Opinion ID: 1517343
Heading Depth: 1
Heading Rank: 5

Heading: Ms Levant's Other Arguments On Appeal Relating To Defamation and Derivative Action

Text: Ms. Levant maintains that her expulsion from office, suspension from membership and denunciation of [her by Mr. Whitley] constitute defamation, because the predicate for her removal from office  that she was unfit for the office . . . is false. Specifically, she appears to claim on appeal that both Mr. Whitley's June 2, 1998 letter, and the June 1998 article in the Afro-American regarding her suspension, constituted defamatory publications. Mr. Whitley contends that Ms. Levant has identified no published defamatory statement. The trial court concluded that Ms. Levant's claims for defamation and false light [] fail[ed], [13] because she did not identify any specific defamatory statement made about her by the defendant that would warrant such a claim. Under our case law, a publication is defamatory `if it tends to injure [a person] in [her] trade, profession or community standing, or lower [her] in the estimation of the community.' Howard Univ. v. Best, 484 A.2d 958, 988 (D.C.1984) (quoting McBride v. Merrell Dow and Pharm., Inc., 540 F.Supp. 1252, 1254 (D.D.C.1982)) (other quotation omitted). Furthermore, an allegedly defamatory remark must be more than unpleasant or offensive; the language must make the plaintiff appear odious, infamous, or ridiculous. Id. (quotation and internal quotation omitted). In addition, the burden is on the plaintiff, in this case Ms. Levant, to prove the defamatory nature of the publication. We agree with the trial court that Ms. Levant failed to sustain her burden. At most, the June 2, 1998 letter reflects an assertion that Ms. Levant and Ms. Whitley had an intense disagreement over certain masonic issues, and that Ms. Levant, acting in her capacity as GWM, did not follow certain directives of Mr. Whitley, given in his role as MWGM. Therefore, on the record before us, we conclude that the assertions set forth in Mr. Whitley's letter, including the bare accusation that Ms. Levant's actions were . . . bringing shame to the Office of [GWM], do not rise to the level of defamation. See Best, supra, 484 A.2d at 988. In addition, the article published in the Afro-American newspaper, which reported Ms. Levant's suspension, contains no statement from Mr. Whitley or Ms. Levant, and accurately points out that: Mr. Whitley is over the men and women who participate in Prince Hall Masonry in Washington, D.C. Nothing in this article makes Ms. Levant appear odious, infamous, or ridiculous. Best, supra, 484 A.2d at 988. Therefore, we see no reason to disturb the trial court's conclusion that Ms. Levant fail[ed] to identify any specific defamatory statement made about her by [Mr. Whitley]. . . . Finally, Ms. Levant argues that she is entitled to maintain a derivative action, under Super. Ct. Civ. R. 23.1, and that she was able to prove a derivative claim for breach of official duties by Grand Master Whitley. Mr. Whitley contends that Ms. Levant may not maintain a derivative action because she did not meet the requirements of Rule 23.1. Rule 23.1 permits a shareholder of a corporation or a member of an unincorporated association to file a derivative action to enforce a right of the organization. [14] In her complaint, Ms. Levant alleges, in paragraph 38, that her action to enjoin [Mr. Whitley] from extracting any further disbursements from the Grand Lodge Jurisdictional Fund is an action in the best interest of Grand Lodge financial management. Moreover, she alleged, in paragraph 39, that her wish to delay a decision on the proposed lease agreement until the Grand Lodge annual session is a reasonable alternative which she had every right to suggest and was in the best interest of the Grand Lodge management of its finances. In addition, she asserted that she has made all efforts [as] Grand Worthy Matron and as a member to propose alternative solutions regarding the proposed lease agreement and to alert the membership about the misuse of the Jurisdiction Account but has been censured in this matter due to her removal from office. Two paragraphs of her affidavit accompanying her complaint appear to concern the derivative action. Both paragraphs relate to the Jurisdictional Account: 15. I have been denied the opportunity to fulfill my duties as part of shared governance in the withdrawal and expenditure of monies from the Jurisdictional Account, thus the integrity of the operation and mechanics related to the Jurisdiction Account as voted by the membership of the Jurisdiction has been violated. 16. I was denied the performance of my duty to sign as Grand Worthy Matron on specific checks which were processed to withdraw funds from the Jurisdictional Account. Mr. Levant also filed an affidavit on June 15, 1998, specifying his status as a member of Prince Hall, D.C. and setting forth his past offices. With respect to the Jurisdictional Account he stated the following in paragraphs 7 and 9 of his affidavit: 7. I am aware that an appropriation of the Jurisdictional Fund without the co-signature of the Grand Worthy Matron and by the approval of the Jurisdiction by vote is in violation of the Funds disbursement process. 