Colonel R.M. Baker Home for Retired Ministers v. Chang Soon Lee

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COLONEL R.M. BAKER HOME FOR RETIRED MINISTERS, Plaintiff and Respondent, v. CHANG SOON LEE et al., Defendants and Appellants.

B331086

California Court of Appeals, Second District, First Division

December 5, 2024

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Los Angeles County No. 20PSCV00794 Thomas C. Falls, Judge.

Moon &Dorsett and Dana Moon for Defendants and Appellants.

Klinkert, Gutierrez &Neavel, James E. Klinkert, Paul J Gutierrez and Kelly A. Neavel for Plaintiff and Respondent.

MOOR J.

Defendants and appellants, a group of residents living in a community for retired ministers, appeal from a summary judgment entered in favor of plaintiff and respondent Colonel R.M. Baker Home for Retired Ministers (the Corporation) in this declaratory relief action. The trial court granted summary judgment declaring the residents were not members of the Corporation and the current amended articles of incorporation are valid and enforceable. On appeal, the residents contend there is a triable issue of fact as to whether a 1971 amendment to the articles of incorporation granted residents statutory membership in the Corporation along with the right to elect directors to the Corporation's board. We conclude summary judgment was properly granted because the articles, as amended in 1971, did not provide for members of the Corporation, and therefore by law, the directors were the members of the Corporation. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

The Corporation is a non-profit public benefit corporation that owns a large property in Rowland Heights, California, which is improved with multiple residences that the Corporation operates for retired ministers.

I. Establishment of the Retirement Community

Established in 1911, the articles of incorporation state "the name of said corporation shall be the Colonel R. M. Baker Home for Retired Ministers." The purpose of the corporation was to "acquire, own, maintain and provide a home for retired ministers and other worthy persons; . . . and to do all acts necessary in acquiring, equipping, maintaining and managing said Home, and providing and caring for such clergymen . . . as may be admitted to membership in said Home according to the rules and regulations to be adopted by the Board of Directors of said corporation."

All real and personal property acquired by the corporation was to be held in trust for the Church of the United Brethern in Christ, California Conferences, and its successors (collectively referred to hereafter as the church). At the church's annual conference, and at each annual conference thereafter, the conference was to elect a board of nine directors.

II. Amendments to the Articles of Incorporation Prior to 1971

In 1944, an amendment to the articles of incorporation made the Corporation's existence perpetual. The 1944 amendment noted that the corporation had nine directors. It also stated "[t]he number of members of said corporation entitled to vote or consent to the adoption of said amendments is Nine[.]" It continued to state that the board of directors would be elected at the church's annual conference. At the end, the amendment listed the names of nine individuals and stated "each of the undersigned members of said corporation" adopted, approved and consented to the amendment, listing the date of signing for each.

In 1947, the California legislature enacted the General Nonprofit Corporation Law (former Corp. Code, § 9000, et seq.). (Stevens v. Perkins (1979) 93 Cal.App.3d 69, 71.)

In 1954, an amendment to the articles of incorporation changed the name of the church to its successor, but was otherwise similar to the 1944 amendment.

III. 1971 Amendment to the Articles of Incorporation

In 1971, the articles of incorporation were substantially amended in a full restatement. The 1971 amendment changed the method for electing directors and specified for the first time that the corporation was organized pursuant to California's general nonprofit corporation law. As amended, the articles stated in pertinent part as follows.

"[T]he name of said corporation shall be the COLONEL R. M. BAKER HOME FOR RETIRED MINISTERS."

"[T]he purposes for which said corporation is formed are to acquire, own, maintain and provide a home for retired ministers and other worthy persons; . . . and to do all acts necessary in acquiring, equipping, maintaining and managing said Home, and providing and caring for such clergymen, and worthy persons, or families, as may be admitted to membership in said Home according to the rules and regulations to be adopted by the Board of Directors of said corporation."

The amendment stated that the number of directors of the corporation was nine. It listed the names of the nine individuals who had been appointed as directors when the corporation was established in 1911.

