Opinion
F073051
02-20-2018
SIKH TEMPLE TURLOCK, CALIFORNIA et al., Plaintiffs, Cross-defendants and Respondents, v. GURJEET SINGH CHAHAL et al., Defendants, Cross-complainants and Appellants.
Rosen Bien Galvan & Grunfeld, Sanford Jay Rosen, Lisa Ells and Christopher Hu; Law Office of Mark Cohen and Mark Cohen for Defendants, Cross-complainants and Appellants. Sodhi Law Group, Jakrun S. Sodhi and Ameet S. Birring for Plaintiffs, Cross-defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 2001354)
OPINION
APPEAL from a judgment of the Superior Court of Stanislaus County. John D. Freeland, Judge. Rosen Bien Galvan & Grunfeld, Sanford Jay Rosen, Lisa Ells and Christopher Hu; Law Office of Mark Cohen and Mark Cohen for Defendants, Cross-complainants and Appellants. Sodhi Law Group, Jakrun S. Sodhi and Ameet S. Birring for Plaintiffs, Cross-defendants and Respondents.
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This appeal arises from a corporate governance dispute between two factions within the congregation of the Sikh Temple Turlock, California (Temple). In the trial court, each faction claimed to be the Temple's duly elected board of directors.
The congregation elected cross-defendants and respondents to the Temple board in August 2011 (First Board). Appellants claimed that an April 2013 election placed them on the board (Second Board). In June 2013, appellants entered the Temple office, changed the lock, and took over running the Temple.
The Temple, through the First Board's directors, filed the underlying action against appellants seeking declaratory and injunctive relief and damages for trespass. Appellants filed a cross-complaint requesting a judicial determination of the validity of the April 2013 election. As an alternative remedy, appellants requested the court to order and supervise a new election.
Following a bench trial, the court found the election of the First Board was valid. The court further concluded the April 2013 election did not occur and that appellants took control of the Temple by usurpation. Accordingly, the trial court reinstated the First Board and ordered that a judicially supervised election take place. The court also enjoined five of the appellants from serving as officers or directors of the Temple for five years.
Appellants contend the trial court erred in reinstating the First Board because respondents were never validly elected. Appellants further argue the five-year ban on their serving as officers or directors is procedurally barred, unconstitutional, and impermissibly overbroad.
The trial court did not err as alleged. Therefore, the judgment will be affirmed.
BACKGROUND
The Temple is a California nonprofit religious corporation. The Temple adopted bylaws when it incorporated in 1985.
Before August 2011, the Temple chose the board of directors through an informal "selection," rather than a formal election. The Temple undertook this practice because the congregants seldom volunteered to run for election. If board members wanted to step down and no one was willing to replace them, those board members would continue on the board. This resulted in a "selection" of the existing board members without a formal election. A selection would also occur when a vacancy arose and another congregant was willing to fill the position.
These selections occurred at meetings attended by congregation members. For several weeks before a selection, the board would give the congregation notice that the selection would take place. This process occurred without objection by those in attendance.
Under the Temple's bylaws, the members are to elect seven directors for two-year terms to manage the Temple's "temporal activities, business and affairs." The bylaws set forth the procedures for such election. The board of directors must appoint a committee to select qualified candidates. Once the committee selects the list of candidates, the Temple secretary mails the candidate report to each member along with a notice of the meeting where the election will take place. At the meeting, the members elect the directors by a majority vote.
In April 2011, the Temple moved from its previous location to its current larger location. With the move, respondents decided to hold an election of directors as opposed to a selection.
Respondents asked Temple members to review the bylaws and report to them regarding the election procedures. Respondents then put together a nominating committee.
Harvinder Grewal was a member of the nominating committee. He testified that he contacted between 40 and 50 Temple members, both in person at Sunday gatherings and by phone, to ask if they were interested in running for a position on the board. However, no members wished to run. According to Grewal, these members believed respondents were adequately fulfilling their duties. In addition, serving on the board requires an extensive time commitment. Similarly, nominating committee member Sahib Sandhu asked another 30 to 50 people to run for the board without success.
Grewal used a handwritten phone list to contact members. This phone list was derived from a handwritten membership list. This membership list was kept in the Temple office.
Instead of mailing notice of the upcoming August 28, 2011, election to the members, the directors posted the notice on the Temple's notice board and announced the election during services. The directors followed this procedure pursuant to tradition and in an effort to cut costs.