9. That the June 2, 1998 removal of the Grand Worthy Matron and the appropriation of the Jurisdictional Fund without proper authorization violate the spirit of the Craft's Landmark and Constitution and may fatally impact on the integrity of our organization. A third affidavit was filed on June 15, 1998 by Yvonne D. Baskerville, a member of the GT Grand Chapter, a past officer of the Chapter, and the then Vice President of the Prince Hall Charitable Foundation. She claimed first hand knowledge and familiarity with the . . . procedure regarding the Organizations Jurisdictional Fund. She also stated that the disbursement of funds from the Jurisdictional Account without the GWM's co-signature and a vote of the Jurisdiction violates the Funds disbursement process. Ms. Baskerville also asserted that the removal of [the GWM] . . . denies her of the opportunity to report on the unauthorized disbursement of Jurisdictional Funds during the Jurisdictional meeting held on June 18, 1998. In his answer to Ms. Levant's complaint, Mr. Whitley admitted that disbursement of funds from [the Jurisdictional] [A]ccount may only be authorized by Jurisdictional vote, but denied that such disbursement required the signature of both the MWGM and the GWM, and that he had made disbursements without the required vote. He also denied Ms. Levant's allegation that she continued to voice her concern to [him] about the potential misuse of the Jurisdictional Fund. The record on appeal shows that during her June 12, 1999 deposition, Ms. Levant described the Jurisdictional Account as follows: The [J]urisdictional [F]und has moneys that have been placed there by both the sisters and brothers, and it has been voted on and accepted that both the Grand Master and the Grand Worthy Matron ha[ve] to have their signature on each check. It does not matter which Grand Treasurer, but the Grand Master and the Grand Worthy Matron's signatures must appear on each check. And the Grand Worthy Matron's signature was not on these checks. . . . At her deposition, Ms. Levant was shown a document listing certain checks and asked: What . . . indicates to you that there were improper disbursements from the [J]urisdictional [F]und? She responded: The check numbers of the checks that did not have my signature. In his statement of undisputed facts, accompanying his motion for summary judgment, Mr. Whitley included paragraphs 18 and 19, relating to the Jurisdictional Account: 18. Plaintiff has made no allegation that there were improper expenditures from the [Prince Hall, D.C.] Jurisdictional Account by Defendant. 19. MWPGM Levant acknowledged, when confronted with checks written on the Jurisdictional Account during his tenure, that 16 out of 25 checks did not have the joint signature of the Grand Worthy Matron. Ms. Levant's statement of undisputed material facts, filed with her opposition to Mr. Whitley's motion for summary judgment, contained paragraph 5 regarding the Jurisdictional account: Defendant improperly disbursed funds from the Jurisdictional Account[,] an account collectively owned by the [GT Grand Chapter] and the [Prince Hall, D.C. Grand Lodge]. In moving for summary judgment on Ms. Levant's derivative action claim, Mr. Whitley stated: Plaintiff alleges that `[T]he Prince Hall Grand Lodge is a membership corporation without stockholders.' Thus, by definition there can be no derivative action by corporate stockholders. Defendant is unaware of any authority for a derivative suit by members of a `membership corporation' (presumably referring to a not for profit corporation). In response to Mr. Whitley's summary judgment motion on this point, Ms. Levant stated in her Opposition, Plaintiff concedes that this cause may require additional testimony to show that the Grand Lodge has some stockholders. The parties and the trial court proceeded under the assumption that a Rule 23.1 derivative action may only be brought by a shareholder. It is true that Prince Hall, D.C. is a corporation without shareholders, but Eastern Star, D.C. is an unincorporated [15] association. Under the plain words of Rule 23.1, a member of an unincorporated association may bring a derivative action. From the record before us, it appears that Ms. Levant's derivative action claim is brought in her capacity as a member of the GT Grand Chapter and as a past high officer of that Chapter. Moreover, she is alleging disbursements from a Jurisdictional Fund, which includes funds contributed by the Eastern Star, D.C., without use of the proper disbursement procedures, specifically the co-signature of the GWM and the vote of the Jurisdiction. As such, she appears to be asserting an injury to the unincorporated association, that is, deprivation of a say as to how the monies it contributed to the Jurisdictional Account should be expended, or an opportunity to approve such expenditures. Thus, in