DLA Piper represents the Conrad Prebys Foundation in dismissal of derivative lawsuit

DLA Piper represented the Conrad Prebys Foundation, a charitable foundation started by late philanthropist and San Diego developer Conrad Prebys, in the successful dismissal of a lawsuit filed by Prebys' partner and former foundation board member.

Debra Turner filed suit on behalf of the foundation, contesting foundation board members' decision to give $15 million of Prebys' $1 billion estate to his son, whom Prebys had previously disinherited, as a settlement after the son threatened to file a probate contest. DLA Piper, together with counsel for board members, argued that Turner lacked standing to sue derivatively on the foundation's behalf because, after filing her case, she was not reelected to serve on the foundation's board.

At the time, there was no California law or reported case clearly establishing that a board member loses standing to sue derivatively if she leaves the board, and several states, including New York, allow standing to be maintained. Before Turner filed her opposition, a California appellate court published an opinion stating that a board member does not need to remain on the board in order to bring a derivative case on behalf of a nonprofit corporation.

However, DLA Piper and counsel for board members persuaded the court to instead follow a California Supreme Court ruling involving shareholder standing in for-profit corporation derivative suits, which required the plaintiff to continuously maintain her relationship with the entity throughout the case. As a result, the court sustained the firm's demurrer to the first amended complaint without leave to amend and dismissed the complaint.

The DLA Piper team representing the foundation included partners Robert Brownlie and Andrew Pharies (both of San Diego).