-appointed to that office. Meanwhile, Cammock and Hunt held meetings with the individuals they regarded as the Board. Matters came to a head when the Cammock-led group filed the Section 225 action asking the Court to declare that Swift, DiMarco, Nichols, Hughes, Woolford, Fleming, Henderson and Lucas were not Board members and had no power to act on behalf of the HCC. A one-day trial was held in the Court of Chancery on September 28, 2012 before Vice Chancellor Travis Laster. Berger Harris attorneys Mike McDermott, Brian Gottesman, Suzanne Holly, and David Anthony all contributed to the successful outcome of the case. On October 5, 2012, Vice Chancellor Laster issued a 51-page opinion vindicating the Defendants as members in good standing of the Board and stating that neither Hunt, nor any of the other individuals added to the Board by Cammock, were lawful directors of the HCC. Berger Harris's representation in this matter is part of the firm's long-standing commitment to community service. Jack Harris, Suzanne Holly, Brian Gottesman, Mike McDermott and David Anthony all serve as attorney guardians ad litem for the Office of the Child Advocate. McDermott also serves as chairman of the board of directors of the St. Patrick's Center in Wilmington and counsels other charities. Buddy Berger provides pro-bono legal services to the Girl Scouts and other nonprofit organizations.