Terry M. ALUISI, Plaintiff and Respondent, v. FORT WASHINGTON GOLF AND COUNTRY CLUB, Defendant and Appellant.
Defendant Fort Washington Golf and Country Club (club) appeals from the judgment entered after court trial reinstating the membership of respondent Terry Aluisi (Aluisi). The club challenges the trial court's finding that the expulsion hearing conducted by the club was procedurally unfair. We will affirm.
STATEMENT OF FACTS
The club is a private country club, incorporated in 1923, which maintains a golf course and related facilities. Aluisi joined the club sometime during the period of 1977 to 1979.1 The instant action arises from Aluisi's expulsion from the club on December 10, 1990.
On October 30, 1990, the women's board of directors (women's board) drafted a letter to the board of directors (board) stating it wished “to file a complaint against member Terry Aluisi for the vulgar, filthy and demeaning remarks made in the presence of women members on Thursday, October 25, 1990 at 1:30 PM in the area between the Pro Shop and Grille Room.”
Barbara Nichols, “captain” of the women's board, also spoke with the club president, Dennis Palmer, regarding the incident. During this discussion, Nichols explained that the women involved in the incident were fearful of Aluisi and wished to remain anonymous. The board decided to keep the name of the witnesses to the incident confidential.
On November 6, 1990, the board considered the letter of complaint. It decided to suspend Aluisi pending an expulsion hearing. On November 7, 1990, the board notified Aluisi in writing that on December 5, 1990, it would decide whether to expel him from the club. In pertinent part, the notice stated:
“The [board] has received a formal written complaint regarding your conduct from the [women's board]. Said complaint alleges that on Thursday, October 25, 1990 at 1:30 PM you did make ‘vulgar, filthy and demeaning remarks in the presence of women members.’
“After consideration of this complaint, actions of which have been verified, and after a review of past offenses committed by you and documented in your file the Directors have voted to suspend your membership for thirty days effective November 9, 1990. During this period this matter will be investigated further, and at its December 5, 1990 regular meeting the Directors will decide whether to expell [sic ] you from the Club. Article IV Section 2 of the By–Laws provides you the opportunity to appear and be heard should you so desire.”
Aluisi had received three previous letters from the board concerning violations of club rules. A letter dated April 12, 1979, reprimanded him for playing golf in a “sixsome” and failing to comply with a directive of the club's professional. A letter dated November 9, 1979, reprimanded Aluisi and five others for playing in groups in excess of five players, using profane language and violating parking regulations. The third letter, dated March 19, 1984, concerned an altercation between an employee and Aluisi in which the board determined Aluisi had acted in a manner beneath that which “is expected and required of a member of a Country Club.”
Shortly after Aluisi received the notice, he telephoned club president Dennis Palmer. During their conversation Palmer discussed the details of the complaint from the women's board. Palmer testified that he was “reasonably sure” they also discussed the letters of reprimand contained in his membership file. Palmer also agreed to speak with Aluisi's witnesses, Julie Haloran and Steve Gutilla.
Prior to the expulsion hearing, Palmer spoke with Steve Gutilla; board member Steve Miller spoke with Haloran. Board member Ed Deatherage spoke with “probably half a dozen” people whom he “believed were present at the time Mr. Aluisi said what he said.”
The expulsion hearing took place December 5, 1990. No witnesses were present and there were no writings presented other than the original letter of complaint. Aluisi appeared and denied using “filthy, vulgar language” toward the women players. He did admit telling his wife the women “were a bunch of old hags,” and that “she should have told that lady to shove her apology up her ass.” 2 He also argued the previous letters of reprimand should not be considered because the incidents occurred long ago. Board member Davidian questioned Aluisi regarding a past incident in which he allegedly threatened a new member. Board member Deatherage asked him whether he had threatened anyone during conversations with various members the week prior to the hearing. Aluisi denied ever threatening anyone. Aluisi complained he had not been given the complainants' names. Board member Deatherage explained that their identities were being kept confidential because “[t]hey're scared to death of you, Terry.”
