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  1. #1
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    in the case Alan Balch as Trustee brought against the USET for not allowing him access to records


    USA Equestrian, Inc.
    (formerly American Horse Shows Association)
    4047 Iron Works Parkway, Lexington, KY 40511-8483 Tel: (859) 258 2472 Fax (859) 231 6662 Web site: www.ahsa.org/

    NEWS RELEASE


    --------------------------------------------------------------------------------

    For Immediate Release August 20, 2001
    COURT FINDS FOR AHSA: USET ACTIONS ?NULL AND VOID?

    In a dramatic court ruling, the United States Equestrian Team?s corporate actions this year have been declared ?null and void,? and its corporate books and records have been opened to unlimited inspection by its trustees.

    The ruling was issued by mail on Thursday, August 16, 2001. The Superior Court of New Jersey found for the AHSA (now USA Equestrian) and its president, Alan F. Balch, in the case Balch vs. United States Equestrian Team, Inc. The decision followed oral argument held on Friday, August 3, at Somerset County Courthouse, Somerville, NJ.

    Balch filed the lawsuit in April upon authorization by the AHSA Executive Committee, following the USET?s commencement of its litigation against AHSA in late February, seeking to replace it as National Governing Body for equestrian sport. Balch had made numerous formal requests for financial and other information beginning in December and January, and placed formal objections to USET?s refusal to respond, as well as other corporate conduct, on the record at its meetings.

    Presiding Judge Helen E. Hoens wrote, ?As abhorrent as Mr. Balch?s effort to secure documents from USET may be to that organization and in spite of the fact that his true motivation may be the advancement of interests of AHSA of which he is the president, New Jersey law is crystal clear respecting his absolute and unfettered right to have copies of the documents he has requested provided to him without any limitations imposed upon him as to their use.? She ordered that Balch be permitted to inspect and copy ?all corporate books and records [he] may request to review.?

    Next, the Court found that Balch had ?quite properly demanded the relief that his position as a trustee requires that he demand? in objecting to the USET?s engaging in ultra vires actions (actions beyond its authority). The USET?s violations of statute and of the governing Certificate and by-laws of the organization ?cannot be overlooked,? and she found these violations ?so fundamental that they render legally null and void all decisions made and actions taken as a result of votes? by improperly seated boards of the USET dating back to at least January 2001. The Court specifically declared ?null and void? all USET?s actions taken at its 2001 Annual Meetings and meetings of its Board of Trustees on April 2, April 25, April 30, and May 23, to which Balch had objected.

    In addition the Court declared null and void ?the USET?s purported adoption? of its most recent bylaws, finding them ?inconsistent with its certificate of incorporation.?

    Commenting on the outcome of the litigation, Balch said, ?Naturally, I?m gratified that the court agreed with our strongly held position and made its reasoning so clear and so emphatic. On the other hand, these matters are so straightforward that no trustee should have to engage in litigation to enforce what are fundamental rights. I?m hopeful the USET?s current leadership will now see the advantages of managing its affairs in a cooperative and open way, and turn away from its destructive and defiant strategy to divide the sport. Certainly the consequences of their actions up to now have been a sad commentary on the management of an organization that seeks to replace a fair and open governing body for this entire sport. We hope this decision can finally move us in a direction toward ending the hostile atmosphere in the sport the USET has fostered.?

    USA Equestrian Press Release

    [This message was edited by SoEasy on Aug. 20, 2001 at 10:10 AM.]
    Mal:This is the Captain. We have a little problem with our entry sequence, so we may experience some slight turbulence and then .... explode



  2. #2
    SoEasy is offline Schoolmaster Premium Member
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    in the case Alan Balch as Trustee brought against the USET for not allowing him access to records


    USA Equestrian, Inc.
    (formerly American Horse Shows Association)
    4047 Iron Works Parkway, Lexington, KY 40511-8483 Tel: (859) 258 2472 Fax (859) 231 6662 Web site: www.ahsa.org/

    NEWS RELEASE


    --------------------------------------------------------------------------------

    For Immediate Release August 20, 2001
    COURT FINDS FOR AHSA: USET ACTIONS ?NULL AND VOID?

    In a dramatic court ruling, the United States Equestrian Team?s corporate actions this year have been declared ?null and void,? and its corporate books and records have been opened to unlimited inspection by its trustees.

    The ruling was issued by mail on Thursday, August 16, 2001. The Superior Court of New Jersey found for the AHSA (now USA Equestrian) and its president, Alan F. Balch, in the case Balch vs. United States Equestrian Team, Inc. The decision followed oral argument held on Friday, August 3, at Somerset County Courthouse, Somerville, NJ.

