National Bd. of Examiners for Osteopathic Physicians and Surgeons, Inc. v. American Osteopathic Ass'n

Decision Date27 December 1994
Docket NumberNo. 49A04-9307-CV-263,49A04-9307-CV-263
Citation645 N.E.2d 608
PartiesThe NATIONAL BOARD OF EXAMINERS FOR OSTEOPATHIC PHYSICIANS AND SURGEONS, INC. d/b/a National Board of Osteopathic Medical Examiners, Inc., and the National Board of Osteopathic Medical Examiners, Inc., and Joseph H. Hogsett, as Secretary of State of the State of Indiana, Appellant-Defendants, v. AMERICAN OSTEOPATHIC ASSOCIATION, Appellee-Plaintiff.
CourtIndiana Appellate Court
OPINION

CHEZEM, Judge.

Case Summary

Appellant-defendant, 1 NBOME, appeals the decision of the trial court to grant partial summary judgment in favor of appellee-plaintiff, the American Osteopathic Association ("AOA"). We affirm.

Issues

NBOME presents three issues for review:, which we restate as:

I. Whether the AOA has standing to bring an action for judicial enforcement of certain provisions of Indiana NBOME's articles of incorporation and bylaws;

II. Whether Indiana NBOME's actions in attempting to accept the provisions of the 1971 Act were effective, and whether those actions eliminated the AOA's approval rights; and

III. Whether Indiana NBOME's merger with Illinois NBOME was effective to eliminate the AOA's approval rights.

Facts and Procedural History

The AOA is the national association of the osteopathic medical profession in the United States. In the early 1930's, the AOA established an unincorporated association originally known as the National Board of Osteopathic Examiners, and later called the National Board of Examiners for Osteopathic Physicians and Surgeons (the "NBOME Predecessor"). The purpose of the association was to develop and administer a licensing examination for the osteopathic medical profession and to encourage recognition of such an examination for the licensing of osteopathic physicians in the several states.

The AOA prepared the NBOME Predecessor's constitution and bylaws in 1933, and elected its initial board of directors in 1934. A condition of the AOA's founding of the NBOME Predecessor was that the AOA would have approval rights over both the selection of the association's board and any changes in its governing documents.

For seventeen years, the NBOME Predecessor operated as an association. Indiana NBOME was incorporated on July 11, 1951, under the Indiana General Not-for-Profit Corporation Act of 1935, Ind.Code §§ 23-7-1-1 et seq. (the "1935 Act"). The stated purpose of Indiana NBOME, as set out in its articles of incorporation, was "[t]o acquire the assets and assume the liabilities of an existing voluntary association known as The National Board of Examiners for Osteopathic Physicians and Surgeons." R. at 30. Indiana NBOME's articles of incorporation and bylaws also expressly reserved to the AOA the right to approve nominations to Indiana NBOME's board and amendments to its articles and bylaws.

At all times up until 1991, the NBOME Predecessor and Indiana NBOME complied with the provisions of their governing documents which permitted the AOA to exercise approval rights over board membership. From 1934 until 1991, the AOA exercised those rights. In addition, before 1991, the NBOME Predecessor and Indiana NBOME sought approval from the AOA when amending either their articles of incorporation or bylaws.

On July 17-18, 1991, the AOA Board of Trustees met to consider certain amendments to Indiana NBOME's bylaws submitted by its board. The proposed amendments would have eliminated the AOA's approval rights over nominations to Indiana NBOME's board. The AOA disapproved of the proposed amendments. On the next day, the AOA Board of Trustees met with Dr. Eugene Mochan, immediate past-president of Indiana NBOME. Dr. Mochan informed the Board of Trustees of Indiana NBOME's concern that it was being perceived as not autonomous from the AOA. Dr. Mochan noted that a special joint task force of the AOA and Indiana NBOME would meet to address this issue.

However, Indiana NBOME's board had already voted to pursue severing its connection with the AOA. On May 11, 1991, the board had adopted a resolution that Indiana NBOME was to be made an autonomous examining board. In furtherance of that resolution, Indiana NBOME's board had drafted articles of incorporation for an Illinois nonprofit corporation, the Illinois NBOME, which did not include the AOA's approval rights. Those articles were executed on July 15, 1991.