The board then went into closed session and Aluisi was excused. In addition to discussing the incident which gave rise to the complaint of the women's board, the board also discussed the following matters which had not been disclosed to Aluisi and which had not been discussed in his presence: (1) Aluisi's threat that he was going to “bust [board member] Davidian's face”; (2) his threat during “a bingo night” to pull another member through a window; (3) a threat to “kick Paul Carroll's ass”; (4) a threat to “mash Jerry Whitehead's face in”; (5) disqualification from a golf tournament in Selma; (6) that Aluisi is “no longer welcome to play at Spyglass in NCGA tournaments because he's an embarrassment to them”; (7) parking his cart “on the aprons of the green”; (8) “driving into people” on the course if they “irritate him”; (9) that Aluisi's father “was cashiered out of the sheriff's department for having liaisons in the back seat of his sheriff's car in a fig orchard with 16 year old girls,” and “subsequent he got into the real estate development business and was indicted for fraud and spent three years in the slammer”; and (10) that Aluisi and his brother got into a “fist fight” on club grounds one day. The board voted unanimously to expel Aluisi “[b]ased on this complaint and prior complaints.”
On November 22, 1991, Aluisi filed a complaint for injunctive relief and for damages arising out of the expulsion. The club answered, denying each accusation and setting forth 15 affirmative defenses.
On September 17, 1992, the club's motion for severance of Aluisi's first cause of action for injunctive relief was granted. This cause was severed and ordered to be tried before the remaining causes of action seeking damages.
Court trial of the first cause of action for injunctive relief commenced July 6, 1993.
On July 27, 1993, the trial court issued its proposed statement of decision in favor of Aluisi. The club filed a request for issuance of a statement of decision. In its request the club asked the court to explain 10 additional “controverted issues.”
On September 3, 1993, the court filed its statement of decision. In relevant part, the court ruled Aluisi was “deprived of a fair procedure when the Board of The Club determined to conceal the identities of two percipient witnesses, Mrs. Stroud and Mrs. Trippell.” The court also found that the board's consideration of matters not documented in his membership file and regarding which Aluisi did not have notice or a chance to respond also deprived him of a fair hearing. The court found that “the cumulative effect of the undocumented matters was likely to and did affect the decision of The Club to expel plaintiff and that plaintiff was neither noticed that these matters would be considered nor given opportunity to examine the evidence and prepare his defense.” Finally, the court declined “to comment further on defendant's request for additional explanation as to the ten matters identified in its proposal,” because these issues “are in truth not issues at all under the facts of this case.” Accordingly, the court ordered the club to reinstate Aluisi to membership pending a new expulsion hearing.
1. Aluisi was denied a fair expulsion hearing.
The club's central contention on appeal is that the trial court erred when it found Aluisi was denied fair procedure at the expulsion hearing. We conclude otherwise.
As was explained in 1976 by the California Law Revision Commission, “California courts have long required minimal due process for expulsion proceedings. [Citations.] The nature of the nonprofit corporation and the extent of the member's interest involved will determine the minimum standards of notice and hearing which must be followed.” (13 Cal.Law Revision Com.Rep. (Dec. 1976) pp. 2424–2425.) “This requirement of procedural fairness has been an established part of the California common law since before the turn of the century.” (Pinsker v. Pacific Coast Society of Orthodontists (1974) 12 Cal.3d 541, 553, 116 Cal.Rptr. 245, 526 P.2d 253 [hereafter Pinsker ].) A member may not be expelled without charges, notice and a hearing. (Ibid.) In Cason v. Glass Bottle Blowers Assn. (1951) 37 Cal.2d 134, 231 P.2d 6 (hereafter Cason ), the high court wrote that courts will interfere with the decision of a private association to expel a member “if the rules of the association governing expulsion have not been observed or if the accused member has not been afforded those rudimentary rights which will give him a reasonable opportunity to defend against the charges made.” (At p. 143, 231 P.2d 6.)
In 1978, the Corporations Code 3 was revised to enact “a new nonprofit corporations law which would be consistent with the new General Corporations Law.” (Sen. Com. on Judiciary, Analysis of Assem. Bill No. 2180 (1977–1978 Reg.Sess.) as amended Aug. 7, 1978, p. 2.) The revision “codifies some existing case law and attempts to solve problems that have troubled the courts in an effort to provide better guidance for nonprofit corporations.” (Enrolled Bill Rep. on Assem. Bill No. 2180 (Sept. 25, 1978) p. 6.) Section 7341 was enacted as part of this revision.4 This section was intended to codify “current case law concerning the procedural due process required for suspending or expelling members․ [I]t provides a ‘safe harbor’ that allows the corporation to act with assurance that procedural regularity is being maintained.” (Leg.Com.Summary, Deerings Ann.Corp.Code, § 7341 (1994) p. 269; see also Assem. Select Com. on Revision of the Nonprofit Corp.Code, Summary of Assem.Bill No. 2180 and Assem.Bill No. 2181 (July 27, 1978) p. 7.) 5 Subdivision (b) of section 7341 provides that “[a]ny expulsion, suspension, or termination must be done in good faith and in a fair and reasonable manner.” Subdivision (c) provides, in relevant part,
“(c) A procedure is fair and reasonable when:
“(1) The provisions of the procedure have been set forth in the articles or bylaws, or copies of such provisions are sent annually to all the members as required by the articles or bylaws;
“(2) It provides the giving of 15 days' prior notice of the expulsion, suspension or termination and the reasons therefor; and
“(3) It provides an opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension or termination by a person or body authorized to decide that the proposed expulsion, termination or suspension not take place.”