At the August 28, 2011, meeting, Temple members unanimously elected respondents, Kirpal Kaeley, Gurdev Singh Basra, Amrik Singh Rai, and Sukhminder S. Deol, along with three nonparties, to the board of directors. Approximately 200 Temple members participated in this election.
The Temple membership held a meeting on January 6, 2013, to select two directors to replace Kaeley and Basra who wanted to step down. No one volunteered to fill these positions. Therefore, Basra and Kaeley decided to remain on the board of directors. Respondent Harvinder Bains was added as a new director. Six of the directors selected were already on the board. Only Bains was added as a new member.
In 2013, a rift developed between two factions of Temple members over the decision of respondents, the First Board, to terminate the contract of a priest. On June 2, 2013, an altercation occurred at the Temple that resulted in violence.
In late June 2013, appellants, Gurjeet Singh Chahal, Gurdev Singh, Davinder Singh, Nirmal Singh Chandi, and Gurjit Singh Dhillon, took control of the Temple office and the Temple operations. They entered the office, had its lock changed, and took over running the Temple. Appellants, Zorawar Singh Sandhu and Harvinder Singh Kullar, did not participate in this hostile takeover.
Respondents, in their capacity as directors, filed the underlying action on behalf of the Temple. They sought a preliminary and permanent injunction, declaratory relief, and damages for trespass.
Appellants answered the complaint and filed a cross-complaint against respondents. Appellants alleged that at the annual meeting held on April 7, 2013, the Temple members elected them as directors. They sought a judicial determination that the alleged April 7, 2013, election was valid, that they constituted the board, and that respondents did not constitute the board. Alternatively, appellants requested the trial court to order a court supervised election. Appellants also sought temporary restraining orders and a preliminary injunction and permanent injunction against respondents.
Following a bench trial, the court ruled in favor of respondents. The court concluded that an election took place on August 28, 2011. The court found the election process did not comply with the written notice requirement in the bylaws. Nevertheless, the court ruled that the election was valid under Corporations Code section 9419 because nine months had passed and failure to give notice was the only defect.
All further statutory references are to the Corporations Code unless otherwise stated. --------
The court further found that neither an election nor a selection took place on April 7, 2013. The court therefore concluded that the Second Board took control by usurpation and illegally entered the Temple office.
The court ruled that respondents were the true governing body of the Temple and reinstated respondents, along with two nonparties, as directors and officers of the Temple. The court also enjoined five of the appellants from serving as officers or directors of the Temple for five years. The court further ordered appellants to divest themselves of control of the Temple and to pay the Temple $1 for their trespass. Finally, the court ordered that a court supervised membership drive and election take place.
DISCUSSION
1. Respondents are the duly elected directors.
Appellants contend we must reverse the trial court's order reinstating respondents as the Temple's directors because respondents were never validly elected. According to appellants, the August 2011 election did not comply with the Temple's bylaws or the Corporations Code.
As noted above, the trial court found the only defect in the August 2011 election was the failure to mail notice of the election as required in the bylaws. However, under section 9419, this failure did not invalidate the election. Section 9419 provides that, "[i]n the absence of fraud, any election ... of a director is conclusively presumed valid nine months thereafter if the only defect in the election ... is the failure to give notice as provided ... in the corporation's ... bylaws." There is no allegation of fraud and more than nine months passed before appellants questioned the validity of the election.
Appellants contend that lack of notice was not the only defect. According to appellants, the August 2011 election was invalid because the record is devoid of evidence sufficient to support finding there was a membership list. Appellants assert that without a validly formed membership list, there was no quorum as required under the bylaws and no way to determine whether those voting were eligible to do so.
From the statement of decision and judgment upholding the validity of the election, we can infer the trial court found there was sufficient evidence that the Temple kept a membership list, that a quorum was established, and that those voting were eligible to do so. Therefore, we review these implied findings under the substantial evidence standard. Accordingly, we must view the evidence in the light most favorable to respondents, give respondents the benefit of every reasonable inference and resolve all conflicts in respondents' favor. (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.)
Contrary to appellants' position, the record supports the trial court's implied finding that the Temple had a membership list that it used for the August 2011 election. Grewal testified that, to notify members of the August 2011 election, he used a handwritten phone list that was derived from a handwritten membership list. This membership list was kept in the Temple office. It included names, addresses and phone numbers of members. Thus, substantial evidence supports finding the Temple complied with its bylaw requiring it to "keep a written list of the names and addresses of all Members."
