FILED 3? 5/10/2017 4:52 PM 6.00 CIRCUIT COURT OF MOBILE COUNTY, ALABAMA JOJO SCI-IWARZAUER, CLERK IN THE CIRCUIT COURT OF MOBILE COUNTY, ALABAMA MONTY THULL, Mobile Ballet, Inc. Board Member; acting on behalf and in the best interest of, Mobile Ballet, Inc.; BEVERLY DAVIS, Mobile Ballet, Inc. Board Member; acting on behalf and in the best interest of, Mobile Ballet, Inc.; RHEA MOSTELLAR, Immediate Past Board Member and long time supporter; acting on behalf and in the best interest of, Mobile Ballet, Inc., Plaintiffs, v. BECKY S. TATE, Mobile Ballet Inc. Ex Officio Board Member; SANDRA PARKER, Mobile Ballet, Inc. Board Member; JIM PARKER, Mobile Ballet, Inc. Board Member; JILL RINGOLD, Mobile Ballet, Inc. Board Member; LIZ KIRBY, Mobile Ballet, Inc. Board Member; CHRIS BURGESS, Mobile Ballet, Inc. Board Member; MARY BYRD, Mobile Ballet, Inc. Board Member; LESLIE JOHNSON, Mobile Ballet, Inc. Board Member; JUL-EE WALDROP, Mobile Ballet, Inc. Board Member; BARBARA Y. CORTE, purported Mobile Ballet, Inc. Board Member; KAREN M. KENNEDY, purported Managing Director, Mobile Ballet, Inc.; MOBILE BALLET, INC, an Alabama nonpro?t corporation, Defendants. CIVIL ACTION NO.: 02-CV-2017-900226 ORAL ARGUMENT REQUESTED MOTION- TO DISMISS AMENDED COMPLAINT Defendants Becky S. Tate, Sandra Parker, M.D., Jim Parker, M.D., Jill Ringold, M.D., Liz Kirby, Chris Burgess, Maiy Byrd, Leslie Johnson, Julee Waldrop and Barbara Y. Corte (the ?Board Defendants?) and Defendant Mobile Ballet, Inc. (?Mobile Ballet?) move the Court to dismiss Plaintiffs? Amended Complaint pursuant to Ala. R. Civ. P. l2(b)(l) and Plaintiffs? counsel conceded the original Complaint was deficient, but the Amended Complaint is no better. Like the original, Plaintiffs? Amended Complaint is without substantial justification and patently frivolous. Parsing through Plaintiffs? ?amboyant histrionics and disparagement of ten upstanding local citizens who have volunteered countless hours and energy for Mobile Ballet, the Amended Complaint must be dismissed because the Plaintiffs lack standing to pursue this action and the Court lacks subject matter jurisdiction over the case. Plaintiffs also fail to state a claim upon which relief may be granted because there is no Alabama law authorizing a derivative action by a director of a nonprofit corporation against other directors or of?cers of the nonprofit corporation, and Plaintiffs have not satisfied the prerequisites necessary to pursue a derivative action in any event. Plaintiffs? new claim against Mobile Ballet should also be dismissed because two Plaintiffs lack standing and because the allegations do not establish any ultra vires act by the non?profit corporation that should be enjoined that is, Mobile Ballet has not acted outside the scope of its corporate powers. In addition, the ten Board Defendants are immune from suit because of their volunteer status under Alabama law, Ala. Code 6?5?336. INTRODUCTION Mobile Ballet, Inc. is a private non?profit corporation organized under Alabama law whose mission is to provide superior dance education, present quality performances, and to promote the ballet to the community as an expression of the human spirit. Mobile Ballet does not have any shareholders or members. It is managed by a volunteer Board of Directors. The Board is currently comprised of 13 individuals, ten of whom are named as defendants in this action.I Dr. Sandra Parker is the current duly elected President of the Board, Liz Kirby is Vice?President, and Chris Burgess is Secretary?Treasurer. Becky Tate, Dr. Jim Parker, Dr. Jill Ringold, Mary Byrd, Leslie Johnson, Julee Waldrop and Barbara Corte serve on the Board of Directors. When faced with the Board Defendants? motion to dismiss the original. Complaint, Plaintiffs amended by naming Mobile Ballet as a Defendant. Plaintiffs now assert paradoxical allegations by purporting to sue on behalf of Mobile Ballet and also against Mobile Ballet. Of the Plaintiffs, Beverly Davis currently serves on the Board of Directors for Mobile Ballet, and Rhea Mostellar and Monty Thull are former board members. In between the filing of the original Complaint and the Amended Complaint, three Board members resigned, including