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A Pocono Country Place Property Owners Association, Inc. v. Kowalski

Commonwealth Court of Pennsylvania

May 7, 2018

A Pocono Country Place Property Owners Association, Inc. and Phyllis Haase, Margaret Cooney, Harry Williams, Carollee Kidd, Lisa Butler, Gail Foster, Beth Raiola and Bonnie Duffy each in his/her capacity as a Director, Appellants
v.
Zbigniew J. Kowalski a/k/a Joe Kowalski

          Argued: April 10, 2018

          BEFORE: HONORABLE ANNE E. COVEY, Judge HONORABLE MICHAEL H. WOJCIK, Judge HONORABLE JAMES GARDNER COLINS, Senior Judge

          OPINION

          JAMES GARDNER COLINS, Senior Judge

         This matter is an appeal from an order of the Monroe County Court of Common Pleas (trial court) denying a petition filed by appellants A Pocono Country Place Property Owners Association, Inc. (Property Owners Association) and eight members of its board of directors (collectively, Plaintiffs) to remove Zbigniew J. Kowalski (Kowalski) as a director of Property Owners Association and bar him from serving as a director in the future. The sole issue presented in this appeal is whether a director's boorish and insulting behavior toward other members of the board of directors constitutes sufficient grounds for judicial removal of a director under Section 5726(c) of the Nonprofit Corporation Law of 1988 (Nonprofit Corporation Law), 15 Pa. C.S. § 5726(c). We conclude that such conduct, while deplorable, does not constitute grounds for court intervention in the governance of a nonprofit corporation, and therefore affirm.

         A Pocono Country Place is a planned community of approximately 4, 500 single-family residences in Coolbaugh Township, Monroe County, Pennsylvania. (Trial Court Decision, Finding of Fact (F.F.) ¶1; Property Owners Association's Bylaws (Bylaws) Art. III, § 11, Reproduced Record (R.R.) at 35; Hearing Transcript (H.T.) at 8-9, R.R. at 106-107.) Property Owners Association is a Pennsylvania nonprofit corporation organized for the purpose of managing A Pocono Country Place and maintaining its common facilities. (Trial Court Decision, F.F. ¶1; Bylaws Art. I, § 1, Art. II, R.R. at 35.) The members of Property Owners Association are the owners of properties in A Pocono Country Place. (Bylaws Art. IV, § 1, R.R. at 36.) Property Owners Association's board of directors (the Board) consists of nine directors who are elected by the membership to three-year terms. (Trial Court Decision, F.F. ¶2; Bylaws Art. V, § 1, Art. VI, § 5, R.R. at 37, 40.) The Board annually elects four of the directors as President, Vice President, Secretary, and Treasurer. (Bylaws Art. VII, §§ 1-2, R.R. at 41-42.)

         Property Owners Association's Bylaws contain the following provisions concerning the removal of directors:

         Section 7 - Removal of Directors

A. Directors may be removed from office individually or as an entire Board only in the ways permitted in the Pennsylvania Nonprofit Corporation Law 5726 [15 Pa. C.S. § 5726] and in compliance with the decisions of Pennsylvania's Courts.
B. Members of the Board of Directors of this Association serve at the pleasure of the membership and may be removed from office by a two-thirds (2/3) majority vote at a Special Meeting of the members called for that express purpose and at which a quorum is present either in person or by proxy. The Board shall fill the newly vacant seat(s) in accordance with the terms of these Bylaws but may not reappoint to the vacancy any Director who at anytime had been removed from office by the membership.
C. The Board of Directors shall declare vacant the office of a Director if he/she is declared of unsound mind by an order of the court, is convicted of a felony while in office, fails to accept office, or by failure to attend in person three (3) consecutive regular meetings of the Board of Directors or six (6) in a twelve (12) month period.
D. If the recall process does not result in the Director's removal, no further recall petition may be filed against the same Director for that same incident.

(Bylaws Art. VI, § 7, R.R. at 41.) Property Owners Association has adopted a board member code of conduct (Board Code of Conduct), which provides, inter alia, that "Board Members shall exhibit honesty, civility and professionalism at all times and shall refrain from abusive conduct, personal charges and/or verbal attacks on the character or motives of [Property Owners Association] members, management, administration, staff, Directors, chairs and the public." (Board Code of Conduct § 4, R.R. at 49.)

         Kowalski owns two properties in A Pocono Country Place that he rents out. (H.T. at 8, 200, R.R. at 106, 298.) Kowalski was elected as a director of Property Owners Association on June 25, 2016, in an election in which the number of candidates did not exceed the number of vacancies on the Board. (Trial Court Decision, F.F. ¶3; Application to Remove Director ¶20, R.R. at 12; Answer to Application ¶20, R.R. at 69.) Kowalski also signed the Board Code of Conduct on that date. (Trial Court Decision, F.F. ¶7; Board Code of Conduct, R.R. at 51.)

         Seven of the other eight directors of Property Owners Association in 2016 were women. (Trial Court Decision, F.F. ¶2.) Between July 17, 2016 and September 29, 2016, Kowalski directed multiple insulting remarks at these Board members. (Id., F.F. ¶¶11, 16-17, 19-22, 24.) These included: emails that characterized specific female directors as "the most dangerous person of the 9 Directors, " "cunning and conniving, " "vindictive and spiteful, " and "incoherent"; emails referring to a female director as having "a nervous breakdown" or "a meltdown"; telling a female director at a Board meeting that "maybe I'd let you cook for me"; and suggesting in emails that a female director's dinner order for a Board meeting be changed because it was too fattening. (Id., F.F. ¶¶11, 16, 19, 21-22, 24.) In this time period, Kowalski also made statements in emails to the other directors that there were too many women on the Board and characterized other directors' actions as based on the fact that they were female. (Id., F.F. ¶¶12, 15, 19, 23.) In addition, Kowalski, in an email in October 2016, characterized the non-director members who serve on Property Owners Association's committees as alcoholics who were motivated to volunteer by the providing of free alcohol at Property Owners Association's volunteers' dinner. (Id., F.F. ΒΆ29.) In September and October 2016, the Board censured Kowalski three times for sending ...


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