2019 Ohio 1958
Ohio2019Background
- Omar Ibn El Khattab Mosque, Inc. is an Ohio nonprofit formed in 2007; its initial board (Reash/Brey faction) purportedly served a two-year term but continued past 2009 without formal membership rolls or annual elections.
- A factional dispute over mosque renovation funds (~$432,313.19) produced two competing boards: the Reash/Brey board and the Khan/Ball board; the Khan/Ball board obtained Chase Bank signing authority, and the bank interpleaded the funds to the Franklin County clerk.
- Multiple lawsuits followed in common pleas and appellate courts; earlier attempts to litigate control were dismissed or stayed for lack of proper quo warranto procedure or jurisdictional reasons.
- Ohio Attorney General filed a quo warranto action under R.C. 2733.02 and 2733.20 seeking dissolution of the corporation (rather than ouster of a particular faction), alleging failure to observe corporate formalities and that the corporation had effectively forfeited its corporate rights because the funds became inaccessible.
- A magistrate and the Tenth District granted the writ dissolving the corporation and remanding to common pleas to appoint trustees; this Court initially affirmed but, on reconsideration, vacated that decision and reversed the court of appeals, instructing the court of appeals to deny the writ.
Issues
| Issue | Plaintiff's Argument (Attorney General) | Defendant's Argument (Reash/Brey & Khan/Ball) | Held |
|---|---|---|---|
| Whether quo warranto dissolution may be granted under R.C. 2733.02/2733.20 where corporation failed to observe corporate formalities and funds became inaccessible | Omar Mosque’s failures to keep membership records, hold annual meetings, and maintain books caused internal paralysis and loss of control over charitable funds, so the corporation forfeited its rights and dissolution is warranted | Factions dispute occurrences and effects of formalities failures; dissolution is improper and AG lacks basis to dissolve rather than seek ouster of a faction | Denied: Court vacated prior affirmance and reversed appellate judgment, holding AG failed to prove dissolution relief was warranted and remanded to deny writ |
| Causation: Did failure to observe formalities cause loss of access to funds? | AG: Yes—statutory violations led to factional dispute that left funds frozen and unrecoverable | Defendants: Dispute arose over use/disbursement of renovation funds; bank’s conduct and subsequent litigation, not mere record-keeping, caused loss | Held: No sufficient evidence that compliance with formalities would have prevented bank or judicial freezing; causal link not established |
| Proper remedy: May AG seek dissolution of the corporation instead of ouster of a faction? | AG: Dissolution under R.C. 2733.02 was appropriate to resolve impasse and free charitable funds | Defendants: AG taking side by dissolving; remedy should target illegitimate faction (ouster) if any | Held: Court held AG sought a remedy to which he had not proved entitlement; if relief sought is ouster, AG must proceed against a faction rather than dissolve corporation |
| Standard for summary judgment in extraordinary-writ context | AG: Magistrate and appellate court correctly applied summary-judgment standard and found no genuine issue of material fact supporting dissolution | Defendants: Factual disputes and improper causal inferences defeat summary judgment for dissolution | Held: On de novo review, court found the record did not support the causal conclusions necessary for dissolution; writ should be denied |
Key Cases Cited
- State ex rel. DeWine v. Omar Ibn El Khattab Mosque, Inc., 130 N.E.3d 227 (Ohio 2018) (earlier opinion affirming writ; later vacated on reconsideration)
- State ex rel. Salim v. Ayed, 22 N.E.3d 1054 (Ohio 2014) (quo warranto standing and procedural guidance)
- State ex rel. Falke v. Montgomery Cty. Residential Dev. Inc., 531 N.E.2d 688 (Ohio 1988) (quo warranto may order partial or total ouster/dissolution)
- State ex rel. Corrigan v. W. Shore Ctr., 287 N.E.2d 803 (Ohio 1972) (quo warranto dissolution principles)
- State ex rel. Brown v. Regional Pub. Safety Serv. Corp., 353 N.E.2d 851 (Ohio App. 1975) (quo warranto as extraordinary remedy when public interest implicated)
- Smith v. McBride, 955 N.E.2d 954 (Ohio 2011) (summary-judgment standard quoted for appellate review)
- State ex rel. Huebner v. W. Jefferson Village Council, 662 N.E.2d 339 (Ohio 1996) (standard for motions for reconsideration)