Thull. Despite his resignation on April 25, 2017, Plaintiffs filed this Amended Complaint on April 26, 2017, falsely identifying Thull as a Board member and acting on behalf of and in the best interest of Mobile Ballet. Plaintiffs have deleted the word ?derivative? from their Amended Complaint, but their intent is the same: they purport to assert a derivative action ?on behalf and in the best interest of Mobile Ballet? for breach of fiduciary duty and conspiracy against the Board Defendants and the Ballet?s Development Director/Managing Director, Karen Kennedy. Plaintiffs also seek under Count Three to enjoin Mobile Ballet from carrying on its operations. Plaintiffs? allegations of wrongdoing are baseless and impugn the character of the Board Defendants, who are upstanding citizens comprised of physicians, business owners, executives and community Of the 13 current Board members, only two are not named parties in this case. One current Board member, Beverly Davis, is a Plaintiff, and the other ten are Defendants. leaders. Each of the Board Defendants volunteers to serve and lead Mobile Ballet for no reason other than his or her altruistic commitment to the arts and this community. Each of them has acted in good faith and exercised his or her best judgment in conducting Mobile Ballet?s business. Plaintiffs say they are acting on behalf of and in the best interest of Mobile Ballet, but this lawsuit is anything but bene?cial to Mobile Ballet. The ?ling of this lawsuit, together with one?sided and unverified reports by some media outlets, has harmed the organization that Plaintiffs say they seek to bene?t and are now suing. Despite the drama perpetuated by Plaintiffs and their counsel, the Court should not supplant its own judgment for the business judgment exercised by the majority of the Board of Directors who govern Mobile Ballet. The lawsuit should end here, at the motion to dismiss stage, for simple legal reasons based on the deficiency ofthe Amended Complaint on its face. Plaintiffs? lawsuit cannot be maintained under Alabama law. The Plaintiffs lack standing, and the Court has no subject matter jurisdiction over the case. There is no procedural or substantive mechanism permitting a director of a nonprofit corporation to sue other directors in a purported derivative action. Plaintiffs also fail to state a claim upon which relief may be granted: Plaintiffs are not shareholders or members entitled to enforce a right of a corporation, and Plaintiffs have not alleged with particularity the efforts they have made to obtain the relief sought in the lawsuit or reasons for their failure to do so. These are fatal defects requiring dismissal of the action as a matter of law. Plaintiffs also have not alleged ultra vires acts that warrant enjoining Mobile Ballet from managing its business as determined within the judgment of its Board of Directors. Mobile Ballet has not acted outside ofits corporate powers. The Board Defendants are also immune as volunteers under Alabama law. ARGUMENT I. Plaintiffs Lack Standing to Pursue the Purported Derivative Claims, and this Court Lacks Subject Matter Jurisdiction Over the Case. Though Plaintiffs deleted the word ?derivative? in their Amended Complaint, that omission does not change the claims they are attempting to assert ?on behalf and in the best interest of? Mobile Ballet. Counts One, Two, Four, Five, Six and Seven are all derivative claims. Count Three, which is asserted against Mobile Ballet, Inc., can only be construed under the Alabama Code section cited by Plaintiffs as a direct claim. Under Alabama law, only a shareholder or member of a corporation may bring a derivative action on the corporation?s behalf. See Ala. R. Civ. P. 23.1 (detailing the required procedure for a derivative action brought by ?one or more shareholders or members . . . of a corporation?). .In addition to being brought by a shareholder or member, ?the complaint shall be veri?ed and shall allege that the plaintiff was a shareholder or member at the time of the transaction of which plaintiff complains.? 