our de novo review of this matter, we must determine whether Ms. Levant satisfied the requirements of a Rule 23.1 derivative action. Rule 23.1 requires that: (1) the complaint be verified; (2) the complaint allege or plead: (a) that the action is not collusive; (b) that the plaintiff was a member at the time of the transaction or occurrence that is the basis for the complaint; and (c) with particularity [any] efforts . . . made by the plaintiff to get the unincorporated association to take the desired action, or the reasons for not making the effort; and (3) the plaintiff . . . fairly and adequately represent[s] the interests of. . . members similarly situated. . . . Mr. Whitley focuses on the requirement that a plaintiff adequately represent the interests of the members of the unincorporated association. He asserts that: Appellant has not even made an allegation that in the litigation she `fairly and adequately represents the interests of the shareholders or members similarly situated.' Further, he argues, No other `similarly situated members' have been identified by Appellant, and it is clear that she is pursuing this litigation to advance her own personal interests. Mr. Whitley ignores the burden of proof with respect to the fairly and adequately represents requirement of Rule 23.1. [U]nlike in class actions under Rule 23, in which the burden of proving adequacy is generally on the plaintiff, the defendant in a derivative action has the burden of demonstrating that the plaintiff is an inadequate representative. MOORE'S FEDERAL PRACTICE § 23.1.09[2] (3d ed., 2000) (footnote omitted). Moreover, unlike the procedure of Rule 23, the [trial] court need not make a preliminary affirmative determination that the plaintiffs will fairly and adequately represent the interest of people similarly situated. Id. (footnote omitted). However, when that determination is made, the trial court must consider whether Ms. Levant represents the interests of members similarly situated, and whether there are factors, such as economic antagonism and use of the derivative action as leverage in a corporate [or associational] struggle, which would make her an inappropriate representative. Id. at § 23.1.09[5][a] and [b] (footnote omitted). Moreover, the trial court's determination will be reviewed only for an abuse of discretion. Id. at § 23.1.09[2] (footnote omitted). With respect to the other procedural requirements of Rule 23.1, Ms. Levant filed an affidavit which can satisfy the verification requirement. Id. at § 23.1.05. She also alleged in her complaint that the action was not collusive for the purpose of conferring jurisdiction on the court, and that she was a member of the association at the time of the check transactions on the Jurisdictional Account which took place without her signature. Ms. Levant's complaint contains a general allegation that she has made all efforts [as] Grand Worthy Matron and as a member to propose alternative solutions regarding the proposed lease agreement and to alert the membership about the misuse of the Jurisdiction account but has been censured in this matter due to her removal from office. This general allegation does not meet the requirement that [t]he complaint allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority. . . . Rule 23.1. However, Rule 23.1 permits a plaintiff to plead futility in making the demand on the board of directors or other comparable authority. See MOORE, supra, § 23.1.08[2][g][iv]; see also Flocco v. State Farm Mutual Automobile Ins. Co., 752 A.2d 147, 156 (D.C.2000); In re Mortgage and Realty Trust Securities Litigation, 787 F.Supp. 84, 87 (E.D.Pa.1991) (Maryland. . . recognize[s] an exception to the demand requirement where such a demand would be futile); Smith v. Gordon, 668 F.Supp. 520, 522, 523 (E.D.Va.1987) (stating the majority rule that: director approval of alleged misdeeds, without specific allegations of bias or self-dealing, is insufficient to render demand futile, and the minority rule that: plaintiff's allegations of board approval of the alleged wrong [are] sufficient to excuse demand) (citations omitted). Whether Ms. Levant's pleadings contain sufficient particularized facts to satisfy the futility rule is a matter which the trial court has not addressed. Hence, there are no factual findings on which we may make a reasoned determination. Accordingly, we are constrained to remand this matter to the trial court solely for the purpose of determining whether Ms. Levant has satisfied, or can satisfy through amendment of her complaint, two requirements imposed by Rule 23.1:(1) fair and adequate representation of similarly situated members; and (2) the allegation of particularized facts showing the futility of making a demand on the appropriate authority [16] with respect to the alleged wrongful act of disbursing funds from the Jurisdictional Fund without the co-signature of the GWM and a Jurisdiction vote and the harm resulting to the association. [17] In all other respects, we affirm the judgment of the trial court.