Contrary to the club's implied assertion, the enactment of this section was not intended to constrict or limit common law due process protections afforded members; rather,
“The [comprehensive revision of the Nonprofit Corporation Law] was undertaken to modernize and clarify the Nonprofit Corporation Law and to facilitate the conduct of nonprofit corporations while maintaining and expanding upon this state's traditional protection of the rights of members, creditors and the public.” (Assem. Select Com. on Revision of the Nonprofit Corp.Code Report on Assem.Bill No. 495 (1979–1980 Reg.Sess.) p. 1, emphasis added.)
Thus, it is clear from the legislative history of this section that the Legislature intended to preserve existing common law due process protections as discussed in Pinsker, supra, 12 Cal.3d 541, 116 Cal.Rptr. 245, 526 P.2d 253 and Cason, supra, 37 Cal.2d 134, 231 P.2d 6.
The trial court's finding that Aluisi was not accorded fair procedure was correct as a matter of law. In Applebaum v. Board of Directors (1980) 104 Cal.App.3d 648, 163 Cal.Rptr. 831, the court observed that the “distinction between fair procedure and due process rights appears to be one of origin and not of the extent of protection afforded an individual; the essence of both rights is fairness. Adequate notice of charges and a reasonable opportunity to respond are basic to both sets of rights.” (Id. at p. 657, 163 Cal.Rptr. 831.) And in Hackethal v. California Medical Assn. (1982) 138 Cal.App.3d 435, 442, 187 Cal.Rptr. 811 (hereafter Hackethal ), the court wrote that the elements of fair procedure also include “an opportunity to confront and cross-examine the accusers and to examine and refute the evidence,” citing Cason, supra, 37 Cal.2d at page 144, 231 P.2d 6. 6
First, the evidence is uncontroverted that Aluisi was not permitted to confront two complaining witnesses, Frances Stroud and Jeannie Trippell,7 and their identities were concealed from him. In addition, Ed Deatherage testified that prior to the expulsion hearing he had spoken with “probably half a dozen” people who were present “at the time Mr. Aluisi said what he said.” The identities of these people were also not disclosed to Aluisi. The refusal to permit Aluisi to confront the complaining witnesses and examine their testimony violated his right to fair procedure. (Hackethal, supra, 138 Cal.App.3d at p. 442, 187 Cal.Rptr. 811; Cason, supra, 37 Cal.2d at pp. 144–145, 231 P.2d 6.)
Second, the evidence is also uncontroverted that the board considered allegations for which Aluisi received no notice and had no chance to respond. The notice specifically stated the suspension and expulsion hearing resulted from the complaint by the women's board and the previous letters of reprimand contained in his membership file. At the expulsion hearing Aluisi was asked to account for his behavior on October 25th and was questioned whether he had ever threatened anyone.
After Aluisi was excused, the board raised and considered several unrelated significant and highly prejudicial charges.8 Even if Aluisi's denial during the hearing that he had ever threatened anyone is found to justify discussion of the many incidents in which he had apparently threatened to assault various members, there was no mention in his presence of the following six incidents which were discussed by the board after he was excused: his disqualification from a golf tournament in Selma; that he is “no longer welcome to play at Spyglass in NCGA tournaments because he's an embarrassment to them”; parking his cart “on the aprons of the green”; “driving into people” on the course if they “irritate him”; that Aluisi's father “was cashiered out of the sheriff's department for having liaisons in the back seat of his sheriff's car in a fig orchard with 16 year old girls,” and that he had “spent three years in the slammer” for fraud; and, finally, that Aluisi and his brother got into a “fist fight” on club grounds one day.
None of the six matters listed ante was documented in Aluisi's membership file and Aluisi had no notice these incidents would be considered by the board. Moreover, he was not given an opportunity to respond to these charges during the expulsion hearing. In short, Aluisi was not given an opportunity to defend himself against serious accusations that he was disqualified from a golf tournament, had been banned from another course, violated parking regulations, intentionally drove into people with his golf cart, got in a public fist fight with his brother and that his father was a lecherous felon.
