Background
Anthony Bovino sued Historic Red Clay Valley, Inc., a Delaware nonprofit nonstock corporation that operates tourist trains, initially seeking under Section 215(d) of the Delaware General Corporation Law to compel an annual meeting for the election of directors. The corporation held an annual meeting in August 2025, where members elected 15 directors. Bovino disputed the meeting’s validity, asserting uncertainty over the governing bylaws, the eligible electorate, notice, and quorum.
In March 2026, the newly elected board adopted a resolution terminating Bovino’s membership effective April 24, citing a bylaw provision permitting termination with or without cause after 30 days’ written notice. Bovino then amended his complaint to challenge the 2025 director election and his termination under Section 225, seek another annual meeting under Section 215, and contest bylaws adopted in 2020 and 2026. The corporation moved to dismiss, arguing that Bovino lacked standing because he was no longer a member.
The Court’s Holding
The Court of Chancery granted the motion to dismiss and dismissed the amended complaint in its entirety for lack of standing. Bovino failed to plead a viable defect in the 2025 election that would undermine the authority of the directors who terminated his membership. His allegations about notice and voter eligibility were conclusory, and the pleaded facts showed that the meeting satisfied the quorum requirements under the 2010 bylaws, the 2020 bylaws, and Section 215(c).
The court also held that Bovino failed to plead facts supporting a reasonable inference that his termination was inequitable or undertaken in bad faith. Both potentially applicable sets of bylaws authorized the board to terminate membership with or without cause upon 30 days’ written notice, and the resolution complied with that procedure. Because the corporation had already held the annual meeting sought in Bovino’s initial complaint, leaving no viable claim pending when the board acted, the court found no reasonable basis to infer that the termination was intended to obstruct his access to judicial relief. As a nonmember, Bovino lacked standing under Sections 215 and 225 and lacked a legally cognizable interest permitting him to challenge the corporation’s governing documents.
Key Takeaways
- A plaintiff seeking relief under DGCL Sections 215 or 225 must qualify as a member, director, or other statutorily authorized applicant when pursuing the claim.
- Conclusory assertions that notice, voter eligibility, or quorum were “disputed” do not adequately plead a defective director election.
- A nonprofit nonstock corporation’s termination of membership may withstand equitable scrutiny when authorized by its governing documents, procedurally compliant, and unsupported by well-pleaded allegations of bad faith.
Why It Matters
The decision illustrates how termination of membership in a Delaware nonstock corporation can eliminate standing to pursue both statutory election claims and broader challenges to corporate governance documents. A former member cannot preserve those claims merely by disputing the authority of the terminating board without pleading specific facts showing that the directors were invalidly elected or that the termination itself was improper.
The opinion also underscores that courts generally treat membership in a voluntary nonprofit association as a privilege rather than a vested property interest. Challenges to expulsion therefore require concrete allegations of procedural noncompliance, conflict with public policy, or bad-faith enforcement.