Foundation of Human Understanding v. Masters ( 2021 )

119
Argued and submitted December 30, 2020, affirmed July 8, 2021
THE FOUNDATION OF
HUMAN UNDERSTANDING,
Plaintiff-Respondent,
v.
Mark MASTERS,
Defendant-Appellant,
and
Michael LOFRANO
and David Masters,
Defendants.
Josephine County Circuit Court
17CV47697; A171050
496 P3d 684
In this declaratory judgment action, The Foundation for Human Understand-
ing (FHU) filed suit seeking a declaration identifying the members of its board;
FHU asserted that defendant was not a member of its board. After more than a
year of discovery, motion practice, and hearings, the trial court granted FHU’s
motion for summary judgment. Defendant appeals, arguing that there are tri-
able issues of material fact that preclude summary judgment. Held: Because
the record reflects both that defendant was removed from the board and that he
subsequently attempted to reconstitute the board as a director of it, an office in
which the power to appoint and remove board members was not vested, the trial
court did not err in concluding that there were no triable issues of fact as to the
board’s composition. Additionally, the trial court did not abuse its discretion by
not considering evidence that was available to defendant before the court ren-
dered its decision but was not submitted to the court until defendant’s motion to
reconsider. Accordingly, the trial court did not err in granting summary judg-
ment to FHU.
Affirmed.
Kathleen E. Johnson, Judge.
Max C. Whittington argued the cause for appellant. Also
on the briefs was Cauble, Selvig & Whittington, LLP.
James R. Dole argued the cause for respondent. Also on
the brief was Watkinson Laird Rubenstein, P.C.
Before Lagesen, Presiding Judge, and James, Judge, and
Kamins, Judge.
120 Foundation of Human Understanding v. Masters
KAMINS, J.
Affirmed.
Cite as 313 Or App 119 (2021) 121
KAMINS, J.
Plaintiff, The Foundation for Human Understanding
(FHU), filed suit seeking a declaratory judgment identi-
fying the members of its board and declaring that defen-
dants were not board members. After more than a year of
discovery, motion practice, and hearings, the trial court
granted FHU’s motion for summary judgment. Defendant
Mark Masters1 appeals that judgment, arguing that there
are triable issues of fact that preclude summary judgment.
For the reasons explained below, we conclude that the trial
court did not err in granting summary judgment to FHU.
Consequently, we affirm.
We first summarize the relevant factual and pro-
cedural history, as well as the parties’ arguments before
the trial court, then we turn to Mark’s2 appeal. FHU is a
California nonprofit corporation that was established in
1984. Under Article III of the foundation’s original bylaws,
Roy Masters served in the role of Founder, and the office
of the Founder had the sole authority to appoint or remove
directors. Roy’s son Mark was named as one of the directors
of the foundation. In September 2016, Roy removed Mark
from FHU’s board of directors.
In September 2017, having been removed from the
board, Mark arranged an FHU “board meeting” with David
Masters, whom Roy had also removed from the board. Mark
also invited Roy to participate in the meeting as a director
of FHU. At that meeting, Mark and David, asserting that
they were directors of FHU, purported to remove Roy from,
and add Michael Lofrano—who had previously done finan-
cial work for FHU—to, FHU’s board of directors. After the
meeting, Lofrano sent a letter to Roy and the other mem-
bers of the board that notified them that “there [had] been
a change in the officers and directors of FHU[,]” they had
been replaced, and the new board consisted of Mark, David,
and Lofrano.
1
Michael Lofrano and David Masters, also defendants below, did not join in
this appeal.
2
We refer to the members of the Masters family mentioned in this opinion—
Mark, Roy, and David—by their first names for ease of understanding.
122 Foundation of Human Understanding v. Masters
In response, FHU initiated the action on appeal
by seeking a declaratory judgment that FHU’s “true and
lawful board of directors are Roy Masters, Wendy Taylor,
Charles Williams, Alan Masters, and Dianne Linderman
and that [Mark, David, and Michael Lofrano] are not offi-
cers or directors of the Foundation and have no lawful right
or authority to participate in the Foundation’s manage-
ment or control or to control any assets or records of the
Foundation.” FHU moved for summary judgment, contend-
ing that Lofrano was never a board member and that Mark
and David were properly removed from the board by Roy
and thus had no authority to continue acting as directors or
to add or remove board members. Mark opposed the sum-
mary judgment motion, arguing both that his 2016 removal
from the board was invalid and that he and David had law-
fully changed the composition of FHU’s board in 2017.