Cason, supra, 37 Cal.2d 134, 231 P.2d 6, is, in certain respects, analogous. Cason was suspended from a labor union. At his hearing before the national grievance committee plaintiff was permitted to appear and present evidence. However, he was not permitted to hear the testimony of Minton, the sole witness against him. The grievance committee was given the union's case file “but plaintiff was not informed of its contents or afforded an opportunity to examine it.” (Id. at p. 144, 231 P.2d 6.) The trial court, in relevant part, granted a peremptory writ directing he be reinstated to membership. (Id. at p. 138, 231 P.2d 6.) The high court agreed with the trial court, determining he did not receive a fair hearing before the union grievance committee. The court reasoned:
“Although he was allowed to appear and testify, he was not permitted to confront Minton, to hear his evidence or refute it. Also, plaintiff was not given any opportunity to examine the file of the national union, which was considered by the committee, and it does not appear that he knew what was in the file or that it had been presented to the committee. We cannot tell, of course, if additional charges were contained in President Minton's testimony before the grievance committee or in the file used by the committee, but this possibility is simply another aspect of plaintiff's claim that he was denied the right to hear the evidence presented against him. Under the circumstances, it is apparent that he did not receive a fair trial within the meaning of the cases discussed above.” (37 Cal.2d at pp. 144–145, 231 P.2d 6.)
Here, Aluisi was permitted to learn the substance of the incident triggering the letter of complaint and to respond to this charge. However, the identities of the complaining witnesses were concealed; he was not given an opportunity to confront and question them. Moreover, Aluisi had no notice of nor opportunity to respond to the many charges leveled against him after he was excused. Aluisi's defense did not put into issue the discussion of his family or the other undocumented incidents involving threats of physical violence. The board's consideration in closed session of unnoticed and undocumented matters regarding which Aluisi had no opportunity to respond clearly deprived him of a procedurally fair hearing. (§ 7341, subd. (c); Cason, supra, 37 Cal.2d at p. 145, 231 P.2d 6.)
The club's argument that the discussion of undocumented matters was harmless because the expulsion motion passed by the board referred to “this complaint and prior complaints” is without merit. It is clear from the transcript of the hearing that in framing the motion, the board was concerned only with ensuring that it was properly worded “from a legalese standpoint,” not that it accurately reflected the reasons for their decision.
The club also asserts, without citation to applicable authority, that the decision of the board should be reviewed under the business judgment rule. Previous courts in analogous situations have not applied the business judgment rule to uphold an expulsion when the organization failed to provide the aggrieved member due process. Rather, when considering the actions of private associations, courts have addressed whether the contested decision is “substantively rational and procedurally fair.” (Pinsker, supra, 12 Cal.3d at p. 550, 116 Cal.Rptr. 245, 526 P.2d 253.) If the trial court finds there was “a denial of common law fair procedure” and the appellate court determines this issue of law was correctly decided, the judgment of the lower court is affirmed. (Hackethal, supra, 138 Cal.App.3d at p. 448, 187 Cal.Rptr. 811.)
Reviewing courts have not undertaken a separate analysis of whether prejudice resulted from the denial of fair procedure; apparently, prejudice is presumed to flow from the denial of due process. (Cason, supra, 37 Cal.2d at pp. 146–147, 231 P.2d 6; Hackethal, supra, 138 Cal.App.3d at pp. 448–449, 187 Cal.Rptr. 811.) In fact, Code of Civil Procedure section 1094.5, which governs issuance of a writ of mandate to inquire into the validity of an administrative order, analogous to the decision of the board of directors here, provides in subdivision (b) that a prejudicial abuse of discretion is established “if the respondent has not proceeded in the manner required by law.” As we have concluded the club's expulsion hearing was procedurally unfair and not in compliance with section 7341, the trial court's finding of the same is correct as a matter of law.
2. The statement of decision is not defective.
The club also argues the judgment must be reversed because the statement of decision did not address the additional uncontested issues it had raised in its objections to the tentative statement of decision.
Code of Civil Procedure section 632 provides that “[t]he court shall issue a statement of decision explaining the factual and legal basis for its decision as to each of the principal controverted issues at trial upon the request of any party appearing at the trial.” In issuing a statement of decision, the trial court is required only to “state ultimate rather than evidentiary facts.” (People v. Casa Blanca Convalescent Homes, Inc. (1984) 159 Cal.App.3d 509, 524, 206 Cal.Rptr. 164.) Moreover,
“Even though a court fails to make a finding on a particular matter, if the judgment is otherwise supported, the omission to make such finding is harmless error unless the evidence is sufficient to sustain a finding in favor of the complaining party which would have the effect of countervailing or destroying other findings. [Citation.] A failure to find on an immaterial issue is not error.” (159 Cal.App.3d at p. 524, 206 Cal.Rptr. 164.)