1d. Plaintiffs do not allege they are shareholders or members of Mobile Ballet, nor could they since Mobile Ballet has no shareholders or members.2 Plaintiff Davis serves on the Board of Directors, and Plaintiffs Mostellar and Thull formerly served on the Board. None of them has veri?ed. the Amended Complaint as required under Rule 23.1. Because Thull, Davis and Mostellar are not shareholders or members, they lack standing to bring a derivative action on behalf of Mobile Ballet. See Green Bradley Inc, 431 So. 2d 1226, 1229 (Ala. 1983) (plaintiff must be a stockholder at the time derivative suit is 2 Nonprofit comorations may have one or more classes of members or may have 110 members. Ala. Code lOA?3?2.0l. Mobile Ballet has no members as provided in its Articles of Incorporation and By?Laws. commenced). The Amended Complaint does not cite any authority to support standing, and dismissal oftheir claims is required.3 Plaintiffs also lack standing to bring a derivative action because they failed to comply with the ?director demand? requirement of Ala. R. Civ. P. 23.1. See Staihvorrh v. AmSouth Bank QfAZabama, 709 So. 2d 458, 463 (Ala. 1997). That rule requires that a derivative plaintiff?allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority and . - . the reasons for the plaintist failure to obtain the action or for not making the effort.? Ala. R. Civ. P. 23.1. This rule ?is not a mere formality, but rather an important aspect of substantive corporate law that limits the respective powers of the individual shareholder and of the directors to control corporate litigation.? Stallworth, 709 So. 2d at 463. Satisfaction of the director demand requirement is necessary for standing. Plaintiffs allege only generally and through reference to documents that ?plaintiffs have made demand upon said defendants to take the corrective actions and relief set forth in the prayer for relief in this matter.? (Am. Compl, 63, 70.) This general statement and the underlying alleged facts do not satisfy Rule 23.1?s particularized pleading requirements, and Plaintiffs consequently lack standing to pursue the action. See Stallworrh, 709 So. 2d at 463. Speci?cally, the prior demands were not made by or submitted on behalf of the Plaintiffs, but even so are not commensurate with the relief now sought in this action. Plaintiffs? prayer for relief requests, among other things: (1) that the present Board of Directors of Mobile Ballet be dissolved or liquidated and a new receivership board be appointed as an interim measure to 3 Even if Plaintiffs were asserting direct claims for breach of fiduciary duty and conspiracy to breach fiduciary duty, as opposed to derivative claims, they fail to state a claim because any duty owed by directors is owed to the corporation and not to other directors. See, eg, Davis v. Dorsey, 495 F. Supp. 2d 1 [62 (MD. Ala. 2007) (officer owes duty to the corporation). Plaintiffs acknowledge that relational duty by alleging that the Board Defendants owe a duty to Mobile Ballet; Plaintiffs do not assert that the Board Defendants owe them a duty individually. manage and operate Mobile Ballet until, with court supervision and direction, a new permanent board of directors can be installed; (2) that Karen Kennedy be terminated and replaced; (3) that damages be awarded against Karen Kennedy in favor of Mobile Ballet; (4) that the defendants be prohibited from using any funds of Mobile Ballet to defend themselves; (5) that the defendants pay to Mobile Ballet any amounts it has paid for their legal defense; (6) that a forensic accounting be performed; (7) that the finance committee be reconstituted; and (8) that attorney?s fees be awarded to plaintiff and against the defendants jointly and severally. (Am. Compl, Prayer for Relief, at pp. 63?66.) In contrast, the ?prior demands? cited by Plaintiffs consist of: (1) (2) (3) one letter puiportedly provided to the Board President by Winthrop Corey (who is not a Plaintiff but was an employee of Mobile Ballet who resigned well before the litigation) which addresses concerns regarding Karen Kennedy?s management but does not call for her termination or the dissolution of the Board of Directors or any other relief sought in this lawsuit (see Am. Compl, EX. a letter from attorney Ray Thompson, as counsel for Winthrop Corey and not as comsel?w any