Brown, et al. v. Pounds, et al.; McGinnis, et al. v. Pounds, et al.Annotate this Case
Cobb Electric Membership Corporation ("Cobb EMC") members filed a derivative action against Cobb EMC and the parties subsequently entered into a settlement agreement. At issue was whether the Court of Appeals erred by failing to defer to the trial court's determination that Cobb EMC's Board of Directors ("Board") was authorized to adopt the proxy voting bylaw agreement. Also at issue was whether the Court of Appeals erred in holding that the use of the proxy voting pursuant to the Board's bylaw amendment violated the provision of the settlement agreement. The court held that although the Court of Appeals mischaracterized the nature of the issue on appeal, it did utilize the correct standard for reviewing the trial court's legal conclusions, i.e., de novo review. The court also held that while it agreed with the conclusion that the Board's proxy voting bylaw amendment violated the terms of the settlement agreement, the Court of Appeal's reasoning was not the basis upon which the court's conclusion rested. The court held, nevertheless, that the Board's proxy voting bylaw amendment violated the trial court order approving the settlement agreement because it significantly changed the conditions under the parties' agreed-upon plan for proposing the option of proxy voting. The court finally held that, because the trial court's May 2009 order did not address the "full cooperation" requirement of its previous order, the Court of Appeals erred in considering the issue. Accordingly, the judgment was affirmed in part and reversed in part.