Legal Question in Business Law in California

Personal Liability as a Board Officer for a Non-Profit 501(c)4

I was recently elected to a Board Position of a Non-Profit club. The Club is threatening to be sued for alleged slanderous comments made by several of it's members (I had no involvement in the alleged slander.) The complaint names the club (which is incorporated as a non-profit 501c4) and individually names each Board Member and Officer. Can I be held personally liable for this? Shouldn't the club's insurance provide any legal defense for me as an Officer? I wouldn't be named in this complaint were it not for my association on the Board. I asked the Pres. for a copy of our club's insurance policy but still haven't received it. The President has sought the advice of an attorney on behalf of the club but also recommended we all seek our own legal counsel for advice and if necessary use our homeowner's insurance policies?! That just doesn't sound right to me! I have considered resigning my position but need to know if that would help me or potentially hurt me?


Asked on 3/31/08, 6:48 pm

2 Answers from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Personal Liability as a Board Officer for a Non-Profit 501(c)4

You can find some solace in Corporations Code section 5047.5(a) which states that it is the public policy of the State of California to provide incentive and protection to individuals who are willing to serve as volunteer officers and directors of non-profit corporations. Note that 5047.5(b) which follows affords specific immunity for alleged negligent acts, but slander is an intentional tort, not negligence. Still I'm confident the statement of public policy would be a strong defense to personal liability.

In addition, there is a set of laws in California aimed at curbing so-called "SLAPP" lawsuits. That is an acronym for "Strategic Lawsuit Against Public Participation." Without any real information, I have a strong suspicion that the suit filed against your organization falls into that category. SLAPP suits are also strongly discouraged by public polocy because of their "chilling effect" on public participation in affairs of community interest and the exercise of First-Amendment free speech rights. Anyone who has to defend a SLAPP suit is entitled to attorney fees upon winning.

I'll bet your club doesn't have insurance. Please feel free to contact me with more information about the suit if you'd like a more complete analysis.

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Answered on 3/31/08, 7:28 pm
Terry A. Nelson Nelson & Lawless

Re: Personal Liability as a Board Officer for a Non-Profit 501(c)4

Quitting now is like the "shut the barn door after the horse leaves" cliche. It won't change anything, except to make it more difficult to deal with the board, their attorney, and their insurance.

IF, IF, the group has appropriate insurance, you should be covered, and provided defense. If you discover they don't, then you'll have to pay for your own defense if the board/organization doesn't do that for you. If that happens, you can consider a Cross-Complaint for your costs if you can't get out of the case by negotiation or motion. If forced to hire your own counsel, discuss whether a motion to strike or demurrer will likely get you out.

Feel free to contact me if put into that position, if the case is in SoCal courts.

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Answered on 3/31/08, 9:10 pm


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