On October 1, 1991, the AOA notified Indiana NBOME of its disapproval of the proposed bylaw amendments which would have eliminated its right to approve nominations to Indiana NBOME's board. On October 10, 1991, Indiana NBOME filed with the Secretary of State of Illinois those articles of incorporation which had been executed on July 15, 1991, and which did not include provisions giving the AOA approval rights over either Illinois NBOME's board members or changes to its articles or bylaws.

On October 26, 1991, Indiana NBOME's board and its members, who were the same individuals, met to review and sign the necessary documents to effectuate its earlier resolution to become an autonomous organization. The board adopted a resolution to accept the provisions of the Indiana Not-for-Profit Corporation Act of 1971, Ind.Code §§ 23-7-1.1-1 et seq. (the "1971 Act"). As part of its acceptance of the 1971 Act, the board also adopted a restatement of its articles of incorporation. The restated articles did not include those provisions which had granted the AOA approval rights over Indiana NBOME's board members and changes to the articles and bylaws. The restated articles were approved by Indiana NBOME's members. Lastly, pursuant to the 1971 Act, the boards of both Indiana NBOME and Illinois NBOME, who again were comprised of the same individuals, approved a merger of Indiana NBOME into Illinois NBOME.

The corporate documents reciting Indiana NBOME's acceptance of the 1971 Act and its restatement of its articles of incorporation were filed with the Secretary of State of Indiana on December 31, 1991. The corporate documents reciting Indiana NBOME's merger into Illinois NBOME were filed with the Secretary of State of Indiana on January 12, 1992, and with the Secretary of State of Illinois on February 18, 1992.

On August 3, 1992, Illinois NBOME elected board members without the AOA's approval of the nominations.

On October 8, 1992, the AOA filed suit against Indiana NBOME and Illinois NBOME (collectively "NBOME"), seeking a declaratory judgment that the AOA's approval rights are valid and enforceable, and that the actions of the defendants which purported to extinguish those rights were of no force and effect. NBOME filed its motion to dismiss and for summary judgment on November 20, 1992. NBOME moved to dismiss the complaint arguing that the AOA had no standing to challenge the actions of either Indiana NBOME or Illinois NBOME. NBOME moved for summary judgment arguing that the corporate actions of accepting the 1971 Act and the subsequent merger were entirely proper and legal under both Indiana and Illinois law. A hearing was conducted on the motions on February 3, 1993. On April 15, 1993, the trial court denied NBOME's motions to dismiss and for summary judgment, and instead granted summary judgment for the AOA pursuant to T.R. 56(B). NBOME appeals.

Discussion and Decision
Summary Judgment

The trial court granted summary judgment for the AOA. Prior to the amendment of Trial Rule 56, this court would engage a broad standard of review upon the appeal of a grant of summary judgment. When reviewing the disposition of a summary judgment motion, this court stood in the same position as the trial court. Rambo v. Cohen (1992), Ind.App., 587 N.E.2d 140, reh'g denied, trans. denied. We would review the pleadings, affidavits, depositions, admissions, interrogatories, testimony, and any materials contained in the record to determine if the trial court properly decided that there were no genuine issues of material fact and that the prevailing party was entitled to judgment as a matter of law. Stackhouse v. Scanlon (1991), Ind.App., 576 N.E.2d 635, trans. denied. Even absent a material issue of fact, summary judgment would be affirmed if it was sustainable on any theory or basis found in the record. Havert v. Caldwell (1983), Ind., 452 N.E.2d 154.

Effective January 1, 1991, our supreme court amended Trial Rule 56. The relevant parts of the amended rule now provide:

(C) Motion and Proceedings Thereon. ... At the time of filing the motion or response, a party shall designate to the court all parts of pleadings, depositions, answers to interrogatories, admissions, matters of judicial notice, and any other matters on which it relies for purposes of the motion. A party opposing the motion shall also designate to the court each material issue of fact which that party asserts precludes entry of summary judgment and the evidence relevant thereto. The judgment shall be rendered forthwith if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.... Summary judgment shall not be granted as of course because the opposing party fails to offer opposing affidavits or evidence, but the court shall make its determination from the evidentiary matter designated to the court.

* * * * * *

(H) Appeal-Reversal. No judgment rendered on the motion shall be reversed on the ground that there is a genuine issue of material fact unless the material fact and the evidence relevant thereto shall have been specifically designated to the trial court.

Our supreme court recently discussed its amendments to Trial Rule 56 in the opinion of Rosi v. Business Furniture Corp....

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