of the Plaintiffs, to the Board of Directors centering on Mr. Corey?s employment and demanding that the Board ?treat Mr. Corey with the utmost respect and generosity? but not demanding any of the relief sought in this lawsuit (sec Am. Compl., Ex. a letter from attorney Ray Thompson, as counsel for Winthrop Corey and not as cor-arise! far any of the Plamrg?s', to the Board of Directors citing many alleged untruths and calling for five persons to resign. from the Board of Directors (Sandra Parker, Jim Parker, Becky Tate, Liz Kirby and Chris Burgess) and the termination of Karen Kennedy (see Am. Compl, Ex. (4) a letter from Marie Grip, who formerly serve on the Board of Directors but is not a Plaintiff, to Dr. Sandra Parker suggesting that the ?honorable course of action? is for board officers and any other board members involved in the meetings with Mr. Corey to resign but not calling any by name or otherwise demanding any other relief as now sought in this lawsuit (see Am. Compl, Ex. and (5) an email from Marie Grip to fellow Board members detailing various concerns but not demanding any particular action other than to give ?thoughtful consideration? to her writing (see Am. Compl, Ex. F). These are not particularized demands made by the Plaintiffs commensurate with the relief sought in this lawsuit, and they are not sufficient to satisfy the standing requirement for a derivative action. Standing is a jurisdictional requirement which the plaintiff has the burden to prove. See Boys Girls Clubs of South Alabama. Inc. v. Fatrltope?Potnt Clear Rotary Youth Programs, Inc, 1 14 So. 3d 817, 819?820 (Ala. 2012). ?When a party without standing purports to commence an action, the trial court acquires no subject?matter jurisdiction.? Id. at 820 (citation omitted). Because the Plaintiffs have no standing under Alabama procedural or substantive law to bring this purported derivative action, the Court lacks subject matter jurisdiction over this case and must dismiss it. 4 No one, including attorney Thompson, has demanded or suggested that Defendants Dr. Jill Ringold, Mary Byrd, Barbara Corte, Julee Waldrop or Leslie Johnson should resign as Board members. 5 Grip resigned from the Board of Directors on April 25, 2017 II. Plaintiffs Lack Standing To Assert a Derivative Action Under Ala. Code 2.44 and Ala. Code Rather than establishing standing under Rule 23.1, Plaintiffs assert that they may proceed to sue ?for and on behalf of Mobile Ballet? under Ala. Code and But Plaintiffs suffer the same standing de?ciencies under those Code sections as they do under Rule 23.1. Plaintiffs? reliance on Ala. Code to support standing and subject matter jurisdiction in this derivative action is misplaced. That section of the Alabama Nonpro?t Entities Code provides in pertinent part: No act of a nonpro?t corporation. . .shall be invalid by reason of the fact that the corporation was without capacity or power to do an act. . ., but lack of capacity or power may be asserted: 1) In a proceeding by a member or director against a nonpro?t comoration to enjoin the doing or continuation ofunauthorized acts, .. . (2) In a proceeding by the nonpro?t corporation, whether acting directly or through a receiver, trustee, or other legal representative, or through members in a representative suit, against the officers or directors of the nonpro?t corporation for exceeding their authority. (3) in a proceeding bv the Attorney General, Ala. Code (emphasis added). Except for Count Three (which has its own de?ciencies), this is not a proceeding by a director against a nonpro?t corporation, nor is it brought by the Attorney General. Subparagraphs and (3) are, therefore, inapplicable to Plaintiffs? derivative claims. 