Appellants further argue that the Temple had no functioning membership process and therefore no validly formed membership list. The membership application process set forth in the bylaws requires an applicant to apply to the board of directors. Thereafter, the congregation is given time to submit written objections to that applicant becoming a member. While not following this procedure, the Temple had a membership process it followed. Grewal testified that, if someone wanted to become a member, that person would write their name and phone number in a notebook kept by the Temple. The Temple would then update the membership list with this information. Thus, substantial evidence supports finding the Temple had a functioning membership process.
Appellants also assert the August 2011 election was invalid because the Temple neither established that a quorum was present nor ascertained voter eligibility. As noted above, the trial court's ruling implies the court found in favor of respondents on these issues.
The Temple bylaws provide that a majority of the members constitutes a quorum. Respondents presented testimony from several members who estimated there were 200 to 400 Temple members from 2011-2013. Testimony also established that approximately 200 members attended the August 28, 2011, election. Thus, substantial evidence supports the trial court's implied finding that a quorum was present. Regarding voter eligibility, Grewal testified that he knows all the Temple members and that the 200 people present at the August 28, 2011, election were members who were eligible to vote. Accordingly, substantial evidence also supports finding the members present were eligible to vote.
The trial court also concluded that a "selection" took place in January 2013 that reaffirmed respondents as directors. In so ruling, the court noted that the Temple failed to conduct this selection according to its bylaws and "failed to maintain membership records." Appellants argue that this conclusion regarding the January 2013 selection demonstrates that the Temple did not have a membership list in 2011.
However, the trial court unambiguously ruled that the only defect in the August 28, 2011, election was the failure to provide mailed notice. Substantial evidence supports this finding. Further, the court's reference to the defects in the January 2013 selection are limited to that meeting. Additionally, the trial court concluded in its final statement of decision that "there is no available current membership list" thus implying there was a membership list available for the August 2011 election as testified to by respondents.
Moreover, even if the January 2013 selection were invalid, respondents would still maintain their positions as directors. Under the bylaws, each director holds office for a two-year term "or until a successor Director has been elected and qualified." The court ruled that the alleged April 7, 2013 election did not take place and appellants have not appealed this finding.
In sum, the trial court found that the August 28, 2011, election was valid. Viewing the evidence in the light most favorable to respondents, giving respondents the benefit of every reasonable inference, and resolving all conflicts in respondents' favor, substantial evidence supports this finding. Accordingly, respondents are the duly elected directors. 2. The purported August 27 , 2016 , election is irrelevant to this appeal.
Appellants request we take judicial notice of an election that allegedly took place at the Temple on August 27, 2016. According to appellants, the Temple members elected seven new directors on that date.
However, the only evidence presented by appellants to support this request is correspondence between the parties' counsel. While these letters make reference to a purported Temple election, respondents' counsel disputes that a valid election took place. Respondents' counsel refers to this alleged election as a "sham 'election'" that put a "'sham' board in place." Since the validity or existence of this event is subject to dispute, judicial notice is not proper. (Evid. Code, § 452, subd. (h).) Therefore, appellants' request for judicial notice is denied.
Moreover, judgment in this matter was entered in December 2015. Therefore, the purported August 2016 election was not part of the trial court record. Thus, even if we were to take judicial notice of the alleged election, we would not consider it in determining the validity of the trial court's judgment. (City of Petaluma v. Cohen (2015) 238 Cal.App.4th 1430, 1439.) It is irrelevant to this appeal. 3. The trial court did not err in enjoining appellants from serving as officers or directors for five years.
The judgment enjoins five of the appellants from serving as officers or directors of the Temple for five years. The trial court concluded the appellants' illegal acts that resulted in their self-appointed status as Temple directors were "'fraudulent acts'" within the meaning of section 9223, subdivision (a). Accordingly, the trial court granted respondents' cause of action for a permanent injunction against appellants. The court reasoned "It would make little sense to remove [appellants] from 'office' under section 9223 without imposing some limits on their ability to turn around and again attempt to illegally and fraudulently wrest control of the temple from its rightful board. A 'cooling off' period is abundantly necessary here, and the clear mandate of Section 9223(a) gives the Court authority to impose one."
a. The five-year ban is procedurally correct.
