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All New Jersey Management Co., L.L.C. v. Springfield Senior Citizens Housing, Inc.

A-3048-02T2 (N.J. Super. App. Div. 2004) (Unpublished)

CORPORATIONS; NON-PROFIT; DIRECTORS—Even if a non-profit corporation’s by-laws requires periodic election of directors and existing directors serve long beyond their terms, a court, following the policy of routinely declining to interfere in the internal management of a non-profit organization, will only step in if a complaining party has suffered an invasion of its civil rights or of its person or property.

The manager of a senior citizen housing project had its contract terminated, arguably for cause. It sued the housing corporation, claiming, among other things, that the members of the housing corporation’s Board of Directors had “served long beyond the time provided by the corporation’s by-laws and, in contravention of those by-laws, [had] refused to elect successors.” The manager “sought an ouster of the board members and a judicial order mandating an election of successors.” The lower court “found no basis for judicial intrusion upon the internal management of [the housing corporation’s] board of directors.” The Appellate Division agreed, adding that the manager was correct in that the housing corporation’s “by-laws provide[d] for three year terms for the members of the board and prohibit[ed] more than two successive terms.” On the other hand, although the by-laws had a procedure for succession, they also provided that a director whose term has expired “shall remain in office and his or her term shall be temporarily extended until and unless a successor is elected.” Courts “have routinely declined to interfere in the internal management of private non-profit organizations.” They do so “only where the complaining parties have suffered an invasion of their civil rights, of person or of property.” According to the Appellate Division, no such circumstance existed here. This didn’t mean that the manager was necessarily without a remedy. The housing corporation was subject to the oversight of the New Jersey Housing and Mortgage Finance Agency and the manager could attempt to seek a remedy within that agency.

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