6 And, similar to their deficiency under Ala. R. Civ. P. 23.1, Plaintiffs are not legal representatives or ?members? bringing a representative suit pursuant to subparagraph There are no members of Mobile Ballet. Thus, it is clear that the Plaintiffs are not persons authorized by 244(2) to commence a derivative action against the Board Defendants. Sec Boys Girls Clubs QfSozrr/r Alana/72a, 114 So. 3d at 821 (vacating judgment and dismissing case against nonpro?t corporation because plaintiffs lacked standing under Ala. Code to commence action against the corporation and the court lacked subject matter jurisdiction over the action). Standing is a jurisdictional requirement which the plaintiff has the burden to prove. See id. at 820. ?When a party without standing purports to commence an action, the trial court acquires no subject-matter jurisdiction.? Id. (citation omitted). Because the Plaintiffs have no standing, either under Alabama procedural or substantive law, to bring this purported derivative action, the Court lacks subject matter jurisdiction over this case and must dismiss it. Plaintiffs also lack standing to assert derivative claims under Ala. Code That code section concerns unauthorized assumption of corporate powers, but it does not create or support an independent cause of action and provides no basis for standing in a derivative suit. It merely states the law regarding a corporation?s entitlement to indemnity. But even if the Code 6 Plaintiffs do not reference subparagraph (3) in their complaint. Plaintiffs must know that given their sensationalized but unsupported attacks, the Attorney General could not be persuaded to bring an action under these circumstances. Further, Plaintiffs? contention that they are acting ?on behalf and in the best interest of? Mobile Ballet is specious for many reasons, but particularly given Plaintiffs? violation of a Mobile Ballet agreement which Plaintiffs reference in their response to Defendants? original motion to dismiss and their support of a competing dance school with classes led by Plaintiffs? counsel?s wife, a former Mobile Ballet teacher. The Court need not make those determinations, though, because it has no subject matter jurisdiction and Plaintiffs fail to state a claim. 7 One director of a l3?director board has no legal authority to bring a derivative action as a legal representative of the corporation. 10 section creates a substantive right of action, a party pursuing a derivative action under it must adhere to the state?s procedural mechanism for asserting such. Because Plaintiffs cannot satisfy Rule 23.1?s standing requirements, this case must be dismissed for lack of subject matter jurisdiction. [11. Plaintiffs Have Not Satis?ed Derivative Action Prerequisites and Fail to State a Claim Upon Which Relief May Be Granted. Not only does the Court lack subject matter jurisdiction over this case, Plaintiffs also fail to state a claim upon which relief may be granted because they have not satis?ed the prerequisites required under Rule 23.1. As discussed above, Plaintiffs are not shareholders or members of Mobile Ballet, which is required to bring a derivative action. 868 Ala. R. Civ. P. 23.1 (?In a derivative action brought by one or more shareholders or members . . (?the complaint . . shall allege that the plaintiff was a shareholder or member at the time of the transaction of which the plaintiff complains . . Second, the Amended Complaint is not veri?ed by any Plaintiff as required. See Ala. R. Civ. P. 23.1 (?the complaint shall be verified?). Third, also discussed above, Plaintiffs have not alleged with particularity the efforts made by them to obtain the action they desire from the directors or the reasons for their failure to make the effort, which is required to bring a derivative action. See id; v. Lowder, 635 F. Supp. 2d 1303 (MD. Ala. 2009) (dismissing shareholder derivative action where plaintiff failed to meet Rule 23.1?s director demand requirement). Consequently, Plaintiffs have not satisfied the prerequisites of Rule 23.1 and fail to state a claim upon which relief may be granted. IV. Plaintiffs Do Not Seek to Liquidate the Mobile Ballet, and Ala. Code 10A-3-7.10 Is lnapplicable. Plaintiffs refer to Ala. Code 10A-3-7.10 in 1 58 of the Amended Complaint, but they have not asserted it as a basis to state a cause of action. Even if they did, however, reliance on 11 the statute would be misplaced. First, that Code section confers jurisdiction on a circuit court ?to liquidate the assets and affairs of a nonprofit corporation? in an action by a member or director when it is established ?[t]hat the acts of the directors or those in control of the nonpro?t corporation are illegal, oppressive or fraudulent? or ?