    Balch filed the lawsuit in April upon authorization by the AHSA Executive Committee, following the USET?s commencement of its litigation against AHSA in late February, seeking to replace it as National Governing Body for equestrian sport. Balch had made numerous formal requests for financial and other information beginning in December and January, and placed formal objections to USET?s refusal to respond, as well as other corporate conduct, on the record at its meetings.

    Presiding Judge Helen E. Hoens wrote, ?As abhorrent as Mr. Balch?s effort to secure documents from USET may be to that organization and in spite of the fact that his true motivation may be the advancement of interests of AHSA of which he is the president, New Jersey law is crystal clear respecting his absolute and unfettered right to have copies of the documents he has requested provided to him without any limitations imposed upon him as to their use.? She ordered that Balch be permitted to inspect and copy ?all corporate books and records [he] may request to review.?

    Next, the Court found that Balch had ?quite properly demanded the relief that his position as a trustee requires that he demand? in objecting to the USET?s engaging in ultra vires actions (actions beyond its authority). The USET?s violations of statute and of the governing Certificate and by-laws of the organization ?cannot be overlooked,? and she found these violations ?so fundamental that they render legally null and void all decisions made and actions taken as a result of votes? by improperly seated boards of the USET dating back to at least January 2001. The Court specifically declared ?null and void? all USET?s actions taken at its 2001 Annual Meetings and meetings of its Board of Trustees on April 2, April 25, April 30, and May 23, to which Balch had objected.

    In addition the Court declared null and void ?the USET?s purported adoption? of its most recent bylaws, finding them ?inconsistent with its certificate of incorporation.?

    Commenting on the outcome of the litigation, Balch said, ?Naturally, I?m gratified that the court agreed with our strongly held position and made its reasoning so clear and so emphatic. On the other hand, these matters are so straightforward that no trustee should have to engage in litigation to enforce what are fundamental rights. I?m hopeful the USET?s current leadership will now see the advantages of managing its affairs in a cooperative and open way, and turn away from its destructive and defiant strategy to divide the sport. Certainly the consequences of their actions up to now have been a sad commentary on the management of an organization that seeks to replace a fair and open governing body for this entire sport. We hope this decision can finally move us in a direction toward ending the hostile atmosphere in the sport the USET has fostered.?

    USA Equestrian Press Release

    [This message was edited by SoEasy on Aug. 20, 2001 at 10:10 AM.]
    Mal:This is the Captain. We have a little problem with our entry sequence, so we may experience some slight turbulence and then .... explode



  3. #3
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    "And, has thou slain the Jabberwock?
    Come to my arms, my beamish boy!
    O frabjous day! Callooh! Callay!'
    He chortled in his joy.
    Nothing says "I love you" like a tractor. (Clydejumper)

    The reports states, “Elizabeth reported that she accidently put down this pony, ........, at the show.”



  4. #4
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    This is monumental. Now maybe we will all get a chance to see what has been going on financially within the USET.

    Almost as exciting - all the board members who have been dismissed - now have their positions back.

    Very exciting to see this occurring!
    Originally Posted by Alagirl
    We just love to shame poor people...when in reality, we are all just peasants.



  5. #5
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    Yes, it is wonderful news - but who knows if we will ever see the truth of the books.... [img]/infopop/emoticons/icon_frown.gif[/img]
    co-author of 101 Jumping Exercises & The Rider's Fitness Program; Soon to come: Dead Ringer - a tale of equine mystery and intrique! Former Moderator!



  6. #6
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    Now, now Weatherford, the glass could be half full [img]/infopop/emoticons/icon_wink.gif[/img]
    Definition of "Horse": a 4 legged mammal looking for an inconvenient place and expensive way to die. Any day they choose not to execute the Master Plan is just more time to perfect it. Be Very Afraid.



  7. #7
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    Well!

    Can't wait to read Armand Leone's response. Should be quite the entertaining spectacle.



  8. #8
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    the Fed's website has the ruling (uset's makes no mention as yet)

    it was an interesting read

    it looks to me that AB's suit won on everything except legal fees

    love the "these violations are so fundamental that they render legally null and void all decisions made and actions taken as a result of votes of the limited group permitted to vote"


    pretty strong wording there against uset actions
    Nothing says "I love you" like a tractor. (Clydejumper)

    The reports states, “Elizabeth reported that she accidently put down this pony, ........, at the show.”



  9. #9
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    The question is does the USET have to give Balch the information now or can they appeal and delay?