Appellants first argue that the trial court could not properly bar appellants from serving as directors for five years because respondents did not include a cause of action under section 9223 in their complaint. According to appellants, the "trial court's eleventh-hour insertion of a ban that no party requested" violated appellants' procedural due process rights.
Section 9223, subdivision (a), provides:
"The superior court of the proper county may, at the suit of a director, or twice the authorized number ... of members, remove from office any director in case of fraudulent acts and may bar from reelection any director so removed for a period prescribed by the court. The corporation shall be made a party to such action."
Appellants are correct that respondents did not specifically request relief under section 9223. However, there was no reason for respondents to seek such relief. Respondents' complaint alleged that appellants were acting without authority "in purportedly taking control of the Board without a legitimate vote." Thus, respondents were not requesting the court to remove a validly elected director from office for fraudulent acts. Rather, they were seeking to enjoin appellants from engaging in unauthorized acts and unlawfully taking control over the Temple.
Respondents' complaint specifically sought a permanent injunction prohibiting appellants from "removing and/or trying to remove the Board without following the notice and voting requirements of the Bylaws" and "from entering the Offices of the [Temple]." The trial court granted the relief requested concluding that appellants illegally took control of the Temple.
Whether and how to grant injunctive relief rests in the trial court's sound discretion. (Palo Alto-Menlo Park Yellow Cab Co. v. Santa Clara County Transit Dist. (1976) 65 Cal.App.3d 121, 132 (Palo Alto-Menlo Park.) The trial court exercises this broad and flexible discretionary power in light of all the facts and circumstances in the case. (Ibid.)
We will not disturb the trial court's grant of a permanent injunction on appeal absent a showing of a clear abuse of discretion. (Horsford v. Board of Trustees of California State University (2005) 132 Cal.App.4th 359, 390 (Horsford).) In reviewing the ruling, we resolve all factual conflicts and questions of credibility in the prevailing party's favor and indulge all reasonable inferences to support the trial court's order. (Ibid.)
Here, in granting injunctive relief, the trial court took into account appellants' illegal usurpation of power and concluded there needed to be limits on their ability to repeat this behavior. Accordingly, the trial court enjoined appellants from serving as officers or directors for five years. Given the circumstances of the case, and the court's broad and flexible discretionary powers, the trial court did not abuse its discretion, i.e., it did not exceed the bounds of reason. (In re Marriage of Connolly (1979) 23 Cal.3d 590, 598.) Further, in determining the validity of the election under section 9418, as requested by respondents, the trial court had the authority to order a new election and to "direct such other relief as may be just and proper." (§ 9418, subd. (c).)
As noted above, because appellants were not directors, an action filed pursuant to section 9223 was not necessary to enjoin their conduct. Nevertheless, the fact that the trial court relied on this section in imposing the five-year ban does not invalidate the trial court's ruling. In granting injunctive relief under its general equitable powers, the trial court had authority and discretion to tailor the injunction to the facts and circumstances of the case. We will not disturb a ruling or decision, itself correct in law, merely because given for a wrong reason. If right on any theory of the law applicable to the case, we must sustain the ruling regardless of the considerations that may have moved the trial court to its conclusion. (David v. Hermann (2005) 129 Cal.App.4th 672, 685.)
Further, appellants' characterization of the five-year ban as being "eleventh-hour" is unwarranted. Respondents specifically requested that the court permanently enjoin appellants from entering the Temple office. Since the duties of a director include managing the Temple's "temporal activities, business and affairs," being banned from the Temple office would seriously impair a director's ability to carry out these management duties. Thus, appellants cannot claim they had no notice of a possible ban. Moreover, whether appellants illegally took control of the Temple was one of the major issues at trial. Thus, appellants had the opportunity to litigate all aspects of this injunction.
b. The ban does not infringe on appellants' freedom of religion.
Appellants contend that barring them from serving as Temple directors for five years violates the free exercise clause of both the United States and California Constitutions. According to appellants, this ban prevents them from performing a core obligation of their religion.
In opposing the trial court's proposed judgment, appellants submitted declarations from Temple members explaining certain aspects of Sikhism. Harpreet Kaur explained that the "core teaching in Sikhism is that each Sikh has an obligation to perform 'seva.'" Seva "includes the obligation to perform selfless service, community service, prayer, preparing and serving 'langar' (food prepared and served to the general public at Sikh temples), and performing tasks requested by the 'sangat' (Temple congregation)." Kaur opined that, "precluding someone from performing 'seva' is tantamount to barring someone from practicing his or her religion."