[t]hat the corporate assets are being misapplied or wasted.? Ala. Code That section does not apply here because Plaintiffs have not requested that the assets and affairs of Mobile Ballet be liquidated. Moreover, neither Mobile Ballet nor the community would be served by the involuntary liquidation of the organization, and Plaintiffs would not be acting in Mobile Ballet?s ?best interest? if they sought such relief. V. Count Three Against Mobile Ballet Should Be Dismissed Because The Acts Alleged Are Not Ultra Vires Acts. Plaintiffs added Mobile Ballet as a Defendant in the Amended Complaint, asserting that the nonprofit corporation is guilty of committing unauthorized or ultra vires acts in violation of Ala. Code. and seeking injunctive relief against it. (Am. Compl, Count Three.) Count Three should be dismissed because two Plaintiffs lack standing to assert such a claim, the alleged actions are not ultra vires acts and the requested relief far exceeds the injunctive relief contemplated by the statute. The applicable section of the Alabama Nonprofit Entities Code provides in part: No act of a nonprofit corporation and no conveyance or transfer of real or personal property to or by a nonpro?t corporation shall be invalid by reason of the fact that the corporation was without capacity or power to do an act or to make or receive a conveyance or transfer, but lack of capacity or power may be asserted: (1) In a proceeding by a member or director against a nonprofit corporation to enjoin the doing or continuation of unauthorized acts, or the transfer of real or personal property by or to the nonprofit corporation. If the unauthorized acts or transfer sought to be enjoined are being, or are to be, performed pursuant to any contract to which the nonprofit corporation is a party, the court may, if all of the parties to the contract are parties to the 12 proceeding and if it deems the same to be equitable, set aside and enjoy the performance of the contract, and in so doing may allow to the nonpro?t corporation or the other parties to the contract, as the case may be, compensation for the loss of damage sustained by either of them which may result from the action of the court in setting aside and enjoining the performance of the contract, but anticipated pro?ts to be derived from the performance of the contract shall not be awarded by the court as a loss or damage sustained. Ala. Code As an initial matter, none of the Plaintiffs are members, and neither Thull nor Mostellar are directors. As such, they have no standing under this Code section to pursue a claim for injunctive relief against Mobile Ballet. They are improper parties and fail to state a claim upon relief may be granted. As for Plaintiff Davis, her request for injunctive relief against Mobile Ballet under should be dismissed for failure to state a claim. That Code section, and each Alabama case citing to it, concems alleged unauthorized or ultra Vires actions taken by a nonprofit corporation. The Alabama Supreme Court has explained that applies only to acts of a nonprofit corporation that the corporation was without the capacity or power to perform. Ex parte The Boys cf: Girls Clubs ofSoutlz Alabama, Inc, 163 So. 3d 1007, 1013 (Ala. 2014) (analyzing whether Club had power under letter of donation to spend funds for a particular purpose). Ultra Vires or unauthorized actions are those that are committed beyond the scope of a corporation?s enabling authority. For example, in. Alabama Stale Florists Ass Inc. v. Lee County Hospital Board, 479 So. 2d 720 (Ala. 1985), the hospital board?s operation ofa gift shop was held lawful and not an ultra vires act contrary to or beyond the powers conferred on the board by the corporate charter. Ultra Vires acts are described and analyzed similarly in other business contexts as acts that exceed a corporation?s enabling charter. 