The 10 additional issues for which the club sought explanation did not concern material issues; rather, the trial court correctly found they “are in truth not issues at all under the facts of this case.” For example, the club argues proposal number 10 was of special import. It asserted that in the absence of any discussion of the undocumented matters, evidence existed to justify the expulsion. This issue was not before the court. Its decision was based on what actually happened, not whether the board would have been justified in expelling Aluisi had the expulsion hearing been procedurally fair.9
Here, just as in People v. Casa Blanca Convalescent Homes, Inc., supra, 159 Cal.App.3d 509, 206 Cal.Rptr. 164, “[t]he statement of decision fairly and completely sets forth the factual and legal basis for the court decision as required by Code of Civil Procedure section 632. It lists all the ultimate facts necessary to decide the issues placed in controversy by the pleadings.” (Id. at p. 524, 206 Cal.Rptr. 164.)
The judgment is affirmed. Costs are awarded to respondent.
1. In his complaint Aluisi alleges he became a member in “approximately 1979.” During trial he testified he became a member in “1977 or 1978.”
2. Apparently, Aluisi's wife had mistakenly been accused of cheating during a golf tournament and had received an apology from an unnamed woman (see fns. 7 and 8, post ).
3. Unless otherwise noted, all statutory references are to the Corporations Code.
4. Section 7341 was amended in 1979 and became operative as amended on January 1, 1980.
5. It is a “fundamental rule that a court should ascertain the intent of the Legislature. The court should seek to effectuate the intent of the law, acting in a reasonable fashion to give the statute a sensible construction in accordance with the purpose of the lawmakers, to promote rather than defeat the policy underlying the legislation.” (People v. Superior Court (Price) (1984) 150 Cal.App.3d 486, 488–489, 198 Cal.Rptr. 61.)
6. Although Applebaum and Hackethal were decided subsequent to enactment of section 7341, neither case cited this code section; their holdings are premised upon common law principles of procedural fairness.
7. Frances Stroud testified at trial that she told Barbara Nichols and board member Ed Deatherage that on October 25th Aluisi's wife was upset because certain women from the Tuesdays' ladies group had accused her of cheating. Aluisi said to his wife in a “[v]ery loud” tone of voice, “ ‘I told you not to play with those fucking old women on Tuesdays,’ ” and “ ‘Why don't you tell those old bitches to go fuck themselves.’ ” She asked that her name not be used in connection with the incident.Jeannie Trippell testified at trial that she told Nichols and Deatherage that she heard Aluisi say to his wife “ ‘I told you not to play with those fucking women’ ” before she moved out of the area. After talking to Deatherage about the incident she told him she “didn't want to be involved in it.”
8. In the statement of decision, the court wrote:“The more significant incidents discussed by the Board [after Aluisi was excused] can be summarized as follows:“1. Plaintiff's threat to bust director Doug Davidian's face in during a telephone conversation with director Larry Huck about three weeks before the hearing;“2. Plaintiff's threat to kick member Paul Carroll's ass in in 1986;“3. Plaintiff's threat to mash member Jerry Whitehead's face in;“4. Deceased member Cal Gardner's warning to plaintiff that he had one last chance, ‘one more time and you're history’;“5. The fact that plaintiff would no longer be welcomed at Spyglass in NCGA tournaments because he is an embarrassment;“6. That plaintiff's father Julius Aluisi had been cashiered from his job as a deputy sheriff for having liaisons in the back seat of his sheriff's car in a fig orchard with 16 year old girls and that while in the real estate development business he was indicted for fraud and spent three years in the slammer;“7. Plaintiff's fistfight with his brother Tony at The Club premises six or seven years before; and“8. Plaintiff's threat to throw a man through a window during an altercation at The Club on bingo night.”
9. In re Marriage of Ananeh–Firempong (1990) 219 Cal.App.3d 272, 268 Cal.Rptr. 83, relied upon by the club, is inapposite. In Marriage of Ananeh–Firempong the trial court had refused to issue a statement of decision after request by the appellant. Here, the trial court filed a 13–page statement of decision, explaining the factual and legal bases supporting the judgment.
BUCKLEY, Associate Justice.
MARTIN, Acting P.J., and STONE (WM. A.), J., concur.