Chief Justice Patricia Guerrero wrote opinion establishing new precedent, allowing charity directors to maintain standing in lawsuits after removal from board
June 17, 2019 On Thursday, the Supreme Court overturned the court of appeal’s ruling, deciding that Turner retains standing to continue her lawsuit. “The position adopted by the Court of Appeal would permit gamesmanship by directors accused of wrongdoing,” Guerrero wrote.
“Directors who are sued would be able to terminate the litigation by removing the plaintiffs from office, refusing to reelect the individuals, or otherwise making it more difficult for the plaintiffs to retain their positions.” The chief justice also wrote that board members “would likely be discouraged” from filing complaints or lawsuits if the other board members could oust them in order to make the lawsuit go away. Streve Strauss, one of Turner’s attorneys and senior counsel for the global law firm Cooley, said the Supreme Court’s decision ensures whistleblower protection for those who serve on the boards of directors of the more than 110,000 charities in California. “The ‘Turner rule’ will be important for charitable foundations,” Strauss told the Union-Tribune on Friday. “Charities throughout the land are going to applaud this.” Strauss said courts in New York and Arizona had already come to similar conclusions. “And now that this is law in California, hopefully it will be followed throughout the country,” Strauss said. Attorneys for the board members named in the lawsuit and The Conrad Prebys Foundation did not respond to requests for comment Friday. Though the Supreme Court’s ruling has wide-ranging implications across the state, it was too early to know Friday exactly how the ruling would affect Turner’s lawsuit, which will head back to San Diego Superior Court. Though she now has standing to continue the suit, it will face other legal challenges. Turner’s initial lawsuit wanted the directors to reimburse the money that went to Prebys’ son and pay damages for the diversion. And she wanted the directors removed.Eric Prebys, whose settlement sparked the legal matter, said he was disappointed but not surprised by the ruling — even though both he and Strauss said his settlement is not in danger of being revoked or taken from him in any way. More than seven years after his father’s death, Eric Prebys maintains that he and his father never had the falling out that Turner claims led to the elder Prebys disinheriting him. “I moved past this,” Prebys said Friday. He said he was “very sad” for Turner that she has not done the same.Crocker Nuclear Laboratory. He was born in South Bend, Ind., but his parents divorced when he was 2 years old. His father came to San Diego with no job before establishing a fortune through construction and real estate ventures. Eric, meanwhile, was raised by his mother in Phoenix and had no contact with his father until he was 16. Eric said Friday that he and his father “grew quite close over the years,” and he believed he would be on the board of the foundation when his father died. But he said that at his father’s funeral, he learned he was being shut out — and that Turner was claiming the two had fallen out. “He was a lot further gone mentally in the last couple years than I think I appreciated at the time,” Eric said of his father. He said Turner kept the elder Prebys “isolated.” Turner has previously denied claims that she exerted undue influence on Prebys in his last years and called it “ridiculous” to suggest Prebys was ever mentally incompetent.
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