1n DeKalb County LP Gas Co, Inc. v. Suburban 13 Gas, Inc, 729 So. 2d 270 (Ala. 1998), the court examined whether an electric cooperative acted within its statutory enabling authority in. purchasing a propane gas provider. In Blue Cross and Blue Shield ofAZo. v. Protective Life, Ins. Co, 527 So. 2d 125 (Ala. Civ. App. 1987), the court considered whether Blue Cross, a special pu1pose corporation organized and deriving all powers from statute for the speci?c and limited purpose of maintaining a health care service plan, acted outside of its limited statut01y purpose by acquiring a subsidiary to market life insurance. See also Kids" Kin/J. Inc. v. State Dep 't of'Hnman Resources, 874 So. 2d 1075 (Ala. Civ. App. 2003) (de?ning ultra vires acts as those going beyond the scope or limits of enabling legislation or statutory authority); Riteway Machine A/[fg Co, Inc. v. irsl Nat?! Bank oanscz/nnbia, 374 So. 2d 1361, 1369?70 (Ala. 1979) (holding there was a lack of evidence that bank?s actions were ultra vires, meaning the bank acted outside its enumerated powers as set out in its charter or statutes); Hughes DeveZOpers, Inc. 12. Montgomery, 903 So. 2d 94 (Ala. 2004) (issuing stock in excess of the amount authorized under a corporation?s articles is ultra vires); 18B Am. Jur. 2d Corporations {2 1712 (de?ning ultra vires as an act that is beyond the power allowed or granted by corporate charter, articles of incorporation, bylaws, or law); 22 Williston on Contracts 60.44 (4th ed.) (de?ning ultra vires as a lack of corporate capacity, with the illegality being that the corporation acted beyond the scope of its expressed or implied powers). The alleged ?unauthorized? acts in the Amended Complaint, including alleged mismanagement, are not the type of acts that can be characterized as ultra vires. There is no allegation that Mobile Ballet acted outside of its charter, bylaws or articles of incorporation. Mobile Ballet is not alleged to have expanded, contracted or exchanged property beyond its enabling purpose. Instead, the allegations concern typical management issues, including the handling of personnel and financial matters, with which Plaintiffs disagree but which are 14 conducted within the sc0pe of Mobile Ballet?s nonpro?t corporate authority. No Alabama cases proscribe acts in a context similar to those alleged by Plaintiffs as ultra Vires. Differing business judgments do not make an act ultra they are simply differences of opinion, which are not illegal. VI. Plaintiffs? Conspiracy Claim Against Three Board Defendants Should Be Dismissed Because Plaintiffs Have No Standing to Assert a Derivative Fraud Claim, and the Underlying Fraud Allegation Fails to State a Claim Upon Which Relief May Be Granted. Plaintiffs? Count Seven alleges a civil conSpiracy between Defendants Tate, Sandra Parker and Burgess with Karen Kennedy to fraudulently suppress and cover up ?nancial information from the Board of Directors. The conspiracy claim is premised on Kemiedy?s alleged fraudulent suppression, which Plaintiffs assert against Kennedy alone in Count Six. plaintiff alleging a conspiracy must have a valid underlying cause of conspiracy claim must fail if the underlying act itself would not support an action.? Callens 12. Jefferson County Nursing Home, 769 So. 2d 273, 280 (Ala. 2000). Here, the conspiracy claim should be dismissed because Plaintiffs fail to state a claim for fraudulent suppression against Kennedy, and without that underlying act, the conspiracy claim likewise fails. (See Keimedy?s brief for more detail re?ecting the fraudulent suppression claim against her.) Plaintiffs allege that Kennedy, as purported Managing Director, owed a duty of disclosure to the Board of Directors. But Kennedy?s duty, as a matter of law, is owed to Mobile Ballet and not to current or former Board members. See, eg, Davis, 495 F. Supp. 2d at 170 (officer owes a duty to the corporation). Therefore, there is no duty of disclosure rumiing from Kennedy in favor of the individual Plaintiffs. And because Plaintiffs? fraud claim is an 15 attempted derivative claim ?on behalf of? the Ballet, Plaintiffs have no standing to bring the claim against Kennedy under either Rule 23.1 or Ala. Code VII. The Board Member Defendants Are Immune From Suit Pursuant to Alabama?s Volunteer Service Act. Each of the ten Board Defendants serves as a Board director in an unpaid volunteer status. The State of Alabama recognizes the importance of volunteers to nonprofit corporations and the deterring