Jaideep Singh's declaration included a similar definition of seva and noted that seva "can be performed in numerous forms and venues." Singh further explained that the gurdwara (temple) is the primary site of seva. Singh opined that "[a]mong the forms seva can take is service as a member of the institution's managing committee, a weighty task requiring a commitment few can make" and that prohibiting an individual from serving on such a management committee for a prescribed length of time "is equivalent to preventing the individual's free practice of their religion."
Based on these declarations, appellants argue that the five-year ban constitutes a direct infringement of the free exercise of their religion. According to appellants, barring a director from future service essentially inserts the court into ongoing monitoring of religious administration. Therefore, appellants argue, we must strictly scrutinize this ban.
"'The general rule that courts will not interfere in religious societies with reference to their ecclesiastical practices stems from the separation of the church and state, but has always been qualified by the rule that civil and property rights would be adjudicated.'" (In re Metropolitan Baptist Church of Richmond, Inc. (1975) 48 Cal.App.3d 850, 859.) Thus, as long as civil rights are involved, a court will entertain jurisdiction of a controversy in a religious body, although some ecclesiastical matters are incidentally involved. (Ibid.) Therefore, while a secular court can resolve internal church disputes, it must not entangle itself in disputes over church doctrine or infringe on the right to free exercise of religion. (Episcopal Church Cases (2009) 45 Cal.4th 467, 478.) However, this rule does not prevent a civil court from using neutral principles of law to resolve a church dispute that does not turn on questions of church doctrine. (Id. at p. 484.)
Here, the evidence established that the duties of the directors involve secular acts. The bylaws state "the temporal activities, business and affairs of the [Temple] shall be managed, and all corporate powers shall be exercised, by or under the direction of the Board." Two of the appellants testified that as board members their duties included preparing balance sheets, making bank deposits, cutting receipts, and installing security cameras. These are not religious acts but, rather, are secular acts common to all corporations.
Appellants submitted evidence that a Sikh has a general obligation to perform selfless service. However, there was no testimony that serving on the board is itself a religious act, constitutes a religious practice, or is required to satisfy the seva obligation. In fact, the evidence suggests otherwise. It is undisputed that the Temple had difficulty seating a board because the congregants seldom volunteered to run for election. Further, members of the nominating committee testified that they contacted 30 to 50 congregants without finding anyone who was willing to run for election to the board. This dearth of volunteers suggests that those serving on the board are not doing so as a central part of their religious practice. Thus, appellants' claim that the ban infringes on the free exercise of their religion has no support in the record. Accordingly, appellants have not met their burden of demonstrating that the trial court erred and violated their rights under the free exercise clause.
c. The ban is not overbroad.
Appellants contend the ban is overbroad because it absolutely prohibits otherwise lawful acts. Appellants note that it bars them from serving as officers or directors under any circumstances, even if they are validly elected and governing in accordance with the bylaws. Appellants further assert that the ban is unwarranted in light of the harm to their free exercise rights.
As discussed above, the trial court has broad and flexible discretion regarding whether and how to grant injunctive relief. (Palo Alto-Menlo Park, supra, 65 Cal.App.3d at p. 132.) Further, we will not disturb the trial court's grant of a permanent injunction absent a showing of a clear abuse of discretion. (Horsford, supra, 132 Cal.App.4th at p. 390.)
Here, the trial court determined that, in light of appellants' illegal usurpation of power and the court's concern that appellants would again attempt to wrest control of the Temple from its rightful board, a "cooling off" period was abundantly necessary. Under the circumstances, this ruling did not exceed the bounds of reason. Moreover, although section 9223, subdivision (a) is inapplicable because the Temple did not elect appellants, it nevertheless provides support for this type of restriction. This section gives the trial court authority to bar a director from reelection "for a period prescribed by the court" if that director was removed for committing fraudulent acts. This is what the court did here.
Appellants' argument that the ban is overbroad because it absolutely prohibits lawful acts is also unpersuasive. The ban is temporary. After five years, appellants are free to run for election to the board.
Finally, because the injunction does not impair appellants' free exercise rights, it is not overbroad on the ground it suppresses religious conduct.
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on appeal.
/s/_________
LEVY, Acting P.J. WE CONCUR: /s/_________
FRANSON, J. /s/_________
MEEHAN, J.