The amendment also stated, "The property of this corporation is irrevocably dedicated to religious and charitable purposes ....[¶] Further, that the Board of Directors of this corporation shall be elected by the membership of said corporation."

The articles stated that the existence of the corporation was perpetual, and the corporation was organized pursuant to California's general nonprofit corporation law. The amendment did not expressly define the members or the membership of the corporation. Unlike prior versions, it did not contain any provision about the members of the corporation entitled to vote on amendments to the articles of incorporation, and at the end of the document, it did not list any members of the corporation who were adopting, approving, and consenting to the amendment.

IV. Church Report and Directions

The 1979 journal for the church reported the following committee recommendation made to the church's board of trustees: "In the instance of . . . the Baker Home . . ., the Trustees have noted that the Annual Conference either elects or confirms the election of the members of the Boards of Trustees of those institutions. It is the opinion of the Trustees that the act of confirming or electing directors of institutions in which the Conference has no direct interest or control tends to create an appearance of responsibility on the part of the Annual Conference for the affairs of those corporations which is nonexistent in practice." "In order to eliminate potential responsibility for those corporations claiming a relationship to the Annual Conference it is recommended that the Annual Conference consider recommending that each of these corporations take the following actions: [¶] 1. Amend its Articles of Incorporation to delete the requirements for election of directors or members by the Annual Conference."

The 1980 journal for the church states recommendations were adopted granting authority to the board of directors of the Corporation to disclaim any legal relationship between the conference and the organization, and requesting that the Corporation "[a]mend its Articles of Incorporation to delete requirements for election of directors or members by the Annual Conference."

V. Residency Contracts and Tax Forms

New residents in the community signed agreements with the Corporation, and received copies of the rules and regulations. The 1996 rules and regulations referred to "Residency Membership in the HOME." The rules and regulations did not state that the resident was a member of the Corporation or had any right to elect the governing body of the Corporation.

A 2007 residency agreement made between the "COLONEL R.M. BAKER HOME FOR RETIRED MINISTERS, a California Corporation . . . hereinafter referred to as 'First Party', and [the new residents], hereinafter referred to as, 'Second Parties'. [¶] . . . Whereas, 'Second Parties', by action of the Board of Directors of the COLONEL R. M. BAKER HOME FOR RETIRED MINISTERS, have been approved as eligible for membership . . . in said Home ...." "Now, therefore, it is agreed: [¶] (1) That [the new residents] have been approved as eligible for membership for the COLONEL R. M. BAKER HOME FOR RETIRED MINISTERS by action heretofore taken by the Board of Directors of said Home, with all the privileges of members of the Home ...."

A 2012 residency agreement entitled "AGREEMENT FOR MEMBERSHIP" stated the agreement was made between the "COLONEL R.M. BAKER HOME FOR RETIRED MINISTERS, a Corporation . . . hereinafter referred to as 'First Party,' and [the new residents], hereinafter referred to as 'Second Parties'. [¶] Whereas, 'Second Parties', by action of the Board of Directors of the COLONEL R. M. BAKER HOME FOR RETIRED MINISTERS, have been admitted as members of said Home ...."

"NOW, THEREFORE, IT IS AGREED: [¶] (1) That [the new residents] have been admitted as members of THE COLONEL R. M. BAKER HOMES FOR RETIRED MINISTERS by action heretofore taken by the Board of Directors of said Home, with all the privileges of members of the Home ...." The agreement used the terms "Board of Directors of said Home," "the Board of Directors of the 'First Party'," and "the Board of Directors of Baker Home." The agreement did not expressly state that the new residents were admitted as members of "the Corporation" or "First Party."

In federal tax forms for the tax years 2011 and 2016, the Corporation stated it did not have any members with "the power to elect or appoint one or more members of the governing body." The Corporation also answered yes, there were "governance decisions of the organization reserved to (or subject to approval by) members . . . other than the governing body."^[1]

VI. 2017 Amendment to Articles and Subsequent Documents

In 2017, the articles of incorporation were amended to state the purpose was "providing and caring for such clergypersons . . . as may...