During a hearing on FHU’s motion, Mark asserted
that there was a previously undisclosed amendment to
FHU’s bylaws, adopted in 2003, that “specifies that in the
event of Roy Masters’ incapacity, [Mark] is appointed as suc-
cessor founder.” In a supplemental response in opposition to
FHU’s motion for summary judgment, Mark provided the
court with a copy of the purported 2003 amendment, and he
asserted in a declaration that Roy had become incapacitated
“in 2016.” However, Mark did not claim that he had taken
any action under the authority of the office of the Founder
since that time. Mark’s declaration also did not address the
seeming inconsistency of inviting Roy to participate in the
purported board meeting in September 2017, if Roy was
incapacitated and no longer able to serve.
The trial court granted FHU’s motion for sum-
mary judgment in a letter opinion in March 2019. The court
stated that FHU’s bylaws “make it clear that the Founder
has sole authority to appoint and remove members of the
Board of Directors[,]” and Mark had been properly removed
under that authority. The court further concluded that the
attempted removal of Roy during the alleged “board meet-
ing” was undertaken by Mark and David as purported
members of the board of directors. Consequently, even if the
purported 2003 amendment was valid (a determination the
Cite as 313 Or App 119 (2021) 123
trial court did not make) and operated to make Mark the
Successor Founder in the event of Roy’s incapacity, FHU
was still entitled to summary judgment because Mark did
not proffer evidence of his assumption of the role of Founder.
The parties agree that only the office of the Founder, no
other office within the board of directors, is vested with the
authority to remove board members; however, Mark did not
assert that he was acting as the Founder when he attempted
to remove Roy. Rather, the evidence in the record reflects
Mark tried to remove Roy as a director himself—an office
which does not have the power to do so.
Mark filed a motion for reconsideration, in which he
informed the trial court for the first time that Roy had been
legally adjudged to be incapacitated in October 2018. Mark
argued that, regardless of any of the prior actions of any
board members, “the subsequent incapacity of Roy Masters
makes [Mark] the successor Founder and grants him the
sole discretion to appoint and remove Board members. * * *
[Mark] has used that authority to [reconstitute the board] in
March of 2019.” The trial court entered its general judgment
in May 2019, in which it referenced its letter opinion grant-
ing FHU’s motion for summary judgment and declared that
the composition of FHU’s board was as FHU contended.
On appeal, Mark contends, in an argument that
deviates from his initial opposition to summary judgment,
that “Roy Masters was legally incapacitated at some point
prior to summary judgment being granted, and therefore,
under the [FHU bylaws and the 2003 amendment], Mark
Masters lawfully became the Successor Founder of FHU
and gained the sole authority to appoint or remove mem-
bers of the board of directors.” Mark makes two arguments
to support that contention: first, that his removal from the
board in 2016 was invalid, and thus Mark and David effec-
tively reconstituted the board in 2017; second, that Mark
became Successor Founder in October 2018 when Roy was
legally adjudged incapacitated and therefore Mark gained
the power to reconstitute the board then if at no time before.
We review a trial court’s grant of summary judg-
ment for errors of law and will affirm if there are no genu-
ine issues as to any material fact and the moving party is
124 Foundation of Human Understanding v. Masters
entitled to judgment as a matter of law. Buchwalter-Drumm
v. Dept. of Human Services, 288 Or App 64, 66, 404 P3d 959
(2017). “No genuine issue as to a material fact exists if * * *
no objectively reasonable juror could return a verdict for the
adverse party.” ORCP 47 C. We view the facts in the light
most favorable to the nonmoving party—here, Mark—and
draw all reasonable inferences therefrom in that party’s
favor. Jones v. General Motors Corp., 325 Or 404, 408, 939
P2d 608 (1997). For the following reasons, we affirm the
trial court’s grant of summary judgment.
First, Roy was authorized to remove Mark from his
position as a director of FHU in 2016. Mark does not dispute
that Roy, as Founder, had the authority to remove him from
the board. Mark does suggest that the removal was invalid
because Roy was incapacitated at the time, but the minutes
reflect the removal and all evidence in the record reflects
that Roy acted in the role of Founder at that time. Moreover,
the record is sparse as to any evidence of Roy’s incapacity
in 2016. That evidence consisted of a declaration in which
Mark testified that he “considered [Roy’s incapacity] to have
occurred in 2016,” and a declaration from an attorney for
FHU who asserted that Roy was incapacitated “[b]y late
2015.” However, the trial court granted FHU’s motion to
strike those declarations in the same letter opinion in which
it granted FHU’s motion for summary judgment, and Mark
does not challenge that decision on appeal.3
Next, Mark contends that he properly removed Roy
from the board in 2017 because Roy was incapacitated at
that time. If the 2003 amendment is valid, its operation
would render Mark the Successor Founder in the event of
Roy’s incapacity, a position with authority to remove direc-
tors. However, regardless of Roy’s alleged incapacity, the
record reflects that Mark acted as a purported director, not
Successor Founder, when he attempted to remove Roy from
and otherwise reconstitute FHU’s board in 2017. Moreover,
in his opposition to FHU’s motion for summary judgment,
Mark averred that he and David, as directors of FHU at a
3
Mark contests the legitimacy of the board meeting at which Roy removed
him from the board. However, Mark does not point to any requirements in the
bylaws that the Founder exercise his authority to remove directors during a
board meeting.