  10. #10
    SoEasy is offline Schoolmaster Premium Member
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    they have to give it to him now

    the ruling is very clear
    Mal:This is the Captain. We have a little problem with our entry sequence, so we may experience some slight turbulence and then .... explode



  11. #11
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    within 30 days of ruling
    Nothing says "I love you" like a tractor. (Clydejumper)

    The reports states, “Elizabeth reported that she accidently put down this pony, ........, at the show.”



  12. #12
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    This will be long, so I'll put it in two parts. [img]/infopop/emoticons/icon_smile.gif[/img]

    The order granting summary judgment orders that the USET shall:

    (1) Within 10 days from the date [of the order] produce for inspection and copying to plaintiff [Alan Balch], without qualification or condition, all corporate books and records the plaintiff may request to review, including but not limited to:

    (a) documents relationg to the amount of cash commercial sponsorships raised by the USET, itemized by sponsor, for each year or quad [Olympic quadrennium], dating back to the quad ending in 1996 and the quad ending in 2000, including an indcation of the amount expensed from each sponsorship by category or use, for the Festival of Champions, direct athlete support, prize money at events, and otherwise;

    (b) a full, complete, and non-redacted list of all USET membership contributions, whether monetary or in kind; and

    (c) USET financial records, general ledger, and all schedules for the calendar years 2000 and 2001 (including schedules of pledged receivables, schedule of collection history, schedule of collection expenses and write-offs, schedules segregating accounts for restricted and unrestricted funds, if any, and a copy of 2000 Federal Form 990 when filed.)

    (2) within 30 days from the date [of the order] take all remedial action necessary to ensure that the terms of its by-laws comport to its certificate of incorporation;

    [This refers to the changing of the by-laws in ways which were ultra vires [beyond the power of the board] and did not comply with the Certificate of Incorporation, mainly the restriction on which members may vote and some of the changes they made to the by-laws to fit the NGB challenge]

    (3) within 30 days from the date [of the order] take all necessary action to cure the USET's failure to provide all members with the right to vote at any rescheduled 2001 annual meeting, including providing all USET members a notice of the annual meeting for 2001 and an accompanying proxy statement; and it is

    FURTHER ORDERED that the USET's actions taken in connection with its 2001 annual meetings conducted on April 2, 2001 and May 23, 2001 and the April 2, 2001, April 25, 2001, and April 30, 2001 Board of Trustees meetings are hereby declared null and void; and it is

    FURTHER ORDERED that the USET's purported adoption of by-laws that are inconsistent with its certificate of incorporation are hereby declared null and void.

    The order then denies Mr. Balch's request for reimbursement for attorneys' fees and costs for bringing the action.
    "I don't want to sound like a broken record here, but why is it that a woman will forgive homicidal behavior in a horse, yet be highly critical of a man for leaving the toilet seat up?" Dave Barry



  13. #13
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    As I see it, the big problems for the USET are the disenfranchisement of its members and its Board's ultra vires acts (acts beyond the purposes of the corporation as stated in its Certificate of Incorporation or beyond the powers given to the Board in the Certificate of Incorporation and the by-laws.)

    Many of the procedural violations the from the USET's first putative 2001 annual meetings, such as being too long after the record date for members and not giving the trustees sufficient notice of the proposed by-law amendments, were cured by the second putative 2001 annual meeting.

    However, the second meeting was also invalid because of the USET's refusal to provide records to a Trustee and, more significantly in terms of the USET attempting to effect a cure, by the limitation on voting members to only those members who have donated at least $100 and the acts in amending the by-laws in ways that did not comport with the Certificate of Incorporation.

    The opinion and of the order granting Alan Balch summary judgment are clear that everything the USET did at both annual meetings this year, and all of the changes to the by-laws it adopted are null and void.

    That means that all the changes made to the by-laws to make them comply with what was necessary for the NGB challenge are void, and all of the people removed from the Board are still on the Board. They have to have yet another annual meeting, and they have to give notice of it and the right to vote to allL the members, not just those who donated more than $100.

    The USET can appeal, and I'm guessing probably will given the potentially devastating consequences of the ruling. However, from my review it seems the New Jersey law on the subject of a Trustee's right to access to records is clear. As the court said in her opinion, Balch presented New Jersey cases clearly holding that a corporate board member or trustee has an absolute and unlimited right to access to corporate records, regardless of the motivation for seeking such access, while the USET could offer only cases from other states in support of its position that they could limit the access to those records because they believed the trustee was not acting for the benefit of the corporation. The New Jersey Superior Court is obligated to follow the New Jersey precedents.