effect that lawsuits have on the willingness of volunteers to serve. To encourage volunteerism, Alabama provides immunity from suit to volunteers under The Volunteer Service Act. The Act provides: Any volunteer shall be immune from civil liability in any action on the basis of any act or omission of a volunteer resulting in damage or injury if: (1) The volunteer was acting in good faith and within the scope of such volunteer?s official functions and duties for a nonpro?t organization, a nonprofit corporation . . . and (2) The damage or injury was not caused by willful or wanton misconduct by such volunteer. Ala. Code The Board Defendants are entitled by statute to immunity as unpaid volunteers serving a non?profit charitable corporation unless they have acted in bad faith and with willful and wanton 9 Plaintiffs allege no particular misconduct. Id. For six of the ten Board Defendants, wrongdoing. According to the Amended Complaint, their greatest crime is having friends. But having friends does not equate to being unable to think for yourself or act in good faith and in a 8 Just as Rule 23.1 does, Ala. Code requires that the claim must be brought by a member in a representative suit, but none of the Plaintiffs are members since there are no members. 9 The six are Dr. Jim Parker, Dr. Jill Ringold, Mary Byrd, Leslie Johnson, Julee Waldrop and Barbara Corte. l6 manner you believe is in the best interest of a nonpro?t corporation for which you volunteer substantial time and energy. For example, Plaintiffs allege that Defendant Becky Tate, as an employee of the University of South Alabama Foundation, has a conflict of interest because she is serving on the board with Defendant Julee Waldrop, who is the wife of the University of South Alabama President Tony Waldrop. Plaintiffs allege Defendant Liz Kirby has a con?ict of interest because she works at the University of South Alabama Children?s and Women?s Hospital and was recommended for board membership by Tate. Plaintiffs further allege that Defendants Tate, Dr. Sandra Parker, Dr. Jim Parker, Barbara Corte, Dr. Jill Ringold, Kirby, and Waldrop are unfit to serve on the board because they are social friends. The contention that illegal con?icts of interest exist because board directors are connected by employment or socially are patently frivolous, and they clearly do not allege bad faith or willful or wanton misconduct. And as for all Board Defendants, Plaintiffs? conclusory allegations of ?intentional? conduct and the insertion of bald ?wanton? labels throughout the Amended Complaint do not rise to the level of bad faith and wanton conduct under Alabama law, and they do not support the stripping away of volunteer immunity for the Board Defendants. At most, they are petty allegations reflecting disagreements between Plaintiffs and the clear majority of the Board over typical management issues attendant in every non?profit organization, such as personnel decisions and selection of new board members. The very purpose of the Act is to protect volunteers in instances such as this to avoid the expense and other burdens that deter citizens from serving as volunteers to nonpro?ts in the first place. 17 CONCLUSION For the reasons stated above, the ten Board Defendants and Mobile Ballet respectfully request that the Court dismiss this case against them. ReSpectfully submitted, /s/Caine O?Rear CAINE (ORE003) WINDY C. BITZER (BITOOS) Attorneys for Defendants Becky S. Tate, Sandra Parker, M.D., Jim Parker, MD, Jili Ringoid, M.D., Liz Kirby, Chris Burgess, iMary Byrd, Leslie Johnson, Julee Waldrop Barbara Y. Corie, and Mobile Ballet, Inc. OF COUNSEL: HAND ARENDALL LLC Post Of?ce Box 123 Mobile, Alabama 36601 Tel: (251) 432?5511 Fax: (251) 694-6375 corear?iilihandarendall.eom wbitzelifilliandarendall.com 18 CERTIFICATE OF SERVICE I. hereby certify that on this day, May 10, 2017, I electronically ?led the foregoing pleading with the Clerk of the Court using the AlaFile system which will send noti?cation of such ?ling to the following: Ray M. Thompson PO. Box 81177 Mobile, Alabama 36689-1 177 . net M. Warren Butler Alex Terry Wood Starnes Davis Florie LLP PO. Box [548 Mobile, Alabama 36633?1548 /S/Caine 0 ?Rear l9