INDIAN HILLS COMMUNITY COLLEGE, Plaintiff-Appellant, vs. INDIAN HILLS BOOSTER CLUB, and CHARLES C. TALBOT, Defendant-Appellee.
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IN THE COURT OF APPEALS OF IOWA
No. 7-064 / 06-0392
Filed March 28, 2007
INDIAN HILLS COMMUNITY COLLEGE,
Plaintiff-Appellant,
vs.
INDIAN HILLS BOOSTER CLUB, and
CHARLES C. TALBOT,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Appanoose County, Annette J.
Scieszinski, Judge.
Indian Hills Community College appeals from the ruling granting summary
judgment and dismissing its claims against Charles C. Talbot. AFFIRMED.
John Moreland, Ottumwa, and Bradley Grothe and Joseph Goedken of
Osborn, Bauerle, Milani, Grothe & Mitchell, L.L.P., Centerville, for appellant.
James Carney of Carney & Appleby, P.L.C., Des Moines, and Aaron
Oliver of Hansen, McClintock & Riley, Des Moines, for appellee Charles C.
Talbot.
Heard by Vogel, P.J., and Vaitheswaran and Eisenhauer, JJ.
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VOGEL, P.J.
Indian Hills Community College appeals from the ruling granting summary
judgment and dismissing its claims against Charles C. Talbot. We affirm.
Background Facts and Proceedings.
In this summary judgment proceeding, one fact is wholly undisputed: since
the 1970’s, Charles Talbot has been an avid supporter of Indian Hills Community
College athletics and widely recognized by the school and community for his
fund-raising success.
In 1992, Indian Hills awarded Talbot the Indian Hills
Community College Outstanding Service Award.
In 1998 Talbot was again
honored by the college when it named the baseball hitting center after him.
However, Indian Hills’ lack of oversight of the raised funds eventually caused the
relationship to deteriorate, leading to this action for an accounting and to enjoin
Talbot’s further use of the college’s name and logo in his fund-raising efforts.
In his affidavit in support of summary judgment, Talbot claims to have
made personal gifts to the college totaling over $45,000 and raised additional
funds for the athletic programs in excess of $97,000.
Since 1988, Talbot
assisted in two annual fund-raising activities for the baseball team: the first
involved selling advertising signs on the outfield wall of the baseball field; the
second concerned the “Annual Sports Banquet,” a dinner and auction
spearheaded by the baseball coach.
Originally, Talbot, along with John Riggall and Bob Traxler, operated
together merely as informal boosters for the sports teams. The group was not
incorporated in any fashion and did not operate under any bylaws or operating
agreement. In 2001, Talbot, Riggall, and Traxler incorporated the “Indian Hills
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Booster Club” as a nonprofit corporation, and in 2002 they filed amended articles
of incorporation in which the Club’s announced sole purpose was, “To promote
and support the best interests and welfare of the Indian Hills Community College
sports programs.” All three men served as the Club’s directors, however, only
Talbot was named individually in this action. Prior to the Club’s incorporation,
Talbot had approached Keith Sasseen, the Executive Vice President of Finance
and Records for the school, to discuss the creation of a tax-exempt booster club.
According to Sasseen, he informed Talbot that the creation of such an entity
would require approval from the school and its board of trustees.
Talbot
proceeded without requesting such approval from the school.
After
incorporation, the Club’s main activities continued to be the sales of outfield signs
and the Annual Sports Banquet.
In January of 2002, F. James Lindenmeyer became president of Indian
Hills Community College and later that summer or fall he held a meeting with
Talbot, Riggall, and Traxler.
It was from this meeting that Lindenmeyer
discovered that their Booster Club had a separate financial account used to
deposit raised funds and in turn disburse funds when requested by the baseball
coach. After further investigation, Lindenmeyer again contacted Talbot, Riggall,
and Traxler, informing them they needed to run the donated funds through a
school-audited account.
Despite Lindenmeyer’s request, the three kept the
raised funds in a separate Booster Club account and did not provide Indian Hills
with the Club’s financial records.
On April 20, 2004, Indian Hills filed a petition in equity against Talbot and
the Booster Club alleging counts of conversion and unauthorized acts of a
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purported agent. It also sought an accounting, imposition of a constructive trust,
and an injunction. A later amended petition sought to enjoin Talbot and the
Booster Club from using the school’s alleged common-law trademarks and
demanded an accounting of all funds produced by the various fund-raising
events. On December 14, 2005, Talbot, but not the Booster Club, moved for
summary judgment. Following a hearing the district court granted the motion and
dismissed Indian Hills’ claims against Talbot. 1 Indian Hills appeals.
Summary Judgment Standards.
We review a summary judgment ruling for the correction of errors at law.
Kelly v. Iowa Mut. Ins. Co., 620 N.W.2d 637, 641 (Iowa 2001). Our supreme
court has set forth the standard of review of a district court's entry of summary
judgment:
In reviewing the grant of summary judgment . . . the question is
whether the moving party demonstrated the absence of any
genuine issue of material fact and showed entitlement to judgment
on the merits as a matter of law. An issue of fact is ‘material’ only
when the dispute is over facts that might affect the outcome of the
suit, given the applicable governing law. The requirement of a
‘genuine’ issue of fact means that the evidence is such that a
reasonable jury could return a verdict for the nonmoving party. Our
task on appeal is to determine only whether a genuine issue of
material fact exists and whether the law was correctly applied. We
examine the record in a light most favorable to the party opposing
the motion for summary judgment to determine if movant met his or
her burden.
Rants v. Vilsack, 684 N.W.2d 193, 199 (Iowa 2004)
Summary Judgment.