    Moreover, in her opinion the court says the USET effectively admitted that its amendments to its by-laws and its limitation of voting rights were ultra vires and contrary to the Certificate of Incorporation. So, just from what I've seen, it seems the chances of success on appeal are minimal.

    However, I'm not a New Jersey lawyer and I do not know New Jersey procedure. I do not know if the USET will have to follow the order and give Mr. Balch access to the records and take the other actions ordered in the meantime pending the appeal. In a regular appeal process, it would not be possible to get an appellate ruling prior to the USOC hearing scheduled to begin on Sept. 24th. But, if New Jersey is similar to the procedure I'm familiar with, it probably has some form of expedited procedure the USET could follow, such as seeking a stay of the court's order pending appeal.

    Any lawyers out there familiar with New Jersey procedure who could give us some idea of what happens now?

    From a practical point of view, I do not think it would be possible for the USET to set a new record date and arrange a new annual meeting, send out proper proxy statements to all members (not just those who donated $100 or more), hold a new 2001 annual meeting, elect a new board and officers, and amend its by-laws and its Certificate of Incorporation, prior to the USOC hearing.

    Technically, as I see it at least, the USET does not qualify to be an NGB because its [pre-amendment] by-laws (and possibly its Certificate of Incorporation) do not give it the rights and powers necessary to act as an NGB. However, the USOC may still decide to go forward with the hearing in any event, on the idea that the USET would eventually be able to cure these defects and remake itself in the image of an NGB as it has tried to do.

    We'll have to wait and see what happens.
    "I don't want to sound like a broken record here, but why is it that a woman will forgive homicidal behavior in a horse, yet be highly critical of a man for leaving the toilet seat up?" Dave Barry



  14. #14
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    Portia, I wondered if part of what might be null and void would include the submission of the challenge?

    Is it possible that when they voted to pass that they were in violation and therefore would have to witdraw the challenge itself?

    I wonder if they could get a stay from the courts, wouldn't they need some just cause that there was an error?



  15. #15
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    So, what would happen if in the very near future (like tomorrow), a lot of people who had an interest in the outcome were to become members of the USET?

    Would this mean that they would be afforded the right to vote (assuming this meeting is held prior to the hearing)? It doesn't sound like it is a "recount" of the previous election (a la Florida and the presidential election), but in fact a whole new ball game...
    Definition of "Horse": a 4 legged mammal looking for an inconvenient place and expensive way to die. Any day they choose not to execute the Master Plan is just more time to perfect it. Be Very Afraid.



  16. #16
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    It is a whole new ballgame, but who can vote would depend on the record date they set.

    The "record date" is the fixed date at which all people who are members on that date may vote. The meeting then has to be held within a certain period of time after the record date (I don't know how long that is under NJ law, but it's usually around 60 or 90 days). The record date can be, and usually is, retroactive to an extent, meaning they could today set a record date of August 1, 2001 and as long as they gave notice to all the members as of that date and held the meeting within X days of that date, it would all be perfectly valid.
    "I don't want to sound like a broken record here, but why is it that a woman will forgive homicidal behavior in a horse, yet be highly critical of a man for leaving the toilet seat up?" Dave Barry



  17. #17
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    well there goes my master plan [img]/infopop/emoticons/icon_wink.gif[/img]
    Definition of "Horse": a 4 legged mammal looking for an inconvenient place and expensive way to die. Any day they choose not to execute the Master Plan is just more time to perfect it. Be Very Afraid.



  18. #18

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    So, what next?

    Are the USOC hearings still on? Is there more of a chance for mediation now?

    Where do we go from here?

    (Oh, the lawyers will appeal and make even more money...)



  19. #19
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    But THANK YOU SGray for this quote. Now I know where my horse's name comes from, "My Beamish Boy". Now I'm even more convinced it's an odd name for a horse. What work is this from, please tell!


    <BLOCKQUOTE class="ip-ubbcode-quote"><font size="-1">quote:</font><HR>Originally posted by SGray:
    "And, has thou slain the Jabberwock?
    Come to my arms, my beamish boy!
    O frabjous day! Callooh! Callay!'
    He chortled in his joy.<HR></BLOCKQUOTE>



  20. #20
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    Why, "Jabberwocky" of course!!

    Here's a link to the poem...

    http://www.jabberwocky.com/carroll/jabber/
    Definition of "Horse": a 4 legged mammal looking for an inconvenient place and expensive way to die. Any day they choose not to execute the Master Plan is just more time to perfect it. Be Very Afraid.



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