By: TONY MARKS
Associate Editor
The Third Circuit Court of Appeal for the State of Louisiana released a decision last week on a case on appeal from Evangeline Parish.
In the case of Randel Brown versus East Side Water System, Inc., the appellate court reversed the change of the quorum needed for a valid election. The change was initially made in the ruling of 13th Judicial District Court Judge Gary J. Ortego.
“We must reverse that portion of the trial court’s judgment fixing the quorum at ten percent,” said the court comprised of Cheif Judge Ulysses Gene Thibodeaux and Judges Sylvia R. Cooks and Elizabeth A. Pickett. “We further declare the board members action on March 11, 2015, changing the quorum from 10 percent to 50 percent was contrary to and exceeded the authority granted the Board by the articles of incorporation. The articles of incorporation grant only the members of the corporation the authority to elect the board of directors and to change the vote requirement for accomplishing the end.”
The Court of Appeal in its decision noted that the original Articles of Incorporation called for a 50 percent quorum to have a valid election. The Court further noted that in 2004 the board of directors for East Side Water voted to amend the bylaws changing the quorum from 50 percent to 10 percent which created a conflict between the bylaws and the Articles of Incorporation. The board voted in 2015 to change the quorum back to the original 50 percent quorum.
This action by the board led to Randel Brown filing suit against the board in the 13th Judicial District Court on March 11, 2015. Brown, in his Petition for Declaratory Judgment, sought to overturn the board’s decision.
Trial on the matter was heard by Judge Ortego on June 17, 2016. After taking the matter under advisement, Judge Ortego cancelled and invalidated the change of the election quorum from 10 percent to 50 percent and ordered reinstituted immediately the 10 percent quorum.
The appellate court then set dates for new staggered elections. According to the decision, “We amend the trial court’s judgment to provide the current board of directors shall give proper notice to the members of the corporation that the staggered election which was originally scheduled for the first Monday of April 2016, namely for the board of directors members, Todd Deville, Steve Vidrine, and John Vidrine, will be held on the first Tuesday of September 2017, being September 5, 2017.”
The decision continued, “We further order that the staggered election of the next two directors, those positions from the 2014 election, shall be held on the regular annual election date of the first Monday of April 2018 and continuing each year in staggered terms.”
The appellate court went on to order “these staggered elections shall be held in accordance with the articles of incorporation or in accordance with Louisiana statute in the event a quorum is not present at the first meeting.”
“I am certainly happy that the Third Circuit Court of Appeals cleared us of all accusations,” said former East Side Water Board President Todd DeVille. “I look forward to getting back to the business of properly running the East Side Water System.”
“We have no choice but to abide by what the Court of Appeal said,” current President Randel Brown said. “According to our attorney, they have outlined a way to have the quorum changed. We’re planning on having the elections, and we’re going to do exactly what the Court of Appeal says.”
According to Brown, the Court of Appeal outlined the steps needed to have a valid election in accordance with state law. He said that if there is not a 50 percent quorum in an election, then there will have to be another election within 30 days. Brown added if there is not a 50 percent quorum at the second election, then the election will nevertheless be considered valid based on the statute. As the Court of Appeal stated in its decision, “This statute provides a reasonable, legally permissible remedy for the membership to avoid a potentially onerous quorum rules for the election of directors.”
Brown went on to add that when members head to the polls for the September election, the members will also vote on “a change to the Articles of Incorporation to reflect a 10 percent quorum rather than at 50 percent.”