Cite as 313 Or App 119 (2021) 125
board of directors meeting, removed Roy from the board and
subsequently sent a letter to notify the other board members
that “there [had] been a change in the officers and directors
of FHU” and listed the purported new directors as Mark,
David, and Michael Lofrano. That letter asserted only that
Mark was a director, not the Successor Founder, nor did it
mention the office of the Founder at all.4
Even if Roy had not validly removed Mark from the
board in 2016 or if Roy was incapacitated in 2017, neither
Mark nor David had the authority as director to appoint or
remove board members. Consequently, Mark and David’s
purported additions and removals of board members could
not have altered the board’s composition. Accordingly, the
trial court did not err when it concluded that there were no
remaining issues of material fact with respect to the compo-
sition of FHU’s board of directors as of 2017.
Finally, Mark asserts that he became Successor
Founder by operation of the purported 2003 amendment
when Roy was adjudged incapacitated in October 2018.
However, despite that judgment being rendered five months
before the trial court issued its letter opinion, Mark did not
put it into evidence or even mention it until his motion for
reconsideration. Mark did not argue that he became FHU’s
Successor Founder as a result of the October 2018 incapacity
judgment or that he took any actions under that authority
during the summary judgment briefing or hearings. Indeed,
he did not present evidence of Roy’s incapacity in 2018 until
the trial court had already rendered its decision.
It is within the trial court’s discretion to decline
requests to supplement the summary judgment record after
the court has rendered its decision. Williams v. Haverfield,
82 Or App 553, 559, 728 P2d 924 (1986) (requesting “the
reopening of a summary judgment hearing is analogous to
reopening a case after trial for presentation of new evidence,
4
The only evidence of incapacity that was not stricken from the record sup-
ports this conclusion. In a declaration, David averred that when “the Board took
action to remove Roy Masters and reconstitute the Board of Directors [in 2017],
we did so with the knowledge that Roy Masters had become incapacitated and we
had the authority to do so by virtue of [the 2003] Bylaw Amendment.” Regardless
of David’s belief as to Roy’s capacity, he acknowledged that the removal was
undertaken by him and Mark as “the Board,” not as Successor Founder.
126 Foundation of Human Understanding v. Masters
a matter in the discretion of the trial court”). And it is not
an abuse of that discretion for a trial court to decline to con-
sider evidence submitted for the first time in a motion for
reconsideration when the moving party “gave no indication
why that [evidence] could not have been submitted prior to
the trial court’s consideration of plaintiff’s motion for sum-
mary judgment.” Citizens Valley Bank v. Mueller, 63 Or App
152, 156, 662 P2d 792 (1983). Here, Mark never provided
any reason that he was unable to provide that judgment to
the court before it issued its letter opinion in March 2019. To
the contrary, the record reflects that Mark knew about the
incapacity judgment and was in communication with Roy’s
appointed guardian no later than January 2019.5
Here, the trial court allowed for extended develop-
ment of the record through multiple hearings, continuances,
and filings from the parties, including allowing Mark to file
a supplemental response to the summary judgment motion
with new evidence.6 Because a trial court makes its determi-
nation about summary judgment on the basis of the record
before it, which is composed of “the pleadings, depositions,
affidavits, declarations, and admissions on file,” see ORCP
47 C (emphasis added), Mark was required to put all avail-
able evidence that he wanted the court to consider into the
record before the trial court decided the motion.
In light of the multiple opportunities that defen-
dant had to submit the October 2018 incapacity judgment,
the trial court did not abuse its discretion when it did not
consider evidence submitted for the first time in a motion
to reconsider. Moreover, given the evidence in the record at
the time that the trial court rendered its decision, Mark did
not establish a triable issue of fact as to the composition of
FHU’s board of directors. Accordingly, we also conclude that
the trial court did not err in granting summary judgment
5
Notably, in those communications with Roy’s appointed guardian, emails
submitted to the court by FHU as an exhibit to a declaration in support of its
summary judgment motion, Mark expressed opposition to placing Roy in a
memory-care facility, because, in Mark’s opinion, Roy’s impairment was temporary.
6
See ORCP 23 E (“Upon motion of a party the court may, upon reasonable
notice and upon such terms as are just, permit the party to serve a supplemen-
tal pleading setting forth transactions or occurrences or events which have hap-
pened since the date of the pleading sought to be supplemented.”).
Cite as 313 Or App 119 (2021) 127
to plaintiff without reaching the issue of the validity of the
2003 amendment.
Affirmed.