1
Although the claims against the Indian Hills Booster Club remained and were set for
trial, Indian Hills Community College and the Indian Hills Booster Club subsequently
settled their portion of this case. As an element of that settlement, the parties stipulated
that Indian Hills’ ability to appeal from the summary judgment ruling on the claims solely
against Talbot would be preserved.
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In granting summary judgment, the district court found no dispute of
material fact as to any wrongdoing that would support Indian Hills’ claims (1) that
Talbot infringed upon the school’s “common-law trademark”; or (2) that Talbot’s
activities constituted “unfair competition” under federal law.
It also found no
support for the demand for an accounting as there was absolutely no evidence of
misconduct by Talbot or that he derived any personal or financial benefit from his
fund-raising activities. In addition, the court held that Talbot was immune under
the provisions of Iowa Code sections 504A.101 and 613.19 (2003).
Immunity.
In its “Conclusions of Law,” the district court determined that “Talbot, as a
volunteer for the Booster Club, is immune from personal liability for his actions on
behalf of the group. The College is unable to show that there is any controverted
fact that, if proven, would trigger an exception to Talbot’s immunity.” In support
of this ruling, it cited Iowa Code sections 504A.101 (relating to nonprofit
corporations) and 613.19 (relating to unincorporated clubs and associations). On
appeal, Indian Hills claims the district court’s determination of Talbot’s immunity
is in error. Finding this issue dispositive of the appeal, we turn to the code
sections.
Iowa Code section 613.19 provides:
Personal liability.
A director, officer, employee, member, trustee, or volunteer, of a
nonprofit organization is not liable on the debts or obligations of the
nonprofit organization and a director, officer, employee, member,
trustee, or volunteer is not personally liable for a claim based upon
an act or omission of the person performed in the discharge of the
person's duties, except for acts or omissions which involve
intentional misconduct or knowing violation of the law, or for a
transaction from which the person derives an improper personal
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benefit. For purposes of this section, "nonprofit organization"
includes an unincorporated club, association, or other similar entity,
however named, if no part of its income or profit is distributed to its
members, directors, or officers.
Section 504A.101, a provision of the Iowa Nonprofit Corporation Act, provides
Personal liability.
Except as otherwise provided in this chapter, a director, officer,
employee, or member of the corporation is not liable on the
corporation’s debts nor obligations and a director, officer, member,
or other volunteer is not personally liable in that capacity, for a
claim based upon an act or omission of the person performed in the
discharge of the person’s duties, except for a breach of the duty of
loyalty to the corporation, for acts or omissions not in good faith or
which involve intentional misconduct or knowing violation of the
law, or for a transaction from which the person derives an improper
personal benefit.
Upon our review of these broad-ranging personal liability statutes and the
facts of this record on summary judgment, we conclude the district court correctly
determined that Talbot is immune from the claims made against him, and that no
genuine issue of material fact remains that would trigger any exception to the
immunity.
It is not disputed that Talbot acted as a director, officer, or volunteer of the
Booster Club, both before and after its official incorporation.
Thus, the first
elements of both section 504A.101 and 613.19 are satisfied. Both provisions
impart immunity for similar actions.
In that respect, they provide that an
individual, as defined above, is not personally liable for the “debts or obligations”
of the organization or corporation. Furthermore, sections 504A.101 and 613.19
identically provide immunity for “a claim based upon an act or omission of the
person performed in the discharge of the person's duties . . . .” Here, Indian Hills
notes in its appeal brief that it is seeking to recover personally from Talbot based
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on his “tortious conduct.” These Code provisions plainly render an individual in
the shoes of Talbot immune for such conduct.
We next look to the types of organizations under which this immunity may
attach. Section 504A.101 is part of the Iowa Nonprofit Corporation Act, and thus
the immunity it details applies to nonprofit corporations.
It is undisputed the
Booster Club was incorporated as a nonprofit organization.
Section 613.19
applies to directors, officers and volunteers of a “‘nonprofit organization’ [which]
includes an unincorporated club, association, or other similar entity . . . .” This
section renders Talbot immune for any actions taken on behalf of the Booster
Club prior to its incorporation. Before that time, Talbot, Riggall and Traxler acted
informally as an “unincorporated club” under the name Indian Hills Booster Club
and conducted largely the same activities as they did after incorporation.
Finally, we address the exceptions to immunity provided in both
provisions, and after viewing the facts in the light most favorable to Indian Hills,
find none of them to be applicable to Talbot. Under section 613.19, such conduct
would be for “acts or omissions which involve intentional misconduct or knowing
violation of the law or for a transaction from which the person derives an
improper personal benefit.” Similarly, section 504A.101 provides an exception
“for acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of the law, or for a transaction from which the person derives
an improper personal benefit.”
As the district court noted in its summary
judgment ruling, there has been “[n]o material evidence . . . presented, and there
is no dispute over any fact leading to any reasonable inference that would
support the College’s claims for wrongdoing” on the part of Talbot. Furthermore,
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“there is no showing that any of his activism on behalf of the Booster Club has
been illegal or inappropriate.” We agree. Absent the raising of even a single
inappropriate act from which a material fact could be in dispute, the claims
against Talbot must fail, and appropriately so at the summary judgment stage.
See Iowa R. Civ. P. 1.981.
Conclusion.
Accordingly, due to our conclusion that the court correctly determined that
sections 504A.101 and 613.19 provided Talbot immunity for any personal liability
in this case, we need not address the remainder of Indian Hills’ theories of
recovery against Talbot personally. Because he is afforded personal immunity,
he cannot be held liable for any alleged tortious actions taken on behalf of the
Indian Hills Booster Club. We therefore affirm the district court’s order granting
summary judgment.
AFFIRMED.
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