09/30/16 — Alumni close to legal resolution

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Alumni close to legal resolution

By Rochelle Moore
Published in News on September 30, 2016 9:57 AM

Raymond Smith

The potential dissolution of the Dillard-Goldsboro Alumni and Friends organization has prompted the parties involved in a two-year legal battle to work out their differences through a court-appointed attorney.

Shelby Benton, a lawyer with Benton Family Law, was appointed by a Special Superior Court Judge Gregory McGuire, in N.C. Business Court, to serve as receiver for the nonprofit group until the disagreements can be resolved.

In her role, Benton has the final authority for decisions regarding the 60-year-old organization that has historical ties and a far-reaching impact in the community. National officers and the board remain intact, but decisions are recommended to Benton for approval.

The legal battle centers around the DGAF board's removal of former national president Raymond Smith Jr., currently a candidate for the at-large seat on the Wayne County Board of Education.

Smith declined to return phone calls seeking comment about the lawsuits.

"This was a situation of a conflict (that) occurred, and so the board voted to remove the national president," Benton said. "There's nothing else in the governance documents on what to do about that and how you go about it.

"The reason it went to business court is because it's very complicated corporate governance."

Several lawsuits were filed in Wayne County Superior Court, in 2014, after the board voted to remove Smith from office, just one month after he took the helm as national president.

Smith, who refused to step down, contends that the same members who voted him in as national president are the only ones with the authority to remove him.

In April, McGuire ruled otherwise.

"The only thing the members get to do, currently, under current documentation, is elect a national president," Benton said. Nationally, the DGAF has 274 members.

"What the judge ruled is that the board acted within its authority -- that it had the power -- to remove the national president, for or not for cause," Benton said. "They didn't have to give a reason."

State Superior Court documents detail issues leading up to the board's decision to remove Smith. Within two weeks of becoming president, in October 2013, Smith disagreed with the board's appointment of a national treasurer. One side of the legal dispute claims that Smith refused to allow the treasurer to assume office or perform her duties. Smith denies the allegations and asserts that he tried to work with the treasurer.

By early November 2013, the DGAF board voted Smith out of office.

"Nevertheless, Smith refused to comply with the board's requests that he step down as national president," according to court documents.

Court documents state that Smith "undertook a course of conduct intended to obstruct and disrupt the DGAF board."

Smith continued in his capacity at least another year, according to court documents. Additional attempts to vote Smith out were halted due to the ongoing litigation.

Prior to the state court review, four lawsuits were filed in Wayne County Superior Court covering a "litany of issues."

The state business court handles cases involving complex issues of corporate and commercial law in North Carolina.

The lawsuits involve the DGAF, its directors, national officers and members that have remained locked in a "series of disputes," according to court records.

"There have been multiple actions filed in order to litigate business issues for running a nonprofit," Benton said.

Benton said the case involves multiple DGAF members and isn't specifically about Smith but rather disagreements regarding the organization's bylaws and constitution, which were last updated in 1999.

"It not a one-person thing," she said. "It's a very complicated corporate governance."

DGAF is a 60-year-old high school alumni association with 274 national members and additional members connected to one of its six chapters. Chapter locations include Atlanta, New York, Washington, D.C., New Jersey, Philadelphia and Goldsboro, where the DGAF is headquartered.

The organization was established to celebrate the successes of Dillard and Goldsboro high school graduates and to support the scholarly efforts of youth.

Each year, during the alumni's homecoming weekend, DGAF provides tens of thousands of dollars in scholarships. DGAF also provides financial support to African-American charities and offers other forms of community support.

Benton said she agreed to serve as receiver because of her belief in the importance and wide-spread influence of the organization in Wayne County. She also has experience in finding common ground between groups and individuals from her experience as president of the North Carolina Bar Association.

Benton was president of the association when asked to serve as receiver, in 2015, and currently serves as the immediate past president of the association's Board of Governors.

"I said I'd be willing to serve," Benton said. "Mainly, I felt it was a good thing for the community.

"The alumni association has been a lifeblood in Goldsboro, and it is critical to the continued health and well-being of Wayne County. It has provided hundreds of thousands of dollars of scholarships over a 60-year period. They've put people in college that would have never gone to college."

Parties on both sides of the legal dispute have committed to working out differences, and all agreed to seek a court-appointed receiver.

"Even though they may be plaintiffs or defendants against each other, they've worked really hard together because they all know it's important," Benton said. "I think they all have a common goal that they want to try to get it resolved."

Another reason for seeking resolution was the financial burden resulting from the ongoing litigation.

"The court believes that maintaining the litigious course that DGAF is currently following will soon render DGAF no longer able to carry out its corporate purposes, and will constitute a waste of DGAF assets," according to McGuire's order appointing a receiver, in May.

"Petitioners and intervenors have each requested the appointment of a receiver to address these issues as an alternative to dissolution of DGAF."

Benton became the receiver a week prior to the Dillard-Goldsboro Alumni and Friends annual homecoming Memorial Day weekend, which annually draws hundreds of people to the city for reunions and other events.

Weekend events continued this year, and the ongoing day-to-day operations of DGAF have continued.

Benton, who is operating as a neutral party, is working with a revision committee in an effort to revise the constitution and bylaws of DGAF. Draft documents should be finished in about six weeks.

All parties continue to work together in an effort to get the nonprofit back on track and end the legal disagreements.

The revised bylaws and constitution will be presented to McGuire, who will make the final decision on the case. If either party disagrees, the case could be appealed to the state Court of Appeals, a move Benton believes is unlikely.

"I would be surprised," Benton said. "I think everybody is trying to work together to a common goal, and the common goal is the unity and the scholarships and the community service to the citizens of Goldsboro, mostly young people.

"I really do think that it will work out fine. I think there'll still be a national president election, and I think that there'll be some different structure to the board."

The process, including a final review by McGuire, may be concluded by the spring, Benton said.